Thomas & Ors v SMP International & Ors

Supreme Court of NSW|2010-08-27|Before: Pembroke J, System J

CITATION : Thomas & Ors v SMP International & Ors (No 3) [2010] NSWSC 900 This decision has been amended. Please see the end of the judgment for a list of the amendments.

CATCHWORDS : CROSS-EXAMINATION - judicial control - curtailing - imposing time limit - principles applicable

Aon Risk Services Australia Ltd v ANU (2009) 239 CLR 175 Fried v National Australia Bank (2000) 175 ALR 194 Giannarelli v Wraith (1988) 165 CLR 543 Government Insurance Office (NSW) v Glasscock (1991) 13 MVR 521 CASES CITED : Government Insurance Office (NSW) v Golby [1992] NSWCA 84 GPI Leisure v Herdsman Investments (No 3) (1990) 20 NSWLR 15 Ketterman v Hansel Properties [1987] 1 AC 189 Rondel v Worsley (1969) 1 AC 191 Vassiliades v Vassiliades (1941) 18 Cyprus LR 10; (1945) 32 AIR 38

The West Australian Law Reform Commission, Review of the Criminal and Justice System in WA: Project No 92, Consultation Paper, Volume 2 TEXTS CITED : Curtailing Irrelevant or Unduly Protracted Cross-Examination & Testimony, Section 3, June 1999 The Role of the Courts at the Turn of the Century (1993), Journal of Judicial Administration, 156

Eric Clyde Thomas John Leslie Sullivan Softsand Design Investments Pty Limited PARTIES : SMP (International) Pty Limited Eugene King David Joseph King Gregory Paul Willett Deborah Willett

P E King - for plaintiffs COUNSEL : W Carney - for third defendant R J Weber SC with I R Pike - for fourth defendant F Kalyk - for fifth defendant1

Hayes Partners - for plaintiffs SOLICITORS : Husseini Lawyers - for third defendant Moray & Agnew - for fourth defendant Bartier Perry - for fifth defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2003/85446 - ERIC CLYDE THOMAS v SMP (INTERNATIONAL) PTY LTD (No 3)

1 At the conclusion of the day's hearing on 2 August, I limited Mr Kalyk to a further two hours to complete his cross-examination of Mr Thomas. In the circumstances at the time, I regarded the allowance of a further two hours as generous. These are my reasons for restricting further cross-examination.

The Witness 2 Mr Thomas is one of the plaintiffs and the first witness in the hearing. He claims damages or equitable compensation in excess of $3.5 million as a result of alleged breaches of fiduciary duty and other wrongful conduct by Mr Willett. He also claims damages against Mrs Willett based upon her alleged knowing involvement in certain conduct. Mr Thomas is a quadriplegic and has given evidence from a wheelchair. During the last five days Mr Thomas' wife has sat beside him throughout his evidence providing her husband with physical support and essential nurturing. 3 It is quite obvious that that support has been essential for Mr Thomas' physical well-being. It is well understood by persons with substantial court experience that cross-examination is invariably a trying, if not an exhausting, experience. It can also be a blunt instrument and is not always an efficient means of assisting a judge to determine the primary facts. Mr Thomas is now tired. He said so on Friday. It was apparent yesterday in both his demeanour and appearance. Mr Weber SC represents Mr Willett. Mr Kalyk represents Mrs Willett. Mr Thomas was cross-examined by Mr Weber on 27, 28, 29 and 30 July and on 2 August. Because of Mr Thomas' physical condition, his cross-examination has been limited to a maximum of three and a half hours on each day.

