Plaintiffs/Defendants by counterclaim v Defendants/Plaintiffs by counterclaim

1 This proceeding concerns what, if any, earn out amount is payable by the plaintiffs (Pact) to the defendants (TIC) under a Share Sale and Purchase Agreement (SSPA) entered into by the parties on 15 August 2018.

2 A central issue in the proceeding is whether dispute notices delivered by TIC on 27 July 2021 and 20 September 2021 were effective to notify Pact that TIC disputed the earn out statement delivered by Pact on 15 January 2021. Pact contends that the dispute notices were ineffective and that no earn out amount is payable.

3 TIC contends that the dispute notices were effective and counterclaims that Pact breached the SSPA by failing to cooperate or refer the dispute to an independent expert for determination as required by the agreement. TIC argues that, having regard to the normalised earnings of the business in the 2020 financial year calculated in accordance with Schedule 11 of the SSPA, TIC is entitled to an earn out amount of $30 million.

4 The proceeding has been on foot since September 2021, and the parties have filed multiple rounds of evidence, both lay and expert.

5 The proceeding is set down for trial commencing 8 December 2025 on an estimated duration of 11 days.[1]

6 Pact proposes to call nine lay witnesses and Ms Janine Thompson as an expert witness. TIC proposes to call three lay witnesses and Mr Brian Morris as an expert witness.

7 The expert evidence to be given by Ms Thompson and Mr Morris relates to accounting issues.

8 At trial, the expert evidence is to be given concurrently, topic-by-topic, with each expert giving a brief summary of their opinion on the topic, followed by cross-examination and re-examination. Each expert will also be permitted to ask questions of the other expert.

9 The concurrent expert evidence of both experts on all issues is estimated to take two days.

10 Pact seeks leave to permit two separate counsel retained by it to cross-examine Mr Morris on different topics. TIC objects to Mr Morris being cross-examined by more than one counsel.

11 Both parties have filed written submissions and were content for the issue to be determined on the papers.

12 Pact accepts that a common law rule of practice prevents more than one counsel of the same party cross-examining a witness. It cites Canberra Residential Developments Pty Ltd v Brendas (Canberra Residential Developments),[2] in submitting that a recognised exception to the common law rule arises from the common feature of modern commercial litigation of counsel splitting their trial preparation on a topic-by-topic basis and that a judge often permits cross-examination and submissions to be divided so that counsel can deal with their assigned topics.

13 Pact submits that such a course is extremely efficient, and that it is appropriate where the issues are complex, there is no overlapping of cross-examination and the proposal is outlined before cross-examination.[3] It submits that all the judge is required to do is to ensure that there is no unfairness to the witness.

14 Pact submits that the common law rule must also be considered in light of the Evidence Act 2008 (Vic) (the Act). Section 27 provides that a party may question any witness except as provided under the Act. Section 29(1) 'assumes that a court can direct a witness not to answer a question put under cross-examination'. Section 41 'relevantly provides that a court must disallow a question if it is unduly annoying, harassing, intimidating, oppressive, humiliating or repetitive'. Pact submits that the common law rule 'would fall under this head' and thus s 29(1) or s 41 of the Act reversed the onus of the common law by requiring that the party calling the witness show that cross-examination is unfair or should not be allowed.

15 Pact further submits that s 26 of the Act provides that the Court may make such orders as it considers just in relation to the questioning of witnesses. That discretion is informed by s 192, which includes the following factors relevant to determining whether a direction should be given for different counsel to cross-examine a witness: whether such a direction would extend or shorten a hearing; the unfairness to the witness; the importance of the evidence; and the nature of the proceeding.

16 Pact submits that allowing multiple counsel to cross-examine a witness cannot be unfair, because it has been held that where junior counsel seeks to continue cross-examining a witness in circumstances where senior counsel who cross-examined them no longer acted for the party, a representation to the Court not to cross-examine on topics already dealt with ensures that a witness is not subjected to unfair cross-examination.[4]

17 Pact submits that there is also no risk of time being wasted, the hearing being unduly extended, or confusion arising from cross-examination by different counsel on discrete topics. It submits that the nature of the proceeding is apt for different counsel cross-examining a witness on a topic-by-topic basis.

