Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited & Ors. [42] [2001] NSWSC 939

New South Wales Supreme Court

CITATION : Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited & Ors. [42] [2001] NSWSC 939 FILE NUMBER(S) : SC 50113/98; 50026/99; 3991/00 HEARING DATE(S) : 22/10/01, 23/10/01 JUDGMENT DATE : 30 October 2001

Idoport Pty Limited (Plaintiff) PARTIES : National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant) JUDGMENT OF : Einstein J

COUNSEL : Mr R Titterton (Plaintiffs) Mr J Sackar QC, Mr J Halley (Defendants) SOLICITORS : Withnell Hetherington (Plaintiffs) Freehills (Defendants) CATCHWORDS : Opinion Evidence DECISION : Supplementary judgment on expertise relating to valuation opinions given.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION – Commercial list Einstein J 30 October 2001 50113/98 Idoport Pty Limited & Anor v National Australia Bank Limited and 8 Ors 50026/99 Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus 3991/00 Idoport Pty Limited "JMG" v National Australia Bank Limited & Ors. Judgment on valuation issues 1 The judgment delivered on 21 March 2001 ([2001] NSWSC 123) dealt in paragraphs 245 - 251 with the question of Mr Maconochie's suggested expertise in relation to valuation issues and the like. A number of questions have now arisen as to the application of those reasons to particular paragraphs of Mr Maconochie statements. This judgment deals with those questions. 2 The burden of the defendant submission is that the court has held that Mr Maconochie has the specialised knowledge on the basis of which, whether wholly or substantially, to express opinions in relation to the potential or actual revenues and costs associated with the Ausmaq Service inasmuch as these relate to the commercial potential of Ausmaq in certain markets. The submission is that the court has held that Mr Maconochie does not have specialised knowledge on the basis of which, whether wholly or substantially, to press opinions that go to the issue of value of Ausmaq or JMG. 3 The defendants then take issue with Mr Maconochie's entitlement to express any opinions as to discount rates; the potential cost to income ratio of the Ausmaq Service; the likely value of the performance bonus payable to JMG and the appropriate price-earnings multiple for the valuation of the NMG and hence JMG. 4 The defendants' submissions deal closely with the true nature of a discount rate, a cost to income ratio, and a price - earnings multiple. In essence the submission is that selection of an appropriate discount rate is an exercise which, for the purposes of calculating damages by a court, requires to be undertaken only by accounting experts. Likewise in essence the submission is that calculation of a cost to income ratio is an exercise of accounting expertise. Likewise the submission is that price-earnings multiples are a method of calculating the value of a business based on its present day earnings and that use of this method is clearly a valuation exercise. As to the question of the performance bonus payable to JMG, the essence of the submission is that a close understanding of the Consulting Agreement throws up the fact that calculation of a performance bonus involves a number of parameters constituting a valuation exercise requiring accounting expertise. 5 The defendants detailed submissions in this regard were in the following terms: " Discount Rates