FEDERAL COURT OF AUSTRALIA

Investa Properties Pty Ltd v Nankervis (No 6) [2014] FCA 804

THE COURT ORDERS THAT:

1.    By 4.00 pm on 11 August 2014 Mr Ashley Nankervis and Mr Adam Barclay each file a written outline of any additional oral evidence-in-chief they each propose to give in the trial of these proceedings.

2.    Each of Mr Ashley Nankervis and Mr Adam Barclay give oral evidence in reply, supplemented by a written statement (if any), no earlier than 48 hours after the completion of their cross-examination by other parties to these proceedings.

3.    In circumstances where Mr Ashley Nankervis or Mr Adam Barclay gives:

(a)    oral evidence-in-chief given by leave of the Court ;or

(b)    evidence in reply following cross-examination;

such evidence must:

(i)    be relevant to an issue of fact in the proceedings;

(ii)    not be hearsay – subject to any exceptions permitted by the Evidence Act 1995 (Cth);

(iii)    not be opinion evidence – subject to any exceptions permitted by the Evidence Act 1995 (Cth).

4.    Evidence as to the contents of a document shall, unless otherwise directed, be given by tendering the document or a copy.

5.    The sequence of cross-examination in respect of witnesses called by Mr Ashley Nankervis or Mr Adam Barclay shall be as follows:

(a)    Counsel for the applicants;

(b)    Counsel for the fourth respondent, followed by either Mr Nankervis or Mr Barclay;

(c)    Leave is reserved to Counsel for the applicants to apply to cross-examine witnesses after cross-examination by other respondents has been concluded, but not so as to introduce any new material by way of cross-examination.

6.    The sequence of cross-examination in respect of witnesses called by the fourth respondent shall be as follows:

(a)    Counsel for the applicants;

(b)    Mr Nankervis;

(c)    Mr Barclay;

(d)    Leave is reserved to Counsel for the applicants to apply to cross-examine witnesses after cross-examination by other respondents has been concluded, but not so as to introduce any new material by way of cross-examination.

7.    Costs of the interlocutory application filed on 7 July 2014 be costs in the proceedings.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    In an interlocutory application filed on 7 July 2014 the applicants seek the following orders:

1.    The Court give directions for the further conduct of the proceedings in relation to:

(a)    the manner in which the first and second respondent are to give evidence-in-chief and evidence in reply;

(b)    the manner in which any witness called to give evidence by the first or second respondent is to give evidence-in-chief;

(c)    the extent to which a respondent is permitted to ask leading questions of another respondent;

(d)    the extent to which a respondent is permitted to ask leading questions of a witness called by another respondent;

(e)    the extent to which the respondents can ask questions of each other or of a witness called;

(f)    the extent to which the respondents can ask questions of each other or of a witness called by another respondent in relation to any issue which has already been the subject of questioning by a respondent; and

(g)    the order in which cross examination is to be conducted of the first and second respondent, and any witness called on behalf of any respondent.

2.    Such other or further orders as the Court thinks appropriate.

2    At the hearing of the interlocutory application on Monday this week, Counsel for the applicants and the fourth respondent made oral submissions. Written submissions have also been filed on behalf of the applicants and the fourth respondent. Mr Nankervis and Mr Barclay took a limited part in the proceedings. In short, the applicants submit that, despite some differences in their respective positions, the respondents have substantially similar interests in contesting a number of primary issues in the proceedings. The applicants identify the areas of “overlap” as follows:

a.    Nankervis and Barclay have identical interests in disputing that they were involved in an agreement with David Tonuri to purchase, develop and re-sell Lot 170 and to divide the profits equally.

b.    Nankervis and Barclay have substantially similar interests in disputing that neither of them disclosed to Investa either the Citimark offer or the CB Richard Ellis valuation of November 2008.

