Dale v Clayton Utz
[2012] VSC 577
•29 November 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT ARBITRATION LIST
No. 4655 of 2011
| CHRISTOPHER ANTONY DALE | Plaintiff |
| V | |
| CLAYTON UTZ (a firm) | Defendant |
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JUDGE: | HOLLINGWORTH J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 August 2012 | |
DATE OF RULING: | 29 November 2012 | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 577 | |
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LEGAL PRACTITIONER – Barrister – Application to restrain senior counsel from acting for defendant in this proceeding – Application brought under inherent jurisdiction and to enforce duties of confidence and loyalty – Whether leave to cross-examine deponents required – If so, whether leave should be granted – Leave granted on a limited basis
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Ehrlich | O’Donnell Salzano Lawyers |
| For the Defendant | Mr R Macaw QC Dr A Hanak | Minter Ellison |
TABLE OF CONTENTS
Introduction
Is leave to cross-examine required?
Matters relevant to whether leave should be granted
Reasons why Clayton Utz says leave should be granted
Reasons why Mr Dale opposes the grant of leave
Mr Dale’s affidavit materials
Mr Dale’s April affidavit
Mr Dale’s June affidavit
The redacted O’Donnell affidavits
Michael Dale’s affidavit
Clayton Utz’s affidavit materials
Mr Myers’ March affidavit
Mr Myers’ June affidavit
Legal principles concerning the grant of leave to cross-examine prior to trial
Legal principles concerning cross-examination as to credit
Reasons why limited leave to cross-examine will be granted
Relevant considerations
Permissible cross-examination
HER HONOUR:
Introduction
Christopher Dale was, for many years, a litigation partner in the solicitors’ firm of Clayton Utz. In October 2005, Clayton Utz terminated Mr Dale’s partnership. One of the grounds relied upon by the firm in the termination was an alleged breach by Mr Dale of the firm’s pro bono policy, in relation to some matters involving a Mr and Mrs Ebner.
In September 2011, Mr Dale issued this proceeding, in which he claims that, in deciding to expel him, his former partners acted unlawfully and in breach of the partnership agreement.
The defence, which Clayton Utz filed in January 2012, was signed by Allan Myers QC.
By summons dated 14 February 2012, Mr Dale seeks an order restraining Clayton Utz from continuing to retain Mr Myers as its counsel in this proceeding (“the injunction application”). In summary:
(a) Mr Dale deposes that in August 2004 and late 2005 he sought and obtained legal advice from Mr Myers, in relation to some of the matters the subject of this proceeding, being the Ebner matters and his expulsion from the firm; and
(b) Mr Myers deposes that he has no recollection of any such communications, and does not believe he was retained to provide advice to Mr Dale.
The injunction application is made on three bases:
(a) First, to prevent the disclosure of confidential information;
(b) Secondly, to ensure that counsel’s duty of loyalty to a former client is respected; and
(c) Thirdly, under the court’s inherent jurisdiction to restrain counsel from acting, in order to protect the proper administration of justice.
Earlier this year, Randall As J determined some disputes about subpoenas, and the admissibility of some parts of the affidavits relating to the injunction application.
The injunction application has now been referred to me for hearing. The parties agreed that two preliminary issues required determination before the hearing of the injunction application:
(a) Is leave required to cross-examine the deponents of any of the affidavits?
(b) If so, should leave be granted?
The preliminary issues arise because Clayton Utz wants to cross-examine Mr Dale. Mr Dale argued that cross-examination of deponents may only occur with the leave of the court, and such leave should not be granted. Clayton Utz argued that it can cross-examine Mr Dale as of right. Alternatively, if leave is required, Clayton Utz argued that leave should be granted.
Is leave to cross-examine required?
In presenting their submissions about whether or not leave was required, the parties focussed on the question of whether the injunction application is interlocutory or final.
That focus was understandable, given the way the application had begun. Initially, the injunction application was supported only by the affidavits of Mr Dale’s solicitor, Francis O’Donnell. Mr O’Donnell deposed to the relevant events, including the communications between Mr Dale and Mr Myers, on the basis of information provided to him by Mr Dale. Clayton Utz objected to the use of that hearsay evidence, arguing that it was inadmissible, on what it said would be a final hearing.
Hearsay evidence is only admissible under s 75 of the Evidence Act 2008 (“the Evidence Act”) in an “interlocutory proceeding”. Similarly, r 43.03(2) of the Supreme Court (General Civil Procedure) Rules 2005 (“the Rules”), permits hearsay evidence to be used in an “interlocutory application”. Accordingly, the parties had filed written submissions, which addressed the question of whether the injunction application was interlocutory for the purposes of those provisions.
Mr Dale subsequently swore affidavits in which he directly deposed to the relevant matters. And Mr O’Donnell’s affidavits were redacted, to remove hearsay evidence.
Even though the hearsay point had ceased to be relevant, the submissions before me continued to focus on the characterisation of the injunction application as interlocutory or final. I was taken to many cases which considered whether different types of applications or proceedings were interlocutory or final.
The question whether an application or proceeding is interlocutory or final can arise in various legal contexts. For example, it commonly arises in considering whether an appeal can be brought as of right, or whether leave to appeal is required. And the question can be answered in different ways, according to the context. For example, in Victoria it has been held that the question whether an application is interlocutory for the purposes of r 43.03(2) (which permits hearsay evidence in interlocutory applications) is not to be decided according to whether the order made on determination would be interlocutory for the purposes of appeal.[1]
[1]Cowie v State Electricity Commission of Victoria [1964] VR 788 at 789; Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290 at 296; FAI Home Security Pty Limited v Price [1999] VSC 274 at [5].
