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 Ors. [41]

[2001] NSWSC 937

CITATION:	Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited & Ors. [41] [2001] NSWSC 937
FILE NUMBER(S):	SC 50113/98; 50026/99; 3991/00
HEARING DATE(S):	18/10/01
JUDGMENT DATE:	25 October 2001
PARTIES :	Idoport Pty Limited (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant)
JUDGMENT OF:	Einstein J

COUNSEL :	Mr JJ Garnsey QC (Plaintiffs) Mr J Sackar QC, Ms K Williams (Defendants)
SOLICITORS:	Withnell Hetherington (Plaintiffs) Freehills (Defendants)
CATCHWORDS:	Evidence Act (1995) - Evidence - Admissibility - Opinion evidence - Expert opinion - Specialised knowledge - Rulings relating to specialised knowledge of witness enabling him to express opinions in relation to New Zealand Markets
CASES CITED:	Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors. [2001] NSWSC 123
DECISION:	Witness shown to have demonstrated the acquisition of sufficient specialised knowledge of the relevant New Zealand financial services industry to be in a position to express "d" class opinions of the type which he seeks to express, as summarised in column 4 of MFI D219 in relation to: (i) the New Zealand Mutual funds market; (ii) the commercial prospects of Ausmaq in New Zealand; and (iii) the functional capabilities of Ausmaq in New Zealand. Witness shown by his general reading and familiarity with issues local to New Zealand to have demonstrated an overarching specialised knowledge in relation to New Zealand Financial Services generally as likely suffices to permit him to also express opinions, wholly or substantially based on that specialised knowledge, in relation to the New Zealand debt market and in relation to the New Zealand cash management market.

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

25 October 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 in relation to Mr Maconochie's expertise qua New Zealand

1 The judgment delivered on 21 March 2001 (Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 123) dealing with Mr Maconochie's section 79 expertise, reserved for further evidence and further submissions the question of whether Mr Maconochie, by his training, study or experience, including his experience in relation to New Zealand, is shown to have acquired the requisite specialised knowledge to equip him with the entitlement to express opinions in relation to the New Zealand Markets, wholly or substantially based upon that specialised knowledge.

2 Following delivery of that judgment Mr Maconochie made a further statement dated 7 May 2001 [MFI P242] supplementing his earlier evidence as to his training study and experience. Both parties have been given a further opportunity to address on the issue.

3 As before, the defendants have produced a template MFI D219. Generally the template sets out the essence of their submissions. The template does not however set out paragraph 9 of Mr Maconochie’s further statement which was in the following terms:

"The establishment of the company Ausmaq (NZ) and the Ausmaq New Zealand Service was a very high maintenance activity on my part from the outset. It was and became increasingly necessary as time went on for me to investigate the detail of and progress [of] almost every aspect of the establishment of the Ausmaq New Zealand Service including the identification of the various dealers and fund managers, identification and selection of a suitable depositee and Custodian, the support infrastructure for the operation of Ausmaq New Zealand Service and the respective commercial arrangements and the regulatory environment".

4 The convenient course is to append MFI P242 and MFI D219 to this judgment.

5 It seems to unnecessary to repeat extensive sections of the Maconochie expertise judgment. Particular reference should however be made to so much of paragraph 236 as held that:

"Specialised knowledge may also be capable of being shown in terms of a relatively conceptual approach to the loss of opportunity damages case by a person who understands sufficient of the market structure and the structure of the funds management and investment management operations to be able, with the benefit of current statistics, to be able to express "d" class opinions in relation to the loss of opportunity case. There are a number of sub-aspects and arguable approaches of relevance to the loss of opportunity damages case. The nature of the issue is simply not such as to permit the court to narrowly circumscribe the nature of the training, study or experience which may qualify as showing the acquisition of specialised knowledge on which to permit a putative expert wholly or substantially to base expert opinions in relation to the issue. In real terms a measure of perspective is here necessary simply by reference to the complex of practical, conceptual, technology oriented and/or business oriented issues all of which may in some fashion play a part in equipping a putative expert with specialised training, study or experience more particularly in one field than another (but having had diverse involvement with other fields), to be shown to have satisfied section 79 in being then entitled to express opinions in relation to the issue"

