Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2017] VSCA 22

Court of Appeal (Vic)|2017-02-22|Before: Keogh J, Mr J, Elliot J, Elliott J, Warren CJ, Tate JA, McLeish JA

Maisano v Bodycorp Repairers Pty Ltd and Oakley Thompson & Co Pty Ltd (Unreported, Supreme Court of Victoria, Keogh J, 27 April 2016)

CONTEMPT - Alleged breach of undertaking with respect to payment into court - Construction of undertaking - Refusal to permit cross-examination in contempt hearing -Alleged denial of natural justice in accepting affidavit in absence of cross-examination -Alleged apprehended bias - Application for leave to appeal refused.

Introduction and summary...............................................................

Background - breach of franchise agreement.......................................

Undertaking given to Elliot J on 24 July 2015........................................

Orders of Gourlay JR on 11 and 13 November 2015................................

Contempt applications before Keogh J................................................

The Ruling ....................................................................................

Bodycorp's grounds of appeal............................................................

Ground 1 - Did the judge misconstrue the undertaking?.................................

Ground 2 - Did the judge err in taking account of Vagg's subjective intention as to what the respondent would do with the money if it was paid into its trust account?....................................................................................

Ground 3 - Was there a reasonable apprehension of bias?.............................

Ground 4 - Should the judge have allowed cross-examination of Vagg?.....

Ground 5 - Were the judge's reasons for judgment adequate?........................

Ground 6 _ - Did the judge have no basis for accepting the primary Vagg affidavit?...................................................................................................................._

Conclusion on the application for leave to appeal.................................

1 This is an application for leave to appeal from a decision of a judge of the Trial Division of this Court, Keogh J,[1] who held that a firm of lawyers, Oakley Thompson & Co Pty Ltd ('Oakley Thompson'), had not breached an undertaking it had given on an earlier occasion to Elliott J and had therefore not acted in contempt of the orders made by Elliott J[2] ('the Ruling'). The application for leave to appeal from the Ruling is brought by Bodycorp Repairers Pty Ltd ('Bodycorp') who had made the application to Keogh J for an order that Oakley Thompson be punished for contempt.[3] Bodycorp also brings an application to adduce further evidence in support of ground 3 of its proposed grounds of appeal.[4]

2 For the reasons that follow, we refuse the application to adduce further evidence and refuse leave to appeal.

3 In 2002, Bodycorp brought an application in the Federal Court against Mr Anuniziato Enzo Maisano ('Maisano')[5] alleging breach of a franchise agreement and inducing breach of contract (the 'Bodycorp proceeding'). The Bodycorp proceeding was transferred to the Supreme Court in 2005. The Australian Associated Motor Insurer ('AAMI') was named as the fourth defendant in the Bodycorp proceeding. Between 2004 and 2010, Maisano retained Oakley Thompson to act on behalf of him in the Bodycorp proceeding. On or about 2 March 2012, Oakley Thompson accepted instructions to recommence acting for Maisano in the Bodycorp proceeding. The Bodycorp proceeding was heard by Elliott J and, on 4 September 2013, was ultimately dismissed.[6] Bodycorp was ordered to pay the costs of Maisano, including any reserved costs.[7] An appeal to the Court of Appeal

was dismissed[8] and an application for special leave to appeal to the High Court was refused.[9]

4 By summons filed 23 April 2014, Maisano commenced a proceeding against Bodycorp in the Costs Court for a taxation of costs (the 'taxation proceeding').[10] While the taxation proceeding was on foot, Maisano terminated Oakley Thompson's retainer following a dispute over outstanding legal fees. On the understanding that Maisano did not wish to prosecute the taxation of costs, Oakley Thompson applied to Elliott J for orders to prosecute the taxation of costs against Bodycorp either on behalf of Maisano or alternatively in its own right.[11]

5 On 30 June 2015, Elliott J delivered judgment in a related proceeding indicating that he proposed to declare that Oakley Thompson had an equitable lien over the costs judgment made against Bodycorp in favour of Maisano in the Bodycorp proceeding, and that Oakley Thompson was entitled to have those costs taxed.[12] He also indicated that Oakley Thompson would be granted relief to enable it to prosecute the taxation in the Costs Court.[13] He found that Oakley Thompson was not entitled to pursue the taxation of costs on Maisano's behalf because to do so would be against Maisano's wishes and contrary to his instructions.[14] He ordered that any application by Oakley Thompson to be added as a plaintiff in the taxation proceeding be filed and served by 10 July 2015 and made returnable before him on 17 July 2015.[15]

6 On 24 July 2015 Elliott J pronounced formal orders declaring, relevantly, that:

The plaintiff [Oakley Thompson] has an equitable right over the costs judgment awarded in favour of the 1st defendant [Maisano] in the order of the court made on 4 September 2013 ('the Costs Order') in the Proceeding, such right being security for payment to the plaintiff by the 1st defendant of all costs and disbursements of, and incidental to, legal services rendered by the plaintiff to the 1st defendant in the Proceeding, being costs and disbursements due and remaining unpaid.
The plaintiff is entitled to have the costs, ordered in favour of the 1st defendant in the Costs Order, taxed.

7 Bodycorp also seeks leave to appeal these orders[16] and applied to stay the orders pending the appeal. On 18 February 2016, the Court of Appeal dismissed the stay application.[17] This Court heard the application for leave to appeal from the orders of Elliott J made on 24 July 2015 at the same time as the application for leave to appeal from the Ruling and our judgment in that matter is reserved.

Undertaking given to Elliot J on 24 July 2015

8 On 24 July 2015 Elliott J heard and determined an application by Oakley Thompson to substitute itself for Maisano as the plaintiff in the taxation proceeding with the stated intention of pursuing the costs against Bodycorp in its own name.[18] Maisano opposed the application and submitted that he intended to pursue the taxation of costs as plaintiff on his own behalf. Elliott J observed that this was the first time that Maisano had stated that this was his intention. He remarked, however, that '[t]his change of position is perfectly understandable given Maisano was unsuccessful in establishing Oakley Thompson's costs were capped, and therefore was unsuccessful in proving that Oakley Thompson had been paid by him in full'.[19]

9 Elliott J determined not to make the order for substitution that Oakley Thompson sought but instead ordered that Oakley Thompson be joined as a second defendant to the taxation proceeding.[20]

10 At the hearing on 24 July 2015 Maisano appeared for himself, Mr Senathirajah of counsel ('Senathirajah') appeared for Oakley Thompson and Mr Levine of counsel ('Levine') appeared for Bodycorp.

11 The orders made by Elliott J on 24 July 2015, in response to the application for substitution, record that an undertaking was given on behalf of Oakley Thompson in the following terms (the 'undertaking'):

The Applicant [Oakley Thompson] undertakes that it agrees that any amount that the defendant [Bodycorp] is ordered to pay in this proceeding is to be paid into court and that it will not seek payment of any such amount to itself except by order of the court or with the plaintiff's [Maisano's] consent.

12 This is the undertaking which Maisano alleged before Keogh J had been breached by Oakley Thompson. It is common ground between the parties that, for the purposes of contempt proceedings, an undertaking is equivalent to an order of the Court.

13 Elliott J also ordered that the part heard taxation of costs resume on a date or dates to be fixed by the Costs Court.

