Idoport Pty Ltd v National Australia Bank [2]

[1999] NSWSC 940

CITATION:	Idoport Pty Ltd v National Australia Bank [2] [1999] NSWSC 940
CURRENT JURISDICTION:	Equity Division, Commercial List
FILE NUMBER(S):	50113/98
HEARING DATE(S):	26,27,28,29,30.7.99, 2,3,4 and 5.8.99
JUDGMENT DATE:	27 August 1999
PARTIES :	Idoport Pty Ltd & anor (Plaintiffs) National Australia Bank Limited & ors (Defendants)
JUDGMENT OF:	Einstein J

COUNSEL :	T.J. Hancock & M. Dicker (Plaintiffs) Tom (AO) Hughes QC, H.K. Insall (Defendants)
SOLICITORS:	Withnell Hetherington (Plaintiffs) Freehill Hollingdale & Page (Defendants)
CATCHWORDS:	Equity - Practise and procedure - Interlocutory injunctions - Keeping of accounts as an alternative to grant of interlocutory injunctive relief - Juridical basis for ordering an account - Plaintiffs seek equitable relief including equitable compensation for alleged breaches of fiduciary duty - Order for the keeping of a record of profits - Costs of interlocutory application - Parties respective rights can only be properly determined at final hearing - Costs of interlocutory application to be costs in the cause.
ACTS CITED:	Supreme Court Act
CASES CITED:	Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 Bridson v McAlpine (1845) 50 ER 90 London, Chatham and Dover Railway Co v South Eastern Railway Co (1891-94) All E R Rep 1610 McIntosh v Great Western Railway Company (1865) 42 ER at 190 Mitchell v Henry (1880) 15 Ch D 181 Plimpton v Spiller (1876) 4 Ch D 286
DECISION:	1. Leave be granted to the plaintiffs to file and serve a further amended notice of motion to embrace a claim to an order in terms of order 3.; 2. In these orders and directions: "AUSMAQ Service" means the service of that name currently operated by Australian Automated Quotation Market (AUSMAQ) System Ltd and AUSMAQ (NZ) Ltd. "MAPLE LEAF (OPERATION FIRST CHOICE) PROJECT", "MAPLE LEAF (OPERATION FIRST CHOICE) PRODUCT", "GATEWAY PROJECT" and "GATEWAY PRODUCT", "MARGIN LENDING PROJECT" AND "MARGIN LENDING PRODUCT" AND "FX AUTO-DEALING PROJECT" AND "FX AUTO-DEALING PRODUCT" mean the projects and products of those names referred to in the affidavit of Alan Lloyd Copsey sworn 16 July 1999 and filed in these proceedings on behalf of the Defendants.; 3. Upon the plaintiffs by their counsel giving to the Court the usual undertaking as to damages, order that until the determination of these proceedings or further order, each of National Markets Group Limited ("NMG"), Australian Automated Quotation Market (AUSMAQ) System Limited and National Australia Bank Limited ("NAB"), by themselves and their respective servants and agents do everything on the part of each necessary to keep and procure to be kept a record of profits made by:; (a) the AUSMAQ Service;; (b) NAB's MAPLE LEAF (OPERATION FIRST CHOICE) PROJECT AND MAPLE LEAF (OPERATION FIRST CHOICE) PRODUCT;; (c) the NAB'S GATEWAY PROJECT and GATEWAY PRODUCT;; (d) the NAB's MARGIN LENDING PROJECT and MARGIN LENDING PRODUCT;; (e) the NAB's FX AUTO-DEALING PROJECT and FX AUTO-DEALING PRODUCT.; 4. Order 3 above be suspended until the expiration of a period of 14 days from 27 August 1999.; 5. Costs of the plaintiffs' notice of motion filed 4 June 1999 as further amended on 3 and 27 August 1999 are to be costs in the cause.; 6. The plaintiffs' notice of motion filed 4 June 1999 as further amended on 3 August and 27 August 1999 be otherwise dismissed.; [Orders 7-23 related to ancillary directions]

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

EINSTEIN J

Sydney Friday 27 August 1999 - ex tempore
Revised 24 September 1999

050113/98 - IDOPORT PTY LTD & MARKET HOLDINGS PTY LTD v NATIONAL AUSTRALIA BANK LTD & ORS

JUDGMENT

1    HIS HONOUR: In proceedings No 50113 of 1998 a reserved judgment was delivered on 19 August 1999 after the interlocutory hearing. In paragraph 353 of that judgment, I indicated that, “in relation to the sections of the notice of motion as seek an order that the Bank and NMG keep separate accounts and records, to my mind the balance of convenience is heavily in favour of the making of such an order, provided that an order can be framed with sufficient specificity to permit of its enforcement”. 2    Leave was reserved to the parties to address submissions inter alia on the keeping of separate accounts and records, on costs and for the bringing in of short minutes of order.

