Facts

The relevant conduct upon which the court exercised its discretion is set out at [5]:

(a) the issuing of the proceeding on 24 December 2008 in the name of Dr Cohen without obtaining his instructions or authorisation to do so;

(b) the maintenance of the claim (for nearly two years) in the name of Dr Cohen without any communication to him advising that he was the named representative plaintiff and therefore the subject of a number of obligations including that imposed by s 33ZD of the Supreme Court Act 1986 (Vic);

(c) the incurring of a number of costs orders against Dr Cohen – none of which were brought to his attention;

(d) the making of an allegation in the statement of claim central to Dr Cohen’s “claim” which, upon any reasonable investigation, was demonstrably false.

Decision

Principles

The key issues for consideration was whether there should be an award of costs against a legal practitioner acting without the authority of the client and, if so, whether to grant those costs on an indemnity rather than a party/party basis. In support of the former proposition Forrest J referred to the English  case of Fricker v Van  Glutten where his honour quoted, with emphasis added, the reasoning as follows:

As regards Mr Toppin, he has done what he ought not to have done. He got this informal consent, and acted on it, and occasioned the trouble that we are asked to set right; and following the course adopted in Nurse v Durnford and Newbiggin-By-the-Sea Gas Co v Armstrong we must order him to pay all Mr Weller’s costs, and all costs which he has been ordered to pay, and he must also pay to the defendants their costs so as to indemnify them. He must pay Mr Weller’s costs as between solicitor and client, and the costs as between solicitor and client, and the costs of the defendants as between party and party; and such costs must include the costs of this application both here and in the Court below. Mr Weller’s name should be struck out for the purpose of all future proceedings [emphasis added].

In determining whether the circumstances warranted the grant of indemnity costs rather than on a party/party basis his Honour’s specifically referred to Colgate Palmolive v Cousins and Ugly Tribe Company Pty Ltd v Sikola, extracting at [10] the special circumstances identified by Harper J in Ugly Tribe, inter alia:

(i) The making of an allegation, known to be false, that the opposite party is guilty of fraud: Fountain Selected Meats (Sales) Pty Ltd v. International Produce Merchants Pty Ltd.

(ii) The making of an irrelevant allegation of fraud: Thors v Weekes

(iii) Conduct which causes loss of time to the Court and to other parties: Tetijo Holdings Pty. Ltd v Keeprite Australia Pty Ltd.

(iv) The commencement or continuation of proceedings for an ulterior motive: Ragata Developments Pty Ltd v. Westpac Banking Corp.

(v) Conduct which amounts to a contempt of court: EMI Records Ltd v Ian Cameron Wallace Ltd.

(vi) The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law: J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA) Branch (No. 2).

(vii) The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial: National Australia Bank v Petit-Breuilh (No. 2).

and, (providing emphasis):

The position changes where a litigant acts dishonestly in the litigation, or where the rights and privileges of a litigant are flouted or abused. Then, the rationale for refusing to order that the losing party indemnify an opposite party against that party’s costs is less compelling. Indeed, costs are more frequently if not invariably awarded on an indemnity or like basis (such as that of solicitor/client) where findings of dishonesty or serious misconduct have been made against the party ordered to pay. (citations omitted and emphasis added)

Analysis

The court awarded indemnity costs against Oldham Naidoo, finding special circumstances, being:

1. but for the actions of Oldham Naidoo, this proceeding, in all probability, would not have been commenced and, so it must follow, the defendants would not have incurred costs in defending the claim. There was never  a realistic prospect of a plaintiff (properly informed of his or her obligations and responsibilities) taking on this case [15]
2. Between the time of issue and February 2011 Dr Cohen was kept in the dark as to the role Oldham Naidoo had created for him as representative plaintiff, despite a number of pieces of correspondence between himself and Oldham Naidoo. Oldham Naidoo did not attempt to enter into a costs agreement with him; it had no retainer (oral or in writing) from him. During the time he was the named representative plaintiff, four costs orders were made against him – none of which he was informed of. He only learnt that he was the representative plaintiff when informed in October 2010 by his son. [16]
3. Oldham Naidoo’s  conduct was deliberate [17].
4. The conduct of Oldham Naidoo amounted to a serious breach of its ethical obligations and arguably  a contempt of court [18]
5. the court rejected taking into account Oldham Naidoo’s acceptance of responsibility for its actions and the making of appropriate concessions. Its position was indefensible. [19]
6. this is a case involving a patent abuse of process by Oldham Naidoo [20]

Issue

This decision is not notable in setting out any new principles regarding the award of indemnity costs. It is however useful, when read with Cohen (No 2), in setting out the methodology and factors relevant in the award of indemnity costs in those rare cases  involving legal practitioners. The scope for such orders is arguably greater under the Civil Procedure Act 2010 than previously was the case.

Facts

The proceedings relate to two schemes promoted by Scully and others designed to allow consumers with financial problems to acquire their own home without a deposit or finance from banks or financial institutions in the short term [8].  The Director brought an action under sections 9, 11 and 12 of the Fair Trading Act in the public interest and representing the interests of certain individuals who participated in the schemes.  There were no pleadings and Associate Justice Daley dismissed an application to order a statement of claim [10 at footnote 1].

On 10 May 2011 the trial was adjourned, part heard, until 26 July 2011. The court called the parties back because of concerns as to the course the trial was taking.  His Honour was concerned that since the proceedings had been issued the nature of the allegations were contained across and originating motion, numbering 50 pages but drawn in broad terms, voluminous affidavit material, running to 11,000 pages over 26 volumes, and written outline of submissions which was at “..a high level of generality” [10]. As a consequence the court was reliant upon the Director and his legal representatives to identify his case, which the did not occur in the first four days of trial [11]. His Honour was quite critical of the assistance provided by the Director (see [15]) saying “..the Court requires significantly greater assistance from the Director than has been provided to date.”

The court was of the view that pleadings were necessary to define the many issues in the case and avoid possible injustice to the defendants ([3] – [4]).

Decision

Pleadings

At [26] the Court cited Mason and Gauldron’s statement in Banque Commerciale SA v Akhil Holdings Ltd that the function of pleadings “..is to state with sufficient clarity the case that must be met, so as to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision by the court.” Here the Director maintained a general case against “a number of defendants” and a six specific cases, involving multiple allegations and seeking various forms of relief, in respect of individual complainants.

Given the potential consequences of findings by the Court, including publication orders, compensation and legal costs, it was a case which requires pleadings “..to assist the Court and provide procedural fairness to the defendants who seek to defend themselves” [27].  This was not a proceeding which should be commenced by originating motion. It was a multifaceted proceeding raising substantial allegations of fact and law (see [32]). If defended it would involve a dispute over facts and even if undefended, pleadings would define the issues for determination. Properly pleading and particularising the claim would also rationalise the discovery.

At [33] his Honour stated “..proceedings of this kind ought be commenced by writ with a fully pleaded and particularised statement of claim, and not just by voluminous affidavits from which a case may be gleaned from submissions.”

