Idoport Pty Limited v National Australia Bank Limited and 8 Ors; Idoport Pty Limited and Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited and..

[2001] NSWSC 1023

CITATION:	Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited and Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited & Ors [46] [2001] NSWSC 1023
FILE NUMBER(S):	SC 50113/98; 50026/99; 3991/00
HEARING DATE(S):	8/11/01
JUDGMENT DATE:	13 November 2001
PARTIES :	Idoport Pty Limited (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant)
JUDGMENT OF:	Einstein J

COUNSEL :	Mr JJ Garnsey QC, Mr M Dicker, Mr R Titterton, Mr R Alkademani (Plaintiff) Mr T Bathurst QC, Mr J Sackar QC, Mr R Smith SC, Mr H Insall SC, Mr J Halley (Defendants)
SOLICITORS:	Withnell Hetherington (Plaintiff) Freehills (Defendants)
CATCHWORDS:	Practice and procedure - Just, quick and cheap overriding purpose rule - Case management procedures - Public interest in the proper allocation of scarce resources as between courts - Extended litigation leading to one of three Commercial List Judges being unavailable to hear other cases for several years - Multiple experts - Procedure for Court appointed examiner to take cross-examination evidence from selected experts
LEGISLATION CITED:	Supreme Court Rules 1970
CASES CITED:	Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2001] NSWSC 661 Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2001 NSWSC 744 Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors [2001] NSWSC 838
DECISION:	Order that the cross-examination of Mr Lloyd and of Mr Richards-Carpenter be taken in Sydney before an examiner and be so taken on a date and at a time to be fixed by the Court. Ancillary orders made.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION – COMMERCIAL LIST

EINSTEIN J

13 November 2001

50113/98 IDOPORT PTY LIMITED & ANOR v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS

50026/99 IDOPORT PTY LIMITED & ANOR v DONALD ROBERT ARGUS

3991/00 IDOPORT PTY LIMITED (“JMG”) v NATIONAL AUSTRALIA BANK

Judgment - Orders in relation to Examiner

1 The judgment [2001] NSWSC 838 delivered on 5 October 2001 [“the examiner judgment”] dealt with case management procedures in relation to the proceedings and in particular with the issue of a Court appointed examiner before whom cross-examination of identified experts would be 'conducted' as explained in the judgment. The judgment dealt with the Court’s power to make the order and the general background context in which evidence on commission had historically been ordered. Ultimately the Court following a careful examination of the many significant parameters requiring to be taken into account and weighed in the balance, held that a particular procedure which would involve the appointment of an examiner would be put into place. The parties were invited to address on a number of practical matters of detail including the question of identifying candidates for examination before an examiner. It is inappropriate to repeat the reasons for judgment. No orders were however made at the time when the judgment was published.

2 The position which now obtains is that the parties on 8 November 2001 addressed submissions in relation to the examiner issue.

3 The defendants sought on 8 November 2001 to address a number of submissions in support of the proposition that the Court had no power to make orders of the kind contemplated in the published judgment. The Court made plain that it was prepared to permit those submissions to be advanced for the record and would privately consider whether or not to grant what amounted in effect to an informal application for leave to reopen the argument which had taken place on 28 September 2001 and 2 October 2001 when the examiner issue as well as other issues were the subject of detailed submissions. Having given careful consideration to the matter I am not dispose to grant leave to the defendants to revisit matters the subject of a published judgment when to my mind the defendants had every opportunity, at the appropriate time to advance those same submissions. No good reason for that course has been advanced. No good reason has been advanced to suggest that the published judgment proceeded on a misapprehension as to the facts or the law. The principles were set out in Idoport Pty Limited v National Australia Bank Limited [2001] NSWSC 661 at paragraphs 8 and 9. The reasons stand.

4 At another level, the defendants further advanced detailed submissions in support of the general proposition that the Court’s examiner proposal would lead to very great difficulties and that the examiner procedure should simply not be imposed upon the parties unless and until, for example, consideration was given to the issue by the Rules Committee of the Supreme Court in terms of the propriety of empowering the Court to conduct hearings in the manner suggested in the judgment. The further submission was that the Court was imposing upon the parties what was in effect "a second best choice" and that the defendants having been brought to the Court were entitled to what any other litigant expects, which was said to be that the proceedings be heard in the sense of witnesses being heard and seen by a judicial officer.