6 It is possible to adapt the wording used in paragraph 241 which related to the United States specialised knowledge issue, as to my mind, very similar reasoning obtains in relation to the question of New Zealand specialised knowledge. In the 1st sentence of paragraph 241, I made the point that the clear burden of a very great deal of the opinions which Mr Maconochie seeks to express on the markets/valuation issues relate in one way or another to the prospects for success of what both parties appear to accept as being the 'novel' Ausmaq proposition in the established financial markets around the world. To my mind in the very unusual circumstances of the issue as raised in these proceedings, Mr Maconochie's training, study or experience, in the terms in which he has expressed it, does demonstrate that he has acquired sufficient knowledge of the New Zealand relevant markets as to be in a position to express expert class "d" opinions by way of an assessment of the detailed prospects for success of the introduction of the Ausmaq service into the New Zealand markets. Without being exhaustive, I intend this finding to extend to cover expression of opinions as to the ascertainment of the New Zealand addressable markets and their extent, likely market penetration and prediction of market success. In reaching this view I have taken into account the extent to which Mr Maconochie is entitled to rely upon the full extent as sworn to, of his own study and analysis (weighed in the light of his further inquiries and obtaining of information in relation to particular research and in light of the background of his antecedent adjectival knowledge, such as it was in relation to the New Zealand markets) of materials on a number of areas as having furthered his store of knowledge upon which to lay claim to have acquired the necessary 'specialised knowledge'. It particularly takes into account his earlier identified training and experience in relation to computer-based analysis and research involving complex mathematical models of physical and commercial systems and applying that experience in the conception, analysis, design and realisation of new projects and services. He has clearly had a detailed involvement in relation to New Zealand markets. Paragraph 9 of his 7 May 2001 statement which was not objected to, carries with it a wide and broadly based investigation by him of the detail and progress of almost every aspect of the establishment of the Ausmaq New Zealand Service including the necessary commercial arrangements, the regulatory environment and the identification of the various dealers and fund managers and support infrastructure for the operation of the new Service.

7 I am entirely satisfied from the evidence given in Mr Maconochie’s statement of 7 May 2001 and from the cross-references in that statement to the earlier evidence given by him on his expertise, that by reading general and financial press articles about the New Zealand economy and its security markets and by regularly reading trade and industry journals as well as by reading materials received by him from Mr Meikle and by his discussions with representatives of fund managers and dealer groups and others, he has had a proper opportunity over an extended period time to familiarise himself generally with who were the fund managers and dealers in New Zealand, what were the products that were listed, what was the pricing of those products, what was their order flow potential, what were their pricing margins and what was the size of the market. Likewise I am satisfied within the parameters as to dates [generally the period up to the end of 1995] referred to in his 7 May 2001 statement, that in the course of his visits and conversations with market participants he gained a considerable amount of information about the structure of the New Zealand markets and the facts and matters to be taken into account for the implementation of the Ausmaq Service in New Zealand. That information included the identity of fund managers; the identity of dealers; the structure of the funds and dealer markets, their fee structures and Ausmaq's likely competitive position; the historical development of the New Zealand funds market and its then state of development relative to the Australian market; the then existing regulatory regime; the identification of potential custodians and depositees; an assessment of the suitability of potential custodians and depositees for these respective roles; the projected costs and revenues that may be realisable as well as the most prospective of market entry strategy.

8 Mr Maconochie’s experience in 1996 is set out in paragraphs 35 - 52 of the statement of 7 May 2001. He clearly continued to involve himself to an extent with Ausmaq New Zealand in many ways including his drafting of the document referred to in paragraph 42(a) of the statement, which document included a description of the New Zealand financial planning market, an assessment of the current position of the implementation of Ausmaq New Zealand and a number of appendices dealing with market development strategy and associated issues. During October 1996 he personally wrote the Ausmaq New Zealand Preliminary Business Plan Structure and the Ausmaq New Zealand Revenue Projections and other documents referred to in paragraph 44 of his statement. Later in October 1996, together with Mr Meikle, he wrote a document consisting of an executive summary, cash flow projections, cost sensitivity and a preliminary allocation of Ausmaq New Zealand internal and external costs.

9 The extent of Mr Maconochie’s involvement with New Zealand in 1997 is detailed in paragraphs 53 and following of his statement, although, it appears from paragraph 13, that from about May 97 his involvement substantially ceased.

