A Team Diamond Headquarters Pty Ltd & Anor v Main Road Property Group Pty Ltd & Ors [2009] VSCA 208

Court of Appeal (Vic)|2009-09-24|Before: REDLICH JA AND BEACH AJA

Main Road Property Group Pty Ltd v Pelligra & Sons Pty Ltd, [2009] VSC 174 (Bell J)

PRACTICE AND PROCEDURE - Appeal from costs order following application for interlocutory injunction - Application for leave to appeal - Objection to bench of two judges hearing substantive appeal - Section 11(1A) Supreme Court Act - Amendment of draft Notice of Appeal - Rule 65.07 Supreme Court Rules - Different orders sought from those sought on the interlocutory hearing - Failure to comply with rule in on interlocutory application - New arguments raised on appeal.

LEGAL PRACTICE - Obligation of legal practitioners in preparation and presentation of case to assist the court in the efficient use of limited resources - Failure to pursue simpler procedure at interlocutory hearing - Submissions on appeal which ignored overarching responsibility.

COSTS - Order for costs where no determination on merits of application for injunction -Application for joinder of party - Injunction unnecessary - Costs order made on basis of what judge would have decided - Delay in delivering reasons - Adequacy of reasons - Failure to pursue simpler joinder application that would obviate need for lengthy hearing - Leave refused.

1 This is an application by A Team Diamond Headquarters Pty Ltd and Michael Artusa (the applicants) seeking leave to appeal an order as to costs made by Bell J on 6 May 2009.

2 It is convenient to set out the following summary of the facts which we have drawn from the judgment of Bell J.[1] The first respondent, a trustee company, participated in a property development project in which the remaining seventeen respondents were investors (the plaintiffs). The promoters were the first and second applicants together with one Gino Pelligra and his associated companies. Mr Pelligra was also the builder. The second applicant brought most of the investors together over 2001-2. They were his associates from other areas of business. The second applicant, through one of his companies, was also the project manager. In early 2003 the second applicant admitted to some of the plaintiffs that he, and the other promoters had engaged in wrong-doing in relation to the project. He says he felt a sense of personal obligation towards them. During 2003 and 2004 the second applicant co-operated with the plaintiffs and the plaintiffs' solicitors[2] and counsel in preparing legal proceedings. He provided a comprehensive witness statement. He and his wife also signed a deed making important admissions and a transfer of the first applicant's interest in the project properties back to the first respondent. Meanwhile he continued to manage the project.

3 The plaintiffs commenced proceedings in May 2004 seeking the return of property and units they say were wrongly obtained by the defendants including the applicants and an accounting for profits. Based in part on matters conveyed to them by the second applicant, the plaintiffs allege that in late 2001 and early 2002 the promoters fraudulently misrepresented and implemented the project. It is alleged that the promoters induced the investors to join the project by representing that the promoters would put their own money into it, which they did not do and that they misused their early control of the first respondent to obtain units in the trust and ownership of the project properties without payment or entitlement. It is also alleged that the promoters, without telling the investors, agreed to share the profits of building and managing the project.

4 The applicants, by summons dated 10 August 2006, sought injunctions to restrain the plaintiffs from retaining or continuing to retain their solicitors (the plaintiffs' solicitors) or their counsel (the plaintiffs' counsel) from acting on their behalf in the proceedings. On 21 December 2006 the applicants by further summons sought to join the plaintiffs' solicitors as defendants to the applicants' counterclaim in the proceedings and to amend their defence and counterclaim (the application for joinder ).

5 The applications for an injunction and joinder were heard by Bell J over seven days in February 2007. On 1 March 2007 his Honour granted the application for joinder but dismissed the application for an injunction against the plaintiffs' counsel. His Honour's reasons for judgment disclose that upon the granting of the joinder application, he considered it unnecessary to consider the application for an injunction so far as it concerned the plaintiffs' solicitors.

6 On 11 May 2007, his Honour heard the parties' submissions on the question of costs of both applications. On 6 May 2009, the trial of the proceedings still not having been heard, his Honour ordered the applicants to pay the costs of the application for an injunction while the costs of the joinder application were reserved.

7 The applicants seek leave to appeal the order for costs made against them on the application for an injunction. Leave to appeal is required pursuant to s 17A(1)(b) of the Supreme Court Act 1986. That section provides:

An order made by the Trial Division constituted by a Judge of the Court ... as to costs which are in the discretion of the Trial Division - is not subject to appeal to the Court of Appeal except by leave of the Court of Appeal or by leave of the Judge of the Court constituting the Trial Division which made the order.

8 Of critical importance in this case is whether the order for costs which the applicants seek to impugn is attended with doubt sufficient to justify the granting of leave. As was said by Redlich JA in Spotless Group Limited v Premier Building and Consulting Pty Ltd:[3]

It is well established that an appellate Court will not, in the absence of strong reasons, interfere with the exercise of discretion by the Court below with respect to the question of costs. As Callaway JA said in Hanlon v Brookes:

It is almost invariably the case that the judge at first instance is better placed to deal with the costs after a long trial and counsel seeking leave ordinarily has a difficult task. The test is not whether we should have exercised the discretion in the same way as his Honour did but whether there was or were a ground or grounds on which he could reasonably do so.

This Court may disturb the costs orders made below where an error in principle is identified, where the judge acted on a manifestly erroneous view of the facts, or where the award is manifestly unreasonable. But the applicant must satisfy a high threshold for such a grant of leave. The test to be applied is not whether the Court of Appeal would have made the same order but whether there is a ground upon which the order by his Honour could reasonably be made. Some manifest error must be exposed to take the case out of the ordinary situation in which, wherever a discretion is to be exercised, minds may differ on the result. Ormiston JA recognised this high threshold in Transport Accident Commissioner v O'Reilly observing that:

It is extraordinarily difficult to show that a court of first instance or a tribunal with wide discretionary powers has erred in the exercise of its powers to award costs, if there be some basis for making an order other than the conventional order in favour of the successful party.[4]

Whether court constituted by two judges should hear the appeal if leave granted

9 At a directions hearing we advised the parties that they should be prepared to argue the substantive appeal on the hearing of the application for leave to appeal. We foreshadowed that the President might determine under s 11(1A) of the Supreme Court Act that the court as constituted by two judges, should have the power to proceed to hear the substantive appeal. Section 11(1A) of the Supreme Court Act provides:

If the President of the Court of Appeal so determines in a particular case, two judges of appeal constitute, and may exercise all the jurisdiction and powers of, the Court of Appeal.