5 One of the matters which became even clearer to me following the argument which took place on 8 November 2001 was that in terms of the precise identification and detail of the many remaining witnesses to be called and cross-examined, the time estimates generally given in the examiner judgment quite likely represent a considerable underestimation of the time which the continued final hearing is in fact likely to take. The matter was the subject of some exchange between the Court and Mr Sackar QC at Transcript 15003-15004. Bearing in mind the detailed witness listing by the defendants in the schedules handed up on 8 November 2001, [MFI D245] and the submissions taken on 8 November 2001 and taking into account the statements to be read by both parties all of which were regarded on 8 November 2001 as going into evidence on the examiner issue [transcript 1408.5], it now seems clear to me that cross-examination of the numerous witnesses who remain to be called will continue in all likelihood until after 2003 and possibly until quite some time, even years, thereafter. Only a bare handful of witnesses have been called to date and in the order of 160 or more witnesses remain to be called, very many of whom have very extensive statements and folders form of exhibits to those statements. It should be said that Mr Martin is one of the plaintiff’s major witnesses and that his third tranche cross-examination is well advanced.

6 MFI D245 lists all of the witnesses who have prepared statements up to this point in time. The document serves to set out generally the defendants’ submissions in relation to the examiner issue, those submissions being conveniently summarised as an absolute opposition to the course being adopted in respect of any witnesses. The defendants written submission MFI D244 set out some suggested fundamental propositions which were then cross-referenced to the schedules MFI D245. The convenient course is to set out MFI D244:

“1. The Defendants oppose the taking of evidence from any of the expert witnesses retained by either the plaintiffs or the defendants in these proceedings. In particular the Court would be prejudiced if it was deprived of the opportunity of observing the reliability, objectivity and impressiveness of each witness before the Court in answering the questions in cross-examination by reason of any one or more of the following matters. Any one of the matters being true for a particular witness means that it is inappropriate for the evidence of that witness to be taken by an examiner:
(a) contemporaneous involvement by the expert witness with Mr Maconochie or Mr Hume in attempts to commercialise the AUSMAQ/EUROMAQ proposition (certain of the plaintiff’s expert witnesses and Mr Hodgkinson);
(b) the approach adopted by the plaintiff’s expert witnesses has been to identify gaps in the relevant marketplace and to reverse engineer and apply an understanding of the AUSMAQ/EUROMAQ proposition which suits the perceived needs of the market, citing the “flexibility” of the proposition. The flexibility enjoyed by these witnesses is entirely due to the fluidity of their assumptions in relation to the nature of AUSMAQ (all of the plaintiff’s expert witnesses);
(c) the absence of any assumptions as to the functionality of the AUSMAQ Service other than a reference to certain statements of Mr Maconochie (substantially all of the plaintiff’s witnesses, which necessitated a similar exercise in response, at least in the case of the defendants’ US and valuation witnesses);
(d) complex and technical subject matter upon which expert witnesses are radically at issue such that the Court will be prejudiced if it is not given the opportunity of oral amplification or explanation of such matters (all plaintiff’s and defendant’s expert witnesses);
(e) many of the plaintiff’s expert witnesses comment on the quality of the methodology used and conclusions reached by other of the plaintiff’s expert witnesses. This creates an interlocking effect in relation to their evidence, such that observation of evidence from one witness would necessitate observation of the evidence of others. There is added importance in observing all such witnesses where their understanding of the nature of the AUSMAQ proposition is not stated by them or provided as assumptions and may differ (all of the plaintiff’s UK expert witnesses; all of the plaintiff’s US market witnesses);
(f) fundamental contradiction of the analysis, the reasoning and conclusions reached by witnesses (Messrs Martin, Coleman and Maconochie) who have been cross-examined, presently are being cross-examined or it is accepted are to be cross-examined before the Court (certain of the defendants’ expert witnesses);
(g) reliance upon representations made by other experts retained by the plaintiffs, Mr Maconochie, Mr Hume or Mr Martin, as to the present and proposed functionality, capabilities and implementation strategy for the AUSMAQ Service and the EUROMAQ Proposition and as to other matters (certain of the plaintiff’s expert witnesses);
(h) it not being possible to asses the comparative reliability, objectivity and impressiveness of significant witnesses on the same issues if one or more are cross-examined before the Court and others before an examiner (many of the plaintiff’s and defendants’ expert witnesses);
(i) loss of the opportunity to observe the complete cross-examination of an expert compounded by the direct observation of re-examination and in some cases oral supplementation in chief (any expert witness in respect of whom the procedure is adopted).”

7 Propositions (b) to (i) furnish no reason to reconsider the reasons set out in the examiner judgment. If anything the submissions advanced on 8 November 2001 in relation to propositions (b) to (i) confirmed in my mind the correctness of the balancing exercise carried out in those reasons.

