Ezra Abrahams Pty Ltd v Milburn

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0042

EZRA ABRAHAMS PTY LTD	Applicant
v
VANESSA MILBURN	Respondent

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JUDGES:	KYROU, KAYE and McLEISH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	10 November 2017
DATE OF JUDGMENT:	1 December 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 355
JUDGMENT APPEALED FROM:	Ezra Abrahams Pty Ltd v Milburn [2017] VCC 123 (Judge Millane)

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PRACTICE AND PROCEDURE – County Court judge refused application for leave to re-open applicant’s case after respondent commenced no case submission – Proposed re-opening of case limited to tendering four documents that were well known to parties – Non-tender due to error by applicant’s counsel – Applicable principles – Whether judge’s discretion miscarried on House v King (1936) 55 CLR 499 grounds – Appeal allowed.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr D V Aghion with Mr N O J Cozens	KCL Law
For the Respondent	Mr I W Upjohn QC with Ms S M Kelly	Mann Lawyers

KYROU JA
KAYE JA
McLEISH JA:

Introduction and summary

This is an application for leave to appeal against a decision of a judge of the County Court refusing to grant leave to the applicant to re-open its case and an order striking out its proceeding on the basis that the respondent did not have a case to answer.[1]
[1]Ezra Abrahams Pty Ltd v Milburn [2017] VCC 123 (‘Reasons’).

The respondent is a former employee of the applicant, which operates a video conferencing business. In an earlier proceeding in the Supreme Court, the applicant alleged that, while the respondent was employed by it, she gained unauthorised access to its confidential information by accessing and downloading on to a USB device certain computer files relating to a competitor, Whygo Video Conferencing Pty Ltd (‘Whygo’). That proceeding was settled. The settlement agreement included the following written undertaking by the respondent: ‘neither I, my servants and agents or howsoever, shall use, disclose or disseminate the Confidential Information or any part of it’ (‘Undertaking’).

In the County Court proceeding, the applicant alleged that the respondent breached the settlement agreement by disseminating the confidential information to Whygo through her then counsel, Mr Jonathan Korman. The applicant also alleged that, as a result of the respondent’s breach, it suffered loss, namely, legal costs in defending a proceeding instituted against it by Whygo.

At the hearing of the County Court proceeding, after trial counsel for the applicant (who was not counsel for the applicant on the application for leave to appeal) closed the applicant’s case, senior trial counsel for the respondent (who also appeared for her on the application for leave to appeal) commenced making a no case submission. Prior to the completion of that submission, but after senior trial counsel for the respondent had identified evidentiary weaknesses in the applicant’s case, trial counsel for the applicant applied for leave to re-open that case. She sought to do so for the limited purpose of tendering four documents which were well known to both parties and which she said she had not tendered due to error on her part. The respondent resisted the application on the basis that she would suffer prejudice.

The judge refused to grant leave to the applicant to re-open its case (‘refusal to re-open decision’). She held that the applicant had failed to tender two of the four documents because of a strategic choice made by trial counsel for the applicant and that the re-opening of the applicant’s case to enable it to tender the four documents would cause incurable prejudice to the respondent. After hearing the balance of the respondent’s no case submission — based on the evidence as it stood when the applicant closed its case — the judge decided to accept that submission (‘no case decision’). The judge ultimately made an order striking out the proceeding and requiring the applicant to pay the respondent’s costs (‘final order’).[2]
[2]The final order is set out at [70] below.

The applicant seeks leave to appeal against the refusal to re-open decision on three House v The King[3] grounds, namely that the judge mistook the facts, acted on a wrong principle and relied on irrelevant matters. The applicant contends that these errors vitiated the refusal to re-open decision, the no case decision and the final order.
[3](1936) 55 CLR 499 (‘House’).

For the reasons that follow, the application for leave to appeal will be granted and the appeal will be allowed. The final order will be set aside and the proceeding will be remitted to the County Court for rehearing de novo by another judge.

Facts and procedural history

Many of the facts relevant to the County Court proceeding were the subject of agreement between the parties. The agreed facts were set out in a number of documents, including an agreed chronology (‘AC’) and admissions in the respondent’s defence. The agreed facts are reflected in the agreed summary which the parties filed with this Court. The statement of facts which follows relies heavily on those documents and, where relevant, identifies the item number in the AC or the paragraph number in the pleadings.

Prior to May 2010, Mr Abrahams, the sole director and shareholder of the applicant, wrote a computer code which the applicant used to download data from Whygo’s website in a convenient readable form.

On 19 and 21 May 2010, while she was employed by the applicant, the respondent accessed and downloaded computer files at the applicant’s office (AC item 2). On 25 May 2010, she gave oral notice of termination of her employment (AC item 3). On 21 September 2010, Mr Abrahams was alerted to a late night access to his office on 21 and 22 May 2010 (AC item 5).

On 23 February 2011, the applicant commenced the Supreme Court proceeding against the respondent. In that proceeding the applicant alleged that, shortly before resigning her employment, the respondent had accessed and downloaded computer files containing confidential information belonging to the applicant. The applicant alleged that the respondent did so without authority and in breach of retainer or alternatively a duty of confidence. The ‘confidential information’ was defined in the statement of claim to include the applicant’s customer data, supplier data, job costings and history, Visual Basic Code and operational software.

The respondent was represented in the Supreme Court proceeding by her then solicitor, John Alderuccio, and her then counsel, Mr Korman.

On 18 April 2011, the applicant served an offer of compromise in the Supreme Court proceeding, which was expressed to be open for acceptance until 9 May 2011 (‘offer of compromise’). The offer of compromise required the respondent, within 14 days of acceptance, to:

(a)deliver to the applicant all external devices upon which the confidential information had been stored by her, her servants or agents;
(b)delete all copies of the confidential information in her possession, custody and control and to serve an affidavit ‘deposing [that] all copies of the computer files in her possession, custody and control had been deleted’;
(c)deliver to the applicant all printed copies of the confidential information and serve an affidavit deposing that all printed copies of the confidential information in her possession, custody and control had been delivered to the applicant;
(d)serve an affidavit deposing as to whether she had disclosed or disseminated the confidential information to any person other than the applicant, and if so, the identity of that person and the date, time and circumstances of the disclosure; and
(e)give the Undertaking.

The offer of compromise adopted the definition of ‘confidential information’ in the applicant’s statement of claim in the Supreme Court proceeding.

On 4 May 2011, Mr Korman wrote to the respondent by way of letter attached to an email ‘about a course of action that would permit her to resolve the [Supreme Court] proceeding and to provide Whygo with access to data from the computer files relating to Whygo’ (AC item 9). Mr Korman’s letter (‘Korman letter’) is the first of the four documents that were the subject of the application to re-open the applicant’s case.

The Korman letter stated that, based on his discussions with the respondent, Mr Korman understood that she sought two ‘outcomes’, namely, ‘avoidance of court proceedings’ and ‘bringing [Mr] Abrahams’ activities to the notice of Whygo and/or the police’. The Korman letter then set out a recommended strategy which would allow the respondent to ‘achieve both of those outcomes’. The strategy involved the applicant’s legal advisers informing Whygo of the files the respondent had downloaded from the applicant’s computer before acceptance by the respondent of the offer of compromise, so that Whygo would be able to sue the applicant prior to the applicant being in a position to destroy the downloaded files.

On 6 May 2011, Mr Korman wrote to two directors of Whygo, Mr Porter and Mr Matthews, enclosing a copy of the pleadings in the Supreme Court proceeding (AC item 11).

At 7:00 am on 9 May 2011 the respondent and Mr Korman met Mr Porter in Brisbane, with Mr Matthews joining the meeting by Skype (AC item 13).

At 3:00 pm on 9 May 2011, the respondent accepted the offer of compromise (AC item 14). This acceptance gave rise to a settlement agreement on the terms set out in the offer of compromise (‘settlement agreement’).

As the events which occurred between 19 May 2011 and 7 June 2011 — and the legal consequences of those events — are very significant to the issues in the County Court proceeding, we set out below what was said about them in the AC and the pleadings.

Relevant items in the AC
1519 May 2011, 10:00 am ‘[the respondent] accesses the … computer files [she had downloaded from the applicant’s computer system] and extracts data relating to Whygo on to a USB and delivers up that USB to Korman’.
1619 May 2011, 4:00 pm ‘[the respondent] signs affidavit (First Milburn Affidavit) and executes undertaking’.
1719 May 2011, 4:00 pm ‘Delivery of USBs, printed documents, First Milburn Affidavit and undertaking to [applicant’s] lawyers in purported compliance with terms of settlement’.
19[7] June 2011,[4] ‘Whygo issues writ & statement of claim against [the applicant]’.
[4]It was common ground that AC item 19 erroneously referred to 10 June 2011 instead of 7 June 2011.
Relevant paragraphs of the statement of claim
10‘In the period between 19 May 2011 and 7 June 2011, and despite having given the undertaking to [the applicant] ... [the respondent]:
10.1gave a copy of the confidential information to her then counsel [Mr Korman];
10.2asserted to Mr Korman that, by giving the confidential information to him, the confidential information “was no longer her property” and that she “no longer [had] possession, custody or control over it”;
10.3instructed Mr Korman to give a copy of the confidential information to [Whygo]; and
10.4by her counsel Mr Korman gave a copy of the confidential information to Whygo.

