First Plaintiff v First Defendant

1 The plaintiffs' summons seeks two things. First, that the plaintiffs ('the Andersons') have leave to cross-examine the following witnesses (deponents): Ms Quigley, Mr Blackburn, Mr Cichelli, and Ms Burgess. Secondly, that the plaintiffs have leave to adduce into evidence an email from Eliza Minney to Demi Anderson dated 5 February 2015.

2 The summons has been issued in an application for leave to appeal an Associate Justice's orders about the costs of a four day trial of the proceeding conducted by a Judge of the Court.[1] Her Honour ordered that the Andersons pay the second defendant's ('VicTrack') costs of the proceeding on a standard basis, and pay its costs of the summons, which was VicTrack's summons for summary dismissal, on an indemnity basis. The Andersons' application for costs was disallowed.[2]

3 The Andersons' application to cross-examine and adduce further evidence is made under r 77.06.09 which includes:

(2) The Judge of the Court shall have power to-

(a) receive further evidence upon questions of fact, whether by oral examination in court, by affidavit, or by deposition taken before an examiner;

(b) draw inferences of fact;

(c) give any judgment and make any order which ought to have been given or made; and

(d) make any further or other order as the case may require.

4 Each of the persons whom the Andersons seek to cross-examine made affidavits that were relied on before the Associate Justice.

5 The Associate Justice gave extensive reasons for her orders as to costs. She described the issues before her as:[3]

First, which party is liable for the costs of the proceeding? By summons filed on 31 March 2021, VicTrack seeks orders that the Andersons pay its costs of the proceeding on a standard basis. The Andersons say VicTrack should pay their costs of the proceeding and indemnify them in relation to the costs they have been ordered to pay the first defendant, City of Stonnington (the 'Council').

Second, should the Andersons pay the costs of VicTrack's application for summary judgment on a standard basis or an indemnity basis? There have already been costs orders requiring the Andersons to pay VicTrack's costs of the summons. The dispute is about the basis upon which they should be paid. VicTrack seeks costs on an indemnity basis, and the Andersons say the standard basis is appropriate.

6 At trial, the Andersons were unsuccessful in obtaining the declarations they sought, and eventually, following VicTrack's summary judgment application, their proceeding was dismissed.[4] The Associate Justice described the effect of her costs decision as follows:[5]

VicTrack says it was wholly successful in the proceeding and costs should follow the event. The Andersons resist the application and seek their costs as described above.

VicTrack was successful at trial. The general rule, which will be applied here, is that costs should follow the event in accordance with my analysis above. I will make the orders sought by VicTrack, namely, that the Andersons pay the costs of this proceeding up to the summons filed by VicTrack on 31 March 2021 on a standard basis.

...

I will make orders that the Andersons pay VicTrack's costs of the proceeding (on a standard basis), and that they pay VicTrack's costs of the summons on an indemnity basis. The Andersons' application for costs is disallowed.

7 Her Honour was asked to decide an application by the Andersons for what was a 'special' order for costs in their favour instead of an order that costs follow the event in favour of VicTrack. The Andersons bore the onus of establishing that such a special order should be made.

8 To justify their application for a special costs order the Andersons relied on representations that they alleged were made to them by VicTrack's representatives and which induced their decision to construct the second fence, commence the proceeding against the Council and join VicTrack as a defendant to the proceedings.

9 Her Honour made findings about a number of these representations, stating:[6]

VicTrack's submissions regarding nature of factual dispute

There is a substantial factual dispute about what was said and the Andersons' characterisation of communications. It is the Andersons who make the application for an extraordinary costs order, and so the burden of proof lies upon them in respect of the alleged representations, not VicTrack. The Court cannot conclude that those representations were made in the manner alleged by the Andersons. The only conclusion that can be reached is that the factual dispute is unresolved and incapable of resolution. Given that the Andersons have elected not to seek leave to cross-examine VicTrack's witnesses, then they cannot challenge their evidence.

10 It is important to note that VicTrack did not seek to cross-examine Mrs Anderson either. The Andersons now seek to cross-examine four of VicTrack's witnesses or deponents of the affidavits on which it relied. They indicated the nature and extent of the cross‑examination of those deponents, which would extend beyond 'puttage'.

11 The parties disagreed on the test I should apply in deciding the Andersons' application. I propose to apply the reasoning of John Dixon J in Chiodo Investments Pty Ltd v Rilac Pty Ltd,[7] while not deciding whether that reasoning should apply to all applications to lead further evidence on an appeal. His Honour stated:[8]

Rule 77.06.9 does not grant to a party to an appeal the right to reconstitute the evidentiary base of the application. The power of the court under Rule 77.06.9 is to be construed, and exercised, by reference to two considerations set out above. The first is the provisions of the Civil Procedure Act to which I have referred, and the second is the observation by Chernov JA in Foody v Horewood, as recited in Apostolidis v Kalenik (No 2) set out above...

In the ordinary case, an appeal will be determined on the evidence that was before the associate judge, but there will be exceptional cases where to refuse to admit fresh evidence would affront common sense or a sense of justice and would not further the overarching purpose of civil litigation. The need for that assessment explains why the admission of further evidence on appeal is a matter for the judge, rather than an entitlement of the appealing parties.

12 The test that Chernov JA had applied,[9] to which John Dixon J referred, emphasised that the question of whether to admit fresh evidence is largely one of discretion, bearing in mind the public interests in finality of litigation, and the requirements of the justice of the case in hand.

