Idoport Pty Ltd v National Australia Bank Ltd
[2001] NSWSC 1081
•26/11/2001
NEW SOUTH WALES SUPREME COURT
CITATION: Idoport Pty Limited & Anor v National Australia Bank Limited and 8 Ors; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited & Ors [51] [2001] NSWSC 1081
CURRENT JURISDICTION:
FILE NUMBER(S): 50113/98
50026/99
3991/00
HEARING DATE{S): 26/11/01
JUDGMENT DATE: 26/11/2001
PARTIES:
Idoport Pty Limited (Plaintiff)
National Australia Bank Limited (Defendant)
Donald Robert Argus (Defendant)
JUDGMENT OF: Einstein J
LOWER COURT JURISDICTION: Not Applicable
LOWER COURT FILE NUMBER(S): Not Applicable
LOWER COURT JUDICIAL OFFICER: Not Applicable
COUNSEL:
Mr JJ Garnsey QC, Mr M Dicker, Mr R Titterton, Mr R Alkadamani (Plaintiff)
Mr T Bathurst QC, Mr J Sackar QC, Dr A S Bell, Mr J Halley (Defendants)
SOLICITORS:
Withnell Hetherington (Plaintiff)
Freehills (Defendants)
CATCHWORDS:
Practice and procedure
Discretion to adjourn proceedings
Principles
Adjournment of final hearing for a period leading to substantial case management difficulties
Final hearing already having continued for 18 months
Failure to comply with orders to provide security for costs
Application for dismissal of proceedings following automatic stay of proceedings operative when security for costs not provided
Case management
Circumstances in which a party may be shut out from litigating an arguable case
Administration of justice requiring that a much less affluent litigant seeking to enforce alleged rights against a much wealthier party should be afforded a reasonable opportunity to secure funds to enable the continued enforcement of those claimed rights
Application to vary or stay or vacate interlocutory orders of a substantive nature made after a contested hearing requires applicant to show a material change of circumstances
ACTS CITED:
Supreme Court Rules 1970 (NSW)
DECISION:
Short moments of order to be brought in to provide for the giving of directions as contemplated by the reasons for judgment, namely being
that insofar as orders and directions currently in place require the defendants to carry out procedural steps of and related to the final hearing, the order and directions be stayed until midnight on 1 December 2001
that the main proceedings be re-listed for directions on the first day of the new term at noon
that the defendants' application for orders dismissing the MLC proceedings be stood over for hearing on the first day of the new term at noon or on such later occasion as the circumstances which obtain on that day may dictate
that each party be given general leave to make returnable on the first day of the new term at noon, such further or other motions as they seek to have heard in determining the fate of the proceedings
the defendants have leave to make returnable on the first day of the new term at noon, any notice of motion seeking to dismiss the main proceedings for failure to prosecute and/or for any failure to provide security for costs
the plaintiff has leave to make returnable on the same day at the same time, any notice of motion seeking to have the stay orders listed
such notices of motion together with affidavits in support are to be filed and served on or before 21 January 2002
affidavits in answer are to be filed and served on or before 24 January 2002
submissions should be exchanged and furnished to my associate by 5pm on 25 January 2001
(10) Costs of and occasioned in relation to the motions presently before the Court are appropriately to be reserved for determination on the first day of the new term at noon or on such later occasion as the circumstances which obtain on that day may dictate.
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION – COMMERCIAL LIST
Einstein J
26 November 2001 ex tempore
Revised 27 November 2001
50113/98IDOPORT PTY LIMITED & ANOR v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS
50026/99IDOPORT PTY LIMITED & ANOR v DONALD ROBERT ARGUS
3991/00IDOPORT PTY LIMITED (“JMG”) v NATIONAL AUSTRALIA BANK
Judgment
The Motions before the Court
There are before the Court a number of notices of motion being heard together.
By motion 51 filed on 13 November 2001 [“the motion to dismiss”] the defendants seek an order dismissing proceedings No 3991 of 2000 [generally referred to as "the MLC proceedings"].
Motion 51
The dismissal of the proceedings is sought pursuant to Part 53 Rule 4 of the Supreme Court Rules and/or in the exercise by the Court of its inherent jurisdiction to control its own processes. The application is pursued following a default by Idoport in failing to provide security for costs ordered by the Court in the MLC proceedings on 24 September 2001.
Motion 52
By motion 52 filed on 16 November 2001 [“the adjournment and ancillary orders motion”] in proceedings No 50113 of 1998 and No 50026 of 1999 [generally together referred to as "the main proceedings “] Idoport seeks:
an order that the orders of the Court for security for costs dated 24 September 2001 [“the main proceedings security orders”] be vacated, or, alternatively, permanently stayed, or, alternatively, stayed until further order [paragraph 4 of the motion];
Directions for the further conduct of the proceedings including:
(a)orders and directions for a separate trial of the proceedings on liability (but including the taking of Mr Maconochie's evidence on both liability and damages), and
(b) alternatively, all directions as to cross-examination of witnesses whose evidence relates to liability issues, cross-examination of witnesses as to damages and for the service of any further statements to be relied on by the plaintiff in relation to damages or "similar and equivalent" functionality [paragraph 5 of the motion];
An order adjourning the proceedings to 15 February 2002 [paragraph 6 of the motion].
Motion 53
By motion 53 filed on 16 November 2001 in the MLC proceedings, Idoport seeks:
an order that the MLC proceedings security orders be vacated, or, alternatively, permanently stayed, or, alternatively, stayed until further order [paragraph 5 of the motion];
An order that the orders of the Court concerning the trial of the MLC as well as the main proceedings and otherwise concerning statements in the proceedings (including the orders dated 5 October 2001, 1 November 2001, 8 November 2001 and 9 November 2001) be vacated, alternatively, permanently stayed, or, alternatively, stayed until further order [paragraph 6 of the motion];
Directions for the further conduct of the proceedings including:
(a)orders and directions for a separate trial of the proceedings on liability (but including the taking of Mr Maconochie's evidence on both liability and damages); and
(b)alternatively, all directions as to cross-examination of witnesses whose evidence relates to liability issues, cross-examination of witnesses as to damages and for the service of any further statements to be relied on by the plaintiff in relation to damages or "similar and equivalent" functionality [paragraph 7 of the motion].
An order adjourning the proceedings to 15 February 2002 [paragraph 6 of the motion].
Motion 50
By motion 50 filed on 9 November 2001, the defendants seek orders vacating orders 1 and 2 of the Court orders made in the main proceedings on 1 November 2001 [“the discovery/notice to produce orders”] relating to discovery ordered to be provided and documents ordered to be produced in relation to:
(a) any proposal to introduce the services known as MasterKey, Your Prosperity and/or NOLT in the United Kingdom; and
(b)documents relating to Project Endeavour.
Notwithstanding that Idoport is the party named as the applicant on motions 52 and 53, submissions in support of the orders sought in those motions have been advanced on behalf of Idoport as well as the cross defendants to the first cross claim and the cross-claimants to the second cross-claim apart from Market Holdings Pty Ltd (in liquidation), all of these parties being referred to in Idoport’s submissions as the "JMG Parties". Whilst I use the term “Idoport” in the Judgment, the common interests of these parties together with Idoport in relation to the future of the proceedings is taken as given.
