FEDERAL COURT OF AUSTRALIA National Mutual Life Association of Australasia Limited v Tolfield Pty Ltd (No 2) [2011] FCA 1309 Citation: National Mutual Life Association of Australasia Limited v Tolfield Pty Ltd (No 2) [2011] FCA 1309 Parties: THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (ACN 004 020 437) v TOLFIELD PTY LTD (ACN 010 147 243), FRANCES MARY SHEAHAN and SUZANNE COX File number: VID 840 of 2010 Judge: COLLIER J Date of judgment: 15 November 2011 Catchwords: PRACTICE AND PROCEDURE – interlocutory application – leave to cross-examine witnesses – security for costs – leave refused Legislation: Evidence Act 1995 (Cth) ss 27, 29(1) Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules O 28 r 3(1) Federal Court Rules 2011 r 19.02 Cases cited: Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 52 ALR 176 cited Friends of Hinchinbrook Society Inc v Minister for Environment (No 1) (1996) 69 FCR 1 cited Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 cited Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321 cited Date of hearing: 15 November 2011 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 18 Counsel for the Applicant: The Applicant did not appear (Leave granted by Court Order of 20 April 2011) Counsel for the First and Third Respondents: Mr PP McQuade and Mr PK O'Higgins Solicitor for the First and Third Respondents: McCullough Robertson Counsel for the Second Respondent: Mr D Cooper SC Solicitor for the Second Respondent: Macpherson+Kelley Lawyers IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION VID 840 of 2010 BETWEEN: THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (ACN 004 020 437) Applicant AND: TOLFIELD PTY LTD (ACN 010 147 243) First Respondent FRANCES MARY SHEAHAN Second Respondent SUZANNE COX Third Respondent JUDGE: COLLIER J DATE OF ORDER: 15 NOVEMBER 2011 WHERE MADE: BRISBANE THE COURT ORDERS THAT: The application for leave to cross-examine Ms Suzanne Cox and Mr Adam Bloom is refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION VID 840 of 2010 BETWEEN: THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (ACN 004 020 437) Applicant AND: TOLFIELD PTY LTD (ACN 010 147 243) First Respondent FRANCES MARY SHEAHAN Second Respondent SUZANNE COX Third Respondent JUDGE: COLLIER J DATE: 15 NOVEMBER 2011 PLACE: BRISBANE REASONS FOR JUDGMENT 1 The second respondent in these proceedings has filed an interlocutory application dated 1 July 2011 seeking security for costs against the first respondent in the amount of $200,000. At the commencement of the hearing, however, Mr Cooper SC for the second respondent sought the leave of the Court to cross-examine two witnesses for the first respondent, namely: Ms Suzanne Cox, who is the third respondent and director of the first respondent; and Mr Adam Bloom, a specialist costs consultant who has prepared two affidavits filed by the first respondent. 2 Leave to cross-examine these witnesses was opposed by the first respondent. 3 In summary Mr Cooper SC for the second respondent submitted that: he sought to cross-examine Ms Cox in respect of the merits of the case, and in respect of the financial statements of the first respondent in Ms Cox's affidavit of 13 September 2011 which: in respect of the financial year ended 30 June 2011, were in draft; in respect of the financial year ended 30 June 2010, were eighteen months old; and revealed considerable movement of funds (in the sum of $300,000). he sought to cross-examine Mr Bloom in respect of his affidavits, where Mr Bloom had critiqued evidence given by Mr Stanley Moffatt filed by the second respondent and reached conclusions without providing reasons. Cases to which the first respondent referred, in particular Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321, were distinguishable from the facts currently before the Court. 4 Opposing the application for leave, Mr McQuade for the first respondent made detailed submissions, in summary: the usual practice in interlocutory applications is not to permit cross-examination of deponents of affidavits; the discretion of the Court to permit such cross-examination is to be exercised sparingly; there is no "right" to cross-examination, merely a right to a fair trial; Wu v Avin and Friends of Hinchinbrook Society Inc v Minister for Environment (No 1) (1996) 69 FCR 1 are authorities that a party seeking leave to cross-examine should inform the Court of the topics upon which cross-examination is to take place in order to assist the Court to resolve the issues for determination; Ms Cox's affidavit opposing security for costs is straightforward and limited to matters relevant to that application; the affidavit of Mr Bloom is also limited, and merely goes to the weighing up of the party's estimates of the likely quantum of costs by the Court; the assessment of security for costs is not an exact science; cross-examination of Ms Cox would be of no value to the Court, in that Ms Cox cannot give opinions as to the valuation of real property to which reference is made in the financial statements of the first respondent; no evidence has been adduced by the second respondent to found an allegation that the claim of the first respondent is not bona fide; the proposed cross-examination is in the nature of a fishing expedition. 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. Associate: Dated: 15 November 2011