The Keeping of an Account

3    There has been argued the question of whether and, if so, in what form, an order for the keeping of separate accounts should be made, and also the question of the appropriate order dealing with costs of the interlocutory hearing. 4    The plaintiffs have sought to propound as the appropriate form of order dealing with the keeping of accounts, an order in terms of the definitions set out in the paragraph numbered 1 in short minutes of orders and directions dated 27 August 1999. 5    In argument, the plaintiffs made plain that they sought to have the definition of "AUSMAQ Service" which appears at the commencement of the proposed order expanded by the addition at the end of that definition of the words "and AUSMAQ(NZ) Limited". 6    The amended notice of motion first before the Court during the interlocutory hearing was that filed on 4 June 1999. During the course of the interlocutory hearing, leave to further amend that notice of motion was granted on 3 August 1999 - see paragraph 31 of the judgment. 7    I grant leave to the plaintiffs to further amend the notice of motion to claim relief in terms of the definitions to which I have referred, and paragraph 1 of the short minutes of order and directions dated 27 August 1999 which I initial and date 27 August 1999 and place with the papers. 8    I direct that the plaintiffs file and serve to regularise the record, an amended notice of motion which is to comprehend the amendments in respect of which leave to amend was granted on 3 August 1999 and the further leave to amend now granted. 9    I turn first to the question of the plaintiff's application to have an order with respect to the keeping of accounts now made. For obvious reasons, it is inappropriate to repeat matters dealt with in the reserved judgment delivered on 19 August 1999 in terms of the plaintiff's pleadings, in terms of the principal issues, in terms of the adjudication of the court on serious questions to be tried, and in terms of the balance of convenience issues. The defendants oppose the making of any order for the taking of accounts, submitting that there is no jurisdictional basis for the making of such an order, and submitting that there is no general discretionary jurisdiction to order a defendant to keep accounts pending a final hearing. The submission is that an order to keep accounts is in the nature of a mandatory injunction and that, at the very least, a plaintiff at interlocutory level must establish that there is a serious question to be tried as to an entitlement on a final hearing to an order for an account of profits. 10    The defendants’ submission is that in essence an entitlement to an order for an account depends on establishing that the defendant has knowingly derived profit from misappropriating proprietary rights that belong to the plaintiff. The submission is that the finding at judgment paragraph 327 makes it clear that in essence Idoport's case at interlocutory level is for unliquidated damages for breach of contract. The defendants’ submission is that such a claim is quite unrelated to the equitable remedy of an account. The defendants’ submission is that the keeping of an account is not an equitable remedy ancillary to a claim for unliquidated damages for breach of contract for fiduciary duty. Finally, the defendants submit that the process of discovery in the current proceedings represents the extent, and the full extent of Idoport's pretrial entitlement to access to information. 11    There are a number of passages to be found in Spry The Principles of Equitable Remedies (1990) The Law Book Company Ltd 4th edition, and in Meagher Gummow and Lehane Equity Doctrines and Remedies Butterworths, 3rd edition 1984, and in Parkinson The Principles of Equity Law Information Services 1996 and in the authorities which, to my mind, make plain that the Court has jurisdiction at this time in these proceedings to order the keeping of accounts as an alternative to the more severe forms of interlocutory injunctive relief which the plaintiffs had sought and which, for reasons set out in the reserved judgment, the Court determined in the exercise of its discretion, not to grant. 12    The following passage appears in Spry (at page 449):

"When it is deciding in its discretion whether or not an interlocutory injunction should issue, the court takes account, not only the efficacy of damages, but also of other equitable remedies that may be more appropriate in all the circumstances than an injunction. So, for example, sometimes undue detriment and inconvenience to the defendant can be avoided, whilst at the same time the plaintiff is sufficiently protected, if the defendant is required to keep an account".

