National Mutual Life Association of Australasia Limited v Tolfield Pty Ltd

Consideration 5 The Court is empowered by s 56 of the Federal Court of Australia Act 1976 (Cth) to order an applicant in a proceeding to give security for the payment of costs which may be awarded against it. Section 56(2) vests the Court with a discretion to order the security to be of such amount and given at such time and in such manner and form as the Court directs. The only relevant limitation on the exercise of the discretion to order security for costs is that the discretion must be exercised judicially: Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 52 ALR 176. There are a number of matters which the Court may legitimately take into account in considering such an application, including matters set out previously in O 28 r 3(1) of the Federal Court Rules and now found in r 19.02 of the Federal Court Rules 2011. It is clear, however that the Court is not limited to those matters, and may also have regard to other factors including the strength and bona fides of the case of the party against whom security is sought and particular discretionary matters peculiar to the circumstances of the case. 6 Section 27 of the Evidence Act 1995 (Cth) provides that a party may question any witness, except as provided by this Act. Section 29(1) of the Evidence Act provides that a party may question a witness in any way the party thinks fit, except as provided by Ch 2 of the Act or as directed by the Court. 7 In Wu v Avin a number of respondents sought security for costs against the applicant. The respondents were self-represented, the applicant represented by Counsel. The second respondent sought to cross-examine the applicant. Kenny J observed at [18] as follows: The Court has a discretion to permit or refuse an application made in an interlocutory proceeding to cross-examine a deponent on an affidavit that he or she has made, although the discretion to permit such cross-examination is exercised cautiously and, as Nicholson J said in Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 at 272, "normally" "somewhat sparingly". Branson J cited this statement of his Honour with approval in Friends of Hinchinbrook Society Inc v Minister for Environment (No 1) (1996) 69 FCR 1 at 17. 8 Her Honour noted that the second respondent wanted to cross-examine the applicant on her affidavits including her family situation, businesses and property, name, ASIC records and allegations against him, on the basis that her statements about these matters were deliberately misleading and that he would suffer serious injustice if he were not permitted to cross-examine, especially bearing in mind the respondents' lack of representation (at [19]). The applicant claimed, in summary, that no particular matters for cross-examination were identified and that in any event the applicant's affidavits were comparatively straightforward and limited to matters relevant to the security for costs application (at [20]). 9 Her Honour found as follows at [21]: The second respondent has not satisfied me that there is any sufficient justification from departing from the usual practice on interlocutory applications. I accept that, as the applicant submitted, her affidavits are straightforward enough. The second respondent made the broad allegation that the applicant is deliberately misleading the Court. He has not identified any particular matter that would warrant cross-examination. I did not consider that, on this application for security for costs, the Court would be assisted by the cross-examination of the applicant. I therefore declined to exercise my discretion to allow cross-examination of her by the second respondent. 10 In Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 Nicholson J provided detailed reasons for refusing the respondents before his Honour the right to cross-examine witnesses, including that in interlocutory matters such a discretion is normally exercised somewhat sparingly, that the application to cross-examine the witnesses was not made bona fide, and that permission to cross-examine would have unreasonably delayed the determination of the matter. 11 Further, in Friends of Hinchinbrook Society Inc v Minister for Environment (No 1) (1996) 69 FCR 1 Branson J refused cross-examination of witnesses for reasons including that the Court would not have been assisted by the relevant cross-examination. 12 In this case Mr Cooper for the second respondent sought cross-examination of Ms Cox and Mr Bloom for reasons which in my view could initially be described as vague and unspecific. In response to submissions by counsel for the first respondent, Mr Cooper further explained to the Court the basis upon which he sought leave to cross-examine these witnesses. 13 While the importance of parties being afforded a fair trial cannot be over-emphasised, it is also important to ensure that the time of the Court is not wasted by cross-examination of witnesses which would be of no assistance to the Court. 14 In this case the cross-examination of Ms Cox sought by the second respondent is, in my view, suggestive of fishing. I accept Mr McQuade's submission that, to date, the merits of the first respondent's claims have not been seriously challenged. No strike-out application in respect of the first respondent's claim is before the Court. No material has been filed to impugn the bona fides of the first respondent's case. I note this particularly in light of the fact that Ms Cox's affidavit containing financial information was filed on 13 September 2011 and it is only today that the merits of the first respondent's case have been questioned. 15 In relation to the substance of Ms Cox's affidavit, I accept the submission that Ms Cox's evidence in respect of the security for costs application is clear and limited to matters relevant to that application. I also accept Mr McQuade's submission concerning the witness' lack of expertise to comment on specific matters pertaining to valuation of real property, an issue of importance in respect of whether the first respondent is able to meet a costs order from its assets. It is not disputed that the financial accounts of the first respondent for the year ended 30 June 2010 were audited, and I have difficulty understanding the value to the Court which lies in cross-examination of Ms Cox in respect of those accounts. Finally, the fact that the 2011 financial accounts of the first respondent as annexed to Ms Cox's September affidavit were in draft has not been demonstrated to be a matter of significance warranting the exercise of discretion of the Court to grant leave for cross-examination of this witness. 16 In relation to the evidence of Mr Bloom, I am not persuaded that the Court would be assisted by his cross-examination. Opinion evidence as to likely costs to be incurred in this litigation has been filed by both the first and second respondents, and the Court will be assisted by submissions in respect of that evidence and the view the Court should take of that evidence in determining the application for security for costs currently before the Court. The evidence of Mr Bloom is limited to matters relevant to that security for costs application. In my view, cross-examination of Mr Bloom would serve no useful purpose. 17 Finally, the facts in Wu v Avin are not so distinguishable as to make the principles discussed in that case inapplicable in these proceedings. Mr Cooper submitted that the fact that the relevant respondents in Wu v Avin were self-represented influenced her Honour's decision to refuse leave to cross-examine the applicant. In my view this fact was of minimal importance in that decision. 18 The application for leave to cross-examine Ms Suzanne Cox and Mr Adam Bloom is refused. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.