I was referred to several cases in which judges have made remarks about whether an application to restrain lawyers from acting is interlocutory or final. But, in none of those cases was the issue considered in the current context, namely, in deciding whether leave was required to cross-examine deponents.
In Spincode Pty Ltd v Look Software Pty Ltd & Ors,[2] the Court of Appeal considered an appeal from an order restraining a firm of solicitors from acting on behalf of the plaintiff in the proceeding. In considering whether leave to appeal was required, Brooking JA said that “the question whether a particular solicitor may act in litigation might be thought to be clearly interlocutory as between the parties to that litigation.”[3]
[2](2001) 4 VR 501 (“Spincode”).
[3]At [5].
In Sent and Primelife Corporation Ltd v John Fairfax Publication Pty Ltd and Hills,[4] Nettle J (as he then was) heard an application to restrain the defendants from continuing to retain Mr Jeffrey Sher QC from acting for them. The application was made on the same three bases as the current injunction application. In discussing evidentiary matters, Nettle J said:
I also accept that although it has been held that an application such as this one is interlocutory, so that evidence on the basis of information and belief is admissible, the application is final in effect because, if successful, it will preclude the retainer of Mr Sher for the balance of the proceeding and the court should thus be slow to act on the basis of evidence which lacks the sort of rigour that would be demanded at trial.[5]
[4][2002] VSC 429 (“Sent”).
[5]At [44].
His Honour did not indicate what authority he was relying upon in making that statement.
Finally, in Legal Practice Board v Lashansky,[6] Templeman J in the Supreme Court of Western Australia heard an application to restrain a firm of solicitors from acting for an opposing client. No affidavit had been filed by a witness with personal knowledge; instead, hearsay evidence was relied upon. His Honour said:
Under O 37 r 6(2) of [the WA rules of court], an affidavit used for the purpose of interlocutory proceedings may contain statements of information and belief. However, an application to restrain a solicitor from acting is not an interlocutory proceeding.[7]
[6][2008] WASC 294 (“Lashansky”).
[7]At [29].
His Honour did not cite as authority for that proposition any case dealing with whether something was interlocutory for the purposes of allowing hearsay evidence to be led. Instead, he seemed to be relying on Michael v Freehill Hollingdale & Page,[8] a case in which the Full Court of the Supreme Court of Western Australia considered whether the respondent’s solicitors should be ordered to indemnify their client for costs he was ordered to pay to another party. Seaman J, with whom Franklyn J agreed, said that because the application involved the court exercising disciplinary control over officers of the court for misconduct, it was a “grave matter and its outcome has all the hallmarks of finality.”[9] Accordingly, it was held in Michael that the order below was final, not interlocutory, and leave to appeal was not required.
[8](1990) 3 WAR 223.
[9]At 234.
Whatever may be the correct position in Western Australia, as mentioned earlier it has been held in Victoria that the answer to the question whether an application is interlocutory for appeal purposes is not the same as whether it is interlocutory for the purposes of allowing hearsay evidence to be led. Accordingly, were it necessary to characterise the current injunction application as interlocutory or final, I would not follow the decision in Lashansky.
Here, the question of whether leave to cross-examine is required now only arises in the context of r 40.04 of the Rules. That rule provides:
(1) Where an affidavit is filed in any proceeding, the Court may –
(a) order that the deponent be examined before the Court; and
(b) order that the deponent attend for that purpose at such time and place as it directs.
(2) Unless the Court otherwise orders, a party to a proceeding commenced by originating motion on whose behalf an affidavit is filed in the proceeding shall cause the deponent to attend at the trial of the proceeding to be examined if notice that such attendance is required is served on the party by any other party a reasonable time before the commencement of the trial.
(3) Where the deponent in respect of whom an order is made under paragraph (1) or a notice is served under paragraph (2) does not attend for examination the Court may order that the affidavit be not received into evidence.
It can be seen that the rule does not speak in terms of “interlocutory” or “final”. Rather, it draws a distinction between affidavits to be used at the trial of proceedings commenced by originating motion (to which sub-rule (2) applies), and affidavits to be used for all other purposes (to which sub-rule (1) applies, and leave is therefore required).
The hearing of the injunction application will not be the trial of a proceeding commenced by originating motion. Therefore, leave is required to cross-examine any deponent.
Matters relevant to whether leave should be granted
Clayton Utz wishes to cross-examine Mr Dale on his two affidavits. Clayton Utz does not seek to cross-examine any other deponents.
Mr Dale’s primary position is that there should be no cross-examination of deponents. However, if Clayton Utz is given leave to cross-examine him, then Mr Dale would wish to cross-examine Mr Myers. Clayton Utz does not oppose the cross-examination of Mr Myers.
Reasons why Clayton Utz says leave should be granted
In the firm’s outline of argument dated 29 June 2012, Clayton Utz submitted that cross-examination was appropriate for the following reasons:
(a) Because there are important differences in the evidence of Mr Myers and Mr Dale, which cross-examination is likely to help to resolve;
(b) The nature or effect of the application (being one to prevent counsel from acting) justifies cross-examination, where there are such evidentiary differences; and
(c) There are matters relevant to Mr Dale’s credit, which may affect the determination of the application.
As far as credit was concerned, the outline simply said:
8 Especially where there are differences in the evidence of two central witnesses, questions bearing on credit may assist the court in determining what weight to be given to a witnesses’ evidence or which witness is to be preferred.