Particulars
As to 10.1–3, the [applicant] relies upon an undated letter from [the respondent] to Mr Korman, and which contains the information, assertion and instruction set out above. A copy of the letter was exhibited as VRM–2 to an affidavit sworn by [the respondent] on 22 June 2011 and filed in the [Supreme Court] proceeding (second Milburn affidavit). …
The period of time in which the letter was sent is to be inferred from the admissions set out in paragraph 8 of the second Milburn affidavit.
As to 10.4, the [applicant] relies upon the admissions in paragraph 10 of the second Milburn affidavit.’
11‘The conduct of [the respondent] in giving the confidential information to Whygo in the manner set out above:
11.1constituted use, disclosure or dissemination of the confidential information within the meaning of the [settlement] agreement;
11.2contravened the undertaking; and
11.3was in breach of the [settlement] agreement.’^[[5]]
[5]In addition to pleading that the respondent had breached the settlement agreement and the Undertaking, the applicant alleged that she had breached a duty of confidence to the applicant. However, that duty was expressed to be confined to the obligations set out in the settlement agreement and the Undertaking.

13‘On 7 June 2011, Whygo commenced a proceeding in the Supreme Court … against [the applicant] (Whygo proceeding).’
14‘The statement of claim in the Whygo proceeding:
14.1alleged, inter alia, that [the applicant] had breached a duty of confidence owed to Whygo; and
14.2relied upon the confidential information in order to found that claim.’

16‘The conduct of [the respondent] (by her then counsel Mr Korman) in disclosing or disseminating the confidential information to Whygo was a cause of Whygo commencing the Whygo proceeding against [the applicant]’. …
17‘By reason of [the respondent’s] breach of the [settlement] agreement, [the applicant] has suffered loss and damage.
Particulars of loss and damage
Legal costs incurred in defending the Whygo proceeding, in the sum of $90,300 excluding GST.

Loss of use of money.’
Relevant paragraphs of the defence
10‘As to paragraph 10 [of the statement of claim]:
(a)[The respondent] admits that after 6 May 2011 and prior to 19 May 2011 she gave to her Counsel, [Mr Korman], certain documents and computer data, which was information not confidential to the [applicant], but rather information confidential to Whygo, which [the applicant] had wrongfully and unlawfully obtained from Whygo and that also after 6 May 2011 and prior to 19 May 2011 she asserted to Mr Korman … that the said information was now (ie as at the time of delivery) his property and that she no longer [had] any possession, custody or control over it, nor would she have any claims against [him] in respect of his use of such data; …
(b)[The respondent] admits that she authorised Mr Korman … to make the said information available to Whygo;
(c)Otherwise [the respondent] denies each and every allegation in paragraph 10.’

11‘[The respondent] denies each and every allegation in paragraph 11 [of the statement of claim] and says further that:
(a)The information supplied to Whygo was not confidential to the [applicant];
(b)The terms of the [settlement] agreement did not prohibit her from doing the acts complained of in paragraphs 10.1 and 10.2 of the Statement of Claim, as partially admitted by paragraph 10(a) and (b) above;
(c)Alternatively, the terms of the [settlement] agreement prohibiting her from disclosing or disseminating the confidential information were void against public policy …’.

13 ‘She admits paragraph 13 [of the statement of claim].’ …
14‘As to paragraph 14 [of the statement of claim]:
(a)[The respondent] admits that the Statement of Claim in the Whygo proceeding contained allegations generally to the effect made in Clause 14.1 and relied upon the confidential information as a foundation for the claims, which were made in breach of confidence, unlawful interference with a trade or business and conversion;
(b)[The respondent] refers to the whole of the Statement of Claim in the Whygo proceeding for their full text and the foundation of the claims made in it.’

16‘[The respondent] does not admit paragraph 16 [of the statement of claim] and says further that Whygo’s decision to sue the [applicant] amounted to a novus actus interveniens.’
17‘[The respondent] denies each and every allegation in paragraph 17 [of the statement of claim] …’.

The statement of claim in the County Court proceeding adopted the definition of ‘confidential information’ in the statement of claim in the Supreme Court proceeding.

The respondent’s affidavit of 19 May 2011 (‘First Milburn Affidavit’) dealt with the requirements of the settlement agreement. In para 6(j), the respondent stated that, on 6 May 2011, Mr Korman had informed Mr Porter and Mr Matthews of Whygo of the existence of the files she had downloaded from the applicant’s computer, but he did not provide any of the downloaded files to them.

As stated in item 19 of the AC,[6] on 7 June 2011, Whygo filed a writ — with an endorsed statement of claim prepared by Mr Korman — against the applicant (‘Whygo writ’).[7] This is the second of the four documents that were the subject of the application to re-open the applicant’s case.
[6]See [20] above.
[7]The Whygo writ also named Mr Abrahams as a defendant. It is not necessary to refer to the allegations against him.

The statement of claim endorsed on the Whygo writ alleged that from approximately January 2009, without Whygo’s authority, the applicant downloaded confidential information from Whygo’s computer and retained and used it for the benefit of the applicant’s business operations. The particulars to para 8 of the statement of claim provided details of how the downloading had taken place — including through the ‘use of an automated software program written by [the applicant] and/or [Mr Abrahams]’ — and what information was downloaded. Paragraph 17 alleged that the applicant’s unauthorised use of Whygo’s confidential information caused it loss. The statement of claim also relied on other causes of action and claimed damages — including aggravated and exemplary damages — against the applicant.

As stated in item 20 of the AC and the particulars to para 10 of the statement of claim,[8] on 22 June 2011, the respondent swore a further affidavit that was filed in the Supreme Court proceeding (‘Second Milburn Affidavit’). This is the third of the four documents that were the subject of the application to re-open the applicant’s case. Although the respondent’s defence did not admit that she made the Second Milburn Affidavit, the making of that affidavit was an agreed fact.[9]
[8]See [20] above.
[9]Reasons [8].

In the Second Milburn Affidavit, the respondent set out the steps she had taken to comply with the settlement agreement. After referring to the First Milburn Affidavit, the Second Milburn Affidavit stated the following:

7[O]n 6^th May 2011, Mr Porter and Mr Matthews [of Whygo] told Mr Korman and myself that Whygo was planning to take legal action against the [applicant] and sought to retain Mr Korman as their counsel. Mr Korman consented subject to my agreement, which I gave.
8Some time prior to swearing the [First Milburn] Affidavit and after Mr Korman had been retained by Whygo as counsel, I divested myself of any possession, custody or control of the information in Mr Korman’s possession and some time prior to swearing the [First Milburn Affidavit] and after Mr Korman had been retained by Whygo as counsel I signed a confirmatory letter to this effect. The contents of that letter are true and correct. Now produced and shown to me and marked ‘VRM–2’ is a true copy of the said letter.
9At the time of swearing the [First Milburn] Affidavit I was aware that Mr Korman had not yet made available any part of the Whygo data to Whygo. There was nothing further I could depose to at that time in relation to the circumstances of my disclosure of the data to Mr Korman. There had been no disclosure of data to Whygo.
10I have been informed that some time subsequent to my swearing the [First Milburn] Affidavit Mr Korman made available the confidential information in his possession to Whygo.

Exhibited to the Second Milburn Affidavit were copies of the First Milburn Affidavit, the Undertaking and the undated letter from the respondent to Mr Korman which is referred to in para 8 of the Second Milburn Affidavit. That letter was in the following terms:

Please find herewith documents and computer data which comprise Whygo’s own information and a computer program written by Mr Abrahams to assist him in extracting information from Whygo’s computers.
This information is now your property, and I no longer have any possession, custody or control over it nor will I have any claims against [you] in respect of your use of that data.
Just to be clear, I am authorising you to make this information available to Whygo and to allow them to assess and further investigate with their programmers if the extraction of data is still continuing.

On 15 August 2011, the applicant discontinued the Supreme Court proceeding (AC item 23).

On 21 September 2011, the respondent wrote to her then solicitor, Mr Alderuccio (‘Milburn email’). This is the fourth of the four documents that were the subject of the application to re-open the applicant’s case.