10 In those circumstances the essential burden of the defendants’ submissions were addressed in relation to currency. In short the submission was that he had demonstrated no ongoing professional academic involvement in the New Zealand relevant markets in respect of which he had had some training, study and experience and that he was simply devoid of any training, study or experience in relation to a number of relevant markets.

11 The parties were also at issue as to the identification of the relevant New Zealand markets, the plaintiffs making the point that the defendant's had in MFI D38 relied upon a category which they had suggested as appropriate, namely D5 "New Zealand Financial Services", whereas on this second occasion for consideration of Mr Maconochie's New Zealand expertise they seek to suggest that the general fields which required to be treated with are:

· NZ 1 New Zealand insurance market

· NZ 2 New Zealand payments market

· NZ 3 New Zealand cash management market

· NZ 4 New Zealand foreign exchange market

· NZ 5 New Zealand debt market

· NZ 6 New Zealand equities market

· NZ 7 New Zealand mutual fund market

· NZ 8 Commercial prospects of Ausmaq in New Zealand

· NZ 9 Functional capabilities of Ausmaq in New Zealand

12 Bearing in mind Mr Maconochie's extensive experience in the examination of the New Zealand markets over a number of years and particularly bearing in mind the very point of his most recent involvement with those markets which was squarely to understand and address the parameters necessary to understand and hence to facilitate the establishment of the Ausmaq New Zealand Service, I am satisfied that he has squarely demonstrated the acquisition of sufficient specialised knowledge of the relevant New Zealand financial services industry to be in a position to express "d" class opinions of the type which he seeks to express, as summarised in column 4 of MFI D219 in relation to:

(i) the New Zealand Mutual funds market;
(ii) the commercial prospects of Ausmaq in New Zealand; and
(iii) the functional capabilities of Ausmaq in New Zealand.

He has, however, by his general reading and familiarity with issues local to New Zealand demonstrated an overarching specialised knowledge in relation to New Zealand Financial Services generally as likely suffices to permit him to also express opinions, wholly or substantially based on that specialised knowledge, in relation to the New Zealand debt market and in relation to the New Zealand cash management market.

13 The above holding carries with it a finding in terms of the approach taken by Wigmore as referred to in the earlier Maconochie expertise judgment, that Mr Maconochie has been shown to have acquired by his training, study or experience, the experiential capacity necessary to qualify him to express opinions on the subject New Zealand market issues. He has by his study, training or experience been shown to have become sufficiently acquainted with different views in the field with which the market issues concerned as to permit him to be in a position to appreciate the arguments and studies relating to particular issues in the field in order to then be in a position to express expert opinions taking into account in an informed way, the literature which he has read. Importantly, he has sufficient experiential capacity to permit him to draw on statistics and other forms of graph or tables all figures as may be located in relevant literature to provide him with a proper basis upon which to draw in expressing his own opinions.

14 Finally I note that that the defendants, when addressing in relation to MFI D 51 (2), apparently conceded that the primary stakeholders in the New Zealand investment industry and the roles which they play are similar to Australia [see also transcript page 6013.45]. Although this concession was not repeated in relation to the argument concerning New Zealand expertise, it is certainly the case that Mr Maconochie quite commonly in certain of the statements, seeks to lump together propositions suggested as applicable to be Australian and New Zealand situations. To the extent that those propositions are grounded upon Mr Maconochie's personal experiences in examining and reading about market issues in the two countries, his experiential knowledge equips him with a sufficient specialised knowledge to provide him with a proper basis on which to draw in expressing such opinions. The weight of those opinions will be altogether another matter for adjudication in final address.

Rulings/further submissions

15 It is not an altogether easy task to apply the above reasons so as to identify the appropriate rulings in relation to each of the paragraphs and sentences, the subject of the objections – see MFI D220. Without binding the parties to these rulings I have endeavoured in the first instance to suggest the rulings which may be appropriate by varying the fourth column in MFI D220.

16 The parties have leave to consult with one another in relation to these suggested rulings and generally leave to raise with the Court any submissions they would wish to make in relation to the rulings which are appropriate following the giving of the above reasons.

I certify that paragraphs 1 - 16
are a true copy of the reasons
for judgment herein of the
Hon. Justice Einstein
given on 25 October 2001

___________________
Susan Piggott
Associate

25 October 2001

Last Modified: 06/13/2002