9 Some matters, such as aspects of Mr Dale’s hostility towards [Clayton Utz] and of conduct bearing upon his standing as a reputable solicitor, are apt to substantially affect an assessment of the reliability of his testimony.
The outline did not identify any of the alleged differences in evidence, or matters of credit, which were said to require testing by cross-examination.
Those matters were elaborated on in an additional outline of submissions, dated 24 August 2012, and in oral submissions before me.
I am told that Clayton Utz wishes to cross-examine Mr Dale in relation to the following matters:
(a) The nature and extent of the contact which Mr Dale says took place with Mr Myers, and Mr Dale’s usual practices when briefing counsel. In particular, the firm wants to explore whether Mr Dale has exaggerated the nature and extent of any contact which he had with Mr Myers, in order to make it look like a barrister and client relationship;
(b) Subsequent contact between Mr Dale and Mr Myers, and whether that was consistent with the existence of a professional relationship;
(c) Health problems which Mr Dale has suffered, which might have affected his memory;
(d) Alleged differences between the O’Donnell and Dale affidavits, concerning Mr Dale’s contact with Mr Myers;
(e) Past disciplinary matters involving Mr Dale, including a reprimand which he is said to have received from the Law Institute of Victoria. Such matters are sought to be relied upon both in relation to character and credibility. As far as character is concerned, these are said to demonstrate that Mr Dale is not a reputable solicitor. As far as credit is concerned, it is said that Mr Dale’s failure to mention past disciplinary matters (in the part of his April affidavit where he set out his professional history) affects his credibility; and
(f) Examples of past untruthfulness by Mr Dale, specifically the following three alleged matters:
(i) That Mr Dale leaked documents to The Age newspaper, but afterwards untruthfully denied doing so;[10]
[10]Whilst a partner of Clayton Utz, Mr Dale had conducted an internal review of the firm’s conduct of the defence by its client, British American Tobacco Australia Services Pty Ltd (“BATAS”), of some tobacco-related proceedings known as the McCabe proceedings. Some of the internal review documents were subsequently leaked to the media. In a later proceeding, referred to before me as the BATAS proceeding, BATAS sought to protect its confidential information and to restrain the further use of the leaked documents. One of the issues in the BATAS proceeding was: who leaked the documents?
(ii) That Mr Dale lied when he told the Clayton Utz partners that counsel in the Ebner matters were prepared to wait for payment of fees; and
(iii) That Mr Dale falsely recorded in the firm’s trust account records that funds had been provided to the firm by Kerry Milte, when in fact they had been provided by Mr Dale.
Reasons why Mr Dale opposes the grant of leave
Mr Dale opposes leave being granted to cross-examine him, on the basis that:
(a) There is no relevant factual dispute which requires elaboration by cross-examination;
(b) To cross-examine him about the nature and extent of his contact with Mr Myers will necessarily involve delving into questions of legal professional privilege and confidentiality; and
(c) In so far as Clayton Utz wishes to cross-examine Mr Dale in relation to the leaking of documents and the BATAS proceeding, he may seek to rely on the privilege against self-incrimination.
In order to consider whether cross-examination should be permitted, it is therefore necessary to consider, in some detail, the evidence relied upon by the parties.
Mr Dale’s affidavit materials
Mr Dale now relies upon the following affidavits in support of the injunction application:
(a) His own affidavits, dated 23 April and 19 June 2012;
(b) The redacted affidavits of Mr O’Donnell, dated 14 February, 9 March and 21 June 2012; and
(c) The affidavit of his brother, Michael Dale, dated 15 June 2012.
Mr Dale’s April affidavit
Although paragraphs 3(b) to (t) inclusive of this affidavit set out Mr Dale’s professional leadership positions and experience, I was informed during the hearing that these paragraphs are no longer relied upon by him.
After briefly describing the history of his relationships with Clayton Utz and Mr Myers prior to 2004, the April affidavit goes on to depose to the following matters.
During 2004, he had various communications with Mr Fagan, the chief executive partner of Clayton Utz, about the Ebner matters. In particular, Mr Dale deposes to a meeting he had with Mr Fagan on 19 August 2004 concerning the Ebner matters, in which he says that Mr Fagan was extremely menacing and angry, and made implied threats about Mr Dale’s partnership.
Shortly after the meeting ended, Mr Dale decided he should seek legal advice from senior counsel in relation to his legal position. He contacted Mr Myers’ secretary, and made an appointment to see Mr Myers at 11.00am on 23 August 2004. He exhibits his contemporaneous diary note, which supports the fact that he made and attended the appointment.
Mr Dale says he has a “very good memory” of the meeting at Mr Myers’ chambers, which lasted for about an hour; these matters were very important to him, and he had never before had to see counsel about a personal legal issue. In particular, he deposes to the following:
16 I do not wish to waive my privilege in respect of the content of my conference with Mr Myers. However, whilst I cannot remember the exact words I spoke, I clearly remember that I gave detailed instructions to Mr Myers in respect of the history of the Ebner matters; my conduct of that matter including the circumstances concerning the incurring of counsel fees and disbursements on behalf of Mr and Mrs Ebner on my authority; [Clayton Utz’s] pro bono policy; Mr Fagan’s assertion that I had acted outside my authority in incurring counsel fees and disbursements on behalf of Mr and Mrs Ebner; my explanation as to why I did not accept that assertion; and Mr Fagan’s demand that I reimburse [Clayton Utz].