13    In Mitchell v Henry (1880) 15 Ch D 181 the judgment of James L J at 192 includes the following passage:

"Therefore, on the balance of convenience and inconvenience, and having regard to the fact that the decision of the Master of the Rolls was in favour of the Defendants, which ought not to be overlooked on an interlocutory application, I am of opinion that the better way will be to let the motion stand until the hearing, the Defendants keeping an account".

14    Spry at page 449 further states:

"If the keeping of an account is proposed, then 'the substantial question is whether the balance of convenience will be better served in the circumstances of the case by adopting that course or by granting an injunction until the trial.'".

15    In Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 the judgment of Kitto, Taylor, Menzies and Owen JJ includes the following passage (at 625):

"The defendant offered before McTiernan J, and has offered again on this appeal, to submit to an order that it keep full and proper accounts of all sales of its substance hetacillin, showing the quantities sold, the sale prices, the profits therefrom and the manner of calculating the profits, every sale of hetacillin being treated as having been made in place of a sale of the plaintiff's substance ampicillin. The order under appeal, as drawn up, is a bare order that the defendant keep an account of all monies received or to be received by it by reason of the sale or use of hetacillin in Australia. A variation of the order would therefore be necessary in any event; but the substantial question is whether the balance of convenience will be better served in the circumstances of the case by adopting that course or by granting an injunction until the trial ." (emphasis added)

16    Spry continues (at 449-450):

"There is no single rule by which it can be ascertained when an interlocutory injunction will be ordered in any particular circumstances, or an account will be ordered to be kept instead. The court exercises a general discretion, and in exercising this discretion it takes into account inter alia whether in the absence of an injunction the plaintiff may suffer substantial loss to his goodwill or else damage that is not able to be quantified accurately , or whether, despite an undertaking by the plaintiff as to damages, the grant of an injunction would work undue hardship on the defendant ... A further consideration, which is here of particular importance, is the degree of probability with which it appears that the plaintiff will ultimately succeed at the final hearing; for if his case appears to be strong, considerations of hardship to the defendant will receive correspondingly less weight … Hence where an imminent breach of trust or of a special fiduciary duty is established, an injunction is, save in exceptional circumstances, granted in a restraint. Whether and to what extent legal damages may be available is hence often a matter of importance in regard to the balance of justice, although here account must be taken also of such other possible courses as requiring an undertaking to keep an account".

17    At 465-466, Spry deals under the heading "The Inappropriateness of Alternative Remedies" with the topic of interlocutory injunctions:

"When a court of equity is determining whether it is appropriate that an interlocutory injunction should be granted either to preserve the status quo or otherwise to regulate the rights of the parties in the most just manner that is possible pending the final hearing, it takes account, in particular, of the availability of other remedies that are open to the plaintiff, whether of a legal or equitable nature ... A further question often arises whether it is more just that the defendant should be required to keep an account of particular profits made by him, by reference to which he may, if necessary, be required at the final hearing to compensate the plaintiff if it is appropriate to do so, rather than that an interlocutory injunction should at once issue against him. Whether this course should be adopted depends largely on questions of hardship and on the balance of justice generally."

18    In Plimpton v Spiller (1876) 4 Ch D 286, the following passage appears (at 289) in the judgment of James L J:

"There will always be, no doubt, the greatest possible difficulty in determining what is the best mode of keeping things in statu quo - for that is really what the Court has to do - to keep things in statu quo - until the final decision of the question; and then, of course, the Court says, 'We will not stop a going trade. We will not adopt a course which will result in very great difficulty in giving compensation on the one side or on the other'. We have to deal with it as a practical question in the best we way we can . I think, on the whole, that the Master of the Rolls has made the right the order, viz, by granting the injunction and putting the Plaintiff upon an undertaking to abide by such order (if any) as to damages as the Court may think fit to make if he should ultimately turn out to be in the wrong; and that it would not be right in this case merely to put the Defendant upon the terms of keeping an account". (emphasis added)

