Security for costs: Colmax Glass Pty Ltd v Polytrade Pty Ltd [2013] VSC 311

The matter of Colmax Glass Pty Ltd v Polytrade Pty Ltd [2013] VSC 311 was a security for costs application before Derham AsJ in the Supreme Court of Victoria. The dispute involved a claim and counterclaim. The claim alleged a breach of contract by the defendant in not supplying recycled glass to the plaintiff, and the defendant counterclaimed alleging that the plaintiff had prevented the defendant from complying with the agreement.

A security for costs application was issued by the defendant against the plaintiff, and the defendant was successful. The matter is particularly helpful because of the articulation, by Derham AsJ, of the principles concerning security for costs applications. I have set this out below:

Applicable legal principles

14 Rule 62.02 of the Supreme Court (General Civil Procedure) Rules 2005 provides, so far as relevant:

62.02 When security for costs may be ordered 

(1) Where –
...
(b) the plaintiff is a corporation or (not being a plaintiff who sues in a representative capacity) sues, not for the plaintiff’s own benefit, but for the benefit of some other person, and there is reason to believe that the plaintiff has insufficient assets in Victoria to pay the costs of the defendant if ordered to do so;
...
(f) under any Act the Court may require security for costs –
the Court may, on the application of a defendant, order that the plaintiff give security for the costs of the defendant of the proceeding and that the proceeding as against that defendant be stayed until the security is given. 

15 Section 1335 of the Corporations Act 2001 relevantly provides:

Costs

(1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is a reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

16 The first question is whether the threshold condition for the exercise of the power is satisfied, that is, whether there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful. That jurisdictional condition must be satisfied before the discretionary power to order security for costs is enlivened: Livingspring Pty Ltd v Kliger Partners.[3] 

17 It is well established that the proper approach to the matter is that the Court has an unfettered discretion, but on the footing that the very fact that the jurisdiction has been enlivened in the first place may itself be a factor, even a most significant factor, in the exercise of the discretion.[4]

18 If the Court has jurisdiction to order security, the burden rests on the defendant to persuade the Court that an order for security should be made.[5]

19 In exercising the discretion whether to order a company to give security for costs the court must carry out a balancing exercise. It must weigh the injustice to the plaintiff if it is prevented from pursuing a proper claim by an order for security, against the injustice to the defendant if no security is ordered and at trial the plaintiff's claim fails and the defendant is unable to recover costs from the plaintiff: See the observations of Smithers J in Tradestock Pty Ltd v TNT (Management) Pty Ltd.[6] The Court will properly be concerned not to allow the power to order security to be used as an instrument of oppression, but also it will be concerned not to be so reluctant to order security that an impecunious company can use its inability to pay costs to put unfair pressure on the defendant: Keary Developments Ltd v Tarmac Construction Ltd.[7]

20 The various factors that have been found to be potentially relevant in the exercise of the discretion were summarised many years ago, compendiously, by Smart J in Sydmar Pty Ltd v Statewise Developments Pty Ltd.[8] So far as relevant to the present application, those factors include: 

(a) The plaintiff’s prospects of success: Whether the plaintiff's claim is made bona fide and has reasonable prospects of success. In this regard, the authorities make the following points: 

(i) As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with reasonable prospects of success;[9]
(ii) Assessing the plaintiff's prospects of success is not really a practicable test in any case of reasonable complexity: Interwest Ltd v Tricontinental Corp Ltd;[10] Although it will ordinarily not be practicable to reach any clear view about the merits of the plaintiff's claim, that is not to say that the merits are always irrelevant (unless totally lacking) or that the bona fides of the claim may be disregarded: Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd;[11]
(iii) The court is not obliged to consider at length the merits of the claim, and to do so would ordinarily be a waste of resources: Impex Pty Ltd v Crowner Products Ltd (1994) 13 ACSR 440 (QSC); 

(b) Plaintiff's impecuniosity caused by defendant: Whether the plaintiff's lack of funds has been caused or contributed to by the conduct of the defendant in relation to the transaction the subject of the claim: Sir Lindsay Parkinson & Co Ltd v Triplan Ltd.[12] In this regard, the authorities make the following points: 