8 Proposition (a) clearly has substance and effectively, in relation to particular expert witnesses in respect of whom the proposition holds good, simply amounts to the fact that such witnesses fall into category 1 of the two categories referred to in the examiner judgment at paragraph 58. This is not the occasion for a determination as to which of the witnesses may be said to the appropriate for the examiner procedure by reason of contemporaneous involvement with Mr Maconochie or Mr Hume in attempts to commercialise the Ausmaq/Euromaq proposition. Hence proposition (a) falls four square within the reasoning already set out in the examiner judgment and in itself provides no reason to reconsider that judgment.

9 The present timetable involves identified witnesses for the plaintiff giving evidence up to and until Mr Maconochie commences to give evidence following Mr Martin tranche 4. This may involve Mr Maconochie being cross-examined and re-examined up to July or August 2002. A recurring theme through the defendants’ schedules MFI D245 is the proposition that the defendants would be substantially prejudiced if they were to cross-examine particular witnesses to be called by the plaintiff prior to the completion of Mr Maconochie's evidence, including his cross-examination. This proposition is advanced upon the basis that the witnesses in question have given their reports upon the basis of a number of assumptions which are in turn, squarely based upon Mr Maconochie's evidence in chief. The proposition is that as Mr Maconochie's cross-examination may result in his moving away from some of his expressions of opinion, the Court should anticipate that the plaintiff's may seek, before these other experts are called, leave to supplement their evidence by putting to them assumptions which will have been appropriately modified to cater for Mr Maconochie's posited changed evidence. The defendants then submit that to allow these other experts to be cross-examined prior to completion of Mr Maconochie's cross-examination would simply lead to further inefficiencies in the running of the hearing.

10 I do not accept these propositions as of substance. The defendants have elected to call Mr Maconochie as their last, rather than their first lay witness (he being of course also put forward as a section 79 expert). The Court made plain on numerous occasions from commencement of the final hearing, the special importance of Mr Maconochie being called as a very early witness for the reason that so much of the tapestry of the case in terms of experts to be called by both parties was very dependent upon the outcome of his evidence. The Court made plain on numerous occasions that the plaintiff should by no means assume that following Mr Maconochie's giving evidence later in the batting order, the Court would grant leave to the plaintiff to supplement the evidence of those experts who had based their opinions upon Mr Maconochie's evidence in chief. Whilst naturally the Court will determine every application upon its merits, it is inappropriate to accept the defendants above described submissions as of substance in circumstances where the likelihood of the plaintiff obtaining leave to supplement the evidence of their remaining experts following Mr Maconochie's cross-examination and re-examination, is relatively speaking quite low.

11 A number matters were raised by both parties in terms of the nuts and bolts of the examiner procedure. These included questions going to the timing of when cross-examination might be ordered and whether the examiner might be sitting to ‘take’ cross-examination at the same time as the Court constituted by myself would be hearing other evidence. The word ‘take’ is used in a technical way – see the examiner judgment at paragraph 77. I return to these matters in paragraph 21 below but note that to a real extent these matters are not presently able to be clarified, remain dynamic and must continue to be dealt with on an instant specific basis.

12 It is important for the Court to make an order in relation to the examiner issue for the reason that the defendants have so clearly telegraphed the high likelihood that they will appeal the order. The appeal is likely to raise the fundamental question of the soundness of the 5 October 2001 judgment. It is clear to all that a decision of the Court of Appeal on the issue is reasonably urgent bearing in mind the number of witnesses who are to be called.

13 In those circumstances, I propose to order:

(1) that the cross-examination of Mr Lloyd, one of the plaintiff’s witnesses who gives evidence in relation to the United States patent issue, be taken before an examiner; and

(2) that the cross-examination of Mr Richards-Carpenter, one of the plaintiff’s witnesses who gives evidence in relation to United Kingdom regulatory issues, be also taken before an examiner.

14 The defendants’ submissions were by reference to MFI D245 which is appended to this judgment. MFI D245 includes the following :

In respect of Mr Lloyd:

· Prematurity issues. A precise and established understanding of how the AUSMAQ Service was proposed to operate is vital before there is any cross-examination on the patent issue or its relevance will be jeopardised and time and resources wasted. Together with Lloyd’s dependence on Maconochie’s evidence as to what AUSMAQ is, this means that the defendants would be substantially prejudiced if they were required to cross-examine Lloyd prior to the completion of Maconochie’s evidence (including his cross-examination).

· It is inappropriate to call Lloyd for cross-examination until after the current timetable for filing of evidence has expired. The defendants have until 25 January 2002 to file and serve a statement in reply from McNamara and the plaintiff then has until 29 March 2002 to file and serve any reply on the issue of invalidity.