18 The expert witnesses are to provide their opinions on issues relating to twenty-nine accounting adjustments, each of which concerns discrete topics. The expert witnesses have prepared expert reports and a joint report identifying the areas of agreement and disagreement between them. There are some fourteen accounting adjustments in dispute between the experts.

19 In their expert reports, both experts have considered each of the accounting adjustments in a separate chapter. Similarly, each of those adjustments is also considered in a separate section of the joint expert report.

20 Pact submits that the adjustments which remain in dispute can be placed in one of two groups, either 'Rebate Adjustments' or 'Non-rebate Adjustments'. It concedes that the Rebate Adjustments may concern similar issues or overlap with issues which arise in another Rebate Adjustment. However, it submits that each of the Non-rebate Adjustments concerns discrete topics and issues. The subject matters in each of those adjustments are different and have been considered by the parties' experts as separate topics.

21 Pact therefore submits that a discrete division of topics that would not give rise to overlap should involve:

(a) one counsel cross-examining exclusively on Rebate Adjustments; and

(b) cross-examination on the Non-rebate Adjustments being divided between two counsel.

22 TIC submits that the leading authority on whether the Court should grant leave to permit multiple counsel for a party to cross-examine a single witness on a topic-by-topic basis is Eva Pty Ltd v Charles David Ltd (Eva).[5]

23 TIC submits that Eva is authority for the following propositions:

(a) it is a well-established rule that one counsel and one counsel only may cross-examine a particular witness, be that witness a party or otherwise;

(b) in considering whether or not to exercise the Court's discretion to permit a witness to be cross-examined by more than one counsel appearing for the same party, a trial judge should have regard to the established practice and should not depart from that practice unless there is some special circumstance of the case that justifies such a departure;

(c) a case may be highly complex and lengthy and involve issues of such magnitude and complexity that it is beyond the capacity of any one counsel to properly prepare and conduct the cross-examination necessary for every aspect of the various actions to do justice to his client's case; this may be a special circumstance that justifies a departure from the established rule, provided the issues to be cross-examined on are clearly defined and do not overlap with other issues in the proceeding.

24 TIC submits that Eva is the most analogous case to the present case. It submits that the other decisions cited by Pact were not Victorian decisions, did not involve the question of whether more than one counsel for the same party should be permitted to cross-examine a witness on a topic-by-topic basis, cited Eva as the only Australian authority for the existence of an exception, applicable in complex commercial litigation, to the rule that only one counsel may examine a witness and did not give consideration as to what constitutes 'complex litigation'.

25 TIC submits that it is necessary to consider the circumstances in Eva in detail as it provides the content of the exception to the rule that only one counsel should cross-examine a witness and the circumstances in which it may apply.

26 TIC submits that the proceeding in Eva had the following salient features:[6]

(a) the hearing of eleven separate actions: two instituted by one group of parties and nine by another group of parties;

(b) numerous complex claims of breach of contract, statutory duty, failure to account, negligence, misrepresentation, deceit, fraud and embezzlement;

(c) investigations of accounting and business transactions in four countries over a ten-year period;

(d) hundreds of 'complex and confused' transactions that would require detailed examination;

(e) more than a thousand documents tendered, and it was expected that thousands more would be tendered;

(f) at the time of the application, the trial was in its seventh week and the first witness was still in the witness box and was expected to remain there for a further three to four weeks. That is, cross-examination was expected to take up to three months; and

(g) the trial was expected to take six to nine months.

27 TIC submits that, once regard is had to those unique features of Eva that gave rise to the 'unusual step of departing from the established practice',[7] it is readily apparent that the circumstances in this case are far removed from the sort of complexity that would warrant a departure from the established rule.

28 In particular, TIC refers to the fact that the present proceeding is a relatively short commercial case listed for a trial of 10 days.[8] The whole of the expert evidence is expected to be heard in two days (in effect, one day cross-examination of each expert) and those experts disagree on only 14 accounting entries.

