McCarthy v Camil Holdings Pty Ltd [2016] VSCA 235

EVIDENCE - Privilege - Applicant sought to rely on email from counsel to instructing solicitor recording communication between counsel - Trial judge satisfied that communication between counsel was for purpose of resolving dispute - Email excluded on basis protected under s 131(1)(a) Evidence Act 2008 - Exception in s 131(2)(f) did not apply - Evidence Act 2008 s 131.

LEGAL PROFESSION - Obligation to ensure costs proportionate to issues and amount in dispute - Civil Procedure Act 2010 s 24.

1 Jane McCarthy purchased a townhouse at 3/13 Fraser Street, Malvern off the plan from Camil Holdings Pty Ltd ('Camil'). On 28 September 2012, Camil lent Ms McCarthy $250,000 to complete the purchase. Ms McCarthy was to pay an annual interest rate of 12 per cent. Both the principal and interest were to be repaid on 29 March 2013. Ms McCarthy defaulted in repayment.

2 Camil brought a proceeding against Ms McCarthy for recovery of the debt due by her. That proceeding was settled on the basis that Ms McCarthy would pay Camil $250,000 plus interest plus Camil's costs which were to be assessed by a costs assessor on a standard basis. Camil's costs were assessed at approximately $39,500. Regrettably, a dispute then developed about whether during the settlement negotiations Camil's counsel (Mr Aaron Weinstock) had represented to Ms McCarthy's counsel (Mr Adrian Muller) that Camil's solicitor/client costs were approximately $25,000. The difference between the amount allegedly represented by Mr Muller and the assessed costs was about $14,500.

3 The dispute about legal costs, and the question of whether the representation was made by Mr Muller, led to a multiplicity of hearings and a judicial mediation in the Supreme Court. On each occasion, the parties incurred further legal costs. In our view, it would not be an exaggeration to say that the dispute about a modest sum of costs spiralled out of control.

4 On the return of a summary judgment application, Ms McCarthy was ordered to pay the $250,000 plus interest plus $15,000 on account of the costs component of the settlement. This left outstanding the question of whether Camil was entitled to the balance of about $25,000 that it claimed for its costs, as assessed. There was a failed mediation to resolve that issue. Camil then sought summary judgment. That application was refused and the proceeding was set down for trial. The trial proceeded over two days before an Associate Judge and dealt directly with the question of whether the representation was made and, if it was made, its legal effect. The Associate Judge was not satisfied that the representation was made. She found in favour of Camil[1] and judgment was entered in its favour for the balance of the costs outstanding. Ms McCarthy was ordered to pay Camil the sum of $24,518.52.

5 Ms McCarthy now seeks leave to appeal. She also made a fresh evidence application. For the reasons which follow, we would dismiss the fresh evidence application and refuse leave to appeal. The proposed appeal does not have a real prospect of success.[2]

6 It is necessary to set out in more detail how the dispute about costs came about. As we have mentioned, Ms McCarthy borrowed $250,000 from Camil to purchase a townhouse off the plan. When the loan was not repaid, Camil began proceedings against Ms McCarthy seeking repayment of the principal and interest. Camil issued a summary judgment application. Ms McCarthy filed a defence and counterclaim. She alleged that the loan deed was unenforceable because Camil was acting as a credit provider and had engaged in unfair conduct within the meaning of the relevant consumer legislation. The summary judgment application was dismissed by consent.

7 An amended statement of claim was filed on 25 June 2013. On 11 October 2013, Camil filed a further summons for summary judgment.

8 On 30 October 2013, Mr John Ahern assessed Camil's costs on a solicitor/client basis (excluding disbursements) at $43,715.[3]

9 The summons for summary judgment was returnable on 11 November 2013. Through their legal representatives, the parties negotiated to resolve the dispute. Ms McCarthy was represented by Mr Muller (instructed by Mr Dimitrios Diakou). Camil was represented by Mr Weinstock (instructed by Mr Darren Kerr). At 6.06 pm on 8 November 2013, Mr Weinstock sent an email to Mr Muller with an offer to settle on certain terms. The email read:

Adrian,

Your email came in at 6.01pm, a minute after the offer expired.

So my client renews its offer that:

• $250,000;
• statutory interest on that sum from 29 March 2013; and
• costs on a standard basis, assessed as provided in cl 2

(the Compromise Sums);

(2) my client's costs be assessed at your client's expense by Mr John White, costs consultants, who shall:

• issue a draft assessment to both of our instructors simultaneously;
• give them 48 hours in which to comment on the draft; and
• after considering any such comments, issue a final assessment to both of our instructors simultaneously;

(3) the Compromise Sums be paid on the settlement of your client's resale of 3/13 Fraser Street Malvern (Settlement) by cheque from the purchasers in favour of my client;

(4) by 13 November 2013, your client give irrevocable instructions to her solicitors to arrange for such a cheque to be given to my instructors at Settlement;

(5) on compliance with cll 1 to 4:

• my client release yours from the claim stated in the Amended Statement of Claim dated 25 June 2013; and
• your client release mine from the counterclaim stated in the Defence & Counterclaim dated 3 June 2013;

(6) in default of any of cll 1-4, your client consent to judgment in this proceeding for the Compromise Sums;

(7) our clients consent to an order adjourning my client's summons dated 11 October 2013 to 2 December 2013 or as soon thereafter as the business of the Court allows.