The approach taken by the defendants
The position taken by the defendants was shortly that they neither consented to, nor opposed, the application for an adjournment sought by the plaintiff but submitted that the Court should not make any of the other orders sought by the plaintiff in its motions. Generally the defendants approached the question of an adjournment upon the basis that if the Court was disposed to grant an adjournment, it should only be granted on a number of terms [see paragraph 3 of the defendants’ written submissions of 23 November 2001 in relation to the plaintiff’s adjournment application and related motions]. Likewise, the defendants took the position that at the present time they neither consented to nor opposed the adjournment of their notice of motion for dismissal of the MLC proceedings.
Clearly:
(1) The nature of the plaintiff’s application for an adjournment at this point in the proceedings;
(2)the interrelationships:
(a) between that application and the stay of the MLC proceedings now in operation; and
(b)between that application and the rapidly approaching anticipated event which will cause an automatic stay of the main proceedings; and
(3) the general significance of the adjournment and/or stay orders to the future of the final hearing;
combine to make it necessary for the Court to carefully examine all the parameters of to the proper exercise of the discretion to adjourn.
The principles
As there is no doubt in my mind but that the pervasive matter for consideration concerns in essence the plaintiff’s application for an effective adjournment of the further hearing of the proceedings until mid February 2001 [which application as the reasons which follow make plain, may be achieved by more than one procedural route], it seems convenient to commence by examining the relevant principles. I did not understand there to be any serious dispute as to these principles but it is nevertheless always convenient to be reminded of the framework within which a discretion falls to be exercised.
Jurisdiction
The general rule is that when a case is brought on for hearing by proper process, it should be heard and determined at the time fixed for hearing: Watson v Watson (1968) 12 FLR 164 at 166. The Court clearly has inherent jurisdiction to order the adjournment of a hearing in order to do justice between the parties: Hinckley & South Leicestershire Permanent Benefit Building Society v Freeman [1941] Ch 32 [cf Rule 34, Part 4, Supreme Court Rules 1970 (NSW)]. The decision by a trial judge to grant or refuse an adjournment “is a typical exercise of purely discretionary powers”: Evans v Bartlam [1937] AC 473 at 487.
The discretion
The wide discretion in deciding whether to grant an adjournment turns upon the overall requirements of justice in the particular circumstances of the case: Squire v Rogers (1979) 39 FLR 106 at 113(see Central Sydney Area Health Service v Cooper [2001] NSWCA 329 referring to justice being the ‘paramount’ criterion for the grant of an adjournment). In exercising this discretion, the Court must strike a balance between the interests of the parties and the requirements of justice:
“Whilst it is the paramount duty of the court to see that justice is done, nevertheless in doing justice a court proceeds on a two-way street and in the exercise of a discretion the rights of both the parties to the litigation must be considered.” (per Asprey JA in Watson v Watson (1968) 12 FLR 164 at 166).
The question of whether to order an adjournment is a matter of discretion for the trial judge which will not be interfered with on appeal unless there has been a denial of justice or the judge has exercised the discretion upon a wrong principle: Dawson v Deputy Commissioner of Taxation (1984) 71 FLR 364 at 374; R v Cox [1960] VR 665 at 667.
Whilst the discretion is an unfettered one, a number of considerations have commonly been considered to be relevant including:
(a) case management considerations;
(b) prejudice to the parties; and
(c)whether any prejudice caused by an adjournment is able to be compensated by costs.
(a) Case management considerations
Tamberlin J in Searle v Keayes 21/11/1994, Fed Ct (NSW) NG309/94 emphasised that one “important” consideration was that litigation must be resolved and must not be the subject of continuous re-opening and prolongation.
Brennan, Deane and Mc Hugh JJ in Sali v SPC (1993) 116 ALR 625 put the matter as follows:
“The contemporary approach to court administration has introduced another element into the equation or, more accurately, has put another consideration onto the scales. The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court’s lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard are pressing concerns to which a court may have regard….
Unless we are to mouth the repeated cautions about discretionary judgments, case management, efficiency, practice and procedure, and the advantages of the managing judge, only to ignore them when it comes to the crunch, this appeal must be dismissed.”
See also Squire v Rogers (1979) 39 FLR 106.
However, in allowing an appeal against the trial judge’s refusal to allow a series of amendments to the defence, the majority of the High Court in Queensland v JL Holdings 189 CLR 146 at 154 referred to these passages in Sali and stated:
“…nothing in that case suggests that those principles might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. Case management is not an end it itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim.” [emphasis added]
Kirby P in Sydney City Council v Ke-Su Investments Pty Ltd (1985) 1 NSWLR 246 in his dissenting judgment at 252 made the following observations:
“True it is, the court maintains control of its own list. True also, the court will not permit its process to be misused by the parties. That is one reason why the court’s practice is not to make orders standing appeals over generally or indefinitely. Courts are frequently held responsible in the public eye, for delays in litigation when the fault of delay is the decision of the parties. That is a reason for courts, including this Court to maintain a close superintendence of their docket.”
King CJ in Dawson v Deputy Commissioner of Taxation [1984] 71 FLR 364 at 366 put the matter as follows:
“The District Court, like the other courts of the State, is subject to great pressure from the volume of cases to be tried. The judges of that Court, like the judges and magistrates of the other courts, have a responsibility to ensure, as far as possible and subject to the overriding considerations of justice, that the limited resources which the State commits to the administration of justice are not wasted by failure of parties to adhere to trial dates of which they have had proper notice. Moreover, the Deputy Commissioner of Taxation, like other plaintiffs, is entitled to have his claim adjudicated upon and enforced without unnecessary delay.”
The trial judge in GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710 refused to grant an adjournment to a claimant who had failed to give its solicitors timely instructions. The trial judge had stated:
“I am not disposed to grant any such deferment. The administration of this Division and this list, in particular, depends, to a significant extent, upon parties adhering to timetables which were laid down for the efficient administration of justice and the disposition of matters in the list before the court.”
On appeal, Kirby P (at 713) considered it permissible for the trial judge to have borne in mind the establishment of a special list of the Supreme Court (the Construction List) and the fact that the matter was within this list, adding at 714:
“I part with this case with an indication that the rules for the Construction List, as the rules governing this Court, or any Division of the Supreme Court (or, indeed, of any court or tribunal) are there to serve the interests of justice. They are not designed to lock judges or members of tribunals, referees, arbitrators or others into an inflexibility which prevents the consideration of the merits of the particular case and frustrates the achievement of substantial justice as the special circumstances of each case require.
It is essential in each case that the considerations of justice should be borne in mind. A degree of flexibility should be preserved to take into account the human errors and mistakes which sometimes lie in the path of litigation.”
In the result, the authorities establish that the Court is entitled to take into account the interference with the court list and prejudice to other litigants which an adjournment would cause (see Sali v SPC International Ltd; GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710 at 713, 715-716; Apex Pallett Hire Pty Ltd v Brambles Holdings Ltd (Supreme Court of Victoria – Full Court, 8 April 1988, unreported); Ringen Pty Ltd v BNY Australian Ltd (Supreme Court of NSW, unreported, 19 May 1994)).