10 The respondents were content for this course to be adopted. However, the applicants submitted that as the appeal was a complex one involving unusual features, it should be heard by a Court constituted by three judges. The applicants' contention was conveyed to the President. He determined that at the hearing of the application for leave, the court comprising two judges should have all of the powers of the Court of Appeal. Consequently, on the hearing of the application for leave to appeal, we also heard full argument on the substantive appeal.

11 Given the submission pressed at some length that this appeal should be determined by a bench of three judges, we would make the following observations. In hearing interlocutory appeals, serious consideration should be given, where practicable, to the determination of the application for leave, together with the hearing of the substantive appeal where leave is or might be granted. That will particularly be so where the appeal is concerned only with a question of costs. As was said by Maxwell P and Buchanan JA in Livingspring Pty Ltd v Kliger Partners:[5]

This approach should be adopted in interlocutory appeals whenever practicable. Its advantages are obvious. As Sir Oliver Gillard pointed out 30 years ago in Niemann v Electronic Industries Ltd, the alternative is to have two separate hearings, leave being granted by a bench of two and then the appeal being determined by a subsequent bench of three, likely to comprise different members. Gillard J said:

[I]n many cases, merits will be investigated and a good deal of time will be spent by an initial court in determining whether leave should be granted, and then subsequently, the same merits would have to be re-investigated by a court if leave to appeal should be granted.[6]

12 In this case, the material filed in support of the application for leave is voluminous. Without the transcript of the hearing below, the material fills three 'Lever Arch' folders.[7] The affidavit material utilised in the interlocutory hearing was excessive and imposed an unnecessary burden on the judge hearing the applications. The transcript below, to which the applicants wish to make substantial reference on the leave application, is a further 785 pages in length. Three folders of authorities were filed. A transcript of the costs application was also produced at the hearing together with the very extensive submissions on costs that were relied upon before the trial judge.[8]

13 On an appeal concerning an order for costs, where the material is voluminous, there will rarely be sufficient justification for two separate hearings, potentially involving five different judges of appeal. When pressed at the directions hearing, counsel for the applicants was not able to articulate what matters or facts he wished to rely upon, additional to those already referred to in the extensive submissions and supplementary submissions in the event of a hearing of the substantive appeal.

14 In our view, this is a very clear case where it is appropriate to consider the substantive appeal, should the application for leave be granted. The issues which had to be considered on the leave application would place the Court, as presently constituted, in a convenient position to also determine the substantive questions on the appeal. To follow the course suggested by the applicants, in the event that we were to grant leave, would have imposed a quite unnecessary additional burden on this Court, requiring three judges to prepare for and determine the appeal at a later time. It would also mean that unnecessary additional costs would be incurred on both sides. As the respondents submitted, a hearing of the substantive appeal would likely result in resources having to be diverted at a time when the parties were pre-occupied with the trial of the proceedings.

Obligation resting upon legal practitioners

15 There is a significant public interest in the timely resolution of disputes and the most efficient utilisation of scarce court resources. We doubt whether the legal representatives of the applicants, as officers of the Court, gave any sufficient consideration in preparing or presenting their case as to how they might best assist the Court in the use of its limited resources.[9] Because of the complexity and increased length of litigation in this age, the obligation which rests upon legal practitioners to give the courts such assistance has become increasingly important. Practitioners must ensure that the course chosen in the interests of the client is compatible with this overarching duty. It is a responsibility which should be at the forefront of every practitioner's considerations throughout the pre-trial and trial process. Without such assistance from the legal profession, the courts are unlikely to succeed in their endeavour to administer justice in a timely and efficient manner.

16 As a consequence of orders made on the directions hearing, the parties were prepared to argue the appeal at the same time as the application for leave to appeal. They were permitted to file further submissions to address any additional matters upon which they wished to rely in the event that we heard the substantive appeal.

17 By its draft notice of appeal, filed with the application for leave, the applicants sought the following orders in lieu of the costs order made against them:

- there be no order as to the costs of the application for an injunction;

- the costs before this Court be costs in the cause.

18 While these were the foreshadowed orders sought if leave were granted, counsel for the applicants informed the court at the directions hearing[10] that the applicants did not consider themselves constrained by the terms of the proposed notice of appeal. It was said that as proposed notices of appeal are often prepared in short timeframes the applicants did not consider themselves bound by the terms of the proposed notice of appeal. It was thus foreshadowed that the applicants might advance an argument on the appeal that if the appeal is allowed, the matter should be remitted to the Trial Division.

19 We drew to the attention of counsel, that while the applicants were not foreclosed from seeking to amend the draft notice of appeal and may be given some latitude in doing so, r 65.07 of the Supreme Court Rules contemplated the production of a proposed notice of appeal upon which the application for leave to appeal was to be determined. An application for leave rests upon the assumption that the draft notice of appeal represents the intended grounds of the appeal and the orders which will be sought. If different orders are intended, they must be the subject of an amendment of the draft notice.

20 In submissions filed after the directions hearing, the applicants gave notice that the proposed notice of appeal would be amended to seek orders, should leave be granted:

- that the respondents pay the costs of the appeal

- that the question of the application for an injunction should be remitted to be heard and determined at the time of the final hearing of the proceeding or alternatively, should be heard immediately after the hearing and final determination of the proceeding or alternatively, the costs of the conflict application be costs in the cause or reserved costs.

21 It can be seen that the orders now sought differed markedly from those in the original draft notice of appeal. An order remitting the matter to the judge who hears the trial would not be an appropriate course. The trial judge, burdened by the knowledge of the trial at which these issues would have been explored in much greater depth, would be in a more difficult position than we to determine how the application before Bell J should have been resolved. We note that the applicants did not seek to have the costs of the application for joinder reserved to the trial judge. The real purpose of an order remitting the matter to the trial judge emerged in the further supplementary submission of the applicants. They wish to seek an order from the trial judge following the trial, that the plaintiffs solicitors should pay the costs of the application for an injunction, pursuant to r 63.23 (1) of the Supreme Court Rules and that their right to those costs should await and depend upon the outcome of the trial.

