Idoport Pty Limited v National Australia Bank Limited; Idoport Pty Limited v Donald Robert Argus

[2006] NSWSC 1296

CITATION:	Idoport Pty Limited v National Australia Bank Limited; Idoport Pty Limited v Donald Robert Argus, [2006] NSWSC 1296
HEARING DATE(S):	27/11/06, 28/11/06
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
EX TEMPORE JUDGMENT DATE:	11/29/2006
DECISION:	Reject line of cross-examination.
CATCHWORDS:	Discretion to disallow questions put in cross-examination - Case within a case - s 135 Evidence Act 1995
LEGISLATION CITED:	Evidence Act 1995
PARTIES:	Idoport Pty Limited (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant)
FILE NUMBER(S):	SC 50113/98; 50026/99
COUNSEL:	Mr L Foster SC, Mr A Paterson (Plaintiff) Mr J Sackar QC, Mr J Halley, Ms K Williams (Defendant)
SOLICITORS:	Sarvaas Ciappara (Plaintiff) Freehills (Defendant)

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

Einstein J

Wednesday 29 November 2006 ex tempore
Revised 30 November 2006

50113/98 Idoport Pty Limited v National Australia Bank Limited & Ors

50026/99 Idoport Pty Limited v Donald Robert Argus

JUDGMENT

Case within a case ruling

1 The Court is hearing the Gross Sum Costs application by the National Australia Bank parties.

2 An objection has been taken to a line of questions sought to be put by Mr Foster SC [leading counsel for the Idoport Parties] to Mr Lovell, the partner of Freehills presently being cross-examined.

3 The line of questions and the respective submissions in relation to the objection to the questions commences at transcript 124.44 and ends at transcript 132.26.

4 The proceedings were never litigated to finality as they were dismissed for a want of compliance with orders made for the provision of security for costs. At the time the proceedings were dismissed the plaintiffs were still in their case and the defendants had not commenced their case.

5 Amongst the suite of issues tendered for litigation by the National Bank Parties were issues which concerned the functionality of the Ausmaq system, its scalability and its potential for commercialisation in many countries. The contention of the National Bank parties was that the plaintiff's loss of chance case would fail for many reasons, including defective/missing functionality as well as an inability to achieve commercialisation of the business in many parts of the world. Numerous statements in support of and against these propositions had been taken from witnesses and, although the defendant's evidence had not been read, there had been many occasions on interlocutory motions before and during the hearing for the Court to be taken to the proposed issues [principally in order to give rulings as to whether or not to grant leave to rely upon particular statements in the context in which the parties were at issue as to whether the statements were within or without time and as to whether or not, and if so when, and precisely how, one or other of the parties was said to have acted unfairly in failing to comply with directions or in putting forward in reply, materials which the other party contended were in fact only masquerading as such, being in truth, materials put forward in chief].

6 The precise questions asked up to the point in time when the objection was taken treated with a transcript headed "JMG/NMG Management Committee Meeting Friday 19 October 2001" [to be found at Exhibit SWH 8 to an affidavit of Mr Hetherington sworn on 20 July 2005].

7 Without descending into the detail, the section the subject of the cross-examination treated with so much of these minutes as included a statement by Mr Burrows [one of the NMG representatives attending at the meeting], giving some history of the suggested lack of functionality of the Ausmaq system and outlining a decision said to have been taken to completely rebuild the system, the time involved in that exercise and the position which had been achieved in that regard by the time of this meeting.

8 The objection to the question and to the line of questions was taken when Mr Lovell was shown a number of sections on the first two pages of the transcript and then asked a detailed question as to whether he had been informed at any time before October 2001 that the bank had a new system code-named Project Badger [transcript 128.3].

9 The transcript taken in the absence of the witness then included the following exchange:

MR FOSTER: I seek to make good the proposition that a large amount of work was done in support of a case which was known to the bank to be a case inconsistent with what had actually occurred.

HIS HONOUR: That would take not three weeks but probably six months. In all seriousness, that is a matter of great substance because it would require a decision from the Court on matters which were not litigated to finality.