17 After I had given my instructions, Mr Myers told me that it looked to him that I was “being set up” and then gave me his opinion as to the validity of the allegation that I had acted outside my authority as a partner in incurring the said counsel fees and disbursement. Mr Myers also gave me legal advice as to the question of whether or not I could lawfully be required to make the reimbursement and whether or not I should in any event accede to the demand made by Mr Fagan that I so reimburse the firm and, if I did so agree, the basis upon which I should so agree. I decline to waive my privilege in the content of that legal advice.
18 I refer to paragraph 3 of the affidavit made in this proceeding by Mr Myers. At no time during my conference with Mr Myers on 23 August 2004 did Mr Myers require or ask me to appoint instructing solicitors so that a brief or back sheet could be provided to him or tell me that he would not continue the conference or provide me with advice unless a brief and back sheet was first provided to him. Neither did he ever tell me that he was seeing me in any capacity other than as a member of counsel. The question of fees were not discussed and Mr Myers never rendered an account to me.
Mr Dale subsequently met with Mr Fagan on 2 September 2004. He informed Mr Fagan that in order to conclude the matter, and without admission of wrongdoing, he would reimburse the firm for the Ebner fees and disbursements. He said those things because of the advice he had received from Mr Myers.
In order to support his evidence of meeting with Mr Myers, Mr Dale exhibits an email which he sent to his brother, Michael Dale, in June 2006. In that email, he refers to having spoken to Mr Myers in 2004 “when I was being forced to pay the Ebner disbursements.”
After briefly dealing with some unrelated contact with Mr Myers between 23 August 2004 and late 2005, Mr Dale deposes as follows:
34 In late 2005 I also had a telephone conversation with Mr Myers concerning my dismissal from Clayton Utz. This was a candid conversation about the alleged basis for my dismissal and I sought advice from Mr Myers about whether or not I had a claim against Clayton Utz. I sought Mr Myers’ advice as to whether or not the [Clayton Utz] board had an obligation to accord me procedural fairness in coming to its decision and whether an action for bad faith could be maintained in respect of the decision. Although short as I had become upset about relating what had happened to me, Mr Myers provided me with his opinion in relation to both matters. I have a very good recollection of that conversation because it gave me great comfort at the time about my legal position. I decline to waive privilege in the content of that legal advice.
Mr Dale’s June 2006 email to his brother also refers to having briefly spoken to Mr Myers “late last year”.
Mr Dale’s June affidavit
This short affidavit responds to Mr Myers’ June affidavit, in which Mr Myers deposes that he was engaged to act for BATAS in the BATAS proceeding, which was brought by that company against various persons, including Mr Dale. Mr Myers’ affidavit says that he was engaged to act for BATAS in October 2006, and that Mr Dale made no objection to his so acting.
Mr Dale’s response is that he was unaware that Mr Myers was retained in the BATAS proceeding until around 23 May 2007, one day before the proceeding was settled against him. He sets out the circumstances in which he first became aware of Mr Myers’ involvement in the BATAS proceeding.
The redacted O’Donnell affidavits
The main function of the redacted affidavits is to exhibit various documents, particularly correspondence between the solicitors.
However, Mr O’Donnell also deposes to some matters within his personal knowledge. For example, he deposes to the fact that even before this proceeding was commenced, Mr Dale had told him that he had obtained advice from Mr Myers about his expulsion from the firm. Mr Dale may seek to rely on this evidence as a prior consistent statement, under s 108(3) of the Evidence Act, if Clayton Utz suggests that Mr Dale’s evidence has been fabricated or re-constructed.
Mr O’Donnell also acted for Mr Dale in the BATAS proceeding, and deposes that neither he nor his firm were aware that Mr Myers was acting against Mr Dale in that proceeding until the day before the proceeding settled against Mr Dale.
Michael Dale’s affidavit
Michael Dale confirms that he received the June 2006 email from his brother, in which Mr Dale mentions having spoken to Mr Myers in 2004 and 2005.
Clayton Utz’s affidavit materials
In opposing the injunction application, Clayton Utz relies upon two affidavits of Mr Myers, dated 2 March 2012 and 4 June 2012.
Clayton Utz has not filed any evidence from Mr Fagan to contradict Mr Dale’s account of their meetings and communications, or the circumstances of the termination of his partnership.
Mr Myers’ March affidavit
In relation to the alleged conference on 23 August 2004, Mr Myers’ evidence is as follows:
3(a) I have no recollection or [sic] any meeting with Mr Dale on or about 23 August 2004;
(b) prior to that date, in his capacity as a partner of Clayton Utz, Mr Dale instructed me on several matters for clients of Clayton Utz;
(c) I recall one discussion with Mr Dale in around 2004 or 2005 in which he volunteered to me a comment about a matter personal to him, being that his wife, a musician, was recording some musical works in Ireland. I do not recall Mr Dale discussing any other personal matter with me at any time. Specifically, I do not recall him ever discussing with me any issues between himself and Clayton Utz, whether relating to Mr and Mrs Ebner or otherwise;
(d) I was not retained by Mr Dale to act for him or advise him personally in conference on or about 23 August 2004 or, I believe, at any other time. I say this because it is my universal practice, if someone seeks my advice as counsel, to insist upon the provision of a brief at least comprising a backsheet. Sometimes I mark backsheets “fee declined”, but my practice, without exception, is not to give legal advice without establishing a professional relationship, and provision of a brief is an essential component of any such relationship;
(e) I record in my fee book all briefs on which I charge a fee. There is no reference in my fee book to any brief in respect of advice to Mr Dale on or about 23 August 2004 and I have not found any reference to any brief to advise Mr Dale at any other time. Further, I believe with a high level of confidence that I did not accept a brief to advise Mr Dale in respect of which I declined a fee.