(b) Prejudice to the parties
It has become a firmly established principle that where the refusal to grant an adjournment would result in serious injustice to one party, the adjournment should be granted unless in turn this would mean serious injustice to another party: Myers v Myers [1969] WAR 19 at 21; Watson v Watson at 171; Wannal Pty Ltd v Jericho Nominees Pty Ltd (1985) 2 SR(WA) 297; Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137. The Court in Walker v Walker [1967] 1 WLR 327 at 330 applied this principle as a two-limb test.
In line with this reasoning, despite the general reluctance of appellate courts to interfere with a trial judge’s decision to refuse an adjournment, they will do so if the refusal results in a denial of justice to the applicant and the adjournment will not result in any injustice to any other party: Maxwell v Keun [1928] 1 KB 645; Sali v SPC at 628.
It has been said that the refusal of an application for an adjournment may, in some circumstances, involve a denial of procedural fairness: Scott v Handley (1999) 58 ALD 373 at 79. The Court in Scott considered a refusal to grant an adjournment to a party who had had insufficient time to deal with certain material for the case and referred to the following passage from R v Thames Magistrates’ Court, ex parte Polemis [1974] 2 All ER 1219 at 1223:
“…nothing is clearer today than that a breach of the rules of natural justice is said to occur if a party to the proceedings…is not given a reasonable chance to present his case. It is so elementary and so basic it hardly needs to be said. But of the versions of breach of the rules of natural justice with which in this court we are dealing constantly, perhaps the most common today is the allegation that the defence were prejudiced because they were not given a fair and reasonable opportunity to present their case to the court, and of course the opportunity to present a case to the court is not confined to being given an opportunity to stand up and say what you want to say; it necessarily extends to a reasonable opportunity to prepare your case before you are called on to present it. A mere allocation of court time is of no value if the party in question is deprived of the opportunity of getting his tackle in order and being able to present his case in the fullest sense.”
Kaye J in McColl v Lehmanm [1987] VR 503 at 506 recognised that where a refusal to grant an adjournment prevents the applicant from presenting his or her case, this may in some circumstances, constitute an injustice:
“This is so because it is essential to the fair trial of an action – whether civil or criminal – that all parties are able to present their case as fully as necessary and within the limits of the law. To overcome an injustice so brought about or threatened, an appellate court will interfere with the trial judge’s discretion.”
See also Walker v Walker at 330.
Importantly, their Honours in Sali v SPC recognised that only in extraordinary circumstances will the interests of justice will be served by a refusal to adjourn the trial where the practical effect of the refusal is to terminate the proceedings.
Moffitt J in Biro v Lloyd [1964 - 1965] 2 NSWR 1059 at 1062 found that “special circumstances” which could justify a court in granting an adjournment could include a party who is taken by surprise in a “material matter for which he is not responsible”, if a miscarriage of justice will result.
McGarvie J in Apex Pallet Hire Pty Ltd v Brambles Holdings Ltd SC (Vic), Full Court, 8 April 1998, unreported, BC8800750 refused to overturn the decision of the trial judge in circumstances where the applicant’s inability to present his case was found to be self-induced and caused by his own neglect. McGarvie J stated:
“…it is not accurate to regard the law as being that if one party, through neglect, is in a position where it is not able properly to present its case, it is automatically entitled to an adjournment.”
The majority in Sali v SPC (at 629) also commented that when the Myers v Myers/Maxwell v Keun principle is applied today, it must be countered with case management considerations. The Court noted that:
“What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources.” (at 629).
(c) Adjournments subject to conditions/orders for costs
It is relevant for the Court to consider whether an order for costs against the party seeking the adjournment would compensate any prejudice the other party caused by the adjournment (Dick v Pillar [1943] 1 KB 497 at 500).
Tamberlin J in Searle v Keayes held that one of the “most important” considerations in that case was that the applicant could never be compensated in costs for the disruption and expense caused by the adjournment because the respondent (who was reliant on pro-bono legal assistance) was clearly unable to meet any such costs.
The majority in Queensland v JL Holdings noted that today, costs are not considered the “healing medicine” they once were and referred to the following quote from Ketteman v Hansel Properties Ltd [1987] AC 189 at 220:
“justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes…”
In considering this passage, the majority took into account the commercial nature of the case and the fact that the litigants were a developer and a government. They concluded (at 155) that:
“…there is nothing which would indicate any personal strain which would justify the conclusion that costs are not an adequate remedy for prejudice caused by the amendment sought to the pleadings.”
Sullivan v Harris (1901) 3 WALR 86 involved an appeal by the plaintiff in whose favour the trial judge had granted an adjournment for a trial set down for hearing. The judge had granted the adjournment on the condition that: (1) the plaintiff pay the costs of the adjournment; and (2) that such payment is a condition precedent to the plaintiff bringing the action for trial.
On appeal, the Court refused to interfere with the first order, stating that an appellate court would not interfere with a trial judge’s decision to award or withhold costs, unless the decision was contrary to some principle.
At the end of the day the salient consideration as in the case of many other instances of the exercise of a discretion, comes down to the requirements of justice in the particular circumstances of the particular case. As will appear from the reasons which follow, there are a large number of reasons why the current litigation clearly occupies a position at an extreme end of the continuum of conventional litigation. That having been said it is necessary to return to the detail.