MR FOSTER: Well, what are we supposed to do? There is a large amount of work which has been done on a basis which we suggest is a basis which can't be sustained. There is an aspect of your Honour's consideration of the costs which requires your Honour in effect to be satisfied that all the work that was done was reasonable.

HIS HONOUR: Mr Foster, I will treat with it obviously very carefully because you no doubt have given it some careful thought, but just off the cuff, because it is a significant issue and I may have to spend quite a deal of time on it, if the case that you are wishing to put through Mr Lovell and other witnesses is something like this: We will establish by cross-examination that the bank and its solicitors, full well knowing that there was no prospect at all of establishing particular matters, determined to prosecute the proceedings by litigating those matters, and/or did so with the intent of running the plaintiffs out of money over an extended period of time then certainly, as a matter of the obligation to make clear to the Court and your opponents what you are about, that should be made clear.

MR FOSTER: It doesn't have to be put that high.

HIS HONOUR: Secondly, I almost certainly would vacate the hearing date and see when I could find you a spare six months.

MR FOSTER: Well, your Honour, it doesn't have to be put that high. All I am seeking to do is establish that as far as the bank was concerned - leave the lawyers out of it - there was a state of mind which did not justify the expenditure on some of the witness statements. That's all I am seeking to do. I am not seeking to pejoratively go further and say that a decision was made a long, long time ago, et cetera, to do things for a particular intent or purpose and I am not making any allegations against the solicitors, I am simply seeking to put the proposition that some of this work should not be compensated for.

HIS HONOUR: But in so doing in this fashion when you are wanting to go into the merits of a cause of action it really does raise a Pandora's box. You may be perfectly entitled to do this, I can understand that a party may have instructions to and, having given the matter thought, determined through counsel to so litigate an application like this, but it is almost impossible, isn't it, to have a partly pregnant circumstance. Either you do it or you don't.

MR FOSTER: Yes, but--

HIS HONOUR: And it has to be defended. I mean I presume it is going to be defended and that may require a very different template.

MR FOSTER: Well, your Honour, I must say I don't see it that way, but the one thing I do not wish to do is create a case within a case at all.

HIS HONOUR: Yes, that is what is concerning me.

MR FOSTER: If your Honour is of the view that that is what I am doing then I don't wish to do it. It is not something I wish to do on this application, there is no point.
[transcript 129-130]

10 On being asked for the record to indicate with such precision as was practicable precisely what Mr Foster was proposing to endeavour to achieve, he answered as follows:

What I am seeking to do is to explore with Mr Lovell the fact that it would appear that the bank had developed and to some extent commercialised the system, if I can call it generally that, during 2000 and 2001 with a view to demonstrating that on this application for costs some of the work done to support the proposition that the system was so hopeless in effect it couldn't be used and had not been tested in Australia and New Zealand was wrong.

11 In my view the precise question objected to and the line of questions require to be rejected. The reasons are as follows:

i. Without ruling on relevance it is apparent that to permit this questioning would necessarily result in a trial within a trial. As in every piece of complex litigation the facts become all-important. The line of questions could not be permitted without the National Bank parties having a proper opportunity to present factual evidence on the issue. They would have to be given proper and detailed notice of the issue which would have to be particularised.

ii. Quarantining the issue in the fashion suggested is possible by Mr Foster, that is to say by treating with the issue upon the basis that the lawyers not be tested with their understanding is also, with respect, a curious proposition bearing in mind the nature of the applications presently before the Court.

iii. Mr Foster made plain that he did not wish to create a case within a case nor to have the hearing adjourned.

iv. In any event the Court would have rejected the line of cross examination on the basis that the probative value is substantially outweighed by the danger that at this stage on these applications the evidence not only might but also would be unfairly prejudicial to the National Parties, would be misleading or confusing and would also cause or result in an undue waste of time [cf s 135 Evidence Act 1995 ].

[The reference to the stage of the applications is intended to refer to the fact that the parties have agreed upon a timetable whereunder an essentially nominate time is to be taken in litigating the applications]


I certify that paragraphs 1 - 11
are a true copy of the reasons
for judgment herein of
the Hon. Justice Einstein
given on 29 November 2006
and revised 30 November 2006

___________________
Susan Piggott
Associate

30 November 2006