Unrepresented litigants

Hargraves J quoted the recent decision of Noone Director of Consumer Affairs Victoria v Operation Smile (Australia) Inc & Ors (No 2) (“Operation Smile”) addressed what was expected of the Director, as a model litigant.  Hargrave endorsed Pagone’s statements in Operation Smile (see [18]):

(1) Circumstances such as the present place the Court and the parties in a difficult position. The Court has an obligation to assist unrepresented litigants. Further, the represented party may have a common interest with the Court in co-operating to achieve the correct result and, in every case, the legal practitioners for the represented party have duties to assist the Court in the discharge of its functions

(2)The Court’s duty to assist unrepresented litigants must be balanced against the requirement that the judge preserve his or her neutrality between the parties. However, the Court must ensure a fair trial for the unrepresented litigant.

(3) A public official such as the Director has an obligation to act as a model litigant. In that capacity, the Director shares a common interest with the Court in co-operating to achieve the correct result. Where one party has a burden to discharge, it is in the interests of justice to ensure that the burden is adequately and reliably discharged.

(4) In some cases, the represented party must assist the Court by drawing attention to matters which, if the unrepresented party was represented, would likely be brought to the Court’s attention by opposing practitioners. This includes matters which might be adverse to the interests of the represented party, ‘but which the Court ought fairly to consider even if only to reject’. It is particularly important for a model litigant, such as the Director, to bring such matters to the attention of the Court.

In cases involving allegations of falsity or misleading conduct it was necessary that the case with respect of each complainant group must be examined individually after hearing comprehensive submissions regarding the evidence and whether as a matter of law they constitute evidence of contraventions [19].

Overarching obligations under the Civil Procedure Act -unrepresented litigants

His Honour stated, at [21], that the Director had a paramount duty under the Act to further the administration of justice (section 16) which in specific terms in the context of this type of case included obligations:

1. to co-operate with the other parties to the proceeding – section 20;
2. to narrow the issues in dispute – section 23;
3. to use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the proceeding are reasonable and proportionate to (among other things) the amount in dispute – section 24; and
4. to use reasonable endeavours in connection with the proceeding to minimise delay – section 25.

Having regard to those obligations the Court was quite critical of the Director in the conduct of the litigation to date (see [23] – [25]).

Issues

In the gradually building jurisprudence of consumer protection law in Victoria this decision is of note in higlighting the complexity of defending a claim brought by originating motion by the Director of Consumer Affairs.  In my experience in Director Consumer Affairs Victoria v  Midas  Trading (Australia) Pty Ltd [2009] VSC 141 (9 April 2009) and Director of Consumer Affairs Victoria v  Abesta  International Pty Ltd & Anor [2009] VSC 639 (16 December 2009) an originating motion is accompanied by a significant number of voluminous affidavits in support.  This poses challenges for a defendant in framing a response.  Scully gives strong and binding guidance as how such cases should be framed by the Director in future and what issues defendants should expect. His Honour did not go so far as to find that all or even most proceedings issued by the Director under the Fair Trading Act should be accompanied by a statement of claim, whether by way of writ or otherwise, however it is a matter that practitioners should consider when dealing with consumer affairs litigation.

His Honour’s statements regarding the operation of the Civil Procedure Act regarding unrepresented litigants are particularly relevant.  They were framed in the context of a model litigant issuing complex proceedings however they are as equally applicable to a plaintiff/defendant opposed to an unrepresented litigant.

Facts

The claim in Matthews arose out of the Black Saturday bush fires.  The firm Oldham Naidoo (“Naidoo”) issued proceedings in the name of a Mr Keane for damages against SPI amongst others. Naidoo did not have instructions from Mr Keanne to issue the proceedings in his name.  Keane asked Naidoo to remove him as a plaintiff, something that did not happen for another year.  Matthews then replaced Keane as representative plaintiff.  After Maurice Blackburn took over conduct of the proceeding it brought Naidoo’s actions to the attention of the court and applied to regularise the proceedings.  The defendants resisted the application and sought variously to strike out the claim and obtain summary judgment.

In Cohen Naidoo issued a group proceeding in Dr Cohen’s name without his knowledge.  Naidoo sought but failed to find a person to be substituted for Cohen.  There had been a substantial history of amendments to the statement of claim. The court considered the application to strike out the proceeding as an abuse of process.

Ruling nos 1 

Lack of authority in a solicitor issuing a proceeding – does it render it a nullity

In opposing the application to regularise the proceeding SPI submitted that the irregularity, issuing a proceeding without authority of the named plaintiff, rendered it a nullity and that it was  incapable of cure by subsequent action or order of the court [40]. His Honour rejected this submission ([42]) stating, at [65]:

the established line of authority to the effect that a proceeding issued by a solicitor without the authority of a plaintiff be regarded, to use the terminology eschewed by the High Court, as neither “void” nor a “nullity“

He found that the defect could be cured if ratified by the purported plaintiff [66].  The fact that a Part 4A proceeding is commenced irregularly does not make it invalid or void from the commencement [73]. At [77] – [78], he rejected the submission that absent the existence of the principal/agent relationship between Keanne and Naidoo the proceeding should be treated as a nullity.  Agency is not essential to the act of ratification. At [79] his Honour stressed that the object of Part 4A was to permit one person in a group proceedings to have a group’s rights determined in a single proceeding. It was not the object of the legislation to render nugatory a group’s right because of the solicitor’s failure.

Is it possible for Matthews or Keane to ratify the institution of the proceedings

It was not necessary for the person ratifying the issue of proceedings being the plaintiff at the time of ratification ([87] – [88]). Keane had been removed as a plaintiff prior to the act of ratification.  His Honour referred to English authority which found that a nominal plaintiff could ratify a proceeding issued without its authority provided it was lawful to do so ([89] & [95]).

Should the proceeding be dismissed or stayed is an abuse of process (also the decision in Cohen)

SPI argued that even if the preceding was capable of ratification it remained an abuse of process in all the circumstances. The prejudice to the defendants included the calculation of interest in the event that the plaintiff was successful. Forrest J found that that it was open to the court to dismiss the claim is an abuse under section 33ZF.   He cited the principles enunciated by the High Court in Jeffery & Katauskas Pty Limited v SST Consulting Pty Ltd where the Court said, inter alia:

It is clear, however, that abuse of process extends to proceedings that are “seriously and unfairly burdensome, prejudicial or damaging” or “productive of serious and unjustified trouble and harassment

In claiming an abuse  SPI  relied on:

• the conduct of the solicitors ([102] & [104])
• the plaintiff and the group members have a remedy in the event that the claim is dismissed ([105])
• there was detriment the SPI regarding entitlement to interest([106])

It was not in the interests of justice to dismiss the claim at this point in time ([111]). His Honour made the point that the conduct of the solicitors is a matter for the court on another occasion and that of the Legal Services Commissioner (see [114] generally).  That said His Honour was not prepared to permit the plaintiffs to benefit from the original solicitors “contumelious actions” in precipitously issuing proceedings (see 119 – 129).To that end the plaintiff’s entitlement to interest would only commence on the 23 July 2010, the date of substitution.

