Advanced Fuels Technology Pty Ltd v Blythe
[2017] VSC 250
•10 May 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S CI 2015 05119
| ADVANCED FUELS TECHNOLOGY PTY LTD (ACN 079 473 699) | Plaintiff |
| v | |
| SEAN DARRELL BLYTHE & ORS | Defendants |
---
JUDGE: | Macaulay J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 May 2017 |
DATE OF RULING: | 10 May 2017 |
CASE MAY BE CITED AS: | Advanced Fuels Technology v Blythe & Ors (Application to re-open plaintiff’s case) |
MEDIUM NEUTRAL CITATION: | [2017] VSC 250 |
---
PRACTICE AND PROCEDURE — Plaintiff’s application to re-open case after evidence concluded and before closing submissions delivered refused — Principles involved — Consideration of interests of justice — Whether the defendants misled the plaintiff about intention to call witnesses or required to warn the plaintiff that they may not call witnesses — Whether the court must ensure it receives all relevant evidence — Civil Procedure Act 2010 (Vic), ss 7, 8, 9.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr I Percy | McKean Park |
| For the First, Third, Fourth and Fifth Defendants | Mr C Northrop | Harwood Andrews |
| For the Second Defendant | Mr A Schlicht | Metaxas & Hager |
HIS HONOUR:
Introduction
On day 7 of a commercial trial the plaintiff (‘AFT’) closed its case subject only to the parties finalising their agreement about telephone records in a notice to admit. Then, apart from tendering one document, the first, third, fourth and fifth defendants (the ‘HA defendants’[1]) announced that they did not propose to call any evidence. Likewise, the second defendant (‘Wilson’) announced he would not call any evidence. Evidence having concluded, I directed the parties to file written submissions and adjourned the case for three days before final oral submissions were to take place. On the afternoon of the next day, AFT applied to re-open its case for the purpose of tendering a number of documents which it had intended to put in evidence during cross-examination of the defendant’s witnesses. The application was opposed by all defendants.
[1] Harwood Andrews are the solicitors acting for the first, third, fourth and fifth defendants.
AFT’s counsel frankly disclosed that the reason for not adducing the documents during the course of AFT’s case was that he wished to gain the tactical element of surprise when putting the documents to the defendants’ witnesses in cross-examination. In other words, the reason why the documents were not adduced during AFT’s case was not an accident, or inadvertence, or because they had only just come to light but, rather, the product of a deliberate strategic decision to obtain an advantage for AFT. AFT’s counsel assumed – he submitted that he was misled to believe – that the defendants would be calling their witnesses.
The application was put on a number of bases:
(a) AFT was misled by the defendants into believing that the defendants would be calling witnesses at the trial;
(b) modern litigation principles required, in the circumstances, that the defendants inform AFT that they did not intend to call witnesses or that there was a risk that they would not do so; and
(c) the requirements of justice dictated that the court should determine the real issues in dispute on all relevant evidence.
After hearing argument I refused the application to re-open (save for the purpose of introducing some company search documents which were not contested) and said that I would give my reasons later. These are my reasons.
Principles
There is no doubt that the court has a discretion to permit a party to re-open its case despite having closed it. The circumstances in which such an application may be made can vary. For instance, an application may be made after all the evidence has been adduced, submissions have been made and judgment is pending;[2] or after all the evidence of the plaintiff has been adduced and while the defendant’s evidence is in progress;[3] or, as in this case, between the end of all evidence and before submissions are made.[4]
[2]See, for example, Spotlight Pty Ltd v NCON Australia [2012] VSCA 232 (‘Spotlight’).
[3]See, for example, Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 28) [2013] VSC 523 (‘Matthews (Ruling No 28)’).
[4]See also, for example, Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 (‘Nweiser’).