29 TIC submits that unlike Eva, the complexity of this case therefore does not constitute a special circumstance that would warrant a departure from the well-established rule that it is oppressive and inefficient to subject a witness to cross-examination by multiple counsel for the same party. The present case is not a case where the complexity renders cross-examination to be 'beyond the physical capacity of any one counsel' to properly prepare and conduct the cross-examination to do justice to the case as it was in Eva.[9]

30 TIC submits that the Act does not displace the common law prohibition on cross-examination by multiple counsel nor does it place the onus on the party opposing such a course of cross-examination to show that it is unfair and should be disallowed.

31 TIC submits that s 27 of the Act simply codifies a party's right to question a witness but does not confer a right of multiple counsel for a party to do so. Sections 29 and 41 of the Act govern the manner and form of questions that may be asked, not the number of counsel who may be permitted to ask those questions. While s 26 does empower the Court to make such orders as it considers just in relation to the way in which witnesses are to be questioned, this involves a 'broad, evaluative assessment' in which the Court is entitled to have regard to 'the conventions developed reflecting the accumulated experience of the common law in securing fair trials and guarding against unfairness'.[10]

32 Having regard to the matters in s 192(2) of the Act, TIC submits that:

(a) permitting multiple counsel to cross-examine the same witness can only add to, and not shorten, the duration of cross-examination;

(b) absent special circumstances, permitting multiple counsel to cross-examine a witness is oppressive and unfair to the witness;

(c) limiting the cross-examination of Mr Morris to one member of counsel will not prevent Pact from deploying its whole counsel team in preparing that cross-examination nor will it prejudice Pact's right to cross-examine Mr Morris on any issue; and

(d) the nature of the proceeding, being a relatively short trial with confined issues, does not warrant a departure from the rule against cross-examination by multiple counsel intended to secure fair trials and guard against unfairness.

33 There is an established common law rule of practice that one counsel and one counsel only should cross-examine a particular witness.[11] The rationale for such a rule is to avoid the time that would be wasted by the examination or cross-examination of as many barristers as were retained; the confusion introduced by way of this process; and to protect the witness from oppression.[12]

34 In Eva, Beach J adverted to this rule of practice in the following observation:

As was pointed out by Allen J in a decision to which I shall refer in a moment, there is a paucity of relevant authority in relation to the matter. Indeed, I have only been referred to three decisions touching upon it, two of which, are distinguishable from the present case. From that fact alone, I would be entitled to conclude that the practice of permitting only one counsel on one side to examine, cross-examine or re-examine a witness, is so firmly entrenched that an application to a trial judge to vary it has rarely been made, let alone, granted--even if my own experience at the bar and on the bench had not driven me to that conclusion.[13]

In my opinion a trial judge has a discretion as to whether or not he will permit a witness to be cross-examined by more than one counsel appearing for the same party. In considering whether or not in the exercise of that discretion he will allow more than one counsel to cross-examine that witness, he should have regard to the established practice that one counsel and one counsel only should cross-examine a particular witness and should not depart from that established practice unless there is some special circumstance in the case which justifies such a departure.

The special circumstance relied upon in the present case is that the issues involved in the many actions before the Court are of such magnitude and complexity that it is beyond the physical capacity of any one counsel appearing for the Charles Davis interests to properly prepare and conduct the cross-examination of the witness Erdi which will be required if he is to do justice to the case for those interests.

If a contention of that nature is soundly based, in my opinion it would constitute a special circumstance sufficient to justify a departure from the established practice.[14]

36 Justice Beach ultimately held that there were sufficient special circumstances to justify a departure from the established practice, for the reasons described in TIC's submissions above. Those circumstances were considerable, as the trial involved what were in reality 11 separate actions, was to span over six to nine months and might have involved counsel travelling to Korea during the trial to receive evidence. These circumstances were such that his Honour considered it 'highly improbable that one counsel ... could so familiarize himself with every aspect of the issues to be investigated, as to be able to adequately prepare and conduct the cross-examination of the witness'.[15]

37 However, the observations of Beach J in Eva must be considered in light of the fact that they were made more than forty years ago in a very different context. Two considerations in particular limit the extent to which the approach of Beach J is to be adopted today.