Orders of Gourlay JR on 11 and 13 November 2015

14 The taxation proceedings resumed before Gourlay JR. On 11 November 2015, she ordered that Maisano's costs were taxed and allowed in the sum of $289,988.68. She also ordered that Bodycorp was to pay Oakley Thompson the sum of $233,988.68, after deducting the part payment Oakley Thompson had already received. The terms of order 4 were:

After deducting the part payment received by the Second Respondent [Oakley Thompson], the First Respondent [Bodycorp] is to pay the Second Respondent the sum of $233,988.68, pursuant to the Orders made by His Honour Justice Elliott on 24 July 2015 in this proceeding and in proceeding S CI 2014 05814.[21]

15 Recorded in 'Other matters' was the observation that Maisano appeared briefly at the taxation but then withdrew:

On 11 November 2015 Mr Maisano appeared in person and sought to adjourn the matter on the basis that he understood that this matter was to recommence on 11 November 2015. This application was refused as he had appeared at the Call Over when the matter was listed and a copy of the Order made that day was sent to his Post Office Box by the Court.

He then withdrew from the taxation hearing.

...

The taxation of costs proceeded on both days unopposed as neither the Applicant [Maisano] nor the First Respondent [Bodycorp] attended the taxation.

On 6 August 2014 an Order was made for payment of an interim sum of $70,000.00 by the First Respondent [Bodycorp]. This sum was partly satisfied by payment from Funds in Court on 11 September 2014 of the sum of $56,400.00 being monies paid by the First Respondent [Bodycorp] as security for costs of the Applicant [Maisano] in proceeding S CI 2005 09071. The Second Respondent [Oakley Thompson] agreed that the taxed sum should be reduced by this sum in the order for payment made at the conclusion of the taxation.

16 Gourlay JR corrected the orders she made on 11 November 2015 under the slip rule by further order made on 13 November 2015 so that '[i]n Order 4 in lieu of the amount referred to as '$233,988.68', the amount should read '$233,588.68'.

17 Maisano and Bodycorp appealed against the orders made by Gourlay JR in the taxation proceeding. The appeal was heard by Wood AsJ on 3 March 2016 and dismissed on 11 March 2016.[22]

18 On 23 November 2015, Oakley Thompson sent a letter and creditor's statutory demand to Bodycorp for payment of the costs ordered by Gourlay JR on 11 and 13 November 2015. The covering letter was signed by Julian Michael Vagg ('Vagg'), the principal of Oakley Thompson who has had the care and conduct of all matters involving Bodycorp and Maisano on behalf of Oakley Thompson.

We enclose herewith by way of service CREDITOR'S STATUTORY DEMAND FOR PAYMENT OF DEBT dated 23 November 2015.

Your payment can be made to the following bank account:

Account Name: Oakley Thompson & Co Trust Account

Bank: National Australia Bank, 330 Collins Street, Melbourne 3000

BSB: [redacted]

Account Number: [redacted]

Reference: [redacted]

Yours faithfully

OAKLEY THOMPSON & CO.

JULIAN M VAGG

FORM 509H

(paragraph 459E(2)(e) Corporations Act 2001)

CREDITOR'S STATUTORY DEMAND FOR PAYMENT OF DEBT

To: BODYCORP ...

BODYCORP ... ('the Company') owes OAKLEY THOMPSON ... ('the Creditor') the amount of $233,588.68, being the amount of the debt described in the Schedule attached hereto and marked 'A'.

2. The amount is due and payable by the Company.

The Creditor requires the Company, within 21 days after service on the Company of this demand:

(a) to pay to the Creditor the amount of the debt; or

(b) to secure or compound for the amount of the debt to the Creditor's reasonable satisfaction.

The Creditor may rely on a failure to comply with this demand within the period for compliance set out in subsection 459F(2) as grounds for an application to a court having jurisdiction under the Corporations Act 2001 for the winding up of the Company.
Section 459G of the Corporations Act 2001 provides that a Company served with a demand may apply to a court having jurisdiction under the Corporations Act 2001 for an order setting the demand aside. ...

Judgment debt - orders made in the Supreme Court of Victoria Costs Court at Melbourne on 11 & 13 November 2015 (copies attached)

Dated: 23 November 2015

Signed

.............................................

Print Name: Julian Michael Vagg

Capacity: Director of the Creditor

21 By email on 3 March 2016, after the hearing before Wood AsJ, the solicitor for Bodycorp, Tony Anamourlis, invited Vagg to withdraw the statutory demand. On the same day Vagg responded and confirmed, first, that if Bodycorp paid the amount demanded into Funds in Court, the statutory demand would be withdrawn and, secondly, that if the amount was paid to the Oakley Thompson trust account, Oakley Thompson would pay the sum into court. Vagg's email read as follows:

Dear Mr Anamourlis,

In response to your email ... we will not be withdrawing the creditors statutory demand dated 23rd November 2015 (the Statutory Demand). Your client is required to pay the amount of $233,588.68 (the Costs Award) pursuant to the Orders of Judicial Registrar Gourlay on 11th November 2015 and 13th November 2016 [sic], and the Statutory Demand is valid. If your client pays the Costs Award into Funds in Court, we will withdraw the Statutory Demand. Likewise, if payment of the Costs Award is made to our statutory trust account, we will pay such amount into Funds in Court and withdraw the Statutory Demand.

Regards,

Julian Vagg

Partner

Oakley Thompson.

22 In late March 2016 Maisano and Bodycorp made applications seeking orders that Oakley Thompson be dealt with for contempt of court.[23] The applications sought orders that Oakley Thompson 'be punished for its contempt in breaching the undertaking made to the Honourable Justice Elliott on 24 July 2015'.

23 The applications alleged that Oakley Thompson, in breach of the undertaking, 'sought direct payment of the costs orders made by Judicial Registrar Gourlay on 11 and 13 November 2015 without the consent of the Plaintiff or by order of the court'. The allegation was particularised by reference to the statutory demand and covering letter that Vagg sent to Bodycorp on behalf of Oakley Thompson. The applications also alleged, as a separate allegation of contempt, that '[i]n breach of the orders, the Second Defendant [Oakley Thompson] prosecuted the taxation of costs and/or acted in the capacity of the Plaintiff on 10 and 11 November 2015 in the taxation of costs in Supreme Court proceeding number 1914 of 2015'.[24] Before Keogh J the contempt was thus argued to consist in: (1) a breach of the undertaking; and (2) the prosecution of the taxation of costs.[25] Bodycorp did not rely on the second ground of contempt in the application for leave to appeal and the proposed grounds of appeal do not allege that Keogh J made an error with respect to this issue.

24 The applications sought orders that Oakley Thompson be punished for its contempt and an order that Oakley Thompson be restrained from taking any further steps to enforce the orders made by Gourlay JR.

25 The applications came before Keogh J in the Practice Court on 27 April 2016. He dismissed the applications and gave his reasons orally by means of the Ruling on that day.

26 Before Keogh J on 27 April 2016 Maisano appeared for himself, Senathirajah of counsel appeared for Oakley Thompson and for Vagg and Levine of counsel appeared for Bodycorp.