22 The applicants did not seek an order against the plaintiffs' solicitors before Bell J and it does not arise for consideration on the appeal. The applicants are not entitled to seek different orders on appeal to those they sought at first instance.

23 The joinder application rested upon the claim that the plaintiffs' solicitors had acted for the applicants during a period prior to the litigation being commenced and that the plaintiffs' solicitors had breached their retainer and their fiduciary duties, given negligent advice and failed to take proper care of the applicants' interests. The applicants sought the injunction on the like bases that the plaintiffs' solicitors had previously acted for the applicants; alternatively that it would be unconscionable for them to continue to act in circumstances where they had acted so as to induce a wrong belief in the applicants that they were acting for the applicants or in their interests.[11] The injunctions sought against counsel were sought on the more limited basis that counsel were in possession of confidential information or were in breach of fiduciary duties of loyalty.

24 His Honour dealt with the interrelationship between the applications for an injunction and joinder as follows:

Because Kempsons would probably cease acting for the plaintiffs if leave to join were to be granted, I would not - to that extent - have to determine the injunction application. It is therefore convenient to deal with the application for leave to join Kempsons first. The injunction application in respect of the plaintiffs' counsel will have to be determined in any event[12].

After saying that leave would be given to join Kempsons as a defendant by counterclaim his Honour said:

The order allowing Kempsons to be joined makes it unnecessary to determine the application for the injunction in respect of that firm. The injunction was also sought to restrain the plaintiffs from retaining or continuing to retain their present three counsel. It is to this outstanding aspect of the injunction that I now turn[13].

25 His Honour then dismissed the application for injunctions against the plaintiffs' counsel, his Honour concluding that counsel had not been given confidential information and that the plaintiffs' solicitors had only briefed counsel to advise the plaintiffs.

26 Before Bell J, the applicants submitted that they were the successful party, and thus entitled to their costs. They submitted that the Court had effectively granted them the result they sought by granting the joinder application thereby preventing the plaintiffs' solicitors from continuing to represent the plaintiffs. Thus they contended that they would have succeeded in restraining the plaintiffs' solicitors, had the application for an injunction been determined on its merits.

27 As for the applicants' failure to obtain an injunction against counsel, the applicants submitted that the injunction sought against the solicitors and the injunction sought against counsel were not put on discrete bases. Accordingly it followed, they said, that if, on the merits, they would have succeeded against the solicitors, then the failure to obtain an injunction against counsel did not disentitle the applicants to their cost of the application for an injunction. For the reasons that follow, this submission cannot be sustained.

28 Bell J commenced his consideration of the issue by noting that s 24 of the Supreme Court Act gave the Court a wide discretion to award costs - albeit that the discretion must be exercised judicially. His Honour summarised a number of principles, including that in most cases costs should follow the event,[14] before concluding that the 'event' in this case was the application for the injunction - it being the application for injunctions which 'overwhelmingly dominated'[15] the seven days of hearing.

29 His Honour rejected the applicants' argument that they had been substantially successful in both applications on the basis that it ignored three important considerations which were described as follows:[16]

First, the plaintiffs said early in the proceedings their then solicitors [Kempsons] would not be acting for them if they were joined as parties to the defendants' amended counterclaim. Second, the grounds for the injunction sought against the solicitors were not established. Third, the plaintiffs' counsel were not restrained from acting, despite the injunctions being pressed heavily against them.

30 With respect to the second matter, Bell J had stated earlier in his reasons that the application for an injunction against the plaintiffs' solicitors was not likely to have succeeded.[17] His Honour then concluded that the applicants should pay the costs of the conflict application, stating:[18]

[T]he fifth and sixth defendants will be ordered to pay the plaintiffs' costs of the summons dated 10 August 2006 [the conflict application]. Very little time was taken up with the summons dated 20 December 2006 [the joinder application]. The issues were so mixed the plaintiffs could not have withdrawn for that small portion of the argument. In the circumstances, the most practical course is to regard all the plaintiffs' costs of the interlocutory proceedings as being related to the first summons. They should have the whole of their costs of participating in the interlocutory proceedings on that basis.

31 If leave is granted, the applicants seek to agitate the following grounds of appeal:

His Honour erred in determining the question of costs on the basis that the defendants failed in their attempt to restrain Kempsons from acting for the respondents, alternatively that the grounds for the Conflict Application in respect of Kempsons were not established;
Alternatively, his Honour erred in failing to provide reasons, or any adequate reasons, for his determination that the appellants had failed in their attempt to restrain Kempsons from acting for the respondents, alternatively that the grounds for the Conflict Application in respect of Kempsons were not established;
His Honour erred by taking into account, and erroneously attributing to the appellants, submissions not put by counsel for the appellants, namely:

a. that the Conflict Application in respect of Kempsons was sought on the basis that the sixth defendant (Michael Artusa) would be a witness on contentious issues in the principal proceeding;

b. that the Conflict Application and the Joinder Application were not put on a discrete basis;

His Honour erred in failing to give sufficient weight to the appellants' submission that the Conflict Application in respect of Kempsons and the Conflict Application in respect of counsel were not put on discrete basis;
His Honour erred in determining that the Conflict Application in respect of counsel was strongly and independently pressed by the appellants in circumstances where the respondents had indicated their willingness at an early stage to withdraw if Kempsons were joined;
His Honour erred in determining that the substantive event of the Conflict Application was the determination of the application in respect of counsel;
That the errors in his Honour's judgment and reasoning outlined above are directly attributable to the significant delay between the date of the Costs Judgment, namely 6 May 2009, and the hearing of the interlocutory Conflict and Joinder Applications on 5-8 and 12-14 February 2007, and the hearing of submissions on costs on 11 May 2007.

