The civil lawyer

Stay for non-payment of interlocutory costs order - Rozenblit v Vainer [2017] VSCA 52

noreply@blogger.com (Unknown) — Tue, 09 May 2017 00:21:00 +0000

Although many interlocutory decisions result in orders for payment of costs that are to be taxed and paid at the conclusion of the proceedings (see R 63.20.1), every now and then there is an interlocutory decision made where costs are fixed and are payable forthwith (see R 63.03(2.1)). Whenever such a cost order is made, there is a chance that the party responsible for paying those costs will not pay, and there is a question about how to deal with compliance.

The primary option appears to be an application, under R 63.03(3), to stay or dismiss the proceeding (if the defaulting party is the plaintiff) or to strike out the defence (if the defaulting party is the defendant). Like R 63.20.1 this is a recent amendment to the Supreme Court Rules. The rule provides as follows:

[63.03](3) Where the Court makes an interlocutory order for costs, the Court may then or thereafter order that if the party liable to pay the costs fails to do so—
(a) if that party is the plaintiff, the proceeding shall be stayed or dismissed;
(b) if that party is a defendant, the defendant's defence shall be struck out.

However, the power is discretionary and it appears that the courts take a conservative approach to granting orders under this rule.

The matter of Rozenblit v Vainer [2017] VSCA 52 contains a neat summary, by Whelan and McLeish JJA, of the principles when a court will stay a proceeding for failure to pay a costs order made on an interlocutory decision, at [67]:

(a) a stay for failure to satisfy an order for costs in an interlocutory matter may only be ordered if it is the only fair and practical way of facilitating the just, efficient, timely and cost-effective resolution of the proceeding;
(b) justice between the parties requires regard to be had to the interests of the party in whose favour the costs were ordered to be paid;
(c) the parties’ conduct of the proceeding to date, and in particular the reasons for which costs were ordered to be taxed immediately, are relevant to the exercise of the power;
(d) a stay should not be ordered unless the conduct of the party in default warrants the condemnation inherent in such an order;
(e) the power is not to be used simply as a means of enforcing payment of the costs in question unless there are grounds for concluding that the party in default is recalcitrant and is capable of remedying the default.

The principles arose out of the case of Gao v Zhang [2005] VSCA 200, discussed by the Court of Appeal in Rozenblit v Vainer at [57]:

57 In Gao v Zhang, this Court upheld an order staying a proceeding pending payment of a series of costs orders. The plaintiff had harassed the defendant persistently with interlocutory applications over minor procedural matters, which were of progressively less merit over time.[51] In the course of his reasons, Ormiston JA (with whom Vincent JA agreed), said that it was necessary to ‘sound a word of warning lest it be thought that orders of this kind can be adopted as a dayto-day means of recovering costs ordered by the court’.[52] The power to stay the proceeding ‘ought not to be employed unless it is the only fair way of protecting the interests of the party seeking such an order’.[53] It was in that context that he described what was said by Dixon J in Cox v Journeaux [No 2] as the ‘basal principle’.[54]

Gao v Zhang was decided at a time when costs were able to be taxed immediately, and therefore a party could incur a substantial debt before the conclusion of the proceeding. As such, the Court of Appeal in Rozenblit v Vainer discussed whether the principles in Gao v Zhang still have application where, because of R 63.20.1, there are fewer circumstances where costs orders will be payable before the conclusion of a proceeding:

61 At the same time, the change in the Rules means that the power in r 63.03(3) now arises for exercise only in cases where the Court has already decided that something in the conduct of the proceeding has warranted the making of an order that costs ordered against a party in an interlocutory matter be taxed immediately. That factor cannot be overlooked. The fact that the Court has required that the costs in question be paid before the proceeding concludes indicates that the case is unusual. The Court’s reasons for imposing that requirement must therefore be taken into account.[60] But it remains the case that a stay should not be ordered simply to give effect to an interlocutory costs order that is taxable immediately. Such an order, after all, will give rise to a debt that may be able to be pursued by other means of enforcement.

62 The above analysis is consistent with the other relevant development since Gao v Zhang was decided: the enactment of the CPA. As is well-known, the Court is required, when exercising its powers under the Rules, to seek to give effect to the overarching purpose of the CPA, being ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’.[61]The grant of a stay represents the extreme case where the dispute is not to be resolved at all pending the meeting of a costs order. Consistently with the approach in Gao v Zhang, that circumstance can only arise when there is no other fair and practical way of ensuring justice between the parties.

That is, the approach remains the same because of the overarching purpose in section 7 of the Civil Procedure Act 2010 to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.

Update and refresher on offers of compromise in civil litigation

noreply@blogger.com (Unknown) — Tue, 23 Jun 2015 01:22:00 +0000

I recently presented a seminar to several audiences on offers of compromise under Order 26 of the Supreme Court (General Civil Procedure) Rules 2005, offers to settle under Order 25 of the Federal Court Rules 2011, and "Calderbank" offers under the common law.

The take-home message from this seminar is that the amendment to the offer of compromise rules in the Supreme Court of Victoria to allow cost inclusive offers (now consistent with the Federal Court Rules 2011) has made offers of compromise more attractive, and arguably better than "Calderbank" offers. This is particularly so when taking into account the onus of proof for each: an offeree for an offer of compromise needs to prove "special circumstances" that demonstrate why an offer of compromise should not apply, whereas an offeror needs to prove that it was unreasonable for the offeree to have rejected a "Calderbank" Offer. That is, it is much easier for an offeror to obtain a costs benefit from an offer of compromise than from a "Calderbank" Offer, where the offer has bettered the result.

I've included below the Slides from the seminar, embedded from Slideshare.

I hope you find the slides informative and helpful.

2015 amendment: Victorian Supreme Court Rules jettison old summary judgment test

noreply@blogger.com (Unknown) — Thu, 18 Jun 2015 05:10:00 +0000

As of 4 May 2015 the Supreme Court (General Civil Procedure) Rules 2005 were amended by the Supreme Court (Chapter I Summary Judgment Amendment) Rules 2015.

These amendments made important revisions to the Rules including:

To revise Order 22 to facilitate the new test for summary judgment in Part 4.4 of the Civil Procedure Act 2010 ("no real prospects of success"), and to maintain most of the previous procedure for making application for summary judgment (that is, to show cause in response).
To remove from the scope of Rule 23.01 ("Stay or Judgment in proceeding") the ground that a claim or defence does not disclose a cause of action.
To revoke Rule 23.03 altogether, which provided for summary judgment where the defendant has a good defence on the merits.

The summary judgment amendment was necessary because of the uncertainty of the process of obtaining summary judgment under Part 4.4 of the Civil Procedure Act 2010, including the interaction of Part 4.4 with the previous Order 22. For instance, Part 4.4 contains no requirement for a responding affidavit to show cause, nor does it require a particular standard of evidence in support of the application. The application of the procedures in Order 22 to Part 4.4, prior to the amendment, was unclear. The result was that it was possible to circumvent the strict requirements for summary judgment in Order 22 by making application under Part 4.4 of the Civil Procedure Act 2010 which arguably contains a more liberal test for obtaining summary judgment (see Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158).

Now Order 22 seeks to facilitate summary judgment under Part 4.4, in the following manner:

it sets out what is required in a supporting affidavit, that is, verifying the facts and stating in the deponent's belief that the claim or defence has no real prospects of success;
it sets out the evidentiary requirements for affidavit material in support of an application;
it sets out a requirement for the respondent to show cause not less than 3 days before the hearing in the summons;
it sets out the evidentiary requirements in showing cause;
it allows cross-examination on the affidavit material;
it provides for directions to be given where the application is not fruitful;
it contains a provision for setting aside the judgment where there is no appearance by the respondent; and
it sets out a process for third party procedure applications.

Vexatious Proceedings Act 2014 (Vic): the three tiers of litigation restraint

noreply@blogger.com (Unknown) — Sun, 07 Dec 2014 22:54:00 +0000

The Vexatious Proceedings Act 2014 (Vic) (the "Act") commenced on 31 October 2014, and repeals the previous single-tier system for dealing with vexatious litigants in (the then) s21 Supreme Court Act 1986 (Vic).

Purpose and background to the Act

The purpose of the Act and the summary of the powers given to Victorian courts and the Victorian Civil and Administrative Tribunal ("VCAT") are set out in the explanatory memorandum to the Bill as follows:

The [Act] introduces a new regime for the management and prevention of vexatious litigation in Victorian courts and tribunals. The [Act] aims to improve the effectiveness of the justice system by ensuring that unmeritorious litigation is disposed of at an early stage and that persons are prevented from wasting court time with further unmeritorious cases. This will allow court and judicial resources to be allocated to the determination of meritorious cases, which will reduce delays in the court system for other pending matters.

The [Act] enables the Supreme Court, the County Court, the Magistrates' Court and VCAT to make various types of "litigation restraint orders", which increase in severity in accordance with a person's litigation history and pattern of vexatious behaviour. The Children's Court is also given the power to make litigation restraint orders, but only in relation to litigation conducted under the intervention order legislation. The tiered approach to litigation restraint orders promotes early intervention and aims to provide flexibility for the Courts and VCAT to adopt a proportionate response to a person's conduct.

An extract from the legislative guide to the Act published by the Civil Law Policy division of the Department of Justice notes that a 2008 Victorian Parliamentary Law Reform Committee conducted an inquiry into vexatious litigants, and found:

that, although small in number, vexatious litigants consume a disproportionate amount of court and tribunal time and resources, which creates delays in the courts and reduces access to justice for other members of the community with meritorious claims. The Committee also found that vexatious litigants can have a significant financial and emotional impact on the people they sue.

For example, one vexatious litigant brought 77 separate civil and criminal proceedings over an 11-year period. Many of these proceedings were private prosecutions attempting to summon grand juries to hear treason charges against judicial officers, government ministers and other public officials. Despite the fact that these allegations were completely lacking in substance, considerable court time was required to hear and ultimately dismiss the claims. This not only caused embarrassment, inconvenience and expense to those involved in the proceedings (who were required to spend time and money in contesting the baseless allegations), but it also created delays in the court system for other litigants with genuine claims.

Summary of the Act's provisions

The Act empowers all Courts and VCAT to make a form of litigation restraint order ("LRO"). Altogether there are three types of litigation restraint order, including the Limited Litigation Restraint Order ("LLRO"), the Extended Litigation Restraint Order ("ELRO") and the General Litigation Restraint Order ("GLRO"). In this article and in the Act they are presented in order of increasing breadth and severity, with the LLRO (Part 2) restricting the issue of interlocutory proceedings, the ELRO (Part 3) restricting the issue of litigation in respect of a particular matter or against a particular person, and the GLRO (Part 4) restricting all litigation without leave. There are also associated orders, including an acting in concert order that seeks to prevent a person from acting in concert with a person the subject of a LRO (Part 5) and an appeal restriction order restricting the right to appeal a decision to refuse leave to proceed (Part 6). The Act aligns the existing regimes in relation to vexatious litigants under the intervention order legislation, including the Family Violence Protection Act 2008 and the Personal Safety Intervention Orders Act 2010.

The central definitions in the Act are "vexatious application" and "vexatious proceeding" that are defined in s3 as:

(a) an interlocutory application / proceeding that is an abuse of the process of a court or tribunal;

(b) an interlocutory application made / proceeding commenced to harass or annoy, to cause delay or detriment, or for another wrongful purpose;

(c) an interlocutory application made or pursued / proceeding commenced or pursued without reasonable ground;

(d) an interlocutory application pursued / proceeding conducted in a way so as to harass or annoy, cause delay or detriment, or achieve another wrongful purpose;

The definitions are then applied to the relevant available orders throughout the Act.

A summary of each type of order, including relevant sections of the Act, is set out below.

LLRO:

It is directed at preventing a person from making or continuing an interlocutory application, or a specified type of an interlocutory application, in a proceeding (s12).
It may be applied for by the Attorney-General, a person against whom a vexatious application has been made or a person with sufficient interest in the matter (s10).
It may be made by any court or VCAT if satisfied that the person, who is a party to a proceeding, has made two or more interlocutory applications in the proceeding and the interlocutory applications are vexatious applications (s11).
When making a LLRO, a Court or VCAT can take into account any matter it considers relevant including any interlocutory application made by the person or an entity controlled by the person in any Australian court or tribunal, the existence of a LRO or associated order against the person, and any other matter relating to the way in which the person conducts or has conducted litigation (s11).
An interlocutory application to which the order relates is stayed, or if made in contravention of the order, is of no effect (s13).
The making of a LLRO in respect of a proceeding does not affect the person's right to make or continue an interlocutory proceeding in another proceeding in a Victorian court or tribunal or to commence or continue another proceeding in a Victorian court or tribunal (s14).

ELRO:

An ELRO issued by the Supreme Court of Victoria against a person may restrict the commencement or continuation of a proceeding in any Victorian court or tribunal in respect of a matter, person, or entity described in the order (s20), and issued by another jurisdiction is restricted to that jurisdiction only (s21, s22, s23, s24).
An ELRO may be applied for by the Attorney-General, a person against whom a vexatious proceeding has been commenced or continued, or a person with sufficient interest in the matter (s16).
It may be made by any court or VCAT if satisfied that the person has frequently commenced or conducted vexatious proceedings against a person or other entity or in relation to a matter (s17).
A proceeding the subject of an ELRO is either stayed, or if commenced in contravention of the order, is of no effect (s25).
A proceeding issued by a person in respect of a matter, person, or entity not specified in an ELRO is not affected by the ELRO (s26).
With the exception of the Supreme Court, a proceeding issued in a jurisdiction that did not issue the ELRO is not affected by the ELRO (s26).