19    Spry at 466 - 467 continues:

"Sometimes, however, further matters must be taken into account, such as acquiescence or laches on the part of the plaintiff, for such considerations as laches depend on the consequences of the grant of the particular relief that is sought, and through delay it may have become unjust to grant one remedy, but yet not unjust to grant another.
Often the matters that would cause undue prejudice or hardship to the plaintiff, if he were confined to damages, serve also to render insufficient the taking of an account by the defendant. Further, sometimes difficulties arise in ensuring that an accurate account will be able to be taken, and often it is doubtful whether the actual profit that will be obtained by the defendant, if he is not restrained, will reflect sufficiently the loss that may meanwhile be suffered by the plaintiff. Nonetheless, on some occasions it is found that it is only by refusing an interlocutory injunction and insisting that an account be kept instead that undue hardship can be avoided, so that on the one hand the defendant is not prevented from proceeding with matters of importance to him, and on other hand the plaintiff is left with a remedy that is appropriate in the particular circumstances in question. So, it is sometimes appropriate that the defendant should not be restrained from carrying on a particular business alleged to be being carried on in breach of the rights of the plaintiff, since the grant of an interlocutory injunction would cause disproportionate hardship to him, and yet would not benefit the plaintiff to a corresponding degree; and in these cases, the refusal of an interlocutory injunction may be made conditional on the defendants giving an undertaking to keep an account".

20    In Bridson v McAlpine (1845) 50 ER 90 at 91, Lord Langdale observed generally:

"According to the doubt which may exist in the mind of the court upon the facts, and according to the degree of inconvenience, to the parties, the Court, not thinking fit to grant the injunction at the time, may take one of several courses; - it may either refuse to grant the injunction simply, or it may refuse it on the terms of the parties undertaking to keep an account, or it may direct the motion to stand over, on the terms of the plaintiff proceeding to a trial at law".

21    At 468 Spry continues:

"Yet as a matter of convenience, it is often found to be preferable, if an injunction is to be refused, to make an interlocutory order requiring separate accounts to be kept, or even requiring specified proceeds to be kept separately from other monies, in order to simplify proof or else to avoid various problems as to tracing".

22    In Meagher Gummow and Lehane Equity Doctines and Remedies in paragraph 2504, the learned authors put the matter as follows:

"If one asks not in what cases would equity refrain from ordering an account in aid of a common law right, but in what cases could it decree an account in aid of such a right, one might suggest the following six categories".

23    There are then set out six categories, the second of which is in the following terms:

"Secondly, where, although the right relied on by the plaintiff was legal, the parties stood in a quasi fiduciary relationship, or a relationship of confidence. A typical example was the principal and agent relationship. In this case, an account will usually (but not necessarily) be decreed on behalf of the principal against the agent, the former having reposed confidence to the latter and not being able to ascertain, the true state of affairs except on discovery, which could not be had at common law".

24    The fourth category is put as follows:

"Fourthly, in the vaguely defined number of cases where an account would be too complicated to settle at law, where the accounts were too entangled to be left to a jury...".

25    The fifth category deals with the case of legal waste. 26    The seventh category is put as follows:

"Seventhly, and perhaps most interestingly, there were those cases where not to order an account would abort the plaintiff's rights; these were cases where the plaintiff would have had a legal right to be paid money from the defendant if only the defendant had not prevented the plaintiff's rights accruing".

27    The following passage is extracted from London, Chatham and Dover Railway Co v South Eastern Railway Co (1891-94) All E R Rep 1610 at 1615:

“Secondly, where the plaintiff would have had a legal right to have money ascertained and paid to him by the defendant, if the defendant had not wrongfully prevented such right from accruing to the plaintiff. In such a case a court of law could only give unliquidated damages for the defendant’s wrongful act; and there was often no machinery for satisfactorily ascertaining what would have been due and payable if the defendant had acted as he ought to have done, and ordered him to pay the amount, McIntosh v Great Western Railway Company (1865, 2 De G & Sm 758; 4 Giff 683; 2 Mac & G 74) is the leading authority on this class of case.”

28    The passage in McIntosh v Great Western Railway Company (1865) 42 ER at 190 is in the following terms:

”The Plaintiff's interests and rights may be well protected by an account being kept by the Defendants such as I propose to require; indeed, I think the Plaintiffs may gain by the injunction being dissolved, but can scarcely be damnified; because if the Defendants be restrained in the terms of the injunction, passengers and traffic may be prevented from being conveyed by the Defendant's railway which never might have gone by the Plaintiffs, and as to all such there would be a loss both to the Plaintiffs and Defendants, and, if the Plaintiffs should ultimately fail in establishing their equity, there is no mode by which the Defendants could be indemnified against such loss; whereas, if the defendants are not restrained, and keep an account of all passengers and traffic which it is supposed may interfere with the Plaintiffs equity, the Plaintiffs, upon the establishment of their equity, may be benefited by the result of such an account".

