Cheers v El Davo Pty Ltd

AND BETWEEN: CAPITAL INVESTMENTS CORPORATION PTY LTD

AND: ALAN FRANCIS CHEERS (and others according to the schedule attached hereto)

AND BETWEEN: CAPITAL INVESTMENTS CORPORATION PTY LTD

Ruling on right to cross-examine and sequence of cross-examination 1 At the conclusion of the opening address by Mr North, counsel for the applicants, both Mr Martindale, counsel for the eighth, eleventh, fifteenth and seventeenth respondents, and Mr Magee QC, senior counsel for the tenth and sixteenth respondents, have sought from me a ruling to the effect that Mr Herskope, counsel for the eightieth to eighty-third cross-respondents ("the Davis cross-respondents") be prevented from asking leading questions of any of the witnesses to be called by the applicants, apart from the applicants themselves. Mr Martindale and Mr Magee have further submitted that, in any event, any questioning by Mr Herskope of any of the applicants' witnesses should take place immediately after they have given their evidence in-chief. 2 It is unnecessary for me to set out in any detail the complex factual background to this proceeding. It is sufficient to say simply that the applicants are, in the main, airline pilots who invested in the 1996 David Copperfield tour of Australia. That tour was promoted as an investment scheme by certain of the respondents. The applicants claim that they were induced to enter into loan agreements with Entercorp Finance Pty Ltd (now known as El Davo Pty Ltd, and now in liquidation), a company associated with what may be termed "the Boyle respondents". The loan agreements are said to have been assigned by the Boyle respondents to the tenth respondent, a company controlled by the sixteenth respondent ("the Capital respondents"). The loan agreements required the applicants to make monthly interest payments. These payments were made for some time, but were ultimately terminated. The applicants claim that they should be relieved of any obligations which might be thought to have arisen under those agreements, and seek to have refunded to them any interest payments already made. They claim, inter alia, that they were induced by misleading or deceptive conduct to enter into the loan agreements. 3 The Capital respondents have cross-claimed against the applicants that as assignees of the loan agreements they are entitled to recover outstanding interest payments, and also in many cases the principal sums said to have been the subject of those agreements. 4 The Capital respondents have also cross-claimed against the Davis cross-respondents alleging that the Davis cross-respondents induced the applicants to breach their obligations under the loan agreements. 5 Both the applicants and the Davis cross-respondents, by their pleadings, allege that Entercorp Finance Pty Ltd never advanced any loan funds under the loan agreements to or on behalf of any of the borrowers and that, further or in the alternative, the first respondent never assigned or transferred its interests, if any, under the loan agreements to the tenth respondent. 6 In substance the ruling sought by the respondents has, as its underlying premise, the obvious fact that the interests of the Davis cross-respondents are closely aligned to those of the applicants. This can be demonstrated by even the most cursory perusal of the amended defence filed by the Davis cross-respondents in answer to the tenth respondent's cross-claim. That amended defence picks up and relies upon a number of the same contentions as are relied upon by the applicants in their pleadings against the respondents. Both Mr Martindale and Mr Magee submitted that it would be unfair, in those circumstances, to allow Mr Herskope to cross-examine the witnesses upon whose evidence his clients seek to rely in support of their own defence to the cross-claim brought by the Capital respondents. It would also be unfair, they submitted, to allow Mr Herskope the opportunity to seek to rehabilitate those witnesses after they had been cross-examined by the respondents. 7 The principles which govern applications of this type seem to me to be relatively clear. 8 Section 26(c) of the Evidence Act 1995 (Cth) ("the Evidence Act") gives power to the court to make such orders as it considers just in relation to the order in which parties may question a witness. Section 42 of the Evidence Act gives power to the court to disallow leading questions put to a witness in cross-examination. Section 42(2) sets out certain criteria which may be taken into account in the exercise of the court's discretion. Section 42 relevantly provides: "(1) A party may put a leading question to a witness in cross-examination unless the court disallows the question or directs the witness not to answer it. (2) Without limiting the matters that the court may take into account in deciding whether to disallow the question or give such a direction, it is to take into account the extent to which: … (b) the witness has an interest consistent with an interest of the cross-examiner; and (c) the witness is sympathetic to the party conducting the cross-examination, either generally or about a particular matter; …" 9 The manner in which these provisions are to be applied must, of course, turn upon the particular circumstances which prevail in any given case. Prior to the enactment of the Evidence Act, Young J, in GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15, reviewed the relevant authorities and stated his conclusions in summary form. His Honour said at 22-23: "Drawing all these threads together, the following appears to me to be the situation. (1) The only actual "right" is the right to have a fair trial. (2) It is the duty of the trial judge to ensure that all parties have a fair trial. (3) In carrying out his duties the trial judge must so exercise his discretion in and about the examination and cross-examination of witnesses that a fair trial is assured. (4) Ordinarily, a judge in carrying out his duty will see that the trial is conducted in the manner that is commonly used throughout the State, namely that witnesses are examined, cross-examined and re-examined. (5) Where there is more than one counsel for the same party, then ordinarily the judge will not permit