Unlike the outcome in Ruling 1 Forrest J dismissed the proceeding in Cohen as an abuse of process.  He referred to the principles set out in Ruling 1 (see [34]) and distinguished the facts there with those in Cohen.  One important difference was that in Cohen there was no actual or putative plaintiff.  Another was that the uniformly substandard manner in which the proceeding was conducted by the plaintiff’s legal representatives. The specific reasons for acceding to the application are:

• the issuing and maintenance of this claim in Dr Cohen’s name was a patent abuse of process. He did not retain any solicitor to act on his behalf [43].
• Cohen had not sought to ratify the proceeding. It remained an unauthorised proceeding [44].
• there was no-one prepared to take on the role of representative plaintiff  and no discrete claim was issued by any group member prior to the expiry of the limitation period [45]
• Naidoo who issued the proceeding without authority was unable to procure a plaintiff prepared to take on the task [46]
• absent a litigation funder or a deep-pocketed lawyer who would carry the costs of the group, there is little or no prospect of finding a willing plaintiff  [47].
• even with appropriate notice there it was unlikely that someone would take on the role of representative plaintiff [48].
  
• the risk of there being, in a real sense, an infringement on the rights of any group member was very low [49].
  
• given the history of the proceeding to date and the issues that are likely to be raised, the prosecution of the claim would be “tortuous and lengthy and inevitably, the claim will be subject to further applications, which would result in the group being reduced in description or divided into sub-groups.” There was a risk that the claim would be “decertified” as a group proceeding and not conform with the requirements of s 33C [50].
• the case without a representative plaintiff had “vexed” the defendants for over two years – with numerous amendments to the statement of claim and interlocutory applications. There was no genuine prospect of it being prosecuted adequately in the future [51].

Ruling nos 2

Summary judgment

The State of Victoria, a defendant, applied for summary judgment relating to those allegations that Victorian police officers breached their statutory and common law duties. The allegations related to a failure to warn residents were exposed to the fire ([4]).  Forrest J reviewed principles relating to strike out at [15] – [22], in particular Rule 23.01, the High Court’s decision in Spencer v the Commonwealth and section 63 of the Civil Procedure Act. He found that the civil procedure legislation intended a less stringent test to be applied in determining summary judgement application.  At [22] he identified the relevant principles as being:

1. If a court determines that a particular cause of action is hopeless or bound to fail, then it should be dismissed;
2. A court may also dismiss a claim where it determines that it has no real prospect of success in the sense that such prospects are fanciful rather than realistic;
3. The less complex the issue in a case then the easier it is for a court to take the view that such a proceeding is capable of being determined on summary judgment; and
4. Whatever the test to be applied, the power to order summary dismissal of a claim must be exercised with care. This is particularly so where a case may involve issues of contested fact, or where its consequences may affect a large number of persons.

Statutory duty & common law breaches alleged against police officers

Forrest J reviewed  the police powers and duties at common law and under the Civil Procedure and the Police Regulations Acts ([28] – [37]) and the operation of Emergency Management Act and the relevant plan.  In that context he found that Victorian police officers did not owe a statutory duty to those who suffered personal injuries because the legislation did not impose an obligation on the police officers nor did the legislature intend to confer a private right upon individuals which would then entitle that person to sue for non-compliance ([68]).  It was question of statutory construction, the exercise of which he undertook at [70] – [87].

His Honour found there was a basis to allege a common law duty owed by the police. He relied upon the High Court authority of Sutherland shire Council v Heyman, Pyrenees Shire Council v Day and Crimmins v Stevedoring industry Finance Committee (see [104] ff).  The starting point in determining the existence of a common law duty was the statutory provisions which set out the powers of the authority or the person in question ([109]). That exercise  was not to be done in isolation, with his Honour quoting Gummow and French in the very recent High Court decision of Kuhl v Zürich Finance Services Australia Ltd at [114]:

“..in determining a duty of care, its scope and content “those questions are determined by considering reasonable foreseeability and the ‘salient features’ of the relationship between the plaintiff and the defendant”.

His Honour found the question of control as of critical significance in the imposition of a duty of care ([118]). In that context he found that the matters alleged in the pleadings could only be fleshed out at trial. Issues such as prior inspection of the area and the properties were also relevant regarding imposition of the duty ([119] – [120]).  The other matters which militated against summary dismissal were:

• that police officers exercise common law functions as well as their statutory powers and the exercise of those powers may point to a duty of care as well as opposing competing considerations (such as public policy, inconsistent obligations) are matters that can only be determined after the whole of the circumstances of the case can be determined [121] – [124].
• section 64 of the Civil Procedure Act which permits a case to proceed to trial even if there is no real prospect of success [126].  He found the nature of this case was such that full hearing on the merits is appropriate.

Issues

The Court made clear that the precipitate action in issuing proceeding sowed some of the seeds of the problems facing the plaintiff in both Matthews and Cohen.  Those problems included obtaining satisfactory plaintiffs and drafting statements of claim to the appropriate standards.  In Matthews the plaintiff was substantially successful in maintaining the proceeding and the core of its claim.  In Cohen the defects proved fatal.

The Matthews Ruling 1 and 2 Forrest J undertook a very useful analysis of Part 4 of the Supreme Court Act and its interrelationship with the Civil Procedure Act.  He continued, from other decisions commencing late last year, to consider the operation of the Civil Procedure Act.  In Matthews Ruling 2 he analysed sections 63 – 64 , relating to summary judgement applications.  Ultimately his Honour maintained the traditional caution of the judiciary in considering a summary judgment application, particularly involving determination of contested facts.

Calderbank offers

Croft J undertook a very thorough analysis of the operation of a Calderbank offer, extracting the key reasoning in the touchstone case, Hazeldene’s Chicken Farm,  including the rationale underpinning such offers ([11]) and the relevant factors to be weighed in deciding whether the rejection of a Calderbank offer is unreasonable ([12]). It is relevant to set out the  now ubiquitous factors relevant in consideration of whether the rejection of a Calderbank offer was unreasonable:

(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 compromise offered;

(d) the offeree’s prospects of success, 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 an indemnity costs in the event of the offeree’s rejecting it.

The discrete issue for consideration here was as to when the effect of a Calderbank offer commences; from the date of service of the offer or upon the date the offer expired. Under Rule 26.08 the costs consequences of an effective Offer of Compromise takes effect on the date it was served. A key differece between formal offers of compromise and Calderbank offers is the discretion available to the court in the latter case.  Croft J stated, at [14]:

Unlike the regime for costs consequences for offers of compromise under Order 26 of the Rules, the Court has discretion to decide when the costs consequences of a Calderbank offer commence.