(i) The plaintiff carries the burden of persuasion on the question whether the conduct of the defendant was the cause of the plaintiff's financial difficulties: BPM Pty Ltd v HPM Pty Ltd;[13]
(ii) There must be a solid foundation for that conclusion: Right Home Improvements International Pty Ltd v Imperial Alarm Screens (Aust) Pty Ltd,[14] referred to in Sandl Trading Pty Ltd v North American Oil Co;[15].
(iii) The plaintiff carries the onus of satisfying the court on the basis of admissible evidence, see Ninan v St George Bank Ltd;[16] 

(c) Plaintiff's proceeding merely defensive: Whether the plaintiff's proceeding is merely a defence against "self-help" measures taken by the defendant: Heller Factors Pty Ltd v John Arnold's Surf Shop Pty Ltd (in liq);[17] Sydmar Pty Ltd v Statewise Developments Pty Ltd;[18] Interwest Ltd v Tricontinental Corp Ltd.[19] Each case must be looked at to see whether in substance the claim set up is by way of defence such that the plaintiff's claims are properly characterised as defensive; 

(d) Security order would stultify pursuit of legitimate claim: Whether the making of the order would unduly stultify the ability of the plaintiff to pursue an arguable case legitimately instituted: See MA Productions Pty Ltd v Austarama Television Pty Ltd;[20] Drumdurno Pty Ltd v Braham;[21] Ariss v Express Interiors Pty Ltd (in liq);[22] Excelsior Run Pty Ltd (in liq) v Nelius Pty Ltd;[23] 

(e) Contribution by shareholders or creditors to security ordered: The extent to which it is reasonable to expect shareholders or creditors (or beneficiaries, if the company is a trustee) to make funds available to satisfy any order for security which is made: National Bank of New Zealand Ltd v Donald Export Trading Ltd;[24] Pacific Acceptance Corp Ltd (t/as Flack & Flack) v Forsyth (No 2);[25] Drumdurno Pty Ltd v Braham;[26] Newtons Travel Services Pty Ltd v Ansett Transport Industries (Operations) Pty Ltd;[27] 

(f) Delay in applying for security: Delay in applying for security may be ground for refusing to order security. The company, which can be assumed to be in financial difficulties, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it makes a substantial financial commitment toward litigating the claim. See Buckley v Bennell Design & Construction Pty Ltd;[28] Smail v Burton; Re Insurance Assocs Pty Ltd (in liq);[29]

(g) Defendant's cross-claim raising same facts: where the defendant has raised a cross-claim, whether substantially the same facts are likely to be canvassed in determining the claim and cross-claim. The court would ordinarily seek to avoid the situation where the claim is stayed because of the inability of the plaintiff to provide security while the defendant's cross-claim covering the same factual areas proceeds: Sydmar Pty Ltd v Statewise Developments Pty Ltd.[30] 

21 In Livingspring Pty Ltd v Kliger Partners the Court of Appeal said:[31] 

There are, of course, particular discretionary matters of which the plaintiff must necessarily have carriage. If, for example, the plaintiff corporation asserts that an order for security would impose on it such a financial burden as would stultify the litigation, the plaintiff must establish the facts which make good that assertion. We respectfully adopt what the Full Federal Court said in this regard in Bell v Wholesale Co Pty Ltd v Gates Export Corporation (No 2):

In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for a party seeking security to raise the matter, it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of the security will frustrate the litigation to raise the issue of impecuniosity of those whom the litigation will benefit and to prove the necessary facts.
The same would be true of a contention that the plaintiff’s impecuniosity was caused by the defendant.

22 In Epping Plaza Fresh Fruit & Vegetables Pty Ltd v Bevendale Pty Ltd,[32] Winneke P and Phillips JA, made the following observations:[33] 

It is thus apparent that the justification for the statutory rule is that the defendant, not being a voluntary litigant, deserves to be protected from the consequences of limited liability. Those who seek to conduct their businesses through limited liability companies expect to receive the benefits which such liability attracts. It seems to us a necessary corollary that they should be prepared to accept the strictures imposed by the section [s 1335] if the company embarks upon litigation: Buckley v Bennell Design and Constructions Pty. Ltd. (1974) 1 ACLR 301at 304 (NSW Court of Appeal).