In so far as Mr Myers states in paragraph 3(d) that he “was not retained” by Mr Dale, I read that as no more than a statement of his personal belief that he was not retained. Whether or not there was a retainer is a legal matter for the court to determine, from the objective facts, and not from the subjective beliefs of the lawyer or the party alleging to have retained the lawyer.[11]
[11]See for example: Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at [227].
In relation to the alleged telephone conversation in late 2005, Mr Myers’ evidence is as follows:
4(a) I have no recollection of any telephone conversation with Mr Dale in late 2005 or any other time concerning his “dismissal” from Clayton Utz or anything of that nature;
(b) my only recollection of a personal discussion with Mr Dale is as set out in paragraph 3(c) above;
(c) Mr Dale did not seek legal advice from me in or around late 2005 and I did not provide it. The basis for me saying this is that there was no brief in relation to any discussion with Mr Dale in or around late 2005 and, as indicated in paragraph 3(d) above, it is my universal practice to insist on the provision of a brief if I provide legal advice in a professional context, even where I decline a fee. There is no reference in my fee book to any brief in respect of advice to Mr Dale in or around late 2005 and I have not found any reference to any brief to advise Mr Dale at any other time.
Mr Myers’ June affidavit
Mr Myers responds to some of the evidence given by Mr Dale about pre and post 2004 dealings between them. Nothing appears to turn on any discrepancies in their evidence about these other unrelated matters.
He also repeats that he has no recollection of any telephone conversation with Mr Dale about his dismissal. Mr Myers says he believes he first heard about Mr Dale’s dismissal around October 2006, when he was engaged to act for BATAS in the BATAS proceeding. This is the affidavit in which he says that Mr Dale did not object to him acting for BATAS.
Legal principles concerning the grant of leave to cross-examine prior to trial
In Comet Products UK Ltd v Hawkex Plastics Ltd,[12] Megaw LJ observed that where there is a bona fide application to cross-examine a deponent on his affidavit in interlocutory proceedings, the application should normally be granted.[13] In fact, cross-examination was not permitted in that case because, although the proceeding was for civil contempt, it had a quasi-criminal nature.
[12][1971] 2 QB 67 at 76 (“Comet”).
[13]At 76.
In Palmer Tube Mills (Aust) Pty Ltd v Semi,[14] Brooking JA (with whom Tadgell and Buchanan JJA agreed) commented that the observation of Megaw LJ in Comet “may go further than the practice in Victoria.”[15]
[14][1998] 4 VR 439.
[15]At 448.
In Scanlon v American Cigarette Company (Overseas) Pty Ltd (No 1),[16] Nicholson J said that the discretion to permit cross-examination on affidavits in an interlocutory proceeding “is normally exercised somewhat sparingly.”[17] Among the reasons given for refusing cross-examination in that case was that the application to cross-examine was not made for the purpose of the interlocutory application itself, but rather to explore the substance of the opposing party’s case in the proceeding.
[16](1987) VR 261 (“Scanlon”).
[17]At 272.
In Yunghanns v Elfic Pty Ltd,[18] Warren J (as she then was) refused to allow cross-examination on an interlocutory application, for similar reasons. In that case, her Honour was considering an application by the plaintiffs for an order allowing them to inspect certain discovered documents, in respect of which the defendants had claimed legal professional privilege. The defendants’ counsel sought to cross-examine Mr Yunghanns, one of the plaintiff’s deponents, in relation to alleged inconsistencies in his evidence, and as to his legal and commercial knowledge, acumen and experience. Warren J refused leave to cross-examine, on the following grounds:
First, in my view, in so far as there were inconsistencies in the statements of Mr Yunghanns as to his position such inconsistencies were appropriately a matter for submission. Secondly, in so far as there was potential for an allegation of recent invention against Mr Yunghanns again such a matter was appropriate for submission. Thirdly, in my view, it is undesirable except in special compelling circumstances for a court to permit a party to have the opportunity at an interlocutory stage to cross-examine an opposing party upon an issue of fact that goes to the core of the proceeding. To do so enables the party seeking to cross-examine to have, in effect, a dress rehearsal of a vital component of evidence to be ventilated at trial. Fourthly, I formed the view that in the exercise of the discretion I would not be assisted by the cross-examination of Mr Yunghanns.[19]
[18](2000) 1 VR 92.
[19]At [18].
Nicholson J’s statement in Scanlon, about the power to cross-examine in an interlocutory application being “normally exercised somewhat sparingly”, was cited with approval by Branson J in Friends of Hinchinbrook Society Inc v Minister for Environment (No 1),[20] by Kenny J in Wu v Avin Operations Pty Ltd (No 3),[21] and by Habersberger J in Talacko v Talacko (No 2).[22]
[20](1996) 69 FCR 1 at 17.
[21][2006] FCA 1321 (“Wu”).
[22](2009) 25 VR 613 (“Talacko”).
In Wu, one of the respondents sought to cross-examine the applicant on her affidavit filed in relation to an application for security for costs. The respondent claimed that the affidavit as to assets was deliberately misleading, and he would suffer serious injustice if he were not permitted to cross-examine; however, he did not identify any particular matter upon which he wished to cross-examine, he merely wanted to have a chance to attack her credit. Kenny J refused to depart from what she described as “the usual practice on interlocutory applications”,[23] namely, that the discretion to permit cross-examination is exercised sparingly.