Does your client accept?

10 At 6.15pm, Mr Muller responded by email to Mr Weinstock. The email said 'Accepted.'

11 As appears from (3) above, the settlement monies were to be paid on settlement of the sale by Ms McCarthy of the townhouse. Settlement was to take place on 29 November 2013.

12 On 20 November 2013, the costs consultant referred to in the offer to settle, Mr White, gave a draft assessment of Camil's costs on a standard basis at approximately $39,500.[4] As we have said, this led to an allegation by Ms McCarthy, made particularly in an email of 21 November 2013 to Mr Daikou, that during the settlement discussions on 8 November 2013, Mr Muller had asked Mr Weinstock for an estimate of Camil's costs and Mr Weinstock had responded by representing that they were approximately $25,000 on a solicitor/client basis.

13 As contemplated by the settlement agreement, the summary judgment application was adjourned by consent to 13 December 2013. On the adjourned date, an Associate Judge ordered that Ms McCarthy pay Camil $250,000 plus interest plus $15,000 on account of Camil's costs. That left outstanding the question of whether Camil was entitled to the balance of its costs as assessed (the balance being approximately $25,000).

15 Next Camil issued a summons seeking judgment on the terms of settlement. An Associate Judge refused to deal with the application in a summary fashion and ordered that there be a trial.

16 The trial proceeded over two days before an Associate Judge.

17 Ms McCarthy gave evidence by affidavit. She deposed that during the course of the settlement discussions, she raised with her solicitor, Mr Diakou, her concern about paying Camil's costs as part of a settlement as she was concerned that the costs would be very high. She also deposed that Mr Diakou told her that Mr Weinstock had said that Camil's costs were approximately $25,000 on a solicitor/client basis and that if those costs were assessed on a standard basis they would be approximately $15,000 or, at worst, $25,000 but definitely not more than that. She deposed that on that basis, she agreed to settle with Camil and pay its costs on a standard basis to be assessed by a jointly agreed costs consultant. Finally, she deposed that if she had not been assured that the costs were approximately $25,000 she would not have settled. Instead she said that she would have tried to negotiate some alternative agreement about costs which limited the amount that she had to pay and if that was not possible, she would have defended Camil's claim. Under cross examination, Ms McCarthy was adamant that at the time she gave instructions to Mr Diakou to settle she understood that her likely maximum exposure for costs was $25,000.

18 Mr Muller also gave evidence by affidavit. He deposed that the agreement was reached after a series of telephone calls and emails between him and Mr Weinstock from about 12.30pm until about 6.15pm on 8 November 2013. He said that he made limited notes during the course of the afternoon because he spoke to his instructor (Mr Diakou) after each telephone call he had with Mr Weinstock. Mr Muller's affidavit evidence about the alleged representation was as follows:

The issue of costs was more difficult to negotiate as my client's instructions were to agree on a sum certain for costs if at all possible and Mr Weinstock told me his client wanted to settle on the basis that the costs were to be assessed. During one of our telephone conversations, I asked Mr Weinstock for an estimate of his client's legal costs on a solicitor-client basis and he said to me that they were approximately $25,000 but that his client still wanted the costs to be assessed. I then relayed this to my instructors and I was then instructed to agree to costs being assessed on a standard basis. This is what ultimately was put in the various offers sent by Mr Weinstock and accepted by me on behalf of my client in the 6.15pm email.

19 In addition, Mr Muller gave oral evidence at the trial. He was taken to a note that he had made during the course of his retainer. It read:

Without prejudice offer

- $250,000 all in

- interest foregone

- legal fees for proceeding less for summary judgment on scale

- payable from settlement sums at on 29 Nov settlement

- 11th - struck out

- 18th - notice of appeal

25th - appeal heard and struck out

Lawyer went hard - should have waited.

√ $250,000 + $25,000 for int & costs

√ - interest from date loan was due

√ - costs to be taxed in default of agreement

√ Payment of settlement $25,000

Judgment for settlement amount √

20 Mr Muller testified that these were notes that he took during the course of the afternoon of 8 November 2013 as he was having various telephone conversations with Mr Weinstock. When he was asked about what the first part of the note referred to, he said:

Look, I have difficulty going back to these notes after the length of time so I presume they relate to the offer that was put initially to Mr Weinstock which was to settle on that basis of $250,000 all in and that would be consistent with the reference to interest being foregone by his client, and legal fees for a proceeding less the summary judgment on scale might have been something he came back with or that was written down during a conversation, I don't recall why that comes up at that point.

21 In respect of the part of the note commencing $250,000 plus $25,000 for interest and costs, Mr Muller testified:

I presume that is a reference to a further offer that's been put once the offer of $250,000 all in was rejected, and then you see the next line is interest from date loan was due followed by costs to be taxed in default of agreement, payment of settlement, judgment for settlement amount, and those are ticked off. So my practice - what I would have done is as we have done various negotiations I would have added to what the offers were and you can see they are ticked off down the side and then under costs to be taxed in default of agreement there is a figure of $25,000 which is what I recall Mr Weinstock telling me their solicitor/client costs were about in the course of those conversations.

22 Under cross examination, Mr Muller said that he does not like to settle on ambiguous terms which is what caused him to ask what Camil's solicitor/client costs were, thinking that that would put an upper limit on the amount of costs because whatever the figure was, the assessment on a standard basis would be no higher. During cross examination, Mr Muller confirmed his evidence in chief that at some point during the afternoon on 8 November 2013, he had a discussion with Mr Weinstock about settling the dispute on the basis that Ms McCarthy would pay $250,000 plus $25,000 for interest and costs.