The Milburn email comprised comments by the respondent, Mr Korman’s responses to those comments and the respondent’s replies to those responses. The following extracts are particularly relevant:

1)On May 7^th, Saturday (day after contacting Whygo for a witness statement) Jonathan [Korman] wrote to me advising me, he will now be acting for [W]hygo as their barrister against Abrahams. He did NOT ask my permission …
RESPONSE: Incorrect. I wrote to say that Whygo were keen to retain me … I was not retained by them at that stage. … [A] plan was discussed with Danny [Lanzer] and Vanessa {Milburn] which had as its key element the fact that I was representing both parties. Vanessa and Danny, by collaborating in preparing this plan, [necessarily] agreed with the proposition that I would represent both parties.
In fact, they were both very excited and keen to proceed with the situation whereby I would be orchestrating both the Whygo suit and the Milburn defence. …
Vanessa response: For all [intents and] purposes Jonathan became their solicitor on that Saturday. The entire meeting on Monday in Sydney was all about how [W]hygo will sue Ezra Abrahams. …

…
4)We decided on an escrow which a friend of mine suggested. [Mr David] Grace [QC] and Jonathan [Korman] decided it was too complicated and no good so we went with the simple fact that Jonathan would hand the info to Whygo since he is their barrister and he has the entire [W]hygo folder and access to the [USB] from [John Alderuccio]. [T]he whole time he just wanted one main thing that the info is given by the 14 days when affidavit is due. Jonathan did not give it. He had in his possession from the time he wrote my defence all the printed information (which was the same as everything on the [USB] stick). He is later claiming he did not have the information until 19^th May — this is not true. He had access through John [Alderuccio] to the USB stick and in his possession he had ALL the printed information the entire time. He could have couriered the file or copied it. It did not have to go electronically.
RESPONSE: Quite a distortion of the truth. I had invested considerable energies setting up the escrow arrangement, including finding a willing third party solicitor and drawing up a deed. At the last minute Danny [Lanzer] and Vanessa [Milburn] vetoed the idea. I was most upset. Vanessa and Danny then decided on a new strategy which is reflected in my email of 18 May. That email sets out the timetable to be followed. It reflects Danny and Vanessa’s new plan. Vanessa was to visit my chambers in the morning and give me the data, which she had carefully prepared in order not to give data that she felt should not be given to Whygo. I was then free to pass on the data to Whygo. Vanessa had given very strict and explicit instructions NOT to hand over the USB stick and all information with John to Whygo because it contained data … which she was very clear Whygo must not receive. The arrangement was that I would pass over only the data that Vanessa was to give to me. That arrangement was followed to the letter.
Vanessa response: Yes [Mr Grace] did not like the escrow. But Jonathan could have followed the new plan … The pages of Abrahams[’] data base could easily have been removed from folder.
5)The latter actions set off the 3 court appearances and new affidavits. We questioned him afterwards and he seemed not to realize the importance that [W]hygo got the information before the affidavit. We in fact knew from [W]hygo directly that they were not allowed to take the [USB] and it remained in their solicitor’s office for some time. There was some conflict of interest going on. He told us ‘how could I have given the information I only got it on the last day when Vanessa came in (11 am).’ Well it should have gone off with a courier!!!
RESPONSE: The timing of Whygo getting the data had absolutely no relationship to the interlocutory actions. The driving force behind the interlocutory actions was Abrahams’ refusal to file a notice of discontinuance, and that was obviously motivated by his own interests in keeping the matter alive and establishing some kind of liability on Vanessa’s behalf for his costs.
Vanessa: not answered concern. Why not give it on that date and why later claim did give it.

...
9)The Judge raised the conflict issue and the moment we got a new Barrister Abrahams dropped the case. …
RESPONSE:I can’t comment about the new barrister and what happened after I was sacked. …

…
11)Amazingly last week Jonathan [Korman] wrote a NEW story that in fact he ‘gave it to [W]hygo’ after signing of the affidavit on day 14. Now if he would have just said that initially then … it would have saved enormous heart ache and costs!! So if he did give it in the 14 days — it would have been a much easier answer than trying to explain whose agent he was when it was given. … I have no idea why he never said that when we were planning all the answers for the second case. We could have simply written ‘the information was given to Whygo on that date.’
RESPONSE: This is not a new story. In fact the story about me NOT giving the data to Whygo is the new story which developed in [Danny Lanzer’s] mind during the period I was overseas. The first I heard of the story that I had NOT given the data promptly to Whygo was upon my return, and I immediately told Danny that he was completely mistaken and that I had passed on the data the same day that I got it, and that it was absurd to suggest that I could have done so quicker. …

The Whygo proceeding was settled on 25 June 2012 (AC item 25).

County Court proceeding

The applicant commenced the County Court proceeding on 8 July 2014.

The Court Book prepared by the applicant included the Korman letter and the Milburn email but did not include the Whygo writ or the Second Milburn Affidavit. Rule 34A.29 of the County Court Civil Procedure Rules2008 (‘Rules’) provides that a party who was required to include a copy of a document in a Court Book but fails to do so cannot tender that document in evidence without the leave of the County Court or by consent.

The trial commenced on 24 January 2017.

The key issues at trial were:

(a)whether the information provided by the respondent to Whygo, through Mr Korman, constituted ‘confidential information’ (as defined) of the applicant;
(b)whether the information was provided to Whygo between 4:00 pm on 19 May 2011 (when the respondent gave the Undertaking) and 7 June 2011 (when the Whygo writ was filed), in breach of the Undertaking;
(c)whether the provision of the information to Whygo was ‘a cause’ of Whygo filing the Whygo writ; and
(d)whether any breach of the Undertaking by the respondent caused any loss to the applicant and, if so, the quantum of the loss.

Trial counsel for the applicant called one witness, Mr Abrahams. Documents comprising 17 exhibits were tendered during his evidence in chief and re-examination. They included Exhibit P17, which was a redacted document containing the computer code authored by Mr Abrahams.[10] During the cross-examination of Mr Abrahams, documents comprising 13 exhibits were tendered by senior trial counsel for the respondent. They included Exhibit D7, which comprised three pages of screenshots of the Whygo database.
[10]See [9] above.

Trial counsel for the applicant closed the applicant’s case at 3:10 pm on 25 January 2017, following which senior trial counsel for the respondent gave notice that he was considering a submission of no case to answer, and sought a short adjournment. On resumption of the hearing at 3:48 pm, senior trial counsel for the respondent provided a written submission to the judge and trial counsel for the applicant, and embarked upon a no case submission.

The written submission of senior trial counsel for the respondent contended that there was no evidence of the following matters which the applicant had to prove in order to succeed:

(a)that the respondent gave Mr Korman information after signing the Undertaking;
(b)that the information the respondent gave to Mr Korman was confidential information within the meaning of the settlement agreement;
(c)that Mr Korman, acting as the respondent’s agent, gave to Whygo some or all of the information given to him by the respondent;
(d)that the information given by Mr Korman was confidential information within the meaning of the settlement agreement; and
(e)that the act by Mr Korman of giving the confidential information to Whygo caused Whygo to file the Whygo writ.

The hearing of the no case submission, and the question of whether the respondent should be put to her election as to whether to call any evidence, were adjourned to 27 January 2017. (The 26^th was the Australia Day public holiday.)

On 26 January 2017, the respondent served a letter containing a Calderbank offer. It stated that the Whygo writ had also not been tendered. The applicant gave notice to the respondent that it would apply to re-open its case.

On resumption of the hearing on 27 January 2017, trial counsel for the applicant applied to re-open the applicant’s case to tender the Korman letter, the Whygo writ, the Second Milburn Affidavit and the Milburn email. We will refer to these documents as ‘the four omitted documents’.

In her submissions in support of the application for leave to re-open the applicant’s case, trial counsel for the applicant, with commendable candour, stated the following:

(a)It had always been her intention to include the Whygo writ and the Second Milburn Affidavit in the Court Book, and to tender them as part of the applicant’s case. She had forgotten to include them in the Court Book as she was focusing on more controversial correspondence when looking through the various documents. When she led the evidence, she erroneously assumed that she had led all of the relevant documents. This was a fundamental error made by her alone, and the applicant ought not be penalised.
(b)The Korman letter and the Milburn email contained evidence of admissions by the respondent. She had intended to tender those documents through the respondent. She did not turn her mind to tendering the documents other than via the simple mechanism of putting them to the respondent in cross-examination. She had not previously been involved in a civil proceeding where the defendant did not go into evidence. Thus, due to want of foresight, rather than a tactical decision, she had failed to tender the documents prior to closing the applicant’s case.
(c)the interests of justice would be best served by granting leave to re-open and tender the four omitted documents, because:

(i) the applicant ought not be disadvantaged by errors of counsel;

(ii) the respondent was not taken by surprise or prejudiced;

(iii) the Whygo writ and the Second Milburn Affidavit were referred to in the applicant’s pleadings, were discovered and were also referred to in the AC;
(iv)the Korman letter and the Milburn email were discovered by the respondent and were admissible;
(v)the application to re-open was made at an early stage, before the respondent had called any evidence and before the making of submissions in response to the no case submission;

(vi) Mr Abrahams could be recalled for additional cross-examination;
(vii)the stage at which the application to re-open was made did not affect the finality of the litigation;

(viii) any delay caused by re-opening was minimal;
(ix)the scope of the leave sought was confined and directly connected to the correction of an error by counsel;
(x)the documents to be tendered did not alter the case put by the applicant and related directly to issues pleaded and mentioned in the applicant’s opening; and
(xi)granting leave to tender the four omitted documents would facilitate the resolution of the real issues in dispute, in accordance with the overarching purpose in s 7(1) of the Civil Procedure Act 2010 (‘CPA’).

