Rees v Bailey Aluminium Products Pty Ltd & Anor (No 2) [2009]

VSCA 96 (14 May 2009)

Last Updated: 14 May 2009
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 7149 of 2002
GARY REES
v
BAILEY ALUMINIUM PRODUCTS PTY
LIMITED
and
BARRY PHILLIPS (NO 2)
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JUDGES: ASHLEY and REDLICH JJA and COGHLAN AJA
WHERE HELD: MELBOURNE
DATE OF HEARING: 18 December 2008
DATE OF ORDERS: 18 December 2008
DATE OF PUBLICATION OF 14 May 2009
REASONS
MEDIUM NEUTRAL CITATION: [2009] VSCA 96
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Practice and Procedure – Costs of appeal and costs of trial – Misconduct of senior counsel for first
respondent – Failure of counsel for appellant and second respondent to take or pursue objections – Whether
first respondent should pay all or part of costs of appeal – Whether first respondent should pay costs of trial
– Order that first respondent pay 75 per cent of appellant’s costs of appeal on party and party basis, that
second respondent bear his own costs of appeal, and that each party bear his or its own costs of trial.
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APPEARANCES: Counsel Solicitors
For the Appellant Mr J Kennan SC with Clark & Toop

Mr A D B Ingram

For the First Respondent Mr R J Stanley QC with Hall & Wilcox

Mr S A O’Meara

For the Second Respondent Mr S Reid Rigby Cooke Lawyers

ASHLEY JA
REDLICH JA
COGHLAN AJA:
1 When we delivered reasons for judgment on 5 December 2008 we made a number of orders. We reserved
our decision, however, in respect of two matters – that is:
1. The question of the appellant’s costs of the appeal;
2. The question of the costs of the first trial.
2 We received written submissions from the parties concerning those matters. Then, on 18 December, we
heard oral submissions.
3 At the end of argument, we ordered that –
1. The respondent Bailey Aluminium Products Pty Ltd pay 75% of the appellant’s costs of the appeal on
a party and party basis.
2. The added respondent Phillips bear his own costs of the appeal.
3. Each of the appellant, the respondent and the added respondent bear his or its costs of the first trial.
4. Each party bear his or its costs of this day.
4 What follows are our reasons for making those orders.
5 We deal firstly with the appellant’s costs of the appeal.
6 When the proceeding was before us on 5 December we said, not having had the benefit of hearing
argument, that the appellant should have his costs of the appeal; but that there might be a question, in effect,
as to who should pay them – that is, Bailey; or perhaps senior counsel for Bailey at trial.
7 Counsel for Bailey thereafter informed the Court that his client did not contend that a non-party should be
required to pay the appellant’s costs of the appeal. We did not pursue that matter any further.
8 A dispute did arise, however, concerning the appellant’s costs of the appeal. His counsel submitted that the
appellant should have all his costs on an indemnity basis as it would be ‘extraordinary’ if it was otherwise. It
was submitted that there had been an unfair trial because of the misconduct of senior counsel for Bailey, who
had ‘started it’. No affirmative action on the part of appellant’s senior counsel at trial had led to the outcome,
this Court finding only that the misconduct on Bailey’s side ‘might have been cured by objection being taken
and appropriately firm directions being given’.
9 Counsel for Bailey submitted, to the contrary, that the appellant should have only 50 per cent of his costs
of the appeal; and that on a party and party basis. He argued that senior counsel for the appellant at trial had
made forensic choices not to take objections, seek directions or seek timely discharge of the jury and that the
Court had so found. This inaction on the part of appellant’s counsel had contributed to the mistrial. Those
circumstances, counsel contended, justified the appellant having only 50 per cent of his costs of the appeal.
He sought to justify that percentage by arguing that if his client was ordered to pay 50 per cent of the
appellant’s costs it would mean that it would in fact pay – having regard to its own costs – much more than
50 per cent of the costs of the trial.
10 We considered that there was merit in the submissions made for Bailey, although we did not accept the
submission that inaction by appellant’s senior counsel at trial bespoke forensic choice in every instance. We
did not accept the justification for the percentage of the appellant’s costs which Bailey proposed.
11 The first of those qualifications intersects with our rejection of the contrary argument for the appellant -
that no affirmative conduct of his counsel at trial had contributed to the mistrial. We recognised that Bailey’s
counsel had initiated most of the problems which were identified in our reasons for judgment and that at
times this made for difficult choices by counsel for the appellant, we nonetheless concluded in those reasons
that in a significant number of instances appellant’s trial counsel did make forensic choices. We refer to the
conduct described at [23] and further described at [43] of our reasons; and to the conduct described at [113]-
[116]. We also concluded in our reasons that the misconduct of Bailey’s counsel ‘could have been
adequately addressed by objection and immediate direction.[1] The submission for the appellant that we
reached no such conclusion – because we said that the misconduct ‘might have been cured’ – was an attempt
to give those words a meaning which they did not bear.
12 On the other hand, counsel for the appellant was correct to point out that trial counsel had taken objection
at times – even if, as happened, the objection was thereafter abandoned or not pursued; and that it was
therefore wrong to say that forensic choice fully explained the conduct of appellant’s trial counsel.
13 We concluded, in our discretion, that we should order Bailey to pay the appellant’s costs of the appeal,
