Idoport Pty Ltd v National Australia Bank Limited and 8 Ors; Idoport Pty Ltd and Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd "JMG" v National Australia Bank Limited [23]

[2001] NSWSC 435

CITATION:	Idoport Pty Ltd & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Ltd & Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd "JMG" v National Australia Bank Limited [23] [2001] NSWSC 435
FILE NUMBER(S):	SC 50113/98; 50026/99; 3991/00
HEARING DATE(S):	22/5/01
JUDGMENT DATE:	22 May 2001
PARTIES :	Idoport Pty Ltd (Plaintiff) Market Holdings Pty Ltd (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant)
JUDGMENT OF:	Einstein J

COUNSEL :	Mr M Dicker (Plaintiffs) Mr J Sackar (Defendants)
SOLICITORS:	Withnell Hetherington (Plaintiffs) Freehills (Defendants)
CATCHWORDS:	Practice and Procedure - Discovery
LEGISLATION CITED:	Supreme Court Rules
CASES CITED:	Ferguson v Mackaness Produce [1970] 2 NSWR National Australia Bank and Others v Idoport Pty Ltd and Another [2000] NSWCA 8
DECISION:	Rulings on Notice of Motion seeking discovery given.

INDEX

Page Paragraph

Notice of Motion paragraphs 2(b) and (c) 1 1
Notice of Motion paragraph 2(b) 4 12
Notice of Motion paragraph 3 6 23

THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION - COMMERCIAL LIST

EINSTEIN J

Tuesday, 22 May 2001 ex tempore

Revised 25 May 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 LIMITED

1    There is before the court under cover of amended notice of motion number 6, filed by the defendants on 2 May 2001, an application for the plaintiffs to give discovery of documents in a number of classes by filing and serving on the defendants a further and better list.

Notice of Motion paragraphs 2(b) and (c)

2    The first sets of documents are those referred to in paragraph 2(b) and (c) of the amended notice of motion.

3    Mr Sackar QC for the defendants, who is arguing the notice of motion today, sought leave to cross-examine Mr D'Emilio in relation to that portion of the amended notice of motion. Mr D'Emilio has made an affidavit on 9 May 2001, in which he relevantly deposes:

"I am informed by Mr John Maconochie, a director of the plaintiffs, and verily believe as follows...
(c) Paragraph 2(b) of the amended notice of motion
As far as Mr Maconochie is aware, there are no other documents in the plaintiffs' possession, custody or control, relating to the project named 'Monty' referred to in the facsimile from Mr Christopher Hume to Mr Maconochie dated 20 March 1998.
(d) Paragraph 2(c) of the amended notice of motion
As far as Mr Maconochie is aware, there are no further documents relating to the project named 'Oasis' referred to in a facsimile from Mr Hume to Mr Maconochie dated 11 November 1997 in the plaintiffs' possession, custody or control."

4    Mr Sackar has taken the court to a number of documents which have been discovered by the defendants in which the words "Monty" or "Oasis" are to be found. The material documents form part of exhibit DGL1 to Mr Lovell's affidavit sworn on 11 July 2000 and are to be found at pages 143 - 155.

5    The burden of Mr Sackar's submissions were that the letters which have been discovered appear to suggest that Mr Maconochie and Mr Hume had developed, or were developing, some form of business project, business relationship or business dealing which may have involved a derivative or permutation of AUSMAQ or may be or have been relevant to business plans which are the subject of extant pleadings.

6    Mr Sackar draws attention, for example, to each reference to these words in the documents to which I have referred. One such reference appears in the document at page 145 of the exhibit where in the facsimile to Mr Maconochie from Mr Hume of 20 March 1998, Mr Hume apparently referring to the project Monty, says:

"... Monty will not compete with the Bank or with AUSMAQ. It will in fact generate business streams that will be available to both NAB and AUSMAQ."