[23]At [21].
In Talacko, Habersberger J was considering an application for an interlocutory injunction, to restrain the defendant from leaving the jurisdiction prior to the trial. The plaintiffs sought leave to cross-examine the defendant in relation to some specific topics. In opposing the grant of leave, the defendant argued that to permit cross-examination would give the plaintiffs an unfair advantage in the imminent trial by “having a practice run at cross-examining the defendant.”[24] Whilst recognising that the discretion is normally exercised sparingly, his Honour did allow cross-examination on all but two of the proposed topics. He did so because “this was an unusual application and therefore it was difficult to know at that early stage what issues would eventually be seen as relevant to the decision.”[25]
[24]At [13].
[25]At [15].
The two topics in respect of which Habersberger J did not allow cross-examination have some similarities to the present case. The first related to the defendant’s taxation status in Australia. The plaintiffs wanted to establish that the defendant had a potential capital gains tax liability in Australia, which might provide him with a reason not to return to Australia if he were free to depart. His Honour agreed that it would be irrelevant and unfair to cross-examine him on the topic, saying he would be “concerned about the possible implications of allowing cross-examination of the defendant on taxation questions.”[26] Whilst his Honour did not articulate what he meant by that, I infer that he was concerned not to require the defendant to risk incriminating himself, or exposing himself to liability, in relation to taxation matters.
[26]At [17].
The second topic in respect of which cross-examination was not permitted was the defendant’s current financial position and his intentions in relation to defending the claim. Habersberger J refused to allow cross-examination, on the basis that requiring the defendant to answer such questions would give the plaintiffs an unfair advantage in the hearing. Even though it was a relevant matter to know whether the defendant had assets in Victoria, in the absence of evidence from him about the topic, the court would simply be entitled to draw an adverse inference against him.[27]
[27]At [18].
I have also considered the various cases which were provided to me, to see whether any cross-examination practice has developed in applications to restrain lawyers from acting. In fact, most of those cases were decided without any cross-examination of deponents.
It appears that deponents were not cross-examined in Sent, Lashansky,Connell v Pistorino,[28] and Pinnacle Living Pty Ltd v Elusive Image Pty Ltd.[29] However, it is not clear from those decisions whether leave to cross-examine had been sought and refused, or whether the parties were content to proceed without cross-examination.
[28][2009] VSC 289 (Byrne J).
[29][2006] VSC 202 (Whelan J).
Some cross-examination of deponents did occur in Commonwealth Bank of Australia v Kyriackou[30] and Spincode.[31] Once again, it is not clear whether that occurred by consent, or after a contested argument.
[30][2008] VSC 146 (Judd J) (“Kyriackou”).
[31]The fact that cross-examination of at least one witness occurred is apparent from the first instance decision: Spincode Pty Ltd v Look Software Pty Ltd [2001] VSC 287 at [21] (Warren J).
Judges have identified a number of practical problems which may arise in cross-examining witnesses in cases concerning the removal of lawyers.
For example, in Kyriackou, a case in which cross-examination did occur, Judd J noted:
[Two of the applicant’s former solicitors] were cross-examined on behalf of the applicant who sought to maintain his overriding claims for legal professional privilege and the confidentiality of his financial affairs and litigation strategies while at the same time having the witnesses trawl through his files in order to give evidence about their knowledge of and involvement in work done on his behalf in the various matters. This course was a treacherous path for the applicant and one which, from time to time, created very real difficulty for the bank and the court in comprehending the evidence being given. It also goes to exemplify the difficulty confronting some applicants seeking to protect confidential information.[32]
[32]Op cit at [4].
The problem of conducting a meaningful cross-examination, in a way that does not destroy claims to privilege and confidentiality, is one which will arise in a very practical way in this case.[33]
[33]Albeit in a different context than in Kyriackou, where it was the former lawyers, rather than the client, who was being cross-examined.
In Sent, the applicant, Mr Sent, relied only on the hearsay affidavit of his solicitor, Leonard Warren, in support of his application to restrain the defendants from continuing to retain Mr Sher QC in the proceeding. The defendants were critical of the way Mr Sent’s evidence was presented. Nettle J made a number of important observations which are very apposite in this case, and will therefore be reproduced in full:
42 Dealing first with the absence of any sworn evidence from Sent, I accept that the defendants are hampered to a significant extent in having to deal with Sent’s evidence in the form of an affidavit sworn by Mr Warren.
43 Plainly they cannot cross-examine Mr Warren with any effect because he has no knowledge of the truth of his instructions. Thus, they must take Mr Warren’s evidence as it is, and confine themselves to criticisms of what they say are its substantive and textual inadequacies.
44 I also accept that although it has been held that an application such as this one is interlocutory, so that evidence on the basis of information and belief is admissible, the application is final in effect because, if successful, it will preclude the retainer of Mr Sher for the balance of the proceeding and the court should thus be slow to act on the basis of evidence which lacks the sort of rigour that would be demanded at trial.
45 That having been said, however, I think it would be unrealistic to expect the plaintiff’s counsel to expose Sent to cross-examination upon this application in advance of the trial, on matters that may well bear upon the outcome of the trial.
46 No doubt it may be said that such a cross-examination would be limited and likely to be controlled by the court. It may also be that many questions upon the facts on which Mr Sher’s advice was taken would be ruled inadmissible. But it is hard to imagine that cross-examination upon the confidential information disclosed to Mr Sher could be effective if it were not permitted to enter to some extent upon the facts on which the advice was based.