In Spotlight[5] the Court of Appeal endorsed the view of Kenny J in Inspector-General in Bankruptcy v Bradshaw[6] that there were four recognised classes of case in which a court may grant leave to reopen a party’s case after the close of final submissions and before judgment has been delivered. The Court said:
… There were, in her Honour’s opinion four recognised classes of case in which a court may grant leave to reopen; and the appellants could not bring themselves within any of them. The four classes (with which we respectfully agree) are: (i) where fresh evidence, unavailable or not reasonably discoverable before, becomes known and available; (ii) where there has been inadvertent error; (iii) where there has been a mistaken apprehension of the facts; and (iv) where there has been a mistaken apprehension of the law.
These classes are not closed; but the present case shares with Bradshaw the distinction that it falls into none of them, and no applicable new category is suggested. The overriding principle is that the court consider whether, taken as a whole, the justice of the case favours the grant of leave to reopen. We are satisfied that, in the present case, it does not.[7]
[5][2012] VSCA 232.
[6][2006] FCA 22.
[7]Spotlight [2012] VSCA 232 [25]-[26].
In ASIC v Rich [2006] NSWSC 826, Austin J listed factors that may be potentially relevant to the question whether to permit the re-opening of a case:
(a) the nature of the proceeding;
(b)whether the occasion for calling the further evidence ought reasonably to have been foreseen;
(c)the consideration of fairness that the defendant is entitled to know all of the evidence he has to meet in taking forensic decisions as to cross-examination and the nature and extent of the evidence he will himself adduce on the matters in question;
(d)the extent to which the plaintiff has embarked upon calling evidence on the issue in question in its case in chief;
(e)the importance of the issue on which the further evidence is sought to be adduced to the pleaded issues in the case;
(f)the degree of relevance and probative value of the further evidence sought to be adduced and its potential to involve an undue waste of time;
(g)the prejudice to the defendant in terms of delay in the completion of the proceeding and the consequential costs;
(h) the public interest in the timely conclusion of litigation;
(i)what explanation is offered by the plaintiff for not having called the evidence in chief.[8]
[8]ASIC v Rich [2006] NSWSC 826 [18].
An instructive case that raises some questions in common with the present is Nweiser.[9] In that matter a worker had sought damages from an employer following an industrial accident. A hotly contested issue was whether an incident had occurred involving the worker slipping on oil, losing control of a flywheel being replaced upon a vehicle and injuring his back. The defendant-employer had called some witnesses disputing the occurrence of the incident. Following a successful objection to a question put by the defendant’s counsel to the worker, upheld on the basis that it only went to credit, the defendant decided not to call a witness who would say that, before the alleged accident, the worker had asked the witness, in substance, whether he would support the worker if the worker staged an accident to obtain compensation for a pre-existing injury. After the defendant closed its case and began submissions it applied to re-open its case to call the witness it had previously decided not to call.
[9](1992) 28 NSWLR 471.
On appeal against the judgment obtained against it, the defendant (appellant) contended that the trial judge had wrongly refused it leave to re-open its case and call the witness. In allowing the appeal, Clarke JA (for the Court) said:
Where, as here, a defendant announced the closing of its case and, there being no case in reply, a short time later sought leave to re-open because its counsel realised he had made a mistake it is difficult to discern how the interests of justice would be furthered by disallowing an application to reopen to call evidence which was clearly relevant to, and may have had a significant impact on, the issues in the case. It is true that the fact that there has been a deliberate decision not to call the witness whose evidence it is later sought to lead in a re-opened case is a relevant consideration. But there may be a number of reasons why a deliberate decision is made. It may, for instance, be made for tactical reasons.
On the other hand it may be that in the heat of the moment counsel has inadvertently overlooked facts proven in the opponent's case or has otherwise acted on some misapprehension. Where the failure to lead evidence from a witness whom it is afterwards desired to call results from a tactical decision by counsel the courts will usually be disinclined to grant an application to re-open. Even in these circumstances, however, the court has a discretion to grant an application by a party to re-open its case and the interests of justice may dictate that the application be allowed. In short the fact that a deliberate decision was taken for tactical reasons is not decisive but remains an important factor.