c.    Nankervis, Barclay and Oliver Hume SEQ have identical interests in disputing that the sale price of Lot 170 to Two Eight Two Nine Pty Ltd was below value, and, as a corollary, that the value of Lot 170 at the time of the put and call option was $3 million. This includes the general issue of valuation as well as subsidiary issues, such as the validity of comparable sales and the effects of bulk sales and rebates on valuation. It also includes related issues such as the GFC and its consequences for the property market generally and Investa in particular, and the financial situation and internal policies of Investa relevant to its need or desire to divest itself of land.

d.    Nankervis and Barclay have substantially similar interests in disputing that the sale of Lot 191 to a company controlled by Barclay’s wife was made without full disclosure to Investa and at an undervalue.

e.    Oliver Hume SEQ is liable to the applicant if it is liable for things that Barclay did or failed to do, and if Barclay’s knowledge of what he was doing is imputed to it. So Oliver Hume SEQ and Barclay have identical interests in disputing the matters referred to in paragraphs a, b and d above.

f.    Insofar as Barclay’s interests in disputing those matters are identical to or substantially similar to Nankervis’s interests, Oliver Hume SEQ’s interest are also identical to or substantially similar to Nankervis’ interests.

3    In support of these contentions, the applicants submit, in summary:

    In respect of the manner in which Nankervis and Barclay, and any witness called by them, are to give evidence-in-chief and evidence in reply:

            o    Nankervis and Barclay have each served three statements relating to their own evidence. All these documents are unsigned, and there is extensive repetition associated with these statements in addition to a plethora of inadmissible material in some of them;

            o    evidence-in-chief of Nankervis and Barclay could be given by adopting and tendering a number of these documents, subject to any objections;

            o    additional evidence-in-chief by Mr Nankervis and Mr Barclay should require them to;

                 ▪    identify in advance the substance of that additional evidence;

                 ▪    give that evidence in narrative form as contemplated by s 29(2) of the Evidence Act 1995 (Cth) (“Evidence Act”); and

                 ▪    seek leave of the Court.

            o    difficulties associated with the provision of narrative evidence could be alleviated if the Court gives directions as to the way that the respondents are to give evidence in narrative form.

    In respect of the extent to which a respondent is permitted to ask leading questions of another respondent and a witness called by another respondent:

            o    section 42(2)(b) and (c) of the Evidence Act are relevant;

            o    section 26(a) of the Evidence Act confers a general discretion on the Court to make such orders as it considers just in relation to the way in which witnesses are to be questioned;

            o    in this case there are reasons for giving a general direction under s 26(a) to the effect that, at the conclusion of the evidence-in-chief of the respondents and their witnesses, the other respondents question each witness using non-leading questions. In particular, parties in the same interest – two of whom personally participated in the transactions under consideration and both of whom are closely cooperating in the conduct of the defence – will be cross-examining each other.

    In respect of the extent to which the respondents can ask questions of each other or of a witness called by another respondent in relation to any issue that has already been the subject of questioning by a respondent:

            o    although the general rule is that the Court should permit cross-examination of all witnesses by all Counsel, this rule may not apply where there are parties in the same interest, in which case the Court may properly direct that only one counsel may cross-examine witnesses;

            o    in relation to the areas of overlapping interest between the respondents, only one of the respondents should be permitted to cross-examine witnesses unless the Court provides leave.

    In respect of the order in which cross-examination is to be conducted of the first and second respondents, and any witness called on behalf of any respondent:

            o    when a number of parties have substantially similar interests in the proceedings – as is the case here – the order of cross-examination may cause unfairness to the party or parties with opposing interest;

            o    one option is for the Court to permit cross-examination to proceed in the usual order, but reserve leave to Counsel for the opposing party to apply to cross-examine further after the conclusion of the other cross-examination;

            o    a second option is to permit Counsel for the opposing party to cross-examine witnesses after the cross-examination by Counsel in similar interests.