GLRO:

It restricts the continuation or commencement of any proceeding in a Victorian court or tribunal without leave of either the Supreme Court or the Victorian court or tribunal in which the proceeding is being heard (s30).
It may only be applied for by the Attorney-General (s28).
It may only be made by a Judge of the Supreme Court of Victoria (s29).
It may only be made if the Judge is satisfied that the person has persistently and without reasonable grounds commenced or conducted vexatious proceedings (s29).
The Judge may take into account any matter he or she considers relevant including any proceeding commenced or conducted by the person or an entity controlled by the person in any Australian court or tribunal, the existence of an LRO or associated order against the person or any other matter relating to the way in which the person conducts or has conducted litigation (s29).
It stays a proceeding the subject of the GLRO and renders of no effect a proceeding commenced in contravention of the GLRO (s32).

Acting in concert order:

It may be applied for by a person who applied for a LRO to which the other person is subject, or by a person named in an interlocutory application or a proceeding that, if made or commenced by the person subject to the LRO, would contravene the terms of the LRO (s34).
A number of orders may be made by a court or VCAT including a LRO on the same terms as the person with whom the person is acting in concert, that the interlocutory proceeding is struck out or the proceeding stayed and that costs are payable (s35).
A GLRO is not available for an acting in concert order (s35).

Appeal restriction order:

It restricts a person from making an appeal against a decision of a court or tribunal either refusing leave to make or continue an interlocutory application or refusing leave to commence or continue a proceeding (s37).
An order made by the Supreme Court relates to all courts or tribunals and an order made by a court or tribunal other than the Supreme Court relates to that court or tribunal only (s37, s38).
It stays an application for leave to appeal and renders an application for leave to appeal made in contravention of the order of no effect (s40).

Leave to proceed where an LRO is in force

A person must obtain leave to proceed if a proceeding or interlocutory application is sought to be made that would otherwise contravene the relevant LRO. That person must disclose matters relevant to the application, including his or her history of leave to proceed applications, a history of each interlocutory application or proceeding commenced that is vexatious or which has been stayed or dismissed on the basis that each has no merit, and an explanation of how the application for leave to proceed is materially different to each application previously made and disclosed (s56).

With the exception of an ELRO made under the intervention order legislation, a person protected by the LRO (including the person who made the LRO to which the application for leave relates or the person named in the interlocutory application or proceeding to which the application for leave relates) must not be given notice of a leave application by a person the subject to a LRO unless the relevant court or VCAT considers that leave to proceed should be granted (s59, s60). In the event that notice is given, that person may be heard (s62). An application for leave to proceed is determined by written submissions or by oral hearing and an oral hearing is required only if there are exceptional circumstances and it is appropriate to do so in the interests of justice (s63).

Discussion

Given the new system provides a lowered threshold for obtaining a LRO, it will be interesting to see the use and threatened use of the LRO in proceedings. For instance, where there is an ongoing discovery battle in a proceeding where, on one view, a party is unwilling to hand over documents and the other party is bombarding that party with applications for further and better discovery, will a threat to obtain an ELRO by the respondent to those proceeding arise? The definition of "vexatious application" does not appear to be cumulative, so such an application (on the respondent's view) may justifiably be regarded as a proceeding made or pursued to "harass or annoy, cause delay or detriment, or achieve another wrongful purpose". Whether or not the threat is justified, a LRO could become another tool to seek to subjugate the other party in litigation, like allegations of breaches of overarching obligations, threats of indemnity costs and threats of personal cost orders against legal practitioners.

Of course, there are likely to be significant efficiencies made by the enactment of this Act, given the examples provided in the legislative guide to the Act and the lowering of the threshold. If this sort of vexatious litigation is restricted, then the courts, VCAT and the parties to proceedings in those jurisdictions are likely to benefit.

On another topic, it makes sense that a person protected by a LRO is not bothered by applications for leave to proceed, since a vexatious litigant who is prone to issuing multiple vexatious proceedings would also be prone to issuing multiple applications for leave to proceed. However, it is unclear whether the balance is correctly struck in not giving the person protected by a LRO a right to be heard before the court has made its mind up. That is, the Act requires disclosure by the person the subject of the LRO of the various matters that are relevant for the leave to proceed application, and a court or VCAT can decide a leave to proceed application on the basis of that material alone without having heard from the person protected by the LRO. Also, the Act expresses a preference for determination to occur on written submissions and without an oral hearing.

The author, like many others, looks forward to reading the first case published under the Act to see how it works in practice.

2014 Victorian Civil Appeal Reforms: requirement for leave to appeal, new time limits, and no entitlement to an oral hearing

noreply@blogger.com (Unknown) — Thu, 20 Nov 2014 23:46:00 +0000

The Courts Legislation (Miscellaneous Amendments) Act 2014 implemented changes to the Supreme Court Act 1986 (Vic) that include a requirement for leave to appeal for all civil appeals, with limited exceptions, and there is no entitlement to an oral hearing for leave to appeal. The changes commenced on 10 November 2014, and the Supreme Court (General Civil Procedure) Rules 2005 were amended also.

These reforms follow the criminal appeal "Ashley-Venne" reforms in 2011, which implemented a leave to appeal requirement. The Court of Appeal has reported (see link to "Revised Instruction to the Profession and Litigants" here) that the criminal appeal reforms requiring leave in all cases have enabled the Court of Appeal to expedite dramatically the hearing of criminal appeals, and it is considered that similar efficiencies can be gained for civil appeals by implementing a leave to appeal requirement also.

The essential features of the new civil appeals regime are set out in the document "Revised Instruction to the Profession and Litigants: Court of Appeal: Proposed New Regime for Civil Appeals and Applications", which was recently published by the Supreme Court of Victoria. This is extracted below, and the author of this article has added the relevant section and rule references in square parentheses, for ease of reference:

With few exceptions (appeals against refusal to grant habeas corpus and appeals under the Serious Sex Offenders (Detention and Supervision) Act 2009) leave to appeal will be required for all appeals [s14A]. Leave to appeal will be granted only if the Court is satisfied there is a real prospect of success on the appeal [s14C].
Appeals and applications for leave to appeal will be commenced by filing rather than service [s14B, r64.05]. Service is to take place after the appeal or application, and other required documents, are accepted for filing by the Registrar and a sealed copy of the application for leave to appeal, or appeal, has been returned by the Court.
The time for initiating applications for leave and appeals will be standardised to 28 days [s14B; r64.05].
An applicant for leave, or appellant, will be required to file a written case (10 pages maximum unless otherwise permitted in advance) with the application for leave, or appeal, setting out the detailed contentions in support of the grounds [r64.01; r64.03; r64.04]. An applicant for leave must address the merits of the application and the appeal [r64.04].
A respondent will have 28 days to file and serve a written case in response, or file a notice of intention not to respond or contest [r64.11].
A respondent will also have 28 days in which to file a cross-application for leave to appeal, or cross-appeal, and accompanying written case and/or a notice of contention and accompanying written case [r64.30; r64.31]. Service of a cross-application for leave to appeal, or a cross-appeal, is to take place after the application or appeal, and other required documents, are accepted for filing by the Registrar and a sealed copy of the cross-application for leave to appeal, or cross-appeal, has been returned by the Court.
Applications, other than for leave to appeal, will continue to be commenced by filing an application supported by affidavit and submissions [r64.03]
Greater capacity for a single judge to determine applications, including for leave to appeal, and on the papers without an oral hearing [s14D; r64.40]. There will be no entitlement to an oral hearing and whether there will be an oral hearing will be the decision of the Court [s14D; r64.15].
Where an application for leave to appeal is determined without an oral hearing the applicant can apply to two or more judges to set aside or vary a dismissal of the application, unless the single judge has also determined that the application is totally without merit in which case the determination on the papers is final [s14D; r64.15]. Such applications to set aside or vary a dismissal of an application will be by way of oral hearing and be determined on the basis of the materials filed prior to the decision to dismiss the application and any additional documents ordered by the Court or the Registrar [s14D; r64.18]. To rely on further material the Court’s leave will be required [s14D; r64.18].
Applications determined on the papers will be final, other than applications for leave to appeal, and it will not be possible to apply to set aside or vary a dismissal of such an application, whether determined on the papers or by way of oral hearing. There will be an exception for ex parte orders.
More intense Registry management of applications and appeals, including early assessment of applications and appeals, and communication with the parties to establish a timetable and making of orders and directions to prepare applications for hearing, or determination by the Court on the papers, and to prepare appeals for hearing.
As appeals will require the leave of the Court, applications for leave will be streamed so that applications for leave to appeal will be listed either with the hearing of the appeal or listed separately, with an appeal being listed at a later date, if leave is granted.
An emphasis on electronic filing wherever possible.
Greater compliance with Court orders. In particular, subject to the Court’s order, if applicant or appellant fails to comply with a direction or order for a month or longer the application or appeal will be taken to be abandoned [r64.45].
The ability of the Court, on its own motion, or for a party, to apply for dismissal of an application or appeal [r64.46]

The Victorian Bar hosted a seminar on 20 October 2014 in which Judicial and Administrative members of the Court of Appeal discussed the civil appeal reforms. Click here for the video presentation (note - only members of the Victorian Bar can access this video).

The most contentious aspects of these reforms are:

The perceived abrogation of the right of appeal, which has been replaced with a requirement for leave to appeal.
A leave to appeal application can be determined "on the papers" by a single Judge and without an oral hearing.

Given applications for leave to appeal can be determined on the papers and without an oral hearing, when a single Judge of Appeal is making an order refusing leave to appeal in part or in whole, including determining that the application for leave to appeal is totally without merit, it is expected that the giving of the order includes the giving of reasons. This is not expressed in the Rules, but in the author's view is the only logical construction of the rules in circumstances where the order dismissing the application can be determined in the absence of the parties, and subsequently set aside or varied under s14D/r64.18 before two Judges of the Court of Appeal. Also, this construction would be consistent with s24 of the Charter of Human Rights and Responsibilities Act 2006 (Vic).

Recent Victorian Offer of Compromise reform: costs inclusiveness, claim failure, pre-litigation offers and other changes

noreply@blogger.com (Unknown) — Thu, 07 Aug 2014 03:09:00 +0000

The Magistrates' Court General Civil Procedure (Offers of Compromise Amendments) Rules 2014 bring the rules on offers of compromise in the Magistrates' Court of Victoria ("MCV") largely into alignment with the Supreme Court of Victoria ("VSC") and County Court of Victoria ("CCV") rules on offers of compromise. This amendment commenced on 1 August 2014. The VSC and CCV rules were amended on 1 September 2013 and 7 October 2013 respectively.

Summary of the reform

By way of summary, the rule amendments for all Victorian Courts implement the following significant changes to Order 26 which concerns offers of compromise:

Offers of compromise shall be either expressed to be inclusive of costs, or costs are to be paid or received in addition to the offer (r26.02(3)).
An acceptance of an offer of compromise may may be withdrawn if the money is not paid within the time specified in the offer or within 28 (SCV/CCV)/30(MCV) days after acceptance of the offer and the court gives leave to do so. A party seeking leave may also seek orders to restore the parties to their position at the time of acceptance and as to the further conduct of the proceeding (r26.07)
If a party defaults in complying with the offer after its acceptance, a non-defaulting party may apply to the court for an order giving effect to the offer, an order staying or dismissing the proceeding if the plaintiff is in default, an order striking out the defendant's defence if the defendant is in default or an order that a claim, not the subject of the offer, shall proceed (r26.07.1). Where there are multiple defendants this rule is limited to where the offer is made to compromise the claim against all defendants (r26.07.2).
The consequences of non-acceptance commence at 11am on the second business day after the offer was served, instead of the day after the offer was served (r26.08).
Where an offer of compromise is made by a defendant and the plaintiff "unreasonably fails to accept the offer" and the claim is dismissed or judgment is entered in favour of the defendant, then, unless the court otherwise orders, the defendant shall be entitled to costs on the usual basis up until 11am on the second business day after the offer was served, and thereafter on an indemnity basis (CCV/SCV)/25% increase on the applicable scale (MCV) (r26.04(4)). The operation of this rule has already been considered, noted below.
The court can take into account pre-litigation offers in exercising its discretion as to costs, provided the offer was open to be accepted for a period of at least 7 days after the offer was made and the offeror obtains an order no less favourable to the offeror than the terms of the offer (r26.08.1).
Offers of compromise are extended to "contributor parties" that may be held liable to contribute towards an amount of debt or damages. A contributor party may make an offer to another contributor party to contribute, to a specified extent, to the amount of the debt or damages. If the offer is made and not accepted, and the offeror obtains an order against the offeree more favourable than the terms of the offer, then unless the court otherwise orders, the offeror is entitled to an order that the offeree pays the offeror's costs on the usual basis up until 11am on the second business day after the offer was served, and thereafter on an indemnity basis (SCV/CCV)/25% increase on the applicable scale (MCV) (r26.10).
Transitional provisions provide that the amendments do not have retrospective effect, and the previous provisions apply to offers of compromise served when the previous provisions were applicable (r26.11).