Background facts
The defendants have helpfully provided a chronology in the following form:
| Date | Event |
| 19 September 2000 | Idoport commences the MLC Proceedings against National Australia Bank Limited, National Markets Group Limited, National Australia Financial Management Limited, Australian Market Automated Quotation (AUSMAQ) System Limited, MLC Limited, National Online Trading Limited and Mr Francis J Cicutto. |
| 5 October 2000 | Einstein J hands down reasons for decision directing that the MLC Proceedings be heard and determined with Main Proceedings and that evidence in the Main Proceedings be evidence in the MLC Proceedings, and vice versa (see [2000] NSWSC 945). |
| 10 October 2000 | Einstein J makes orders in the MLC Proceedings that: i. the plaintiff file and serve its statements in chief by 29 December 2000; ii. the plaintiff give general discovery by serving a verified list of documents by 6 November 2000; and iii. the defendants serve on the plaintiff an unverified list of documents falling within categories specified in the short minutes on or before 17 November 2000 with a verified list of documents to be filed by 1 December 2000. |
| 24 October 2000 | Plaintiff is granted leave to file in Court an Amended Statement of Claim (34 pages) including MLC Holdings Limited, Your Prosperity Limited and National Wealth Management Holdings Limited as additional defendants. |
| 23 January 2001 | Defendants file Notice of Motion 19 seeking security for costs in the Main Proceedings |
| 24 January 2001 | Defendants file Notice of Motion 22 seeking security for costs in the MLC Proceedings |
| 21 June 2001 | The Defendants write to the plaintiff in relation to the failure to comply with the timetable of 10 October 2000. |
| 13 July 2001 | Letter from Freehills to Withnell Hetherington asking when an amended form of the pleading (to reflect amendments similar to those in the Fourth Further Amended Statement of Claim in the Main Proceedings) will be provided. |
| 30 July 2001 | Plaintiff serves the statement of Mr Brian Martin relating to National Online Trading. |
| 21 August 2001 | Defendants write to the plaintiff in relation to the failure to comply with the timetable of 10 October 2000. |
| 24 August 2001 | Defendants again write to the plaintiff in relation to the failure to comply with the timetable of 10 October 2000. Plaintiff serves the statement of Mr Brian Martin relating to Your Prosperity. |
| 29-31 August 2001 | Einstein J hears argument in relation to the security for costs motions. |
| 3-4 September 2001 | Einstein J hears further argument in relation to the security for costs motions. |
| 3 September 2001 | Defendants again write to the plaintiff in relation to the failure to comply with the timetable of 10 October 2000. |
| 5 September 2001 | Letter from Withnell Hetherington to Freehills providing the defendants with a form of a proposed Second Further Amended Statement of Claim (75 pages) for comment. |
| 13 September 2001 | Einstein J hands down his reasons for decision in relation to the security for costs motions ([2001] NSWSC 744). |
| 24 September 2001 | Einstein J makes orders in the Main Proceedings and the MLC Proceedings providing, inter alia, in relation to the MLC Proceedings that: i. by 31 October 2001 the plaintiff pay into Court or provide a suitable bank guarantee in the amount of $479,305.50, as security for the defendants’ past costs for the period to 1 June 2001; |
| 25 September 2001 | Letter from Freehills to Withnell Hetherington commenting on the proposed form of the Further Amended Statement of Claim. |
| 29 September 2001 | The Court hears argument in relation to seven Notices of Motion, including the plaintiff’s Notice of Motion 45 seeking various case management directions in respect of the Main Proceedings and the MLC Proceedings. |
| 2 October 2001 | The Court hears further argument in relation to the above Notices of Motion. At the conclusion of argument Einstein J fixes a timetable for the uninterrupted hearing of the Main Proceedings and the MLC Proceedings. |
| 5 October 2001 | Einstein J hands down his reasons for decision ([2001] NSWSC 868 and [2001] NSWSC 838) and makes orders in the MLC Proceedings. |
| 15 October 2001 | Argument takes place before Einstein J in relation to the defendants’ Notices of Motion numbered 47 and 48 seeking to set aside Notices to Produce numbered 4/2000 (MLC Proceedings), 11/2000 and 12/2000 (Main Proceedings) and plaintiff’s Notice of Motion seeking further discovery dated 10 October 2001. |
| 19 October 2001 | Einstein J hands down his reasons for decision ([2001] NSWSC 922) in relation to the above Notices of Motion. |
| 1 November 2001 | Letter from Freehills to Withnell Hetherington regarding the failure to comply with His Honour’s orders regarding security for costs in the MLC Proceedings. Mr Garnsey QC raises in Court the plaintiff’s failure to comply with His Honour’s orders in relation to security for costs in the MLC Proceedings. His Honour makes orders 1, 2, 3 and 6 of the short minutes of order relating to Notices of Motion 47 and 48 and the plaintiff’s motion dated 10 October 2001 seeking additional discovery. |
| 8 November 2001 | The plaintiff’s failure to comply with His Honour’s orders in relation to security for costs in the MLC Proceedings is again raised in Court. |
| 12 November 2001 | The defendants serve Notice of Motion 51 seeking to have the MLC Proceedings dismissed together with a supporting affidavit of Mr DG Lovell. |
The judgment in relation to the security for costs motions ([2001] NSWSC 744) sets out a number of further background facts and funding details. The reasons extend to an examination of certain parameters of the proceedings. For obvious reasons it is unnecessary to presently repeat the reasoning to be found in that judgment.
The plaintiff has usefully collated excerpts from a number of interlocutory judgments where the size and scope of the proceedings was referred to and where certain parameters of significance were outlined. Notwithstanding that these excerpts overlap from time to time it seems convenient to set them out in order to deal with the motions presently before the court, if only, to emphasise:
(1)that the size and scope of the proceedings has been exceptional and that the extent of them is quite possibly unparalleled in a commercial case in this country; and
(2)that a number of aspects of the proceedings, as well as matters outside of the proceedings, could not have reasonably been anticipated and on my findings were not anticipated, by the plaintiff or by the defendants.
I proceed to set out these excerpts from previous Judgments:
(a) Judgment [2001] NSWSC 868 (5 October 2001):
“3.The plaintiffs claim damages from the defendants in excess of $50 billion. The general nature of the proceedings was outlined in an interlocutory judgment [(1999) NSWSC 828] delivered on 19 August 1999. Since that date there have been numerous contested motions and contested directions hearings. The pleadings have also moved on in terms of a number of further issues being raised and further particulars being furnished. More than 50 judgments have been delivered in relation to the proceedings; many of them delivered following the commencement of the final hearing. The general state of the matter as at mid-April 2000 was set out in a judgment dealing with a contested application relating to use of the Technology Court ([2000) 49 NSWLR 51). The most recent judgment on the defendants’ applications for security for costs ([2001] NSWSC 744) delivered on 13 September 2001 gives further substantial detail updating the state of the matter as at that date. . . .
9In the course of previous published judgments I have had occasion to make the point that this litigation is in my view particularly difficult for the curial process. The essential difficulty which is encountered is readily revealed when one bears in mind that the proceedings concern claims by the plaintiffs which:
(a) if successful, were (during the opening) said to exceed the capitalisation of the National Australia Bank; and
(b)encapsulate a number of proceedings covering a plethora of factual and legal issues - and as to the damages claims, embrace a global investigation of e-commerce markets and technology.
Moreover the number of witnesses and witness statements filed by both parties in the proceedings can only be regarded as extraordinary…
63.There is no doubt that there are significant case management difficulties in relation to the present stage of the proceedings. It is now a matter of documented history that there have been significant case management difficulties at every stage of the period starting from the interlocutory receivership injunctive proceedings heard and determined in mid 1999 up until the commencement of the final hearing in late July 2000 and ever since. Further, there is no doubt that the proceedings are of a “one off” nature; and this has been the subject of observations in past interlocutory judgments (most recently the [2001] NSWSC 744 judgment dealing with the security for costs applications). It cannot be gainsaid that the capacity of the curial process to deal with the scale of these proceedings is stretched to the limit. Moreover, further factors to be considered in relation to the case management of the proceedings concern the respective positions of each of the parties to the proceedings. The position of the plaintiffs and the pressing significance and urgency attaching to the proceedings, was generally outlined in the interlocutory judgment [1999] NSWSC 828, where reference was made in paragraph 355 to "JMG's" claims of an ongoing and radical undermining of its contractual rights". The position of the defendants is that a very substantial verdict against the National Australia Bank which is probably the largest bank and one of the largest corporations in this country, would potentially have a marked effect upon the value of shares held by numerous shareholders and a potential flow on effect upon the economy of this country.”