but that it should have to pay something less than 100 per cent of the costs on a party and party basis. Whilst
the predominant cause of the mistrial was the conduct of senior counsel for Bailey, we considered that the
conduct of appellant’s counsel was part of the reason why there was a mistrial; and that the making of
forensic choices, and laxity in assessing and dealing with that misconduct, made it appropriate that the
appellant bear some part of the cost of the appeal. In all the circumstances, we considered that Bailey should
pay 75 per cent of the appellant’s costs of the appeal, on the ordinary – that is, party and party - basis. In
settling upon 75 per cent, we rejected the submission for Bailey that by paying 50 per cent it would be
paying a substantially greater percentage of the overall costs. That submission ignored the impact of the
certificate which we granted Bailey under s 4 of the Appeal Costs Act 1998. Further, even had the
submission been accepted, it would not have meant that an order that Bailey pay 50 per cent of the
appellant’s costs of the appeal would have sufficiently reflected the appellant’s success on the appeal and all
the circumstances which led to the mistrial.
14 By written and oral submissions the added respondent, Mr Phillips, sought an order in his favour in the
respect of his costs of the appeal. That was not a question in respect of which we reserved liberty to apply.
But the Court having not yet finally disposed of the appeal, we considered that we were able to consider the
application. In the event, we rejected it, ordering that Mr Phillips bear his own costs of the appeal.
15 Counsel for Mr Phillips submitted that his client had properly appeared on the appeal, seeking to maintain
the judgment. He submitted that, as the judgment had been lost by reason of the misconduct of senior
counsel for Bailey at trial, it was proper that Bailey or its counsel pay Mr Phillips’ costs of the appeal.
16 We agreed that it was proper for Mr Phillips to appear on the appeal, seeking to maintain the judgment;
for its effect was to relieve him of the risk of an adverse outcome in the third party proceedings. But we did
not agree, the appeal having succeeded for the reasons which it did, that Bailey or its trial counsel should
have to pay Mr Phillips’ costs. Again, we considered that the conduct of counsel at trial was relevant.
17 We understand that counsel for Mr Phillips was placed in a somewhat difficult position. As Redlich JA
observed in the course of argument, his client’s interests were effectively advantaged if each of the appellant
and his client was discredited. That provides an explanation, but not an excuse, for counsel not objecting to
some of the cross-examination, even though it effectively accused his client of fraudulent collusion with the
appellant.[2] We understand also that counsel may have wished, for forensic reasons, to keep a low profile at
trial. But all that said, the trial miscarried because, in significant part, an unwarranted allegation of collusion
was made against Mr Phillips; and because Bailey’s counsel, in final address, told objectionable anecdotes
which had as their starting-point the address by Mr Phillips’ counsel, and made the ‘ practice, practice,
practice, no doubt’ remark to which we referred in our reasons.[3] About each of those matters, Mr Phillips’
counsel at trial had remained silent. We could not accept, in the circumstances, that Mr Phillips was free of
blame for the fiasco which ensued. Moreover, on the appeal, for obvious forensic reasons, counsel for Mr
Phillips sought to resist the appellant’s claim that the conduct of Bailey’s counsel warranted a new trial. That
led to the conclusion that he should bear his own costs of the appeal, subject to the ameliorating effect of the
certificate which we had already granted him under the Appeal Costs Act 1998.
18 That takes us to the costs of the first trial.
19 When the matter was last before the Court we proposed, but subject to hearing argument, that the costs of
the first trial abide the result of the re-trial.
20 That is the order which counsel for Bailey submitted we should make. It is, Bailey submitted, the general
rule that an order in that form should be made, the rights of the parties not having been finally determined.
[4]
21 Counsel for the appellant and for Mr Phillips did not demur to that statement of principle. But they
submitted that where a party has caused a trial to miscarry, such party may be ordered to pay the costs of the
first trial. They further submitted that the circumstances of this case called for an order that Bailey, or its
senior counsel at trial, should pay their costs, respectively, of the first trial.
22 Counsel for the appellant sought not only that Bailey or its counsel pay the costs of the first trial, but that
such costs be payable on an indemnity basis. In response to a question asked by the Court, he argued that it
would be inappropriate that each party bear his or its own costs of the trial. That was because there had been
a ‘big difference’ in the conduct of counsel for Bailey and the appellant at trial. He submitted that it would
be a ‘jurisprudential low’ for this Court to equate failure to object with the positive acts which produced the
need for objection. It was not a ‘50/50’ situation. It would open the door to counsel misbehaving, without
sanction. He submitted also that it is difficult for counsel to be [seen to be] objecting all the time in a jury
trial.
23 Counsel for the appellant further submitted, in the alternative, that at very least Bailey should not have its
costs of the first trial in the event that his client failed on re-trial; and that his client should not have to pay
Mr Phillips’ costs of the first trial whatever be the result of the second trial.
24 Counsel for Mr Phillips argued, in support of his submission that Bailey or its counsel should pay his
client’s costs of the first trial, that whatever be the position in respect of the appellant’s costs of the first trial,