It has not been, and could not be, suggested that the section compels the court to order security against an impecunious corporate plaintiff. The court is given an unfettered discretion to do what is justly required by the circumstances of each case. Street CJ made this point in Buckley when he said, at 305: 

It seems to me that the discretion could properly be regarded as ordinarily exercisable so as to protect a defendant sued by an impecunious company, but that, if the court in any case takes the view that this protection should not be afforded to the defendant, it has an unlimited and unrestricted discretion to give effect to such view without having to look for special circumstances.

The defendant persuaded Derham AsJ that the threshold question was satisfied because the company had no paid up capital, had no property in Victoria, was the subject of many winding up applications, had refused to provide evidence of its capacity to pay costs, and its plant and equipment was under charge to the NAB. An unaudited balance sheet produced by the plaintiff did not help the situation either, revealing a dire situation. His Honour ordered that security be provided even though His Honour found that the claim was bona fide, there was some foundation for the submission that the plaintiff's impecuniosity was caused by the defendant, and there was some delay by the defendant in issuing the application for security.

No ADR fees for VCAT

A Regulatory Impact Statement was issued by the Victorian Government in December 2012 which recommended an increase in application fees, and also the imposition of fees for alternative dispute resolution (that is, mediations and compulsory conferences).

Click here for a copy of the Regulatory Impact Statement.

I attended a BDPS function yesterday evening and I was informed that the Attorney-General Robert Clark wrote to BDPS stating that the government will not implement alternative dispute resolution fees.

Click here for a press release that I just spotted which notes that ADR fees will not be imposed.

Judicial appointments: Pagone J (VSC), Davies J (VSC) and Mortimer S.C. appointed to the Federal Court

The Commonwealth Attorney-General made the announcement today (13 June 2013) that three Victorians are appointed to the Federal Court of Australia. The Victorian appointees are the Hon Justice Tony Pagone, the Hon Justice Jennifer Davies, and Debbie Mortimer S.C. The one non-Victorian appointee, the Hon Justice Richard White, was appointed from the Supreme Court of South Australia.

Here's an extract from the announcement:

Attorney-General Mark Dreyfus QC today announced that four new judges have been appointed to the Federal Court of Australia.

The appointees are:

• The Hon Justice Tony Pagone, a Judge of the Supreme Court of Victoria, who will be appointed to the Melbourne Registry, with effect from 21 June 2013 
• The Hon Justice Jennifer Davies, a Judge of the Supreme Court of Victoria, who will be appointed to the Melbourne Registry, with effect from 4 July 2013 
• Ms Debbie Mortimer SC, who will be appointed to the Melbourne Registry, with effect from 12 July 2013, and 
• The Hon Justice Richard White, a Judge of the Supreme Court of South Australia, who will be appointed to the Adelaide Registry, with effect from 31 August 2013. 

“I am very pleased to be able to announce these four excellent appointments to the Federal Court,” Mr Dreyfus said.

“All four appointees come to the Court with a strong commitment to the service of the law and access to justice, and their considerable experience will be a great addition to the Federal Court bench.

“Justice Pagone and Justice Davies are currently judges of the Supreme Court of Victoria and Justice White is a judge of the Supreme Court of South Australia, and all have made valuable contributions to the rule of law in their respective State jurisdictions.

“Ms Mortimer is an experienced Senior Counsel with a long and distinguished career at the Bar.”

An advisory panel comprising the Hon Margaret Stone, former Federal Court Judge, Ms Catherine Gale, a former President of the Law Council of Australia and Director of Resolve Conflict, and a senior officer of the Attorney-General’s Department considered candidates for these appointments. The panel recommended all four appointees to the Attorney-General as suitable for appointment to the Federal Court.

Short professional biographies for the appointees follow. 

