Federal Court of Australia

LK Law Pty Ltd v Karas (Cross-examination) [2024] FCA 265

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 26 of the Evidence Act 1995 (Cth), the cross-examination of the second applicant, Scipio John Lipman, by senior counsel for the fourth respondent, be limited to factual matters relating to topics:

(a)    Not covered during the cross-examination of the second applicant by senior counsel for the first to third respondents; and

(b)    In respect of which it is contended by the fourth respondent that it has a different interest in the conduct of the defence of these proceedings to that of the first to third respondents.

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

REASONS FOR JUDGMENT

O’SULLIVAN J:

1    An issue has arisen in relation to the cross-examination of the second applicant, Scipio John Lipman.

2    The first to third respondents are represented by Mr Sullivan KC and two juniors. The fourth respondent, Mishcon De Reya LLP (MDR), is represented by Mr Robertson SC and junior counsel.

3    At the conclusion of the cross-examination of Mr Lipman by Mr Sullivan KC, Mr Sullivan KC announced: T 541.41-542.5, that he and Mr Robertson SC had agreed that Mr Robertson SC would cross-examine on topics Mr Sullivan KC had deliberately not touched upon, being:

(a)    The issue of the knowledge of MDR and the circumstances in which Mr Lipman became aware of MDR; and

(b)    The counterfactual, being the evidence by Mr Lipman and others as to what he or the first applicant, LK Law Pty Ltd, would have done had the alleged wrongful conduct by the first to third respondents and MDR not occurred.

4    Counsel for the applicants, Mr Roberts KC, objected to Mr Robertson SC cross-examining Mr Lipman.

5    On 14 March 2024, I made orders permitting Mr Robertson SC to cross-examine Mr Lipman. At that time, I indicated I would publish reasons for doing so. These are those reasons.

Principles

6    The principles applicable to the cross-examination of a witness by different counsel were considered in GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15. In that matter, Young J (as his Honour then was) conducted an examination of the authorities before setting out a number of principles arising from those authorities at pp 22F-23F in a well-known passage:

Drawing all these threads together, the following appears to me to be the situation:

(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.

(Square brackets provided – the reference to ‘he’ or ‘his’ is an historical artefact)

7    GPI Leisure reflects the common law position where, as the above makes clear, there is no unfettered right to cross-examine a witness at common law.

8    Sections 26, 27 and 28 of the Evidence Act 1995 (Cth) are part of Division 3 which deals with general rules about giving evidence. They provide:

26 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; 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.

28 Order of examination in chief, cross-examination and re-examination

Unless the court otherwise directs:

(a)    cross-examination of a witness is not to take place before the examination in chief of the witness; and

(b)    re-examination of a witness is not to take place before all other parties who wish to do so have cross-examined the witness.

9    Section 192 of the Evidence Act provides:

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

(d)    the nature of the proceeding; 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.

10    It seems the only Full Court authority governing this area is Canberra Residential Developments Pty Ltd v Brendas [2010] FCAFC 125; (2010) 188 FCR 140, (Finkelstein, Siopis and Katzmann JJ). In that matter, although the Full Court dismissed the appeal from a decision of the trial judge who refused leave for junior counsel to continue cross-examination of a witness after senior counsel withdrew, the Full Court considered the primary judge had erred in refusing leave to junior counsel to continue cross-examination.

11    At [44]-[45] the Court said:

44    To understand how we have arrived at the view that the judge erred it is necessary to examine the rationale for the rule of practice preventing two counsel from cross-examining one witness. It can be traced back to the decision of Doe v Roe (1809) 2 Camp 280; 170 ER 1155. As Lord Ellenborough made clear, the rule is for the protection of the witness. He said (at 1156): “If this rule were not adhered to, a witness might be subject to the examination or cross-examination of as many barristers as were retained for the plaintiff or defendant, much time would be wasted, and great confusion would be introduced into proceedings at Nisi Prius”. Put another way, the common law frowns upon cross-examination by multiple counsel because of the possibility of oppression: JD Heydon, Cross on Evidence, 8th ed at p 627.

45    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: see for eg Eva Pty Ltd v Charles Davis Ltd [1982] VR 515. 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: GPI Leisure Corp Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15, 22-23.

12    In Lehrmann v Network Ten Pty Ltd (Cross-Examination) [2023] FCA 1477 after referring to GPI Leisure and Canberra Residential as well as ss 26, 27, 28 and 192 of the Evidence Act, Lee J observed: at [13]

What is involved is a self-evidently broad, evaluative assessment, and in considering a direction or order there be no or limited cross-examination by [2nd respondents counsel] I am entitled to have regard to the conventions developed reflecting the accumulated experience of the common law in securing fair trials and guarding against unfairness. Further, I am required, by reason of s 192(2) of the EA, to take into account the following relevant considerations: (a) the extent to which the direction would be likely unduly to add to, or shorten, the length of the hearing; (b) the extent to which the direction would be unfair to a party or to a witness; (c) the importance of the relevant evidence; and (d) the nature of the proceeding.