7    It seems clear, at least in relation to that document, that it was discoverable. It seems clear, at least in relation to the document to be found at pages 143 and 144, where in the third last bullet point, Mr Hume, writing to Mr Maconochie, says, "We must get past the listing problem which bedevilled AUSMAQ", that any copy of that facsimile in Mr Maconochie's possession would require to have been discovered.

8    Moving on in relation to Mr Sackar's submissions, the application for leave to cross-examination Mr D'Emilio is, as I have understood it, for the purpose of more closely treating with Mr D'Emilio under oath or affirmation, for the purpose of carefully scrutinising what precisely Mr D'Emilio said to Mr Maconochie or vice versa leading to sub-paragraphs (b) and (c) on page 4 of Mr D'Emilio's affidavit, and more particularly, in terms of endeavouring to clarify with Mr D'Emilio under oath or affirmation, precisely what other steps had been taken by Mr D'Emilio, as a solicitor dealing with discovery, to ensure that the plaintiffs' discovery obligations had been properly discharged - in which circumstance Mr Sackar cites Ferguson v Mackaness Produce [1970] 2 NSWR MacFarlan J page 66, where his Honour expressed the following view:

"It is, therefore, I hope, clear from what I have said that it is not sufficient for a solicitor simply to inquire of his client or of a principal, if he himself happens to be an agent only for the principal's solicitor in another State, if he has any documents and request that he send any documents that he has to him; the obligation extends much further, namely, to the extent that the solicitor is obliged to make an appraisal of the case and form his own opinions as to what documents probably are in existence and actively to seek out from the client or his interstate or foreign principal whether or not those documents exist. It is only, indeed, in that way that the obligation of the solicitor can be properly discharged."

9    I am not disposed to grant the subject leave to cross-examine Mr D'Emilio, at least presently. To my mind, the two paragraphs to which I have referred are properly to be construed as Mr D'Emilio swearing that he has been informed by Mr Maconochie and verily believes that, as far as Mr Maconochie is aware, there are no other documents in the plaintiffs' possession, custody or control relating to the project named Monty referred to in the subject facsimile, and there are no further documents relating to the project named Oasis referred to in the other facsimile in the plaintiffs' possession, custody or control.

10   In those circumstances, the appropriate course, as a matter of the court protecting the defendants and at the same time quarantining, to the extent practicable, the defendants' entitlement to cross-examine the plaintiffs' instructing solicitors on the topic, is for the court to direct that an affidavit be filed and served by Mr Maconochie generally and subject of course, to this being the truth, to the effect that, as far as Mr Maconochie is aware, there are no other documents in the plaintiffs' possession, custody or control relating to the projects named Monty or Oasis referred to in the subject facsimiles.

11   Upon that affidavit being filed, the plaintiffs have leave to move to have dismissed the portions of the amended notice of motion as include the claims to paragraphs 2 (b) and (c). Pending that affidavit being filed, the court reserves for further argument, and to be otherwise pressed as necessary, sub-paragraphs 2 (b) and (c) of the notice of motion.

Notice of Motion paragraph 2(b)

12   The next matter which has been the subject of submission is the application by the defendants pursued for further discovery in relation to paragraph 2(g). In this regard, the position is that it is common ground that each of the subject telephone numbers or facsimile numbers are telephone or facsimile numbers in respect of which either Mr Maconochie or Idoport has sought reimbursement for some of the costs of making telephone calls from AUSMAQ.

13   The matter has been before the court on a number of occasions for examination in submissions in the last year. The general position, as I have understood it, is that the plaintiffs have discovered, or have no difficulty in discovering, all accounts or invoices or relevant detail relating to any telephone calls made by Mr Maconochie or made from his home to Mr Hume, to Mr Martin, to Mr Nelson, to NAB, to Mr Aitken or to Mr Joslin.

14 The plaintiffs submit that insofar as the telephone records may include reference to telephone calls made to other persons or companies, the short position is that they are not discoverable within the definition of the word "relevance" in Rule 1 of Part 23 of the Supreme Court Rules:

“a document or matter is to be taken to be relevant to a fact in issue if it could or contains material which could rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence.”