any more than one counsel to cross-examine the same witness. (6) Where there are parties in the same interest, the judge will apply the same rule as stated in (5). (7) Where the issues are complex and there is no overlapping of cross-examination and the proposal is outlined before cross-examination begins, it may be proper for the judge to permit cross-examination of one or more witnesses by more than one counsel in the same interest notwithstanding prima facie rules (5) and (6). (8) It may be that in the interests of time or to prevent "torture" of the witness or for other good reasons, a judge may in special circumstances limit cross-examination. Such a situation would occur where, for instance, there was only a fixed amount of time before an event occurred and a decision was essential before that event occurred. (9) It is usually not proper to indicate at the commencement of the hearing that cross-examination will be limited to X minutes subject to the right to make an application for an extension, although such a ruling might be justified if time was limited. It would, however, appear to be proper for the judge to say, at any stage during the cross-examination, that he would, unless convinced that the cross-examiner was being of more assistance to the court, curtail cross-examination in Y minutes time. This power would of necessity be used sparingly. (10) Group cross-examination either by all counsel cross-examining the witness at one time or a group of witnesses being cross-examined by one counsel at the same time is not a procedure that should be permitted. (11) In all proceedings, the court has a duty to prevent cross-examination purely for a collateral purpose or to "torture" the witness. (12) In interlocutory proceedings, especially proceedings for an interlocutory injunction, the collateral purpose rules must be looked at very closely because ordinarily it is not proper to permit counsel to go on a fishing expedition and all that the plaintiff need show is a prima facie or strongly arguable case on the merits. Cross-examination on laches, balance of convenience etc is, of course, in a different plight. (13) Ordinarily a judge should permit cross-examination of all witnesses by all counsel unless one or more of the above rules apply." 10 These observations were recently cited with approval in NMFM Property Pty Ltd v Citibank Ltd (No 8) (1999) 161 ALR 581 at 584 by Lindgren J. His Honour held that ordinarily, where two or more parties were "in the same interest", the trial judge's discretion would properly be exercised if not more than one counsel were permitted to cross-examine. 11 Lindgren J also observed that normally counsel for the respondent would cross-examine a cross-respondent first and counsel for the applicant would cross-examine second. However, the trial judge might exercise his discretion to reverse this sequence. 12 Applying the principles set out above, I am not persuaded that Mr Herskope should be prevented from asking leading questions of any of the witnesses to be called on behalf of the applicants. It may be accepted, as the pleadings demonstrate, that the interests of the applicants and the interests of the Davis cross-respondents are indeed closely aligned in a number of important respects. Those interests are not, however, identical, as may be seen from the allegation made by the Capital respondents that the Davis cross-respondents are guilty of the tort of inducing breach of contract. It cannot be said that the applicants and the Davis cross-respondents are "in precisely the same interest". 13 I am not prepared to prevent Mr Herskope from putting leading questions to witnesses called by the applicants in circumstances where I cannot, at least at this stage, be satisfied that any particular witness to be called "has an interest consistent with an interest of the cross-examiner" (s 42(2)(b)), or is "sympathetic to the party conducting the cross-examination" (s 42(2)(c)). I can discern no other considerations which would warrant a departure from the ordinary practice to which Young J referred in GPI Leisure Corp Ltd (supra) of permitting cross-examination of all witnesses by all counsel. 14 That is not to say that should Mr Herskope choose to ask leading questions when cross-examining witnesses called by the applicant that will not affect the weight which I would attach to the answers elicited. That is a matter which Mr Herskope will no doubt bear in mind. 15 As regards the order in which witnesses should be cross-examined, I am satisfied that the interests of justice require that Mr Herskope cross-examine all the witnesses to be called by the applicants, including the applicants themselves, immediately after they have been examined in-chief by counsel for the applicants. That course is calculated to ensure that the cross-examination of the applicants' witnesses serves best to elicit the truth of what occurred. At the same time, it ensures that any party significantly and adversely affected by the evidence of a particular witness is able to confront that witness effectively. 16 As between the Boyle respondents and the Capital respondents, it seems to me to be logical that each witness to be called by the applicants should first be cross-examined by counsel for the Boyle respondents, and then by counsel for the Capital respondents. I am prepared to relax that order if there is agreement among the respondents that a different order should be followed. 17 I have not yet formed a definite view as to whether or not each of "the Boyle respondents" (including Mr Peter Boyle and Mr Sam Mancuso, who represent themselves) should be permitted to cross-examine each of the witnesses to be called by the applicants. I will defer final consideration of that matter for the moment. 18 I should stress that my ruling concerning the order of cross-examination of witnesses applies only to the cross-examination of witnesses called by the applicants. I will consider the order of cross-examination of other witnesses at the conclusion of the applicants' case. 19 I should also stress that nothing in this ruling should be taken as a licence to engage in repetitive or prolix cross-examination. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