The Hon Justice Tony Pagone

Justice Pagone holds a Bachelor of Arts, a Diploma in Education, and a Bachelor of Laws from Monash University (1976, 1977 and 1979, respectively) and a Master of Law with First Class Honours from the University of Cambridge (1983). Justice Pagone was admitted to the Supreme Court of Victoria as a barrister and solicitor in 1980.

From 1980 to 1992, he held various teaching positions as Tutor, Senior Tutor, Lecturer and Senior Lecturer in Law at Monash University. He became a barrister in 1985 and was appointed Queen’s Counsel in 1996.

Justice Pagone has been a judge of the Supreme Court of Victoria since 2007. He was first appointed to the Supreme Court in October 2001 but in June 2002 took up a newly created position of Special Counsel to the Australian Taxation Office, which he held from July 2002 to December 2003. His specialities include tax, commercial law, administrative law and civil rights. Justice Pagone was the judge in charge of the then newly established Commercial Court of the Supreme Court of Victoria between 2009 and 2012.

In 2002, Justice Pagone was made a Professorial Fellow, University of Melbourne Law School. From 1992 to 1996 and from 1998 to 2001, he was a member of the Ethics Committee of the Victorian Bar. Between 1992 and 2001, Justice Pagone also held various positions with the Law Council of Australia, including those of Chairman, Business Law Section Executive. He has also been the author and editor of several books and published articles, including his book Tax Avoidance in Australia, published by The Federation Press.

The Hon Justice Jennifer Davies

Justice Davies holds a Bachelor of Jurisprudence and a Bachelor of Laws from Monash University (1978). She was admitted to the Supreme Court of Victoria, as a barrister and solicitor, in 1980.

In 1979, she commenced practice at Paveys, articled to Del Bobeff. In 1983, she signed the Victorian Bar Roll and was appointed Senior Counsel in 2004. At the Bar she practised in corporations, revenue, commercial and administrative law. Justice Davies has been a judge of the Supreme Court of Victoria since 2009.

Since 2009, Justice Davies has been Senior Fellow, University of Melbourne, lecturing in taxation law and written advocacy. She was formerly a member of several professional law organisations, including President of the Tax Bar Association, member of the Business Law Section of the Law Council of Australia, Chair of the Ethics Committee of the Victorian Bar and Associate Convenor of the Women Barristers’ Association. Justice Davies organises the commercial law seminars for the legal profession conducted by the Supreme Court of Victoria in conjunction with Monash University, the Law Institute of Victoria and the Victorian Bar.

Ms Debbie Mortimer SC

Ms Mortimer holds a Bachelor of Jurisprudence and a Bachelor of Laws (First Class Honours) from Monash University (1985 and 1987, respectively). Ms Mortimer was admitted to the Supreme Court of Victoria, as a barrister and solicitor, in 1988.

Ms Mortimer was articled to Gordon Goldberg of Goldberg and Window Solicitors, Richmond, Victoria from 1987 to 1988. From 1988 to 1989, she was an Associate to then Justice Brennan, High Court of Australia, later the Chief Justice of the High Court. Ms Mortimer signed the Victorian Bar roll in 1989 and was appointed Senior Counsel in 2003. One of the few women with an established High Court practice, Ms Mortimer has undertaken a wide range of cases at the Bar, specialising in administrative and constitutional law, anti-discrimination and extradition.

Ms Mortimer had four years away from the Bar between 1991 and 1994 while her children were young and during that time taught torts, property law and evidence in the Faculty of Law at Monash University. Since 2011, she has been a Senior Fellow, University of Melbourne Law School, teaching in the Masters Program. Ms Mortimer is a regular presenter at academic and professional conferences and is the author of several publications, including co-authoring the student textbook Evidence, published by Butterworths.

Ms Mortimer is a member of a number of professional law associations, and was Chair of the Victorian Bar Human Rights Committee and Chair of the Public Law Section of the Commercial Bar Association for several years.

The Hon Justice Richard White
Justice White holds a Bachelor of Laws (Honours) and a Bachelor of Arts from the University of Adelaide (1976 and 1981, respectively). Justice White was admitted as a barrister and solicitor of the Supreme Court of South Australia in 1977.