Click here for the VSC amending legislation (Supreme Court (Chapter I Offers of Compromise Amendments) Rules 2013), here for the CCV amending legislation (County Court (Chapter I Amendment No. 8) Rules 2013) and here for the MCV amending legislation (Magistrates' Court General Civil Procedure (Offers of Compromise Amendments) Rules 2014) from the Victorian Parliament website.

These amendments follow the suggestion by the Victorian Law Reform Commission in its 2008 "Civil Justice Review" Report for the Costs Council to review the rules relating to offers of compromise, and a 2012 consultation process between the Civil Procedure Advisory Group and various industry stakeholders.

Consequences on failure of a claim where there is an offer by a defendant

In Smith v Jovanoska & Anor (No. 2) [2013] VSC 714 the Supreme Court of Victoria considered the new r26.04(4), which provides for cost consequences on a dismissal of a claim where an offer was served by a defendant and the plaintiff unreasonably fails to accept the offer. There, an offer of compromise was served by the first defendant offering to pay the plaintiff $40,000 inclusive of costs. It is not made clear from the decision, but it can be reasonably assumed, that the outcome of the case is that the plaintiff failed in the claim.

There, Zammit AsJ held that the considerations for "Calderbank" offers (see Calderbank v Calderbank [1975] 3 WLR 586) set out in the matter of Hazeldene’s Chicken Farm v Victorian WorkCover Authority (No 2) [2005] VSCA 298 ("Hazeldene's") are applicable to an offer of compromise under this new provision, and ordered that the plaintiff pay the first defendant's costs from the second business day after the offer was served on an indemnity basis. By way of recap, the matters a court is to have regard to, from Hazeldene's, are as follows:

(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the offer of compromise;
(d) the offeree’s prospects of success as assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.

In Smith, the offer was served late in the proceeding, after mediation and before trial. These facts were decisive in the outcome.

Discussion

Since the reform allows cost inclusive offers, this may have the effect of displacing the "Calderbank" offer as the offer of first resort, since a "Calderbank" offer has the disadvantage of requiring the offeror to prove that the rejection of the offer was unreasonable. However, there is still a benefit in making an offer "plus costs", because where an offer is made "plus costs" it is much easier for the court to assess whether the result is more or less favourable than the offer. This is because where an offer is made "plus costs" there doesn't need to be an assessment of what the costs would have been at the date of the offer.

The inclusion of contributor parties will make offers of compromise more attractive to complex multi-party disputes, such as building and insurance disputes. However, the language of this provision appears convoluted and this may give rise to some disagreement about what sort of parties are intended to be captured by this provision. For instance, is this intended to apply to apportionable claims under Part IVAA Wrongs Act 1958, or contribution proceedings under Part IV Wrongs Act 1958, or both?

Recent (2014) discovery amendments to the Civil Procedure Act 2010 (Vic)

noreply@blogger.com (Unknown) — Fri, 01 Aug 2014 06:30:00 +0000

The Justice Legislation Amendment (Discovery, Disclosure and Other Matters) Act 2014 (Vic) was given Royal Asset on 8 April 2014, and amends the Civil Procedure Act 2010 (Vic) (the "CPA"). The amendments mainly concern document management in the discovery process.

Click here for the link to the Explanatory Memorandum.

Click here for the link to the Justice Legislation Amendment (Discovery, Disclosure and Other Matters) Act 2014.

The amending legislation does the following to the CPA:

It gives a court power to order parties to prepare a statement of issues, which may be used for many purposes including discovery (ss50 and 50A).
It gives a court power to give directions limiting the obligation of discovery to a class or classes of documents or to documents relating to one or more specified facts or issues in dispute (s55(2)(c)).
It gives a court power to order a party to pay a specified amount to another party in relation to the costs of discovery, including by way of payment in advance or as costs in the proceeding (s55(4) and (5)).
It gives the court power, on consent of the parties, to give over all documents in that party's possession or control, on the basis that privilege is not waived (s55A).
It gives the court power to order a party to provide an affidavit of document management, including details of the volume or location of discoverable documents, the way the documents are arranged or stored, or the party's document management processes more generally (s55B).
It gives the court power to order oral examination of a deponent of an affidavit of document management or another appropriate person who is able to provide information about the matters in the affidavit (s55C).

The amendments relating to discovery are novel, and reflect the increasing need for proper document management and the kind of document management processes. The purpose of the amendments, expressed in the Explanatory Memorandum, is:

[T]o ensure that the courts, parties and legal practitioners are using appropriate tools to reduce the costs and delays associated with the discovery process, for example by more clearly defining the issues in dispute, considering document management issues prior to undertaking discovery, and limiting the scope of discovery requests.

The amendment that allows a party to hand over all of its documents and maintain privilege is a method used in large-scale litigation where it is considered too onerous for a party to wade through millions of documents to extract privileged and irrelevant documents. Of course, the risk of agreeing to this kind of order is that once a document is seen, it cannot be unseen. On the other hand, this sort of order may avoid the kind of extreme satellite litigation that occurred in the recent High Court of Australia decision of Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 303 ALR 199. There, a party inadvertently discovered and produced 13 documents because of errors made in a large and complex discovery process, and the opposing party refused to return them. The discovery dispute started in the New South Wales Supreme Court, then went to the Court of Appeal, and then on to the High Court.

This is the sort of balancing exercise the Court and the parties will need to engage in when considering this kind of order, in light of the overarching purpose to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute (CPA, s7).

Receiver's access to intermingled company documents, and confidentiality regimes: Re Kavia Holdings [2013] NSWSC 1269 and Hall v Sherman [2001] NSWSC 810

noreply@blogger.com (Unknown) — Sat, 07 Jun 2014 03:20:00 +0000

In the matter of Kavia Holdings Pty Limited (Administrators Appointed) (Receivers and Managers appointed) & Ors [2013] NSWSC 1269 ("Kavia") concerned a claim by receivers for books and records held by a director of a company in administration, in particular, emails held by a defendant director. There, the director refused to provide emails on the basis that the emails sent by him as director were intermingled with emails sent by him as a solicitor in his own capacity, and those emails may contain privileged communications.

There was resistance in providing the emails, relying on the decision in Hall v Sherman [2001] NSWSC 810.

Hall v Sherman concerned the One.Tel group of telecommunications companies. Administrators were appointed to the parent company and most of the subsidiaries, and they were appointed liquidators when the creditors resolved the group be wound up. Certain subsidiaries of the group had a receiver and manager appointed to them, and the receiver and manager sought documents from the liquidators. The evidence was that it was difficult to determine whether any given document belonged to the parent or another company, and there were around 1400 boxes of intermingled documents. The receiver and manager said that the non-provision of documents was impeding his function. Austin J held that books of the company, to which the receiver and manager was entitled under the appointment deed and s420 Corporations Act 2001 (Cth), meant books belonging to the company, rather than books relating to the company ([70] and [71]). Further, in respect of a declaration sought by the receiver that it be entitled to possession of the books of the company, Austin J considered this order futile, and identified the real controversy in the matter as not who had a right to documents, but instead ([62]):

The real controversy between the parties in this case, in my opinion, is not at all about whether the plaintiff is entitled to possession of documents belonging to Network Group companies; it is about the practical problem of how to classify documents, given the mass of documents involved, and who is to pay for the cost of doing so.

In respect of a right of inspection of the books and records of the companies, Austin J considered that it would not be appropriate ([77]):

by declaration or order, to impose on the liquidators the duty, either immediately or in the future, of trawling through tens of thousands of documents to ascertain which documents were books of the corporation to which the plaintiff's statutory right would attach.

The end result is that the Court did not grant the receiver and manager orders giving access to the books and records of the company, despite his right, in the appointment deed and the Corporations Act 2001, to the books and records.

In Kavia, Bergin CJ in Equity allowed access to the emails of the director, even though there was a risk that it contained emails in his capacity as a solicitor. The effect of this result is that Hall v Sherman does not stand in the way of a mechanism put in place, with the appropriate confidentiality regime, to ensure that the books and records of the companies are produced ([40]):

The only outstanding express resistance to production is in respect of Mr Crawley's emails. The defendants submitted that because Mr Crawley utilised the email account of his legal practice and intermingled the Companies' emails with those of the legal practice, the defendants are not obliged to produce them to the plaintiffs. I do not accept this submission. There is no doubt that mechanisms can be put in place, with the appropriate confidentiality regime, if necessary, to ensure that the books and records of the Companies are produced from the email account in which the Companies' records were created.

That is, provided one party (most likely an official liquidator, being an officer of the court) is giving confidentiality undertakings in respect of books and records that may not belong to the company to which he or she is appointed receiver or manager, then this may be an impediment to that party having access to the intermingled group books and records.

Inadvertent production of confidential documents: ERA v Armstrong (2013) 303 ALR 199

noreply@blogger.com (Unknown) — Mon, 12 May 2014 23:40:00 +0000

At present the New South Wales, Queensland, South Australia and Western Australia Solicitors’ Rules require the return of documents to an opponent where there is inadvertent disclosure of confidential documents. The High Court recently commented that such a rule should not be necessary as “in the not too distant past it was understood that acting in this way obviates unnecessary and costly interlocutory applications” (Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 303 ALR 199 (“ERA v Armstrong”))

In ERA v Armstrong a firm of solicitors, Norton Rose, gave general discovery on behalf of a client. This included 13 documents that the client intended to claim privilege over, but which were inadvertently listed as non-privileged and produced for inspection. The error appeared to result from a mistake in the process of reviewing and identifying documents in large-scale discovery. On receipt of the documents Marque Lawyers sent a letter to Norton Rose stating that there was an inconsistency in the discovery as some communications were disclosed, but others were the subject of a claim for privilege. Norton Rose wrote to Marque Lawyers stating that the production was a mistake and requested the documents be returned. Marque Lawyers refused to return the documents and said that any privilege attaching to them had been waived.

Marque Lawyers was successful in the New South Wales Supreme Court and Court of Appeal. On appeal the High Court of Australia unanimously ordered the return of the documents to Norton Rose. The High Court noted that times have changed since the decision of Slade LJ in Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027 at 1044. and case management concerns, including specific case management powers in the rules (in ERA v Armstrong, the CPA NSW ss 56, 57, 58 and 59) now give courts the power to order the return of the documents to further the “overriding purpose”, that is, the just, quick and cheap resolution of the real issues in the dispute or proceedings (ERA v Armstrong, [56], [57]). The High Court considered the pursuit of satellite interlocutory proceedings, in circumstances where the discovery dispute was a minor issue and offered very little advantage to the recipient, would not fulfill the overriding purpose and is the kind of conduct to be avoided (ERA v Armstrong, [59]). Also, a mistake had been made and this fact was not disputed. As such, there was no question of waiver sufficient to be agitated, and it was necessary that the mistake be corrected and the parties continue with their preparation for trial (ERA v Armstrong, [60] - [63]).

Expert determinations and procedural fairness: Glenvill Projects v North North Melbourne [2013] VSC 717

noreply@blogger.com (Unknown) — Tue, 04 Mar 2014 00:30:00 +0000

In Glenvill Projects Pty Ltd & Ors v North North Melbourne Pty Ltd & Ors [2013] VSC 71 a claimant in an expert determination challenged an interlocutory decision of the expert to refuse the claimant leave to amend its claim. After discussing the nature and purpose of expert determination, and construing the contract between the parties and the expert, the Court held that the expert did not err.

Facts

A dispute between an owner of a residential building and the builder was referred to expert determination. The builder alleged that it was entitled to liquidated damages arising out of the failure of the owner to deliver the site to the builder with utility services connected.

Late in the expert determination process, and after exchange of submissions and affidavits, the builder sought to amend its claim, alleging that liquidated damages were also payable because of other matters unrelated to the failure to provide utility services. The expert’s terms of engagement with the parties to the building contract provided, among other things, that any dispute arising between the parties in respect of the expert determination process was to be determined by the expert.

The expert disallowed the proposed amendment because:

the owner refused consent to it;
he considered it was not within the scope of the referral; and
he considered that the process would need to be recommenced with fresh submissions.

There were terms of the building contract including:

the decision of the expert is final and binding in the absence of manifest error; and
the expert must decide the dispute acting as an expert and not an arbitrator.

The builder submitted to the expert that if leave to amend was not granted, it would be compelled to commence further proceedings, either by way of another expert determination, or by issuing in VCAT or the Courts. It contended that this would result in a multiplicity of proceedings and the risk of inconsistent finding or issue estoppel.

The builder submitted to the court that because the expert disallowed the proposed amendment, there was a manifest error within the meaning of the building contract because the amendment was within the scope of the expert determination referral, and also because the expert denied the builder a proper opportunity to put its case.