23 The Associate Judge summarised some of the evidence that Mr Muller gave in cross examination:

Mr Muller had little direct recollection about the timing and circumstances in which he had the conversation with Mr Weinstock during which the allegation was allegedly made, or the form of words which he had used. He could not recall whether there was one or more conversations between him and Mr Weinstock between the first and second emails, or whether the conversation occurred later, or whether Mr Weinstock's response was immediate. He did not believe that Mr Weinstock told him that the file had been costed. He could not say whether there had been an ongoing discussion about costs.[5]

24 Mr Diakou also gave evidence by affidavit. He deposed that Mr Muller called and told him that he had spoken to Mr Weinstock who had said that Camil's costs had already been assessed on a solicitor/client basis at $25,000. He also deposed that he told Ms McCarthy this and she instructed him to agree to pay Camil's costs to be assessed on an ordinary basis, the assumption being that the assessed costs would be approximately $15,000. Mr Diakou also gave oral evidence at the trial. He testified that he told Ms McCarthy that in his experience if solicitor/client costs were $25,000, standard costs would be $15,000 to $20,000, but definitely no more than $25,000. Mr Diakou also gave evidence that Ms McCarthy's solicitor/own client costs were in the order of $20,000 to $25,000.

25 Mr Weinstock also gave evidence by affidavit. He denied representing to Mr Muller that Camil's solicitor/client costs were $25,000. He deposed that:

I did not say this, because I did not know it. No-one had told me that my client's legal costs, on a solicitor-client or any other basis, were approximately $25,000. And I would not have made up, and accordingly did not make up, a number for those costs.

26 During cross examination, Mr Weinstock confirmed his affidavit evidence denying that he had told Mr Muller that Camil's costs were $25,000 - he reiterated that he did not tell him because he did not know it. Mr Weinstock said that he was told at some stage that the costs had been assessed at about $39,000. He also recalled being told at some point that the file had been costed but he said he was never told it was costed at $25,000. Mr Weinstock had no notes of his discussions with Mr Muller.

27 The Associate Judge found that Mr Weinstock had not made the representation he was alleged to have made. In reaching this conclusion, the Associate Judge carefully summarised all of the evidence.[6] She then noted that Ms McCarthy bore the onus of proof.[7] The Associate Judge observed that it was 'apparent from the evidence of a number of witnesses that their recollection of the relevant events is relatively shaky.'[8] She stated that four of the five witnesses were officers of the Court; that there had not been a real attack on the credit of any of them; that the real concern was as to the reliability of the evidence of each of those witnesses due to the passage of time and that they were legal practitioners who would have dealt with many litigious matters.[9] Consequently, she stated that much 'does turn upon the plausibility of the evidence and its consistency with uncontroversial facts and what contemporaneous documents are available.'[10] Relevant to the first of these matters, the Associate Judge had observed that to find that the representation had been made by Mr Weinstock, she 'would need to make a finding that he had given Mr Muller a cost estimate in circumstances where he had no sound basis for doing so.'[11]

28 The Associate Judge accepted that there was evidence to support a finding that Ms McCarthy and her legal advisers believed that Camil's costs were in the order of $25,000.[12] However, she was not satisfied that that belief was engendered by any statement of Mr Weinstock to that effect.[13] The Associate Judge said:

[g]iven that the evidence of Mr Weinstock and Mr Kerr was largely unshaken, the inconsistencies in the evidence of the witnesses called by Ms McCarthy on some key factual matters and the absence of any reference in any document to Camil's costs being estimated at $25,000 until 21 November 2013 means that I am not persuaded, to the level of satisfaction required, that such a statement was made.

I accept Mr Kerr's evidence that he did not discuss the question of the quantum of Camil's costs with Mr Weinstock. In any event, it would be almost inconceivable that, if he had, he would have told Mr Weinstock that Camil's solicitor client costs were $25,000, having received advice from Mr Ahern only days before that the professional fees alone had been assessed at $43,000. Therefore, in order to find that the representation was made, I would need to be satisfied that Mr Weinstock, when asked about the costs incurred by Camil, simply made a guess, which he passed on to Mr Muller, without any knowledge of or regard for its accuracy.

I accept Mr Weinstock's evidence which was to the effect that he really does not know or understand much about costs. There are of course legal practitioners, both solicitors and barristers, but particularly the former, who are experienced in calculating and estimating the costs associated with litigation and particular steps in litigation. However, I accept that there are many practitioners, particularly barristers, who have just not had to be concerned with such matters during the course of their practice. Further, I do not accept that the implied criticism of Mr Weinstock's file note taking practices and lack of awareness of his disclosure obligations under the Legal Profession Act 2004 goes very far in undermining Mr Weinstock's credibility as a witness, or cause me to draw an inference that he made the representation to Mr Muller. After all, Mr Muller's own file notes were not comprehensive, and Mr Diakou made no file notes at all.