From 1977 to 1982, Justice White was a barrister and solicitor with Stanley and Partners, and from 1982 to 2004, a barrister practising from Hanson Chambers. He was appointed Queen’s Counsel in 1997 and since 2004 has been a judge of the Supreme Court of South Australia.

Justice White is Chair of the Supreme Court’s Joint Rules Advisory Committee, Chair of the Court’s Civil Change and Reform Group, a member of the Court’s Special Classification Panel, a member of the Governing Council of the Judicial Conference of Australia and an Associate Member of the Courts Administration Authority of South Australia. He formerly held memberships of a number of professional organisations, including as a member of committees of the Law Council of Australia and the Law Society of South Australia. Prior to his appointment to the Supreme Court, Justice White was a member of the Court’s Board of Examiners and the Presiding member of the Legal Practitioners Disciplinary Tribunal in South Australia. 

Congratulations to the appointees!

This means that there are two vacant spots in the Commercial Court of the Supreme Court of Victoria. Speculation about who the replacements will be should raise the Commercial Bar's spirit during these grey and wet winter months!

Questionable AFL Rules: the 'deliberate' out of bounds rule, and determining intention.

I thought I'd do something different for a change. For those of my readers that are interested in the AFL, please feel free to read. For those that aren't, then please be patient with me.

I'm noticing that a lot of the 2013 AFL Rules are resulting in questionable decisions by umpires. One rule in particular that I consider to be of questionable application is the 'deliberate' out of bounds rule. This is the rule which prohibits a player from intentionally forcing a ball across a boundary line.

The 2013 AFL Rules provide as follows in relation to this rule:

'15.6 Free kicks - relating to out of bounds 

A free kick shall be awarded against a Player who:... 

(c) intentionally Kicks, Handballs or forces the football over the Boundary Line without the football being touched by another Player;...'

The arbitrariness of the application of this rule is a common complaint that I hear [normally screamed into my ear while I am watching the football at the MCG]. I too believe the application of the rule is likely to be arbitrary. This is because the umpire is placed in the unfortunate position of having to ascertain intention, based on the actions of the players. This brings into focus two ways of determining intention. The first is finding out what the player actually intended to do. The second is inferring what the player intended to do on the basis of his actions.

The umpire cannot possibly determine what the player actually intended to do. First, the umpire cannot read the player's mind. Second, if the umpire stopped the player and asked the player what the player intended to do, that would unreasonably stop play, and there is a reasonable to very good chance that the player will protest his innocence in any event. 

Therefore the only thing the umpire can do is ascertain what the player intended to do based on the player's actions. That is, the umpire needs to infer, based on the actions of the player having acted in the way that the player did, whether there was an intention to kick, handball or force the football over the boundary line.

However, it is entirely unsatisfactory to have a rule which requires an umpire to determine intention based on the actions of the player. I say this for the following reasons:

• Umpires are doing things on the run and whilst under pressure, and have very little time to mentally absorb and compute the actions of a player and attribute a particular intention based on those actions.
• Often the umpire is not near the play when a player has caused the ball to move over the boundary line, which brings into question whether the umpire has seen all of the actions of the player which allows the umpire to infer a particular intention.
• Each umpire is different and brings a different experience to the assessment of a player's intention. Many umpires have played football before, and each has experienced football to different degrees. They will each bring their own experience to the assessment of a player's intention, and this will result in different assessments of what a player's intention is when a ball is caused to go over a boundary line.
• The umpire is qualified at ascertaining whether certain actions are a breach of the rules, but an umpire is not qualified to ascertain intention, and is no better than a spectator in the crowd at ascertaining intention. In some instances, the crowd would be better suited at ascertaining intention as they are closer to the player when the offending action occurred.

The rule could be made more objective by, say, penalising any movement of the ball over the boundary line (as in soccer). Alternatively the rule could be removed, which will result in more stoppages of play (which is presumably the issue that the rule was designed to avoid). If the AFL wished to reduce audience dissatisfaction in the umpiring of the matches, then this sort of rule ought to be addressed.