27 In the course of the hearing Keogh J identified the affidavits that were relied upon, namely, an affidavit of Mr Murdaca ('Murdaca'), the sole director of Bodycorp, of 22 March 2016; an affidavit of Maisano sworn 24 March 2016; an affidavit of Vagg sworn 20 April 2016 ('the primary Vagg affidavit'); and a further affidavit from Murdaca (exhibiting the transcript of the hearing before Elliott J on 24 July 2015). Keogh J also identified the written submissions that had been filed, from Bodycorp (dated 4 April 2016), from Maisano (dated 21 April 2016), from Oakley Thompson (dated 20 April 2016), and additional submissions from Oakley Thompson responding to Maisano (dated 22 April 2016).

28 In the primary Vagg affidavit, Vagg swore that he had instructed counsel to give the undertaking in the terms recorded, that he had responsibility for the statutory demand being sent, and that his intention was to pay any money received pursuant to the statutory demand into Court:

On behalf of Oakley Thompson, on 23 November 2015, I caused a letter (together with a creditor's statutory demand) to be sent to Bodycorp seeking payment of the Costs Amount in accordance with Judicial Registrar Gourlay's Orders made on 11 November 2015 and 13 November 2015 (Oakley Thompson's Letter). ... I believe, and at all relevant times believed, that the effect of Elliott J's Orders and the Undertaking was to entitle Oakley Thompson to prosecute this proceeding to its conclusion (and complete the taxation) on its own behalf but that it could not retain payment of the taxed amount (as determined by the Court) and the money was to be deposited into Court.

Accordingly I sought payment of the taxed amount to Oakley Thompson's statutory trust account (Trust Account) as I considered that any payment by Bodycorp would not be available for Oakley Thompson to use but was to be deposited into Court upon receipt. I would have been equally content for Bodycorp to pay the money directly into Court itself. I confirmed this position in the email of 3 March 2016 I sent to Bodycorp's solicitors on behalf of Oakley Thompson. ...

I confirm that if Bodycorp had paid the Costs Amount into the Trust Account, I would have immediately paid it to Funds in Court in accordance with the Undertaking. It was never my intention to breach the terms of the Undertaking or Elliott J's Orders, and I did not believe that I was doing so in sending Oakley Thompson's Letter. In hindsight, I agree it would have been preferable to have expressly stated in Oakley Thompson's Letter that payment could be made to either the Trust Account or into Court.

If Bodycorp pays the Costs Amount to Funds in Court, either directly or via the Trust Account, so that there is no room for doubt, I reiterate that Oakley Thompson will not seek payment of the Costs Amount to itself without the consent of Maisano or a further order of the Court.

29 Having identified the evidence relied upon, Keogh J then formally took a plea of not guilty from counsel for Oakley Thompson and Vagg.

30 Levine commenced his submissions by addressing the allegation that, by prosecuting the taxation, Oakley Thompson had acted in contempt of Elliott J's orders. He argued that it was apparent from the orders of Gourlay JR of 11 November 2015 that Maisano appeared only briefly at the taxation and that Oakley Thompson effectively stepped into the shoes of the plaintiff and thereby prosecuted the matter 'as a plaintiff', contrary to the orders of Elliott J. Keogh J noted that Oakley Thompson was entitled to appear and that it was appropriate for orders to be made. He observed that on Bodycorp's material there was no evidence as to what was done by Oakley Thompson on 11 November 2015, other than to appear. He queried whether there was any evidence of any act or thing done by Oakley Thompson, beyond simply appearing, that constituted a contempt. Levine responded by saying that he was relying on inferences but would be seeking to cross-examine Vagg. This was the first occasion on which Levine announced an intention to cross-examine Vagg. No notice to cross-examine had been given. The following exchange took place:

LEVINE: I'd be relying upon inference at this stage, Your Honour, but given that there's an affidavit been filed by Mr Julian Vagg, I'd also be seeking to be able to cross-examine him as it is a contempt application and generally speaking you're entitled to, on contempt applications, to cross-examine. So it's a matter of inference that would be drawn at the first stage and then it would be a matter of adducing evidence from Mr Vagg.

His Honour: Have you given any notice that you wanted to cross-examine Mr Vagg?

LEVINE: I don't believe so. I don't believe so, Your Honour.

His Honour: So this comes out of the blue.

...

His Honour: It's pretty unsatisfactory, Mr Levine, isn't it, on a contempt proceeding where an affidavit is filed, sworn by Mr Vagg on 20 April, and there's no notice given of any intention to cross-examine Mr Vagg until mid-way through your submissions.

31 Levine submitted that the lack of notice should not be material and that leave was sought to cross-examine Vagg only on discrete issues: his conduct on 10 and 11 November 2015 in relation to the prosecution of the taxation proceeding and also 'in relation to the terms of an undertaking and his understanding of it because it seems to be that the defence of the defendant is that it wasn't a wilful breach of contempt of court and, secondly, that the undertaking was such that he didn't understand it'. To this the judge responded by querying why Levine had not raised his application for leave to cross-examine before launching into submissions:

I'm a little puzzled, Mr Levine, because this just seems to come out of the blue. You've launched into your submission and if your starting position was that you wanted to cross-examine Mr Vagg to elicit further evidence, should not that have been the first step you took before you launch into submissions?

32 Senathirajah opposed leave being granted for the cross-examination of Vagg. He submitted that although Vagg was in court he had not been given any notice and as Levine had moved into his submissions, the time for evidence had passed. He noted that Keogh J had already identified all the evidence that was before him. The judge refused the application for leave to cross-examine Vagg:

Mr Levine, I'm not inclined at this stage to allow cross-examination. That should have been dealt with firstly by notice and secondly by indicating clearly to me at the commencement of the proceeding when I went through the evidence that was being relied upon and before commencing submissions, that you wish to cross-examine Mr Vagg.

33 Levine turned to the allegation that there was a breach of the undertaking. He argued that the undertaking was unambiguous and that it had two limbs: (1) that the moneys Bodycorp owed, properly assessed, were to be paid into court; and (2) that the moneys could not be paid out of court unless there was a further court order, or by agreement; that is, Oakley Thompson could not directly seek the moneys to be paid to itself in the absence of a further court order or by consent. He submitted that the undertaking was breached because the letter accompanying the statutory demand directed that the money demanded be paid into a bank account of Oakley Thompson. When Keogh J pointed out that this was a trust account Levine contended, first, that the character of the account as a trust account was irrelevant, and it was impermissible for moneys to be directed to Oakley Thompson's trust account rather than paid into court.[26] Secondly, he denied that Oakley Thompson had the intention to receive the payment into their trust account and then pay it into Funds in Court and that it was apparent from the terms of the statutory demand that 'the Creditor [Oakley Thompson] requires the Company [Bodycorp] ... to pay to the Creditor the amount of the debt'.[27] He submitted that the statutory demand makes it plain that the money is to be paid to Oakley Thompson directly and paid to it as a judgment creditor. He went so far as to submit that this was a breach of the undertaking 'not to pay Oakley Thompson'.

34 Levine relied upon Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd[28] to support the proposition that it is sufficient to found a contempt that a person bound by an undertaking, or order, intends to commit an action in breach of the undertaking, or order, and there is no requirement for the person to intend to breach.

35 Maisano submitted that if Oakley Thompson wished to receive payment into its trust account it ought to have returned to Elliott J and sought a variation of the orders. He also embraced the two-limbed foundation of the contempt argument, namely, (1) Oakley Thompson's prosecution of the taxation before Gourlay JR in Maisano's absence; and (2) the statutory demand for payment to Oakley Thompson together with the covering letter.