4    The fourth respondent disputes that the respondents have a common interest such that directions as sought by the applicants are justified. Further, it contends (in summary):

    The applicants have failed to properly identify the interests said to be “identical” or “in common” between the three respondents.

    The applicants have not attempted to properly analyse witnesses to be called by any of the respondents, or their likely evidence.

    The real purpose of the application is not to curtail cross-examination but ultimately to achieve the forensic advantage for the applicants of cross examining all witnesses after all the respondents.

    While the respondents have a “common interest” insofar as they all wish to defeat the applicants’ claims, this is to be expected in any case involving multiple respondents.

    The fact that the respondents have some interests in common is not sufficient to deny a party the entitlement to the usual processes of a trial which are designed to ensure fairness.

    There are few common interests as between the first and second respondents, and no common interests as between the fourth respondent and either of the first or second respondents.

    There is a genuine legal and factual distinction as between the first and second respondents, in that Mr Nankervis was at all times the agent of the applicants and Mr Barclay was not.

    The fourth respondent alleges Mr Barclay was on a frolic of his own, and has a cross-claim against him.

    The fourth respondent does not share the alleged common interests alleged between the first and second respondent in paragraphs a., b., and d. above.

    The applicants are confusing the ability of the Court to curtain cross-examination where it is unproductive or contrary to the interests of a fair trial with limiting the ability to cross-examine a witness.

Consideration

Relevant principles

5    That the Court has power to make orders in the form sought by the applicants in this case is not in dispute. The relevant legislative provisions are s 26 (in particular s 26(a) and (c)) and s 42 of the Evidence Act. Relevantly s 26 provides:

Court’s control over questioning of witnesses

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

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

…

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

6    Section 42 provides:

Leading questions

(1)    A party may put a leading question to a witness in cross-examination unless the court disallows the question or directs the witness not to answer it.

(2)    Without limiting the matters that the court may take into account in deciding whether to disallow the question or give such a direction, it is to take into account the extent to which:

(a)    evidence that has been given by the witness in examination in chief is unfavourable to the party who called the witness; and

(b)    the witness has an interest consistent with an interest of the cross-examiner; and

(c)    the witness is sympathetic to the party conducting the cross-examination, either generally or about a particular matter; and

(d)    the witness’s age, or any mental, intellectual or physical disability to which the witness is subject, may affect the witness’s answers.

(3)    The court is to disallow the question, or direct the witness not to answer it, if the court is satisfied that the facts concerned would be better ascertained if leading questions were not used.

(4)    This section does not limit the court’s power to control leading questions.

Note:    Leading question is defined in the Dictionary.

7    The parties have directed my attention to a number of authorities of relevance in the context of the application before me. In particular, I note GPI Leisure Corporation Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15; NMFM Property Pty Ltd v Citibank Ltd (No 8) [1999] FCA 266; and Cheers v El Davo Pty Ltd (in liquidation) [2000] FCA 144.

8    In GPI Leisure Young J considered a claim for rectification of a contract and in particular whether the plaintiff before his Honour was required to transfer its units in a trust for a price which it considered far below their true value (and which would result in a corresponding increase in the value of units in the trust held by cross-claimants in that case). A subsidiary question at issue was whether Standard Chartered Bank, as mortgagee of the plaintiff’s interests, was protected against an order for rectification on the ground that it was a bona fide purchaser for value. The cross-claimant’s claims were resisted by both the plaintiff and Standard Chartered Bank.

9    Before his Honour the cross-claimant argued that an owner and mortgagee of units in a unit trust are parties in the same interest, and further that there is a general rule that where parties are in the same interest, only the most senior of the Counsel representing those parties may cross-examine. His Honour found that the question of what cross-examination would be allowed was a matter entirely in the discretion of the Court (at 17). Further, after canvassing numerous authorities including from the United States, New Zealand and Canada, his Honour observed at pages 22-23:

(1)    The only actual “right” is the right to have a fair trial.