What do you, as my audience, think?

Browne v Dunn: Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No 3) [2013] FCA 525

The matter of Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No 3) [2013] FCA 525 was an industrial action in the Federal Court of Australia (Victorian Registry) before Murphy J.

An interesting part of this decision is a question about the fairness rule in Browne v Dunn [1894] 6 R 67. The respondents submitted that because the applicant didn't put to their witnesses in cross examination that they were being untruthful, the rule in Browne v Dunn was breached and they were therefore denied procedural fairness. Murphy J considered that the respondents misunderstood the rule, and considered that because of the pleadings, witness statements and written opening that had been filed and relied on, notice had been given of the applicant's case:

The rule in Browne v Dunn

245. In reliance on the rule in Browne v Dunn [1894] 6 R 67 (“Browne v Dunn”), the respondents allege a lack of procedural fairness in that the applicants sought to impugn the credit of Mr Street and Mr Wiltshire but did not directly put to them in cross-examination that they were being untruthful. They describe the cross examination of these witnesses as “peripheral” and “willing to wound, but afraid to strike”: Reid v Kerr (1974) 9 SASR 367 at 374. They contend that Mr Street and Mr Wiltshire were not given adequate opportunity to deny that they had been untruthful in giving certain evidence, and that the respondents were therefore not adequately put on notice of the case required to be met.

246. In the formulation of the rule in Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1 at 16 (“Allied Pastoral Co v FCT”), Hunt J said:

It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn… 

At 22 to 23 his Honour continued:

… There are many reasons why it should be made clear, prior to final addresses and by way of cross-examination or otherwise, not only that the evidence of the witness is to be challenged but also how it is to be challenged. Firstly, it gives the witness the opportunity to deny the challenge on oath, to show his mettle under attack (so to speak), although this may often be of little value. Secondly, and far more significantly, it gives the party calling the witness the opportunity to call corroborative evidence which in the absence of such a challenge is unlikely to have been called. Thirdly, it gives the witness the opportunity both to explain or to qualify his own evidence in the light of the contradiction of which warning has been given and also, if he can, to explain or to qualify the other evidence upon which the challenge is to be based…

247. In the present case I consider that the respondents incorrectly state the operation of the rule. InWhite Industries (QLD) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 216-217 Goldberg J explained:

The rule in Browne v Dunn is a rule of fairness which requires a party or a witness to be put on notice that a statement made by the witness may be used against the party or witness or to be put on notice that an adverse inference may be drawn against the witness or an adverse comment made about the witness in order that the witness may respond to that issue and give an explanation: Browne v Dunn [1894] 6 R 67 at 70;Bulstrode v Trimble [1970] VR 840 at 849; Karidis v General Motors-Holdens Pty Ltd[1971] SASR 422 at 425–6; Allied Pastoral Holdings Pty Ltd v FCT (1983) 44 ALR 607 at 623.
The significance of the rule is that it requires notice to be given of a proposed attack on a witness or on the witness’ evidence where that attack is not otherwise apparent to the witness. The rule does not require that there be put to the witness every point upon which his or her evidence might be used against him or her or against the party who calls the witness.

At 218 his Honour went on to say:

The rule does not apply, in the sense that it is not transgressed, where the witness is on notice that his version is challenged or that an inference may be drawn against him and such notice may be found in the pleadings, in an opening or in the manner in which a case is conducted: Seymour v Australian Broadcasting Commission [1977] 19 NSWLR 219 at 224-5, 236; Jagelman v FCT (1995) 31 ATR 467 at 472 -3; Raben Footwear Pty Ltd v Polygram Records Inc (1997) 145 ALR 1 at 15.