In the end, Mr Weinstock's evidence that he did not say that Camil's costs were $25,000, because he did not know it, was largely unshaken. His only source of knowledge could have been Mr Kerr, and as previously noted, I accept Mr Kerr's evidence that he did not discuss the quantum of Camil's costs on 8 November: the focus of the discussion was the mode of assessment. I also find it inherently improbable that, given Mr Weinstock's professed lack of knowledge of costs, that if he had been asked by Mr Muller what Camil's costs were, that he would not simply ask the person who would know, being Mr Kerr. As noted by counsel for Camil in his submissions, Mr Weinstock was in regular telephone contact with Mr Kerr throughout the course of the afternoon. He obtained his instructions from Mr Kerr, and it is apparent from Mr Kerr's file note that he referred to Mr Kerr for instructions in relation to the detail of the terms of settlement. [14]

29 Having evaluated the evidence given by Mr Kerr and Mr Weinstock, the Associate Judge turned to consider the other evidence:

Mr Muller's lack of recollection about the circumstances in which the representations was made is significant here. If Mr Muller had been able to give positive, confident evidence that, in a phone call with Mr Weinstock, he had asked about Camil's costs, Mr Weinstock had said words to the effect that he would find out and call him back, and then did so, it would be difficult not to accept that evidence. However, Mr Muller's lack of recollection regarding the timing and circumstances in which the representation was made makes it difficult to assess whether the statement was made, but, also if it was, whether it was promissory in nature. The reference to $25,000 in the notes is not conclusive, particularly given that it is apparent from another reference in the notes that a settlement on terms that Ms McCarthy pay Camil the sum of $250,000 plus $25,000 in respect of interest and costs, was at least contemplated, if not formally made. It is possible that the separate reference to $25,000 in the notes referred to Ms McCarthy's own costs.

I should emphasise that I have no reason to find that Mr Muller gave untruthful evidence. I also accept that it is possible that Ms McCarthy, Mr Diakou, and Mr Muller believed Camil's costs would be in the order of $25,000. It is conceivable that this belief may have arisen by reason of discussions amongst themselves, particularly given that Mr Diakou has given evidence that Ms McCarthy's own solicitor client costs were in the order of $20,000 to $25,000. It also may have arisen because of a proposal that was discussed that Ms McCarthy pay $25,000 on account of interest and costs, although it is not apparent from the evidence that this proposal was ever conveyed to Mr Weinstock. But, while these are matters of mere speculation, they do highlight how some confusion might have arisen in Ms McCarthy's camp.

It is also difficult to reconcile the evidence of Mr Diakou that he asked Mr Muller to include a reference to costs being capped at $25,000 in the terms of settlement with Mr Muller's evidence that he could not recall such a conversation taking place. While understandably the passage of time will affect recollection, one would expect Mr Muller to recall such a conversation if it took place. If it did take place, then it casts further doubt upon Mr Muller's ability to recall key conversations and factual matters. If it did not occur, then that casts some doubt upon the reliability of Mr Diakou's evidence. Either way, such inconsistencies make Ms McCarthy's task of discharging her burden of proof more difficult.

Further, while I could not, and do not need to make a positive finding to this effect, there is also evidence consistent with Ms McCarthy and her team not having a belief that Camil's costs were $25,000. I accept Mr Kerr's evidence, supported by a contemporaneous file note, that on 14 November 2013 Mr Diakou contacted him and told him he had irrevocable instructions for payment of the sum of $250,000 to Camil, and then enquired what the costs would be. Mr Diakou at first denied that such a conversation took place, then, when presented with Mr Kerr's file note, said he did not recall the conversation. When Mr Kerr put to him that the costs will be assessed, and that his client did not have a lot of 'wriggle room', Mr Diakou apparently agreed. One would have expected that if the representation of $25,000 had been made on 8 November, that would have been mentioned on this occasion. Similarly, Mr Diakou's email to Ms McCarthy on 21 November 2013 enclosing Mr White's assessment expressed no surprise or concern about its contents, despite his evidence that costs were such a significant matter that he asked Mr Muller for a reference to the quantum of costs being incorporated in the terms of settlement. The terms of settlement provided both parties with an opportunity to make submissions on the draft assessment, but there is no evidence of any submissions being made. There was no communication from Mr Diakou to Mr Kerr in the period 21 November to 28 November 2013, despite Mr Kerr's repeated attempts to contact him between 26 and 29 November 2013. This evidence is more consistent with a case of 'buyer's remorse' on the part of Ms McCarthy rather than Ms McCarthy having been misled.

Indeed, it is apparent from Ms McCarthy's email of 21 November 2013 that she did not entirely understand what had been agreed in the terms of settlement, referring to only being required to pay half of Camil's costs. While such a proposal may have been one of the options under discussion on the afternoon of 8 November, it was not part of any offer made in writing, and was certainly not part of the terms of settlement.[15]

30 Overall, as mentioned, the Associate Judge was not satisfied that Mr Weinstock had made the representation he was alleged to have made to Mr Muller.[16] She ordered that Ms McCarthy pay the balance of approximately $25,000 to Camil for its costs as assessed.