36 Maisano sought to emphasise that Vagg is an experienced solicitor who understood the terms of the undertaking given to Elliott J. He said:

Well, it will be in my submission to your Honour it's wilful contempt because Mr Vagg is not a first-year practitioner. If I was to estimate, he's probably got 25 years under his belt.

37 To the mention of Vagg's experience Keogh J said: 'Yes. Certainly experienced barrister'.

38 As recorded, it is unclear whether Keogh J was referring to Vagg or to the barrister representing him.

39 Keogh J reassured Maisano that Elliott J had appreciated that there were issues between the parties as to who was entitled to the money that would be paid into court and that this was a reason for the undertaking to be given. If a dispute remained, that would need to return to court.

40 In response to the submission that Oakley Thompson was in contempt by prosecuting the taxation in Maisano's absence, Senathirajah took Keogh J to the transcript of evidence of the hearing before Elliott J on 24 July 2015 where he had raised before his Honour the concern that, if Oakley Thompson had only the status of a defendant in the taxation it may be at risk of not recovering the full amount due to it. He had argued that this might occur if Maisano prosecuted the taxation, as plaintiff, and sought an inappropriately low sum, say, only $50,000, and Oakley Thompson's equitable lien over the taxed costs would be limited by that. He submitted that Bodycorp might say:

'The proper plaintiff and the only plaintiff is Mr Maisano. He is only seeking $50,000. That's the end of the matter. The defendant doesn't have a direct claim against us.'

Now this is the critical part. His Honour [Elliott J] says, 'That is where I beg to differ because the authorities say you (I interpose, Oakley Thompson) have a claim directly against the judgment'. That's what I have put to Justice Elliott on the occasion. That's what's occurred and his Honour's answer was, 'No, you're perfectly entitled (Oakley Thompson) to prosecute the taxation and get an order in your name'. That's what happened.

41 The latter part of these submissions would appear to be a summary of what in effect Elliott J meant by saying that Oakley Thompson had a claim directly against the judgment.

42 With respect to the second alleged basis of contempt, Senathirajah accepted that there were two aspects to the undertaking: (1) that there be a payment to the court; and (2) that Oakley Thompson would not keep the payment for itself. He argued that the second component of the undertaking would not have been necessary if the parties had envisaged that the payment would be made directly into court; the second component revealed that it was in the contemplation of the parties that the mechanics of the transaction might be that a payment would first be made into Oakley Thompson's trust account and from there paid into court. He emphasised that it was always Vagg's intention that if Bodycorp made the payment into Oakley Thompson's trust account the amount so paid would be paid into court.

43 He submitted in the alternative that, if receiving a payment into a trust account 'for [a] finite temporal moment' was regarded as tantamount to directly receiving the payment, this was nevertheless permissible because the undertaking envisaged that an order of the court might permit Oakley Thompson to seek payment for itself and the order made by Gourlay JR permitted Oakley Thompson to take the benefit of the order.[29] In other words, the order of Gourlay JR authorised the use of the mechanism of the statutory demand and the payment into the Oakley Thompson trust account before its transfer into Funds in Court.

44 He contended that there was a consistency between the letter of 23 November 2015,[30] the email of 3 March 2016[31] and the contents of the primary Vagg affidavit[32] in respect of Vagg's intention to ensure payment from Bodycorp went into Funds in Court.

45 Finally, he submitted that even if Keogh J was against him on each of his submissions, and considered that there was a 'technical breach' of the undertaking, the judge retained a discretion 'not to exercise the contempt jurisdiction'; in other words, because, on the evidence, there was no intentional disregard of the undertaking by Vagg, Keogh J could make no finding of contempt.

46 Keogh J dismissed the applications to have Oakley Thompson punished for contempt.

47 He rejected the first basis upon which the contempt argument was put by observing that it was clear from Elliott J's judgment that the orders he made were 'to enable Oakley Thompson to be actively involved in the taxation'.[33] He held that Elliott J 'clearly found that Oakley Thompson had a real equitable interest in the Bodycorp costs and that Oakley Thompson should be entitled to take an active role in the taxation.'[34] He observed that Elliott J had left to the Costs Court the precise means by which Oakley Thompson would participate in the taxation. Vagg had appeared, together with the costs consultant Mr McKay, for Oakley Thompson, at the further taxation hearing on 10 and 11 November 2015. The orders of Elliott J 'entitled Oakley Thompson to appear as a party on the taxation',[35] and there was 'no evidence that in doing so Oakley Thompson took any step in the proceeding inconsistent with Elliott J's orders'.[36]

48 He rejected the second basis of the contempt applications by construing the undertaking as permitting the demand that payment be made to Oakley Thompson's trust account because this was not a demand by Oakley Thompson 'for payment of costs to it'.[37] He accepted that it was always Vagg's intention to pay any money received from Bodycorp, in response to the statutory demand, into Funds in Court. He said:

The actions of Mr Vagg in sending the letter attaching the statutory demand to Bodycorp do not breach the Oakley Thompson undertaking recorded in the order of 24 July 2015 and do not constitute a contempt. At no stage did Oakley Thompson make demand for payment of costs to it. The demand was for payment of the costs to the Oakley Thompson trust account. I accept Mr Vagg's evidence that it was always his intention that the amount, if paid, would be paid into funds in court. The mechanism chosen by Mr Vagg was designed to enforce, not to subvert, orders made by Elliott J and Judicial Registrar Gourlay. ...

[T]here is no uncertainty about Mr Vagg's intentions. They were, as I have found, that any amount paid for the costs by Bodycorp be paid into funds in court and not to Oakley Thompson.[38]

49 He considered that Vagg's conduct in sending the statutory demand and accompanying letter was 'consistent with and contemplated by the orders made by Elliott J and Judicial Registrar Gourlay'.[39]

50 He refused to restrain Oakley Thompson from taking any further steps to enforce the order of Gourlay JR. He observed that, however, if Vagg was to act in a manner contrary to that proposed in his affidavit by taking a step other than paying any amount received from Bodycorp in the Oakley Thompson trust account into Funds in Court, 'then that might, subject to any further order, justifiably give rise to a further application in this nature by either or both of the applicants'.[40]

51 Bodycorp seeks leave to appeal from the decision of Keogh J. There are six proposed grounds of appeal, as follows:

GROUND 1

The Trial Judge failed to properly construe the undertaking that was given on 24 July 2015, that provided that any amount that the Respondent [Oakley Thompson] is ordered to be paid in this proceeding is to be paid into court, and that it will not seek payment of any such amount to itself was not breached by Oakley Thompson seeking payment of the moneys to its solicitor's trust account.

GROUND 2

The Trial Judge erred in taking into account the subjective intentions of Oakley Thompson to pay the monies into court, in determining whether the undertaking that was given on 24 July 2015, had been breached.

GROUND 3

The Trial Judge should have disqualified himself from hearing the contempt application.

Particulars

The Trial Judge had a professional and/or social relationship with the director of Oakley Thompson (Vagg).

The Trial Judge had no basis for assessing the credibility of the director of Oakley Thompson (Vagg), and his decision was based upon extraneous factors.

GROUND 4

The Trial Judge denied the Applicant [Bodycorp] natural justice by accepting the primary Vagg affidavit, without cross examination.

GROUND 5

The Trial Judge failed to provide proper reasons for the decision.