38 The first is the changing nature of commercial litigation, in which the splitting of cross-examination has become more common to conform to the efficient practice of counsel splitting trial preparation on a topic-by-topic basis.

39 In Canberra Residential Developments, the Full Court of the Federal Court of Australia said:

Naturally the common law rule is subject to reasonable exceptions. One exception arises from the changing nature of litigation. A common feature of modern commercial litigation is for counsel on one side of the record to split their trial preparation on a topic by topic basis. The conduct of the trial often follows this split with the judge permitting both cross-examination and submissions to be divided so that counsel can deal with his/her assigned topic. This can be an extremely efficient way in which to conduct complex litigation. All the judge need do in such circumstances is ensure there is no unfairness to the witness.[16]

40 The second is the passage of the Act, which includes provisions directly relating to cross-examination. As the Full Court in Canberra Residential Developments considered in obiter in relation to the relevant sections of the cognate Evidence Act 1995 (Cth):

The Evidence Act makes provision for cross-examination and imposes restrictions on the ability of a party to cross-examine an opposing party's witnesses.

Section 27 provides that a party may question any witness, except as provided by the Act. There are several restrictions on the right to cross-examine. For example, s 29(1) assumes that the court can direct a witness not to answer a question put in chief or under cross-examination. Further, s 41 relevantly provides in subs (1)(b) that the court must disallow a question if it is unduly annoying, harassing, intimidating, offensive, oppressive, humiliating or repetitive. Presumably the common law rule we have been discussing would fall under this head.

If the question whether Junior Counsel should be permitted to continue with the cross-examination of Mr Brendas had been argued by reference to the statute rather than the common law rules, it is possible that a different approach would have been called for. Under either s 29(1) or s 41 it may be that the party calling the witness bears the onus of showing that cross-examination is unfair or otherwise should not be allowed, which is in contrast to the common law where the onus is the other way. However, that is not an issue which need be disposed of in this appeal.[17]

41 Lehrmann v Network Ten Pty Limited (Cross-Examination) concerned different circumstances to the present case. Counsel for the second respondent sought to cross-examine the applicant where counsel for the first respondent would already have cross-examined the applicant. Nevertheless, Lee J's observation that 'notwithstanding the well-entrenched nature of the common law rule of practice, the starting point now must be the [Evidence Act 1995 (Cth)] and, in particular, Pt 2.1, Div 3, which provides for "General rules about giving evidence"'[18] is apposite.

42 While I do not consider that the Act completely displaces the established common law practice, it does provide a flexible framework for managing cross-examination that focuses on preventing unfairness rather than rigidly applying historical prohibitions. Sections 29 and 41 govern the manner and propriety of questioning, providing tools to address unfairness as it arises. This statutory framework supports a more nuanced approach to case management that can accommodate efficient modern litigation practices while maintaining appropriate safeguards against witness oppression.

43 The relevant sections of the Act are set out below:

26 Court's control over questioning of witness

The court may make such orders as it considers just in relation to -

(a) the way in which witnesses are to be questioned; and

(b) the production and use of documents and things in connection with the questioning of witnesses; and

(c) the order in which parties may question a witness; and

(d) the presence and behaviour of any person in connection with the questioning of witnesses.

27 Parties may question witnesses

A party may question any witness, except as provided by this Act.

29 Manner and form of questioning witnesses and their responses

(1) A party may question a witness in any way the party thinks fit, except as provided by this Chapter or as directed by the court.

(2) A court may, on its own motion or on the application of the party that called the witness, direct that the witness give evidence wholly or partly in narrative form.

(3) Such a direction may include directions about the way in which evidence is to be given in that form.

(4) Evidence may be given in the form of charts, summaries or other explanatory material if it appears to the court that the material would be likely to aid its comprehension of other evidence that has been given or is to be given.

(1) The court must disallow an improper question or improper questioning put to a witness in cross-examination, or inform the witness that it need not be answered.