The Case Against Mrs Willett 4 The plaintiffs' primary case is against Mr Willett. The case against Mrs Willett is essentially secondary but it has two aspects. It involves a direct claim for misleading conduct as well as a claim that she was knowingly concerned in certain wrongful conduct by Mr Willett. 5 The conduct with which the allegations are substantially concerned involves the financial position and prospects of the first defendant (SMP). The respective roles of Mr Willett, Mr Thomas and Mr Sullivan and many of the alleged representations concerning SMP, were traversed in Mr Weber's cross-examination of Mr Thomas. A major emphasis of the cross-examination was that Mr Thomas and Mr Sullivan were arm's length commercial investors and lenders who sought higher returns and accepted the higher correlative risks to which they were consequently exposed. The defendants' case is that those risks, not any wrongful conduct by Mr Willett, have resulted in the losses which the plaintiffs claim. 6 There are no substantial representations alleged against Mrs Willett that are not also alleged against Mr Willett. The substance of the case against Mrs Willett is that she was present when certain representations were made and knew of their falsity. The correctness of the allegation that she knew of the falsity of the representations will depend on her evidence, not on any evidence by Mr Thomas. The Cross-examination 7 Prior to the commencement of the hearing, I had informed the parties that: I will not be inclined to permit multiple cross-examinations of the plaintiffs' witnesses unless either there is agreement between the defendants about division among them according to separate topics or that one of you satisfies me that the separate interests of any one defendant are relevantly different from those of any other defendant so as to justify additional cross-examination. 8 I did so in order to guard against the possibility of repetition and duplication, and consequently oppression, of the witness. In doing so, I had regard to the approach taken by Young J (as he then was) in GPI Leisure v Herdsman Investments (No 3) (1990) 20 NSWLR 15.

9 I allowed Mr Weber's cross-examination to continue for a considerable time because it was reasonably fair, focused and productive. It assisted me in understanding and appreciating the complexion of the evidence. It explored, as far as could be reasonably necessary, issues of credit relevant to Mr Thomas' evidence.

10 I have limited further cross-examination by Mr Kalyk, partly because the witness's position is entrenched, partly because the cross-examination has been ineffective (and therefore of no assistance to me), and partly because of my concern for the witness's welfare. 11 I do not underestimate the importance to Mrs Willett of ensuring that her defence of the claims against her is prosecuted fully and fairly. And I will naturally consider the strength of the case advanced against her having regard to all of the evidence. But cross-examination by her counsel of choice is only one of the tools available to me in reaching conclusions as to the primary facts. The contemporaneous written documents and the inherent probabilities may well be more persuasive and more reliable.

Judicial Control of Cross-examination 12 The right to cross-examine a witness, at least in a civil case, is not unfettered. It is controlled by the trial judge, not by the litigants or their legal representatives. There are times when a judge will be justified in curtailing a cross-examination. This will usually be done by giving notice and imposing a time limit on the remainder of the cross-examination. The smooth operation of lengthy and complex civil cases depends on sensible co-operation by counsel. It sometimes requires, for its efficient operation, compromise and restraint in the advancement of a party's case. More importantly, it invariably requires judgment. This includes recognition that, in some cases, and with some witnesses, cross-examination can have a limited utility. 13 Unduly lengthy, ineffective or unnecessary cross-examination can be a significant factor contributing to delay and unwarranted cost: Fried v National Australia Bank (2000) 175 ALR 194 at 197-198 per Weinberg J. The Law Reform Commission of Western Australia has identified it as a significant problem, stating, among other things, that unduly protracted cross-examination "increases the time and expense of litigation without assisting justice to be done in the particular case": The West Australian Law Reform Commission, Review of the Criminal and Justice System in WA: Project No. 92, Consultation Paper, Volume 2, Curtailing Irrelevant or Unduly Protracted Cross-Examination & Testimony, Section 3 (3.2) (June 1999). 14 Mahoney JA explained the appropriateness of judicial intervention in the cross-examination process in Government Insurance Office (NSW) v Glasscock (1991) 13 MVR 521 at 529-530 in the following terms: It is also appropriate for a judge to intervene, to an appropriate extent, where the conduct of the case for one party is less adept than the needs of justice require. If a judge feels, after appropriate time and consideration, that the position of a party is unacceptably prejudiced in this way, he may, I think, suggest, or even ask, the necessary questions. … It will be appropriate for a judge to ensure that unnecessary time is not wasted or cost incurred. The principles of judicial administration require that the procedures of the justice system be effective, efficient and timely. They are to be effective in the sense of bringing to an end the dispute with which they deal. They are to be efficient in the sense of using for the purpose no more resources than are appropriate. And it is necessary that what is to be done be done in due time.

15 And in GPI Leisure v Herdsman Investments (No 3) (supra) at 23, per Young J specifically described the exercise of the discretionary power to curtail a cross-examination as follows: It would, however, appear to be proper for the judge to say, at any stage during the cross-examination, that he would, unless convinced that the cross-examiner was being of more assistance to the court, curtail cross-examination in Y minutes time.