Associate: Dated: Counsel for the Pryles Applicants: Mr T North

Solicitors for the Pryles Applicants: Pryles and Defteros

Counsel for the Tenth and Sixteenth Respondents: Mr N Magee QC, with Mr AA Monichino and Mr RS Hay

Solicitors for the Tenth and Sixteenth Respondents: Cornwall Stodart

Counsel for the Eighth, Eleventh, Fifteenth and Seventeenth Respondents: Mr ID Martindale

Solicitors for the Eighth, Eleventh, Fifteenth and Seventeenth Respondents: Fetter Gdanski

Counsel for the Eightieth, Eighty-First, Eighty-Second and Eighty-Third Respondents: Mr A Herskope with Mr JL Evans

Solicitors for the Eightieth, Eighty-First, Eighty-Second and Eighty-Third Respondents: Kalus Kenny Solicitors

Solicitors for the Thirteenth Respondent: Mr P Boyle appeared in person and sought leave to appear on behalf of the Second to Ninth and Twelfth Respondents

Solicitors for the Fourteenth Respondent: Mr S Mancuso appeared in person

Mr R Gonn appeared with leave on behalf of the applicant Monsu Pty Ltd in the related proceeding (No VG 405 of 1997)

Date of Hearing: 18 February 2000

Date of Judgment: 21 February 2000

SCHEDULE OF PARTIES ALLAN FRANCIS CHEERS First Applicant PETER MICHAEL ABRAHAMSON Second Applicant JAMES AYLWARD BOLAND Third Applicant RODNEY JOHN BOND Fourth Applicant MICHAEL THOMAS BODSWORTH Fifth Applicant RICHARD THOMAS BOWDEN Sixth Applicant ALAN NOEL BROWN Seventh Applicant EDWARD BULLOCK Eight Applicant PERRY RAYMOND BURNS Ninth Applicant IAN JAMES CARKEEK Tenth Applicant GREGORY WILLIAM CHISHOLM Eleventh Applicant LAWRENCE RAYMOND COLE Twelfth Applicant RONNIE JOE COLEMAN Thirteenth Applicant ALLAN ARCHIBALD COLLINS Fourteenth Applicant DARRYL ROSS COLLISTER Fifteenth Applicant CHRISTOPHER PAUL COLTON Sixteenth Applicant GARY GORDON COOPER Seventeenth Applicant RUSSELL CRAIG DINNING Eighteenth Applicant ROGER LEE DUNCAN Nineteenth Applicant TREVOR ALLAN DOUGLAS Twentieth Applicant STEPHEN JOHN EATON Twenty First Applicant MALCOLM JOHN ELLIS Twenty Second Applicant ROBERT GAM Twenty Third Applicant ASHLEY GARLAND Twenty Fourth Applicant ANTHEA ELIZABETH MORGAN GEDGE Twenty Fifth Applicant EDWARD JOHN GODEK Twenty Sixth Applicant STEWART JOHN GOW Twenty Seventh Applicant JASON ANDREW HAMMOND Twenty Eighth Applicant GARY WILLIAM HANRAHAN Twenty Ninth Applicant JOHN GARY HERBERT Thirtieth Applicant VINCENTKEIR HINSCHEN Thirty First Applicant JOHN PETER HOLGATE Thirty Second Applicant ROGER HOPPER Thirty Third Applicant WILLIAM JAMES HUGHES Thirty Fourth Applicant KRISTAN PETER KRAWINKEL Thirty Fifth Applicant TERRENCE ARTHUR LAWSON Thirty Sixth Applicant ADAM EDWARD LEE Thirty Seventh Applicant PETER VERNON LIDDELL Thirty Eighth Applicant GARY MAJOR Thirty Ninth Applicant JUDITH ANNE MARTIN Fortieth Applicant MARK McWHINNIE Forty First Applicant JONATHAN PAUL MERRITT Forty Second Applicant ROBERT LEONARD MILLER Forty Third Applicant JOHN MAXWELL MORRIS Forty Fourth Applicant PETER JOHN MOWSON Forty Fifth Applicant DEREK ANTHONY MURRAY Forty Sixth Applicant PHILIP RAYMOND OAKES Forty Seventh Applicant STEPHEN JOHN O'ROURKE Forty Eighth Applicant