32 The applicants delivered further submissions in which they sought to add additional grounds of appeal to those in the proposed notice of appeal. To a large extent, there is an overlap between the proposed additional grounds and the matters already set out in the applicants' earlier submissions. The additional grounds are as follows:

Justice Bell erred in failing to consider the following matters in determining the application for costs and in support of the contention that Michael Artusa had engaged Kempsons to act on his behalf:

(a) that Main Road had no authority to have engaged Kempsons to have acted on its behalf and thus the retainer was between Kempsons and Artusa, at least from March 2003 to 30 May 2003;

(b) Michael Artusa and his company paid the tax invoices of Kempsons and was entitled to be reimbursed for the said payments;

(c) Michael Beswick provided legal advice to Mr Michael Artusa;

(d) Michael Artusa assisted in the preparation of the case for the Respondents;

(e) Michael Beswick communicated directly and indirectly with Michael Artusa;

(f) Michael Beswick drew documents that were provided to Michael Artusa, his wife and his company to execute;

(g) Michael Artusa was requested by Michael Beswick to provide a witness statement;

(h) Michael Artusa was provided with confidential and legally privileged documents such as the draft statement of claim, and the memorandum of advice of counsel;

Justice Bell erred in taking into account the following matters in the application for costs and in determining whether there was a retainer between Kempsons and Michael Artusa:

(a) the subsequent conduct of the parties as deposed to in the affidavits of Douglas James dated 25 August 2006, Peter Lithgow dated 24 August 2006 and James Cyngler dated 17 August 2006;

(b) the standing of Michael Artusa to initiate legal proceedings on behalf of Main Road, and ignoring his duty as a director of Main Road to have initiated such a proceeding and his ability to have sought an order pursuant to s 236 and s 237 of the Corporations Act (Commonwealth) 2001;

the evidence of the belief of Michael Beswick that he was acting on behalf of Main Road in paragraph 17 of his affidavit dated 23 August 2003 was not admissible and should have been disregarded;

Justice Bell erred in failing to find that the application to restrain Kempsons from continuing to act on behalf of the Plaintiffs had been made and should have been granted on the following grounds:

(a) Michael Beswick was a potential witness;

(b) there was an application to amend the defence that would have made serious allegations against Michael Beswick and would have made it untenable for Kempsons to have continued to have acted; and

(c) that there was an application to join Kempsons as a defendant to the counterclaim that would have made it untenable for Kempsons to have continued to have acted.

The evidence provided in the affidavit of Michael Beswick dated 23 August 2003, was false and misleading and should not have been taken into account, at all.

33 The applicants submitted before his Honour that as there had been no determination of the application to restrain the plaintiffs' solicitors it was necessary for his Honour to determine what he would have decided.[19] His Honour agreed to adopt that approach. The circumstances in which a court may do so where there has been no decision on the merits was considered in Jeruth Pty Ltd v Haybale Pty Ltd & Ors[20] where Redlich J said:

If a supervening event or compromise so removes or modifies the issues in dispute that it cannot be said that one side has won, the Court should not attempt to assess the merits of the case. This is particularly so where the issues are complex or questions of credit are involved. If it is clear on the undisputed facts that one party would almost certainly have succeeded if the matter had been fully tried, the Court may make an order in favour of that party.

Where it is not clearly discernible that a party would have won and it appears that both parties have acted reasonably in commencing and defending the proceedings until the litigation was compromised or became futile, the Court would usually make no order as to costs. But where the Court concludes that a party has acted unreasonably prior to or during the course of the litigation the making of a costs order against it may be justified.

It is not in doubt that a party may rely upon matters of undisputed fact disclosed by the pleadings, affidavits, discovered documents or interlocutory relief granted in the course of proceedings to establish that the party acted reasonably and would have succeeded had the matter been tried... Such a course is appropriate where the hearing can be of relatively short compass and those matters that are not in dispute readily identified. The boundaries of such an inquiry must be strictly observed to ensure that an inappropriate use of Court resources does not occur.

34 The parties accepted that Bell J was in a position to determine what would have been the outcome of the application to restrain the plaintiffs' solicitors and that it was appropriate for him to state that outcome. The respondents rely upon the conclusion, expressed in the costs judgment, that the applicants would have lost had his Honour been required to decide whether to restrain the plaintiffs' solicitors. They further rely on the fact that the applicants lost the allied application to restrain plaintiffs' counsel. Alternatively they submit that even if the applicants might have won, the applicants acted unreasonably in pursuing the application when the joinder application was a simpler and less expensive procedure which would have achieved the same objective and rendered the application for an injunction unnecessary

35 Central to the applicants' submissions in support of the original and additional grounds is the proposition that the trial judge had heard the evidence and submissions and was in a position to determine who would have won. They submitted that the evidence was persuasive that the plaintiffs' solicitors had acted for the applicants. Hence it was submitted that the trial judge was in error to have concluded that they would have been unsuccessful in obtaining an injunction against the plaintiffs' solicitors. They relied upon the following matters:

(a) the applicants paid tax invoices of Kempsons.

(b) Mr Michael Beswick (a solicitor of Kempsons) provided legal advice to Mr Artusa directly (or at least indirectly) not to resign as a director and releases were sought from him to the knowledge of, and in the course of negotiations between, Mr Beswick and the respondents.

(c) Mr Artusa assisted in the preparation of the case for the respondents.

(d) Mr Beswick communicated directly (and indirectly) with Mr Artusa.

(e) Mr Beswick drew documents that were provided to Mr Artusa, his wife and his company to execute.

(f) Mr Artusa was requested by Mr Beswick to provide a witness statement.

(g) Mr Artusa was provided with confidential and legally privileged documents such as the draft statement of claim and the memorandum of advice of counsel.