Senior trial counsel for the respondent did not challenge the explanation given by trial counsel for the applicant as to why she did not tender the Whygo writ and the Second Milburn Affidavit and as to why she deferred the tender of the Korman letter and the Milburn email. However, he submitted that the application for leave to re-open the applicant’s case should be refused for the following reasons:

(a)The interests of justice required the Court to balance the adverse consequences for the applicant arising from the errors of counsel in not tendering the four omitted documents, against the prejudice to the respondent arising from her conduct of her defence on the basis of the non-tender of the four omitted documents. Admission of the four omitted documents would be so unfair to the respondent that the interests of justice favoured refusal of leave to re-open the applicant’s case.
(b)The failure to tender the Whygo writ and the Second Milburn Affidavit established not one but a series of oversights and went beyond ‘mere’ inadvertence. Rather, the conduct of the applicant’s case demonstrated a persistent failure by counsel, before and during the trial, to identify them as documents that ought to be tendered.
(c)The reasons given by trial counsel for the applicant for not tendering the Korman letter and the Milburn email before closing the applicant’s case reflected a deliberate forensic decision about how and when she would seek to admit these documents.
(d)Were the applicant to obtain leave to tender the Korman letter and the Milburn email, the respondent would be irreversibly deprived of a tactical advantage gained as a result of a deliberate choice by trial counsel for the applicant, not an inadvertent error. That tactical advantage was the making of a no case submission without those documents forming part of the applicant’s case.
(e)Until notification of the no case submission and receipt of the respondent’s written submissions, the applicant appeared not to have been alive to evidentiary deficiencies it sought to correct through the tender of the four omitted documents.
(f)The overriding consideration was the interests of justice and the touchstone in this case was prejudice.
(g)Granting leave would secure a tactical advantage to the applicant and would result in prejudice to the respondent that could not be cured by orders for costs, adjournment or retrial.

(h) That prejudice was:
(i)the respondent had, by her written no case submission, oral submissions and Calderbank letter, given the applicant the benefit of a detailed analysis or ‘roadmap’ of the weaknesses in its evidentiary case which it sought to cure by re-opening its case;
(ii)the making of forensic decisions about the cross-examination of Mr Abrahams — including the decision not to cross-examine about the Whygo writ to avoid it being the subject of re-examination — and a decision to tender exhibit D7, on the basis that the four omitted documents would not form part of the applicant’s case;
(iii)the making of forensic decisions about whether to object to evidence being adduced from Mr Abrahams, including non-objection to the tender of Exhibit P17 in redacted form; and
(iv)the applicant could use the ‘roadmap’ to its advantage in conducting the litigation generally, including by cross-examining the respondent on issues covered in the ‘roadmap’ which may otherwise not have been subject to cross-examination.

Trial counsel for the applicant submitted that the Korman letter and the Milburn email were admissible under s 81 of the Evidence Act 2008 as evidence of admissions by the respondent. Senior trial counsel for the respondent made no submission as to the admissibility of the four omitted documents. The judge made an assumption that admissibility was not in issue.[11]
[11]Admissibility issues are discussed at [111]–[113], [115] and [120] below.

Principles relating to re-opening of a party’s case

The principles governing the exercise of a court’s discretion to permit a party to re-open its case were not in contention before the judge or before this Court. They are briefly summarised below.

The overriding principle is ‘whether, taken as a whole, the justice of the case favours the grant of leave to re-open.’[12] This principle was stated as follows by Kirby J in Goldsmith v Sandilands[13] upon which the applicant relied in the present case:

The guiding principle for the grant or refusal of leave to call evidence in response to the evidence of another party, where this is sought by a party, is, ultimately, what the justice of the case — including procedural fairness — requires. That principle should not become unduly entangled in precedents or procedural rules.
Whilst efficiency and economy in the conduct of civil trials are important requirements of the contemporary trial process, those objectives are valid only as they contribute to just outcomes. Once the trial process is under way, rigidity should be avoided, certainly at a time before the evidence has been closed and before the decision foreshadowed or announced. To exclude relevant evidence during a trial, in response to evidence tendered by another party in its case, simply because it could, or should, have been adduced earlier may, in particular circumstances, deny the party tendering such evidence the fair opportunity to present its case. It may render that party unjustly hostage to the defective perception, imagination and industry of its legal representatives. This is why a large discretion is reserved to the trial judge in civil trials to admit or reject evidence in rebuttal or reply. In an appeal, the exercise of the judge's discretion in such matters is subject to the usual restraints upon appellate disturbance of discretionary decisions.[14]

[12]Spotlight Pty Ltd v NCON Australia Ltd (2012) 46 VR 1, 7 [26] (‘Spotlight’).

[13](2002) 190 ALR 370 (‘Goldsmith’).

[14]Goldsmith (2002) 190 ALR 370, 385 [58]–[59] (citations omitted).

There are four recognised categories of case in which a court may grant leave to re-open a party’s case: where fresh evidence, unavailable or not reasonably discoverable previously, becomes known and available; where there has been inadvertent error; where there has been a mistaken apprehension of the facts; and where there has been a mistaken apprehension of the law.[15] These categories are not closed.[16]
[15]Spotlight (2012) 46 VR 1, 7 [25], citing Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 [24].
[16]Spotlight (2012) 46 VR 1, 7 [26].

Where, as in the present case, a party relies on the ‘inadvertent error’ category in applying to re-open its case for the purpose of adducing additional evidence, the nature and reasons for the error are relevant in considering whether it is in the interests of justice to grant the application.

The distinction between the omission of evidence due to an error by counsel, and a tactical decision on counsel’s part not to adduce that evidence, was considered in Urban Transport Authority of NSW v Nweiser.[17] In that case, the plaintiff claimed damages for personal injuries against his employer. Counsel for the defendant employer decided not to call a particular witness because of an erroneous belief that the witness’s evidence would be inadmissible. Counsel closed the defendant’s case and, as the plaintiff did not adduce any evidence, counsel commenced his final address. The next morning, upon resumption of the hearing, counsel sought leave to re-open the defendant’s case to call the witness. The primary judge refused leave on the basis that counsel had made a deliberate decision not to call the witness.
[17](1992) 28 NSWLR 471 (‘Nweiser’).

The New South Wales Court of Appeal held that the judge had erred. The Court discussed three different situations involving a failure by counsel to adduce evidence: first, where the failure is unintentional; secondly, where the failure is deliberate but based on a factual or legal misapprehension; and thirdly, where the failure is deliberate and is intended to gain a tactical advantage for counsel’s client in the litigation. We will refer to these, respectively, as ‘the Nweiser unintentional category’, ‘the Nweiser intentional but mistaken category’ and ‘the Nweiser tactical category’.

Clarke JA, with whom Mahoney and Meagher JJA agreed, held that the judge had erred in basing his decision on the fact that counsel’s decision not to call the witness was deliberate, without taking into account the fact that that decision was based on a misapprehension. Clarke JA stated the relevant principles as follows:

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 re-open 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 principle which should guide the court in determining whether to grant an application for leave to re-open is whether the interests of justice are better served by allowing or rejecting the application as the case may be. No doubt it is relevant to take account of a number of matters such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place, but there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not [to] call the witness in the party’s case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel’s deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel.[18]

[18]Nweiser (1992) 28 NSWLR 471, 475–6, 478.

As noted in Nweiser, prejudice to the opposing party is a relevant factor to be weighed in the balance when determining whether it is in the interests of justice to allow a party to re-open its case. Clarke JA held that, on the facts of that case, the plaintiff would not have been prejudiced if the defendant had been permitted to re-open its case. This was because all that had happened between the closing of the defendant’s case and the application to re-open was that the defendant’s counsel had commenced his closing address. Clarke JA said that the position may be different where a party seeks leave to re-open its case after the other party has called evidence and it would be unjust to allow the first party to call further evidence.[19]
[19]Nweiser (1992) 28 NSWLR 471, 475.

Another matter which Clarke JA stated may be relevant to the exercise of the discretion whether to grant leave to re-open a party’s case is the importance of the evidence to be called if leave were granted.[20] He said that, if the evidence could not possibly affect the outcome of the trial, or was peripheral to the main issues, then the trial judge may well be justified in refusing to grant leave.[21] He concluded that the evidence to be given by the proposed witness in that case was relevant to the central issue at trial.[22]
[20]For a list of matters that may be relevant to the exercise of the court’s discretion to permit a plaintiff to re-open his or her case, see ASIC v Rich (2006) 235 ALR 587, 593 [18]; Advanced Fuels Technology Pty Ltd v Blythe [2017] VSC 250 [7] (‘Blythe’).
[21]Nweiser (1992) 28 NSWLR 471, 476–7.
[22]Nweiser (1992) 28 NSWLR 471, 477.