16 This particular power has been long recognised and endorsed. In a war-time appeal from Cyprus (Vassiliades v Vassiliades (1941) 18 Cyprus L.R. 10 at 22), Lord Wright observed that the judge always has a discretion as to how far, or how long, cross-examination should be allowed to go: Cross-examination is one of the most important processes for the elucidation of the facts of a case, and all reasonable latitude should be allowed, but the judge always has a discretion as to how far it may go, or how long it may continue. A fair and reasonable exercise of his discretion will not generally be questioned by an appellate court.

17 More recently, Sir Anthony Mason, writing extra-judicially, referred to the "expectation" that trial judges will limit cross-examination that is prolonged unnecessarily: "The Role of the Courts at the Turn of the Century", (1993), Journal of Judicial Administration, 156 at 160-161.

18 It goes without saying that "every counsel has a duty to his client fearlessly to raise every issue, advance every argument, and ask every question … which he thinks will help his client's case": Rondel v Worsley (1969) 1 AC 191 at 227 per Lord Reid. But the generality of that statement belies the limitations that surround it. It is not an invitation without qualification. Counsel's duty to "ask every question" is subject to limits - of which the trial judge is the ultimate arbiter. 19 Nor is it an answer to the exercise of the power to curtail a cross-examination to say that the role of a judge is simply "to hear the evidence, rule upon objections to admissibility and decide the case": Government Insurance Office of NSW v Golby [1992] NSWCA 84 (page 18). That view has been modified by the pressures placed upon courts efficiently and expeditiously to dispose of litigation. It is no longer a correct statement, if it ever was. The history and role of judicial intervention in cross-examination were surveyed in the Law Reform Commission of Western Australia's Consultation Paper (supra) at 651-654. At least in relation to limiting cross-examination, the culture of judicial reticence is not the modern approach. 20 As Clarke, Handley and Sheller JJA said in their joint judgment in Golby (supra) at pages18-19: Case management is not solely concerned with pre-trial procedures but also covers the period of the trial itself. … One aspect of these procedures is the identification and the elimination of those features of a trial which lead to a needless waste of time. A relevant example is furnished by lengthy repetitive cross-examination. … There are, of course, many other instances in which a trial judge will perceive that time is being wasted and will intervene in an attempt to ensure that the trial is disposed of both efficiently and expeditiously. … It must be recognised that it is the judge who is in the best position to determine what procedures should be followed in the interests of the efficient administration of the case. 21 There is, of course, a qualitative difference between curtailing a cross-examination where it is appropriate to do so, and improperly interfering in the presentation of a party's case. Golby was a case concerned with unfair intrusion by the trial judge in the presentation and conduct of a party's case, resulting in a miscarriage of justice. My decision is of a different order. The adversarial system under which we operate is not diminished by judicial limitation of cross-examination where such control is justified in the circumstances. cf: Giannarelli v Wraith (1988) 165 CLR 543 at 556.

Discretionary Considerations 22 In addition, in this case, there are overriding discretionary factors. This case was listed for a six week hearing. The parties assured me that the estimate was generous. On that basis they requested an adjournment for one week, which I granted. At the time of my decision to limit further cross-examination, there were less than four weeks remaining and I was still hearing the evidence of the first witness. There were at least 20 further witnesses. I was concerned that if this case did not conclude in the time allotted, it may have deprived other litigants, with hearings pending, of the opportunity to have their claims determined on the dates allocated by the court. 23 Further, the plaintiffs' trust and confidence in Mr Willett disintegrated in 2002. If their contentions are correct, the plaintiffs have been entitled for almost 10 years to be recompensed for the millions of dollars which they invested, advanced or outlaid on the recommendation, and with the encouragement, of Mr Willett. The observations by Heydon J in Aon Risk Services Australia Ltd v ANU (2009) 239 CLR 175 at 224 are a pointed and important reminder of the harmful consequences of delay in resolving money claims: Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce. 24 A final factor is the human one. The strain of litigation on personal litigants is well recognised: Ketterman v Hansel Properties [1987] 1 AC 189 at 220 per Lord Griffiths. In the case of Mr Thomas, the strain is obvious. That strain has been exacerbated by the length of time that Mr Thomas has already spent in the witness box. I should do what I can to alleviate that strain - especially where, as here, I am satisfied that there will be no unfairness to Mrs Willett in limiting cross-examination by counsel representing her.

23/09/2010 - Alternative Citation - Paragraph(s) 16

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