36 Bell J having considered the merit of the application to restrain the plaintiffs' solicitors from continuing to act, stated that the application was unlikely to have succeeded.[21] The applicants complain that his Honour's reasons for this conclusion were insufficient. In addition they submit that having regard to certain errors contained within his reasons and the inordinate lapse of time between the hearing of the costs argument and the decision, it should be set aside. His Honour was however ruling on a question of costs - rather than upon the question of whether or not he should grant an injunction. In such circumstances, it is to be expected that the reasons for any conclusion as to the prospects of success of the underlying application would be more sparse than if the underlying application was being determined.[22]

37 In the course of their submissions below, the applicants attacked Mr Beswick's evidence that neither he nor his firm had ever been engaged by the applicants, describing that evidence as 'unsatisfactory'.[23] Bell J rejected the submission. His Honour expressly stated that he accepted Mr Beswick's evidence that neither he nor his firm had acted for the applicants, and that they had done nothing to induce any belief in the applicants that the firm were acting for the applicants. He considered the attack on Mr Beswick's credit was 'without foundation'.[24] In such circumstances, the reason was plain why his Honour concluded that the application for an injunction against the plaintiffs' solicitors was not likely to succeed. Nothing put by the applicants before us suggests that his Honour was wrong in rejecting the attack made on Mr Beswick. It is apparent from the language employed by his Honour in his primary judgment that he was anxious to avoid the expression of any view that would reflect unnecessarily upon the credit of the applicants and so affect his ability to hear the trial. As his Honour stated at the time of writing his costs judgment, he was no longer subject to such constraints.

38 In any event, we have read the evidence that was put before his Honour. Mr Beswick's affidavit evidence was both clear and cogent. He swore:[25]

8. Neither I nor Kempsons have ever been engaged by Artusa or by his company, A Team Diamond Headquarters Pty Ltd ('ATDH'), and neither I nor Kempsons have ever engaged counsel to act on behalf of Artusa or ATDH.

9. I refer to paragraph 57 of Artusa's affidavit in which he says he believed that Kempsons had always been acting on his behalf. That was not so. I have never suggested to Artusa that either I or Kempsons were acting on his behalf, and I have done nothing which would permit that impression to arise.

...

54. I wish to speak plainly about what I said to Artusa. On many occasions I told him that he was likely to be a defendant; and Kempsons was not acting for him. Present on many of these occasions were Douglas James, solicitor, who worked for Kempsons and Trewartha. On every occasion Artusa acknowledged that he understood that and said that he did not want to get his own lawyer and accepted that he may be a defendant but wanted to cooperate.

39 Mr Beswick, in his affidavit, also refuted the detail of the applicants' evidence which it was submitted supported the existence of a retainer. Further, we note that Mr Beswick was cross-examined before his Honour. Notwithstanding a suggestion of recent invention in respect of one document about which he was cross-examined, no successful challenge was made to Mr Beswick's evidence during cross-examination.[26] Additionally, Mr Beswick's evidence was supported by other affidavit evidence. Specifically, Mr James' affidavit[27] at paragraphs 5, 14 and 15 supports paragraph 54 of Mr Beswick's affidavit. Similarly, the affidavit of Mr Alan Trewartha[28] (the second plaintiff/second respondent), at paragraphs 146, 148 and 152, confirms paragraph 54 of Mr Beswick's affidavit. Mr Beswick's evidence was persuasive as was the evidence of others who deposed that the applicants had been told by Mr Beswick to obtain independent advice.

40 The application for an injunction invoked the exceptional jurisdiction of the court to restrain an alleged abuse of process. It would have had the effect of denying the plaintiffs the lawyers of their choice. It was the applicants who bore the onus, in the interlocutory proceeding, of establishing to the requisite degree, that an injunction should be granted preventing the plaintiffs' solicitors from acting for the respondents. Where the tribunal at first instance, having seen and heard a critical witness, whose account is supported by other oral and documentary evidence, places significant reliance on that witness's testimony to reach a conclusion in favour of the party upon whom the burden of proof does not lie, it is ordinarily a difficult task to induce a Court of Appeal to interfere with that finding unless it has clearly proceeded upon a wrong principle.[29]

41 In this case his Honour did not see and hear all the witnesses.[30] But there was cross-examination of Mr Beswick. The response by the applicants on appeal, but not before the trial judge, was that the evidence of Mr Beswick 'should not have been taken into account at all',[31] because it was 'false and misleading'.[32] The applicants persisted with submissions in support of this newly added ground in circumstances where the suggestion that Mr Beswick's evidence was false or misleading was never put to Mr Beswick in cross-examination below. The conduct of the applicants in pursuing this course disclosed a failure to appreciate the significance of the failure to comply with the rule in Browne v Dunn.[33]

42 In Rees v Bailey Aluminium Products Pty Ltd & Anor[34] this court said concerning the rule in Browne v Dunn:

The rule arises from an obligation of fairness to both the witness and the party calling the witness. The cross-examiner must confront the witness whose evidence is to be contradicted by other evidence or to be otherwise challenged. The obligation will also arise where the cross-examiner intends to adduce evidence as to the conduct of the witness which may be a matter of controversy. The rule rests upon notions of fairness and is designed to give the witness and the party calling that witness an opportunity to meet that challenge. The rule facilitates the tribunal's assessment of the reliability and accuracy of the witness. Consequently if matters in controversy are not 'put' to the witness in cross examination the tribunal's capacity to assess the merit of the allegation subsequently to be made and the credit of the witness is likely to be impeded.[35]

43 Browne v Dunn is a rule of law and practice. Any relaxation of the obligation to comply with this rule increases the risk of injustice to the witness and the party calling that witness. Cross examination provides the primary means by which the tribunal of fact can make the necessary assessment of the witness in relation to issues on which the witness is to be impeached.[36] Notwithstanding that the applications to restrain the solicitors and counsel and the joinder application were interlocutory, it was necessary for the applicants to give Mr Beswick the opportunity to deal with any submission they proposed to make concerning the serious allegation that his evidence was false and misleading. In circumstances where the applicants conducted only a limited cross-examination of Mr Beswick and denied the tribunal of fact the benefit of any cross examination which might have supported such a hypothesis, the applicants now seek to contend as a ground of appeal that Mr Beswick's evidence should not be taken into account because it was false and misleading.