The issue of prejudice was discussed in Smith v New South Wales Bar Association,[23] which involved a disciplinary proceeding against a barrister. In that case, an application to re-open the barrister’s case for the purpose of adducing additional evidence was made after the hearing had concluded and judgment had been delivered, but before the order was entered. Brennan, Dawson, Toohey and Gaudron JJ stated the following:

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 [to re-open]. But assuming that that hurdle is passed, different considerations may apply depending upon 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. …
Not every case involving error will invite further evidence: it will depend entirely on the issue that is opened up. If the issue is one that invites further evidence, then, prima facie and subject to the ordinary rules of evidence, that evidence should be allowed. We say prima facie because there may be situations in which the particular evidence involved would cause embarrassment or prejudice such that, in the circumstances, it would be unfair to allow it.[24]

[23](1992) 176 CLR 256 (‘Smith’).

[24]Smith (1992) 176 CLR 256, 266–7 (citations omitted).

The only civil case that the parties referred to the judge, and to this Court, in which the plaintiff applied to re-open her case after the defendant had made a no case submission, was Mayne v The MTT (No 1).[25] That case involved a claim for damages for personal injuries sustained by the plaintiff when the defendant’s bus collided with her bicycle. After the plaintiff closed her case, the defendant made a no case submission and elected not to call evidence. The plaintiff sought to re-open her case on the basis that her counsel had omitted, through inadvertence, to call evidence going to the visibility of the plaintiff to the defendant’s bus driver shortly prior to the accident. In opposing the application, counsel for the defendant submitted that granting the application to re-open would prejudice the defendant because it would be deprived of the opportunity to successfully defend the claim on the basis of the no case submission and also because, having elected not to call evidence, a potential interstate witness had been sent home.
[25][1991] TASSC 81 (‘Mayne’).

Underwood J held that the justice of the case required that the application to re-open be granted, provided that the defendant was permitted to resile from its election. He stated that ‘[o]nce the defendant is freed from the election it made and permitted to call any evidence it wishes, no prejudice will result from an order granting the application’.[26] He added that ‘[h]ad this application been made at the end of the plaintiff’s case but before the defendant had been put to its election there is no doubt that the justice of the case would have required that it be granted.’[27] This was because the conduct of the defendant’s case, prior to making its election and the submission of no case to answer, had not been affected by the absence of the evidence the plaintiff sought to call.[28]
[26]Mayne [1991] TASSC 81 [4].
[27]Mayne [1991] TASSC 81 [4].
[28]Mayne [1991] TASSC 81 [4].

Henning v Lynch[29] was a criminal case in which the prosecutor had omitted to adduce, prior to closing the prosecution case, evidence that the breathalyser that was used to conduct a breath test on the defendant was an approved device. The prosecutor sought leave to adduce this evidence after the defendant made a no case submission. The Supreme Court of New South Wales held that the magistrate had erred in not permitting the prosecution to re-open its case to adduce the additional evidence. The Court treated the failure to adduce the evidence as a technical defect in the evidence and held that the applicable principle strongly favoured the re-opening of the prosecution case. The Court drew a distinction between an inadvertent failure to adduce evidence, as in the instant case, and an election not to adduce evidence. The Court said the following:

[W]here the defendant’s case has not been gone into and there is ready to be tendered some additional evidence which by accident, mistake or want of foresight has not been tendered before the prosecution case is closed, it is — to use the words of Cave J in Hargreaves v Hilliam … ‘a very fit and proper thing to allow the evidence to be given unless there is some very good reason.’[30]

[29][1974] 2 NSWLR 254 (‘Henning’).

[30]Henning [1974] 2 NSWLR 254, 259.

The principles summarised at [46]–[57] above must now be applied having regard to the overarching purpose in s 7(1) of the CPA, namely, ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’. Section 8(1) provides that a court must seek to give effect to the overarching purpose in the exercise of any of its powers, or in the interpretation of those powers. Section 9(1) provides that, in making any order in a civil proceeding, a court must further the overarching purpose by having regard to a number of objects, including the just determination of the proceeding, the efficient conduct of the business of the court, the efficient use of judicial and administrative resources and the timely determination of the proceeding. Section 49(1) empowers the court to ‘give any direction or make any order it considers appropriate to further the overarching purpose in relation to the conduct of the hearing in a civil proceeding’.

Judge’s reasons for the refusal to re-open decision

The judge published a single set of reasons for the refusal to re-open decision, which was made on 2 February 2017, and the no case decision, which was made on 24 February 2017. The refusal to re-open decision commences at para 23 of the reasons under the heading ‘The application to re-open the plaintiff company’s case’ and concludes at para 76.

The structure of the refusal to re-open decision is broadly as follows: paras 19–27 describe the events of 25–27 January 2017; paras 28–30 describe the four omitted documents under the heading ‘The documents’; paras 31–44 summarise the applicable legal principles under the heading ‘The principles’; paras 45–51 summarise the applicant’s submissions under the heading ‘The reasons for not tendering each of the documents — the plaintiff company’s submissions’; and paras 52–76 set out the respondent’s submissions and the judge’s conclusions under the heading ‘The defendant’s submissions’. As a result of this structure, the judge’s conclusions are not set out in a discrete part of her reasons under a separate heading but are primarily expounded as part of her analysis of the respondent’s submissions.

The judge’s summary of the relevant legal principles was broadly consistent with the summary set out at [46]–[58] above. The judge also referred to r 34A.29 of the Rules and noted that the Whygo writ and the Second Milburn Affidavit were not included in the applicant’s Court Book.[31]
[31]See [33] above.

The judge distinguished Mayne on the basis that Underwood J had found that steps could be taken in that case to overcome the prejudice to the defendant arising from the re-opening of the plaintiff’s case. She also distinguished Henning on the basis there was no finding in that case that the re-opening of the prosecution case would cause prejudice to the defendant.

At para 49 of her reasons, after setting out the explanation of trial counsel for the applicant for not tendering the Korman letter and the Milburn email prior to closing the applicant’s case, the judge stated:

[The] decision [of trial counsel for the applicant] to defer leading this documentary evidence until cross-examination of the [respondent], nonetheless, involved making a strategic choice about how and when to lead the evidence contained in each document to best effect.

At para 55 of her reasons, the judge accepted the respondent’s submission that the reasons given by trial counsel for the applicant for not tendering the Whygo writ and the Second Milburn Affidavit:

established, not one, but a series of oversights culminating in a failure to tender each document before the [applicant’s] case was closed, before the submission of no case to answer was raised and outlined in some detail in the [respondent’s] written submissions and before service of the letter containing the Calderbank offer.

At para 54 of her reasons, the judge accepted the respondent’s submission that disclosure to the applicant of the details of the respondent’s no case submission and the Calderbank letter sent on 26 January 2017 ‘at the very least caused the [applicant] to re-evaluate the evidence called and, in so doing the [applicant’s] legal team identified the need to tender the documents in question to meet outstanding evidentiary deficiencies’.

At para 39 of her reasons, the judge noted that senior trial counsel for the respondent relied upon Smith in support of his submission that ‘the primary consideration when determining where the interests of justice lie in the present case should be that of embarrassment or prejudice to the [respondent]’. At para 40, the judge observed that ‘the significance of embarrassment or prejudice (if any) in determining where the interests of justice lie, will likely vary depending on the circumstances of the case’.

At para 51 of her reasons, after setting out the submissions of trial counsel for the applicant as to why the interests of justice would be best served by granting leave to the applicant to re-open its case,[32] the judge stated:

As my discussion of the [respondent’s] submissions below shows, when considered individually or collectively, the matters advanced on behalf of the [applicant] did not adequately address the nature and degree of any prejudice the [respondent] would likely suffer were the Court to grant the leave sought.

[32]The submissions of trial counsel for the applicant are summarised at [42(c)] above.

