Reasons For Refusing The Application
15 The first reason why, in my opinion, the application should be refused is that, as was conceded in argument, there is no guarantee that certain witnesses will not give evidence on the issues of liability and damages. Whilst the plaintiff stated it had filed all its evidence in chief, it did not rule out the possibility that evidence in reply may be filed from a witness going to both issues. In my view, it would require an exceptional case for the Court to order a separate hearing of liability and damages when any witness is likely to give evidence on both issues. The reasons are obvious. A case should be conducted on the basis that the witness is cross-examined on all issues at the same time and in the context of all issues, because his or her evidence on one issue may impact on the acceptability of his or her evidence on the other. If there is not adherence to this practice difficult questions arise for the Court as to the extent to which cross-examination on the matter not being litigated should be allowed, and for the cross-examiner as to how far matters not in issue can and/or should be pursued, and how that evidence should be treated in the overall assessment of the witness. In my opinion, the cross-examiner should not be precluded, particularly where credit is in issue, from cross-examining on the issue of damages merely because the only matter being litigated is liability. That not only causes difficulties for the cross-examiner, but also for the Court. The Court may be prevented from making a fully informed assessment of the credibility of the witness if the cross-examination is truncated, or if certain contradictory material cannot be led because the cross-examination goes only to credit and not to an issue.
16 A further difficulty, in these circumstances, is that if a Judge hearing the issue of liability makes any finding as to the credit of a witness, who is subsequently to give evidence in the event of the question of damages being litigated, that Judge will, in all probability, be disqualified from hearing the matter and, accordingly, the store of knowledge he or she has obtained from the initial hearing is lost, as is the impact of the evidence upon him or her: Australian National Industries Limited v Spedley Securities Limited (In Liquidation) (1992) 26 NSWLR 411. The finding may not necessarily have to be an adverse one to have this result. This is but one consequence, which leads to an inefficient use of the Court's and the parties' time and resources.
17 The next reason why I do not consider it appropriate to make the order is that I proceed on the assumption that the plaintiff, in bringing the litigation, believes it is entitled to damages. In the present case that has been confirmed. Two matters flow from that. Firstly, if the plaintiff does not succeed on the issue of liability there is a strong likelihood that an application will be made for leave to appeal and, if that application and the appeal are successful, the issue of damages will have to be addressed, possibly, in this case, but probably in most, by another Judge. Once the issue of damages is decided another application can be made for leave to appeal, thus prolonging the litigation even further. I have left out of this equation any application for special leave to appeal to the High Court. I see nothing efficient, in the administration of justice, in the sense of bringing about finality to litigation, or in the utilisation of the time and resources available to the Court and the parties, to have, in the general run of case, four potential hearings. In fact it seems to me an entirely inefficient use of such time and resources. It also means that the time during which the litigation is on foot is lengthened to a substantial extent. This is not in the interests of the Court or the parties. A real objective of the Commercial List is to have cases resolved quickly, so that parties will know what their respective financial positions are. The presently suggested approach thwarts that aim, with the resulting financial detriment to the parties.
18 Secondly, the costs of proving damages, on the assumption that the defendant is liable, will have to be incurred in any event. A plaintiff, bringing forward a case bona fide, must confront that, as must a defendant facing such a case. To suggest that the costs will be saved if the issue of liability is determined first is to make the pessimistic assumption that the plaintiff will not succeed on it at first instance or on appeal.
19 My next reason is that until there has been an assessment by the parties of the amount to which each says the plaintiff, if successful on the issue of liability, would be entitled, there can be no meaningful consideration by the parties of what the financial stake in issue is. In those circumstances, the parties are unable to give proper thought to an appropriate commercial settlement, consideration of which will be dependent not only on the amount involved, but also on the risk inherent in the issue of liability. In my opinion, it is highly desirable for parties involved in commercial litigation to focus on the whole case in determining how it can best be resolved.
20 Finally, I consider that in most cases, (and this does not seem an exceptional one), a Judge at first instance should decide as many issues as possible, so that in the event of an appeal the Court of Appeal will be in a position to dispose of the matter finally, if it seems appropriate to that Court to do so.
21 All of these matters, taken in isolation or in the aggregate, constitute compelling reasons why, at least in the normal run of case of which I think this is one, there should be no separation of issues. I have expressed similar views on a number of previous occasions: e.g. McLernon Group (Insurances) v Kelly & Ors (1 October 1999, unreported).