(2)    It is the duty of the trial judge to ensure that all parties have a fair trial.

(3)    In carrying out his duties the trial judge must so exercise his discretion in and about the examination and cross-examination of witnesses that a fair trial is assured.

(4)    Ordinarily, a judge in carrying out his duty will see that the trial is conducted in the manner that is commonly used throughout the State, namely that witnesses are examined, cross-examined and re-examined.

(5)    Where there is more than one counsel for the same party, then ordinarily the judge will not permit any more than one counsel to cross-examine the same witness.

(6)    Where there are parties in the same interest, the judge will apply the same rule as stated in (5).

(7)    Where the issues are complex and there is no overlapping of cross-examination and the proposal is outlined before cross-examination begins, it may be proper for the judge to permit cross-examination of one or more witnesses by more than one counsel in the same interest notwithstanding prima facie rules (5) and (6).

(8)    It may be that in the interests of time or to prevent “torture” of the witness or for other good reasons, a judge may in special circumstances limit cross-examination. Such a situation would occur where, for instance, there was only a fixed amount of time before an event occurred and a decision was essential before that event occurred.

(9)    It is usually not proper to indicate at the commencement of the hearing that cross-examination will be limited to X minutes subject to the right to make an application for an extension, although such a ruling might be justified if time was limited. 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. This power would of necessity be used sparingly.

(10)    Group cross-examination either by all counsel cross-examining the witness at one time or a group of witnesses being cross-examined by one counsel at the same time is not a procedure that should be permitted.

(11)    In all proceedings, the court has a duty to prevent cross-examination purely for a collateral purpose or to “torture” the witness.

(12)    In interlocutory proceedings, especially proceedings for an interlocutory injunction, the collateral purpose rules must be looked at very closely because ordinarily it is not proper to permit counsel to go on a fishing expedition and all that the plaintiff need show is a prima facie or strongly arguable case on the merits. Cross-examination on laches, balance of convenience etc is, of course, in a different plight.

(13)    Ordinarily a judge should permit cross-examination of all witnesses by all counsel unless one or more of the above rules apply.

10    His Honour did not consider that the plaintiff and Standard Chartered Bank had precisely the same interest, however he did consider that so far as the great bulk of the factual material was concerned, the interests of these two parties in opposing the cross-claimant’s claim were exactly the same. In conclusion, his Honour found that Counsel for those two parties could agree who would go first in cross-examination, but that they could both cross-examine witnesses of the cross-claimant, on the basis that there was to be no material overlapping in the cross-examination.

11    In NMFM Property Pty Ltd v Citibank Ltd (No 8) Lindgren J considered complex circumstances involving multiple applicants and multiple respondents. The first applicant had paid a substantial sum to 132 investors who had invested in a “Negative Gearing Package” and a financial institution, Citibank, lent the investors (who were also applicants) money which constituted part of the funds they used for that purpose. The applicants sued Citibank as first respondent and in particular four other respondents whom one of the applicants claimed had acted as agents for the first applicant and caused the first applicant to incur certain liability to the investors. Citibank cross-claimed against those four other respondents and parties associated with them. In their defences at that time to Citibank’s cross-claim, the four respondents and their associated parties claimed that the first applicant should fail against Citibank (and so Citibank should fail on its cross-claim against them) because, inter alia, the first applicant had, in substance, been well aware of, and acquiesced in, the alleged making of representations by the four respondents to induce the investors to enter into the Negative Gearing Package. After execution of a deed of settlement the applicants ceased to pursue all respondents other than Citibank; further the applicants agreed to pay for the legal costs of the four respondents and their associated parties in defending Citibank’s cross-claim.

12    The issue before his Honour arose when one of the associated parties (who happened to be the fifteenth cross-respondent) was called as a witness. Citibank submitted that the applicants and Mr Hacopian (the fifteenth cross-respondent) were in the same interest, and that Counsel for the applicants should be permitted only to lead evidence-in-chief from him. In the alternative, and for the same reason, Citibank submitted that counsel for the applicants should be obliged to cross-examine the Mr Hacopian first.