15 The plaintiffs have a particular sensitivity to the possible disclosure of material which relates to these records, save to the extent of the communications to which I have referred. Their submission is that the defendants are merely embarking here upon a train of inquiry which their submission asserts is no longer the test applicable following the 1996 new discovery rules - see National Australia Bank and Others v Idoport Pty Ltd and Another [2000] NSWCA 8, a decision of the New South Wales Court of Appeal, handed down on 15 February 2000, particularly at paragraph 7.

16   The defendants, on the other hand, have put forward submissions, as I have understood it, that these documents are relevant and are relevant to a fact in issue as they could all contain material which could rationally affect the existence or the probability of the existence of that fact.

17   There is no doubt but that a principal issue in the proceedings concerns the plaintiffs' claims that from approximately August 1997 up to the present time, Mr Maconochie personally was excluded or effectively excluded from or locked out from the Harrington Street premises of AUSMAQ and excluded from involvement in the ongoing AUSMAQ business, which involvement Idoport and JMG claim to have been the contractual entitlement of JMG under the consultancy agreement.

18   The circumstance of the so-called exclusion or lock-out, the period covered by it and the precise information which Mr Maconochie acquired, if any, such as it may have been from any person or persons within AUSMAQ (or acting as a conduit from AUSMAQ), are all, to my mind, clearly material issues in the proceedings. To a certain extent, the plaintiffs' written submissions in relation to the issue concede this where the plaintiffs say that they "recognise that it may be important for the purposes of the proceedings to establish the degree of telephone or facsimile contact between the plaintiffs through Mr Maconochie and certain persons such as Mr Hume, Mr Crutchley or Mr Martin."

19   The question is one of some sensitivity and delicacy. The view which I have reached is that the telephone records are records which fall within the definition of relevance to which I have referred. To my mind, in that circumstance, the approach suggested by the defendants in their submissions is one which ought be implemented. I have in mind in this regard an approach which would oblige the plaintiffs to make the relevant documents available for inspection, but only for inspection by nominated counsel or solicitors of the defendants. I understood that the defendants were suggesting that the catchment area of those who will be permitted to inspect these documents ought include paralegals. I reject that as a parameter of the group of persons who will be entitled to inspect these records.

20   To my observation, that group of persons should be nominated counsel and nominated instructing solicitors, but a limited number of persons. Mr Insall was suggested as one of the appropriate counsel who would inspect the documents and I have no difficulty with his selection. I should have thought that possibly one other of counsel might be put forward and I am content to accept whichever other counsel is put forward by the defendants.

21   To my observation, it would be appropriate for persons with the familiarity with the proceedings that Mr Lovell and Mr Healy, have to also be added to the list. I have some hesitance in any more general expanded list, but am open to persuasion as to names of solicitors. I have no particular reason to doubt that any officer of the court would do otherwise than to punctiliously comply with the confidentiality obligations which I propose to impose, but would be reasonably comfortable if Mr Insall, one other of counsel for the defendants, Mr Lovell and Mr Healy were the limited list. The terms of the proposed confidentiality undertakings have been suggested by the defendants as those set out in the short minutes of order relating to the Telstra and Hutchison Telecommunications proposals by the defendants. I am disposed to allow the plaintiffs and the defendants some further opportunity to look carefully at the exact words in the confidentiality undertaking before finalising the content of that undertaking.

22   In those circumstances and for those reasons, subject to that form of regime, I am disposed to permit the claim sought in paragraph 2(g) of the amended notice of motion and when short minutes of order are brought in in due course, will make those orders and give those directions.

Notice of Motion paragraph 3

23   The third section of the amended notice of motion which has been pressed today and the subject of submission is that to be found in paragraph 3 of that motion where the defendants seek an order "Pursuant to Part 23 rule 4 (or alternatively, Part 25 rule 8) of the Supreme Court Rules the Plaintiffs allow the Defendants to inspect the hard drives of the Texas Instrument computer and the Gateway computer referred to in paragraph 4 of Part 2 of the Plaintiffs' Draft Further Supplementary List of Documents."