Particulars

The Trial Judge failed to provide proper reasons for the construction of the undertaking.

The Trial Judge failed to provide proper reasons for his acceptance of the primary Vagg affidavit.

GROUND 6

The Trial Judge had no basis for accepting the primary Vagg affidavit.[41]

Ground 1 - Did the judge misconstrue the undertaking?

52 Bodycorp maintains its position that the undertaking is to be construed objectively and requires that the amounts that Bodycorp had been ordered to pay were to be paid directly into court. It submits that Oakley Thompson was not entitled to seek payment into its trust account because this did not constitute a payment into court but a payment to itself.

53 Oakley Thompson agrees that the undertaking is to be construed objectively. It argues that the undertaking generated two distinct obligations. The first is that it was required to pay into court any funds it received from Bodycorp, because it had agreed that any money that Bodycorp was required to pay pursuant to orders made by the Costs Court were to be paid into court. The second obligation is to refrain from seeking payment to itself of the money paid into court until it obtains a further order of the Court or Maisano's consent.

54 Oakley Thompson identifies the rationale behind the undertaking as the protection of Maisano's interest in any money ordered to be paid by Bodycorp in respect of costs. The protection is afforded because the relationship between Maisano and Oakley Thompson has irretrievably broken down. Had it not broken down the ordinary course would be for Oakley Thompson to have received payment from Bodycorp and then accounted to its client. Because of the mutual loss of confidence, Oakley Thompson was willing to agree that, contrary to the usual course, the money paid by Bodycorp would be paid into court pending the resolution of solicitor-client costs between Oakley Thompson and Maisano. It submits, however, that there is no requirement in the undertaking that any payment from Bodycorp be paid directly into Court and that Bodycorp's insistence on the need for a direct payment is to insert words into the undertaking that do not exist. Moreover, the protection to be afforded to Maisano did not require that payment be made directly; it was sufficient that the payment made by Bodycorp was paid into court and not retained, in whole or in part, by Oakley Thompson.

56 We consider that the undertaking should be construed as obliging Oakley Thompson to pay money received from Bodycorp into court and not to seek payment to itself. The terms of the undertaking did not prohibit Oakley Thompson from requesting that the money be paid into its trust account, which is not payment 'for itself'. There would only have been a breach, prospectively, if Oakley Thompson had then sought to take the money from its trust account for its own use.

57 We consider that there is no requirement in the undertaking that the money be paid 'directly' into court. An undertaking to make direct payment into court would be an obligation assumed by the party making the payment, here, Bodycorp, not Oakley Thompson. The undertaking that was given is a restraint upon Oakley Thompson. The undertaking restrains Oakley Thompson's conduct by its acceptance that any money it received from Bodycorp would be paid into court and that Oakley Thompson would not seek the money for itself. We agree with Keogh J that the undertaking allowed for the possibility that Bodycorp would pay money into Oakley Thompson's trust account and that, if it did so, Oakley Thompson was obliged to pay that money into court and not seek payment for itself.

58 To the extent that this ground also challenges the finding that the undertaking was not breached by the service of the statutory demand, it fails. The question of breach requires consideration of the whole of Oakley Thompson's conduct, not only the statutory demand itself. It is necessary to read the covering letter together with the statutory demand to identify how to comply with the demand. When read with the covering letter, it is plain that Oakley Thompson did not seek payment to itself. The covering letter made it clear that the account into which payment was sought to be made was the 'Oakley Thompson & Co Trust Account'.[42] As mentioned, we do not regard a demand that money be paid into a statutory solicitor's trust account operated by Oakley Thompson as a demand that payment be made to Oakley Thompson 'for itself'. Pursuant to the Legal Profession Uniform Law (Victoria), money paid into a solicitor's trust account is trust money; the money in a solicitor's trust account does not belong to the solicitor.[43] This is apparent from s 138 which provides:

Holding, disbursing and accounting for trust money in general trust account
- (1) Except as otherwise provided in this Part, a law practice must -

(a) hold trust money deposited in the law practice's general trust account exclusively for the person on whose behalf it is received; and

(b) disburse the trust money only in accordance with a direction given by the person.

Civil penalty: 50 penalty units.

(2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law.

(3) The law practice must account for the trust money as required by the Uniform Rules.

59 Furthermore, insofar as there was any ambiguity arising from the statutory demand itself, we consider that the ambiguity was cured by the email from Vagg of 3 March 2016.[44] This was sent before the applications were made that Oakley Thompson be punished for contempt[45] and conveyed an assurance that if the payment was made into Oakley Thompson's trust account, it would be paid into court.

60 In separate proceedings before Hargrave J, Bodycorp sought to set aside the statutory demand (the 'statutory demand proceeding').[46] On 5 July 2016 Hargrave J ordered that the statutory demand be set aside. We note that the considerations that apply to setting aside a statutory demand on the ground that there is no indebtedness between the parties are different from the considerations which apply when assessing whether the service of a statutory demand amounts to contempt.

61 We also note that at the hearing of the application for leave to appeal Oakley Thompson did not repeat, in its oral submissions, the proposition that the order of Gourlay JR constituted a further order of the Court that varied the orders made by Elliott J.[47] In our view this was a sensible course because the orders of Gourlay JR expressly provided that the directions given were 'pursuant to the Orders made by His Honour Justice Elliott on 24 July 2015 in this proceeding'[48] and thus sought to give effect to those orders and not to vary them.

Ground 2 - Did the judge err in taking account of Vagg's subjective intention as to what the respondent would do with the money if it was paid into its trust account?

63 Bodycorp submits that Keogh J should have confined his attention to the conduct of Oakley Thompson and what actions it performed, and not to the subjective intentions of Vagg. It reiterates that a finding of contempt requires only that the conduct engaged in be voluntary and contravene a court order; it is not necessary that there is an intention to breach. It submits that subjective intentions are therefore irrelevant.

64 In response, Oakley Thompson submits that Keogh J was well aware that all that needs to be established for contempt is the intention to commit the act which constitutes the contempt and not an intention to act in contumelious disregard of a court order.

65 The conduct relied upon as giving rise to the contempt was the making of the demand that Bodycorp pay the sum ordered into Oakley Thompson's trust account. It was not in doubt that this alleged contemptuous action was intentional. As described, Bodycorp argued that this demand involved Oakley Thompson demanding that the money be paid 'to itself'. We have rejected the view that the demand can be characterised in this way. We consider that Keogh J was correct in refusing to punish Oakley Thompson for contempt on the basis of this conduct.

66 Nothing turns on the fact that Keogh J took into account Vagg's intentions more generally as those intentions were not in issue.[49]

Ground 3 - Was there a reasonable apprehension of bias?