29    Meagher Gummow and Lehane at p 631 further make the point that it is not suggested that the categories to which they have referred are closed. 30    The plaintiffs have sought to rely not only on those categories to which I have referred above but additionally upon the category described by Meagher Gummow and Lehane as circumstances in which an account will be taken in industrial property cases such as passing off and infringement of patent or trademark cases. 31    Parkinson, in The Principles of Equity at p 901 states:

"In interlocutory proceedings involving infringement of intellectual property rights, a defendant may be put on terms to keep separate accounts where an interlocutory injunction is refused".

32 The judgment in its reserved form makes plain what are the plaintiff's claims, inter alia, to relief in respect of alleged breaches of fiduciary obligation. It is clear enough that situations involving relief sought for claimed breaches of fiduciary obligation involve plaintiffs entitled to seek, subject to being able to prove their case, equitable compensation or an account. That one circumstance taken alone, and without regard to any other aspect of the plaintiffs’ pleadings, furnishes the plaintiffs, on the appropriate principles with the necessary juridical basis for pressing for an interlocutory order for the keeping of accounts. That is of course not the only basis upon which such an order may be made. 33 The plaintiffs rely, inter alia, upon the provisions of the Supreme Court rules dealing with interim preservation of property. It is unnecessary to set out here the whole of the relevant provisions in part 28, save to refer to part 28 rule 2 (1). 34 The plaintiffs further rely, as setting a jurisdictional basis for the making of the order for accounts in the present case, upon section 66 of the Supreme Court Act, which is of course the section giving to the court power at any stage in the proceedings by interlocutory or other injunction, to restrain any threatened or apprehended breach of contract or other injury. Here the plaintiffs, as I have understood it, submit that under that head of power, an order may be made by the Court for the keeping of accounts, being in effect an injunction. 35    To my mind, the serious case issues having been identified and on an interlocutory basis clearly spelt out in the reserved judgment, the plaintiffs have made good their case seeking to have an order that an account be kept. The plaintiffs are seeking equitable relief including equitable compensation for alleged breaches of fiduciary duty in respect of which the Court has held that there is a serious question to be tried. I further accept that even if the plaintiffs were claiming only damages, the present by reason, inter alia, of the fiduciary claims is one of those cases in which Equity would assist with a decree of an account in an appropriate form. 36    To my mind, the matters put forward by the defendants as to the suggested inconvenience and or difficulties involved in the keeping of an account are, at the end of the day, without substance at this case, at this time, when one takes into account the matters the subject of the reserved judgment. 37    Having said that, I do not accept that the form in which the plaintiffs have sought to propound the proposed order, sets out the form of order which should be made. To my mind the appropriate order to be made is an order which, subject to first specifying the definitional section of the order, which will be in the form of the proposed amended notice of motion, would read as follows:

"Order that, until the determination of these proceedings, or further order, each of National Markets Group Limited ("NMG") Australian Automated Quotation Market (AUSMAQ) System Limited and National Australia Bank Limited (NAB) by themselves and their representative servants and agents do everything on the part of each necessary to keep and procure to be kept a record of the profits made by (a) the AUSMAQ Service (b) NAB's Maple Leaf (Operation First Choice) Project and Maple Leaf (Operation First Choice) Product; (c) the NAB’s Gateway Project and Gateway Product; (d) the NAB's Margin Lending Project and Margin Lending Product; (e) the NAB's FX Auto Dealing Project and FX Auto Dealing Product".

38    To my mind the case for an account falls further within the category of cases of which McIntosh v Great Western Railway Company was the leading authority. 39    Plainly, the trial judge will ultimately have to determine whether Idoport has the legal rights for which it contends and whether the defendants, or any of them, can be said to have wrongfully prevented such rights from accruing to Idoport. 40    At an interlocutory stage that basis, together with the plaintiffs fiduciary obligation case, and the other matters earlier referred to, provide a juridical basis for the Court making the orders to which I have referred. 41    As indicated in the reserved judgement, the balance of convenience is "heavily in favour the making of an order for the keeping of separate accounts and records, providing that such an order can be framed with sufficient specificity to permit its enforcement”. To my mind, the form of order to which I have referred is the appropriate form of order in the case.