Croft J, referring to similar rulings in Love v State of Victoria & Anor and  Foster v Galea (No. 2) held that the cost consequences of a successful Calderbank offer commenced on the date of expiry of the offer.  A separate factor which he regarded as relevant in the exercise of the discretion was the relative lateness of the offer, stating at [16]:

Additionally, regard should be had to the circumstances that it was the defendant which chose, at the “eleventh hour” to make the offer, in a proceeding issued in 2004. The defendant had in the timing of its offer itself created the possibility that if it succeeded at trial and the offer was not accepted within the time expressly limited the trial preparation costs would not be treated on a special basis.

Costs where  a claim may be regarded as without merit

His Honour stressed that the usual costs order is that the successful party be awarded costs on a party and party basis (see [7]) but , at [8] – [10], there was scope for the court exercise its discretion and make a special costs order where a proceeding had  no prospects of success.   His Honour makes it clear that such orders are  rare and the bar is set high; it needs to have been a hopeless case on the uncontroverted facts.  The Defendant submitted that the effect of the statutory defences pleaded, which was the basis upon which it succeeded at trial, and the known facts were such that the Plaintiff’s commencement and maintenance of the action was clearly unreasonable (see [17] - [21]). The Plaintiff contended that ultimately the deciding factor was preference by the court of the Defendant’s witnesses over those of the Plaintiff.  Accordingly the issue was not one of known facts but rather contested facts, requiring specific findings by the court.  His Honour agreed with the Plaintiff’s submission, stating at [22]:

…If I had accepted the evidence of the plaintiff’s witnesses, the plaintiff may have been able to prove reliance on the representations. The plaintiff’s case on the issue of reliance did fail, but it did not reach the high threshold of having no chance of success, or of being hopeless, so that a special costs order should be considered.

In this proceeding another factor, though not a decisive one, weighing against the Defendant obtaining such a costs order was that it had declined to have the court deal with the pleaded statutory defence as a preliminary legal point when given the opportunity  to do so.  It  preferred to have factual issues considered by the court together with the legal issues. The obvious inference was that the statutory defences were not decisive in and of themselves.

Issues

Based on his Honour’s consideration of the authorities on point, the likely commencement of a special cost orders consequent upon a successful Calderbank offer is the date of expiry of the offer.  That  said it is always a matter of discretion, a factor not available under the rules governing offers of compromise.

I will be  providing occasional posts on the  operation of the Act over the next 6 weeks. I have included the second reading speech in its entirety below.

This post focuses on section 1 of the Act. For practitioners the relevant provisons are section 1(2)  is the most relevant provision.  At least in the early stages of this process these provisions will be important in applying the rules of procedure.

It provides

Chapter 1—Preliminary

1   Purposes

(1)  The main purposes of this Act are—

(a)  to reform and modernise the laws, practice, procedure and processes relating to the resolution of civil disputes which may lead to civil proceedings and to civil proceedings in the Supreme Court, the County Court and the Magistrates’ Court and provide for uniformity;

(b)  to simplify the language relating to civil procedure;

(c)  to provide for an overarching purpose in relation to the conduct of civil proceedings to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute;

(d)  to amend various Acts in relation to the conduct of civil proceedings to reflect the new procedures.

(2)        Without limiting subsection (1), this Act provides for—

(a) overarching obligations for participants in civil proceedings to improve standards of conduct in litigation;

(b)  the facilitation of the resolution of disputes before civil proceedings are commenced;

(c)  the enhancement of case management powers of the courts, including in relation to discovery;

(d)  further enhancement of appropriate dispute resolution processes;

(e)  reform of the law relating to summary judgment;

(f)  clarifying sanctions available to courts in relation to contravention of discovery obligations.

The explanatory memorandum provides:

CHAPTER 1--PRELIMINARY
This Chapter sets out the purpose of the Bill, when the Bill commences,
definitions for terms used and the application of the Bill.

Clause 1   provides that the main purposes of the Bill are to reform and modernise the laws, practice, procedure and processes relating to
           the resolution of civil disputes which may lead to civil proceedings and to civil proceedings in the Supreme Court,
           County Court and Magistrates' Court and to provide for uniformity, to simplify the language relating to civil procedure
           and to provide for an overarching purpose in relation to the conduct of civil proceedings.
           Without limiting the purposes set out in subclause (1), the Bill implements the following specific reform initiatives--
             ·       overarching obligations for participants in civil proceedings in order to improve the standards of
                     conduct of all participants in litigation;
             ·       measures to assist the facilitation of the resolution of disputes before civil proceedings are commenced;
             ·       the enhancement of case management powers of the courts, including in relation to discovery;
             ·       further enhancement of appropriate dispute resolution processes;
             ·       reform of the law relating to summary judgment;
             ·       clarifying sanctions available to courts in relation to contravention of discovery obligations.

The Second Reading speech provides:

I move:

That this bill be now read a second time.

The Civil Procedure Bill 2010 will reform, modernise and unify the procedure for the conduct of civil litigation. Courts play an important role in adjudicating civil disputes and procedural rights and that role should, of course, continue. But as a public resource, courts must be used responsibly. Parties should not abuse their right of access to the courts by unnecessarily tying up court resources, thereby preventing others from accessing justice. A well-resourced litigant should not be able to use their power to play tactical games and draw out litigation until the other party is forced into an unfair settlement or withdraws.

This bill will curtail such behaviour and arm the courts with the power to prevent such conduct.

Parties should be encouraged to resolve their disputes by agreement, and where they require court intervention, the bill will ensure they adhere to appropriate standards of conduct. The result will be a more accessible civil justice system for those parties who need adjudication by the courts.

Very few of the cases which are lodged with the courts proceed to a final hearing. Most cases settle or are withdrawn prior to trial. However, the process to achieve resolution of civil matters that are started in the courts, including the cases that are settled before trial, is often unduly long and costly. The current cost of litigation has reached a point where access to the civil courts is beyond the reach of most Victorians.

Access to justice in the civil courts is not meaningful unless there are processes in place to facilitate the quick, just and inexpensive resolution of those disputes.

The Victorian civil procedure reforms represent a generational change in the way civil litigation will be managed. The proposed changes are the first major attempt at civil law reform in Victoria in over 20 years. Following the recommendations made by Lord Woolf in the Access to Justice Report (1996), the United Kingdom rules of civil procedure were subjected to a major overhaul. Extensive civil reform initiatives were implemented in New South Wales and Queensland several years ago, and recently by the federal government.

The Victorian reform proposals are, therefore, an extension of the trend of civil justice reforms in Australia and in the United Kingdom, and as a package they break new ground, particularly in the areas of the prelitigation requirements and the overarching obligations.

The bill recognises that the civil litigation system has become out of balance and is increasingly unable to achieve essential goals of accessibility, affordability, proportionality, timeliness and getting to the truth quickly and easily. This bill will make these goals once again more achievable.

One of the bill’s key objectives is to build a culture in which litigants are encouraged and empowered to resolve their cases without going to court. Lawyers, litigants, insurers, litigation funders, expert witnesses and the courts will be required to work together to achieve this important objective.