13 The Andersons then made submissions about whether the evidence that might be adduced in cross-examination would be important to the ultimate determination of the costs dispute. I accept that there is a possibility that such evidence might matter in that determination, but it is not possible to put that eventuality any higher.

14 The next question is whether the refusal to admit fresh evidence from cross-examination would affront common sense or a sense of justice and would not further the overarching purpose of civil litigation. That overarching purpose is described in s 7(1) of the Civil Procedure Act 2010 as, 'to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute'. To further that purpose, the Court is given a wide power under s 47 to limit the time for a hearing, including limiting the time for the examination or cross-examination of any witnesses.

15 Again, in my opinion, the Andersons have the onus of proof on this point. Their case is that the Associate Justice gave them no real opportunity to cross-examine VicTrack's deponents. They argue that her Honour's comments at the directions hearing about s 24 of the Civil Procedure Act and the terms of her order which referred to that section, would have had a 'chilling effect' on the Andersons' decision on whether to seek to cross-examine VicTrack's deponents.

16 At the directions hearing, the Associate Justice emphasised that the costs hearing should only last for a day, because the trial had only occupied four days, and that the parties had no right to call evidence, but must apply to the Court to do so. However, I do not accept that a fair reading of the transcript of the directions hearing, or her Honour's orders made that day, establish that she denied the Andersons a real opportunity to cross-examine the four persons whom they now seek to cross-examine. The Andersons did not apply to cross-examine them at the directions hearing nor in response to the email from her Honour's chambers on the day before the costs hearing, asking if witnesses were to be cross-examined.

17 At the directions hearing, her Honour did refer to s 24 of the Civil Procedure Act, which requires litigants and their lawyers to ensure that costs incurred are reasonable and proportionate. However, her Honour did not suggest, or indicate, that the parties' decision to cross-examine deponents might result in a breach of their overarching obligations, and subject them to orders under s 29.

18 The Andersons ought to have been aware that a failure to cross-examine deponents might result in the Court finding that evidence, which was not cross-examined, was not disputed, or, as her Honour put it, that the evidence of the VicTrack witnesses could not be challenged.[10]

19 Her Honour's judgment makes apparent that she understood correctly that, although deponents were not cross-examined, it remained open to her to assess the plausibility of their evidence. Because the witnesses were not cross-examined, it was open to her Honour to conclude that the facts about which they gave evidence were not disputed.[11]

20 In the circumstances I have described, the Andersons ought to have been aware that her Honour might reach the conclusions based on the four deponents' evidence that she did. Therefore, I do not accept the Andersons' submissions that their position was analogous to a litigant who only learns that they have been denied natural justice after reading the published judgment and therefore could not be taken to have waived their rights to challenge the judgment on that ground.

21 I accept VicTrack's submission that it appears to have made a forensic decision not to cross-examine the Andersons because of their indication that they did not propose to cross-examine its deponents.

22 Allowing cross-examination of the four deponents now would potentially reopen many of the issues in the case, lengthen the proceedings and require that VicTrack be given the opportunity to cross-examine the Andersons. These outcomes would be contrary to the overarching obligations in s 7 of the Civil Procedure Act. As is often said, a trial, or an initial hearing, is not a dress rehearsal. In my opinion, the orders that the Andersons seek in paragraph 1 of their summons must be refused.

23 However, I consider that the order sought in paragraph 2 of the summons should be referred for determination to the judge who hears the appeal from the Associate Justice's costs orders. The email that is sought to be admitted appears to show that VicTrack's letter of 3 February 2015 was sent to the Andersons by their lawyer before the decision was made to join VicTrack as a party. Her Honour concluded that:[12]

...I decline to draw the inference that the Andersons became aware of the letter prior to joining VicTrack to the proceeding. Accordingly, I decline to draw the inference that it was relied upon to join VicTrack to the proceeding. However, even if the Andersons were aware of the letter prior to joining VicTrack, it would have been reasonable to consider that letter alongside the VicTrack 10 Nov 14 letter which clearly articulated VicTrack's position.

24 It is possible, that the email that the Andersons seek to adduce may be relevant to a determination of an issue or issues relied on by the Andersons to show reasons for the making of a special costs order.

25 The judge who hears the application for leave to appeal will be provided with complete submissions on all costs issues, and can best determine if the email should be admitted into evidence. The judge will be able to consider whether its admission would cause such prejudice to VicTrack that it should not be admitted.

26 I therefore refer paragraph 2 of the summons for determination to the judge hearing the Andersons' application for leave to appeal against the Associate Justice's costs orders.

27 In summary, the orders that I will make are first, that paragraph 1 of the Andersons' summons dated 27 February 2023 is dismissed. Secondly, paragraph 2 of that summons is referred for determination to the judge hearing the Andersons' application for leave to appeal the Associate Justice's order as to costs.

[1] They need leave to appeal because the order concern costs - Supreme Court Act 1986 s 17A(2)(b).

[2] [2022] VSC 216.

[3] Anderson v City of Stonnington [2022] VSC 216 [3]-[4] ('AsJ judgment').

[4] Anderson v City of Stonnington [2016] VSC 374 and Anderson & Anor v City of Stonnington & Anor (No 2) [2016] VSC 575 and on appeal Anderson & Anor v City of Stonnington & Anor [2017] VSCA 229.

[5] AsJ judgment, [222]-[223] and [253] (citations omitted).

[7] [2023] VSC 32.

[8] Ibid [26]-[27] (citations omitted).

[9] Foody v Horewood (2007) 62 ACSR 576, 599; [2007] VSCA 130 [62].