If, however, counsel inadvertently fails to call a witness different considerations arise and, as it seems to me, if counsel makes a deliberate decision based on a mistaken apprehension of the nature of the evidence called against his client or the admissibility of the evidence which he seeks to call the justice of the case may well point to the granting of the application. The decision made by counsel in this case although a deliberate one stands in a very different category from one based on tactical grounds. It is more appropriately regarded as one in which counsel had made a mistake or failed to appreciate the relevance and admissibility of the evidence which he omitted to lead.
The primary purpose for the rules pursuant to which cases are contested in this State is the furtherance of the interests of justice. For this reason the exercise of the discretion to allow an application to re-open depends essentially upon the trial judge's view as to whether the interests of justice are served better by granting than refusing the application. Of course, there needs to be finality in litigation and a limit upon the number of issues which it is open to the parties to contest at a hearing.[10]
[10]Nweiser (1992) 28 NSWLR 471, 475-476.
In relation to a deliberate decision not to call evidence, in Smith v New South Wales Bar Association[11] the High Court said as follows:
If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to enquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised.[12]
[11](1992) 176 CLR 256 (‘Smith’).
[12]Smith (1992) 176 CLR 256, 266-7 (emphasis added); See also, Ronnoc Finance Ltd v Spectrum Network Systems Ltd & Ors (Unreported, Supreme Court of New South Wales, Santow J, 19 November 1997).
In Matthews (Ruling No 28)[13], J Forrest J permitted the re-opening of the plaintiff’s case during the course of the defendants’ evidence to allow the tender of a coach screw found by a metal detector near an electricity pole when it had not been adduced in evidence during the course of the plaintiff’s case. Having noted the observations of the High Court in Smith (above) his Honour dealt with the defendants’ argument that the plaintiff should not be permitted to adduce the evidence because the decision not to adduce it had been made deliberately for tactical reasons. Importantly, his Honour emphasised that it had been made upon a ‘combination of minor misjudgement and misunderstanding of counsel’ and ‘not a deliberate tactical decision to gain a forensic advantage’.[14]
[13]Matthews (Ruling No 28) [2013] VSC 523.
[14]Ibid [39].
Undoubtedly, the primary purpose for all rules of procedure in evidence is to further the interests of justice.[15] Nevertheless, those interests are pursued in the context of the adversarial system which permits the parties to determine the issues and adduce such evidence as they choose; it is the court’s function to ‘hearken to the evidence’ as called.[16] A trial does not involve the pursuit of truth by any means, rather its pursuit is by means of the adversary system.[17]
[15]Nweiser (1992) 28 NSWLR 471, 476; Matthews (Ruling No 28) [2013] VSC 523 [24].
[16]Jones v National Coal Board [1957] 2 QB 55, 63-64; LexisNexis, Halsbury’s Laws of Australia (at 7 March 2013) Duties and Conduct of Trial Judge, ‘General [325-8380]’.
[17]Whitehorn v The Queen (1983) 152 CLR 657, 682 (Dawson J). See also, in the context of a criminal trial, Ratten v The Queen (1974) 131 CLR 510, 517 (Barwick CJ).
In Victoria, the Civil Procedure Act 2010 (Vic) requires that in the conduct of civil proceeding a court must seek to give effect to the objective of facilitating ‘the just, efficient, timely and cost-effective resolution of the real issues in dispute’.[18] In doing so, the court is to have regard, amongst other things, to the objects of a just determination of the civil proceeding,[19] and the efficient conduct of the business of the court.[20]
[18]S 7(1), s 8(1), s 9(1).
[19]S 9(1)(a).
[20]S 9(1)(c).
Nature of the case and the context of the application
AFT sued two natural persons, Blythe and Wilson, who were once employed or engaged by it for its business in the supply of products and services to users of compressed natural gas. The other defendants are companies with which Blythe and Wilson are associated. Both Blythe and Wilson resigned from AFT in early 2013. It is alleged they pursued and obtained business opportunities that belonged to AFT thereby breaching contractual and fiduciary duties owed to AFT and contravening the Corporations Act 2001 (Cth). It is also alleged that, with others, they engaged in a dishonest and fraudulent design to transfer AFT’s business opportunities to themselves or the companies with which they are associated.
