smartcard court case could catch cabinet

http://www.smh.com.au/business/smartcard-court-case-could-catch-cabinet-20101207-18ofc.html


THE NSW cabinet could be drawn into the $300 million litigation over the abandonment of a transport smartcard developed by the former listed technology company ERG Ltd.

ERG's barrister told a procedural hearing in the NSW Supreme Court yesterday that the company wants to amend the case it brought in 2008 against the Public Transport Ticketing Corporation and the State of NSW.

Wayne Muddle, SC, said the amendment would plead ''that cabinet was the decision-maker and it took into account matters extraneous to the contract and therefore acted contrary to the obligations of good faith under the contract''.

Advertisement: Story continues below Justice David Hammerschlag, who will hear the trial, which is expected to run for more than three months next year, said the application to amend was ''obviously an important juncture in this case''.

Justice Hammerschlag decided to defer hearing submissions on whether ERG should be allowed to amend its pleading until after an appeal relating to access to government documents. ''If you succeed in the Court of Appeal, there's a significant change to the present forensic landscape,'' he told Mr Muddle.

The appeal, due to be heard next week, relates to a decision by Justice Clifford Einstein in June giving ERG access to most, but not all, documents relevant to the case over which the government claims public interest immunity.

Justice Einstein said that only documents marked ''Cabinet-in-Confidence'' could be withheld.

He said there was a public interest in ''ensuring that parties that enter into contracts with government which have a commercial nature know that in future litigation the government will not be permitted to hold back documents relevant to the litigation on an assertion of public interest immunity and that the party will have the dispute with the government (particularly a claim for damages brought by the government) resolved by the court with the knowledge of all relevant information and documents''.

The government is suing ERG for $77 million for failing to fulfil its part of the Tcard contract. ERG has countered with a suit seeking $215 million for wrongful termination.

ERG was delisted from the Australian Securities Exchange in June last year after a restructuring that left the company's interest in the litigation as its sole asset.

The court actions are being funded by the Ingot Capital group of funds management companies run by Duncan Saville, which was ERG's largest shareholder and lender.