13    After consider the facts his Honour observed:

[17]    I do not think that the ordinary practice according to which [the applicants] may, if it wishes, cross-examine Mr Hacopian, is rendered inappropriate in the interests of a fair trial by the circumstances of this case. Mr Hacopian’s affidavit appears on its face to have been prepared by his legal representatives and, so far as I know, they prepared it in what they perceived to be his interests and [the applicants’] legal representatives did not participate in its preparation. While [the insurer of one of the four respondents] undertook by the deed of settlement of November 1997 to assist [the applicants], I do not know the extent to which, if at all, there has been cooperation between the legal representatives of [the applicants] and Mr Hacopian in relation to the course of the trial and, in particular, in relation to his evidence in chief and cross-examination. Finally, Citibank’s position is adequately protected by the availability to me of the discretion under ss 26(a) and 42 of the Act.

[18]    [The applicants] may cross-examine Mr Hacopian.

14    In respect of the sequence of cross-examination, his Honour noted the usual sequence of cross-examination would be that Counsel for Citibank (as cross-claimant) would cross-examine Mr Hacopian first. His Honour further noted the submission on behalf of Citibank that Counsel for the applicants should not have the opportunity, by means of a later cross-examination sympathetic to Mr Hacopian, to set at nought advantages achieved by Counsel for Citibank in his own cross-examination. Citibank submitted that leading questions by Counsel for the applicants should be disallowed.

15    His Honour concluded that it would be more efficient if Counsel for Citibank conducted cross-examination first, however his Honour also decided that:

    he would reserve leave to Counsel for Citibank to apply to cross-examine further after the applicants’ cross-examination was concluded; and

    the issue of the sequence of cross-examinations could be reviewed in respect of other cross-respondents in light of the intervening experience in respect of Mr Hacopian.

16    In Cheers v El Davo Pty Ltd (in liquidation) the applicants were primarily airline pilots who invested in an investment scheme promoted by certain of the respondents. The applicants claim that they were induced to enter into loan agreements with El Davo Pty Ltd a company associated with respondents described by Weinberg J as “the Boyle respondents”. The loan agreements were claimed to have been assigned by the Boyle respondents to the tenth respondent, a company controlled by the sixteenth respondent (“the Capital respondents”). The applicants claimed that they were induced by misleading or deceptive conduct to enter into those loan agreements. The Capital respondents cross-claimed against the applicants on the basis that as assignees of the loan agreements they are entitled to recover outstanding interest payments, and also in many cases the principal sums said to have been the subject of those agreements. The Capital respondents also cross-claimed against the Davis cross-respondents alleging that the Davis cross-respondents induced the applicants to breach their obligations under the loan agreements.

17    His Honour observed:

[6]    … the interests of the Davis cross-respondents are closely aligned to those of the applicants. This can be demonstrated by even the most cursory perusal of the amended defence filed by the Davis cross-respondents in answer to the tenth respondent’s cross-claim. That amended defence picks up and relies upon a number of the same contentions as are relied upon by the applicants in their pleadings against the respondents. Both Mr Martindale [counsel for the eighth, eleventh, fifteenth and seventeenth respondents] and Mr Magee [senior counsel for the tenth and sixteenth respondents] submitted that it would be unfair, in those circumstances, to allow Mr Herskope [counsel for the Davis cross-respondents] to cross-examine the witnesses upon whose evidence his clients seek to rely in support of their own defence to the cross-claim brought by the Capital respondents. It would also be unfair, they submitted, to allow Mr Herskope the opportunity to seek to rehabilitate those witnesses after they had been cross-examined by the respondents.