44 During the course of argument before us, counsel for the applicants stated that the cross-examination of Mr Beswick below had been limited by his Honour. However, when asked, counsel was unable to identify where in the transcript this had occurred. Accordingly, we asked counsel for a one page memorandum with the relevant page and line numbers of the transcript where any limit was placed on Mr Beswick's cross-examination. In what we assume was purported compliance with our request, we were provided with additional copies of pages 341, 652-3 and 680-717 of the transcript. No particular lines were identified. Having re-read those pages of the transcript, the true position appears to be that no limit was placed upon the cross-examination of Mr Beswick by his Honour.

45 It was pointed out during the course of oral submissions that different arguments were now being advanced to show that an injunction should have been granted. We nevertheless permitted the applicants to develop their submission in this regard. The centrepiece of the submission that Mr Beswick's evidence was false and misleading related to the question of whether Mr Beswick acted for the first respondent, Main Road Property Group Pty Ltd ('Main Road') in April 2003. The applicants contend that the respondents' own material demonstrates that Mr Beswick's gave untruthful evidence. They point to paragraph 27 of Mr Beswick's affidavit[37] and paragraph 65[38] of the affidavit of Mr Tewartha.[39]

46 In paragraph 27 of his affidavit, Mr Beswick swore:

Up to early 2003 Kempsons were engaged by Main Road in consequence of Artusa's request, and was engaged in respect of the allegation of overcharging by the builder. On 6 April 2003, Trewartha attended at my home and on behalf of Angelo Russo and himself, requested that Kempsons act on their behalf, and on behalf of the other investors as well as Main Road. I did not respond immediately, as I wished to give consideration to what had been done in 2002 and earlier in 2003 to ensure that was no conflict. I did so, and having concluded that at all times I had been acting for Main Road, albeit instructed by Artusa as its director, that Kempsons could accept that engagement. The file on the matter, encompassing the expanded instructions, records it being opened in April 2003.

47 Paragraph 65 of Mr Trewartha's affidavit provided:

I received written advice from Kempsons on 10 April 2003 that for it to act on behalf of Main Road and for the unit trust, it would have to be appointed by the directors. As Paul Pelligra was a director, this was not likely to happen. Thus it was necessary for Paul Pelligra to be replaced as a director, and also Artusa, and for new directors to be appointed; alternatively the unit holders should change the trustee. Kempsons were instructed to write to Paul Pelligra calling upon him to resign as a director, which he did on about that date.

48 The applicants contend that as at April 2003, Mr Beswick had no authority to act for the first respondent because one of its directors (Mr Pelligra) would not agree. From this point, the applicants contend that Mr Beswick knew that he was not acting for the first respondent in April 2003. It is then contended that the only person Mr Beswick could be acting for was the second applicant - and that therefore all of Mr Beswick's evidence was false.

49 When considering this application and more particularly, this argument, it is necessary to have regard to the way in which the case was conducted below. On this issue, it is to be noted that the case was conducted below on the basis that the second applicant did not deny that at all times, the plaintiffs' solicitors represented the first respondent and the various investors.[40] In our view, the passages identified in the evidence by the applicants cannot, without more, justify a submission that Mr Beswick's evidence was false or constituted a misleading of the Court. The material pointed to by the applicants does not compel a conclusion either that Mr Beswick lied or that he was acting for the applicants in April 2003, whatever be the position in respect of the second applicant's actual or ostensible authority to engage solicitors on behalf of the first respondent. At least one innocent hypothesis emerged during the course of oral argument. Moreover, none of this was put to Mr Beswick in cross-examination so that he was denied the opportunity to address the matter on which the applicants now rely.

50 There is no basis for any complaint concerning the adequacy of his Honour's reasons. The reasons rest upon his Honour's acceptance of the evidence of Mr Beswick and inform the applicants why the costs order was made against them. As was said by Ashley JA[41] in Franklin v Ubaldi Foods Pty Ltd:[42]

Reasons must be such as reveal - although in a particular case it may be by necessary inference - the path of reasoning which leads to the ultimate conclusion. If reasons fail in that respect, they will not enable the losing party to know why the case was lost, they will tend to frustrate a right of appeal, and their inadequacy will in such circumstances constitute an error of law.

51 In our view, the reasons of Bell J satisfy this test. That is, his Honour's reasons disclose the path of reasoning and enable the applicants to know why the costs order about which they make complaint was made against them.

52 The applicants suggest that the adequacy of reasons is to be determined by considering only his Honour's costs judgment. We do not agree. The explanation for the events that gave rise to the application for costs are in part to be found in his Honour's reasons for dismissing the application to restrain plaintiffs' counsel. As was said on a number of occasions below, the application to restrain counsel was not put on a discrete basis from the application to enjoin the plaintiffs' solicitors.[43] In essence, the argument was that if the application was successful against the plaintiffs' solicitors, then it must also be successful against counsel briefed by them. The written submissions before Bell J bear that out. In the primary judgment Bell J observed that the evidence was overwhelming that counsel were only briefed to advise the plaintiffs.[44] His Honour also noted that the second applicant did not allege that counsel acted for him.[45] The applicants did not allege that counsel had come into possession of some confidential information independently from their instructing solicitors but rather that counsel were to be disqualified from acting for the plaintiffs once it was established that the plaintiffs' solicitors were in a solicitor-client relationship with the applicants. As the plaintiffs did not establish the latter, and no separate basis for enjoining counsel was established, the application to restrain counsel failed. Thus the reasons given by his Honour on the application for joinder and injunctions discloses the path of reasoning for rejecting the application to restrain the plaintiffs' solicitors.

53 The applicants also make complaint that there were specific errors in his Honour's reasons. For example, the applicants contend that his Honour was incorrect when he stated that a ground upon which the applicants sought the injunction was that the second applicant would be a witness on contentious issues. The submission that they made referred to Mr Beswick and not the second applicant. They point to his Honour's statement that the applications to restrain the plaintiffs' solicitors and the joinder application were not put on a discrete basis. The applicants' submission was that the applications to restrain the solicitors and counsel were not made on a discrete basis.