The judge dealt with the prejudice that the respondent would suffer if the applicant were granted leave to re-open its case at paras 59 and 67–74 of her reasons. Those paragraphs are as follows:

Importantly, I could not be satisfied that the submission that the [respondent] would not suffer any prejudice were the [applicant] permitted to re-open its case to tender each document could be sustained. Indeed, after weighing the various considerations advanced by each party, I concluded that it would be unfair to allow the [applicant] to re-open to tender the additional documents.
…
Furthermore, I have accepted that, as [senior trial counsel for the respondent] submitted, were the [applicant] permitted to re-open and tender the Whygo Writ, in combination, Exhibit P17 and … Exhibit D7 could strengthen the chain of causation between the [respondent’s] disclosure of information and Whygo’s decision to sue.
Based on the pleadings, the contested matters and the evidence called, I have also accepted that, as claimed, [senior trial counsel for the respondent] had been faced with a dilemma about how he should conduct cross-examination of Mr Abrahams. In short, it is unlikely that counsel would have tendered Exhibit D7 or traversed in cross-examination of Mr Abrahams, matters relating to the screen shots or the copy Whygo invoice, had the Whygo Writ been in evidence.
Thirdly, I have accepted that admission into evidence of the documents would potentially expose the [respondent] to cross examination where, as [senior trial counsel for the respondent] submitted, the [respondent’s] written submission had provided an analysis of the weaknesses in the [applicant’s] case and, to adopt counsel’s words: ‘a roadmap of contentious issues about which it must elicit evidence from [the respondent] if it is to succeed.’ Furthermore, I have accepted that, in circumstances where the [applicant] failed to cover this territory during its own case, I could not conclude that the [applicant] would have done so in any event.
Fourthly, the [applicant] was bound by the conduct of its case and the [respondent] was entitled, as she did, to make tactical and strategic decisions based on that conduct. In this regard, I have accepted that, as claimed, the [respondent] prepared for trial on the basis of the documents contained in [the applicant’s] Court Book; cross-examination was crafted on the basis of these documents and Mr Abrahams’ evidence-in-chief; counsel had already prepared a detailed application in writing containing a submission of no case to answer; and the [respondent] had been ready to be put to her election when [trial counsel for the applicant] closed the [applicant’s] case.

What steps, if any, could be taken to cure the likely embarrassment or prejudice to the [respondent] were the application to re-open to be granted?
The [respondent] submitted, in my view with good reason, that an award of costs, even on an indemnity basis, could not remedy the prejudice she would suffer should she lose the forensic and tactical advantages gained so far. Indeed, I have accepted that, as claimed, the granting of the application to re-open would likely confer a tactical advantage on the [applicant], which would not be adequately addressed by [the] suggestion [of trial counsel for the applicant] that Mr Abrahams be made available for further cross examination or, that counsel for the [applicant] be replaced by counsel who was not privy to the content of the [respondent’s] submissions.
This is not to deny that, despite the indication given in the course of hearing the application to re-open that it was ‘highly unlikely’ that [the respondent] would elect to call evidence, the [respondent] had not been put to her election before the conclusion of the application to re-open.
The point that needs to be made at this juncture is that, an award of costs and/or the ordering of a new trial with or without different counsel (if taken, this course would also give rise to significant delay) was unlikely to achieve a timely and cost-effective resolution of the real issues in this dispute and, as was also submitted, would likely cast a heavy burden on an individual defendant who, as it happens, does not reside in Victoria.

After refusing the applicant’s application to re-open its case, the judge heard the balance of the no case submission. She analysed the evidence as it stood at the close of the applicant’s case and decided that that evidence was insufficient to establish that the respondent breached any duty to the applicant by directly or indirectly giving to Whygo any of the applicant’s confidential information or that, even if a breach were established, any confidential information given to Whygo was a cause of Whygo suing the applicant. Accordingly, the judge upheld the respondent’s no case submission.

On 16 March 2017, the judge made the final order, which was relevantly in the following terms:

1The proceeding is struck out with the right of reinstatement to the [respondent] to make any non-party costs application within 60 days of the date on which taxation of costs ordered below is completed, or the parties otherwise agree on the quantum of such costs, whichever occurs first. Unless such application is made within the time limited, the proceeding shall stand dismissed.
2The [applicant] … pay the [respondent’s] costs of and incidental to the proceeding, including any reserved costs.^[[33]]
…
4The costs … are to be taxed on a standard basis up to and including 26 January 2017 and thereafter to be taxed on an indemnity basis.

…
[33]The order for costs was expressed to bind the applicant in its own capacity and in its capacity as trustee of a trust. The trust capacity is not presently relevant.

Grounds of appeal

The applicant’s proposed grounds of appeal are as follows.

1The learned trial judge mistook the facts — within the meaning of House v The King (1936) 55 CLR 499 … by finding that the decision of the [applicant’s] counsel to close her case prematurely (counsel’s forensic decision) was ‘a strategic choice’ [49] and ‘a deliberate forensic decision’ [56] when:
(a)the [respondent] did not challenge, and it was the fact, that as to two of the four documents that ought to have been tendered in the [applicant’s] case — being the documents described at [28] — counsel for the [applicant] had overlooked the tender of those documents [53];
(b)The [respondent] did not challenge, and it was the fact, that as to two of the four documents that ought to have been tendered in the [applicant’s] case — being the ‘admissions documents’ described at [29] — counsel had not anticipated the making of a submission of no case to answer by the [respondent] [53];
(c)by reason of the aforementioned errors, counsel’s forensic decision was impaired.

2In the alternative to ground 1, the learned trial judge acted on a wrong principle, by holding the [applicant] to counsel’s forensic decision when that decision was infected by error.
3The learned trial judge [was] affected or guided by irrelevant matters — within the meaning of House — in finding at [61]–[70] that the [respondent] had suffered material prejudice by reason of counsel’s forensic decision, when in fact:
(a) the [respondent] had suffered no prejudice at all; or
(b)in the alternative, if the [respondent] had suffered prejudice, such prejudice was immaterial.

The grounds rely on different aspects of the principles in House.[34] The statement setting out these principles is as follows:

It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. [35]
[34](1936) 55 CLR 499.
[35]House (1936) 55 CLR 499, 504–5.

Ground 1: Mistake as to facts

The applicant submitted that its trial counsel had made two types of errors in respect of two different categories of documents and did not realise that she had done so until she closed the applicant’s case and senior trial counsel for the respondent commenced his no case submission. Those errors were said to be:

(a)in relation to the Whygo writ and the Second Milburn Affidavit, trial counsel overlooked them at the time of preparing the applicant’s Court Book and then again at the time she tendered other documents; and
(b)in relation to the Korman letter and the Milburn email, trial counsel intended to lead those documents through the respondent, but failed to anticipate a no case submission.

The applicant contended that the judge erred in finding that its trial counsel had not tendered the Korman letter and the Milburn email because she had made a ‘strategic choice’ and a ‘deliberate forensic decision’[36] that they would be led to best effect during cross-examination of the respondent. According to the applicant, although the decision of its trial counsel to delay the tender of those documents was deliberate in the sense of being intentional, it was not a deliberate forensic decision in the sense of being fully informed and properly formed: it was a decision impaired by error.
[36]Reasons [49], [56].

The applicant argued that it was not clear from the judge’s reasons whether she made a finding that the Whygo writ and the Second Milburn Affidavit were not tendered due to a ‘strategic choice’ and a ‘deliberate forensic decision’. It was said that such a finding would be inconsistent with the evidence of inadvertent error on the part of trial counsel for the applicant which caused her to prematurely close the applicant’s case.

According to the applicant, the judge’s findings were vitiated because they were based on a mistaken view of the facts.

The respondent conceded that the decision of trial counsel for the applicant to defer the tender of the Korman letter and the Milburn email until the cross-examination of the respondent was not a tactical decision intended to ambush the respondent. However, she contended that the decision did not fall in the ‘mere inadvertence’ category but fell ‘somewhere in between’. She accepted that the judge had found that trial counsel for the applicant had made a ‘strategic choice’ but disputed that the judge had found that counsel had made a ‘deliberate forensic decision’. She submitted that it was open to the judge to conclude that trial counsel for the applicant had made a strategic choice. She argued that, in every civil trial, there is always a possibility that a defendant will elect not to call evidence and that, in the face of that possibility in the present case, trial counsel for the applicant elected not to tender the two documents but to withhold them until she cross-examined the respondent.

The respondent argued that, in any event, the reasons of trial counsel for the applicant for failing to tender the four omitted documents were one factor to be taken into account, and those reasons — when weighed against the prejudice to the respondent that would arise if the applicant were permitted to re-open its case — did not impair the refusal to re-open decision.

In our opinion Ground 1 is made out.

Both the respondent and the judge accepted the explanation of trial counsel for the applicant for the non-tender of the four omitted documents prior to the closing of the applicant’s case. That explanation made clear that she had not tendered the Whygo writ and the Second Milburn Affidavit prior to that time due to inadvertence and that she had not tendered the Korman letter and the Milburn email prior to that time because she had erroneously assumed that the respondent would give evidence. The non-tender of the former documents was not deliberate and clearly fell within the Nweiser unintentional category. The non-tender of the latter documents, while deliberate, was infected by error and fell within the Nweiser intentional but mistaken category, rather than in the Nweiser tactical category.

Although the judge referred to the principles in Nweiser, she did not mention the Nweiser ‘intentional but mistaken’ category. The main focus of her reasons was the Nweiser tactical category. The judge’s statement at para 49 of her reasons[37] that trial counsel for the applicant had made a ‘strategic choice about how and when to lead the evidence contained in each document to best effect’ indicates that the judge decided that counsel made a choice as to timing in order to obtain a strategic advantage for the applicant. It follows that the judge placed the timing decision of trial counsel for the applicant in the Nweiser tactical category. In our opinion this categorisation was not open to the judge on the evidence before her.
[37]See [63] above.