his client stood in a different position. The mistrial had been caused by the conduct of Bailey’s counsel, and
to lesser extent by the inadequate response of appellant’s counsel. He further submitted, in the alternative,
that at least Bailey should not be entitled to its costs of the first trial even if it prevailed on the re-trial.
25 The general rule to which we referred at [21] above is not in doubt. Neither is our discretion to make an
exceptional order such as the appellant and Mr Phillips primarily sought. Neither again do we doubt our
discretionary power to make orders of the kind alternatively sought by the appellant and Mr Phillips. But
orders of those different kinds do not exhaust the alternatives.[5] And in our opinion , on reflection, none of
the proposed alternative orders addressed the unique circumstances of this matter.
26 The trial miscarried predominantly because of the misconduct of senior counsel for Bailey. But, as we
said in our reasons, the conduct of senior counsel for the appellant permitted the misconduct of Bailey’s
counsel to have the effect which it did. Neither was counsel for Mr Phillips entirely free from blame.
27 Further, whilst it is true that in our reasons we made no finding that the conduct of Mr Phillips’ counsel
contributed to the need for re-trial, we did not need do so because it was extraneous to resolution of the
appeal. The essential issues for resolution were identification of the misconduct of senior counsel for Bailey,
evaluation of its gravity, and consideration of the appellant’s response – or lack of it. Looking, however, at
the matter in the context of costs - for present purposes, the costs of the first trial - it is relevant to consider
the conduct of Mr Phillips’ counsel at trial. We consider, as we have already said, that counsel was not free
of some degree of blame in the events which occurred. So much, indeed, is implicit in our description of
some of the events which occurred. We refer, for example, to matters first raised at paragraphs [17], [46],
[62], [67], [89] of our reasons.
28 In the event, in what were unique circumstances, the trial miscarried, in the first place, because of the
misconduct of senior counsel for the respondent. But no party was free of fault.
29 It seemed to us, in the circumstances, that it would have been unsatisfactory to apply the general rule. For
if we did so, the appellant or Bailey or Mr Phillips (in the last-mentioned case, depending on the fate of the
third party proceeding if it became relevant) would become liable for all the costs of the first trial. On the
other hand, the orders primarily sought by the appellant and Mr Phillips would in substance assign
responsibility for the mistrial solely to Bailey; and we considered that this would not reflect the true
situation.
30 We were attracted to the argument that the outcome of the second trial should not produce the result that
either the appellant or Mr Phillips should have to pay Bailey’s costs of the first trial. An order avoiding that
outcome would have recognised the fact that the contributions by the parties to the need for a re-trial were
not exactly the same. But we ultimately considered that each of the parties so contributed to the
unsatisfactory circumstances of the trial that it would be unjust, depending upon the outcome of the re-trial,
to require any one of them to bear the costs of the other parties. In the circumstances of this very unusual
case, we considered that the situation would best be met if we ordered that each party bear its own costs of
the first trial, thereby recognising the contribution by each party to the fiasco which occurred.
31 We rejected the submission for the appellant to the effect that such an order would inadequately reflect
the blameworthiness of respondent’s trial counsel and would encourage misconduct by counsel. As to the
first of those matters, we should say, inter alia, that both the costs of the appeal and of the first trial needed to
be considered; and Bailey has been ordered to pay a large proportion of the former. As to the second of
them, we considered that the order which we made reflected the unique circumstances of the matter. It
underlined the responsibility which counsel bears for ensuring that, despite an opponent’s misconduct, a trial
is not put at risk of miscarrying. In our collective experience of jury trials, there is no forensic disadvantage
in showing, by a series of well-founded objections, that opposing counsel has been conducting himself or
herself in breach of rules of evidence or practice, or has been making allegations of serious wrongdoing
without there being a basis for doing so. The order we made reflected the consequence of a failure to take
such objections, whether it be the result of forensic choice or for other reasons. We take leave to doubt that
this order or our reasons for decision could possibly provide any encouragement for counsel in a future trial
to conduct themselves in a fashion similar to counsel in the trial the subject of this appeal.
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[1] [2008] VSCA 244, [120].

[2] Insofar as Mr Phillips was attacked in cross-examination of the appellant, it was at least open to counsel
to have taken the matter up with the judge in the absence of the jury. For instance, some cross-examination
of the appellant was based upon a ‘without prejudice’ communication between the solicitors for Mr Phillips
and Bailey; whilst other cross-examination was founded upon a misstatement of one of Mr Phillips’ answers
to interrogatories.
[3] [2008] VSCA 244, [72].
[4] Citing Malpas v Malpas (1885) 11 VLR 670, 711; and Britain v Commonwealth (No 2) [2004] NSWCA
427, [30].
[5] See, for instance, Brownlie v Overend [1979] VR 283, where the costs of the first trial were confided to
the judge presiding at the retrial; and Cutts v Buckley [1933] HCA 21; (1933) 49 CLR 189, where, by
majority, the parties were ordered to pay their own costs of the first trial.