(b) Judgment [2001] NSWSC 744 (13 September 2001):
“83.The nature of the proceedings and the approach taken by each of the parties to the proceedings from their commencement has always made it crystal clear that the duration of the final hearing would be very extended indeed. Whilst the precise ambit of the plaintiffs’ claims to damages may be said to have moved over time arguably from $20 billion to in excess of $50 billion, there was never any shadow of a doubt but that the defendants would defend the claim to the hilt and would do so in a careful and considered way using every resource available in that regard. It is not surprising that the defendants have retained one of Australia's largest law firms and built up a considerable legal team made up of many counsel and solicitors, no doubt backed by the National Australia Bank in every way possible. Previous judgments have described the defendants as mobilising massive legal resources in relation to the litigation. It is not surprising that the defendants would have carefully investigated any possible cross-claims and in due course determined to pursue the first cross-claim. It is not surprising that the defendants would have gone about investigation of the factual issues in the most meticulous fashion and would then have filed statements from their many witnesses. Mr Lovell’s evidence was that in round terms the defendants had paid between $20 million and $30 million to legal advisers between September 1998 and 3 October 2000 and a further $10 million to $15 million since 3 October 2000. Costs were running at between $1 million and $11/2 million per month possibly excluding GST. ...
92The statistics with respect to the statements were nothing short of staggering. On the defendants’ side of the record, there are currently 177 statements [see the table Appendix “B” to this judgment]. . . .
95In relation to the plaintiffs’ statements, the evidence was that the plaintiffs have filed and/or served 104 statements from 39 witnesses namely:
between 20 November 1998 and 14 July 1999 – 13 statements and one affidavit;
between 8 March 2000 and 12 September 2000 – 57 statements; and
from 12 September 2000 up to 10 August 2001 – 34 statements.”
(c) Judgment [2001] NSWSC 648 (31 July 2001):
“The parties are committed to litigation of a high order. The proceedings being heard together have already continued for over a calendar year and will clearly continue well into 2003. The lead up to the actual hearing itself involved a period of years, and the issues as pleaded are clearly of the greatest significance to both parties. In terms of volume, the extent of the evidence sought to be mobilised by both parties quite probably outdistances the extent of evidence sought to be mobilised in any other proceedings in this country at any time. The issues are very complicated indeed. The defendants’ resources in terms of the team conducting the litigation have previously been described by the court as “massive” ([2001] NSWSC 509 at paragraph 39). As at 1 July 2001, the evidence was that approximately 20 solicitors were working full-time on the case and some six counsel briefed. The plaintiffs’ resources have previously been referred to and are of altogether a different order. Having said that, the Court has not been able to discern any overt signs of the plaintiffs being unable to handle the continued litigation, notwithstanding the extent of the hearing nor the need to deal with innumerable issues at an evidentiary level.”
(d) Judgment [2001] NSWSC 427 (23 May 2001):
“5The litigation is in my view particularly difficult for the curial process. The Court must administer justice in terms of any proceedings before the court.. The parties are entitled to present their respective cases and to test one another's cases in accordance with well-established procedures. Evidence which is relevant to the issues will generally be admitted. The capacity of the court to test the substance of pleaded issues is limited. The ultimate judgment must take into account all of the evidence presented during the hearing and all of the submissions put by the parties to the court. Notwithstanding the seemingly inapt, in relation to the proceedings, use of the words `quick' and `cheap' in the expression `just, quick and cheap', the court under cover of the overriding purpose rule [Supreme Court Rules - Part 1 Rule 3] may take whatever steps are practicable to case manage the proceedings so as to expedite the hearing and bring the proceedings to a conclusion. The court has approached the hearing of the proceedings by time and time again, endeavouring to tie down the material issues and requiring that relevant issues be properly pleaded and particularised. Achieving a measure of expedition in proceedings of the current scale is exceptionally difficult for obvious reasons. Achieving a measure of expedition is likely to be all the more difficult in circumstances in which the plaintiffs have elected to call Mr Maconochie as their last witness and to intersperse expert and lay witnesses, witnesses going to damages and witnesses going to liability, in the batting order. In contradistinction to the manner in which evidence is commonly adduced by first establishing relevant assumptions and then calling expert witnesses asked to make assumptions, the plaintiffs are proceeding to in many instances reverse this order. This is the plaintiffs' forensic entitlement but clearly causes sundry case management difficulties. Whilst the Court has the power to interfere in the order of presentation by a party of a case, the Court has not up to this point in time been disposed to exercise that power. Such a step would be extreme in proceedings of the complexity of these proceedings and of course the defendants order of witnesses will (barring Court interference) generally be also a matter for them .
6The essential difficulty which is encountered is readily revealed when one bears in mind that the proceedings concern a claim by the plaintiffs which:
(a)if successful, was (during the opening) said to exceed the capitalisation of the National Australia Bank,
(b)encapsulate a number of proceedings covering a plethora of factual and legal issues - and as to the damages claims, embrace a global investigation of e-commerce markets, and technology.
7In those circumstances the defendants, within the dual constraints of practicable case management and the public interest in preventing individual litigants from unduly burdening the list, have every entitlement to take care and time in defending the proceedings. And the plaintiffs have of course, a concomitant entitlement to pursue their pleaded cases with vigour.
8The number of witnesses and witness statements filed by both parties in the proceedings can only be regarded as extraordinary. A frank and careful overview of the witnesses (lay and expert) proposed to be called on specific issues and of the evidentiary materials to be treated with through the hearing, suggests that the proceedings are likely to be completed in terms of the hearing, in early 2003. The Court may be expected to take particular care, consistently with the interests of justice, to move the proceedings along in circumstances where the issues have now been clarified and more particularly identified. A judgment will then have to be delivered and no doubt the preparation of the judgment will also take real-time.”
(e) Judgment [2000] NSWSC 945 (5 October 2000):
“4.I venture to suggest that there would be few occasions when as much energy and time has been spent by parties to proceedings in this country in preparing for a final hearing. Presumably this is because of the significance to the parties of the issues, the plaintiffs asserting that the relief to which they are entitled, exceeds the market capitalisation of the National Australia Bank Limited ["NAB"].”
(f) Judgment [2000] NSWSC 338 (14 April 2000):
“45The formal position as it has been announced and accepted by both parties without the need for further evidence is as follows:
The proceedings involve a very large number of documents. The defendants have currently filed 117 statements. Those statements occupy approximately 5,700 pages of type. Additionally to that, and referred to in the defendant's statements, are some 40,000 pages of exhibits. Additionally to that the defendants have in the order of some 40,000 documents discovered or capable of requirement for use at some stage in the proceedings. It is possible and probable that some of the last mentioned figure of 40,000, overlaps with the 40,000 pages of exhibits. In short, as I understood Mr Halley of Counsel and Mr Lovell, solicitor, who have respectively addressed from time to time for the defendants today, it may be taken that there are certainly in excess of 100,000 relevant pages of materials to be arguably referred to, relied upon and/or conceivably tendered on the defendant's side of the equation.
46The position, as far as the state which the defendant's have achieved in pre-trial preparation as announced, is that the defendants have substantially imaged discovered documents. They have not imaged documents relied upon or seen by experts, documents produced on subpoena, or documents discovered by the plaintiffs and which the defendants may determine to tender.