248. In Burke v Corruption and Crime Commission (2012) 289 ALR 150 a recent decision of the Full Court of the West Australian Court of Appeal, Buss JA (with whom Martin CJ and Mazza JA agreed) explained the rule in Browne v Dunn in the following terms at [180]-[192]:

[180] The rule in Browne v Dunn comprises two limbs. The first limb is that, unless notice has already clearly been given of the party's or cross-examiner's intention to rely upon such matters, a party or cross-examiner who intends to invite the court to disbelieve an opposing witness must put to the witness in cross-examination the grounds upon which the evidence is to be disbelieved. The second limb is that, unless notice has already clearly been given of the party's or cross-examiner's intention to rely upon such matters, a party or cross-examiner must put to an opposing witness in cross-examination the nature of the case upon which it is intended to rely in contradiction of the witness's evidence, especially where that case relies upon inferences to be drawn from other evidence (citations omitted).
…
[183] The first limb does not apply where the witness is clearly on notice of the other party's or cross-examiner's intention to invite the court to disbelieve the witness and the witness is also clearly on notice as to the grounds upon which it will be contended that his or her evidence should be disbelieved. The second limb does not apply where the witness is clearly on notice as to the nature of the case upon which it is intended to rely in contradiction of the witness's evidence.

249. Particularly apposite to the present case is a passage at [186] where his Honour said:

In Thomas v Van Den Yssel (1976) 14 SASR 205, Bray CJ (Jacobs and King JJ agreeing) said in relation to the general credibility of a witness (at 207):

[The] principles [in Browne v Dunn] cannot…be applied without qualification to a challenge to the witness’s credit generally…[I]n many…cases the witness must know that the other side will contend that he is not telling the truth, and even in some cases that he is deliberately not telling the truth. I cannot assent to the proposition that counsel cannot argue or the court find that a witness is deliberately giving false evidence unless the witness is asked some such question as, “I put it to you that your evidence is false”, or “I suggest that that is a deliberate lie” or the like. 

And at [192] 

Where the rule has been breached, and the tribunal of fact is a judge or a magistrate, there is no requirement that the court must accept or cannot reject evidence that has not been the subject of cross-examination. A failure to cross-examine a witness on a point does not mean that any evidence adduced in contradiction cannot be taken into account. The failure to cross-examine is merely a relevant factor to be evaluated and weighed, together with all other relevant factors in the case, in deciding whether to accept or reject the witness's evidence on the point. This is especially the case where the evidence in question is contradicted by other evidence. 

(Citations omitted.)

250. The pleadings, the witness statements filed (including in the earlier interlocutory proceedings) and the written opening all set out the applicants’ version of events. The thrust of Mr Zwart’s case before me and through earlier interlocutory hearings was that the action taken against him was not because of his conduct in the meetings, but because he tagged the forklifts on safety grounds. It has always been his case that he rejected Mr Scott’s proposed temporary measures to deal with the deficiency with the beepers. The applicants’ case has always been that the respondents’ stated reasons for taking adverse action against Mr Zwart, were not their real reasons.

251. Mr Street is a party to the proceeding represented by counsel and must be taken to be aware of pleadings and the witness statements. He was obviously on notice that his version of the reasons for the adverse action was under attack. Mr Wiltshire too must have understood the same. I have no doubt that Mr Street and Mr Wiltshire understood that the applicants contended that the respondents’ stated reasons for taking action against Mr Zwart were not their real reasons. They each displayed a good understanding of the nuances of the applicants’ case. The events of 5 August, particularly the reasonableness of Mr Zwart’s conduct, were clearly at issue between the parties. It did not require to be put to each of the respondents’ witnesses that they were being untruthful in their account: see Stern and Another v National Australia Bank Ltd (2000) 171 ALR 192 at [42]-[44] per Hill, O’Connor and Moore JJ.

252. Nor is this a case where, having not challenged the veracity of the respondents’ evidence, the applicants surprised the respondents by producing contradictory evidence. The credit attack made on Mr Street’s and Mr Wiltshire’s evidence is largely based on inconsistencies in the respondents’ evidence, and its implausibility when seen against surrounding facts and circumstances. The evidence in the proceeding was put on by way of witness statements under a pre-trial timetable.

This case is a useful reminder than in commercial cases, often the written documentation, such as witness statements, pleadings and submissions, filed and served in the proceeding before and during the trial place the parties on notice of the case to be met, and the rule in Browne v Dunn may be satisfied, or at least relaxed, as a result.