It has been hard fought litigation from the outset. I was informed that there have been lengthy and difficult disputes over discovery and pleadings. Each party is represented by experienced solicitors and counsel.
The trial was set down for hearing on an estimate of up to 14 days. The court had directed that the parties file and exchange outlines of evidence for any witness they proposed to call, and each party complied with that direction. In addition, the HA defendants applied and were granted leave (without opposition) for two of their witnesses to give evidence by audio visual link and arrangements had been put in place for that to occur.[21] At the commencement of the case I requested the defendants to give an opening of their respective cases, following AFT’s opening, in order to assist me in determining the issues that were in dispute. The defendants complied with that request.
[21]Evidence (Miscellaneous Provisions) Act 1958 (Vic) pt IIA.
AFT proceeded to call its witnesses, eight in total including two experts. The proceeding was conducted as an electronic trial facilitated by a third party operator. That enables me to say that of the 1700 odd documents uploaded to the electronic court book, before the application to re-open the case was made 230 had been admitted into evidence. Of those, 142 were adduced into evidence by AFT and the balance were adduced by the defendants either through cross-examination of AFT’s witnesses or in the course of their openings with the consent of AFT.
When applying to re-open its case, AFT sought leave to adduce 21 documents that had not previously been admitted into evidence. Five were company searches the admission of which was not resisted. Of the remaining 16 all but two were business records of AFT. There was no suggestion they would not have been readily capable of being tendered by AFT in its case had it sought to do so during its evidence. Four of the documents were explicitly referred to in AFT’s third amended statement of claim. AFT notified the defendants of its desire to tender the additional documents in two tranches; the first 16 late in the afternoon after the court adjourned on 3 May 2017 and the remaining five over lunchtime on 4 May 2017 immediately before the application for re-opening was heard.
Counsel for AFT informed the court that the additional documents AFT wished to put into evidence touched on the same topics as many other documents already adduced had; however, he said, they had a particular sting to them.[22] When asked what prejudice AFT would suffer if not allowed to re-open the case and put those documents into evidence, AFT’s counsel said that their absence would not prevent AFT making good its allegations but their admission would allow counsel to make final submissions more powerfully and they would ‘considerably strengthen its hand’.[23] Counsel for AFT made it plain that the documents were deliberately withheld from tender during AFT’s case in order to gain the tactical advantage of surprise and effect when they were put to the defendants’ witnesses in cross-examination.
[22]Transcript 686.
[23]Ibid 687.
It was not disputed that the documents in question were otherwise relevant and admissible. Other than the need to take time to consider the content and impact of the further documents the defendants did not identify any specific prejudice they would suffer if AFT were given leave to re-open its case. Nor did they say whether it would alter their decision not to call any witness.
I turn to the principal arguments.
Did the defendants mislead AFT about their intention to call witnesses?
As indicated above, the first argument put forward by AFT in support of its application was that it had been misled by the defendants into believing that they were going to call witnesses. AFT argued that it was misled into believing that the defendants would call witnesses because:
(a) the defendants had filed outlines of evidence for the witnesses they proposed to call and, in two cases, amended those outlines during the course of the trial;
(b) during the course of the opening for the HA defendants, counsel for those defendants, on two occasions, had informed the court that it would ‘hear’ of matters which intimated an intention that witnesses for the defendants would be called; and
(c) on several occasions during the course of AFT’s evidence counsel for the HA defendants made reference to the necessary arrangements that would need to be made for the video link witnesses.
In my view, neither alone or in combination do these matters amount to any misleading of AFT as to whether the defendants had made any final decision whether to call witnesses in the case. None of them are explicable only by a final decision having been made to call a witness; rather, each is consistent with keeping open the option to call witnesses.
