Mond v Berger [2003] VSC 450

2 Though the subject matter of the disputes referred to the arbitrators may not have been commercial in character, the arbitrants agreed that the arbitration should be conducted under and pursuant to the Commercial Arbitration Act 1984. In summary, the plaintiffs in this proceeding complain about a number of aspects of the conduct of the arbitration by the arbitrators. Accordingly, they seek, first, orders pursuant to s. 42 that the award be set aside for misconduct; for the removal of the arbitrators pursuant to s. 44 for misconduct and for the arbitrators to be denied their fees and expenses and that they pay the Monds' costs of the arbitration. Second, and alternatively, the Monds seek an order pursuant to s. 43 for remission of the matters to the arbitrators. Ancillary relief extending time is sought, if that be necessary, pursuant to s. 48.

3 I have mentioned that the disputes between the arbitrants are not truly commercial. As best I understand the position, their disputes arise out of a conflict between the Monds and the management of the congregation. Mr David Mond in his affidavit affirmed on 29 November 2002 describes this conflict as his attempt to exercise what he describes as "my rights as a member of" the congregation. It is not necessary for my present purposes that I go further into these matters, except to record my observation that the Monds feel a strong sense of grievance at the way they have been dealt with by the administration of the congregation and, latterly, by the arbitrators.

4 The application to impugn the award came on for hearing before Dodds-Streeton J last week. At the outset, counsel on behalf of the CHC defendants applied for an order, effectively, that Mr Peter Hayes QC, senior counsel retained by the Monds, be restrained from acting at the trial. This relief is sought by summons filed on behalf of the CHC defendants on 6 November 2003. The ground of the application is that Mr Hayes had previously been retained by the CHC defendants, had received confidential information from them and had advised them in conference. These matters took place in November 2002 after this proceeding had commenced and concerned the subject matter of the proceeding. Her Honour took the view that such an application should not be made before her as trial judge. Accordingly, it has been referred to me.

5 In support of the application has been filed four affidavits affirmed by Andrew Stanley Romer on 6 (two), 7 and 9 November respectively. Mr Romer is the solicitor for the CHC defendants. Exhibit 139 to Mr Romer's second affidavit of 6 November is an affidavit affirmed by Issac Alexander Brott on 6 November 2003. This was filed as a confidential exhibit. Mr Brott apparently acted as a go-between Mr Hayes and the CHC defendants and he suggested that Mr Hayes might act for them. In opposition were filed affidavits of Mr Hayes and of Nicholas Weston, both sworn 10 November 2003. Mr Weston is the solicitor for the Monds.

6 When the application came on for hearing before me on 10 November, I was told that Mr Hayes was no longer retained by the CHC defendants. There remained only the question of costs. On behalf of the CHC defendants counsel sought the costs of the application on the basis that it had been successful. The position of the Monds was that the CHC defendants should pay the costs of the application, the costs thrown away by reason of the time lost at trial and, further, their costs of retaining Mr Hayes from the time that CHC defendants became aware that he had been retained. They sought these costs on an indemnity basis.

7 The facts as they appear from the material before me may be set out as follows.

8 The following appears from the Brott affidavit. In September or October 2002 after the proceeding had been commenced, Mr Brott telephoned Mr Hayes to make arrangements to see him about the proceeding. He told counsel that he had been consulted by a representative of the CHC defendants . Over the next few weeks Mr Brott discussed the case and related matters with Mr Hayes in his chambers on several occasions and agreed the basis for the retainer. This was, apparently, that Mr Hayes should appear on a pro-bono basis. Confidential information was communicated to Mr Hayes in the course of these discussions.

9 Mr Romer said that, on 7 November 2002, he telephoned Mr Hayes at the instance of one of the CHC defendants to arrange an appointment to discuss the matter. On 11 November 2002 Mr Romer consulted with Mr Hayes in chambers for 30 minutes. In the course of this consultation Mr Romer summarised the status of the proceeding. Mr Romer's notes of the consultation contain no further information. He has no further recollection of the discussions between them.