47 In large part, the facts and the confidential information may be one and the same and thus an excursus into the facts of the matter would be probable if indeed not inevitable.
48 The point can perhaps be demonstrated by reference to the defendants’ criticism of the imprecision with which they say Sent has chosen to describe the confidential information which he imparted to Mr Sher.
49 It may readily be supposed that if Sent had exposed himself to cross-examination, he could and would have been permitted to be asked to explain in precise terms what he told Mr Sher during the course of conference. Questions of that kind would be directly relevant to the scope and quality of the confidence claimed in respect of the instructions and they would be admissible.
50 Yet such an exercise would almost certainly deliver to the defendants the very result which the confidentiality of the instructions was designed to protect.
51 In my view that should not be permitted to occur. It makes no sense that Sent should have to expose himself to the prospect of the destruction of the confidence to establish that it once existed, and thus I consider that the method Sent has chosen of giving evidence, in effect through Warren, should not be viewed with disfavour.
52 I also consider it would be a mistake to reason that, because Sent has not gone on oath, the evidence which he has given, in effect through Warren, should be treated as devoid of the sort of credit which an oath would have given it.
The application of those authorities to the present case will be considered shortly.
Legal principles concerning cross-examination as to credit
There are several specific evidentiary principles that also need to be borne in mind, in considering the scope of any possible cross-examination.
Under s 102 of the Evidence Act, evidence that is relevant only to the credibility of a witness is not admissible. But there is an exception in the case of cross-examination “if the evidence could substantially affect the assessment of the credibility of the witness”.[34] In determining whether it could have that effect, the court is required to have regard to whether the evidence tends to prove that the witness knowingly or recklessly made a false representation, when the witness was under an obligation to tell the truth, and the period which has elapsed since the events to which the evidence relates were done or occurred.[35]
[34]Section 103(1).
[35]Section 103(2).
A further evidentiary principle, which may be relevant in this case, is the so-called “collateral credit rule”. This rule applies where a witness, including a party witness, is cross-examined not as to an issue in dispute, but as to credit. In order to avoid a multiplicity of issues, the general rule is that the answers given by the witness must be treated as final, and evidence may not be led to contradict those answers.
Reasons why limited leave to cross-examine will be granted
Relevant considerations
In accordance with the cases discussed earlier, I begin with the general principles that:
(a) The power to cross-examine in a pre-trial application should normally be exercised “somewhat sparingly”; and
(b) The court should be hesitant to allow cross-examination which is a practice run, or a dress rehearsal, of the evidence to be ventilated at trial. That is particularly so where such cross-examination would give an unfair advantage to one side.
However, I also bear in mind that the nature of the injunction application is such that, if successful, it will deprive Clayton Utz of the senior counsel of its choice. Particularly in relation to the third basis on which Mr Myers’ removal is sought (namely, under the court’s inherent jurisdiction to ensure the due administration of justice and to protect the integrity of the judicial process), courts have noted that appropriate weight should be given to the public interest in a litigant not being deprived of the lawyer of their choice without due cause.[36]
[36]See for example: Grimwade v Meagher [1995] 1 VR 446 at 452; Sent at [114]; Kallinicos v Hunt (2005) 64 NSWLR 561.
Just because Mr Myers has no positive recollection of any relevant contact, it does not follow that there is no relevant factual dispute which requires exploring by cross-examination. In circumstances where Mr Myers has no such recollection, it is fair and reasonable to allow Clayton Utz an opportunity to test Mr Dale’s recollection of their contact, subject to some important limits.
Mr Dale has indicated that he does not wish to waive legal professional privilege or confidentiality in relation to the matters which he discussed with Mr Myers. Legal professional privilege and confidentiality are both important, substantive, common law rights, which courts are alert to protect.
As far as confidentiality is concerned, for the reasons articulated by Nettle J in Sent,[37] Mr Dale should not have to expose himself to the prospect of the destruction of the confidence, in order to establish that it once existed. Accordingly, leave will not be granted to cross-examine in relation to the substance of the confidential information, which Mr Dale says he communicated to Mr Myers.
[37]At [49] to [51].
If Clayton Utz wishes to challenge the adequacy of the description of the confidential information (as it has foreshadowed it wishes to do), it can do so as a matter of textual analysis of the relevant paragraphs of Mr Dale’s affidavits.
For legal professional privilege to arise, there must be a relationship of lawyer and client in existence or, at the very least, in contemplation. Whether or not such a relationship existed between Mr Dale and Mr Myers is one of the matters which the court will need to determine at the hearing of the injunction application, having regard to the objective evidence. Mr Dale should not have to expose himself to the prospect of the destruction of any legal professional privilege, in order to establish that a lawyer-client relationship existed. Accordingly, leave will not be granted to cross-examine in relation to the substance of any instructions which Mr Dale says he gave to Mr Myers, or any legal advice which he says that Mr Myers provided to him.
Cross-examination will also not be permitted in relation to Mr Dale’s account of his interactions with Mr Fagan or other Clayton Utz partners, which he says led to him contacting Mr Myers on each occasion. That is for two reasons. First, Clayton Utz has chosen not to file any affidavit by Mr Fagan or any other Clayton Utz partner, taking issue with Mr Dale’s account of those matters; there is, therefore, no relevant factual dispute for the purposes of the injunction application. Secondly, Mr Dale’s various interactions with Mr Fagan and other partners, leading up to the termination of his partnership, are matters which are the subject of this proceeding, and are likely to be the subject of vigorous cross-examination at trial. In the circumstances, it would be quite unfair to allow Clayton Utz to use the injunction application as a cross-examination practice run or dress rehearsal, while not exposing any of its witnesses to similar pre-trial cross-examination.