The prelitigation processes will provide a general framework for parties and lawyers to achieve resolution of the dispute or if that is not possible, to narrow the issues in dispute. The bill’s intention is to give real meaning to the saying that litigation should be a measure of last resort.

Once proceedings have been initiated, the role of the overarching obligations is to continue to encourage the parties and their lawyers to use reasonable endeavours to achieve early resolution of cases by agreement or to narrow the issues in dispute except where justice or judicial determination is genuinely required.

The bill also provides clear legislative guidance to judges to proactively manage cases in a manner that will promote the overarching purpose — that is, the just, efficient, timely and cost-effective resolution of the real issues in dispute.

This will empower them to give clear, effective directions in cases by requiring the parties to keep to the real issues in dispute. It should reduce the number of interlocutory applications in complex litigation and could be used, for example, to limit the time taken up in oral submissions.

At the core of these reforms is the concept of proportionality. Participants in litigation will be required to use reasonable endeavours to ensure that legal and other costs spent in the proceeding are reasonable and proportionate to the complexity or importance of the issues in dispute, and the amount in dispute. The courts will also be required to deal with a civil proceeding in the same manner.

These provisions are designed to cure unnecessary expenditure on litigation and the inappropriate use of the courts as a public resource, a matter that has been highlighted in several recent decisions.

I note recent judicial statements criticising the costs charged by some lawyers as being disproportionately high in comparison to the amounts in dispute, as well as urging lawyers to focus on resolving disputes, rather than attempting to win at all costs. Under the civil procedure reforms, these kinds of behaviours will need to change.

When the courts are used by litigants and lawyers in this way, the public loses faith in the justice system and the courts are unavailable to hear meritorious claims. This package of reforms will require all participants in the civil justice system to lift the standards of conduct in civil litigation and to work together to achieve a positive change in the civil justice system.

Reform process

Reform of the civil justice system was identified as one of the priorities in the Attorney-General’s first justice statement. The government gave the Victorian Law Reform Commission a reference in September 2006 to undertake a review of the civil justice system and the commission presented its report in March 2008.

The commission’s work was led by Peter Cashman and the report contains a comprehensive range of recommendations for reform of the civil justice system. The commission set strategic objectives for various reforms of the civil procedure rules, substantive law and case management. These objectives, now reflected in the bill, seek not only to change the formal rules for the conduct of proceedings, but to change litigation culture itself.

Justice statement 2 in October 2008 restated the government’s commitment to reforming civil justice using the VLRC report as a guide.

The government recognised that long-term change was not possible without first securing the agreement of the courts and the profession. Therefore, I established a civil procedure advisory group in November 2008 to consider the commission’s recommendations. The advisory group is chaired by the Chief Justice of the Supreme Court and has representatives from the Supreme, County and Magistrates courts, VCAT, the Victorian Bar, the Law Institute of Victoria, the Federation of Community Legal Centres and the Department of Justice.

The results of the advisory group’s deliberations are now proposed for inclusion in the Civil Procedure Bill and comprise the fundamental architecture for reform of the civil justice system.

I would like to thank the chief justice for her leadership of the advisory group and the members for their significant commitment of time and expertise. The reforms contained in the bill are proceeding with a high degree of support from these important stakeholders. The bill represents an outstanding achievement in collaborative law reform.

The bill is the first part of a major reform program that will continue until 2013, and is likely to involve at least one further piece of substantial amending legislation implementing the remaining recommendations of the commission’s report to be agreed to by the government.

The second phase will emphasise reviewing the costs rules for litigation, but will also include a review of the role of expert witnesses.

Summary of key reforms

The reforms will apply to civil proceedings in the three mainstream Victorian courts: the Supreme Court, the County Court and the Magistrates Court. VCAT is designed to offer flexible and cost-effective practices for determining specific types of disputes, and is not currently included within the scope of these general reforms.

With the exception of the prelitigation requirements, the bill will apply in a civil proceeding where a civil penalty is sought under a civil penalty provision.

The bill will not apply to criminal or quasi-criminal proceedings, for example proceedings for contempt of court, or to the acts listed in clause 4.

Overarching purpose and duties of the courts

The bill will introduce a uniform statutory statement to define the overarching purpose of the courts, which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.

This might be achieved by determination of the proceeding by the court, agreement between the parties or any appropriate dispute resolution process agreed to by the parties or ordered by the court.

A similar provision introduced in the United Kingdom at the time of the Woolf reforms has been used as the driving force for cultural change in the United Kingdom civil justice system.

The courts will be required to give effect to the overarching purpose when exercising powers or interpreting their powers. When giving effect to the overarching purpose, a court must have regard to a broad range of objects. I have already mentioned proportionality, but other objects include the public interest in the early settlement of disputes by agreement between the parties and the efficient conduct of the business of the court.

The court may also have regard to the extent to which the parties have complied with the prelitigation requirements under this bill or any other prelitigation processes.

This means that what the parties and their lawyers do before a proceeding commences may come under the scrutiny of the court later on, if it turns out that they have failed to take reasonable steps to resolve the dispute.

Overarching obligations — standards of conduct for parties

The bill contains new provisions prescribing standards of conduct in civil proceedings.

The overarching obligations will apply to parties, legal practitioners or other representatives of parties, law practices, any person who provides financial or other assistance to any party insofar as they exercise direct or indirect control, or any influence over the conduct of the proceeding or a party, for example, insurers and litigation funders. They will also apply, where relevant, to expert witnesses, but will not apply to lay witnesses.

The prelitigation requirements apply up until the commencement of proceedings. The overarching obligations commence as soon as a party files its first document in a proceeding and apply to all aspects of a civil proceeding, including appropriate dispute resolution processes, interlocutory proceedings and appeals.

‘Appropriate dispute resolution’ is defined in the bill. The government prefers this expression to ‘alternative dispute resolution’, as ‘ADR’ should become the appropriate vehicle for dispute resolution, not an alternative to ‘mainstream’ litigation. In the future, as a result of these reforms, litigation in the courts should be the last resort when all other options are exhausted, or where the interests of justice require it.

The bill provides that each person to whom the overarching obligations applies has a duty to the court to further the administration of justice. There are 10 overarching obligations that are components of the paramount duty.

Some of these obligations are very familiar to lawyers, and include duties to:

act honestly;

not make any claims or responses that are frivolous, vexatious or do not have, on the material available, a proper legal and factual basis; and

act promptly and minimise delay.

Others are completely new and draw upon good dispute resolution practice and promote the cultural change that is at the centre of these reforms. They include duties to:

cooperate with the parties and the court in connection with the conduct of a civil proceeding;

use reasonable endeavours to resolve the dispute by agreement or using ADR processes, unless it is not in the interests of justice to do so, or the dispute is of such a nature that only judicial determination is appropriate; and

as I mentioned earlier, to ensure that the legal and other costs incurred in connection with the proceeding are reasonable and proportionate to the complexity or importance of the issues and the amount in dispute.