Decision

Vickery J analysed the law concerning the role of an expert. A summary of the analysis (at [45], [46], [56] and [57]) follows:

The activities of an expert are subject to little control of the court, save as to jurisdiction or departure from the mandate given.
A referral to an expert usually arises because the parties desire a particular body of expert experience, learning, skill and judgment to be applied to the resolution of defined issues that may arise in the course of the relationship and need to be dealt with.
The problem solving role is usually intended to be applied in a manner which is untrammelled by overly restrictive procedural considerations, so that the specialist skills and insights of the expert can be fully applied to the issues for resolution, in an expeditious and cost effective manner which is attended with an appropriate measure of finality.
There is no obligation to give procedural fairness in the absence of an express contractual provision.
Parties who by the terms of their contract agree to submit a question to an independent expert are bound by the determination of that expert acting honestly and in good faith.
Mistake or error in the process of the determination will not invalidate a decision as long as it is made in accordance with the terms of the agreement.

Vickery J noted that how the expert went about making the determination was in the hands of the expert subject to the terms of the expert’s terms of engagement, which in this instance was comprised of the IAMA Rules and a preliminary conference agenda. His Honour construed the expert’s terms of engagement in light of its commercial context, particularly the reasons for submitting disputes to experts set out in the analysis summarised above.

His Honour considered that the IAMA rules conferred the following important procedural processes to be determined by the expert:

defining the issues in dispute; and
appropriate procedures for determination of those issues.

Vickery J reviewed the reasons of the expert for refusing leave to amend and held that there was no error of law manifest in those reasons. Further, His Honour held that the expert did not deny the builder procedural fairness, and it was within the expert’s power to reject the application for the reasons given.

Finally, Vickery J noted that the only remedies available to the builder would be contractual in nature, limited to discretionary declaratory relief. His Honour held that specific performance would not be appropriate as the process to be followed is left to the expert’s discretion within the broad parameters of the Expert’s terms of engagement. Further, His Honour noted that administrative law remedies would not be available for a contractual appointment.

Discussion

The decision is important because it highlights the distinction between arbitrations on the one hand and expert determination on the other. The arbitration process is a quasi-judicial process whereas the expert determination process is governed by the expert within the parameters of his terms of engagement.

In this matter the builder also contended that although the dispute resolution process prescribed in the building contract was described as an expert determination, it was in effect an arbitration in the sense that the expert was being asked to hear and resolve opposing contentions.

The Court construed the terms of the Expert’s terms of engagement and found that, irrespective of the expert’s role appearing to be similar to an arbitrator, the process was governed by the building contract and the Expert’s terms of engagement.

Electronic court books, and running trials electronically

noreply@blogger.com (Unknown) — Thu, 13 Feb 2014 23:42:00 +0000

Happy new year to my readers! Apologies for being off-air since December 2013 - I returned from a month-long holiday in late January and I was straight into paperwork and trial work. I just finished my trial, and I found a moment to rest and write this post.

The trial was interesting because it is the first trial I have run without a hardcopy court book or hardcopy transcript. Instead I used the electronic versions on my iPad. I found using an electronic court book and transcript on my iPad to be a lot more efficient than having the hardcopy version. Rather than jumping between different folders and having to wade through tabs and pages in each, I was flicking through my electronic directory on my iPad.

I have described my methodology from start to finish below. Note that statements in [square brackets] denote a note for the purposes of this post. I suppose this post is the next phase of using electronic documents once the 'electronic brief' is delivered - click here for my guide on how to compile electronic briefs.

Electronic court book structure

A week before the trial I created a folder on my computer called '[Matter name] court book'. Then I created a series subfolders with the following names:

[Matter name] court book [folder]

1 indexes [subfolder]
2 tabbed documents in court book [subfolder]
3 aides [subfolder]
4 summaries [subfolder]
5 notes [subfolder]
6 transcript [subfolder]
7 annotated transcript [subfolder]
8 loose documents [subfolder]

I numbered each subfolder so that they could be ordered as I wanted them (otherwise they would be ordered alphabetically, in an order that may not have been intuitive to me).

Electronic court book documents

As the court book index was developed by me, my instructor and my opponent, I ensured that each document was in electronic PDF format, either by my instructor sending it to me in PDF, or me scanning it from my hardcopy brief. I copied each file into subfolder 2. The filename of each document started with the tab number in the court book index, and following that was a description of the document summarised from the court book index, including the date. As such, subfolder 2, when opened, was the court book index with each document ordered by its particular number in the court book index (since computers sort by name and number).

The following is an example of the structure:

[Matter name] court book [folder]

1 indexes [subfolder]
2 tabbed documents in court book [subfolder]

1 statement of claim of the plaintiff dated [###]
2 defence of the defendant dated [###]
3 amended statement of claim of the plaintiff dated [###]
...
17 contract of sale dated [###]
18 amended plans dated [###]
...
50 expert report of Webster dated [###]
51 joint expert report dated [###]
...

3 aides [subfolder]
...

Text recognition, annotation and bookmarking

Once each document was loaded into subfolder 2, I made them text searchable by batch OCR'ing them through Adobe Acrobat. This makes life easier in preparing questions and submissions, because it enables me to find the relevant passage I want from each document, I can highlight and annotate that passage, and I can also copy and paste the relevant passage into my submission.

I then revisited my preparation of the matter, and highlighted and bookmarked the relevant portion of each document using Abode Acrobat. I used bookmark codes similar to those which I referred to in my article on electronic briefs, here.

I then obtained all of the court book indexes, scanned them and added them into subfolder 1. I made these text searchable as well.

As aides were handed up to the Judge, at the end of that day I scanned them and added them into subfolder 3. I did the same for summaries (into subfolder 4), my instructor's notes (into subfolder 5) and loose documents that were produced by my opponent or my instructor (into subfolder 8).

Transcript annotation and bookmarking

After each day, I received the transcript from the transcription service in PDF and Word (DOC/DOCX) format. At the end of the day, or in the morning of the next day (depending on tiredness levels) I read the PDF version of the transcript on Adobe Acrobat, and each time I read something relevant I highlighted that part of the transcript, and bookmarked it. The great thing about highlighting transcript electronically is that the highlight also highlights the line numbers on the left hand side of the page, making it easy to refer to while on your feet, and in footnotes in written submissions.

Each electronic bookmark I created in the transcript recorded the witness name and whether that witness was giving evidence-in-chief (denoted 'X'), being cross-examined (denoted 'XX') or being re-examined (denoted 'ReX'). After this detail, I summarised in the bookmark what evidence was given. For example, the bookmarks looked something like the following [note - I have not summarised the actual evidence nor named witnesses - the information is fictional]:

X Smith - signed the contract on 1 Apr 2009
...
X Smith - told the agent that she wanted an apartment with ocean views
...
XX Teller - heard conversation with agent but didn't hear ref to ocean views
...
XX Barnes - saw plaintiff talking to planner on 25 March 2009, didn't heard what saying
...
ReX Barnes - saw plaintiff write notes of conversation

Each file of the transcript (representing 1 day of evidence) had around 20 to 40 bookmarks, each with a line describing the evidence given.

Efficiency in preparing submissions

As I was running the trial, I was working on my submissions. After I annotated the transcript each day, I worked on the submissions by typing in extracts of the transcript references where appropriate (that is, under each cause of action or issue set out in the written submissions). I found it easy doing this because I had already highlighted and bookmarked all of the relevant portions of the transcript. Also, footnoting the transcript was a simple task - each time I wanted to footnote something in the transcript, I found the bookmark in the transcript, clicked on it, and it took me to the relevant page, and the highlights showed the lines where the relevant evidence appeared.

A few times while writing the submissions I remembered a particular part of the evidence that I had not highlighted or bookmarked, and wanted to find in the transcript. I used Foxtrot Pro, particularly the neighbouring word search function, to find the relevant passage. Foxtrot Pro is an advanced indexing program for Mac - the equivalent of ISIS or DTSearch for PC.

Electronic court book and transcript on iPad, including examining witnesses and submissions

As I noted above, I had the court book folder on my iPad. I had it loaded onto the program, GoodReader, as a synced folder. Click here for my article on electronic briefs describing this syncing process with GoodReader Because the folder was synced with my computer (via Dropbox), each time I updated the court book on my computer (whether by annotating transcript, adding summaries, bookmarks to court book documents, etc) I pressed the 'Sync' button on GoodReader and it updated the folder on my iPad.

I found examining witnesses a very simple task as for each witness I had a 1-page paper running sheet which had on it the relevant court book references and a summary of the questions to be asked. Each time I needed to visit a particular document in the running sheet, I clicked on the document in subfolder 2 on GoodReader. If I needed to visit a particular part of that document (for instance, I had a 200 or so page contract which I had bookmarked and highlighted in parts) I clicked on the bookmark for that part and I was taken there straight away. I couldn't have my running sheet on my iPad, as I would be attempting to juggle a running sheet and court book documents on the one device. Perhaps another iPad for running sheets, submissions and notes...

I also found the ability to zoom on the iPad's screen to be very useful while on my feet. I was dealing with a contract with small terms, a document with disclaimers, and engineering drawings which were originally in A0 size. Whenever something was too small for the screen, I zoomed in on it.

As far as oral submissions went, referring to the transcript was a breeze since the annotated transcript was loaded onto my iPad and was entirely bookmarked and highlighted. Every time I needed to refer to a particular part of the evidence, I found the file for the relevant day (sorted in subfolder 6), found the bookmark summarising the evidence, and it pulled up the highlighted part of the transcript that I wanted.

Authorities

I had each authority which I relied on in PDF format, with the full name and citation as the filename. I created another folder, called '[matter name] folder of authorities' and created subfolders referring to each legal issue. For example:

[matter name] folder of authorities [folder]

apportionment [subfolder]
estate agents act [subfolder]
misleading or deceptive conduct [subfolder]
disclaimers [subfolder]
reliance [subfolder]
contract [subfolder]
damages [subfolder]

I then placed each authority into the particular folder representing the particular cause of action or issue the authority concerned. When annotating the authorities, I highlighted the relevant part of each authority and created a bookmark describing what that part was about. I then synced this folder onto GoodReader on my iPad. As such, referring to the relevant parts of the authorities during submissions was also simple.

As it turned out, the Judge wanted hardcopy versions of the authorities. So, I put these on a USB stick and gave them to my instructor to print and send to the court - with instructions to print without annotations, of course!

Throughout the trial the only pieces of paper I had in front of me which I referred to regularly were the witness running sheet and the exhibit list. Otherwise, everything I needed was in my iPad.

I thought it best to clarify at the end of this article that I have no financial interest in the products I refer to in this post. They are just the products that have worked best for me and my practice.

Over-representation, voluminous material and costs proportionality: Yara Australia Pty Ltd & Ors v Oswal [2013] VSCA 337

noreply@blogger.com (Unknown) — Wed, 11 Dec 2013 22:00:00 +0000

The matter of Yara Australia Pty Ltd & Ors v Oswal [2013] VSCA 337 was a unique step taken by the Court of Appeal, in which the Court of Appeal asked the parties to address the Court on the question of whether an unsuccessful leave to appeal application involved the breach by any party of its overarching obligations under the Civil Procedure Act 2010 (Vic) (the 'Act'). The concern of the Court of Appeal was whether, during a leave to appeal application, there was over-representation of a party by counsel and whether the material produced on the hearing of the application for leave to appeal was unnecessary or excessive.

That is, the Court of Appeal was concerned with whether the overarching obligation in s24 of the Act was breached, which provides as follows:

A person to whom the overarching obligations apply must use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to—
(a) the complexity or importance of the issues in dispute; and
(b) the amount in dispute.

The Court sought submissions under s29(2)(b) of the Act, which allows a court to make certain orders on its own motion in the event that it finds a person has contravened the overarching obligations in the Act.

Background and summary of findings

By way of summary, the Court of Appeal noted the following relevant facts:

The leave to appeal application was from a decision by Whelan J to set aside orders of Efthim AsJ that the respondents provide security for costs of the applicants in the proceedings.
The amount of security for costs sought for each party was between $20,000 and $80,000.
There were five senior counsel, six junior counsel and five firms of solicitors representing the parties. One group of parties had two senior counsel and one junior acting for them; another had two juniors; and another had senior and junior counsel.
The Court was provided with six application folders comprising submissions, affidavit material, transcript and authorities running to over 2,700 pages. The affidavits filed by the applicants contained many unnecessary documents, many of which were not referred to in the submissions.

The Court of Appeal considered that because of the complexity and expense of the broader litigation, including the ongoing legal costs for preparing the litigation and a damages claim that could run to hundreds of millions of dollars, it was appropriate that each party be represented by the counsel that were engaged (at [39]).

However, the Court of Appeal considered that the applicants breached the overarching obligation in s24 because of the filing of voluminous material (at [53]). The Court of Appeal summed up the mischief that the Act is seeking to address, as follows:

52 The Act’s objective is the reform of the culture of unnecessary expenditure on civil litigation. Parliament has intended that this reform can only be achieved by holding parties to account for undesirable civil litigation practices that are unfortunately too common. The court was burdened with excessive material. The applicants and the respondents were burdened with the costs of that material. There has been a breach of the overarching obligation to ensure the costs are reasonable and proportionate by including in the application books voluminous material that was extraneous or repetitious and excessive.