For similar reasons, I will not permit cross-examination in relation to the following two matters, which Clayton Utz says affect Mr Dale’s credit:
(a) The allegation that Mr Dale falsely recorded in the firm’s trust account records that certain funds had been provided to the firm by Mr Milte, when in fact they had been provided by Mr Dale;[38] and
(b) The allegation that Mr Dale lied when he told the Clayton Utz partners that counsel in the Ebner matters were prepared to wait for payment of fees.[39]
[38]That allegation is specifically pleaded in paragraph [85] of the defence.
[39]Although that allegation is not specifically pleaded in the defence, Mr Dale’s communications with his partners concerning the Ebner matters (including in relation to the payment of counsel fees) are pleaded in some detail at paragraphs [91] to [100] of the defence. Cross-examination on this alleged lie could assist Clayton Utz in relation to proving other parts of its case, or may lead to Clayton Utz amending its pleading against Mr Dale.
Both of those matters are likely to be the subject of contested evidence at trial. It would be unfair to allow Clayton Utz the opportunity to use the injunction application as a practice run at cross-examining Mr Dale, in circumstances where none of its witnesses are exposed to equivalent pre-trial cross-examination, in relation to those same matters.
As to the proposed cross-examination concerning past disciplinary matters involving Mr Dale, I make the following observations. Mr Dale no longer seeks to rely on the paragraphs in his April affidavit which set out the details of his professional history; that is to say, he is not seeking to rely on his “good character” in support of the injunction application. In the circumstances, I would not allow cross-examination as to past disciplinary matters, if its only purpose was to establish “bad character”, namely, that Mr Dale is not a reputable solicitor. In any event, I doubt whether Mr Dale’s “character” (as opposed to his credibility) is really a relevant issue on the injunction application.
I am not aware of the specific details of those disciplinary matters. I also do not know whether they will be admitted or disputed by Mr Dale. If Mr Dale disputes them, the collateral credit rule may prevent Clayton Utz from exploring the matters further.[40] But, in so far as the disciplinary matters themselves, or Mr Dale’s failure to mention them in his affidavit, may be relevant to his credibility, I would consider allowing cross-examination in relation to them, once I know more about them, and subject to hearing further argument about whether the requirements of s 103 of the Evidence Act are satisfied.
[40]Subject to any relevant exception to that rule that may be raised.
The final credit matter upon which Clayton Utz wants to cross-examine relates to the allegation that Mr Dale leaked documents to The Age newspaper, but afterwards untruthfully denied doing so. Mr Dale says that he should not be cross-examined in relation to that matter, as he is likely to claim the privilege against self-incrimination. The fact that he may wish to object to answering specific questions on the ground of privilege against self-incrimination is not a reason for prohibiting any cross-examination at all on the topic. Rather, what should occur is this. If, during the course of cross-examination, Mr Dale wishes to claim the privilege in relation to a specific question or questions, he should object to answering on that basis. I would then hear evidence and argument, in order to determine whether there were reasonable grounds for the objection and, if so, whether Mr Dale should be excused from answering the question, or required to answer (in which case a certificate would be granted under s 128 of the Evidence Act).
If such a certificate were granted, it would preclude the use of that evidence in other proceedings, but would not preclude the use of the evidence in the injunction application.
Finally, before I would admit such evidence concerning this alleged lie, Clayton Utz would also need to persuade me that the requirements of s 103 of the Evidence Act have been satisfied in relation to that evidence.
Permissible cross-examination
Clayton Utz will be permitted to cross-examine Mr Dale in relation to the following matters:
(a) Mr Dale’s usual practices when briefing counsel, and why he did not adopt them in relation to Mr Myers (assuming that to be the case);
(b) The nature and extent of all of Mr Dale’s contact with Mr Myers, including in August 2004, late 2005, and subsequently (provided that such cross-examination does not enquire into privileged or confidential matters);
(c) Health problems which Mr Dale has suffered, which might have affected his memory; and
(d) Alleged differences between the O’Donnell and Dale affidavits, concerning Mr Dale’s contact with Mr Myers.
Whether cross-examination will be permitted in relation to past disciplinary matters will be determined after I have heard further about them.
Cross-examination in relation to the alleged lie concerning the leaked information will be permitted in the manner discussed earlier.
When I raised with counsel the possibility of limiting cross-examination in some way, both sides opposed it, for obvious reasons; each sought what might be described as an “all or nothing” outcome. In particular, Clayton Utz complained that to limit the matters about which it could cross-examine would cause it forensic disadvantage, and unduly hamper the cross-examiner. No doubt cross-examination of Mr Dale would be easier if permitted without any restriction, but convenience is not the overriding consideration here. There are more important principles, including considerations of privilege and confidentiality, and fairness between the parties, which need to be taken into account.
When asked to illustrate the type of cross-examination which Clayton Utz might wish to undertake, Mr Macaw QC was able to demonstrate, very effectively, how meaningful cross-examination might take place without infringing legal professional privilege or confidentiality.
Clayton Utz will be granted leave to cross-examine Mr Dale, limited in accordance with these reasons for decision.
Mr Dale will be granted leave to cross-examine Mr Myers, without limitation. No limitation was sought by Clayton Utz, and there is no equivalent reason to limit his cross-examination.
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