13    With respect, I agree with his Honour’s distillation of the relevant principles.

14    In the circumstances of this matter, the relevant principles taken from GPI Leisure at pp 22F-23F are that:

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

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

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

(4)    …

(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).

…

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

Consideration

15    The applicants object to Mr Robertson SC cross-examining Mr Lipman on three bases:

(a)    MDR has the same interest as the first to third respondents;

(b)    There is nothing in the counterfactual that would suggest any divergence between the first to third respondents, and the fourth respondent’s interests; and

(c)    The matters raised in s 192(2)(a)-(d) inclusive.

16    As to the first basis, the applicants submit there is no divergent interest because it is common ground that the first respondent, Mr Jason Demetrios Karas, kept from Mr Lipman at all times, prior to an agreement known as the “Framework Agreement” between Mr Karas and MDR that became unconditional in April 2021, any notion of MDR’s existence and that remained the position until what is known as the “Separation Agreement” between, amongst others, Mr Lipman and Mr Karas was reached on 25 May 2021.

17    As to the second basis, the applicants submit there is no divergence between the respondents on the counterfactual.

18    Senior counsel for MDR refers to the pleading in the applicants’ fourth statement of claim at [79] which alleges, in part:

By its knowledge of the matters referred to in paragraph 78, MDR had knowledge that by Mr Karas’ entry into the Framework Agreement, Mr Karas was acting in breach of his fiduciary duties to LKPL in furtherance of a dishonest and fraudulent design …

19    Paragraph 78 of the fourth statement of claim is an extensive paragraph in which the applicants plead that before entering into the Framework Agreement and prior to the satisfaction of the conditions precedent to the Framework Agreement, MDR had actual knowledge of a number of matters.

20    The pleading continues at [79A] that: “In the premises, MDR knowingly participated in Mr Karas’ breach of his fiduciary duties to LKPL by entering into the Framework Agreement and formally approving it on or before 27 April 2021”.

21    None of those matters have been the subject of cross-examination, at least in the context of knowing participation.

22    In reply to that submission, the applicants submit that whether it be the law of Australia or the law of England, there is no requirement for knowing assistance for there to be fraud or conscious dishonesty.

23    That is a matter that I will consider in due course but in any event, whereas I accept that the interests of the first to third respondents and MDR are closely aligned, nonetheless there are quite distinct matters which are applicable to MDR. I am not satisfied that it can be said that they have identical interests, and in the circumstances, I am satisfied that there are divergent interests.

24    In the course of his submissions, senior counsel for MDR identified the topics upon which he proposed to cross-examine Mr Lipman being:

(a)    The timing and extent of Mr Lipman’s knowledge about MDR;

(b)    The fact that Mr Lipman knew about MDR earlier than his evidence suggests and that he would not have done anything differently. It is this second topic which is the counterfactual; and

(c)    The referral of litigious matters from LKHK to MDR against the provisions of the Separation Agreement.

25    Finally, Mr Robertson SC submits that each of the criteria in s 190(4)(a) and (b) of the Evidence Act militate in favour of not restricting his cross-examination at all, although he referred to the agreement between Mr Sullivan KC and he as to the division of cross-examination. With respect, that is an entirely appropriate course. I consider that it would not be appropriate for a second counsel to cross-examine on the same topics as the first counsel.

26    I am satisfied that the topics upon which senior counsel for MDR proposes to cross-examine are important and the nature of the cause of action and the subject matter of the proceedings are such that MDR should be entitled to cross-examine Mr Lipman, albeit on a limited basis.

27    I am conscious that Mr Lipman has been under cross-examination by senior counsel for the first to third respondents for some three and a half days. The proposed cross-examination by MDR is a further half day. The cross-examination thus far has been entirely appropriate and cannot be said to be in any way oppressive. I do not consider a further half days cross-examination to be oppressive or otherwise unwarranted.

28    In view of these matters, at a fundamental level, I consider that permitting Mr Lipman to be cross-examined by senior counsel for MDR is necessary for there to be a fair trial.

29    Accordingly, in the exercise of my discretion, there will be orders permitting cross-examination of Mr Lipman by senior counsel for MDR relating to the topics identified, and provided cross-examination does not stray into topics covered during the cross-examination of Mr Lipman by senior counsel for the first to third respondents. Cross-examination will be limited to those topics upon which it is contended by MDR that it has a different interest in the conduct of the defence of these proceedings to that of the first to third respondents.

30    It is likely that there will be some ambiguity in the application of these orders. To that extent, the issues can be dealt with on a question-by-question basis.

Associate:

Dated:    14 March 2024

SCHEDULE OF PARTIES