68 As mentioned, Bodycorp seeks to support ground 3 by applying to adduce further evidence, pursuant to r 64.13(2) of the Supreme Court (General Civil Procedure) Rules 2015. Bodycorp submits that the further evidence will establish that Keogh J had an association with Oakley Thompson that should have been disclosed at the hearing for contempt. It relies on the observation of Ormiston JA in Gascor v Ellicott[50] that 'every judicial officer ... should feel obliged, if he [or she] does not decide to withdraw of his [or her] own accord, to bring to the attention of the parties as soon as practicable any fact or circumstance which could lead to disqualification for [apprehended] bias'.[51] It submits that the further evidence establishes that the association between Keogh J and Oakley Thompson was such that the judge should have declined to hear the matter. It points to the remarks by Deane J in Webb v The Queen:[52]

The third category is disqualification by association. It will often overlap the first [category] and consists of cases where the apprehension of prejudgment or other bias results from some direct or indirect relationship, experience or contact with a person or persons interested in, or otherwise involved in, the proceedings.[53]

69 We note that we ultimately conclude the evidence lacks cogency and was of a conflicting and unsatisfactory nature.

70 The evidence sought to be adduced consists of an affidavit of Murdaca sworn 25 July 2016, an affidavit of Peter Martin ('Martin') sworn 26 July 2016, and an affidavit of Maisano sworn 20 September 2016[54] to the effect that Keogh J, then a barrister, had been briefed by Oakley Thompson to act for Maisano in a couple of matters in about 1999-2001 and that Keogh J and Vagg had a close professional and personal relationship. In response, Vagg swore an affidavit on 7 September 2016 in which he denied any personal or professional relationship with Keogh J. He deposed as follows:

I reiterate that I do not have, nor have ever had, any personal, social or professional relationship with his Honour Justice Keogh, and the only time that I can ever recall seeing his Honour was in the Supreme Court on 27 April 2016 on the hearing of the Proceeding [for contempt].

71 Furthermore, Vagg's evidence was that Oakley Thompson had not briefed Keogh J:

Further, I have searched the available accounts of Oakley Thompson for the period commencing on 1 June 2000 to 30 June 2016 and there is no record of Oakley Thompson ever having briefed his Honour when his Honour practised at the Bar.

72 Significantly, Bodycorp did not seek leave to cross-examine Vagg in this Court.

73 We observe that similar allegations of an association had been made, indeed rehearsed, in the statutory demand proceeding and Vagg had responded with the same denials. Hargrave J treated the allegations as wholly irrelevant to the statutory demand proceeding.

74 In support of the application to adduce further evidence, Bodycorp also filed subpoenas for production of documents, dated 12 September 2016, to Lennon's List Pty Ltd ('Lennon's List') of the Victorian Bar and AAMI. The schedule to the subpoena to Lennon's List described the documents sought as follows:

A statement of all fees rendered by Andrew Keogh to Oakley Thompson & Co for the past 7 years.
A statement of all fees paid by Oakley Thompson & Co to Andrew Keogh for the past 7 years.
A statement of all fees rendered by Andrew Keogh in which Oakley Thompson & Co were the instructing solicitor, for the past 7 years.
A statement of all fees paid to Andrew Keogh in which Oakley Thompson & Co were the instructing solicitor, for the past 7 years.
A statement of all fees rendered by Andrew Keogh to AAMI in respect of a dispute that was conducted in the Dandenong Magistrates' Court in which Michael Maisano/Moorabbin Automotive/AAMI were the Defendants from 1999 to 2003.
A statement of all fees rendered by Andrew Keogh to Oakley Thompson & Co in respect of a dispute that was conducted in the Dandenong Magistrates' Court in which Michael Maisano/Moorabbin Automotive/AAMI were the Defendants from 1999 to 2003.

75 In response to the subpoena, Daniel Siscos, Barrister's Clerk, Lennon's List, stated that none of the documents described in the Schedule exist:

I have checked the accounting records of Lennon's List. There is no record of Mr Andrew Keogh (now Justice Keogh) having been engaged by the law practice Oakley Thompson & Co, or appearing on behalf of AAMI, at any time. None of the documents described in the Schedule to the subpoena exist. Accordingly, I produce no documents in answer to the subpoena.

76 Bodycorp had filed and served a subpoena for production, dated 23 June 2016, upon Lennon's List in similar terms in the statutory demand proceeding. On 24 June 2016 Lennon's List responded to that subpoena by writing to the Prothonotary of the Supreme Court stating that no such documents exist.

A statement of all fees rendered by Andrew Keogh (barrister) to AAMI in respect of a dispute that was conducted in the Dandenong Magistrates' Court and that involved a motor vehicle repair that was made by Moorabbin Automotive/Michael Maisano from 1999 to 2003.
A statement of all fees rendered by Oakley Thompson & Co to AAMI in respect of a dispute that was conducted in the Dandenong Magistrates' Court and that involved a motor vehicle repair that was made by Moorabbin Automotive/Michael Maisano from 1999 to 2003.
A copy of any brief to Andrew Keogh (barrister) in respect of a dispute that was conducted in the Dandenong Magistrates' Court and that involved a motor vehicle repair that was made by Moorabbin Automotive/Michael Maisano from 1999 to 2003.

78 At the hearing in this Court, Bodycorp did not call for the production of the documents sought in the subpoena to AAMI.

79 On or about 2 September 2016 Bodycorp filed draft subpoenas to give evidence addressed to Timothy Davies, Jeremy Broadbent and Stephen Howard. In his affidavit of 7 September 2016, Vagg said that Timothy Davies ceased his employment with Oakley Thompson on 12 May 2009, Stephen Howard is a consultant with Oakley Thompson and had little involvement in any relevant proceeding, save for reviewing drafts of affidavits and other documents filed by Oakley Thompson, and that Jeremy Broadbent ceased his employment with Oakley Thompson on 18 September 2015. At the hearing in this Court, Bodycorp did not invite the court to do anything further in relation to those matters. In particular, Bodycorp did not seek to call evidence.

80 The principles governing a grant of leave to adduce further evidence are well understood. In Refaat v Barry[55] this Court reaffirmed the principles identified in Clark v Stingel[56] and emphasised the exceptional nature of such a grant of leave:

In Clark v Stingel, the Court described the applicable principles in the following way:

The principles upon which the Court will give leave to introduce fresh evidence upon an appeal are not in doubt. Leave should be given only if:

By the exercise of reasonable diligence such evidence could not have been discovered in time to be used in the original trial.
It is reasonably clear that if the evidence had been available at the trial, and had been adduced, an opposite result would have been produced.
The evidence proposed to be adduced is reasonably credible.

In Commonwealth Bank of Australia v Quade, the High Court observed that '[s]uch a stringent rule ... is supported by considerations of both justice and public interest', specifically the public interest in the 'finality of litigation in other than the truly exceptional case'.[57]

81 We are not persuaded at all that the evidence sought to be relied upon could not have been obtained by reasonable diligence to be used before Keogh J.

82 In the affidavit Murdaca swore on 25 July 2016 he recorded that he was present during the hearing of the contempt application and had a distinct recollection of the judge saying, 'I know them they would not do that'. We note that the transcript with which the Court was provided did not include those words. Murdaca states that as he walked out of court he had a conversation with Maisano in which he alleges Maisano said: 'That bloke acted for me when he was a barrister'. Murdaca swears that he queried why Maisano did not say that in court and Maisano said he was not sure. Murdaca asked Maisano to check and come back to him. He also alleges that on a later occasion Martin said to him that Keogh J had a close personal association with Vagg. In his affidavit sworn 20 September 2016 Maisano confirmed that it was his belief that Keogh J had acted for him, possibly from 1999 to 2001, that he did not recall the specifics of the case but did recall that Keogh J was counsel and believed that it was the case against his company and AAMI. In his affidavit Martin stated that he had been introduced to Keogh J by Vagg and had seen them together more than once.