IAN ROBERT PAIGE Forty Ninth Applicant PETER PATERSON Fiftieth Applicant CHRISTOPHER JAMES PENNYCUICK Fifty First Applicant DARRYL MARCELLUS PETERSON Fifty Second Applicant PAUL PROSSER Fifty Third Applicant THOMAS JOSEPH RANIERE Fifty Fourth Applicant ANDREW JOHN ROBERTS Fifty Fifth Applicant WAYNE BARRY SANDERSON Fifty Sixth Applicant NOEL MALCOLM SEMLER Fifty Seventh Applicant FELICE SIRIO Fifty Eighth Applicant FRANCESCA SIRIO Fifty Ninth Applicant BRENDAN MURRAY SMITH Sixtieth Applicant THOMAS BRUCE SMITH Sixty First Applicant ROBERT PAUL STEPHENS Sixty Second Applicant ANDREW GORDON STEWART Sixty Third Applicant JAMES DAVID SUTHERLAND Sixty Fourth Applicant JOHN TASHOUNIDIS Sixty Fifth Applicant GORDON CLYDE TERRIL Sixty Sixth Applicant GREGOR JAMES THOMSON Sixty Seventh Applicant CHRISTOPHER DALE THORESEN Sixty Eighth Applicant MAURICE JOSEPH TRAUGOTT Sixty Ninth Applicant GERALD GORDON VENABLES Seventieth Applicant WALTER WAIT Seventy First Applicant TREVOR FREDERICK WARK Seventy Second Applicant PETER ROBERT WATERWORTH Seventy Third Applicant ANTHONY GEORGE WILSON Seventy Fourth Applicant ELIZABETH ANNE WILSON Seventy Fifth Applicant DESMOND ATHOL WRIGHT Seventy Sixth Applicant AND EL DAVO PTY LTD (In liq) (formerly known as ENTERCORP FINANCE PTY LTD (ACN 060 214 502) First Respondent SKH MANAGEMENT PTY LTD (ACN 060 155 688) Second Respondent GRIFFIN ENTERTAINMENT AUSTRALIA PTY LTD (ACN 060 155 679) Third Respondent BOYMAN MANAGEMENT PTY LTD (ACN 063 902 182) Fourth Respondent BARNETT BOYLE CONCERTS PTY LTD (ACN 070 092 376) Fifth Respondent RETRAK PTY LTD (ACN 071 999 481) Sixth Respondent SUMSKERRY HOLDINGS PTY LTD (ACN 007 413 229) Seventh Respondent WEINGARTEN NESVEDA INVESTMENT SERVICES PTY LTD (ACN 063 779 939) Eighth Respondent ENTERCORP HOLDINGS PTY LTD (ACN 030 544 968) Ninth Respondent CAPITAL INVESTMENTS CORPORATION PTY LTD (ACN 072 988 946) Tenth Respondent ROCK EAGLE PTY LTD (ACN 007 298 991) Eleventh Respondent ENTERCORP PTY LTD (ACN 061 212 913) Twelfth Respondent PETER LINDSAY BOYLE Thirteenth Respondent SALVATORE MANCUSO Fourteenth Respondent LOUIS WEINGARTEN Fifteenth Respondent KERROD GRANT PARK Sixteenth Respondent KERRIE ANNE BOYLE Seventeenth Respondent AND CAPITAL INVESTMENTS CORPORATIONS PTY LTD (ACN 072 988 946) Cross Claimant AND ALLAN FRANCIS CHEERS First Cross Respondent PETER MICHAEL ABRAHAMSON Second Cross Respondent JAMES AYLWARD BOLAND Third Cross Respondent RODNEY JOHN BOND Fourth Cross Respondent MICHAEL THOMAS BODSWORTH Fifth Cross Respondent RICHARD THOMAS BOWDEN Sixth Cross Respondent ALAN NOEL BROWN Seventh Cross Respondent EDWARD BULLOCK Eight Cross Respondent PERRY RAYMOND BURNS Ninth Cross Respondent IAN JAMES CARKEEK Tenth Cross Respondent GREGORY WILLIAM CHISHOLM Eleventh Cross Respondent LAWRENCE RAYMOND COLE Twelfth Cross Respondent RONNIE JOE COLEMAN Thirteenth Cross Respondent ALLAN ARCHIBALD COLLINS Fourteenth Cross Respondent DARRYL ROSS COLLISTER Fifteenth Cross Respondent CHRISTOPHER PAUL COLTON Sixteenth Cross Respondent GARY GORDON COOPER Seventeenth Cross Respondent RUSSELL CRAIG DINNING Eighteenth