The end result in Yara was that the Court of Appeal took the contravention into account under s29 and made the following orders, on its own motion, amongst others:

each applicant was ordered to pay the respondent's costs;
each applicant's solicitor was ordered to indemnify the applicant 50% of the respondent's costs incurred as a consequence of the excessive content of the application books; and
each applicant's solicitor was disallowed recovery from the applicant of 50% of the costs relating to the preparation of the application books and incidental costs.

s24 requirement for costs to be reasonable and proportionate

The discussion about s24 focused on the obligation of legal practitioners to ensure that costs are reasonable and proportionate. The Court of Appeal said that this overrides the legal practitioner's duty to the client such that the client's instructions would not relieve the legal practitioner of this overarching obligation (at [14] to [15]):

14 Each party and their solicitor and counsel have an obligation to comply with the overarching obligation. Whether any of them have breached that overarching obligation is to be determined by an objective evaluation of their conduct having regard to the issues and the amount in dispute in the proceeding. The legal practitioners’ duty is non-delegable. The obligation will override their duty to their client where the discharge of that duty would be inconsistent with the overarching obligation.[19] The legal practitioner will not be relieved of this overarching responsibility because of the instructions of their client.[20]

15 Legal practitioners, whether solicitor or counsel, involved in the preparation of pleadings, affidavits or other materials that are to be used in the proceeding or who provide advice as to such matters, have individual responsibilities to comply with the overarching obligation. Both solicitor and counsel also have an overarching responsibility with respect to the extent and level of their client’s representation. Each must ensure that, having regard to the issues, the extent and level of representation proposed is reasonable and proportionate. Advice or instructions given or received by legal practitioners, and instructions given by the client may inform but will not be determinative of the question whether, viewed objectively, there has been a breach of the obligation.

That is, if the client insists on senior counsel, or a number of counsel, in circumstances where it might not be reasonable because of the nature, complexity or quantum of the dispute, the legal practitioner is still on the hook despite those instructions.

s29 power to make orders on contravention of overarching obligations

The Court of Appeal also focused on s29, which gives the court power to sanction legal practitioners and parties for contravening their overarching obligations. The Court of Appeal noted that the power is broader and more flexible than that in R62.23 and the inherent jurisdiction of the Court, which are designed to compensate for negligence or incompetence ([18]).

The Court of Appeal said that s29 gives a degree of flexibility in sanctioning parties or legal practitioners because of a breach of the overarching obligations, and the sanctions are not just limited to incompetence or improper conduct, but failure to use reasonable endeavours to comply with the overarching obligations ([20]):

20 The Court’s powers under s 29 of the Act include the power to sanction legal practitioners and parties for a contravention of their obligations as the heading to Part 2.4 indicates.[30] In our view, these powers are intended to make all those involved in the conduct of litigation — parties and practitioners — accountable for the just, efficient, timely and cost effective resolution of disputes. Through them, Parliament has given the courts flexible means of distributing the cost burden upon and across those who fail to comply with their overarching obligations. A sanction which redistributes that burden may have the effect of compensating a party. It may take the form of a costs order against a practitioner, an order that requires the practitioner to share the burden of a costs order made against their client or an order which deprives the practitioner of costs to which they would otherwise be entitled. The Act is clearly designed to influence the culture of litigation through the imposition of sanctions on those who do not observe their obligations. Moreover, the power to sanction is not confined to cases of incompetence or improper conduct by a legal practitioner. Where there is a failure by the practitioner, whether solicitor or counsel, to use reasonable endeavours to comply with the overarching obligations, it will be no answer that the practitioner acted upon the explicit and informed instructions of the client. A sanction may be imposed where, contrary to s 13(3)(b), the legal practitioner acts on the instruction of his or her client in breach of the overarching obligations.

As such, the Court of Appeal regarded ss28 and 29 as giving the Court broad disciplinary powers which may be reflected in the costs orders made ([21]).

The Court of Appeal also noted that s29 has resulted in courts at first instance taking a more pro-active and innovative approach in achieving its objects, particularly because judicial officers must actively hold the parties to account ([24] and [26]):

26 The Act prescribes that parties to a civil proceeding are under a strict, positive duty to ensure that they comply with each of the overarching obligations and the court is obliged to enforce these duties. The statutory sanctions provide a valuable tool for improving case management, reducing waste and delay and enhancing the accessibility and proportionality of civil litigation. Judicial officers must actively hold the parties to account.

The Court of Appeal also noted the under-utilisation of these provisions by the courts on their own motion, and considered whether there was judicial disinclination to do this because of a fear that an inquiry about a potential breach might be time-consuming and require the introduction of additional material. The Court of Appeal noted that such fears cannot relieve judges of their responsibilities, and in any event a judge at first instance would not be expected to undertake a substantial inquiry particularly when most of what would be required is a brief submission on costs ([27]):

27 Yet as we have observed, sanctions imposed for a breach of any overarching provisions have been a rarity at first instance. When no party invites the court to determine whether there has been a breach of the Act, there may be a judicial disinclination to embark upon such an own-motion inquiry for fear that inquiry as to a potential breach may be time consuming and may require the introduction of material that was not before the court as part of the proceeding. Such fears cannot relieve judges of their responsibilities. But we would not wish it to be thought that a judicial officer at first instance must undertake a substantial inquiry when considering whether there has been a contravention of the Act. As the sanction for a breach will usually lie in an appropriate costs order, a judge may at the conclusion of the reasons for judgment immediately invite oral submissions as to why there should not be a finding that the Act was contravened. The judge may in a relatively brief way deal with that issue in providing succinct reasons for a finding that there has been a breach of the Act and how that finding affects the orders for costs that are to be pronounced.

Summary

Yara is an important case because it has considered the core case management provisions in the Act. It has signalled that the purpose of s28 and 29 is both punitive and compensatory, and that parties and practitioners who do not act reasonably and who do not comply with their overarching obligations ought to beware, as a court may be obliged, because of circumstances that arise during a case, to undertake its own inquiry into whether or not there has been a breach of the Act.

Also, the Court of Appeal noted that legal practitioners cannot rely on their client's instructions as an excuse for a breach of their overarching obligations, and must ensure they also comply. This applies to both the seniority of counsel and number of lawyers engaged on the matter, and the volume and relevance of documentation before the Court. The legal practitioners remain on the hook for these matters despite the client's instructions.

Electronic briefs to counsel - Downie's step-by-step guide

noreply@blogger.com (Unknown) — Sun, 17 Nov 2013 22:06:00 +0000

I was reading a terrific post by Mark McKillop called 'A tale of a brief in 29 parts – tips for junior lawyers briefing counsel in the email age. Mark's post discusses what to put in a brief to counsel and why. He focuses on the provision of a hardcopy brief and perhaps an email to counsel, in urgent circumstances, of the key documents in the brief. I have experienced the horror of a brief emailed in 29 or so separate parts and it almost always results in loss of time and increased expense for the client, and it occasionally results in overlooked or omitted documents. That is, it should be avoided.

I agree with the comments Mark makes in his post; however, I am of the view that a properly organised electronic brief can be a lot more effective than a hardcopy brief, and can be delivered and updated a lot quicker.

So how is it done? Here's my step-by-step guide.

What equipment and software do you need?

In order to make life easier with electronic briefs from chambers or the office to the court room you need 6 things: a computer, a scanner, an iPad (or a like tablet device), Goodreader (iPad app, or an equivalent tablet PDF annotating app), Adobe Acrobat (PDF computer program) and a cloud based storage service, like Dropbox. Most of these (apart from a cloud service and Goodreader) are expensive. However they are cheap in the long run when you consider the time, paper and cost saved.

I say time, paper and cost saved because:

instead of photocopying each page and paying for each page of paper, you scan one page and the resulting file is used by all working on the matter;
instead of physically compiling each piece of paper into folders, all you do is drag and drop each electronic file (containing all pages referred to) into electronic folders; and
instead of delivering large numbers of folders to multiple people, all you do is email the folders containing the files, or better yet send a link to the cloud service you are storing the brief in.

Step 1 - scanning the files and creating PDF documents

Let's start with the computer, the scanner and Adobe Acrobat, as this is the file creation process. First, ensure all of the documents relevant to the brief are PDF [portable document format] files, apart from any drafts that you want counsel to settle (which should be in Microsoft Word format - .doc/.docx).

Ensuring all files are in PDF can be done by saving Microsoft Word format documents (.doc/.docx) as PDF files (a function that Microsoft word supports with Adobe Acrobat), or (in most cases) by scanning all of the original documents in the instructor's possession using a scanner. It is often best to scan each individual document as a separate PDF file, although this isn't a golden rule since cumbersome files, such as affidavits and contracts, can be bookmarked (see further below).

Step 2 - renaming the scanned or saved PDF electronic files

Once you have all of the documents in PDF format, then you need to change the name of each of the scanned electronic files so they make sense. My system is to give them a reverse date order, followed by a description of the document that is in the file, so as to ensure that the files are date ordered (even though the computer is sorting by name). An example of this is as follows:

2013-09-20 SOC McGee
2013-10-01 Defence Meyer
2013-10-13 affidavit McGee
2013-10-20 affidavit Meyer
2013-10-21 submissions McGee
2013-10-22 supplementary submissions Meyer
2013-11-01 bundle of discovered documents Meyer
2013-11-10 submissions Meyer
2013-11-13 expert report O'Grady
2013-11-14 expert report Schleck
2013-11-14 court order

Because a computer sorts files by name (and therefore number) by default, a reverse date order will always be sorted chronologically; and chronological order is the key to ordering documents in a brief.

Step 3 - creating the electronic folders

So once you have scanned all of the documents and renamed the files, you have a group of electronic files in a folder, such as a generic 'scans' folder. The next process is to create electronic folders in the same way a brief might be structured physically. For instance, the following is an example folder structure for a brief (my descriptive notes for the purpose of this post are placed in [square brackets] next to the folder or subfolder name):

McGee v Meyer brief [root folder]

1 Pleadings [subfolder]
2 Expert reports [subfolder]
3 Submissions [subfolder]
4 Affidavits [subfolder]
5 Witness statements [subfolder]
6 Plaintiff's discovery [subfolder]
7 Defendant's discovery [subfolder]
8 Court orders [subfolder]
Index.docx

Further folders you might add include:

9 Transcript [subfolder]
10 Offers [subfolder]
11 Solicitor correspondence [subfolder]
12 Memoranda to counsel [subfolder]

Here's a picture of this basic file structure on my computer.

The file index.docx is an index of each document to be placed within each folder, for ease of reference.

I have numbered each folder in order to have them structured in the order I want them. Like reverse date ordering, because name sorting is the default, folders that are numbered will be sorted by the number that precedes the folder's descriptive name.

Step 4 - sorting the electronic files into folders

Once you have the files renamed, you then sort them into the electronic folder according to their description. As such, the above documents get sorted as follows:

McGee v Meyer brief [root folder]

1 Pleadings [subfolder]

2013-09-20 SOC McGee [file]
2013-10-01 Defence Meyer [file]

2 Expert reports [subfolder]

2013-11-13 expert report O'Grady [file]
2013-11-14 expert report Schleck [file]

3 Submissions [subfolder]

2013-10-21 submissions McGee [file]
2013-10-22 supplementary submissions Jones [file]
2013-11-10 submissions Meyer [file]

4 Affidavits [subfolder]

2013-10-13 affidavit McGee [file]
2013-10-20 affidavit Meyer [file]

5 Witness statements [subfolder]
6 Plaintiff's discovery [subfolder]

2013-11-01 bundle of discovered documents McGee [file]

7 Defendant's discovery [subfolder]

2013-11-01 bundle of discovered documents Meyer [file]

8 Court orders [subfolder]

2013-11-14 court order [file]

Index.docx [file]

Step 5 - create an index

In order to work out where each document is located in each folder, it is best to create an index. This is basically the same as any hardcopy brief index, except it is modified for electronic folders. An index may be created by using Microsoft Word to create a table based index, with the following column names:

folder number
folder name
filename
document description

Always free to add more fields such as:

author
provenance
relevant
privileged
issue
document note

The more fields you add, the easier it is for counsel to understand what documents counsel is dealing with and what his or her instructor thinks about each document. This can be done in Microsoft Excel also, which makes it more convenient to convert the index into a database. I won't discuss databases in this post other than to say that they are a convenient way of keeping track of documents.

Step 6 - make all of the files searchable

The next step is to OCR [optical character recognition] all of the electronic PDF files so that they have recognised text and are therefore searchable. Scanned PDF files are usually saved as an image, rather than as text, and as such each PDF file needs to have its image converted into text for the text to be recognisable. Saved Microsoft Word documents will almost always be OCR'd.

OCR'ing (that is, converting a PDF from image to text) is useful for, amongst other things, annotating the subject document, drafting affidavits, preparing submissions, and searching for relevant issues. For instance, where an electronic brief has, say, 2000 pages, if each page is in searchable PDF format then locating particular words or a particular phrase is easy. Also, by using a sophisticated search program such as Foxtrot Pro, specific strings and combinations of words can be searched for. Further, text may be readily copied and pasted from searchable PDF documents into affidavits and submissions.

A program such as Adobe Acrobat will allow you to OCR PDF files. I am informed by my colleagues that there are free programs available which allow you to convert an imaged PDF into a text recognised PDF. However, I find that Adobe Acrobat is ideal as you can run batch OCR'ing on folders so as to convert multiple files at the one time, and then use the same program to manipulate the file with bookmarks and annotations (more on these below).