54 The applicants contend that the errors they have identified in his Honour's reasoning are directly attributable to the significant delay between the hearing of the submissions on costs and the date of the costs judgment.[46] We were not informed by the parties as to the circumstances which gave rise to the delay although it is apparent that the parties continued to prepare for trial during this period. The delay necessitated close scrutiny of the reasons and the affidavit material.[47] The submission that Mr Beswick was likely to be a witness at the trial had no significance in the event that it was not established that he had acted for the applicants at any material time. The misstatement of the applicants' argument that the application to restrain the plaintiffs' solicitors was not made on a discrete basis from the application to restrain counsel did nothing to advance the applicants' contention that the applications to restrain the plaintiffs' solicitors would have been resolved differently from the attempt to restrain counsel. It served to place the applicants in a more favourable position than was warranted. And neither party suggested on the appeal that the applications for injunctions and the joinder application were not discrete claims despite their common substratum of facts. The errors were not material to the determination by Bell J that the attempt to restrain the plaintiffs' solicitors would have failed and do not detract from his Honour's principal conclusion that the grounds for the injunction sought against the solicitors were not established

55 The applicants also submitted that his Honour was in error in finding that the application to enjoin counsel was strongly and independently pressed by the applicants after the time when it was made clear that the plaintiffs' solicitors would cease to act for the plaintiffs if they were joined as defendants to the counterclaim. We do not consider it a matter of great moment at what point in time, during the hearing, it was first stated that the plaintiffs' solicitors would not continue to act if they were joined as defendants. The costs order was made against the applicants because his Honour concluded that the application to restrain the plaintiffs' solicitors had been fought to a conclusion, and that it was not likely to succeed. There was no appellable error in this approach. Moreover, it should have been obvious to the applicants from a very early point in time that if they succeeded in joining the solicitors, the high probability would be that they and counsel which they had briefed would no longer act for the respondents. His Honour found that the applicants had delayed in making their application for joinder. The applicants did not do so until after the voluminous affidavit material and submissions from all parties in relation to the application for injunctions had been served and filed. No error is disclosed in relation to this aspect of his Honour's judgment.

56 It is true that his Honour's reasons do not specifically avert to each of the matters now relied upon in the applicants' submissions and in the proposed grounds of appeal but there is nothing to suggest that such consideration as was appropriate was not given to each of them. The requirement to give reasons does not demand that each and every matter considered by a court be explicitly referred to in that court's reasons.[48] Further, it is of some significance to note that nowhere in the applicants' submissions on costs below[49] was it ever submitted to his Honour that he should take into account the various matters which are now identified as matters which called for specific reference. Before us the applicants seek to rely upon substantially different arguments to those relied upon before Bell J. The emphasis in both the applicants' written submissions on costs and the applicants' oral submissions at trial was the argument that they had achieved their objective; that the failure of the application against counsel did not add to the length of the hearing; and that there was no conduct on their part which disentitled them to an order for costs.

57 A close analysis of the submissions advanced before this court which rest upon the material presented to his Honour discloses that it was well open to his Honour to conclude that the application to restrain the plaintiffs' solicitors was not likely to succeed. We are not persuaded that his Honour's conclusion that the application to restrain the plaintiffs' solicitors was likely to have failed was wrong or attended with sufficient doubt to justify a grant of leave.

58 Further, a number of the matters identified by the applicants are of limited (if any) relevance in the circumstances of this case. For example, the question of whether the second applicant was provided with confidential and legally privileged documents (such as the draft statement of claim or a memorandum of advice of counsel) does not necessarily lead to a conclusion favourable to the applicants. It was open to his Honour to conclude that each of the matters relied upon by the applicants which required explanation were adequately dealt with by Mr Beswick. The second applicant may have hoped that in cooperating with the respondents he might avoid the possibility that they would bring proceedings against him. No facts have been drawn to our attention that would require the affirmative conclusion that the plaintiffs' solicitors were acting for him or behaved in a manner which led him to believe that they were acting for him. The matter was put succinctly by his Honour in an exchange with counsel for the applicants below as follows:[50]

HIS HONOUR: I could be wrong about this, but I get the impression from reading the plaintiffs' material that much of what you say about the keyman position of Artusa and his company is not disputed. Rather what's said, and I hope I do it justice in summarising it in this way, is that Artusa elected by reason of pang of conscience to assist in putting right what he had helped to put wrong.

APPLICANTS' COUNSEL: Yes.

HIS HONOUR: And that he was warned at all times about the possibility of his involvement and so on.

APPLICANTS' COUNSEL: Yes.

HIS HONOUR: So that there is a confession and avoidance at the heart of the plaintiffs' case.

APPLICANTS' COUNSEL: He's a volunteer in other words, yes.

HIS HONOUR: And there's frequent reference to warnings and so on and there's some evidence about that on your side as well. At the heart of that approach is the contention that he should have realised that he wasn't being acted for by these lawyers who were acting for the investors and not for him.

APPLICANTS' COUNSEL: I agree with Your Honour's summary.

59 The applicants also contend that his Honour erred in stating that the substantive event was the failure of the application for an injunction against counsel. That misconceives his Honour's reasons. His Honour found that the 'motive force in this interlocutory proceeding was the defendants' application to restrain the plaintiffs' solicitors and counsel from continuing to act'.[51] The written submissions filed in the appeal acknowledge that the application against counsel was 'entirely contingent upon the applicants succeeding' against the plaintiffs' solicitors.[52] The continuing attempt to restrain the plaintiffs' solicitors did not cease to be relevant to the question of costs because the joinder application was granted. A review of the transcript of the seven days of hearing before his Honour amply demonstrates that the injunction applications occupied the vast bulk of the hearing time. In our view, his Honour was correct to determine the question of costs by reference to the likelihood of success in the application to restrain the plaintiffs' solicitors, and the failure of the application to restrain plaintiffs' counsel.

60 Having examined the evidentiary material put before us, we can see no basis upon which it could be concluded that it was not open to his Honour to find that the applicants had failed to make out their case for an injunction, let alone as the applicants contend, that he was bound to so find. It has not been demonstrated that the order ultimately made was wrong or attended with sufficient doubt to justify the granting of leave to appeal. We agree with his Honour's conclusion that the applicants failed to establish grounds for restraining the plaintiffs' solicitor and counsel.