Cross Respondent ROGER LEE DUNCAN Nineteenth Cross Respondent TREVOR ALLAN DOUGLAS Twentieth Cross Respondent STEPHEN JOHN EATON Twenty First Cross Respondent MALCOLM JOHN ELLIS Twenty Second Cross Respondent ROBERT GAM Twenty Third Cross Respondent ASHLEY GARLAND Twenty Fourth Cross Respondent ANTHEA ELIZABETH MORGAN GEDGE Twenty Fifth Cross Respondent EDWARD JOHN GODEK Twenty Sixth Cross Respondent STEWART JOHN GOW Twenty Seventh Cross Respondent JASON ANDREW HAMMOND Twenty Eighth Cross Respondent GARY WILLIAM HANRAHAN Twenty Ninth Cross Respondent JOHN GARY HERBERT Thirtieth Cross Respondent VINCENTKEIR HINSCHEN Thirty First Cross Respondent JOHN PETER HOLGATE Thirty Second Cross Respondent ROGER HOPPER Thirty Third Cross Respondent WILLIAM JAMES HUGHES Thirty Fourth Cross Respondent KRISTAN PETER KRAWINKEL Thirty Fifth Cross Respondent TERRENCE ARTHUR LAWSON Thirty Sixth Cross Respondent ADAM EDWARD LEE Thirty Seventh Cross Respondent PETER VERNON LIDDELL Thirty Eighth Cross Respondent GARY MAJOR Thirty Ninth Cross Respondent JUDITH ANNE MARTIN Forutieth Cross Respondent MARK McWHINNIE Forty First Cross Respondent JONATHAN PAUL MERRITT Forty Second Cross Respondent ROBERT LEONARD MILLER Forty Third Cross Respondent JOHN MAXWELL MORRIS Forty Fourth Cross Respondent PETER JOHN MOWSON Forty Fifth Cross Respondent DEREK ANTHONY MURRAY Forty Sixth Cross Respondent PHILIP RAYMOND OAKES Forty Seventh Cross Respondent STEPHEN JOHN O'ROURKE Forty Eighth Cross Respondent IAN ROBERT PAIGE Forty Ninth Cross Respondent PETER PATERSON Fiftieth Cross Respondent CHRISTOPHER JAMES PENNYCUICK Fifty First Cross Respondent DARRYL MARCELLUS PETERSON Fifty Second Cross Respondent PAUL PROSSER Fifty Third Cross Respondent THOMAS JOSEPH RANIERE Fifty Fourth Cross Respondent ANDREW JOHN ROBERTS Fifty Fifth Cross Respondent WAYNE BARRY SANDERSON Fifty Sixth Cross Respondent NOEL MALCOLM SEMLER Fifty Seventh Cross Respondent FELICE SIRIO Fifty Eighth Cross Respondent FRANCESCA SIRIO Fifty Ninth Cross Respondent BRENDAN MURRAY SMITH Sixtieth Cross Respondent THOMAS BRUCE SMITH Sixty First Cross Respondent ROBERT PAUL STEPHENS Sixty Second Cross Respondent ANDREW GORDON STEWART Sixty Third Cross Respondent JAMES DAVID SUTHERLAND Sixty Fourth Cross Respondent JOHN TASHOUNIDIS Sixty Fifth Cross Respondent GORDON CLYDE TERRIL Sixty Sixth Cross Respondent GREGOR JAMES THOMSON Sixty Seventh Cross Respondent CHRISTOPHER DALE THORESEN Sixty Eighth Cross Respondent MAURICE JOSEPH TRAUGOTT Sixty Ninth Cross Respondent GERALD GORDON VENABLES Seventieth Cross Respondent WALTER WAIT Seventy First Cross Respondent TREVOR FREDERICK WARK Seventy Second Cross Respondent PETER ROBERT WATERWORTH Seventy Third Cross Respondent ANTHONY GEORGE WILSON Seventy Fourth Cross Respondent ELIZABETH ANNE WILSON Seventy Fifth Cross Respondent DESMOND ATHOL WRIGHT Seventy Sixth Cross Respondent ENTERCORP FINANCE PTY LTD (ACN 060 214 502) Seventy Seventh Cross Respondent PETER LINDSAY BOYLE Seventy Eighth Cross Respondent LOUIS WEINGARTEN Seventy Ninth Cross Respondent CLASSIC TRADING PTY LTD (ACN 006 792 249)