(3) In this section, improper question or improper questioning means a question or a sequence of questions put to a witness that -

(b) is unduly annoying, harassing, intimidating, offensive, oppressive, humiliating or repetitive;

...

192 Leave, permission or direction may be given on terms

(1) If, because of this Act, a court may give any leave, permission or direction, the leave, permission or direction may be given on such terms as the court thinks fit.

(2) Without limiting the matters that the court may take into account in deciding whether to give the leave, permission or direction, it is to take into account -

(a) the extent to which to do so would be likely to add unduly to, or to shorten, the length of the hearing; and

(b) the extent to which to do so would be unfair to a party or to a witness; and

(c) the importance of the evidence in relation to which the leave, permission or direction is sought; and

(e) the power (if any) of the court to adjourn the hearing or to make another order or to give a direction in relation to the evidence.

44 I consider that it is appropriate to permit Pact to have two of its counsel cross-examine Mr Morris in the manner contemplated by Pact's submissions.

45 Section 26 of the Act provides that I may make such orders as I consider 'just' in relation to the way in which witnesses are to be questioned. I consider that it would be just for two separate counsel retained by Pact to cross-examine Mr Morris on separate, discrete accounting adjustments. The rationale supporting the common law rule of practice, namely the potential for time to be wasted, the production of confusion and the risk of oppression of the witness if multiple counsel were allowed to cross-examine the witness do not apply with any real force in the circumstances of this case.

46 Each counsel will examine Mr Morris on completely separate accounting adjustments with no overlap. This limits any wasted time or confusion. I consider that an expert accounting witness can reasonably handle questioning by two counsel on different matters without oppression or unfairness. If, however, questioning becomes repetitive or unfair, or there is an improper attack on Mr Morris' credit I can disallow questions pursuant to s 41 of the Act to ensure fairness.

47 It is also significant that Mr Morris is an expert witness testifying within his professional area of accounting expertise. Expert witnesses are professionally trained to maintain objectivity under rigorous questioning and are experienced in handling complex technical inquiries. Unlike lay witnesses who may be unfamiliar with court procedures or intimidated by multiple questioners, expert witnesses regularly face intensive cross-examination as part of their professional practice. The risk of intimidation or unfairness that underlies the common law rule is significantly diminished when dealing with an expert witness testifying on clearly delineated technical matters within their field of expertise.

48 Moreover, the structured nature of the expert evidence in this case - organised around discrete accounting adjustments that have been separately analysed in both expert reports and the joint expert report - naturally lends itself to topic-based examination. This approach is consistent with the now well-established practice of concurrent expert evidence or 'hot tubbing', where experts are examined topic-by-topic in a structured manner.

49 The application of the factors to be taken into account pursuant to s 192 of the Act do not take the matter any further. At the risk of repetition, I do not consider that the cross-examination by separate counsel of Mr Morris will unduly extend the length of the hearing because they will each cover discrete accounting adjustments with no overlap. Further, the risk of oppression is minimal since I will control questioning under s 41 of the Act.

50 While TIC may be correct in its submission that allowing only one counsel to cross-examine Mr Morris will not significantly prejudice Pact, it does not sufficiently demonstrate why the course suggested by Pact is unfair or otherwise inappropriate.

51 The Act provides me with broad discretion under s 26 to make orders that are 'just' regarding the questioning of witnesses. Given the discrete nature of the accounting adjustments, the expert status of the witness, and my ability to control questioning under s 41 to prevent any unfairness, I consider it just to permit the proposed division of cross-examination. This approach promotes efficiency while maintaining appropriate safeguards, consistent with the modern statutory framework for evidence.

52 TIC's reliance on Eva provides limited assistance. Beach J decided that case in a different litigation context and before the passage of the current Act. The exceptional circumstances that justified splitting cross-examination in Eva should not set the standard for when it is appropriate under the modern statutory framework.

53 I will permit the cross-examination of Mr Morris to be split between two counsel retained by Pact in the manner described at paragraph [21] above.

54 If TIC wished to have two counsel cross-examine Ms Thompson, I would also allow it if the bifurcation of cross-examination was similarly confined to discrete accounting adjustments with no overlap, for the same reasons set out above.