Step 7 - create electronic bookmarks

Once each file is OCR'd, go through each document on your screen and bookmark each document within the file. For instance, if within the brief there is an affidavit with exhibits, you might want to bookmark the files as follows:

Page 1 of the affidavit - bookmark as 'affidavit McGee'.
Exhibit PM-1, which is a contract dated 12 May 2011 - bookmark as 'PM-1 contract 12 May 2011'.
Exhibit PM-2, which is a letter from McGee to Meyer dated 13 May 2011 - bookmark as 'PM-2 letter McGee 13 May 2011'.
Exhibit PM-3, which is a caveat dated 20 May 2011 - bookmark as 'PM-3 caveat 20 May 2011'.
And so on.

Generally it's okay to be less fussy about the way that electronic bookmarks are named (unlike files) because they are ordered based on their placement in the document. It is more important to ensure that they are sufficiently described so as to understand what the bookmark refers to.

Here's an example of a bookmarked document, opened in Adobe Acrobat.

The bookmarks are on the left hand side, and I created them using Adobe Acrobat. In Court I like to read and refer to the electronic version rather than the paper version of a document because I find it a lot easier to navigate the electronic bookmarks than physical tabs and post-it notes.

Step 8 - deliver the brief by sharing on a cloud service, like Dropbox

At this stage the files are named, bookmarked and sorted into organised and named folders. Once the memorandum to counsel is drafted and in PDF format, the electronic brief is ready to be delivered!

So how do you deliver it?

The chances are that a folder containing 50+ files will exceed the maximum size allowed for delivery via email. If the brief is small enough, it is possible to send it via email; however there are disadvantages with sending via email which you do not have with a cloud service such as Dropbox. The main benefit of a cloud service over email is that the instructor's folder structure and counsel's folder structure, if shared by a cloud service, will be synchronised and contain consistent content on an ongoing basis (assuming both instructor and counsel are online, either via Wi-Fi, or a wireless network). Email only sends the folders and files in the state they were in at the date they were sent, so any updates to the folder and files by one party after the email delivering the brief is sent will not be synchronised and updated on the other party's computer. Updates via synchronisation are especially important where court documents are being produced at a rate of knots, or discovery/instructions are being drip-fed.

Dropbox and cloud services are, in essence, private hard drives stored externally to your computer and accessible online. As such, if you subscribe to a cloud service you will have a folder on your computer which allows you to drag and drop content into that cloud service. To place the electronic brief into a cloud service, all you need to do is drag and drop the root folder into the cloud service, and this will create a copy of the brief externally to your computer in the cloud.

Once this is done, most if not all cloud services allow you to 'share' the folders in the cloud by sending a link of that folder to whomever you want to share it with. Otherwise (subject to the specific terms of service of the cloud service you subscribe to) the content in the cloud is only accessible by you via a password. Those that you share the folder with may include counsel, the client and other solicitors in the firm, as long as they all subscribe to the same cloud service. Once the link is sent by email, counsel opens it up and the brief is with counsel in counsel's cloud service and on counsel's computer for counsel to read, amend and add to as he or she wishes.

Side issue - confidentiality and legal professional privilege in the cloud

Some lawyers query whether a cloud service is sufficiently secure to store documents that might be confidential and/or privileged. It is up to the instructor and counsel to determine whether the particular cloud service is secure enough by reading its terms of use. Click here for the Dropbox terms of service. Consent to use a cloud service could be obtained by including a written consent in the costs agreement between the instructor and client, and between counsel and the instructor.

If there is a particularly sensitive document in the brief, then this doesn't have to be placed in the cloud, but instead could be sent via email. That is, there will be a solution to the issue of confidentiality and it ought not stand in the way of briefing and sharing documents electronically. In saying this I do speak from the point of view of a commercial practitioner. Most if not all of the documents I have in a particular matter, other than documents that are subject to legal professional privilege, would be common between the parties. In any event, privileged documents can be separated into a specific subfolder in the electronic brief, or sent via email instead.

Step 9 - portability, including using the brief in court

A great outcome of this process is that counsel and the instructor have the electronic brief available for use on an iPad by using GoodReader, alternatively Documents by Readdle. I use Goodreader because I am used to it, and it has great functionality. I previously posted a review on Goodreader - click here to read it.

Goodreader, like Adobe Acrobat on a computer, allows the user to go through folders, read documents (particularly PDF documents), and annotate those documents as counsel pleases. The annotation functionality is similar to hardcopy annotation - you can put notes on each page, highlight sections, and bookmark each page. The original PDF document doesn't have to be adulterated since Goodreader asks the user whether the user wishes to create a copy document for annotation.

Once the folder is on the cloud, counsel can connect to the cloud service and 'synchronise' the folder in Goodreader. What that means is that the brief is downloaded to counsel's iPad and, whenever a document is updated and synchronised by counsel or by the instructor on their computers or on their iPads, the brief is updated on all users' iPads and computers. Goodreader doesn't automatically synchronise - one has to select to synchronise for this to occur. This is convenient to avoid corrupted files and synchronisation errors where, for instance, one user is reading a file while another user is editing or updating it.

Here's an image of the above electronic brief synchronised to Goodreader on my iPad.

So that's about it. This is how I prefer my briefs to be and it is a process I often undertake to convert my hardcopy briefs into electronic briefs.

That doesn't mean I don't like hardcopy. I just prefer the convenience of electronic briefs, particularly when I sit at the bar table in front of a Judge and look at what comprises my brief. At that point I'm either staring at an iPad with a perfectly organised folder of annotated and sorted documents which I can move through with ease, or I'm staring at a huge pile of 5 or so lever arch folders which have post it notes in them and highlights throughout.

Which would you prefer?

Abuse of process: Putt v Perfect Builders Pty Ltd [2013] VSC 600

noreply@blogger.com (Unknown) — Mon, 11 Nov 2013 19:27:00 +0000

The matter of Putt v Perfect Builders Pty Ltd [2013] VSC 600 was a proceeding before Kyrou J in the Supreme Court of Victoria in which the plaintiffs were claiming return of a deposit pursuant to a terminated contract. In a prior proceeding before Williams J, the plaintiffs alleged termination under the terms of the contract and sought return of the deposit under the summary procedure in s49 Property Law Act 1958 (Vic), and the proceeding before Kyrou J sought return of the deposit pursuant to the terms of the contract.

The defendant sought summary judgment under s63 Civil Procedure Act 2010 (Vic) and R23.03 VSC Rules, and otherwise to strike the matter out under VSC Rule 23.01, alleging an abuse of process.

The matter was permanently stayed, and the discussion of the principles of what is an abuse of process, set out by Kyrou J, follow:

13 In State Bank of New South Wales Ltd v Stenhouse Ltd,[4] Giles CJ stated that the ‘guiding considerations’ in determining whether re-litigation of an issue in a subsequent proceeding constitutes an abuse of process are ‘oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice’.[5] His Honour listed the following non-exhaustive factors to which regard may be had:

(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or an ultimate issue;(b) the opportunity available and taken to fully litigate the issue;
(c) the terms and finality of the finding as to the issue;
(d) the identity between the relevant issues in the two proceedings;
(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; all part of—
(f) the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and
(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.^[6]

14 The factors listed in the above passage provide a convenient framework for a consideration of whether this proceeding constitutes an abuse of process.

His Honour considered that (by way of summary):

The issue of compliance with the contract and the issue of return of the deposit, being the ultimate issue, were of central importance to this proceeding and the earlier proceeding.
The plaintiff had ample opportunity to fully litigate the ultimate issue in the earlier proceeding.
In the earlier proceeding, Williams J found that the plaintiffs were not entitled to a refund of the deposit under the relevant provision of the contract, and this was not appealed nor varied.
The same substantive relief was sought in both proceedings.
The plaintiffs did not seek to rely on fresh evidence, but instead sought to rely on evidence that they previously had in their possession but consciously decided to not adduce at the earlier proceeding.
If the plaintiffs are permitted to re-litigate the defendant would be at risk of an adverse decision, and the principal of finality undermined.
The prejudice to the plaintiffs, caused mainly by the forensic decisions they made in the earlier proceeding, is outweighed by the strong public interest in finality in litigation.

In ordering that the proceeding be permanently stayed, His Honour said:

25 The power to permanently stay a proceeding as an abuse of process is to be exercised sparingly and upon examination of the relevant circumstances of the particular case.[11] In the present case, a consideration of all the circumstances and an overall balancing of justice as between the parties overwhelmingly supports the conclusion that this proceeding constitutes an abuse of process that is serious enough to warrant an order that the proceeding be permanently stayed.

His Honour considered the application of res judicata and issue estoppel, but did not consider it necessary to reach a final view of the matter.

The nuts and bolts of the PPSA considered: Maiden v QES [2013] NSWSC 852

noreply@blogger.com (Unknown) — Thu, 31 Oct 2013 23:00:00 +0000

The only Australian case to date to comprehensively consider the Personal Properties Security Act 2009 (Cth), particularly PPSA leases, transitional security interests and priorities is In the matter of Maiden Civil (P&E) Pty Ltd; Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852 (‘Maiden v QES’). This was a priority dispute before Brereton J of the New South Wales Supreme Court.

This matter concerned a lessee (Maiden) of 3 Caterpillar construction vehicles (the ‘Caterpillars’). The lessee granted a charge over his property, including the Caterpillars. The charge was given by the lessee to the chargee (Fast) pursuant to a General Security Deed. By reason of the operation of the PPSA, the lessor (QES) of the Caterpillars had a security interest (ss12, 13) but did not perfect that interest by registration (s21). However, the chargee registered the charge as a security interest on the PPSR. The lessee defaulted and the chargee appointed receivers and managers over the assets. The lessee went into liquidation one month after the appointment of receivers and managers. The chargee asserted priority over the Caterpillars. Brereton J found for the chargee and not the lessor.

First, Brereton J held that the lease from QES to Maiden was a PPS lease (s13), and thus a security interest (s12(3)(c)), because:

the lessee retained continuous possession of the Caterpillars for more than one year (ss 13(1)(b) and 13(1)(d);
the Caterpillars are goods described by serial numbers and were in the lessee’s possession for more than 90 days (ss 13(1)(e)(ii) and (iii));
The income from hiring the Caterpillars was QES’s only income and thus it was not established that QES was not regularly engaged in the business of leasing goods (s13(2)).

Second, Brereton J considered s19(5) which provides:

(5) For the purposes of paragraph (2)(a), a grantor has rights in goods that are leased or bailed to the grantor under a PPS lease, consigned to the grantor, or sold to the grantor under a conditional sale agreement (including an agreement to sell subject to retention of title) when the grantor obtains possession of the goods.

His Honour reviewed the New Zealand and Canadian authorities on the cognate provision in those jurisdictions and held that a lessee under a PPS lease had proprietary, and not just possessory, rights in the Caterpillars to which a security interest could attach (at [26]).His Honour cited the seminal New Zealand PPSA case of Graham v Portacom New Zealand Ltd [2004] 2 NZLR 528, [28] in which Rodney Hansen J held ‘[a]s against the lessee's secured creditors, the lessee has rights of ownership in the goods sufficient to permit a secured creditor to acquire rights in priority to those of the lessor’ and ‘ostensible ownership - in the radical sense of bare possession or control of the collateral - has effectively replaced derivative title for the purposes of determining the scope of the secured debtor's estate at the priority level.’

His Honour also held that the General Security Deed was a ‘security agreement’ within the meaning of the PPSA and thus created a ‘security interest’ as the agreement created an interest in personal property that secured payment or performance of an obligation (s12(1)) (at [33], [34]). Because the funds were advanced, the security interest attached to the collateral and was enforceable against the lessee (s19), and the security interest was enforceable against third parties (particularly QES) because:

it was attached to the collateral (s20(1)(a));
the security interest ‘covered the collateral’ because:

the General Security Agreement was a security agreement evidenced in writing signed by the lessee as grantor (s20(2)(a)(i));
it contained a description of the particular collateral (s20(2)(b)(i)); and
it contained a statement that a security interest is taken in all of the lessee’s present and after acquired property (s20(2)(b)(ii)).

Because the General Security Deed was registered and was enforceable against the grantor and third parties it was perfected (s21) (at [39], [40]). As such, without more, the lessor’s interest was subordinated to the chargee’s interest by operation of s55(3) PPSA which provides ‘a perfected security interest in collateral has priority over an unperfected security interest in the same collateral’ (at [41]). His Honour also noted that the PPSA lease was arguably also vulnerable because it was not written, which is a prerequisite for it to be enforceable against third parties (s20(2)) and thus perfected (s21(1)(b)(ii)) (at [41]).

The lessor argued that although its interest was not registered, it was perfected as a ‘transitional security interest’ (ss 308, 322), and was afforded priority for a period up to 24 months after the commencement of the PPSA by reason of it being a ‘temporarily perfected’ security interest (ss 320, 322). However, Brereton J noted that the exception to the perfection of a transitional security interest set out in the regulations was a security interest registrable on a transitional register (being a register maintained under a law of the Commonwealth, a State or a Territory from which data was provided to and accepted by the PPS Registrar), and the Northern Territory, in which the Caterpillars was used, had such a register (at [50] – [55]). Further, the Caterpillars were registrable on that register, and therefore the security interest was not perfected as a transitional security interest. QES submitted that there was a Queensland register that was exclusively applicable; however, this submission was rejected by Brereton J noting that the relevant provision was not engaged by the facts of the case (at [58] – [65]).