31 Given her conclusion, it was not necessary for the Associate Judge to determine what relief was appropriate had the representation been made. Nevertheless, she did address that issue. The Associate Judge stated that if the representation had been made, she would have found that it amounted to a collateral warranty, or, alternatively, that the making of the representation amounted to misleading and deceptive conduct in breach of s 18 of the Australian Consumer Law.[17] In those circumstances, she said that 'the appropriate remedy would be to limit Ms McCarthy's liability for costs to $25,000, which would require the making of an order that Ms McCarthy pay Camil the sum of $10,000.'[18]

32 Ms McCarthy has three proposed grounds of appeal:

(a) the Court erred in failing to admit into evidence:

(i) oral evidence of Mr Muller in respect of a telephone conversation on 29 November 2013 between him and Mr Weinstock;

(ii) an email of 29 November 2013 from Mr Muller to Mr Daikou reporting on that conversation;

(b) the Court erred in finding that Mr Weinstock did not make a representation to the effect that Camil's solicitor/client costs were approximately $25,000;

(c) the Court erred in finding that if that representation had been made, the appropriate remedy would have been to limit Ms McCarthy's liability for costs to $25,000.

Was evidence about the discussion between Mr Muller and Mr Weinstock on 29 November 2013 wrongly excluded? (Proposed ground 1)

33 Some weeks after the discussions on 8 November 2013 between Mr Weinstock and Mr Muller about settlement, on 29 November 2013 Mr Muller sent an email to Mr Diakou which reads:

I just received a call from Aaron Weinstock informing me that Jane is not paying (some or all, I'm not sure) on the basis that she was induced into the settlement by his representation to me that the plaintiff's solicitor client costs were $25,000.

He asked me whether I would be making an affidavit. I said I would not answer that question but that I did recall him saying that the plaintiff's costs were approximately $25,000 (which he did not deny) and that I had informed you of that as part of reporting back on settlement discussions.

Aaron did say that this matter was heading back to court. Accordingly, given that I am likely to be a witness (at least insofar as the question of the mediation agreement). I have taken the precaution of returning the papers I hold.

I have reviewed my notes and emails and I do [not] hold anything else that is relevant to the issue of $25,000 of costs.

34 It will be recalled that 29 November 2013 was the day that settlement of the sale of the townhouse and payment of the settlement moneys to Camil from the proceeds of sale was to take place. During the course of Mr Weinstock's cross examination, counsel proposed to take him to the email. Mr Weinstock testified that the genesis of the call he made to Mr Muller on 29 November 2013 was to try to resolve the dispute about whether the representation as to Camil's costs had been made and the enforceability of the settlement agreement. Camil's counsel interposed some evidence in chief about the email for the purpose of objecting to its admissibility. On this basis, Mr Weinstock's evidence was as follows:

Do you have a copy of Mr Muller's affidavit in front of you?---Yes.

Does that affidavit also have attached to it that email of which we speak, the one dated 29 November at 7.34?---Yes.

Did you speak to Mr Muller on 29 November?---Yes.

Can you tell Her Honour how that came about?---I had been telephoned by my instructor, Mr Kerr. During that telephone call he told me that the defendant was refusing to comply with the terms of settlement because as she alleged she had been misled about the amount of my client's costs and that she was misled because I had allegedly misrepresented the costs at about $25,000.

Were you on notice of that any earlier about a suggestion of $25,000?---Earlier in the day Mr Kerr had forwarded me an email from the defendant's solicitor, Mr Diakou, stating the same allegation. I asked Mr Kerr to call me, he called me and he again told me this and we agreed that I should call Mr Muller and try to resolve this and that's what I did.

So what was your intention in calling Mr Muller?---To resolve the dispute which had arisen about the enforceability of the settlement agreement.

Did you have a conversation that went that way? Don't go into the conversation but what was that conversation?---We had a conversation for that purpose, it did not succeed in achieving that.

35 Counsel for Camil objected to the email being adduced into evidence on the basis that it was protected under s 131 of the Evidence Act 2008. Section 131(1)(a) provides that evidence is not to be adduced of a communication made between persons in dispute in connection with an attempt to negotiate a settlement of the dispute. Section 131(2) sets out some exceptions including in paragraph (f) where the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue.

36 The Associate Judge upheld Camil's objection because she was satisfied on the evidence that the communication was for the purpose of resolving the dispute which had arisen as to whether Mr Weinstock had made a representation with respect to the quantum of Camil's costs. Her Honour ruled that the exception in s 131(2)(f) did not apply because it did not extend to communications about the representation which were aimed at resolving a further and quite different dispute from the earlier dispute about liability for repayment of the loan notwithstanding the identity of the parties and the close connection with that earlier dispute. Consequently, both the email and oral evidence about the conversation on 29 November 2013 were excluded.

37 Ms McCarthy contends that the Associate Judge misapplied s 131(1)(a). She submitted that the email was critical evidence because it recorded Mr Muller's recollections of Mr Weinstock's representation. The email was sent close in time to when the representation was made (21 days). Ms McCarthy submitted that neither the conversation between Mr Muller and Mr Weinstock nor the email recording that conversation was subject to the privilege protected by s 131(1)(a). In this regard, she submitted that the Associate Judge had not taken into account the objective evidence and had relied entirely on the subjective intent of only one of the participants in the conversation - Mr Weinstock. She argued that there was nothing in the email that made any mention of any settlement offer or attempt to settle the dispute. Nor did any other contemporaneous document mention settlement. She complained that she was denied procedural fairness because there was no opportunity to cross examine Mr Weinstock and there was no evidence from Mr Muller.

38 In our opinion, there is no error in the Associate Judge's finding that the communication was privileged. Ms McCarthy now makes an application to lead fresh evidence from Mr Muller on the appeal. To this end, Mr Diakou has exhibited to an affidavit by him an affidavit of Mr Muller to the effect that he received an unsolicited telephone call from Mr Weinstock shortly after 7 am on 29 November 2013; neither he nor Mr Weinstock made any offers to settle the proceeding and no discussion about settlement arose; if an offer had been made, he would have communicated it to his instructors; the substance of the discussion is recorded in the email he sent to Mr Diakou.