Costs of the Interlocutory Application

42    I turn then to the question of the costs of the interlocutory application and the manner in which they should be dealt with. 43    Costs, as is plain, are at all times in the discretion of the Court. This is a case in which the interlocutory application raised a number of particularly complex questions both of principle and of fact and of application of principle to fact. It is again, in relation to costs, unnecessary to repeat the findings in the interlocutory judgment which were generally that the plaintiffs had established a serious case for trial on many issues and causes of action and which dealt with balance of convenience issues. For the reasons given in the judgment, the Court’s discretion was exercised against the granting to the plaintiffs of any of the interlocutory relief sought save for the matter of the keeping of accounts. 44    In paragraph 174 of the reserved judgment the following appears:

"It has to be said that the present is a very difficult case insofar as the interlocutory motion is concerned. The respective cases clearly cry out for determination at a final hearing, which hearing may be expected to take an extended time and to involve voluminous documents and evidence given by numerous witnesses, including many witnesses at expert level. In a curious way the task of a Judge in relation to the final hearing may be expected to be far easier than the task of determining this interlocutory motion, because on the final hearing all the evidence ought to be before the Court, and final, as opposed to interim, decisions both as to principle and as to fact, and as to the application of principles to facts can be given."

45    The plaintiffs have submitted that the following matters should be taken into account in relation to the costs issue:

(a) The defendants are said to have refused and failed to respond in any substantial way to the plaintiffs' complaints made in correspondence over a considerable period until they were compelled to file some affidavits in answer to those of the plaintiffs on the interlocutory application. Even then, they are said to have studiously avoided any person with direct first hand knowledge of any relevant evidence going into evidence (with the exception of Mr Purcell and Ms Cox).
(b) The Court has found that there is a serious case to be tried in relation to the manner of the plaintiffs' allegations.
(c) The plaintiffs have been successful in obtaining some relief.
(d) A significant ground for the Court's refusal to grant the bulk of the relief sought by the plaintiffs in the amended notice of motion is said to be by reason of the plaintiffs' delay and not for reasons of a failure to establish a serious question to be tried or the balance of convenience.
(e) The relevant factor to the Court is said to have been the inadequacy of the plaintiffs' undertaking as to damages in the circumstances where an open view, and one which the plaintiffs assert, is that a reason for the inadequacy is the plaintiffs failure to receive performance bonuses which they should have received of the consultancy agreement.
(f) The management committee relief is said only to have been refused on the balance of convenience at this stage in these proceedings.
(g) The motion is said to have been heard in the context of the solicitors for the defendants asserting that "there is no basis in fact or in law for any of the relief sought". (Page 3 letter from Freehill Hollingdale & Page to Withnell Hetherington dated 21 July 1999).

46    The plaintiffs submit that having regard to their success on the serious question to be tried issues and the fact that in relation to much of the interlocutory relief, the significant reason for failure was delay, the appropriate order in the circumstances is that the costs of the amended motion be the plaintiffs' costs in the cause. This is said to reflect the fact that the plaintiffs were put in a difficult position of perceiving the need to make the application through the unavailability of other legal relief to protect their position and being compelled to make the application because of the defendants' conduct and refusal to countenance any interim commercial arrangements. 47    The plaintiffs also submit that this would reflect what is suggested as the substantial success of the plaintiffs on the issue of serious questions to be tried. 48    The plaintiffs further submit that this would recognise that if the plaintiffs are not ultimately successful at the final trial they will not obtain their costs in relation to the notice of motion. 49    The plaintiffs secondary submission is that the costs of the amended notice of motion should be costs in the cause. This is said to reflect the fact that the ultimate successful party will "pick up their costs of the notice of motion". Such an order is said to also recognise that the substantial airing of the issues on the amended motion is said to lead to a reduction in the final hearing time and a better understanding for the Court of relevant matters at the final hearing and in relation to other interlocutory disputes until that time. It is said to also recognise that each party has been successful in relation to aspects of the amended notice of motion. 50    The defendants, on the other hand, submit that an application for extraordinary interlocutory relief has been made, persisted in and failed when, so the defendants submit, it is and has at all times been clear that the application was deemed to failure and that the application was staged for the purposes of attracting adverse policy. 51    The defendants submit that in those circumstances the Court would be justified in awarding indemnity costs against the applicants and submit that the Court would not hesitate in awarding party/party costs against the applicants. 52    The defendants submissions are that the substantive claim in the motion was for the appointment of a receiver and that this application was made and persisted with when the applicants, and or their legal representatives, knew or ought to have known that:

(a) Appointment of a receiver was inconceivable in the present circumstances.
(b) The appointment of a receiver is an extraordinary and destructive form of relief. The mere bringing of such an application is capable of causing damage to trading entities.
(c) A receiver is not an entrepreneur who will carry out the wishes of the parties.

53    The defendants make the point that the express basis of the appointment was, on the defendants' submission, to carry into effect AUSMAQ's plans for business expansion throughout the world. 54    The defendants further submit that:

(a) No effective undertaking as to damages was proffered despite the clearest statements in the cases that this would be fatal to the application.
(b) The applicants had been guilty of extraordinary delay (see paragraph 344 of the judgment) which the defendants submit was deliberate and as to which the applicants advanced no proper explanation.
(c) The applicants' claim is for unliquidated damages.

55    The defendants further submit that the claims in the motion for various ancillary injunctions and orders in the nature of interlocutory specific performance were flawed for several reasons, that is to say the absence of an effective undertaking, laches, the applicants' status as claimants for unliquidated damages and the notoriously limited circumstances in which the Court will grant mandatory interlocutory relief. 56    The defendants rely upon the fact that notwithstanding these obvious obstacles to the claimants, the application pursued the motion. 57    To my mind in this most unusual case where the parties respective rights can only be properly determined at the final hearing and where the plaintiffs succeeded on the serious issue for trial issues and obtained an order for the keeping of accounts, the appropriate exercise of the Court's discretion is to order that the costs of the amended notice of motion should be costs in the cause.

Ancilliary Matters

58    Following the giving of the above reasons, Mr Hughes, of Senior Counsel for the defendants, was given an opportunity to address on matters arising from and relating to these reasons. 59    It was the defendants’ submission first that any order which is to be made should be expressly made as operating in relation to the future. That is a matter which was and remains the Court's intention and is not opposed by the plaintiffs. When the short minutes of order are brought in they should reflect this position. 60    Mr Hughes then submitted that it would take some time for the Bank to work out a system for segregating expenses of and apportioning expenses of and relating to the subject services, projects or products, so as to be in a position to apportion them. The submission was that the operation of the order necessarily required to be suspended for a period to permit the defendants to work out a system so that the order may be complied with. That matter likewise is not opposed by the plaintiffs. The short minutes of order when they are brought in are to make provisions for the order to be suspended for a period of 14 days to permit the defendants to carry out those steps. 61    Mr Hughes then raised with the Court the question of the undertaking as to damages being proffered by the plaintiffs making the point that this was not a matter expressly dealt with in the reasons for judgment. 62    In giving those reasons I was quite cognisant that from its inception and through the whole of the hearing of the interlocutory motion, the plaintiffs had sought several strands of relief upon the basis that an undertaking as to damages was proffered by the plaintiffs, and was so proffered notwithstanding the attack by the defendants upon the worth of the undertaking. To my mind and notwithstanding the findings in the reserved judgment as to the inadequacy of the undertaking as to damages in respect of the receivership orders sought and in respect of the claims to orders seeking to bring NMG’s and AUSMAQ System’s operations under the rubric of NMG, the undertaking is altogether another matter when proffered and accepted on the making of an order to keep an account. The balance of convenience was and is in favour of the making of that order and the usual undertaking as to damages is to be taken in that regard. Whilst the adequacy of the undertaking is of relevance as a factor in relation to whether or not the keeping of an account ought be ordered, it is by no means the only relevant factor. In indicating in the reserved judgment that the balance of convenience was heavily in favour of the making of such an order, the court took into account all of the matters dealt with in the reserved judgment. Of course the plaintiff’s very worth is dependent in large measure upon the ultimate result on the final hearing and the keeping of an account of profits is an interim order. 63    Hence it is entirely appropriate that, and the Court requires that, as a condition of the granting of the order for accounts, the usual undertaking as to damages be forthcoming and the short minutes of order when they are brought in should, in the usual way, make this plain.