QES submitted that the lease of the Caterpillars was terminated for repudiation and the lessee, and thus the chargee, no longer had a right to possession. Referring to s267(2), Brereton J noted that immediately before the commencement of the winding up or voluntary administration of the grantor, an unperfected security interest held by a secured party vested in the grantor (at [70] – [72]). The consequence of this was that on the commencement of the administration or winding up of the lessee, the lessor’s unperfected security interests in the Caterpillars vested in the lessee, and thus was extinguished (at [72]).

Further, His Honour held that a PPS lease gives possessory and proprietary rights in the collateral to the lessee, and therefore a lessee may grant security interests in the collateral sufficient to defeat the lessor’s interests (at [73]):

The Canadian and New Zealand cases already mentioned demonstrate that a PPS lessee on taking possession of the collateral acquires not only a possessory right but also proprietary rights to the extent that it can grant security interests to third parties, so that the lessor's interest if unregistered is vulnerable to being defeated by security interests so granted to such third parties. The PPSA treats the lessee under a PPS lease as the grantor of a security interest with rights in the collateral, and the lessor as a secured party, because it sees the transaction as, in substance, a security transaction, though in form it is a lease. As the cases mentioned show, it recognises that the lessee may validly and effectively grant security interests in the collateral to third parties, that can take priority of the lessor's unperfected interest, because the lessee is regarded for that purpose as having rights in the collateral

QES further submitted that the PPSA does not grant rights beyond that which the grantor has because of the operation of s112(1), which provides:

In exercising rights and remedies provided by this Chapter, a secured party may deal with collateral only to the same extent as the grantor would be entitled to so deal with the collateral.

The QES argument went that because Maiden was a lessee under a lease that had been since terminated, Fast, which took no interest greater than the lessee, could not deal with the Caterpillars. That is, QES was saying nemo dat quod non habet (no one can give what he does not have). Brereton J said that s112 should be interpreted in a manner consistent with the approach taken to title and priorities in the PPSA, which is contrary to the nemo dat rule which QES was arguing for.

Brereton J held that the purpose of s112 is to confirm that limitations and restrictions imposed by law on a grantor's ability to deal with collateral apply also to the secured party in enforcement action under Chapter 4 (at [78]). For instance, requirements that a license not be assigned without the consent of the licensor, or pre-conditions to the grantor dealing with the collateral. Further, Brereton J considered that Chapter 4 was concerned with remedies under that chapter and not remedies exercised pursuant to a security agreement. In support of this His Honour referred to s18(1) which provides that ‘a security agreement is effective according to its terms, and s110 which provides that the PPSA does not derogate from the rights and remedies of the secured party. Finally, Brereton J noted that Chapter 4 does not apply to property while there is a receiver and manager (s116).

Because Brereton J's reasons were so comprehensive and because this is the first Australian case to comprehensively consider the PPSA, QES v Maiden is likely to play a guiding role in the construction and application of the PPSA to security interests in priority disputes.

Reasonable apprehension of bias: MSI Developments Pty Ltd & Ors v National Australia Bank (Ruling No 1) [2013] VSC 551

noreply@blogger.com (Unknown) — Tue, 22 Oct 2013 23:00:00 +0000

The matter of MSI Developments Pty Ltd & Ors v National Australia Bank (Ruling No 1) [2013] VSC 551 was an application for Almond J to disqualify himself from a proceedings as His Honour was said to:

have shares in the defendant, the National Australia Bank ('NAB'), through his superannuation fund; and
have acted as a barrister for the NAB when His Honour was at the Bar.

In dismissing the application, His Honour set out the principles for disqualification for bias. These are as follows:

4 In Livesey v New South Wales Bar Association,[1] the High Court set out the relevant principle as follows:

a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it.^[2]

5 In Ebner v Official Trustee in Bankruptcy,[3] the court described the principle and its application as follows:

the governing principle is that...a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide (citations omitted)...
Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
...
Similarly, the bare identification of an “association” will not suffice to answer the relevant question.^[4]

6 The test is objective and the hypothetical fair minded lay observer is not assumed to have a detailed knowledge of the law, or of the character and ability of a particular judge.[5]

His Honour noted:

when at the bar His Honour acted for NAB every two or three years and never had a general retainer;
he did not recognise any names on the list of employees of the NAB who were to be called as witnesses in the proceeding; and
when dealing with the banks as counsel his dealings were primarily with solicitors acting for the bank.

In considering the 'fair-minded lay observer' His Honour said

13 In my view, a fair-minded lay observer would appreciate the following. First, that barristers who practice in commercial law are likely to have, from time to time, acted for banks. Secondly, that the nature of such associations in the practice of commercial law do not necessarily lead to associations which would divert a judge (who has previously acted as counsel for a bank) from deciding a case involving such a party on its merits. In the present circumstances, my view is that a fair-minded lay observer with a general understanding of the way barristers carry out their work would not reasonably apprehend that a judge might bring a partial or prejudiced mind to the resolution of the questions in this proceeding, including the assessment of matters such as the credit of bank witnesses.

Re-opening the plaintiff's case: Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 28) [2013] VSC 523

noreply@blogger.com (Unknown) — Thu, 17 Oct 2013 22:00:00 +0000

The matter of Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 28) [2013] VSC 523 was an application, in the bushfires class action, to re-open the plaintiff's case during the trial. The plaintiff sought leave to re-open her case to tender a coach screw found by a metal detector. The defendants opposed the application on the basis that it was too late and the evidence was of little or no probative value. His Honour J Forrest J gave the plaintiff leave to re-open her case and discussed the principles concerning re-opening a case, an extract of which follows.

19. The relevant question raised by the application is whether, on the whole, it is in the interests of justice that leave be granted for Mrs Matthews to re-open her case.

20. The position in relation to re-opening a case after the close of final submissions or judgment has been delivered is clear. In Spotlight Pty Ltd v NCON Australia Ltd [12] the Court of Appeal agreed with the opinion of Kenny J in Inspector-General in Bankruptcy v Bradshaw[13] that there are four recognised classes of case in which a court may grant leave to re-open a party’s case:[14]

The four classes (with which we respectfully agree) are: (i) where fresh evidence, unavailable or not reasonably discoverable before, becomes known and available; (ii) where there has been inadvertent error; (iii) where there has been a mistaken apprehension of the facts; and (iv) where there has been a mistaken apprehension of the law.

These classes are not closed; but the present case shares with Bradshaw the distinction that it falls into none of them, and no applicable new category is suggested. The overriding principle is that the court consider whether, taken as a whole, the justice of the case favours the grant of leave to reopen. We are satisfied that, in the present, it does not.

21. This year Sifris J dealt with an application by a plaintiff to re-open its case in Nicholson v Hilldove Pty Ltd & Ors.[15] In that case the application was made after the trial of the proceeding and reasons for judgment had been handed down. His Honour reviewed the authorities and said:[16]

The authorities establish that the existence or discovery of fresh evidence alone is not sufficient to re-open the case. If this were not so decisions would be “of a provisional character only”. Rather, public policy requires a more “stringent rule”. Accordingly a party seeking to re-open a case on the grounds of fresh evidence is required to show “that there was no lack of reasonable diligence on his part and that it is reasonably clear that the fresh evidence would have produced an opposite verdict”.

22. Each of these cases involved re-opening a case after final submissions and in two of the cases (Bradshaw and Nicholson) after the judgment. It is clear that a very powerful reason is required and, of course, one that satisfies the criteria set out by the Court of Appeal in Spotlight. However re-opening a case whilst the trial is still underway is a different kettle of fish altogether.

23. The High Court in Smith v New South Wales [17] referred to the considerations relevant to determining whether to permit the re-opening of a case during the course of a trial:[18]

If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to enquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending upon whether the case is simply one in which the hearing is complete, or one in which reasons for the judgement [sic] have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised.

24. Thus the primary consideration is whether the interests of justice require that the application be allowed. In this state the Court’s broad powers of case management under the Civil Procedure Act 2010 (Vic)[19] need to be noted: to achieve the objective of ‘[facilitating] the just, efficient, timely and cost-effective resolution of the real issues in dispute’ the Court may make any order or give any direction with regard to the objects listed in s 9(1)[20] including (a) the just determination of the civil proceeding and (c) the efficient conduct of the business of the court.

25. Section 49(1) of the CPA also gives the Court the power to ‘give any direction or make any order it considers appropriate to further the overarching purpose in relation to the conduct of the hearing in a civil proceeding’ before a hearing commences or during a hearing.'

In granting leave, His Honour considered that:

The delay in searching for the screw was explicable.
The failure to tender the screw earlier was the result of a misunderstanding or misjudgment of counsel.
The evidence was relevant, and in so finding His Honour said, 'It merely requires the court to ask: could the evidence if accepted, affect the probability, even indirectly, of the existence of a fact in issue in the proceedings? There need only be a minimal logical connection between the evidence and a fact in issue. It is important not to confuse relevance with sufficiency or weight (at [45]).'
Any prejudice in re-opening the case would be minimal, and it was particularly important that the plaintiff submitted that it was not intended to conduct an expert analysis of the screw and therefore avoid 'instigating another battle of expert evidence'.

Injunctions and disputed facts: Mendonca v Mason [2013] VSC 516

noreply@blogger.com (Unknown) — Fri, 11 Oct 2013 19:35:00 +0000

Mendonca v Mason [2013] VSC 516 was a hearing before Macaulay J in the Supreme Court of Victoria in which a tenant was seeking to restrain a landlord from taking possession of a property in which the tenant resided. In essence, a mortgagee took over from an insolvent landlord and claimed that she had not been paid and that the lease documents were non-existent. The tenant claimed to have paid the insolvent landlord and the two mortgagees, and that being removed from the premises would leave him homeless. The mortgagee alleged that payment to anyone other than her did not discharge the obligations to her.

Macaulay J discussed the principles for granting interlocutory injunctions. In particular, His Honour considered that contested facts do not automatically satisfy the 'serious question to be tried' limb, and that adequacy of damages is to be considered in the context of whether the defendant succeeded at trial.

The end result was that Macaulay J dismissed the injunction, finding that there was serious question to be tried, albeit a weak case, but that damages were an adequate remedy and that the balance of convenience favoured the mortgagee. In particular, Macaulay J questioned how the tenant could claim that he would be homeless when he claims to have been paying rent to the landlord and mortgagees on an ongoing basis, and he could apply those payments elsewhere.

On a 'serious question to be tried', His Honour said:

[21] Accepting that a genuine conflict on the evidence about a fact important to the claim often denotes a ‘serious question’ for trial, the mere existence of that conflict does not foreclose the court’s consideration of the strength of the plaintiff’s claim. In ABC v O’Neill, Gummow and Hayne JJ (Gleeson CJ and Crennan J agreeing) rejected the idea that so long as the court is satisfied that there is a question for determination that is not frivolous and vexatious there will necessarily be a serious question to be tried sufficient to satisfy the first of the usual elements. Instead, their Honours described the ‘governing consideration’ as ‘the strength of the probability of ultimate success [which] depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought’.

[22] Therefore, it is not necessarily sufficient, in order to shift the focus solely to the balance of convenience (including the adequacy of damages), for a plaintiff to simply identify a contested fact upon which his or her entitlement to relief depends. In assessing the seriousness of the question to be tried, the court will also consider the strength of the probability of success. The degree to which the court may wish to consider that relative strength will vary from case to case.

On whether damages are an adequate remedy, His Honour said:

[18] The second consideration (often combined with the third) is whether or not damages would be an adequate remedy.

[36] If I declined to order an interlocutory injunction, yet Mendonca [the tenant] ultimately succeeded at trial, in my view damages would be an adequate remedy. In fact, it was not specifically put to me that damages would not be an adequate remedy.

The matter went on to appeal shortly after the decision, and the Court of Appeal dismissed the appeal. The special leave application was dismissed also.

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

noreply@blogger.com (Unknown) — Thu, 27 Jun 2013 19:11:00 +0000

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

noreply@blogger.com (Unknown) — Wed, 19 Jun 2013 22:14:00 +0000

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

noreply@blogger.com (Unknown) — Thu, 13 Jun 2013 12:39:00 +0000

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.

noreply@blogger.com (Unknown) — Tue, 04 Jun 2013 08:35:00 +0000

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

noreply@blogger.com (Unknown) — Fri, 31 May 2013 20:40:00 +0000

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.

County Court Commercial List Practice Notes for 2013.

noreply@blogger.com (Unknown) — Wed, 15 May 2013 23:17:00 +0000

The County Court has issued several practice notes for the Commercial List.

The first is Practice Note PNCI 3-2013 for the Commercial List, General Division, of the County Court of Victoria. This supersedes the previous practice note issued. Click here for the Practice Note PNCI 3-2013.