18    After considering relevant principles his Honour continued:

[12]    Applying the principles set out above, I am not persuaded that Mr Herskope should be prevented from asking leading questions of any of the witnesses to be called on behalf of the applicants. It may be accepted, as the pleadings demonstrate, that the interests of the applicants and the interests of the Davis cross-respondents are indeed closely aligned in a number of important respects. Those interests are not, however, identical, as may be seen from the allegation made by the Capital respondents that the Davis cross-respondents are guilty of the tort of inducing breach of contract. It cannot be said that the applicants and the Davis cross-respondents are “in precisely the same interest”.

[13]    I am not prepared to prevent Mr Herskope from putting leading questions to witnesses called by the applicants in circumstances where I cannot, at least at this stage, be satisfied that any particular witness to be called “has an interest consistent with an interest of the cross-examiner” (s 42(2)(b)), or is “sympathetic to the party conducting the cross-examination” (s 42(2)(c)). I can discern no other considerations which would warrant a departure from the ordinary practice to which Young J referred in GPI Leisure Corp Ltd (supra) of permitting cross-examination of all witnesses by all counsel.

[14]    That is not to say that should Mr Herskope choose to ask leading questions when cross-examining witnesses called by the applicant that will not affect the weight which I would attach to the answers elicited. That is a matter which Mr Herskope will no doubt bear in mind.

19    Turning now from consideration of these cases, I make the following observations.

Mr Nankervis and Mr Barclay – evidence-in-chief and evidence in reply

20    Mr Nankervis and Mr Barclay are both litigants in person. To date, they have represented themselves in Court, including conducting on their own behalf cross-examination of witnesses called by the applicants. When the substantive trial resumes, they will be required to give evidence-in-chief, and be subject to cross-examination by both each other and Counsel for the applicants and the fourth respondent. They do not have their own Counsel who can conduct a re-examination of them following cross-examination.

21    At present Mr Nankervis and Mr Barclay have each filed three statements by way of evidence (including one affidavit filed by Mr Nankervis). Both Mr Murr for the applicants and Mr Collins for the fourth respondents have indicated that they will have numerous objections in respect of this evidence. With respect, having examined these statements, I can understand why. There is, for example, a great deal of material repeated in statements of each witness. Further, at least in respect of some of the statements there is material which appears to be in the nature of submissions and identification of witnesses proposed to be called rather than actual evidence. As the Full Court of this Court observed in Australian Competition and Consumer Commission v Cadbury Schweppes Pty Ltd (2009) 174 FCR 547 at [73]:

The ‘essential character’ of a final proof of evidence is to make disclosure to the opponent and the court of the evidence which is proposed to be led at trial. Such finalised witness statements may be prepared in the finalised form because of the court order for disclosure of evidence before the hearing. However, the fact remains that the purpose of the party preparing and delivering a final version of a witness statement is to give advance notice of what evidence that party proposes to put before the court. It does not matter whether the finalised version was or was not intended to be tendered in court -- the purpose of bringing into existence the finalised proof of evidence was to give it to the opposing party at the time of service and to disclose the information contained in the proof.

22    As I understand from the hearing on Monday, objections to this evidence are being finalised. It would be appropriate for Mr Nankervis and Mr Barclay to give serious consideration to which (if any) of these statements upon which they wish to rely, and whether any amendments or consolidation would be useful. In the absence of proper submissions from these parties in this respect however I make no further observations at this point.

23    I understand that Mr Nankervis and Mr Barclay propose to give oral evidence in addition to the written statements upon which they currently rely. It is not entirely clear why they wish to give oral evidence in narrative form as well as rely on witness statements, when they could provide evidence in the form of sworn affidavits. I understand that one reason could be the difficulty they, as litigants in person, experience in endeavouring to prepare an affidavit in a form acceptable for presentation to the Court.