One starts with the proposition that defendants are not obliged to call any witnesses. At the conclusion of a plaintiff’s case, a defendant may make a no case to answer submission, or elect not to call any evidence, or to call such evidence as considered necessary in order to meet the case put against them during the course of the plaintiff’s evidence. Sometimes it is difficult to know precisely what the evidence will be until all of it has been brought forward. It may or may not live up to what has been foreshadowed.
In this case, there was a very good example of evidence foreshadowed in a witness outline not eventuating in an important respect. AFT had filed an outline of evidence for a computer repairer who would apparently say that the first defendant, Blythe, had asked him to remove the files from a laptop used by Blythe for AFT business, reformat the hard drive but not replace the files concerning AFT’s business back onto the computer. This is a significant issue; AFT contends that it received the computer back from Blythe with none (or very few) of its files on it, thereafter hampering its ability to progress its business. However, when he gave evidence, the computer repairer said that Blythe asked him to replace all files (excepting Blythe’s personal files) back onto the computer and that he did so.
The fact that the defendants had filed outlines of evidence could not, in my view, lead to any reasonable conclusion that the defendants would necessarily call any of those witnesses. To preserve an entitlement to call witnesses at the trial the defendants (as with AFT) were obliged to file witness outlines. No assurance that they would actually call any of the witnesses could be gleaned from having done so. Nor could any such assurance be gleaned from the fact that, during the course of evidence, they filed two amended outlines. Filing an outline is merely the gateway to an entitlement to call evidence; it is not a guarantee that a party will call evidence. Of course if, having filed an outline, a party chooses not to call the witness the opposite party is at liberty to invite the court to draw an appropriate inference in accordance with the rule in Jones v Dunkel.[24]
[24](1959) 101 CLR 298.
The argument proceeding from the fact that the defendants had made arrangements to call some evidence by video link stands much in the same position. Under the Evidence (Miscellaneous Provisions) Act 1958 (Vic) a party who contemplates calling evidence by video link is obliged to make certain arrangements. Again, that does not commit the party to call such evidence and should not be taken as doing so. Further, parties are to be encouraged to keep the court informed during the running of a trial of any necessary timing arrangements for the calling of a video link witness so that the trial is not interrupted if that witness is ultimately to be called. Again, doing so does not betoken any commitment or guarantee that the evidence will be called. Consistently with that proposition, in making comments to the court about these arrangements to call audio link evidence, counsel for the HA defendants added the words ‘if needs be’.[25]
[25]Transcript 569.
Finally, there was nothing of any real substance in what was put to the court in the opening by either defendant about what the court might ‘hear’ in due course. One of those references was to a topic upon which the court in fact did ‘hear’ when matters were put in cross-examination. The other was a relatively innocuous reference to the circumstances in which two of the defendants met. Moreover, nothing was put to any of AFT’s witnesses, in accordance with the rule in Browne v Dunn,[26] based upon what a witness to be called by a defendant would say.
[26]Browne v Dunn (1893) 6 R 67.
When asked if he sought any assurance from the defendants that they would be calling their witnesses, before he closed his case, counsel for AFT frankly conceded that he did not make any such request. He did rely upon the fact that he had asked his opponents shortly before closing his case what the order of their witnesses would be and he said they gave a ‘non-responsive’ answer.[27] In my view that does not assist AFT. If anything, it should have reinforced the need to obtain an assurance of the defendants’ position if AFT was going to rely upon an assumption that the defendants’ witnesses would be called.
[27]Transcript 676.
For these reasons, if AFT believed that the defendants would, as a matter of certainty, be calling their witnesses I reject the submission that such belief was the product of anything said or done by the defendants that could be characterised as misleading.
Should the defendants have warned AFT that they may not call their witnesses?