In relation to the duty to ensure costs are reasonable and proportionate, an example of a possible breach may be the practice of briefing two barristers (senior counsel and junior counsel) where the complexity of the case does not warrant it. I note that the obligation is worded so that resources are not unreasonably constrained for cases that might in themselves be for a small amount, but that have significant precedent or public interest value.

The bill clarifies any potential conflict that a person who carries the overarching obligations may have with other legal, contractual or other obligations that person may have. It provides that the overarching obligations will prevail to the extent of any inconsistency. However, this provision does not override the lawyer’s special duty to the court, which is paramount.

Imposing equivalent duties on participants in litigation will address the conduct of some parties who sometimes are invisible to the court, but by their decisions inappropriately use the courts, to further their own interests.

Parties will be required to certify in their pleadings that they have read and understood the obligations and their lawyers will have to certify that the allegations they make have a proper basis.

There are examples in the United Kingdom, and interstate, such as in the Federal Court and in NSW, of overriding or overarching purposes for the courts. Victoria will be the first Australian jurisdiction to implement statutory conduct obligations that apply not only to lawyers, but to all participants who have the power to influence the course of civil litigation.

The chief justice has recently drawn attention to the ethical challenges faced by lawyers in light of the ever-increasing commercialisation of legal practice. This bill makes clear the fundamental ethical obligations of lawyers in conducting litigation, especially their duties to the court. It will assist them in resolving tensions between such duties and the demands of overzealous clients by also bringing clients and those who fund litigation within the orbit of the overarching obligations.

The court will be able to impose penalties for breach of the overarching obligations. In deciding if a sanction for non-compliance is appropriate, the court will be required to take into account whether or not a party has had legal representation.

A lawyer may be required to personally bear any costs order made by the court for breach of the obligations, and an order may be made that those costs are payable immediately and enforceable immediately.

General prelitigation requirements — background

The bill will introduce mandatory general prelitigation requirements for parties to use reasonable endeavours to resolve the dispute by agreement, or to clarify and narrow the issues in dispute in the event that civil proceedings are commenced.

The prelitigation requirements signify an important cultural turning point for the legal profession and potential litigants in that they will require persons involved in civil disputes to take reasonable steps, having regard to their situation and the nature of the dispute:

to resolve the dispute by agreement; or

to clarify and narrow the issues in dispute in the event that civil proceedings are commenced.

Each person involved in a civil dispute must exchange appropriate prelitigation correspondence, information and documents critical to the resolution of the dispute.

Each person involved in a civil dispute must also consider options for resolving the dispute without the need for civil proceedings in a court, including, but not limited to, resolution through genuine and reasonable negotiations or appropriate dispute resolution.

This bill does not make ADR compulsory, but persons involved in a civil dispute must not unreasonably refuse to participate in genuine and reasonable negotiations or appropriate dispute resolution.

Parties or their legal representatives will be required to certify that they have complied with the prelitigation requirements, and if they have not, to set out the reasons for such non-compliance.

It is at this stage that a party, if it regards that it would be unreasonable for it to comply with the prelitigation requirements, would set out the reasons why they have not. Examples might include where property is at risk of dissipation or destruction if advance notice of proceedings were given; where a party is terminally ill; where a limitation period is about to expire and a cause of action would be statute barred if legal proceedings were not commenced immediately.

A court may not prevent the commencement of civil proceedings in the court merely because of non-compliance with the prelitigation requirements, but where a party has failed to meet those requirements, they are at risk of adverse costs orders being made against them once they get to court.

Examples of a failure to comply might include an unreasonable refusal to participate in mediation or other ADR, or an unreasonable refusal to consider a reasonable offer of settlement.

The prelitigation requirements are less prescriptive than the general pre-action protocol recommended by the commission. The advisory group has given much consideration to achieving the right balance between providing enough guidance to the parties in the prelitigation stage, and avoiding creating a system that inadvertently builds in further layers of cost and delay.

The aim is to ensure that disputants have taken the opportunity to understand what is in dispute and to consider whether it can be resolved without resorting to litigation. In doing so, the prelitigation requirements only reflect current good practice.

It is recognised that there will be some disputes where it would be unreasonable to require the parties to go through a prelitigation process. There may be an urgent time limit that must be met, or the case is one in which only a judicial direction or decision will suffice. It is hoped that these types of cases will be adequately allowed for by the courts in considering the reasonableness of the parties’ actions in individual cases where the prelitigation process has not been adopted.

To provide some guidance around what matters do not need to follow this process, there are some limited statutory exceptions, including appeals, proceedings under the Charter of Human Rights and Responsibilities, and proceedings in which civil penalties are sought. The bill contains an exemption for Corporations Law matters in recognition of the prescriptive nature of many such proceedings (for example, chapter 5 liquidation proceedings), but this exemption may be reviewed in the light of any developments at the commonwealth level.

The existence of prelitigation protocols for claims under the Accident Compensation Act 1985 and the Transport Accident Act 1986 also qualify those claims for an exemption.

It is anticipated that most cases for which the prelitigation requirements would be inappropriate would be covered by the test in clause 34, which only requires reasonable prelitigation steps to be taken, having regard to the disputants’ situation and the nature of the dispute. However, the bill also provides the courts with a general power to exempt civil proceedings or classes of civil proceeding from compliance with the prelitigation requirements. This will allow the courts to make rules that more clearly identify the classes of disputant who are not required to take the steps envisaged by clause 34 where the courts think that such clarification is necessary.

In addition, the bill provides the courts with a rule-making power to design specific prelitigation processes for certain types of cases. The experience in the United Kingdom of the use of specific pre-action protocols has been very positive, according to Lord Justice Jackson in his recent final report on civil litigation costs.

It is expected that the development of any exceptions and specific protocols will occur in the consultative spirit that has characterised the reform process to date. The operation of the prelitigation requirements and any rules made to clarify their operation will be reviewed by the government to ensure that this new and innovative reform achieves its objectives.

Costs of compliance

Generally, there will be a presumption that each person involved in a civil dispute or party to a civil proceeding is to bear that person’s or party’s own costs of compliance with the prelitigation requirements, subject to the rules of court.

This presumption may be displaced where a court is satisfied that it is reasonable to do so, having regard to furthering the overarching purpose. A court may order that a representative of a party to a civil proceeding, rather than the party, pay some or all of another party’s cost of compliance with the prelitigation requirements if the court is satisfied that, by the representative’s conduct in relation to compliance with the prelitigation requirements, another party has unnecessarily incurred costs in complying with the prelitigation requirements.

Despite the general rule that each party will bear their own costs, where a party fails to comply with the prelitigation requirements, the court will be able take this into account in determining costs in respect of civil proceedings which are issued in respect of that civil dispute, or in making other orders.