In respect of Mr Richards-Carpenter:

· Due to the importance of a precise and established understanding of what AUSMAQ is to his evidence, the defendants would be substantially prejudiced if they were required to cross-examine Mr Richards-Carpenter prior to the completion of Mr Maconochie’s evidence, including his cross-examination.

15 In respect of both of these witnesses the defendants rely upon the proposition that it is inappropriate for their evidence to be taken by an examiner for the reasons:

· that the complex and technical subject matter upon which the witnesses are radically at issue is such that the Court will be prejudiced if it is not given the opportunity of oral amplification or explanation of such matters (fundamental proposition (d)); and

· that there is suggested to be a loss of the opportunity to observe the complex cross-examination of the expert compounded by the direct observation of re-examination and in some cases oral supplementation in chief (fundamental proposition (i)).

16 In the case of Mr Lloyd, the defendants further submit that is inappropriate for the evidence to be taken by an examiner for the reasons:

· that there is reliance upon representations made by other experts retained by the plaintiff, Mr Maconochie, Mr Hume or Mr Martin, as to the present and proposed functionality, capabilities and implementation strategy for the Ausmaq Service and the Euromaq proposition and as the other matters (fundamental proposition (g)); and

· that it is suggested that it is not possible to assess the comparative reliability, objectivity and impressiveness of significant witnesses on the same issues if one or more are cross-examined before the Court and others before an examiner (fundamental proposition (h)).

17 In the case of Mr Richards-Carpenter, the defendants further rely upon the suggested impropriety of the course of appointing the examiner for the reason that it is said that the approach adopted by the plaintiff’s expert witnesses has been to identify gaps in the relevant marketplace and to reverse engineer and apply an understanding of the Ausmaq/Euromáq proposition which suits the perceived needs of the market, citing the "flexibility" of the proposition. The flexibility said to be enjoyed by these witnesses is said to be entirely due to the fluidity of their assumptions in relation to the nature of Ausmaq (fundamental proposition (b)).

18 In my view none of these submissions is of substance. For the reasons given in the judgment delivered on 5 October 2001 the practicable and possible procedure to be adopted in the course of these proceedings is to require the evidence of these witnesses by way of cross-examination to be 'taken' before the examiner in the sense described in the examiner judgment - see in particular paragraph 77. The evidence of Mr Lloyd will not however be required to be taken before 29 March 2002.

19 The cross-examination is to be the subject of a video tape recording. Subject to hearing submissions from the parties on the issue, the Court may approach the matter by directing that the defendants fund the taking of the video tape recording exercise and by noting that the costs of the exercise may be regarded as costs of the proceedings. This approach has been taken in other discrete areas from time to time. The parties may seek to tender the video recording before the Court constituted by myself.

20 My intent is that the parties not be required to pay for the examiner whom it is proposed, subject to the Chief Justice’s concurrence, will be an officer of the Court. Should the Chief Justice’s concurrence not be forthcoming, for whatever reason, as for example it simply proving impracticable for an officer of the Court to be appointed, the issue of payment being made by the parties for the examiner will require to be revisited.

21 The general intention behind the imposition of the examiner procedure is wherever practicable and possible, to achieve a situation where there can be an ongoing 'taking' of evidence before the examiner as well as a continuance of the hearing before myself (in terms of the taking of evidence in chief and in terms of witnesses who are to be cross-examined before me). This may well not be possible or practicable on particular occasions. Hence I would propose to endeavour to take such steps as are practicable and able to be taken, to avoid circumstances where a party might be prejudiced for example for the reason that counsel or a particular instructing solicitor, who would be required to be present for the taking of evidence before the examiner, had an inconsistent requirement to be present during that portion of the proceedings which was ongoing before me. The matter would have to be left in my hands for a decision on an instance specific basis depending on many integers. Having said that, depending upon the degree of notice which may be given to the parties, there may be occasions when new arrangements for cross-examination can practicably be made in circumstances in which there are teams of barristers and solicitors involved on each side of the bar table. Clearly the parties having prepared to conduct the proceedings in a particular way, the Court would be generally reticent to require any departure if irremediable prejudice would result from a requirement for new arrangements for cross-examination to take place (see examiner judgment paragraph 88(i)). But the now estimates of what is in essence involved in terms of the scale of the proceedings and in particular, in terms of the amount of Court time apparently still required, make it imperative for special, albeit novel, case management steps to be taken for the reasons given in the examiner judgment. Allotting responsibility for the blowout in the factual and legal issues being litigated is a complex matter. The issue has been referred to in numerous judgments delivered during the past year. The Security for Costs judgment delivered on 13 September 2001 ([2001] NSWSC 744) includes some discussion of the matter in paragraphs 89-96. Standing back from the minutiae, my assessment is that both parties, for disparate reasons, bear responsibility for the blowout in the factual and legal issues being litigated.