24    Section 29(2) and (3) of the Evidence Act provides:

Manner and form of questioning witnesses and their responses

 (1)    …

(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)    …

25    While I am prepared to grant leave to Mr Nankervis and Mr Barclay to give oral evidence in narrative form to complement any written statements they have prepared and which may be eventually accepted into evidence, in the interests of justice to the other parties, it is appropriate that the other parties receive some notice of the notice of any additional evidence Mr Nankervis and Mr Barclay propose to give. In my view the appropriate order is that Mr Nankervis and Mr Barclay file an outline of the oral evidence of any additional evidence they propose to give by no later than seven days before the trial resumes on 18 August 2014 – that is by 11 August 2014.

26    The applicants have also sought specific directions from the Court to the effect that such evidence must be relevant, not hearsay, and not opinion evidence. While such conditions merely reiterate the provisions of the Evidence Act, I am prepared to specifically make such orders because I consider it useful as a guide to the litigants in person appearing in these proceedings.

27    In relation to evidence of both Mr Nankervis and Mr Barclay which would usually be given by them under re-examination by their own Counsel, I consider it would be appropriate for Mr Nankervis and Mr Barclay to:

    Give such evidence under oath orally after the conclusion of the cross-examination, in a narrative form, and supplemented by a written statement should they seek so choose. Again, such evidence must be relevant, not hearsay, and not opinion evidence. Further, I note that evidence by way of reply must not raise new issues unless the Court otherwise grants leave, and should be confined to addressing, clarifying and correcting matters raised in the course of cross-examination. In making such a direction I do not in any way purport to deprive the applicants, the fourth respondent, and either Mr Nankervis or Mr Barclay in respect of each other’s evidence, of the right to object to evidence which is inadmissible.

    Have the opportunity to review the transcript for a reasonable time prior to giving evidence by way of reply. In my view it is fair to permit both Mr Nankervis and Mr Barclay 48 hours from the conclusion of their cross-examination to prepare a narrative oral statement (and/or witness statement) to Court.

Cross-examination

28    Despite the helpful submissions of the applicants, I am not satisfied that Mr Nankervis, Mr Barclay and the fourth respondent have such an identity of interest that each ought not be permitted to conduct cross-examination of the other’s witnesses. In particular:

    As in substance Mr Collins for the fourth respondent correctly submitted, while multiple respondents resisting a claim of an applicant have a common interest in the applicant being unsuccessful in respect of that claim, this does not of itself mean that the respondents have the same interest or are sympathetic to each other.

    There are clearly overlaps in respect of the defences of the respondents to the claims of the applicants. However:

          o    the nature of their respective cases and the basis upon which the applicants have a claim against them are quite different. So, for example, Mr Nankervis’ role as a manager of the first applicant’s business in Queensland is quite distinguishable from that of Mr Barclay’s role as a real estate agent (who may or may not have been engaged by the applicants), and even more distinguishable from that of the fourth respondent as Mr Barclay’s employer (and who also may or may not have been engaged by the applicants);

          o    while there may be some aspects of their respective defences in common, there are also aspects of their respective defences which are quite at odds and exclusive to their particular cases (for example, the position taken by the fourth respondent in respect of the conduct of Mr Barclay);

          o    importantly, and notwithstanding some common interests, the respondents have cross-claims inter se, namely:

                ▪    Mr Nankervis has a cross-claim filed 15 November 2013 against the fourth respondent and Mr Barclay,

                ▪    Mr Barclay has a cross-claim filed 18 November 2013 against Mr Nankervis

                ▪    Mr Barclay has a cross-claim filed 15 December 2012 against the fourth respondent

                ▪    the fourth respondent has a cross-claim filed 10 December 2012 against Mr Barclay.

Mr Barclay also filed a cross-claim on 15 December 2012 against Vero Insurance Ltd.

It follows that there may be circumstances in which, in order to substantiate a cross-claim, a respondent will need to ask specific questions in cross-examination of one of the other respondents which are not sympathetic to that respondent or to the other respondents.