39 The principles for when leave will be given to adduce fresh evidence on appeal are well settled. Leave should be given if, by using reasonable diligence, the fresh evidence could not have been discovered in time to be used in the original trial; it is reasonably clear that an opposite result would have been produced if the evidence had been available at the trial, and had been adduced; and the evidence proposed to be adduced is reasonably credible.[19] Applying those principles, the application to adduce fresh evidence must be refused. Mr Muller was available and gave evidence at the trial. He could have given evidence (subject to objection) about the matters set out in the affidavit now sought to be relied upon. Nor is there any substance in Ms McCarthy's complaint that Mr Weinstock was not cross examined on these issues.[20] No attempt was made to cross examine him when he gave evidence in relation to the application to exclude the email.

40 In our view, on the basis of the evidence given by Mr Weinstock, the Associate Judge was correct to rule that the discussion between him and Mr Muller on 29 November 2013 was privileged. The fact that the email from Mr Muller did not say anything about the discussion having been made in connection with an attempt to settle does not affect the matter. It is true that the Associate Judge did not review the email and therefore could not have taken it into account, but silence in the email is not determinative of the point. The Associate Judge had the unchallenged and credible evidence of the maker of the call as to his intention in speaking to Mr Muller, namely, to resolve the dispute about whether he had made the alleged representation as to Camil's costs being $25,000 that would affect the enforceability of the settlement agreement. His intention is sufficient for s 131(1)(a) uses the broad language of 'in connection with' when speaking of 'an attempt to negotiate a settlement of the dispute' (emphasis added). We consider that under s 131(1)(a) 'the dispute' is referring to the dispute over the alleged representation and its effect on the settlement agreement. The communication between Mr Weinstock and Mr Muller attracted the privilege because it clearly bore a connection to an attempt to settle that dispute.

41 Ms McCarthy's second contention was that even if the email and conversation were properly characterised as communications connected with an attempt to negotiate a settlement of the dispute, they fell within the exclusion in s 131(2)(f). Ms McCarthy submitted that the dispute was about whether the representation had been made and was inextricably linked to the earlier settlement attempts on 8 November 2013. She contended that one issue in the proceeding was whether an agreement had been made to the effect of the representation. Further, she submitted, the proceeding was also brought by Camil to enforce an agreement which it claimed existed in respect of costs and had been made to settle the overall dispute.

42 There is no doubt that the matter with respect to the repayment of the loan had been settled, nor as to the terms of the settlement. They were set out in the email exchange of 8 November 2013 between Mr Muller and Mr Weinstock. Ms McCarthy did not allege that the representation constituted a term of the settlement agreement. Rather, her case was that if the representation had been made by Mr Weinstock, it amounted to a collateral contract which induced her to enter into the terms of settlement or that the making of the statement amounted to misleading and deceptive conduct within the meaning of s 18 of the Australian Consumer Law. The dispute then was not about the terms of settlement nor the dispute which was the subject of those terms of settlement, namely, the repayment of the loan. The relevant dispute for determining whether the exception in s 131(2)(f) applied was the dispute about the separate alleged collateral contract or cause of action for misleading conduct. This was a distinct dispute, later in time, from the dispute about the repayment of the loan. As the Associate Judge observed, although the parties in the dispute about the representation were the same as those in dispute about the loan repayment and there was a close connection between the later dispute and the earlier one, the exception in s 131(2)(f) does not extend to communications aimed at resolving a further and distinct dispute from the dispute in respect of which there had been a negotiated settlement.

43 On this view, the words 'the dispute' are intended to refer to the same dispute in both s 131(1)(a) and s 131(2)(f). This is in accordance with the presumption that when the same words are used in legislation the words should be construed as far as possible so as to give the same meaning, most particularly within the same section of an Act.[21] Here, 'the dispute', referred to in s 131(1)(a) is the dispute over whether the alleged representation was made and, if it was, its effect either as a collateral contract or misleading and deceptive conduct. There was never any settlement of that dispute. The problem for Ms McCarthy is that while the communication of 29 November 2013 between Mr Weinstock and Mr Muller attracted the privilege under s 131(1)(a) because it was made 'in connection with' with an attempt to negotiate a settlement of the dispute over the alleged representation and its effect, it fails to attract the exception under s 131(2)(f) because the proceeding before her Honour was not a proceeding to enforce an agreement to settle that dispute, nor a proceeding in which the making of the agreement to settle that dispute was in issue.

44 In any event, we consider that had evidence of the communication of 29 November 2013 between Mr Weinstock and Mr Muller been admitted, this would have made no material difference to the conclusion reached by her Honour. We consider that Mr Muller's report that, in that communication, Mr Weinstock did not deny that he had made the representation is of negligible probative value given the considerations we identify at [53] below which we consider render it inherently improbable that Mr Weinstock would have made up the figure of $25,000 and given it to Mr Muller.

45 Finally, Ms McCarthy submitted that the exception in s 131(2)(g) applies. That exception arises where evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the Court unless evidence of the communication or document is adduced to contradict or to qualify that evidence. Ms McCarthy submitted that evidence about the 29 November 2013 conversation contradicted the evidence of Mr Weinstock and without that evidence, the Court was likely to be misled.