I reject the submission that it was incumbent upon the defendants to advise AFT, in the circumstances, that they would not be calling their witnesses. Much of what I have already said is relevant to this conclusion. There was no proper basis for AFT to apprehend that they would do so as a matter of certainty. There was no conduct of the defendants which required them, as a matter of fairness, to warn AFT that they were considering not calling their witnesses. Why would they have thought it necessary to do so? Ought they have contemplated that AFT might have held back cogent documents for cross-examination to gain itself an advantage, and so be constrained to protect AFT from any disadvantage it might suffer if they elected not to call their witnesses? I reject the submission that modern litigation principles or the requirements of the Civil Procedure Act obliged the defendants to have informed AFT of their intention not to call their witnesses.
Further, it does not lie well in the mouth of AFT, having masked its intention to rely upon certain evidence by not presenting it during the course of its own case, to complain that the defendants did not volunteer their intention not to call any witnesses before AFT closed its case. Exposing that inconsistency rather neatly, AFT argued it was entitled to the forensic advantage gained by not ‘telegraphing [its] punches’[28] when it came to cross-examining witnesses yet the defendants were obliged to ‘telegraph an intention as to whether or not they are going into evidence’.[29]
Must the court ensure that it receives all relevant evidence?
[28]Ibid 673.
[29]Ibid 685.
AFT argued that the court should have regard to the need to decide the ‘real issues in dispute’[30] on all the relevant evidence. It submitted that the further documents it sought to adduce were relevant and in fact would be highly cogent.
[30]Civil Procedure Act2010 (Vic ) s 7(1).
Accepting that it is desirable that the court hears the evidence that is relevant to the dispute it must resolve, the adversarial system does not guarantee (or insist) that the court hears all relevant evidence. It is for the parties to choose which evidence they will bring forth to the court and it is for the parties to decide which witnesses they will call. It is not uncommon for a party not to adduce a relevant document or call a relevant witness. The principles in Jones v Dunkel have been developed to cater for that very situation. It may even be that both parties seek to keep out a relevant document because each of them thinks, for different reasons, it will harm their case. The court only hears the evidence the parties produce. If parties make tactical, deliberate decisions not to adduce certain evidence, they are entitled to do so: the court must decide the case without reference to that evidence.
Accepting this reality, neither the Civil Procedure Act nor any modern litigation principle weakens the weight of the proposition referred to in Smith (and other cases) above. That is, if a party for tactical reasons deliberately refrains from adducing evidence when it could have done so, that fact will be a very important (if not decisive) consideration for a court when considering whether to allow the re-opening of the case to permit that evidence to be lead.
In this case, although I consider it a very important factor I do not regard it to be the only relevant consideration. I also take into account the fact that AFT considers that it can make good its case even without the evidence but that the evidence in question would merely make its case more powerfully. Additionally, I take into account that in electing not to call witnesses the defendants have exposed themselves to the risk that the court will draw an inference against them in accordance with the Jones v Dunkel principle. I assume that the decision not to call witnesses, having regard to that risk, was taken after careful analysis of the evidence as it then stood.
Further, as has been shown, AFT’s tactical decision has been productive of inefficiency rather than efficiency. It has meant that the parties have been distracted by a flurry of communications and the need for a further application while they would otherwise have been preparing final submissions. The court has had to deal with and resolve this application. The ‘efficient, timely and cost effective resolution of the real issues in dispute’ is not facilitated by parties withholding key elements of their evidence when presenting their case to the court. But, if in order to seek a forensic advantage a party chooses to do so, the interests of justice will not necessarily conduce to save them from a disadvantageous consequence of that choice.
Conclusion
Taken as a whole, it is my view that the interests of justice do not favour AFT being permitted to re-open its case to admit the documents it withheld. The plaintiff’s application to re-open its case is refused.
SCHEDULE OF PARTIES
| ADVANCED FUELS TECHNOLOGY PTY LTD | Plaintiff |
| - and - | |
| SEAN BLYTHE | First Defendant |
| TIMOTHY WILSON | Second Defendant |
| TIMOTHY SHANE O’LEARY | Third Defendant |
| NGV GROUP PTY LTD (ACN 163 139 053) | Fourth Defendant |
| ENVIROTRANS PTY LTD (ACN 114 292 250) | Fifth Defendant |
7
8
0