Claims for personal injury under the Transport Accident Act 1986

Claims for personal injury under part 6 of the Transport Accident Act 1986 may be conducted in accordance with a voluntary prelitigation process. There are currently no sanctions for breach of the Transport Accident Commission’s voluntary prelitigation scheme. The sanctions for breach of the prelitigation requirements under this bill will also be applicable to claims conducted pursuant to the voluntary pre-action process under the Transport Accident Commission regime. The bill will not, however, interfere with the fixed costs regime that applies to compliance with the TAC prelitigation regime.

For transport accident claims that are not conducted in accordance with the voluntary prelitigation process, those claims will be governed by this bill — that is, they are civil proceedings as defined in the bill and must comply with the prelitigation requirements.

Express case management powers for judges and magistrates

The courts already have broad, inherent discretion to manage their own proceedings. The primary objective of the case management reforms is to make it clear that the courts have express power to make appropriate orders and impose reasonable limits to enable them to better or actively manage the conduct of proceedings, thereby reducing costs and delay.

The bill provides clear legislative guidance to judges to proactively manage cases in a manner that will promote the overarching purpose — that is, the just, efficient, timely and cost-effective resolution of the real issues in dispute.

The bill provides that for the purpose of ensuring that a civil proceeding is managed and conducted in accordance with the overarching purpose, the court may give any direction or make any order it considers appropriate.

This might include ensuring that the proceeding is conducted promptly and efficiently or encouraging the parties to cooperate with each other in the conduct of the civil proceedings, to settle the proceeding or to use ADR, or limiting the time for the hearing including the number of witnesses and the time taken for examination or cross-examination of witnesses.

The bill further provides that a court may make any order or give any direction it considers appropriate in relation to pre-trial procedures. This is an important power. The bill gives judges and magistrates powers to make orders in relation to setting timetables, time limits and time frames for completion of a proceeding and the use of ADR to assist in the conduct and resolution of all or part of the proceeding.

Further, the bill empowers judges and magistrates to make orders in relation to the conduct of the hearing in a civil proceeding, including: limiting the time to be taken in leading evidence, cross-examining or re-examining, not allowing cross-examination of witnesses or limiting the number of witnesses including expert witnesses and limiting the length of written and oral submissions.

Sanctions apply for breach of the case management orders or directions made by a judge or magistrate. These include costs orders, dismissal of the civil proceeding, striking out of parts of a claim or any other order that the court considers appropriate.

Liberalising the test for summary judgement

The bill reforms the procedure for the earlier determination of disputes, including liberalising the test for the summary disposal of unmeritorious claims and defences. This will help the courts to remove at an early stage cases where a party has no real prospect of success.

Improving appropriate dispute resolution

The bill provides that a court may make an order referring a civil proceeding, or part of a civil proceeding, to appropriate dispute resolution to resolve or settle the proceeding.

The provisions will be essentially facilitative and complement the legislation passed in 2009 in respect of judicial dispute resolution (the Courts Legislation Amendment (Judicial Resolution Conference) Act 2009). The courts are already empowered under their rules and legislation to make orders of this kind, but the purpose of the provision and the extensive definition of ADR is to encourage the courts to make more use of the variety of ADR processes that are available to litigants for resolving their disputes.

The bill also enhances the capacity of the courts to order that parties participate in non-binding ADR, with or without their consent.

There is an expectation that the courts will become, as the Supreme Court’s Commercial Court has named itself, a true litigation laboratory and get some runs on the board, encouraging and in some cases requiring parties to engage with appropriate dispute resolution processes to achieve an early settlement of their dispute.

Narrowing the test of discovery

The commission recommended reform of the procedure for the compulsory production of documents in civil proceedings. The discovery procedure is a critical element of fact-finding in litigation and has become a very contested and costly process.

The main concerns with discovery revolve around issues of expense, scale and delay, as well as abuse of discovery obligations.

It is identified by stakeholders as the most expensive aspect of the civil justice system. For example, it was reported that in one Supreme Court case, a party spent $40 million on the discovery process alone, and that 120 legal professionals worked on the discovery process.

At present, the respective courts’ rules require the disclosure of all documents that are directly or indirectly relevant to issues in a case. In the United Kingdom and some other Australian jurisdictions, the discovery test has been narrowed to remove the requirement of indirect relevance. The advisory group recommended that the test in Victoria be similarly narrowed and the government understands that the courts are currently considering adoption of a test similar to that applied by the Federal Court.

The bill implements the commission’s recommendations with respect to case management reforms and sanctions for discovery abuse.

As with the case management reforms, it clarifies that a court may make any order in relation to discovery that it considers necessary or appropriate, including limiting or expanding a party’s obligation to make discovery.

Further, the bill clarifies that a court may make any order or give any directions it considers appropriate if the court finds that there has been:

a failure to comply with discovery obligations;

a failure to comply with any order or direction of the court in relation to discovery; or

conduct intended to delay, frustrate or avoid discovery of discoverable documents.

Conclusion

This bill is a landmark reform in the way that civil disputes in Victoria are managed and resolved. It will strengthen the changes that are already occurring to develop a less adversarial approach to dispute resolution. It will promote a culture that focuses on achieving the best outcomes in a timely and cost-effective way for disputants, whether they are global corporations or individuals going about their daily lives. This government has already made great strides in promoting ADR. Now it is complementing those initiatives with a bill that provides the foundations for the comprehensive overhaul of civil litigation in Victoria.

FACTS

Mr Peter Spencer has conducted a vigorous campaign in the public arena and through Federal Court litigation against land clearing legislation and the attendant regulations.  A very useful summation is found at the ABC Law Report site.   He commenced proceedings against the Commonwealth in the Federal Court alleging that the restrictions imposed upon land clearing by New South Wales legislation constituted an acquisition of property. Because those laws were enacted in furtherance of an agreement with the Commonwealth such acquisition was made for the purpose of obtaining land other than on just terms and, accordingly, in breach of section 51(xxxi) of the Constitution.  The primary judge dismissed Mr Spencer’s claim pursuant to Rule 31A of the Federal Court Rules, the summary judgment provisions (see pars [10] - [13]).  The Full Court  dismissed Mr Spencer’s appeal (see [14] - [16] for more detailed discussion).

ISSUES

The decision, while unanimous, was considered in separate judgments of French CJ and Gummow, that of Hayne, Crennan, Kiefel and Bell JJ and a short judgment of Heydon J.  Rule 31A provides:

“(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Court has apart from this section.”

Per Hayne, Crennan, Kiefel and Bell

Their Honours regarded the starting point of any enquiry is, at [52], whether “..there is a “reasonable” prospect of prosecuting the proceeding, not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.”  The no reasonable prospect test differs from earlier rules of procedure relating to summary judgment applications where the exercise was a determination as to whether a proceeding would necessarily fail ([53]) with the test “requiring certain demonstration of the outcome of litigation, not an assessment of the prospect of its success” [54].