55 The costs of the parties in respect of this application will be reserved.

56 The parties should, within seven days, provide the Court with a form of order giving effect to the conclusions expressed in these reasons.

PACT GROUP INDUSTRIES (ANZ) PTY LTD (ACN 147 260 848)

PACT GROUP INDUSTRIES (ASIA) PTY LTD (ACN 166 188 058)

MANIPUR NOMINEES PTY LTD (ACN 005 731 975) as trustee for THE HARRIS (MANIPUR) TRUST AND THE MANIPUR NO. 2 TRUST

STANNINGFIELD PROPRIETARY LIMITED (ACN 006 967 433) as trustee for THE LIPKIES GANDUR UNIT TRUST

GANDUR HIGHTECH INVESTMENTS PTY LTD (ACN 119 071 724) as trustee for THE GANDUR INNOVATECH TRUST

SHRIAR NOMINEES PTY LIMITED (ACN 005 128 996) as trustee for THE DAVID HARRIS FAMILY TRUST AND THE HARRIS NEW ZEALAND TRUST

PAHU PTY LTD (ACN 147 104 747) as trustee for THE GANDUR NEW ZEALAND TRUST

CODY RIDGE PTY LTD (ACN 077 204 829) as trustee for THE MARK GANDUR (RLO) TRUST

TIC (RA) MANUFACTURING PTY LTD (ACN 120 994 710) as trustee for THE TIC (RA) MANUFACTURING UNIT TRUST

MANIPUR NOMINEES PTY LTD (ACN 005 731 975) as trustee for THE HARRIS (MANIPUR) TRUST AND THE MANIPUR NO. 2 TRUST

STANNINGFIELD PROPRIETARY LIMITED (ACN 006 967 433) as trustee for THE LIPKIES GANDUR UNIT TRUST

GANDUR HIGHTECH INVESTMENTS PTY LTD (ACN 119 071 724) as trustee for THE GANDUR INNOVATECH TRUST

SHRIAR NOMINEES PTY LIMITED (ACN 005 128 996) as trustee for THE DAVID HARRIS FAMILY TRUST AND THE HARRIS NEW ZEALAND TRUST

PAHU PTY LTD (ACN 147 104 747) as trustee for THE GANDUR NEW ZEALAND TRUST

CODY RIDGE PTY LTD (ACN 077 204 829) as trustee for THE MARK GANDUR (RLO) TRUST

TIC (RA) MANUFACTURING PTY LTD (ACN 120 994 710) as trustee for THE TIC (RA) MANUFACTURING UNIT TRUST

PACT GROUP INDUSTRIES (ANZ) PTY LTD (ACN 147 260 848)

PACT GROUP INDUSTRIES (ASIA) PTY LTD (ACN 166 188 058)

[1] The trial was originally fixed to commence on 22 April 2025 but was vacated as a consequence of Pact filing substantive additional witness statements shortly prior to that date.

[2] [2010] FCAFC 125; (2010) 188 FCR 140, 148 [44]-[45] (Finkelstein, Siopis and Katzmann JJ) (Canberra Residential Developments).

[3] GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15, 22-3 (Young J).

[4] Canberra Residential Developments, 148-9 [46] (Finkelstein, Siopis and Katzmann JJ).

[5] [1982] VicRp 52; [1982] VR 515 (Eva).

[8] These submissions were made before the estimated length of the trial was extended to 11 days.

[10] Lehrmann v Network Ten Pty Ltd (2023) 301 FCR 151, 154 [13] (Lee J) (Lehrmann).

[12] Canberra Residential Developments, 148 [44] (Finkelstein, Siopis and Katzmann JJ) citing Doe v Roe [1809] EngR 526; (1809) 170 ER 1155, 1156 (Lord Ellenborough) and JD Heydon, Cross on Evidence (8th ed, Butterworths, 2010) 627.

[16] Canberra Residential Developments, 148 [45] (Finkelstein, Siopis and Katzmann JJ) (citations omitted).

[17] Canberra Residential Developments, 149 [48]-[50] (Finkelstein, Siopis and Katzmann JJ).