    I particularly take the view I have reached concerning identity of interest in light of similar exercises conducted by their Honours in GPI Leisure, NMFM Property, and Cheers v El Davo Pty Ltd. I consider the facts in those cases presented stronger features of similarity than in the proceedings currently before me, however their Honours declined to make orders in similar terms to those sought by the applicants in this case.

29    The applicants submit that any limitation of cross-examination be limited to the circumstances they define in their submissions. However in light of the circumstances I have outlined, I consider it would be unjust to disallow leading questions by way of cross-examination by a respondent of witnesses of other respondents. Further, and practically, I consider such a course could be unwieldy and lead to ad hoc rulings in circumstances where, for example, a respondent’s proposed question bore some relevance to a “prohibited” area of cross examination and some relevance to other areas of the case. Such an approach would not, in my view, be in conformity with the purpose contemplated by s 37M of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”).

30    Having reached this conclusion in respect of cross-examination, however, I accept the submission of the applicants that there is some cause for consideration of the sequence of cross-examination of the respondents’ witnesses (including the litigants in person). I take this view because, while I do not consider that the respondents have such similar interests that leading questions should be disallowed, I consider there is some risk that the cross-examination of the respondents’ witnesses by Mr Murr SC or Ms Painter SC by the applicants could, to some extent, be “undone” by a more sympathetic approach by the other respondents. It is important that the trial of the substantive proceedings be fair to the respondents, and in particular the litigants in person – as Mr Murr correctly submitted, it is also important that the conduct of the trial be fair to the applicants. However as Mr Murr also submitted, someone must cross-examine first. In my view a fair and appropriate sequence of cross-examination of witnesses for the respondents is:

1.    Counsel for the applicants.

2.    In respect of witnesses called by Mr Nankervis and Mr Barclay – Counsel for the fourth respondent, followed by cross-examination by either Mr Nankervis or Mr Barclay.

3.    Similarly to the approach adopted by Lindgren J in NMFM: I will reserve leave to Counsel for the applicants to apply to cross-examine witnesses for the respondents further after the cross-examination by other respondents has been concluded, but not so as to introduce any new material by way of cross-examination.

31    I take this view because:

    I am not persuaded that there should be a departure from the usual sequence of cross-examination as explained by Young J in GPI Leisure. I consider that the cross-examination of the respondents’ witnesses by the applicants immediately after evidence-in-chief is concluded will result in key issues in the proceedings being ventilated and tested. Indeed, and similarly to the view adopted by Weinberg J in Cheers v El Davo Pty Ltd at [15], I am satisfied that this is a course calculated to ensure that the cross-examination of the respondents’ witnesses serves best to elicit the truth of what occurred.

    In respect of witnesses called by Mr Nankervis and Mr Barclay, following cross-examination by Counsel for the applicants I consider the best approach is to require cross-examination of those witnesses by Counsel for the fourth respondent before the remaining litigant in person is entitled to question the witness. In my view this will achieve an expedition in cross-examination by the respondents as a whole in accordance with s 37M of the Federal Court Act, as clearly experienced Counsel can more effectively and efficiently question witnesses than can litigants in person.

    While I am prepared to entertain the prospect of Counsel for the applicants applying to further cross-examine witnesses for the respondents after the other respondents have completed their own cross-examination, I do not consider that the applicants ought be permitted to introduce new material at this point. In my view this limitation is consistent with the purpose of permitting such further cross-examination by Counsel for the applicants, namely to address any perceived sympathetic cross-examination by other respondents.

32    In respect of witnesses called by the fourth respondent, I consider that a similar sequence should apply, except that Mr Nankervis as first respondent ought precede Mr Barclay as second respondent in cross-examining those witnesses.

33    Finally, to repeat and adopt the sentiments of Weinberg J in Cheers v El Davo at [19], nothing in this judgment should be taken as a licence to engage in repetitive or prolix cross-examination.

Associate:

Dated:    1 August 2014