10 Mr Romer said that, on 18 November 2002, he spoke by telephone with Mr Brott. The latter was angry that he had been by-passed by Mr Romer who had dealt direct with counsel. Two days later, on 20 November, Mr Romer wrote to his clients reporting that he had met with Mr Hayes and had given him a copy of the amended statement of claim, the deed of submission to arbitration and the award. He told them that he had told Mr Hayes the current status of the proceeding and "the plans for bringing it to fruition". There was no further involvement by Mr Hayes in the proceeding on behalf of the CHC defendants.

11 When the matter was raised before the trial judge on 5 November, Mr Hayes said this:

"At 9 o'clock this morning I was approached by Mr Hammond to be told that there was a complaint about me appearing on the basis that I had previously given advice to some of the defendants. I was given details of the occasion. I said I had no recollection of it. I checked my fee book and diary. I have no record of it but said I was prepared to accept it happened but I would like to see what I was told was a file note about it. I was told that no file note would be produced for reasons of legal professional privilege and I indicated in clear terms that my clients and I regarded the situation as unsatisfactory and unworthy."

Mr Hayes did not deal with the allegations of Mr Romer or Mr Brott in his affidavit of 10 November. With respect to the Brott affidavit, this is explicable by the fact that Mr Hayes did not then have access to it.

12 I move forward in time. On 5 May 2003, the proceeding was fixed with trial to commence on 28 October 2003 on an estimate of five to seven days.

13 On 23 October 2003, Mr Hayes was retained by the Monds.

14 On 28 October 2003, Mr D. Havin, junior counsel for the CHC defendants, informed Mr Romer that Mr Hayes had been retained by the Monds.

15 On Wednesday 29 October 2003, Dr C.E. Croft SC, then senior counsel for the CHC defendants, Mr Havin and Mr Romer formed the view that there was not sufficient material to warrant an application to have Mr Hayes cease to act for the Monds.

16 On Thursday 30 October 2003, Mr Hammond QC was retained on behalf of the CHC defendants in place of Dr Croft who was unable to appear. On this day Mr Romer was told by one of his clients that Mr Brott had made a remarkable offer. This was to submit on behalf of the CHC defendants an affidavit to the Victorian Bar Council setting out his discussions with Mr Hayes in support of a request the council not permit Mr Hayes to continue to act for the Monds. I describe this as remarkable because, to that time, no one appears to have raised the matter with Mr Hayes himself.

17 Late on the evening of Thursday 30 October, Mr Romer spoke by telephone with Mr Brott and requested that he provide information in writing about his communications with Mr Hayes first thing on Friday 31 October. Mr Brott did not provide the information sought on that day notwithstanding reminders from Mr Romer.

18 The weekend passed. On Monday 3 November 2003, Mr Hammond was informed of Mr Brott's involvement, but not, it would seem, of the detail of his communications with Mr Hayes other than that contained in Mr Romer's letter of 20 November 2002 to his clients. It will be recalled that Mr Romer had no further recollection of what had passed between him and Mr Hayes at his meeting on 11 November 2002.

19 Tuesday 4 November 2003 was Melbourne Cup Day. On that day, having been shown Mr Romer's notes of the meeting of 11 November and his letter of 20 November Mr Hammond and his junior advised Mr Romer that there were grounds to have Mr Hayes restrained from acting at the trial which was to commence the following day. They suggested however that further particulars be obtained from Brott.

20 At 1.15 pm on that day, having received instructions to do so, Mr Romer requested counsel to raise the question of conflict with Mr Hayes. This was a public holiday and Mr Hammond was unable, despite considerable efforts on his part, to contact Mr Hayes until later that day and, then, only in circumstances which did not permit any discussions of the conflict question. He was not able to discuss this matter with him until 9.05 am on Wednesday 5 November. When he did so, Mr Hammond mentioned only Mr Romer's contact with Mr Hayes in November 2002. He did not mention Mr Brott's involvement.

21 Mr Hayes, not surprisingly, was reluctant to withdraw from the trial which was due to start that morning and he declined to do so. I have already set out the statement he made to the Court when the trial commenced. The trial was then stood down to enable a formal application to be brought by noon on 6 November.