Trial counsel for the applicant stated that she did not seek to achieve any forensic advantage by deciding to tender the Korman letter and the Milburn email through the respondent, and no such advantage is readily apparent.[38] Trial counsel for the applicant also stated that she had never been involved in a civil proceeding where the defendant did not go into evidence and thus had not anticipated that the respondent would not give evidence. In these circumstances, the only conclusion that was open to the judge was that the decision of trial counsel for the applicant to defer the tender of the two documents fell within the Nweiser deliberate but mistaken category. This is because while the decision was deliberate, it was based on an erroneous assumption that the respondent would necessarily give evidence. The true explanation for the decision was that trial counsel for the applicant was inexperienced in relation to no case submissions in civil proceedings rather than due to any strategy on her part to gain an advantage for the applicant’s case or to cause detriment to the respondent’s case.
[38]Cf Blythe [2017] VSC 250 [2], [19].

The failure of trial counsel for the applicant to tender the Whygo writ and the Second Milburn Affidavit was clearly inadvertent and fell within the Nweiser unintentional category. However, the judge did not unequivocally acknowledge this. The judge’s statement that there had been ‘not one but a series of oversights’ by trial counsel for the applicant suggests that the judge erroneously regarded this as a disentitling circumstance.

As the judge’s refusal to re-open decision was based on a fundamentally erroneous factual basis, the exercise of her discretion miscarried.

Ground 2: Acting on wrong principle

The applicant submitted that, despite setting out the relevant legal principles relating to the re-opening of a party’s case, the judge acted on a wrong principle by making the central theme of her analysis the prejudice to the respondent rather than whether the interests of justice would be better served by granting or refusing leave to the applicant to re-open its case. By doing so, so it was said, the judge subordinated the interests of justice to the consideration of prejudice to the respondent and lost sight of the distinction between a deliberate, tactical decision made by counsel, and a deliberate decision made by counsel that was caused by an error.

The respondent contended that the judge’s reasons do not disclose that the judge acted on any wrong principle, and that she applied the relevant principles within the permissible bounds of her discretion. The respondent accepted that the issue of prejudice to her featured prominently in the judge’s reasons, but argued that this was because it was the primary basis on which the applicant’s application to re-open its case was resisted. The respondent submitted that the judge consistently tied her reasoning and conclusions to the question of what was in the interests of justice.

In our opinion Ground 2 is made out.

Although the judge correctly set out the applicable principles and noted that the ultimate test was whether the justice of the case favoured the grant of leave to re-open the applicant’s case, her reasons focused disproportionately on the issue of prejudice to the respondent, before turning to address whether that prejudice could be cured if leave to re-open were granted. By doing so, the judge’s analysis lacked a balanced consideration of the impact on both parties of her decision whether to grant leave to the applicant to re-open its case and was skewed in favour of the impact upon the respondent. The judge may well have fallen into this error because of the structure of her reasons as described at [60] above, namely the intermingling of her conclusions with her consideration of the respondent’s submissions.

The intermingling of the judge’s summary of the respondent’s submissions and her own conclusions is so extensive that it is sometimes difficult to work out whether particular statements refer to the respondent’s submissions or form part of the judge’s reasons. This difficulty gave rise to disagreements in the parties’ submissions to this Court as to whether particular statements were to be attributed to the respondent’s submissions or to the judge’s reasons.

We will refer to one example of ambiguity in the judge’s reasons. Paragraphs 55 and 56 refer to submissions made by the respondent. The first sentence of para 55 states ‘Furthermore, allowing for the matters addressed in [the] submission [of trial counsel for the applicant], the [respondent] submitted (in my view correctly) that, firstly …’. The remaining sentences in para 55 summarise submissions without expressly stating whether they are accepted by the judge. As the first sentence refers to ‘firstly’ one would have expected the word ‘secondly’ to appear somewhere in para 55. However, that word does not appear until the first sentence of para 56, which continues to summarise arguments without making it clear whether they are further submissions of the respondent or the judge’s reasons for accepting those submissions. Similarly, para 57 then states: ‘These were matters that required consideration and were considered when determining where the interests of justice lie’. Based on the wording of paras 55–57, it is not clear whether the judge accepted all of the submissions of the respondent summarised in those paragraphs or only the submission summarised in the first sentence of para 55.

We have adopted the approach that is most favourable to the respondent, namely, treating the judge as accepting only those submissions of the respondent which are subject to an express statement of approval. However, even with this approach, the analysis of the judge’s reasons set out at [59]–[68] above clearly shows that, after some initial observations about the errors made by trial counsel for the applicant, the judge proceeded to endorse a series of submissions made by senior trial counsel for the respondent about prejudice to the respondent. The judge’s analysis of the issue of prejudice indicates that she treated that issue as determinative rather than as one of the factors to be balanced against other relevant factors with a view to deciding where the interests of justice lay. By proceeding in this manner the judge acted on a wrong principle and the exercise of her discretion miscarried.

Ground 3: Decision guided or affected by irrelevant matters

The applicant submitted that the judge was affected or guided by irrelevant matters because the matters that she considered to be prejudicial to the respondent were not prejudicial or, if they were prejudicial, they were not material. The applicant summarised the matters found to be prejudicial to the respondent, and which informed the judge’s decision, as follows:

(a)The application to re-open was intended to cure weaknesses in the applicant’s case after the respondent had revealed those weaknesses in her submission of no case to answer.
(b)Senior trial counsel for the respondent had made forensic decisions, including in the cross-examination of Mr Abrahams, on the assumption that the four omitted documents would not be tendered;
(c)The four omitted documents, if allowed to be tendered, could strengthen the evidence of causation between the respondent’s disclosure of information and Whygo’s decision to sue the applicant.
(d)Tender of the four omitted documents would expose the respondent to cross-examination in circumstances where the respondent had provided an analysis of the weaknesses in the applicant’s case in her submission of no case to answer.
(e)The applicant was bound by the conduct of its case, and the respondent was entitled to make tactical and strategic decisions based on that conduct.

The applicant contended that the matters set out at [92(a)] and [92(c)–(e)] are variations of the same alleged prejudice, namely, that the respondent would be prejudiced by losing the tactical benefit of being able to defend the proceeding, including by making a no case submission, without having to answer the evidence contained in the four omitted documents. This was said not to be prejudicial as it amounted to no more than the loss of a tactical advantage gained as a consequence of the applicant’s error. The applicant argued that if these matters were considered to be prejudicial, any party in the respondent’s circumstances would always be able to successfully oppose an application to re-open.

The applicant submitted that the matter set out at [92(b)] above was not prejudicial as it was open to the applicant to tender the four omitted documents at any time during its case, including after all witnesses had been called and excused.

The applicant contended in the alternative that, if the matters set out at [92] above amounted to prejudice, the prejudice was not material. On either basis, so it was said, the judge’s exercise of her discretion miscarried because it was affected by those matters.

The respondent submitted that prejudice is a relevant consideration on an application for leave to re-open and the judge was entitled to take it into account. According to the respondent, Ground 3 is, in effect, a complaint that the judge gave too much weight to prejudice, which is not a House appealable error. In any event, so it was said, the judge was correct in her findings as to the prejudice caused to the respondent.

The respondent argued that the judge did not make the finding of prejudice referred to above at [92(a)]. Regarding the matter set out at [92(c)], she submitted that the strengthening of the applicant’s case was self-evidently prejudicial to her, but conceded that that prejudice alone would not carry sufficient weight to require the refusal of an application to re-open.

According to the respondent, the prejudice set out at [92(d)] is of a high order because the written submission which the respondent had provided to the applicant in support of the no case submission gave the applicant notice of the evidentiary deficiencies which it would need to address by eliciting evidence from the respondent in cross-examination. It was said that this was both a material disadvantage to the respondent, and an advantage to the applicant. She also drew attention to the failure of trial counsel for the applicant to minimise this prejudice by only making the application to re-open after she had received the respondent’s written submissions, despite having the opportunity to do so earlier.

The respondent contended that prejudice arose as a consequence of the matter set out at [92(b)], as her senior trial counsel would have conducted his cross-examination of Mr Abrahams differently had the Whygo writ and the Second Milburn Affidavit been included in the Court Book. She submitted that she was not therefore always at risk of those documents being tendered at the end of the applicant’s case, as contended by the applicant, and her senior trial counsel was entitled to conduct her case on the basis that the Court Book contained all documents to be tendered during the trial.

In our opinion, Ground 3 is made out.

We note that Ground 3 does not contend that prejudice to the party resisting an application by another party to re-open its case is not a relevant matter to be taken into account in deciding whether to grant the application. Any such contention would obviously be wrong. Rather, what Ground 3 contends is that the respondent would suffer either no prejudice, or no material prejudice, if the applicant were granted leave to re-open its case, and that the judge was wrong to refuse leave on the basis of prejudice to the respondent. We also note that Ground 3 does not contend that, if the alleged prejudice to the respondent were material, the judge erred in finding that that prejudice would be incurable.