46 Ms McCarthy accepted that this argument had not been raised before the Associate Judge. There is then a question as to whether Ms McCarthy ought to be permitted to raise it on appeal. A party seeking to rely upon an argument that was not run at trial faces a difficult task if it would require a further trial of the action or where the point sought to be raised could have been met by calling evidence which would have prevented the argument from succeeding.[22] Ordinarily in those circumstances, it is unlikely that the appeal court will entertain the new argument.[23] Such an outcome is consistent with the principle of finality in litigation and also with the Court giving effect to the overarching purpose of the Civil Procedure Act 2010; that is, to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute between the parties.[24]

47 Here, Camil says that it would have relied upon other evidence. Camil did not descend into the detail of the additional evidence that it would have wished to adduce and it is difficult to identify what it may have been so far as the new argument (which is about the admissibility of the email) was concerned. Nevertheless, were Ms McCarthy to be permitted to ventilate the s 131(2)(g) exception argument and were that argument to be successful, the matter would need to be remitted for re-trial. It would be unsurprising if on a re-trial there was cross examination of Mr Muller about the email, its contents and the telephone call, and cross examination of Mr Diakou and additional evidence adduced from Mr Weinstock.

48 In the circumstances of this case, it is not in the interests of justice to permit Ms McCarthy to run on appeal the new argument that the email was admissible based upon s 131(2)(g). She is bound by the manner in which she conducted the case before the Associate Judge. We have reached our conclusion taking into account the history of the various disputes between the parties and the quantum involved. We have also taken into account that the email is not a contemporaneous document created at the time of the alleged representation but rather one created three weeks later, that, even if admissible, it would be just one piece of additional evidence, that further evidence may be adduced in respect of it and the conversation between Mr Muller and Mr Weinstock on 29 November 2013 and that a re-trial would result if the argument were to succeed.

Did the Court make a wrong factual finding when it found that the alleged representation had not been made? (Proposed ground 2)

49 In Robinson Helicopter Company Inc v McDermott,[25] the High Court said:

A court of appeal conducting an appeal by way of rehearing is bound to conduct a 'real review' of the evidence given at first instance and of the judge's reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But a court of appeal should not interfere with a judge's findings of fact unless they are demonstrated to be wrong by 'incontrovertible facts or uncontested testimony', or they are 'glaringly improbable' or 'contrary to compelling inferences.'[26]

50 Here, Ms McCarthy seeks to attack the Associate Judge's finding that no representation was made as alleged. It is a difficult task for her to succeed on this ground because the Associate Judge's finding was made having seen the witnesses testify and having carefully considered all of their evidence (both oral and written) and the documentary evidence (such as it was).

51 Ms McCarthy specifically relies on a number of matters. Some of them[27] rest upon the first proposed ground of appeal in respect of the refusal to admit evidence about the telephone call between the barristers on 29 November 2013. For the reasons given above, there is no substance in this complaint.

52 The other matters relied upon by Ms McCarthy are:

(a) incorrectly finding that the alleged representation was not made based on a lack of recollection by Mr Muller in circumstances in which:

(i) the Court found that if Mr Muller had been able to give positive, confident evidence that the alleged representation was made it would be difficult not to accept that evidence;

(ii) Mr Muller's affidavit contained such evidence (see [18] above) and was affirmed in May 2014, significantly closer in time to when the alleged representation was made than when his oral evidence was given;

(iii) Mr Muller did give such evidence in his oral testimony;

(b) failing to give any or sufficient weight to Mr Weinstock's lack of recollection of events and lack of credibility;

(c) making an incorrect finding that there was an absence of any reference in any document to Camil's costs being estimated at $25,000 until 21 November 2013;

(d) incorrectly finding that it was possible that the reference to $25,000 in Mr Muller's notes referred to Ms McCarthy's own costs when:

(i) that proposition was not put to Mr Muller when he gave his evidence;

(ii) there was no evidence that Mr Muller was told, or otherwise knew, Ms McCarthy's total legal costs;

(e) incorrectly finding that the belief of Ms McCarthy's witnesses that the alleged representation had been made arose from the quantum of her own legal costs when:

(i) that proposition was not put to any of those witnesses;

(ii) there was no evidence that Mr Muller was told, or otherwise knew, Ms McCarthy's total legal costs;

(f) incorrectly finding that the following were consistent with Ms McCarthy's witnesses not having a belief that Camil's costs were $25,000:

(ii) a lack of communication between the parties in the period 21 to 28 November 2013;

(g) incorrectly drawing a negative inference from Ms McCarthy's email of 21 November 2013, which referred to paying half of Camil's costs, when Mr Diakou had given evidence to the effect that he had told Ms McCarthy that Camil's solicitor-client costs of $25,000 when assessed on a standard basis would be approximately $15,000 (that is, a little over half the solicitor-client costs).