22 On the same day, Wednesday 5 November, at about 6.20 pm Mr Brott finally attended counsel in chambers and instructed Mr Hammond and his junior and Mr Romer about his discussions with Mr Hayes in 2002. None of this was then disclosed to Mr Hayes or to his solicitor.

23 The application to restrain Mr Hayes was brought by summons which is stamped as having been filed at 10.35 am on 6 November. It was supported by Mr Romer's first affidavit which made no mention of Mr Brott or of his involvement. The documents were served prior to noon on 6 November. The summons was returnable before her Honour at 2.15 on 7 November.

24 Mr Brott affirmed his confidential affidavit "late in the morning of Thursday 6 November". In it he does not condescend to any detail of his communications with Mr Hayes other than to list the topics discussed. Nevertheless, it was treated by those representing the CHC defendants as so sensitive that it could not be disclosed. It was exhibited to, but not served with, Mr Romer's second affidavit of 6 November when it was served, but this was not done until 3.26 pm on that day.

25 Then followed negotiations as to the terms upon which Mr Brott's confidential affidavit would be made available to counsel for the Monds. The application was, nevertheless, commenced before the trial judge at 2.15 pm as appointed.

26 It was not until after 3.00 pm on Friday 7 November that the Brott affidavit was made available to counsel for the Monds. The matter was then stood down and it was, later that day, referred to me for hearing as a contested matter on Monday 10 November at 9.30 am. At 5.10 pm on Friday 7 November Mr Hayes withdrew from the trial and counsel for the CHC defendants were so informed.

27 I make the following observations. First, Mr Hayes stated, properly in my view, that he would withdraw notwithstanding the proximity of the trial if details were provided of confidential communications made to him. This he did after the Brott affidavit was released. Second, Mr Hayes' decision to withdraw was a proper one given the matters disclosed in the Brott affidavit. Third, no satisfactory reason was offered on behalf of the CHC defendants for their withholding of the Brott affidavit until late on Friday 7 November. Fourth, I am content to proceed on the basis that Mr Hayes had no recollection of his communications with Mr Romer or Mr Brott, at least until the Brott affidavit was disclosed. Prior to this, he believed, as he told the Court on the morning of 5 November, that he strongly suspected that the application was but a tactical manoeuvre, not by Mr Hammond, but "by someone on his behalf". Fifth, he was entitled to hold that suspicion in the circumstances as they then appeared. It would not have been proper for him, at that late stage, to withdraw unless he was satisfied that there was some genuine basis for him to do so.

28 I turn now to the question of where the costs which have undoubtedly been incurred and those thrown away should fall. I can see no reason why the Monds should bear this burden. There is nothing to suggest that they acted in any way improperly. The only basis upon which it might be contended otherwise is that they opposed the application until late Friday 7 November 2003.

29 The Monds' own costs application focusses on the delay on the part of the CHC defendants in not raising the matter until the morning of Thursday 6 November and in not disclosing in any detail the involvement of Mr Brott until late on the Friday. I accept that they were entitled to act on the advice of Dr Croft which they received on 29 October. This is unaffected by the fact that Mr Hammond took a different view of the material on 4 November. I accept, too, that it was proper for them to exercise caution in bringing the matter to the attention of Mr Hayes and his clients and the Court until they were satisfied that there were grounds for so doing. They must, however, accept responsibility for the failure of their witness, Mr Brott, to provide these grounds until the afternoon of 5 November and, for their failure for two days to bring forward their information so obtained.

30 In the circumstances, the proper conclusion is that the costs of the application must lie where they fall. I will make no order in favour of either party. I decline to deal with the application for the costs of the trial thrown away. It seems to me that the disposition of these costs should lie with the trial judge in whose hands the costs of the proceeding generally lie. I have, nevertheless, set out in some detail my findings of fact in the hope that her Honour might find them useful in dealing with those costs.

31 I will, therefore, order that the applications of the plaintiffs and of the fourth to twenty-fourthnamed defendants for the costs of the summons filed on behalf of the fourth to the twenty-fourthnamed defendants on 6 November 2003, including any reserved costs, be dismissed.