Fixing the Proceedings for Hearing

64    In the judgment handed down on 19 August 1999 the Court made plain that the plaintiffs had established a serious case for trial in relation to many of their allegations and that the Court accepted the pressing significance and urgency attaching to the case and attaching to MMG's claims of an ongoing and radical undermining of its contractual rights. The judgment includes the statement:

"I have come to the conclusion that the case is in all likelihood one appropriate to be fixed for final hearing on the first Monday in May 2000. The parties will have an opportunity to adduce evidence and direct submissions on the hearing day and the matter will be before the Court on Friday 27 August 1999 on which date a final hearing date will be fixed."

65    Lengthy and detailed submission have now been received from all parties in relation to the past chronology and directions given in relation to proceedings and in relation to future timetable. 66    Both parties have further had an opportunity to address the Court on matters going to the appropriate hearing date which is to be fixed and going to their respective suggested difficulties with one another's proposed timetables. 67    Taking into account all of those submissions and doing the best that I can, as a matter of procedural fairness, to adjudicate between on the one hand, the pressing urgency of bringing the case to a final hearing and, on the other hand, the necessity to ensure that each party has a full and proper opportunity to present its own case and to respond to the opponents case, I have come to the firm conclusion that the hearing should be fixed to commence on 15 May 2000. 68    The short minutes of order to be brought in early next week should then identify that date as the fixture for hearing.

Further Directions

69    A number of other directions have been the subject of submissions. In the first instance I propose to vacate all existing pre-trial directions excluding, of course, any orders relating to confidentiality matters and undertakings and the like. 70    I am then disposed to give the following directions which will be the subject of the short minutes to be brought in early next week by counsel. 71    The first is that the transcript is to record that all statements on which the plaintiffs propose to rely in chief, including the statement in affidavit form of Mr Martin, have now been served. 72    Secondly, the time for the defendants to file and serve statements in relation to the issues concerning the development and operation of the bank projects, being one segment of the defendants' case on liability, is to be extended to 6 December 1999. 73    The time for the defendants to file and serve statements in relation to the issues concerning the events following the commencement of the consultancy agreement related to the alleged breaches referred to in paragraphs 50 to 54, 56, 56.2, 56.3 and 57 of the Statement of Claim, being the further segment of the defendants' liability statements, will be extended to 14 January 2000. 74    The time for the defendants to file and serve statements in relation to issues of causation and damages is extended to 14 January 2000. 75    The time for the filing and serving of statements of the plaintiffs in reply is to be extended to 20 March 2000. 76    The time for the plaintiffs to file and serve their final lists on discovery and so make discovery is extended to 24 September 1999. 77    The time for the defendants to file and serve their list of documents in relation to the FX Auto Dealing project and Margin Lending projects and products is to be extended to 29 September 1999. 78    The time for the defendants to file and serve their list of documents in relation to the Gateway Maple Leaf projects and products is to be extended to 26 October 1999. 79    The time for the defendants to file and serve a list of documents in relation to the issues concerning the events following the commencement of the consultancy agreement is to be extended to 14 December 1999. 80    The particulars of amendments to the second further amended statement of claim sought by the defendants on 25 May 1999 are to be provided by the plaintiffs on or before 10 September 1999. 81    The plaintiffs are to file and serve a third amended statement of claim with such amendments as may be appropriate claiming any relief, if it is to be pressed, relating to the Independence One project and the Remote Wealth project or by way of removing from the pleading reference to those projects on or before 20 September 1999. 82    The plaintiffs are also to file and serve such amendments to their summons on or before 20 September 1999 as are appropriate to embrace such relief to be pressed, if any, or the deletion of such relief, as may be related to the Independence One and Remote Wealth projects. 83    The defendants are to file and serve their amended defence by 11 October 1999. 84    The plaintiffs are to file and serve any reply by 15 October 1999. 85    Liberty is to be granted to any party to apply on 7 days notice or such earlier notice as the Court on application may be disposed to permit is to be granted. 86    I will direct that if any party is unable to comply with any of the above directions the matter be relisted on notice by that party within two days of the party becoming aware of its inability to comply with any direction. 87    Costs of and related to the respective matters the subject of submissions, directions and orders of today are to be costs of the cause. ******

Last Modified: 06/13/2002