47The position from the plaintiff's side of the record as announced by Mr Hancock of counsel who has addressed the court on this topic today, is that there are 15 statements which have been filed to date. There are approximately 7,500 pages of discovered materials, many already being exhibits to statements. In short, up to this point in time, as I have understood Mr Hancock, there are approximately 10,000 pages of documents which are or may be deployed by the plaintiffs for the purpose of the hearing. It is common ground, however, that in coming weeks the plaintiffs will be filing and serving a deal of material in reply. This is said to be likely to be in the order of 10,000 to 15,000 pages of documents. In short, from the plaintiffs' side of the record, the trial may have to cope with in the order of 20,000 to 25,000 pages. When one adds that it is something in excess of arguably 100,000 pages of materials which are, or may be, relied upon on the defendant's side of the record, the parameters of the case become a little clearer.”
The affidavit made by Mr Lovell on 12 November 2001 in support of the motion to dismiss gives the procedural history of the MLC proceedings in some detail. The convenient course is to annex that affidavit to this judgment as Appendix “A”.
Mr Lovell covers in the same affidavit, a number of issues which are relevant both to the defendants’ motion to dismiss as well as to the adjournment and ancillary orders motion.
Clearly, if the hearing of the main proceedings continues in an uninterrupted fashion, a continuation of the present stay of the MLC proceedings with the possibility that the proceedings may (following an order to this effect) revive on payment of the security ordered, would cause real difficulty in a number of respects for the defendants. These include the problem of dealing with the existing timetable, the effect on the preparation and prosecution of the defence of the main proceedings, (the final hearing of which has proceeded up to the present) and the ability of the defendants to allocate resources to the defence of each of the main proceedings and the MLC proceedings with certainty.
A number of the directions and orders in the MLC proceedings are described in paragraph 30 of Mr Lovell’s 12 November 2001 affidavit. These include the obligations of the defendants to file a defence in the MLC proceedings, to file statements in accordance with the orders of 5 October 2001 and to give discovery in relation to damages. It seems unarguable that if the defendants do not continue to work on these tasks then if the security is paid and the existing stay is lifted, a new directions regime would be required which is likely to include an extension of the time for compliance with such directions and orders. As Mr Lovell points out, if the defendants continue to work there is a real possibility that they would incur costs which would never be recoverable if the security was not paid and the stay not lifted.
Mr Lovell makes the point (which is common ground), that the final hearing is presently at a stage where a particular program is generally in place for the calling and cross-examination of a number of identified witnesses. As at the present time, the third tranche of Mr Martin's cross-examination is nearing completion. Three further witnesses were to have been called and cross-examined prior to the end of term. From the commencement of term next year, Mr Coleman was to be called and cross-examined. He was to be followed by the calling and cross-examination of Mr Hume, Mr Martin and Mr Maconochie. Mr Hume’s other commitments have been taken into account by the Court, in effect, giving a ‘special fixture’ in relation to his cross-examination. The defendants' preparation for that cross-examination as well as for the cross-examination of Professor Aitken in the main proceedings has apparently been ongoing. Mr Lovell makes the very valid point that the preparation of the cross-examination of many witnesses will be affected if the present uncertainty as to the status of the MLC proceedings remains. Clearly the very same point may be made in relation to any adjournment of the main proceedings.
Mr Lovell has also made a subsequent and extremely detailed affidavit on 20 November 2001 which covers many matters including:
the status of the main proceedings;
the status of the MLC proceedings;
the progress of the hearing;
outstanding matters in the main proceedings and the MLC proceedings; and
issues of prejudice to the defendants.
The affidavit gives chapter and verse by way of adjectival information to the many parameters which require to be taken into account in relation to the motions presently before the Court. The convenient course is to annex the affidavit to this judgment as Appendix “B”.
The short point which I see as unarguable, is that to grant the plaintiff’s application for the adjournment and to make ancillary orders staying until further order, the orders of the Court for the provision of security for costs made on 24 September 2001 (or by whatever route, to procure an adjournment of the final hearing until some time in February of next year) will cause very considerable inconvenience and additional costs to the defendants and will present a number of extremely difficult problems in relation to the ongoing case management of and hearing of the final proceedings. These problems include the uncertainty as to:
(1)the amount of court time which a continuance of the hearing would require; and
(2)when the final hearing could practicably resume following a new regime in terms of directions.
The problems concerning the situation with respect to the Court are very real for a number of reasons. Special arrangements have obviously had to be made to make one of the three Commercial List judges available to hear the final hearing over the last 18 months and available to be in a position to continue that hearing through the whole of next year and quite probably thereafter until its conclusion. Those arrangements have included use of the Technology Court with its ancillary complex document management facility. The arrangements as in fact used in this litigation are broadly summarised in a paper entitled "Technology in the Court Room-2001" to be found on the Supreme Court ‘Lawlink’ website at The short point is that uninterrupted use of the Technology Court cannot of course, be taken as a given, where other pending litigation may require use of that Court room with its special facilities.
It is also important to bear in mind the recent judgments and orders in relation to the appointment of an examiner to 'take' the cross-examination of identified experts and to do so wherever possible in parallel with the continuance of the final hearing before myself. Those orders were made in a context in which it would clearly take some time before the examiner would actually commence to sit and in a context in which it seemed likely that the defendants might seek leave to appeal. The position of the plaintiff in that regard was by no means clear although I gained the impression (which may be entirely incorrect) that the plaintiff may have determined not to pursue an appeal. If the final proceedings are to continue it is particularly important that if the examiner judgments and orders are to be tested, this take place very soon so that the administrative and other arrangements necessary to be made to further the procedure can progress. The applications and general approach to the way forward now pursued by the plaintiff with the resultant anticipated stay of all proceedings, will have an additional and very real drawback in that if acceded to, those applications will simply set back considerably the timetable which was achievable in terms of the putting into place of the examiner appointment and procedure. I see this matter as an important consideration to bear in mind particularly in terms of the length of any adjournment which may be granted and in terms of the considerable inconvenience involved in an interference with what had been the status quo (qua the running of time for leave to appeal; the courts administrative situation; the need to obtain concurrence of the Chief Justice &c.) in relation to the whole of the examiner procedure orders.
Further, the ability of the defendants to ready themselves to cross-examine all of the witnesses presently in line to be cross-examined towards the end of this year and from the commencement of term next year at least until the middle of next year, may be affected by such a course in several ways. These include:
the fact that outstanding discovery, subpoena and notice to produce requirements/directions are necessary to be attended to prior to certain of these witnesses being called;
the fact that preparation for cross-examination of the plaintiff’s remaining lay and technical witnesses takes considerable time. Hence, for example, the Court clearly accepts that Mr Bathurst QC, all other things being equal, would over coming months have been extensively engaged in preparing to cross-examine Mr Hume and Mr Maconochie. Uncertainty over the next few months as to the future of the litigation and as to whether it is to be prosecuted on and after some date in February next year is calculated to cause very considerable difficulties of this nature as the defendants could simply not be certain as to whether or not to continue their regular preparation for an ongoing rollout on and after February, of the plaintiff’s case; and
the many other matters detailed by Mr Lovell in his 20 November 2001 affidavit.