Where prejudice is relied upon as a basis for refusing an application by a party to re-open its case, the prejudice must be identified and placed in the context of the circumstances of the particular case rather than being dealt with in generic terms. In the present case, although the judge summarised at length the respondent’s submissions regarding the prejudice she would suffer if leave were granted to the applicant to re-open its case, the judge did not satisfactorily explain why the matters relied upon by the respondent were prejudicial, or why any such prejudice was material.

The making of a no case submission by a defendant in a civil proceeding always carries a risk that the plaintiff will seek leave to re-open its case in order to address the deficiencies in the plaintiff’s case identified in the submission and thereby strengthen one or more elements of the plaintiff’s case. Depending on the circumstances of the case, the judge may be persuaded to grant such leave in accordance with the principles summarised at [46]–[58] above. In the present case, the fact that the applicant was alerted to the need to tender the four omitted documents by the respondent’s no case submission and Calderbank letter is neither surprising nor unusual. Of itself, it is not a matter of prejudice.

One of the forms of prejudice which the respondent said she would suffer if the applicant were granted leave to re-open its case, namely, the inability to pursue her no case submission on the basis of the evidence as it stood when the applicant closed its case, cannot be determinative. If that submission were correct, the court would never be able to grant leave to a plaintiff after the defendant has made a no case submission. As the principles summarised at [46]–[58] above demonstrate, that has never been the law.

Before this Court, senior counsel for the respondent correctly conceded that the Whygo writ could have been tendered by trial counsel for the applicant at any time prior to the close of the applicant’s case and that he could not necessarily assume when he was cross-examining Mr Abrahams that the document would not be tendered after Mr Abrahams finished his evidence. Although senior counsel did not make the same concession in relation to the other three omitted documents, we are of the opinion that, subject to any objections as to admissibility,[39] those documents could also have been tendered at any time prior to the close of the applicant’s case. If any of the four omitted documents had been tendered after Mr Abrahams completed his evidence, senior trial counsel for the respondent could have applied to have Mr Abrahams recalled for further cross-examination.
[39]Admissibility issues are discussed at [111]–[113], [115] and [120] below.

We note that, at the time that the no case submission was made, the respondent was not put to her election whether to call evidence. Although her senior trial counsel indicated to the judge that it was unlikely that he would call the respondent, he would not have been precluded from doing so if the four omitted documents had been admitted into evidence.

Conclusion on whether judge’s exercise of discretion miscarried

It follows from our upholding of all three grounds of appeal that the judge’s exercise of the discretion whether to grant leave to the applicant to re-open its case miscarried. In our opinion, had the judge properly characterised the errors of trial counsel for the applicant in accordance with the categories in Nweiser and correctly applied the principles summarised at [46]–[58] above, she would have been bound to conclude that the justice of the case favoured the grant of leave to the applicant to re-open its case. This is so for the following reasons:

(a)The application for leave was confined to the four omitted documents which were well known to the parties. Indeed, the Whygo writ and the Second Milburn Affidavit were referred to in the applicant’s statement of claim and partial admissions in relation to the Whygo writ were made in the respondent’s defence. The Korman letter and the Milburn email were discovered by the respondent and were in the applicant’s Court Book. The Korman letter, the Whygo writ and the Second Milburn Affidavit were referred to in the AC.
(b)The non-tender of the Whygo writ and the Second Milburn Affidavit fell within the Nweiser unintentional category and the non-tender of the Korman letter and the Milburn email fell within the Nweiser intentional but mistaken category. Trial counsel for the applicant did not seek to gain any tactical advantage by not tendering any of these documents prior to the close of the applicant’s case.
(c)The absence of any material prejudice to the respondent. If there was any forensic disadvantage to the respondent arising from the fact that her senior trial counsel cross-examined Mr Abrahams when the four omitted documents were not then in evidence, counsel could have applied to have Mr Abrahams recalled for further cross-examination after those documents were tendered.
(d)The grant of leave to reopen the applicant’s case would have furthered the overarching purpose in s 7(1) of the CPA because it would have enabled the County Court to decide the case on its merits with the benefit of the four omitted documents being in evidence, rather than on the artificial basis of ignoring those well known documents.

We hasten to add that nothing we have said should be construed as an indication that the fact that a defendant has made a no case submission is not a relevant consideration in determining whether the plaintiff should be permitted to re-open his or her case. Clearly, it is relevant. However, its importance will vary according to the circumstances of each case, including whether the no case submission has been completed or only just commenced when the application to re-open is made. For the reasons we have given, in the present case, the factors in favour of granting leave to the applicant to re-open its case overwhelmingly outweighed the factors militating against the granting of leave.

Would granting leave to appeal be futile?

Although the respondent did not file a notice of contention, the applicant did not object to the respondent submitting to this Court that, even if any of the grounds of appeal were upheld, nevertheless leave to appeal should be refused because it would be futile to grant it. This was said to be because, even if leave to re-open the applicant’s case were granted and the four omitted documents were admitted into evidence, those documents could not cure the deficiencies in the applicant’s case.

The respondent submitted that, in making the no case decision, the judge had found evidentiary deficiencies with various critical aspects of the applicant’s case. The deficiencies were said to include the following: there was no evidence of what information the respondent had downloaded from the applicant’s computer or that this was confidential information as defined in the settlement agreement; the evidence did not establish that the respondent or Mr Korman as her agent gave to Whygo any confidential information after she signed the Undertaking and before the Whygo writ was filed; and there was no direct oral or documentary evidence of causation. According to the respondent, the four omitted documents did not provide evidence on these fundamental matters.

The respondent contended that, even if the four omitted documents were able to cure the deficiencies in the applicant’s case, the Korman letter was not admissible under s 81 of the Evidence Act 2008 as an admission because she was not the author of that document. The respondent conceded that the Korman letter may be admissible under s 87(1)(c) of that Act insofar as it contains statements made in furtherance of a common purpose between her and Mr Korman, but she submitted that the letter was not relevant because the strategy it recommended was not implemented.

The respondent submitted that those parts of the Milburn email which she authored were potentially admissible insofar as they contain admissions by her, contemporaneous representations necessary to understand the admissions, or statements made in furtherance of a common purpose between her and Mr Korman. The remaining parts of the Milburn email were said to be inadmissible hearsay. The respondent also submitted that some paragraphs of the Second Milburn Affidavit were inadmissible hearsay. The respondent did not contend that the Whygo writ was inadmissible.

Senior counsel for the respondent informed us that it had been his intention to challenge the admissibility of the Korman letter and the Milburn email if the judge had granted leave to the applicant to re-open its case. He stated that, as the judge refused such leave and upheld the no case submission, the issue of the admissibility of the documents did not need to be ventilated. According to senior counsel, the judge’s statement at para 47 of her reasons that the admissibility of the documents was not disputed, was accurate as at the time that the application for leave to re-open the applicant’s case was made and did not reflect any concession by the respondent as to the admissibility of the documents.

The applicant submitted that, as this Court is not seized of all the relevant material, it is not in a position to make a finding as to whether the admission of the four omitted documents would be sufficient to enable the applicant to prove its case.

In relation to the admissibility of the four omitted documents, the applicant contended that: the Whygo writ was admissible as a court process document under s 157(c) of the Evidence Act 2008; the Second Milburn Affidavit and the parts of the Milburn email that were authored by the respondent were admissible as admissions under s 81 of that Act; and the Korman letter and the parts of the Milburn email that were authored by Mr Korman were admissible under s 87(1)(c) of that Act as statements made in furtherance of a common purpose between the respondent and Mr Korman. The applicant also submitted that the Whygo writ, the Second Milburn Affidavit and the Korman letter were admissible under s 190 of the Evidence Act 2008 because, by her conduct, the respondent had consented to the Court treating them as admissible.

In our opinion, the question whether the admission of the four omitted documents would enable the applicant to establish its case would depend on an assessment of the evidence as a whole, including any inferences that can be drawn from the established facts. As we do not have the entire trial transcript or any of the trial exhibits, we are unable to undertake that assessment. Accordingly, we are unable to accept the respondent’s submission that the granting of leave to appeal would be futile.

Conclusion

As the judge erred in not granting leave to the applicant to re-open its case and the no case decision was made on the basis that the four omitted documents were not in evidence, that decision is vitiated. This, in turn, means that the final order is vitiated. It follows that the application for leave to appeal must be granted, the appeal must be allowed, the final order must be set aside and the proceeding must be remitted to the County Court for rehearing de novo.

The applicant submitted that the County Court should be differently constituted for the rehearing because, in making the no case decision, the judge drew inferences adverse to the applicant. We agree with this submission.

As the proceeding will be reheard de novo by a different judge, it will be a matter for that judge to decide how the rehearing should be conducted, including whether evidence that has already been adduced by the applicant should stand as the evidence — or part of the evidence — of the applicant on the rehearing.

Any ongoing issues as to the admissibility of the four omitted documents should be decided by the trial judge in the context of the evidence as a whole and full submissions by the parties on those issues.

[2017] VSCA 355

1 December 2017