83 In our view, the evidence of the alleged professional association, which is said to have existed well before the contempt proceeding, was not a matter that arose after that proceeding was heard. True it is that Bodycorp may not have had knowledge of the alleged association at the time of the contempt application. However, given that the conversation between Murdaca and Maisano occurred as the men were walking out of the Practice Court, the issue could have been raised with Keogh J immediately. This would have given the judge an opportunity to respond to the allegations that were made. Furthermore, an application could have been made to Keogh J to enable Bodycorp to investigate the position further and have the matter relisted at a later time. As it is, Keogh J never had the opportunity to respond to the allegations. Ultimately, if warranted, an application to set aside the orders on the ground of apprehended bias could have been made by returning before Keogh J. His Honour would not have been functus officio because a court has inherent jurisdiction to set its determination aside where the determination is affected by actual or ostensible bias and there has thus been no valid trial. This is so whether or not the orders of Keogh J had been authenticated.

84 Recently, Refshauge ACJ made some relevant observations on these issues in Commonwealth v Davis Samuel Pty Ltd [No 11]:[58]

There is no doubt that, prior to a final judgment being delivered and the record of it being 'drawn up, passed and entered', a superior court of record has full power to rehear the proceedings and vary the judgment pronounced. See Texas Co (Australasia) Ltd v Federal Commissioner of Taxation. ...

Ordinarily, once a court has pronounced judgment, ... and final orders are made, ... and perfected, the Court which made those orders is functus officio (R v Cripps; Ex parte Muldoon), and its power to reconsider the subject matter of the proceedings is at an end: Burrell v The Queen.

As so often happens in the law, there are, to this rule, exceptions.

...

[The Applicant Defendants] seek that the order and judgment be set aside because of a fundamental defect that, they submit, so infects the judgment that it cannot stand; it is, they assert, a nullity.

Such an application is sometimes described as based on the entitlement to relief from an injustice; that is, the Applicant Defendants are entitled ex debito justitiae to have the judgment set aside. As was said in Craig v Kanssen:

Those cases appear to me to establish that a person who is affected by an order which can properly be described as a nullity is entitled ex debito justitiae to have it set aside. So far as procedure is concerned, it seems to me that the court in its inherent jurisdiction can set aside its own order, and that it is not necessary to appeal from it.

A judgment which has been procured by a failure to observe the rules of natural justice would be an example of where the judgment is a nullity: Hoskins v Van Den-Braak.

This is an inherent power in the Court and does not depend on any statutory power: Isaacs v Robertson.[59]

85 Refshauge ACJ also relied upon the remarks of Rich J in Cameron v Cole:[60]

It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside; and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside (Craig v Kanssen). In such a case there has been no valid trial at all. The setting aside of the invalid determination lays the ghost of simulacrum of a trial, and leaves the field open for a real trial (Crane v Director of Public Prosecutions).[61]

86 While these remarks were made in the context of that aspect of natural justice concerned with the hearing rule, the same considerations would apply to the requirement of natural justice that the decision-maker be impartial.[62]

87 In circumstances in which Bodycorp could have immediately returned to Keogh J to request further time for the investigation of an alleged association which might found a claim for disqualification on the ground of apprehended bias, it is not at all clear that the fresh evidence could not have been discovered by reasonable diligence[63] for the purpose of being placed before Keogh J. Every occasion on which a party seeks to adduce fresh evidence on appeal depends on its own facts. It is significant that here the issue could have been raised almost immediately upon leaving the Practice Court; other cases may be different.

88 We are also not persuaded that it is reasonably clear, or 'highly likely',[64] that if the evidence had been adduced an opposite result would have been reached. Furthermore, we are not persuaded that the evidence is reasonably credible.

89 Bodycorp sought to rely upon the evidence to provide a factual foundation for the allegation of a disqualifying association. The factual foundation has two parts: an alleged past connection between Keogh J and Vagg, in which they represented Maisano in a legal proceeding, and an alleged close professional and personal relationship between Keogh J and Vagg.

90 That foundation fails. As to the first element, the evidence lacks credibility. The records of Lennon's List provide no substantiation of the allegation. Moreover, Bodycorp knew, from the response to the subpoenas it served in the statutory demand proceeding, that the records of Lennon's List provide no substantiation of the allegation. Vagg unequivocally denies ever having briefed Keogh J. Again, Bodycorp knew from the statutory demand proceeding that Vagg denied briefing Keogh J. Yet there was no application to cross-examine Vagg about his denials. In the light of the denials by Lennon's List, the denials by Vagg, and the absence of any cross-examination of Vagg, the evidence sought to be adduced by Bodycorp lacks credibility. Lacking credibility, it is not reasonably clear that it would have produced an opposite result had it been available, and adduced, in the contempt proceeding.

91 As to the second element, the evidence is conflicting. Vagg was not cross-examined on the appeal about his denial of a personal relationship. The evidence to the contrary is substantially hearsay, or is based on inferences drawn by someone who said he had seen Keogh J and Vagg together on more than one occasion between 2000 and 2003 (which Vagg denies). Again, the evidence lacks cogency. It is not reasonably clear that it would have produced an opposite result and it allegedly was in existence at the time of the proceeding before Keogh J. If it existed, it has not been established that it was not discoverable by reasonable diligence once the professional association was alleged so that it similarly could have been adduced before Keogh J, if necessary, by returning before him.

92 In our view, the application for leave to adduce further evidence should be refused.

93 In any event, our concerns also support the rejection of ground 3 as a matter of substance, even if leave was granted to adduce the further evidence. We take the view that, given the conflicting and unsatisfactory nature of the evidence, and the absence of any cross-examination of Vagg, Vagg's evidence should be preferred. At the very least, even putting aside the fact that Vagg was not cross-examined, Bodycorp failed to prove the allegation on the balance of probabilities. We venture to say, for the detailed reasons above, the allegation ought not to have been made.

94 The allegation that is the foundation of ground 3 is not established. We reject ground 3.

Ground 4 - Should the judge have allowed cross-examination of Vagg?

95 As we explained under ground 1, Keogh J's refusal to punish Oakley Thompson for contempt was based upon his construction of the undertaking, a construction we have upheld. It was also based upon his Honour's rejection of the proposition that the conduct relied upon, the demand that money be paid into Oakley Thompson's trust account, was a demand by Oakley Thompson to seek payment 'to itself'. It was not in dispute that this conduct was intentional and it is not to the point that Keogh J considered Vagg's intentions more generally. His consideration of Vagg's intentions in sending the statutory demand was irrelevant to the question of construction.

96 Indeed, before Keogh J, Levine identified the basis on which he sought to cross-examine as consisting in the exploration of a defence that Vagg might rely upon to the effect that Vagg had misunderstood the undertaking and was not defiant.[65] Such a defence may prompt a court to refuse to make an order against a party '[i]f the Court is satisfied that the party said to be in contempt bona fide believed himself bound only by a construction which the Court thinks to be erroneous'.[66] This is an aspect of the 'discretionary character [of] ... the jurisdiction which enables a court to decline to exercise the contempt jurisdiction at all even though the court may be satisfied that the contempt has been established'.[67] Here, however, there was no finding of contempt which may have rendered relevant reliance upon a defence of misunderstanding, or the like. Given that there was no finding of contempt, the subjective intentions of Vagg were not in issue.