61 Had it become necessary for this court to determine the appropriate order for costs, there is a compelling reason why we would have made the same order as that made by his Honour. Given the limited judicial resources of the courts, it is incumbent upon parties to pursue applications they wish to make with reasonable efficiency and expedition. The time of the court is a publicly funded resource.[53] We refer again to the obligation which rest upon practitioners to assist the court in utilising its scarce resources in the most efficient manner. A reasonable litigant in the position of the applicants should have realised that there was every likelihood that upon the success of the joinder application the need to obtain injunctions against either the solicitors or counsel would be obviated. The prospect that following joinder, the plaintiffs' legal representatives would withdraw, had been indicated by senior counsel for the respondents during the trial and should have been recognised by the applicants as the likely consequence.

62 While there was debate before us as to whether the conflict application occupied some six-and-a-half days of the hearing and the joinder application occupied only half a day (those timeframes initially being accepted by counsel for the applicants, but later disputed on the basis of an overlapping of issues), during argument it became apparent that if it was (as the applicants contend) the objective of the applicants to have the plaintiffs' solicitors prevented from acting further in the litigation, then an even simpler mechanism by which this objective might have been achieved was to pursue an application to amend the applicants' defence by the adding of the paragraph which alleged breaches of retainer, fiduciary duties and a duty of care and misleading and deceptive conduct on the part of Mr Beswick.

63 There could be little doubt that an application dealing with only that amendment to the applicants' defence would have had the practical effect of preventing the plaintiffs' solicitors from continuing to act. Further, any such application would have taken far less time than was taken before his Honour. In such circumstances, the joinder application should have been pursued first. The joinder application could not have taken more than one day. If, upon the success of an application to amend or on the joinder application, the respondents continued to engage the same solicitors, then, and only then, should an injunction have been sought.

64 In our view it was unreasonable to pursue the injunction application before the joinder application. Courts have long held that a party may be deprived of its costs where multiple applications are brought in circumstances where one would have sufficed or in cases where a less expensive procedure could have been adopted.[54] That provides a further justification for the order made by his Honour on the question of costs. It is the order we would have made had we been called upon to make a discretionary order.

65 For these reasons, the application for leave to appeal must be dismissed. If contrary to our view, a grant of leave for any of the reasons advanced by the applicants was appropriate, we would, for the reasons we have given, dismiss the appeal.

[2] The applicants allege the solicitors were acting for them.

[3] [2008] VSCA 115, [10] and [11].

[7] This does not include an additional two lever arch folders containing 27 authorities filed and served by the applicants.

[8] The applicants' written submissions on costs below were exhibited as Exhibit MAA17 of Mr Artusa's affidavit sworn 19 May 2009.

[9] See [33] of these reasons and Jeruth v Haybale [2004] VSC 319, [4]-[6] as to the importance of such an approach when seeking costs where there has been no determination on the merits

[10] Conducted by us on 25 August 2009.

[11] See his Honour's formulation of this alternative basis at T70.23 - 71.11.

[12] [7] of his judgment of 1 March 2007.

[13] [64] of the judgment of 1 March 2007.

[14] Oshalck v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97 (McHugh J).

[19] See Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106; (2000) 179 ALR 664.

[22] Cf Barlow v Hollis [2000] VSCA 26, [15] and [16].

[23] See paragraph 8 of Mr Beswick's affidavit sworn 23 August 2006 (Exhibit MAA5 to the affidavit of Mr Artusa sworn 19 May 2009).

[29] See Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549, 553 (Griffith CJ); Fox v Percy [2003] HCA 22; (2003) 214 CLR 118; Devries v Australian National Railways Commission (1993) 177 CLR 472; Pledge v Roads Traffic Authority [2004] HCA 13; (2004) 205 ALR 56; CSR v Maddalena [2006] HCA 1; (2006) 224 ALR 1.

[30] While there was some limited cross-examination of Mr Beswick and Mr Trewartha, there was no cross-examination of the remaining deponents (Mr Artusa (who swore affidavits on behalf of the applicants) and Messrs Cyngler, Lithgow, Russo, Galtieri and James (who swore affidavits on behalf of the respondents)). As to the lack of any cross-examination of Mr Artusa, see T248.4 - .28.

[31] See the fourth of the new additional proposed grounds of appeal.

[36] Advanced Wire & Cable Pty Ltd & Anor v Abdulle [2009] VSCA 170, [13]; Bulstrode v Trimble [1970] VicRp 104; [1970] VR 840; Reid v Kerr (1974) 9 SASR 367, [373]-[374] (Wells J).

[38] Wrongly identified as paragraph 53 in paragraph 5 of the applicants' further supplementary submissions dated 27 August 2009.

[40] See for example T281.9 - .12. See also paragraph 11 of Mr Artusa's affidavit sworn 10 August 2006.

[41] With whom Warren CJ and Nettle JA agreed.

[46] See ground 7 of the proposed notice of appeal.

[47] See generally Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189; (2004) 140 FCR 17, 32 [66] and following (and in particular [71] and [72]) and Hadid v Redpath [2001] NSWCA 416.

[48] See generally Dornan v Riordan (1990) 24 FCR 564, 567; Housing Commission of New South Wales v Tatmar Pastoral Company Pty Ltd [1983] 3 NSWLR 378, 386; Sun Alliance Insurance Limited v Massoud [1989] VicRp 2; [1989] VR 8, 19; Harrison v Mansfield [1953] VicLawRp 60; [1953] VLR 399, 404 and State of Victoria v Subramanian [2008] VSC 9; (2008) 19 VR 335, 341 [16].

[49] Exhibit MAA17 of the affidavit of Mr Artusa sworn 19 May 2009.

[53] See Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 258 ALR 14, [5] (French CJ).

[54] See for example Young v Thomas [1892] 2 Ch 134; Nally v Walsh [1899] VicLawRp 174; (1899) 24 VLR 929; Maher v Maher [1919] VicLawRp 81; [1919] VLR 577; In the matter of The Real Estate Mortgage and Deposit Bank Limited (1897) 3 ALR (current notes) 29; London Steam Dyeing Co v Digby (1885) 36 WR 497 and Allen v Oakey (1890) 62 LT (NS) 724.

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Cases Cited (12)