The main points of note in Practice Note PNCI 3-2013 are as follows:

It concerns the General Division only.
Once an appearance is filed an administrative mention is triggered, which requires the parties to submit consent orders to the court and for the court to nominate a trial date. If the parties are not ready to proceed at the time an administrative mention notice is received, they should contact the directions group indicating why the matter is not ready and requesting that the case be listed for administrative mention.
Discovery of certain minimum documents will be required, and a catch all order of the documents which are 'reasonable in the circumstances' for a party to discover will be made. The parties must determine the question of reasonableness, and if they cannot, they can obtain the assistance of the Court.
The Court encourages the preparation of agreed lists of discoverable documents.
Applications for interlocutory hearings may be made to the Commercial List Duty Judge through the Directions Group. Applications are made by filing a draft form of order together with any affidavit(s) in support, unless the Rules specifically require the issue of a summons.
The Court may order a case conference or a judicial resolution conference. The parties, or a representative of a corporate party with authority to settle the proceeding, must attend. A case conference will be held in open court and counsel for the parties will be expected to be able to discuss the issues of fact and law. There will be an opportunity for private negotiations.
The Judge may participate in without prejudice discussions where both parties are present at a judicial resolution conference. Everything said or done in a judicial resolution conference is confidential. The Judge who conducts the judicial resolution conference will not hear the trial of the proceeding unless the parties consent.
Every effort will be made to ensure that General Division cases are listed before a Judge with commercial experience. Where a case cannot be reached, it will be transferred to the Expedited Cases Division and listed before a specific commercial Judge, with priority.
Parties are encouraged to agree to the tender of non-contentious documents wherever possible.

The second is Practice Note PNCI 1-2013 for the Commercial List Duty Judge. This supersedes the previous practice note issue. Click here for Practice Note PNCI 1-2013.

The main points of note in Practice Note PNCI 1-2013 are as follows:

The Duty Judge hears all case conferences and judicial resolution conferences, in addition to administrative mentions, directions hearings and hearing interlocutory disputes. In other lists of the Commercial List, the Judge in charge will deal with interlocutory applications, and not the Duty Judge.
Unless a summons is specifically required by the rules, the standard order reserving liberty to apply will be regarded by the court as obviating the need for a summons to apply for all other applications.
Where a summons is not required for an application, application is made by email to the directions group, and the email must be copied to all other parties. An affidavit is not required where only correspondence is relied on, and the correspondence may be produced as a bundle at the hearing.
Where the application requires evidence of contentious facts, an affidavit is necessary. The affidavit must be served in sufficient time before the application is heard to allow all parties an opportunity to respond to the application.
If the matter requires a relatively short directions hearing in the General Division, it is likely to be given a return date on the next available Thursday at 9.30am provided the time estimate is less than 1 hour.
Short directions hearings in the Expedited Cases Division will be listed on Fridays at 9.30am.
More substantive interlocutory matters will be listed during Monday to Wednesday subject to the availability of the Duty Judge.
Proceedings are not automatically transcribed unless by prior arrangement.

The third is Practice Note PNCI 2-2013 for the Commercial List, Expedited Cases Division. This supersedes the previous practice note issued. Click here for Practice Note PNCI 2-2013.

The main points of note in Practice Note PNCI 2-2013 are as follows:

Directions will depend on the circumstances of the case, and flexibility will be shown in relation to interlocutory steps and the mode of presenting evidence at the trial.

New costs regime for the Supreme Court of Victoria: Supreme Court (Chapter I New Scale of Costs and Other Costs Amendments) Rules 2012

noreply@blogger.com (Unknown) — Sun, 24 Mar 2013 01:01:00 +0000

The Supreme Court (Chapter I New Scale of Costs and Other Costs Amendments) Rules 2012 is a significant amendment to Order 63 (costs) and the Scale of Costs in the Supreme Court (General Civil Procedure) Rules 2005. The amendment commences on 1 April 2013 in relation to all proceedings irrespective of commencement date (that is, it applies to proceedings commenced before 1 April 2013).

2 major changes include the removal of the 3 current bases of taxation (being party-party, solicitor-client and indemnity) and the replacement with ‘standard basis’ (being all costs reasonably incurred and of reasonable amount) and ‘indemnity basis’; and the alteration of the Scale of Costs to a time charging basis of 6 minute units.

In terms of the time-value of the Scale of Costs, the following are the hourly rates for attendances by a legal practice (based on the 6 minute units):

Item 1(a) attendance requiring legal skill or knowledge, $36 per 6 min, being $360 per hour.
Item 1(b) attendance requiring legal skill or knowledge by an employee who is not a legal practitioner, $27 per 6 min, being $270 per hour.
Item 1(c) attendance not requiring legal skill or knowledge capable of being performed by a clerk $21 per 6 min, being $210 per hour.

Where the attendances in the Scale of Costs are not based on folios or individual attendance charges, they are based on the timed charges above.

Counsel's fees are a maximum of $500 per hour and $5,000 per day for junior counsel, and $750 per hour and $7,500 per day for senior counsel.

The scale is expressed to be GST exclusive, so the above rates are the GST exclusive figures.

I have included below the explanation from the Supreme Court, followed by the Practice Note (1 of 2013):

Explanatory note

Commencing on 1 April 2013 the Supreme Court (Chapter I New Scale of Costs and Other Costs Amendments) Rules 2012 introduce a new scale of costs for the Supreme Court and make significant amendments to aspects of the costs rules.

The new Rule 63.90 will provide that the Rules as amended

“apply to all things done or required to be done or omitted to be done on or after 1 April 2013 in or in relation to, any proceeding in the Court… regardless of the date of commencement of the proceeding”.
The Court has also issued Practice Note No 1 of 2013 which includes a summary of the changes, an explanation of the process for applications for allowance of counsel fees in excess of scale, and the guideline figure for allowance for the reproduction of documents (22 cents per printed side of a page).

All lawyers practising in the Supreme Court civil jurisdiction should familiarise themselves with the changes.

In summary, the major changes to the Rules are

The current bases for taxation will be replaced with the following:

i. standard basis- all costs reasonably incurred and of reasonable amount

ii. indemnity basis- (as now) all costs except in so far as they are of an unreasonable amount or have been unreasonably incurred.

Interlocutory costs orders are not to be taxed until the completion of proceedings unless the Court orders otherwise.

The parties’ costs in the proceeding, unless the Court orders otherwise, will include reserved costs, the cost of an interlocutory application if no order is made or the order is silent as to costs, and costs thrown away by reason of amendment to a pleading or of and occasioned by amendment to a pleading.

Proceedings for debt or damages which do not recover amounts over $100,000 only attract County Court costs unless the Court orders otherwise.

The main changes to the Scale of Costs are:

The scale is exclusive of GST

The scale has been changed to allow a higher hourly rate for attendances charged in 6-minute units in line with most time recording systems currently used by law firms. The hourly rates actually charged by the individuals who performed the work will need to be included in the bill as well.

The cost of photocopying is entirely discretionary in the scale. Guidelines for photocopying will be issued from time to time.

The scale provides an allowance for solicitors to approve documents drawn by Counsel prior to filing and service.

The scale provides for the leaving of messages by email or SMS or other means that are 20 words or less.

The charges for letters include delivery by any means. No additional charge applies.

The scale includes a charge to receive correspondence by any means and placing a copy of the letter on a file. This includes the printing of emails or facsimiles.

The scale differentiates between perusal, scanning and examination of documents.

Items 11, 12, and 13 of the scale include allowances for review and consideration, delegation and supervision, and research.

The scale provides allowances for redaction and collation, pagination and indexing of documents.

Item 17 of the scale includes an allowance of an additional amount having regard to the circumstances of the case.

Fixed fees are provided in relation to Corporations short form bills. Additional costs in the way of reasonable disbursements can be allowed.

Tips

An order for costs will by default mean reasonable 'costs' (standard basis) not the lower recovery test of 'necessary or proper' (party and party basis). Parties seeking orders on a different basis will require a specific order to that effect.

An order for indemnity costs means on scale - so if the intention is to order that costs be taxed on the basis of the costs agreement in place between the party and their lawyers this will need to be articulated in the order.

Parties who wish to recover interlocutory costs before the conclusion of proceedings will need to apply for a order that the costs be taxed forthwith.

Amendments to pleadings will be costs in the proceeding unless the Court orders otherwise. If a party seeks costs 'thrown away' (i.e. wasted as a result of the amendment) or costs 'of and occasioned by' (i.e. future costs arising from the amendment) they need an order to this effect.

Counsel must ask for an order if they are contending for costs to be recovered from the other party over and above the maximums in the scale ($7,500 for senior counsel and $5,000 for junior counsel). They can either seek an order for a specific sum, or an order that a figure above the maximum is appropriate with the quantum to be determined by the Costs Court on taxation.

Practice Note (No. 1 of 2013)

The New Scale of Costs and Counsel fees

1. The Chief Justice has authorised the issue of the following practice note.

2. Significant changes have been introduced to the Supreme Court of Victoria scale of costs contained in Appendix A and to the provisions in Rule 63 of the Supreme Court (General Civil Procedure) Rules 2005 generally. The changes are effective from 1 April 2013 and apply to work undertaken after that date.

3. The basis of allowance of costs has changed to abolish the default “necessary or proper” test for party and party costs. The standard basis of costs that are “reasonable in amount and reasonably incurred” is now the usual basis for assessment or taxation of party and party costs. Indemnity costs may be allowed if the Court so orders.

4. The scale in its preamble allows the Judge, Associate Judge, Costs Judge, Judicial Registrar or costs registrar full discretion to allow any fee, cost or disbursement in full or in part or such other fee, costs or disbursement as is fair or reasonable to compensate for the work actually done.

5. Item 19 in the new scale now contains maxima fees for Counsel. Where costs are taxed pursuant to an order of the Supreme Court, Counsel’s fees in excess of scale cannot be allowed by the Costs Court unless the Supreme Court otherwise orders. Therefore where costs are sought pursuant to an order of the Supreme Court, and a party seeks sums for Counsel’s fees in excess of the maximums in the scale, an application will need to be made to the Supreme Court at the time a costs order is sought and an order made that Counsel’s fees in excess of the scale be allowed before they can be allowed on taxation by the Costs Court.

6. The Supreme Court may fix the rate or amount of Counsel’s fees above scale, or direct the Costs Court to allow the fees of Counsel in excess of scale when assessing or taxing the costs. In the latter case the Costs Judge, Judicial Registrar or Costs Registrar will fix the rate of charge in excess of the scale amount.

7. The Costs Court will only have a full discretion to allow fees in excess of the maximum in limited circumstances. For example, pursuant to a Notice of Discontinuance or arising from the acceptance of a formal Offer of Compromise, or taxation pursuant to the terms of a Release, or in reviews under the Legal Profession Act 2004 where the reviews are conducted in accordance with scale.

8. Additional changes have also been made including:

(a) The scale is exclusive of GST. This amendment allows legal practitioners who charge their clients on scale to add GST to the total sum to be charged.

(b) The scale has been changed to allow a higher hourly rate for attendances but now in 6-minute units in line with most time recording systems currently used by law firms. The hourly rates actually charged by the individuals who performed the work will need to be included in the bill as well.

(c) The cost of photocopying is entirely discretionary in the scale. Guidelines for photocopying will be issued from time to time. The guide is not intended to limit the discretion to allow higher or lower fees if it is considered appropriate. Guidelines appears at paragraph 11 below.

(d) The scale provides an allowance for solicitors to approve documents drawn by Counsel prior to filing and service.

(e) The scale provides for the leaving of messages by email or SMS or other means that are 20 words or less.

(f) The charges for letters include delivery by any means. No additional charge applies.

(g) The scale includes a charge to receive correspondence by any means and placing a copy of the letter on a file. This includes the printing of emails or facsimiles.

(h) The scale differentiates between perusal, scanning and examination of documents.

(i) Items 11, 12, and 13 of the scale include allowances for review and consideration, delegation and supervision, and research. Applications to the Costs Court for allowances for these items will need to be supported by file notes or other means. The Costs Court has a full discretion to make allowances for claims made pursuant to these items depending on the proof produced and the particular claims made for perusal, scanning and examination in the bill of costs.

(j) Any claim made for research will not be allowed unless the research involves a legal question of some complexity that is not procedural in nature.
(k) The scale provides allowances for redaction and collation, pagination and indexing of documents. These allowances are for the time taken to complete each task that is reasonable in the circumstances.

(l) Item 17 of the scale includes an allowance of an additional amount having regard to the circumstances of the case. Rule 63 provides that bills of costs are to be prepared on an itemised and chronological basis without differentiation between instructions for brief or preparation for trial work and any other work.

(m) Fixed fees are provided in relation to Corporations short form bills. Additional costs in the way of reasonable disbursements can be allowed.
10. Appendix B of the scale includes allowances for Witness Expenses and interpreters’ fees. An additional fee or higher fees may be allowed if the Court makes an order for a higher rate.

11. Guide to reproduction of documents

The scale of costs allows a discretion in relation to copy documents. The new scale provides at item 4 that reproduction by photocopy or other machine made copy including hard copies of electronic documents shall be at the discretion of the Costs Court.

As a guide, the Costs Court will allow reproduction as follows:

Reproduction—

for each printed side of a page
0.22
If printed out of the office, the amount charged by the service provider should be claimed as a disbursement and will be allowed if reasonable.