97 If Vagg's subjective intentions had been in issue before Keogh J, it would have been preferable for his Honour to have permitted cross-examination. Vagg was present in court and the absence of notice could have been cured by an adjournment, if necessary. No prejudice was identified. Although Levine did not make the application to cross-examine until all the affidavit evidence had been identified, and he had already embarked upon his submissions, the proceeding was being heard in the Practice Court and this carries a degree of informality.

98 However, as mentioned, Vagg's subjective intentions were not in issue. Nothing therefore follows from the fact that he was not cross-examined and it is unnecessary to consider whether the judge's refusal to permit that course was liable to deprive the applicant of procedural fairness.

Ground 5 - Were the judge's reasons for judgment adequate?

100 The principles relating to the obligation of a judge, or judicial officer, to provide adequate reasons for a decision are well established.

101 In Pham v Legal Services Commissioner,[68] this Court said:

In essence, the reasons must be sufficient to enable the parties to understand the extent to which their arguments have been understood, and either accepted or rejected, and to understand the basis of the judge's decision. In addition the reasons must be sufficient to enable an appeal court to ascertain the reasoning upon which the decision has been made. However, that obligation does not require the judge to expressly deal with each and every argument that might have arisen in the course of the case. In Hunter v Trans__port Accident Commission, Nettle JA (in an appeal arising out of an application under s 93(4)(d) of the Transport Accident Act 1986), stated:

... Furthermore, while the extent of the reasons will depend upon the circumstances of the case, the reasons should deal with the substantial points which have been raised; ... while it is not incumbent upon the judge to deal with every argument and issue that might arise in the course of a case, where an argument is substantial or an issue is significant, it is necessary to refer to and assign reasons for the rejection of the argument or the resolution of the issue.

The adequacy of the reasons must depend upon the issues, and the nature of the proceeding, in any particular case. In an appropriate case, the reasons may be adequate by a combination of what is expressly stated, in conjunction with the inferences that necessarily arise from what is expressly stated. In Murray Goulburn Co-op Co Ltd v Fillipino, Neave JA and Beach AJA stated:

In some cases, the path of reasoning which led to the ultimate conclusion is necessarily implicit in a sufficiently detailed recitation of the relevant material upon which the decision was based.[69]

102 Here, Keogh J dealt with the substantial points raised by the parties and revealed an intelligible path of reasoning. Moreover, he delivered his reasons promptly on the day the applications were made before him and the basis for his findings are clear.

Ground 6 - Did the judge have no basis for accepting the primary Vagg affidavit?

104 Bodycorp submits that Keogh J had no basis for accepting Vagg's affidavit because he was not cross-examined. This ground in effect reasserts the complaint under ground 4 that Keogh J ought not to have refused cross-examination.

105 We reject ground 6 on two bases: first, there is no requirement that an affidavit cannot be accepted unless the deponent has been cross-examined; secondly, as mentioned, ultimately the consideration of Vagg's intentions was irrelevant because the finding that there was no contempt relied upon the construction given by Keogh J to the undertaking and the characterisation of the statutory demand and covering letter, both of which we have upheld.

Conclusion on the application for leave to appeal

[1] Maisano v Bodycorp Repairers Pty Ltd (Unreported, Supreme Court of Victoria, Keogh J, 27 April 2016). (Proceeding S CI 2014 01914). The application for leave to appeal from Keogh J is Proceeding S APCI 2016 0064.

[2] Maisano v Bodycorp Repairers Pty Ltd [No 2] [2015] VSC 365 (Elliott J). (Proceeding S CI 2014 01914).

[3] An application that Oakley Thompson be punished for contempt was also made by Maisano (see [22] below) and dismissed. Maisano does not seek leave to appeal.

[4] See [68] ff below. It is convenient to deal with the application to adduce further evidence in the consideration of ground 3.

[5] No disrespect is intended by the removal of titles, which we have done consistently throughout the judgment.

[6] Bodycorp Repairers Pty Ltd v Maisano [No 8] [2013] VSC 472 (Elliott J). (Proceeding S CI 2005 09071).

[8] Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurers Ltd [2015] VSCA 73.

[9] Bodycorp Repairers Pty Ltd v Australian Associated Motor Insurers Ltd [2016] HCASL 24.

[11] See Maisano v Bodycorp Repairers Pty Ltd [No 2] [2015] VSC 365 [1].

[12] Oakley Thompson & Co Pty Ltd v Maisano [No 2] [2015] VSC 210 (Proceeding S CI 2014 05814).

[16] The application for leave to appeal from Elliott J is Proceeding S APCI 2015 0081.

[17] Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd [2016] VSCA 19.

[18] Maisano v Bodycorp Repairers Pty Ltd [No 2] [2015] VSC 365. (Proceeding S CI 2014 01914).

[21] Proceeding S CI 2014 05814 is the Proceeding No of Oakley Thompson & Co Pty Ltd v Maisano [No 2] [2015] VSC 210.

[22] Maisano v Bodycorp Repairers Pty Ltd [No 2] [2016] VSC 92.

[23] These were separate applications made by a summons by Bodycorp dated 23 March 2016 and a summons by Maisano dated 24 March 2016 (later amended on 6 April 2016).

[24] The reference to the proceeding appears to be a mistake as the number of the taxation proceeding is S CI 2014 01914. Nothing turns on this.

[25] The issue of whether Oakley Thompson's equitable lien extended to the right to prosecute the taxation is raised in the application for leave to appeal from the orders of Elliott J made 24 July 2015 (Proceeding S APCI 2015 0081). See [7] above.

[26] There had been some allegations made by Maisano in respect of Oakley Thompson's trust account but no finding had been made by Elliott J who had regarded the material put before him on the issue as 'simply not relevant to the questions to be determined in this proceeding': Oakley Thompson & Co Pty Ltd v Maisano [No 2] [2015] VSC 210 [125].

[27] See [20] above. (Emphasis added)

[29] See [14] above.

[30] See [19] above.

[31] See [21] above.

[32] See [28] above.

[33] Maisano v Bodycorp Repairers Pty Ltd (Unreported, Supreme Court of Victoria, Keogh J, 27 April 2016) 2.

[41] The grounds have been modified in light of matters already defined.

[42] See [19] above.

[43] See also ss 129, 135, 136, 145 and 146 of the Legal Profession Uniform Law (Victoria); Legal Profession Uniform Law Application Act 2014 s 4.

[44] See [21] above.

[45] The applications before Keogh J were made in late March 2016. See n 23 above.

[46] See Bodycorp Repairers Pty Ltd v Oakley Thompson & Co Pty Ltd (Unreported, Supreme Court of Victoria, Hargrave J, 5 July 2016)(Proceeding S CI 2015 06326).

[47] In Oakley Thompson's written submissions before this Court, it was argued that the orders of Gourlay JR 'clarified/provided that Oakley Thompson was entitled to use a mechanism such as a letter of demand and statutory demand so as to recover the costs ordered to be paid by Bodycorp to Oakley Thompson' but this was not pressed orally.

[48] See [14] above.

[49] See also ground 4 - the challenge to Keogh J's refusal to permit cross-examination of Vagg: see [95]-[98] below.

[53] Ibid 74 (citations omitted). The first category is disqualification by interest, for example, a pecuniary interest.

[54] The Court granted leave to Bodycorp to rely upon this affidavit, despite its late filing and service, in the absence of any particular prejudice identified by Oakley Thompson.

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