The central proposition which emerges from Mr Lovell's 20 November 2001 affidavit concerns the dimensional difference between the Court granting an adjournment on the basis that the defendants are not required to incur any costs, or any substantial costs, during the period of the adjournment on the one hand, and the Court now imposing a regime which requires the defendants and their legal representatives to continue to prepare for a continuance of the final hearing on the assumption that the final hearing would immediately recommence on 15 February 2002 (or shortly thereafter) on the other hand.
The position is reasonably clearly summarised in paragraphs 71 - 74 of Mr Lovell's 20 November 2001 affidavit as follows:
“71.If the Court grants an adjournment on the basis that the Defendants are not required to incur any costs, or any substantial costs, during that period, I am of the view that the Defendants will need a reasonable period in which to properly prepare for the resumption of the hearing after the adjournment.
72.If the Court grants an adjournment on those terms, I anticipate that the following will occur during the period of the adjournment.
(a)Counsel currently briefed by the Defendants will cease to work on the matter, and will seek to take on other briefs, including briefs to appear in other proceedings following the commencement of the Court term in February 2002. (This is because no certainty would be able to be provided to counsel that hearing of these proceedings will resume on 15 February 2002).
(b)Partners and solicitors at Freehills will cease to work on the matter, and will be re-deployed to other work. In my view, it would be difficult, if not impossible, to ensure that all of the solicitors currently working on the matter are re-deployed to short-term work which can immediately be halted or passed on to another solicitor if the Plaintiff indicates on 15 February 2002 that it is in a position to resume the hearing immediately.
(c)Experts currently briefed to provide statements will be directed to cease working on those statements. They may then take on other work commitments.
73.If the Plaintiff indicates to the Court on 15 February 2002 that it is in a position to resume the hearing, the Defendants would then require a period in which to properly prepare for resumption, including resourcing the proceedings with appropriate counsel and solicitors. That would also include a completely revised timetable to allow the Defendants to complete the tasks in paragraphs 40 and 41 above and to prepare for cross-examination, as referred to in paragraph 50 above.
74.If the Plaintiff is not, on 15 February 2002, in a position to resume the hearing the position in relation to the availability of counsel and solicitors will become even more acute.”
In circumstances where the very continuance of major litigation of the scale and significance to the parties of these proceedings falls for consideration, it is absolutely plain that the task of the Court is to stand back from the detail and to assess the proper exercise of the discretion as to the way forward in the light of all of the relevant circumstances. Clearly those circumstances include an examination of the expenditure by both parties in terms of funding the litigation and importantly also include the considerations which the plaintiff had in mind as at the commencement of the main proceedings and as at the commencement of the final hearing. The reasonableness of those considerations is also in focus. The changes in the anticipated manner in which the final hearing would likely go forward are in focus. And of course it is equally important to look at the considerations which the defendants must be assumed to have had in mind as at the commencement of the main proceedings as to the commencement of the final hearing, as the anticipated manner in which the final hearing would likely go forward.
Mr Maconochie in his affidavit of 16 November 2001 has carefully dealt with a number of these matters in paragraphs 3, 6 and 7:
“3.Since 24 September 1998 the plaintiff has expended the following sums of money directly on the proceedings. I am informed as to the approximate amounts by Mr Hetherington of Withnell Hetherington, the plaintiff's solicitors as shown in Withnell Hetherington's trust account records:-
(a)Witnesses (including expert witnesses) - $ 805,200.00
(b)Counsel’s fees - $3,977,000.00
(c)E-Court and Real Time transcript - $ 483,000.00
(d)Miscellaneous disbursements - $2,700,000.00
In addition to this total of $7,965,200.00, I estimate an additional amount of about $2 million has been directly disbursed on the proceedings and which I have estimated as follows:-
Proceedings funding:
(i) Efficiency Investments BV $ 7,500,000.00
AIIL (“OAMPS) $ 1,550,000.00
North & South Group $ 1,900,000.00
Total $10,950,000.00Less approximate amount expended
directly from Withnell HetheringtonTrust Account $ 7,965,200.00
Less approximate amount in
Idoport Pty Limited’s Bank WestAccount $ 867,000.00
Total$2,117,800.00
4.I refer to the evidence of Mr Damian Lovell given on 30 August 2001 concerning the costs of the defendants of and incidental to the proceedings until the time of the application for security (see Transcript pages 12358 to 12362).
5.At the time of commencement of the Main Proceedings on 24 September 1998 and at the time of the trial (24 July 2000), the plaintiff did not consider that the trial would or could proceed as long as it has to date and be only at the present stage of hearing of the evidence, or be of the likely continuous duration of at least 3.5 years and possibly one or more years longer and which has been the subject of recent discussion in Court, that is a trial proceeding at least until the end of 2003 and possibly one or more years longer. I refer to the following estimates of the trial given by senior counsel for the defendants in the course of the Opening:-
(a)“at least a year”, Mr Bathurst QC, 24 August 2000, T 1563 lines 18-19;
(b)“my best guess is that this case would take two years from the time it commenced [24 July 2000]”, Mr Bathurst QC, 16 October 2000, T 2566 lines 36-37.
6.Further, at the time of commencement of the Main Proceedings in September 1998 or at the commencement of 2000 as the case may be, the following matters were not apparent and were not taken into account by the plaintiff:
(a)that the volume of evidence filed or permitted to be filed on behalf of the defendants could be near the volume which has been filed or permitted to be filed on behalf of the defendants and which required substantial responses from the plaintiff including additional expert witnesses. In particular I refer to the evidence on behalf of the defendants filed shortly before the commencement of the trial of the proceedings, and subsequently after the commencement of proceedings in accordance with the schedules annexed to Mr D'Emilio's affidavits of 26 and 27 September 2001 filed in the defendants’ recent application for adjournment and in support of the plaintiff's application for directions;
(b)the extent of the Opening Addresses;
(c)that the defendants' counsel would proceed to cross-examine in the manner and to the extent they have done; I refer in particular to the cross-examinations of Mr Campbell and Mr James and to the cross-examination of Mr Martin which is still continuing;
(d)the appointment by the Court of an examiner to hear substantial cross-examination in the proceedings at the same time as the trial of the Main Proceedings and the preparation and contemporaneous trial of the MLC Proceedings;
(e)the extent of the defendants’ objections to evidence and the requirement for supplementation occasioned by rulings on those objections;
(f)the number and frequency of interlocutory applications by or on behalf of the defendants or the extent to which the defendants contested interlocutory applications by the plaintiff;
(g)the number of counsel and solicitors engaged or retained by the defendants and occupied in the conduct of the proceedings and the discrepancy between the personnel and other resources employed by or on behalf of the defendants in and in relation to the conduct of the proceedings as compared with the solicitors and counsel retained or engaged for the plaintiff;
(h)that it would be necessary to contemplate and to commence the MLC Proceedings or that the trial of these would be joined and proceed with the trial of the Main Proceedings and security for costs ordered in respect of the MLC Proceedings, either at all or as for a trial; and
(i)the applications the subject of the judgment and orders in proceedings No 4091 and 4694 of 2000 and the proceedings heard before Hodgson CJ in Equity;
(j)the failure of the plaintiff's application for a separate trial on liability and related orders, with the consequent inability to resolve liability in a reasonably short trial period; and
(k)that the defendants would by use of the funds of a public company expend moneys in the conduct of the litigation approximately at a rate six times or more as great as that of the plaintiff and employ and multiply resources and legal representation accordingly.