24   The application is made in circumstances in which Mr D'Emilio in his affidavit of 9 May 2001, paragraph 3(i), has sworn that he has been informed by Mr Maconochie and verily believes that:

"Mr Maconochie has attempted to access documents which he believes were stored on the Texas Instrument computer and the Gateway computer referred to in paragraph 4 of part 2 of the plaintiffs' list of documents which is at page 73 of exhibit 'DGL2' to Mr Lovell's affidavit sworn 27 April 2001, without success. Mr Maconochie repeated his attempts on several occasions but was unable to retrieve, view or print any material existing on the hard disks of either computer."

25   The plaintiffs have put forward a proposal that a Mr Graham Henley, an Associate Director in the dispute analysis and investigations team at PriceWaterhouseCoopers be permitted to carry out certain identified steps in an endeavour to recover lost data from the subject computers.

26   The plaintiffs, on the other hand, have submitted that as a matter of principle, they should not be obliged to incur the expense of computer experts to undertake experiments in an attempt to resurrect material either once appearing on the computers or from the computers deep memory. The submission is that it would be extraordinary if the court imposed such an obligation on a party to discovery as it may require each party to discovery in each case to retain experts to access documents in the deep memory of any computer. The submission is that similar obligations would thus arise on the defendants in the present case, including in relation to all computers used throughout the Bank or at any time by any one or more of the personal defendants or by any person in any Bank subsidiary.

27   The submission is that in relation to computers which have failed, a party to proceedings is not obliged to engage computer experts to determine if, with unspecified actions and at unspecified cost, material can be resurrected.

28   I accept and acknowledge that it is a difficult question as to the circumstances and occasions when as part of discovery obligations, the court will oblige a party to proceedings to engage or pay for computer experts to undertake experiments in an attempt to resurrect material which once appeared on a computer or was perceived as still reposing in what is colloquially sometimes referred to as the computer's ‘deep memory’. To my observation, that question and the extent to which the court would ever oblige a party to take those steps on discovery should be determined on an instant specific basis depending on the particular case, depending on the particular issues, depending on the costs involved and depending, obviously, on all the particular circumstances. In the present situation, in circumstances in which it is quite plain that Mr Maconochie has without success attempted to access documents which he believes were stored on these computers and had repeated his attempts on several occasions without being able to retrieve, view or print such material which may exist or have existed on the hard disks of either computer, the defendants are, as a matter of the circumstances, considerably advanced from the otherwise academic question of whether or not and if so, in what general circumstances such an approach would be taken.

29   In my view, the defendants are entitled to some form of regime to permit Mr Henley and/or such other persons in his team as the court may be satisfied require to be permitted to carry out the steps identified in his affidavit - to carry out those steps.

30   However, this decision of the court in the exercise of its undoubted discretion to so order, is entirely subject to the court being satisfied as to the imposition of what will amount to stringent conditions of confidentiality and covering expense and covering possible loss to Mr Maconochie in terms of the exercise. Some of those types of matters were treated with when, in similar vain, the court directed that a second letter of request go to the High Court in the United Kingdom related to the deep memory of computers of/or associated with Mr Hume. In that regard, special care was taken to protect Mr Hume.

31   In the present instance, the decision which I have announced is subject to the court being totally satisfied if necessary after argument and/or additional evidence, as to the conditions upon which the defendants through Mr Henley and his team, are to be permitted to carry out the steps identified in Mr Henley's affidavit.

32   The question of further examination of the confidentiality regime and undertakings to the court is stood over until short minutes of order are brought in. The parties are directed to carry out their best endeavours to reach a consensus as to that matter. The conditions which I have in mind will also require to deal very carefully with the covering of the costs to Mr Maconochie of or related in any fashion to the proposed exercise.

I certify that paragraphs 1 -32
are a true copy of the reasons
for judgment herein of the
Hon. Justice Einstein
given on 22 May 2001
and revised on 25 May 2001

___________________
Susan Piggott
Associate
25 May 2001

Last Modified: 06/13/2002