53 Having reviewed the evidence, the Associate Judge's finding that Mr Weinstock did not make the alleged representation as to Camil's solicitor/client costs being $25,000 is not glaringly improbable. Nor are there incontrovertible facts or uncontested testimony that demonstrate that the Associate Judge erred in her finding. We accept that some evidence supported Ms McCarthy's case. But that is not unusual. It would be rare for all the evidence to point in one direction. The Associate Judge had to consider, in particular, the evidence of Mr Muller and Mr Weinstock and the documentary evidence. Having read the affidavit material and the transcript for ourselves, it seems that Mr Muller's evidence was largely reconstruction based upon the emails and his notes from 8 November 2013. That is unsurprising given the passage of time and the fact that Mr Muller has no doubt represented many clients in settlement discussions. On his own evidence, at least one reference to $25,000 in his notes of 8 November 2013 referred to part of an offer that his client made. In that context, the reference to $25,000 in the notes is not conclusive evidence that the alleged representation was made. Against the evidence of Mr Muller and his 8 November notes, the Associate Judge had to weigh the objective documentary fact that Mr Ahern had assessed Camil's solicitor/client costs at over $43,000 only 9 days before the settlement discussions. That was a fact known to Mr Kerr who was Mr Weinstock's instructing solicitor. As the Associate Judge observed, if Mr Weinstock wanted to know Camil's estimated solicitor/client costs so that he could tell Mr Muller, then Mr Kerr was the most likely person to give him that information. It would make no sense for Mr Kerr to tell Mr Weinstock those costs were $25,000 when the Ahern figure was $18,000 more. It is inherently improbable that Mr Weinstock would have made up a figure and given it to Mr Muller.

54 There is no proper basis to disturb the Associate Judge's finding that, on the balance of probabilities, no representation was made by Mr Weinstock as to the amount of Camil's solicitor/client costs.

The appropriate remedy if the representation had been made (Proposed ground 3)

55 Given the conclusion which we have reached about the first two proposed grounds of appeal, it is not necessary to consider the third which would only be relevant if the alleged representation had been made by Mr Weinstock.

56 We consider that it is imperative to emphasise that it is regrettable that this dispute proceeded to the stage of an application for leave to appeal in this Court. When settlement of the sale of the apartment took place on 29 November 2013, Ms McCarthy should have paid the costs she had agreed to pay. On that date, the difference between the amount that was claimed for those costs ($39,000) and what she says was the most that she thought she might have to pay ($25,000) was, as we mentioned at the outset, about $14,500. She did not pay. As recounted above, there was then a summary judgment application, a failed judicial mediation, a two-day trial and the application for leave to appeal. This has very likely generated significant legal costs for the parties. It has certainly taken up scarce judicial resources (judges, associate judges, registry and judicial staff) which has delayed the hearing and determination of other litigation.

57 We consider that this proceeding should provide an example to other litigants to keep steadily in mind the question of whether the quantum at stake warrants persisting with a claim where the pursuit of that claim inevitably incurs further and perhaps significant legal costs. Practitioners must be aware of their obligation under s 24 of the Civil Procedure Act to use reasonable endeavours to ensure that legal costs and other costs are reasonable and proportionate to the complexity or importance of the issues in dispute and the amount in dispute.

58 In this regard, the Court alerted the parties to its concerns and listed the matter for mention in December last year. The Court urged the practitioners to consider these matters and to advise the Court Registry if the application for leave was to proceed. In mid-January 2016, the Court was informed that the application would continue. At that time, there were outstanding procedural steps in respect of the leave application. On multiple occasions over the succeeding months, the dates for these steps were extended by consent. Ultimately, the Court was informed that the leave application would proceed.

59 Bearing in mind the quantum and issues in dispute and the history of the dispute, the Court determined to dispose of the application for leave without an oral hearing. It is notable that in its written case of 4 November 2015, Camil urged the Court to refuse leave to appeal partly on the basis that the amount in dispute was small and the costs of the appeal would likely exceed that amount. It urged the Court to dispose of the application without the need for an oral hearing. That was opposed by Ms McCarthy.

60 We consider that this protracted litigation, where considerable time and effort has been expended in pursuing a dispute over a modest sum, reinforces the need for practitioners to examine regularly, during the course of a proceeding, whether there is a proportionate relationship between their endeavours and the quantum in dispute. As mentioned, we consider it regrettable that this proceeding reached the stage of an application for leave to appeal. It is to be hoped that the refusal of leave will bring finality to this litigation.

61 Ms McCarthy's application for leave to appeal will be refused as the proposed appeal has no real prospect of success.

[1] Camil Holdings Pty Ltd v McCarthy [2015] VSC 430 ('Reasons').

[2] Supreme Court Act 1986 s 14C_, Kennedy v Shire of Campaspe_ [2015] VSCA 47 [12].

[3] There was a later draft assessment given on 20 November 2013 by a different costs assessor, Mr John White, of about $39,500 on a standard (rather than solicitor/client) basis. It is the White assessment which is referred to in [2] above.

[19] Orr v Holmes [1948] HCA 16; (1948) 76 CLR 632, 635; Wollongong Corporation v Cowan [1955] HCA 16; (1955) 93 CLR 435, 444.

[20] Nodnara Pty Ltd v Deputy Commissioner of Taxation (1997) 140 FLR 336, 340.

[21] Craig Williamson Pty Ltd v Barrowcliff [1915] VicLawRp 66; [1915] VLR 450, 452 (Hodges J).

[22] Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 200 ALR 447, 461.

[23] Water Board v Moustakas (1988) 180 CLR 491, 497; Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 200 ALR 447, 461.

[24] Civil Procedure Act 2010 ss 7-9.

[25] [2016] HCA 22; (2016) 331 ALR 550.

[27] Proposed grounds of appeal 2 (a), (b)(iii).