7.1I refer to the evidence before the Court on the application for security for costs concerning the plaintiff's funding and seek to maintain the confidentiality thereof. At the respective times funding was arranged with the various entities referred to in that application the plaintiff and I did not contemplate the matters to which I have referred in paragraph 6 above. Since the orders for security for costs in the proceedings and the hearing of the defendants' application for an adjournment and the plaintiff's applications for directions and the Court's judgments and orders thereon, the plaintiff has endeavoured to but has been unable to obtain continued access to its funds in the plaintiff’s Idoport Account at Bank West in Sydney to meet the payment of security for costs in the MLC Proceedings and the costs of continuing with the Main Proceedings for the time being including the payment of security after the first payment. The plaintiff does not itself have other funds on which it can draw to meet these payments……..
7.2Were it not for the matters referred to in paragraph 7.1 above, the plaintiff would have met the payment of security for costs in the MLC Proceedings and the costs of continuing with the Main Proceedings including the payment of security after the first payment and would not have had to bring this application for an adjournment and related matters.
7.3The plaintiff has not previously been in a position to explain to the Court why security has not been paid in the MLC Proceedings as it has been endeavouring to secure access to its funds in the Idoport Account and which has substantial funds sufficient at least to pay that security and the costs of continuing with the Main Proceedings for the time being at least including the payment of security after the first payment and has not wished to prejudice its position in relation to obtaining access to those funds or disclosure of the other matters referred to in Confidential Exhibit A. I and the plaintiff have not wished to seem discourteous to the Court in not previously proffering an explanation and on 1 November 2001 I informed the Court through senior counsel (transcript page 14718) that it might take up to 14 days to be able to inform the Court.”
Insofar as the orders sought in motion 53 are concerned there is no substance in any of the submissions that such orders should be made. The MLC proceedings are presently stayed. There is no substance in any of the submissions to the effect that the evidence now before the court justifies the making of the orders sought in paragraphs 5, 6, 7 or 8 of motion 53. A judgment was delivered on 5 October 2000 (revised 10 October 2000) ordering that the MLC Proceedings be heard and determined with the main proceedings (see [2000] NSWSC 945). Orders were made in conformity with the judgment. The plaintiff did not appeal. There is no material change of circumstances that the plaintiff can point to since the order was made on 5 October 2000. The reasons for judgment of 5 October 2000 remain as relevant today as they did when delivered. Further, the work carried out by the defendants in conformity with the orders made, as set out in the affidavit of Mr Damian Lovell of 20 November 2001 and filed in the MLC Proceedings, requires that the order not be varied or vacated. The only matter which requires to be currently attended to is to stand over the defendants’ application to dismiss the MLC proceedings. Outside of an order to that effect, it is simply inappropriate to stand the proceedings themselves over. In the event that Idoport seeks leave to revive the proceedings, a positive application in that regard will require to be made prior to determination of the defendants’ motion to dismiss the proceedings, for the obvious reason that once the proceedings are dismissed, the revival application would seem certainly doomed to failure.
Even had the MLC proceedings not been currently stayed, which they are, no case whatever has been made for the making of the orders sought in paragraph 7 of motion 53. Generally the very same considerations as dictate rejection of Idoport’s application pursued in paragraph 5 of motion 52, remain pervasive in like fashion qua the MLC proceedings.
It remains to deal with motion 50. Clearly the existing discovery/notice to produce orders now required to be vacated and the whole issue of whether, and if so when the orders should be re-enlivened, stood over to the occasion early in the new term next year when the continuance or no of the final hearing will doubtless be determined.
Certainly the usual order which is likely to be made where a party seeks an adjournment of a final hearing will require that party to pay costs thrown away by the adjournment (see Ord v Ord [1923] 2 KB 432 at 439; Unilever Aust Ltd v Karounos [2001] FCA 162). The current circumstances are somewhat more complex for reasons generally given above. As the difficulties which the plaintiff currently has with respect to funding form the centrepiece of the matters which underpin the respective motions, it seems to me that the proper exercise of the discretion is presently to reserve costs for further consideration when the proceedings are again before the court in the new term next year.
As to the difference between the proceedings being before the Court at the beginning of term next year on the one hand or on 15 February 2002 on the other hand, I do not see that the plaintiff has made good a case for the additional two weeks. The fact is that the plaintiff has doubtless been aware of the funding difficulties from 31 October 2001. It is being given, as it seems to me, an entirely fair and reasonable period of time to accommodate its obvious desire to treat with its present funding crisis. The decision in favour of substantially acceding to the plaintiff’s application has by no means been a foregone event and I have at times clearly contemplated simply permitting the defendants to go forward presently with their motion to dismiss the MLC proceedings. There are too many ongoing problems in relation to the fate of the proceedings which require to be properly clarified shortly for the Court to permit the current state of flux to continue to a point in time beyond the commencement of term next year. As McHugh J. made plain in Oshlack v Richmond River Council, (1998) 193 CLR 72 at 97, it is important that a party contemplating litigation, [or no doubt, as here, contemplating continuing the current mammoth final hearing], be under a sober realisation of the potential financial expense involved in that exercise. All relevant considerations having been taken into account, the proper administration of justice in relation to the proceedings makes clear that a continuation, beyond the commencement of next year, of the situation in which the future of the final hearing remains inchoate, is simply out of the question.
It seems to me that the justice of the situation requires:
that insofar as orders and directions currently in place require the defendants to carry out procedural steps of and related to the final hearing, the orders and directions be stayed until midnight on 1 December 2001;
that the main proceedings be re-listed for directions on the first day of the new term at noon;
that the defendants’ application for orders dismissing the MLC proceedings be stood over for hearing on the first day of the new term at noon or on such later occasion as the circumstances which obtain on that day may dictate;
that each party be given general leave to make returnable on the first day of the new term at noon, such further or other motions as they seek to have heard in determining the fate of the proceedings. In particular the defendants have leave to make returnable on the first day of the new term at noon, any notice of motion seeking to dismiss the main proceedings for failure to prosecute and/or for any failure to provide security for costs. Likewise the plaintiff has leave to make returnable on the same day at the same time, any notice of motion seeking to have the stay orders listed. Such notices of motion together with affidavits in support are to be filed and served on or before 21 January 2002. Affidavits in answer are to be filed and served on or before 24 January 2002. Submissions should be exchanged and furnished to my associate by 5pm on 25 January 2002;
the costs of and occasioned in relation to the motions presently before the Court are appropriately to be reserved for determination on the first day of the new term at noon or on such later occasion as the circumstances which obtain on that day may dictate.
Short minutes of order
The parties are to bring in short minutes of order.
I certify that paragraphs 1 - 118
are a true copy of the reasons
for judgment herein of the
Hon. Justice Einstein given on
26 November 2001ex tempore
and revised on 27 November 2001___________________
Susan Piggott
Associate27 November 2001
LAST UPDATED: 11/06/2002
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