22 To the extent that the plaintiff may find it necessary, by reason of the examiner procedure, to instruct a second solicitor who would be present when the examiner was sitting, this is something which cannot be avoided (see examiner judgment paragraph 80). A concomitant of commencing proceedings on the scale of the present proceedings is that the party prosecuting the proceedings must accept the legitimacy of case management procedures aimed at efficiency-particularly where the proceedings, following numerous amendments to pleadings and relevant changes to the plaintiff’s cases, are in due course seen to have adopted the dimensions now in contemplation.

23 Depending upon the particular point in time when the ‘taking’ of the cross-examination before an examiner may appear to me, in the course of the regular case management of the proceedings, to be appropriate to take place, an order in that regard will be made, proper time being given to both parties to prepare for the exercise.

24 Standing back from the defendants’ detailed submissions, it seems clear to me that the defendants have, not to put too fine a point upon it, sought to submit that the nature of the issues being litigated, which concern in various ways diverse jurisdictions and consequential flow on effects in relation to a number of technical areas, simply make it impossible for any witnesses to be separated out from others so as to be available for the examiner procedure. [See transcript page 15004]. Whilst I am prepared to accept that in certain instances it will clearly prove necessary to have the evidence, including cross-examination, taken from certain experts before me, I cannot accept that this must be the case with a number of the other experts. And as the particular decision in relation to each expert who is to be cross-examined before the examiner will depend upon the logistics of the ongoing case management of the proceedings, it is impracticable to presently outline a regime with sufficient precision to identify all of those experts whose cross-examination will be ordered to be ‘taken’ before the examiner, or indeed to stipulate the precise dates or brackets of time when evidence so taken is to take place. As a general proposition I simply do not accept that the time constraints for which the defendants contend, mean that none of the plaintiff’s experts who give evidence based upon assumptions drawn from Mr Maconochie’s evidence in chief can be cross-examined before all of Mr Maconochie’s evidence has been completed.

25 I intend to order that subject to the concurrence of the Chief Justice [see Part 27 Rule 1C (1)] being obtained and subject to appropriate administrative arrangements being able to be put in place, the cross-examination of Mr Lloyd and of Mr Richards-Carpenter be taken before an examiner who is to be an officer of the Court and be so taken on a date and at a time fixed by the Court to commence:

(a) following the admission into evidence of all of Mr Maconochie's evidence in chief; and

(b) prior to the commencement of cross-examination of Mr Maconochie before me

26 I intend to ensure in this regard that all of Mr Maconochie's evidence in chief, whether in written form or as supplemented by leave, is before the Court by the time the taking of the evidence of Mr Lloyd and Mr Richards-Carpenter before the examiner commences.

27 In the circumstances the Court orders:

(1) that the cross-examination of Mr Lloyd and of Mr Richards-Carpenter be taken in Sydney before an examiner and be so taken on a date and at a time to be fixed by the Court;

(2) that the examiner may put any question to a person whose cross-examination is taken before the examiner as to:


(a) the meaning of any answer made by that person; or

(b) any matter arising in the course of the examination; and

(3) that the examiner may adjourn the examination from time to time or from place to place.

28 In the event that the concurrence of the Chief Justice to this course is obtained, a further order will be made appointing an officer of the court as the examiner.

29 Until the office of the examiner to be appointed becomes clear, it is not possible to give directions in terms of Part 27 Rule 7. However, if as I intend, it is possible for a deputy registrar of the court to be appointed as the examiner, the provisions of Part 27 Rule 7 (1) will apply.

30 In the event that the concurrence of the Chief Justice to the appointment of an officer of the Court as examiner cannot be obtained, the matter will require to be revisited in terms of other alternative candidates for appointment as examiner.

31 Ancillary questions of detail clearly require to be dealt with. Here again these matters must depend upon the courts administrative capacities and can only be determined at some time in the future. Clearly the taking of the evidence before the examiner will have to be transcribed and relevant documents shown to the witness identified. Clearly questions relating to whether the electronic document management system can be utilised in some fashion in another courtroom are raised. But even if the taking of the cross-examination evidence before the examiner must be by hard copy and without access to the document management system, the procedure, which mandates the appointment of the examiner should take place.

I certify that paragraphs 1 - 31
are a true copy of the reasons
for judgment herein of the
Hon. Justice Einstein
given on 13 November 2001
which refer to Appendix
MFI D245 which is attached

___________________
Susan Piggott
Associate

13 November 2001

Last Modified: 06/13/2002