Their Honours in posing the question of how the expression “no reasonable prospect” should be understood explicitly refused to define it or provide a paraphrase by way of explanation ([58]). Instead their Honours stated :

• that in many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty” [59];
• the word “reasonable”, in the phrase “no reasonable prospect”, is sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim [59];
• the Federal Court can only exercise its summary judgment power “.if, and only if, satisfied that there is “no reasonable prospect” of success” [60];

Per French and Gummow

Their Honours undertook a detailed study of Rule 31A’s provenance (see [18] – [21]) and its distinction to strike out applications ([22] – [24]).

Their Honours stressed that in both summary judgment and strike out applications the exercise of power must always be attended with caution ([24]) and the court must apply a practical judgment in determining whether an applicant has more than a “fanciful” prospect of success ([25]).  In that context:

• Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue [25];
• Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter.

• Given existing authority may be overruled, qualified or further explained summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of the High Court, the Federal Court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success [25];

• Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution is warranted because it may be resolvable without conducting  mini trial [26];
• The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact [25];

ISSUE

On one level Spencer is confined to the operation of Rule 31A of the Federal Court Rules. The rules are specific, distinct and differ from Rules 22 and 23 of the Victorian Supreme Court Civil Rules of Procedure or its equivalents in other jurisdictions.  That said their Honours comments on the general principles are relevant when preparing submissions in such applications.

Burchell & Anor v Hill & Ors

Facts

The plaintiff issued a subpoena to the National Australia Bank Limited, a non party. The NAB objected to producing the documents specified on the (not unusual grounds) that:

1. it was fishing for documents for the purpose of determining whether there was a cause of action against NAB;
2. it was oppressive and too wide;
3. the documents sought were irrelevant.

Analysis

The issue Muhktar AsJ considered was the scope and operation of the phrase “..to produce any document for evidence..” found in Order 42A.01.  He posited the question, at [3], as:

The question is: does the expression ”for evidence” mean that the only document capable of being sought under this rule is a document – a tenderable document – that the subpoenaing party wants to tender into evidence at trial? The Bank says the rule is to be so circumscribed and relies on the decision of Gillard J in Kennedy Taylor (Vic) Pty Ltd v Grocon.

The plaintiff/respondent submitted that the test was whether there is a legitimate forensic purpose in having the documents produced.  Reference to for evidence only requires that the documents may be needed for trial.  After a detailed review of authorities Muhktar AsJ set out the following applicable broad propositions:

1. at [15], “..the expression “for evidence” might be conjectural but the idea … is to convey an intention that an interlocutory subpoena under rule 42A should not be used as a substitute for non-party discovery. It is looking to obtain documents after the completion of the ordinary pleading and discovery process for use, or potential use, at trial. Whether the subpoena does, or does not, will depend on the terms of the subpoena…it will come to an examination, some times an impression by the Judge, of the breath of amplitude of the document description and nature, and whether the recipient is required to make a judgment whether a particular document satisfies the description
2. at [16], “..for evidence” means no more than the document produced may be potentially required for evidence, either in-chief or by cross-examination.”
3. at [17], “..for evidence” means no more than the document produced may be potentially required for evidence, either in-chief or by cross-examination. “
4. at [18], having regard to court’s practice prior to orders 42 and 42A “..the test was whether there was a legitimate forensic purpose in seeking documents before trial, and if it would be in the interests of justice to compel production. ..the essential test was whether the documents were identified with sufficient particularity.“
5. at [19], “..much might depend on the timing. At an early stage, a court might be more inclined to direct a party to rule 32.07 because at that stage attention is usually focussed on case formulation or pre-trial process. However, closer to trial, a court might be more supportive of the subpoena as long as it was not too wide.”
6. at [20], in determining whether the document can permissibly be subpoened “A useful test and one which I shall apply here is to ask whether the subpoena would have been objectionable if it was made returnable at trial.“

The NAB contended the subpoena was oppressive because there was evidence of illicit purposes.  Shortly before issuing the subpoena the plaintiff wrote to NAB and intimated that it was liable to compensate the plaintiff because a contravention of section 260A of the Corporations Act.  The court took into account the plaintiff’s disavowal of any ulterior purpose and noted that the subpoena was issued in the shadow of a looming trial.  The documents were relevant for that trial.  If they could be used for another purpose there would be a real question of the Court providing leave.  The Court was interested in the  issue at hand.  Compare this approach to that taken by Gillard J in Kennedy Taylor.

Issue

The propositions the court set out while very broad and general are a very useful point of reference when framing a subpoena under Order 42A and making application to set aside such a subpoena.  Some caution is warranted in relying on this decision as determinative of the scope of Order 42A subpoenas.  Gillard J in Kennedy Taylor (Vic) Pty Ltd v Grocon adopted a far more stringent test on the question of “evidence” as did Kaye J in Newnham v Davis. Muhktar AsJ essentially distinguished those decisions on the facts.

Re Bill Express Limited (in liq)

Facts

The applicant’s complaint at first instance, see [3],  was that the wording “all books and records relating to the affairs of [the] Bill Express [Group]” was oppressive and that the use of the expression “relating to the affairs” was uncertain and too wide.  On appeal the applicants in addition to maintaining the objection submitted the summons were beyond power because, see [6],:

1. summons issued under 596B of the Corporations Act must be “specified” whereas the summons described the documents as “relating to” the examinable affairs of the corporation;
2. the documents sought must be confined to examinable affairs of the corporation;
3. it is a fishing expedition;
4. it is too wide

Analysis

Davies J embarked upon a detailed analysis of sections 596D and 596B.  The court’s power under section 596B is enlivened when an eligible applicant provides sufficient facts which which satisfy it that the person summonsed may be able, rather than will be able,  to give information about the corporation or its examinable affairs.  It is not a high threshold (see [13]).  While the discretion is unfettered it must be exercised judicially (see analysis at [14]).

Davies J found that “relates”, a word capable of wide meaning, must be construed in the context within which it appears ([22]).  She found:

In this context, the phrase operates to indicate the requirement that there must be a connection between the documents sought to be produced and the examinable affairs of the company. It follows that a document that is unconnected with the company the subject of the examination or of its examinable affairs would not be a document required to be produced

Regarding point 2 of the applicants submissions her Honour summarised the guiding principles, after a detailed examination of the authorities,  as “the cases confirm that the scope and exercise of the power to order the production of documents for the purposes of an examination depends on the scope and exercise of the power to order an examination.” (see [26]). Where there is no limitation on the subject matter of the examination, other than it is about a corporation’s examinable affairs, the examinee must produce all books and records relating to the affairs of the  corporation.

Davies, extracting Re New Tel (In Liq) listed legitimate purpose of examination under 597 of the Corporations Act (see [27]):

(a) an examination is designed to serve the purpose of enabling an eligible applicant to gather information to assist the eligible applicant in the administration of the corporation;

(b) an examination assists the corporation’s administrators to identify the corporation’s assets, both tangible and intangible and also allows the corporation’s liabilities to be identified;

(c) the purpose is to protect the interest of the corporation’s creditors;

(d) the examination serves the purpose of enabling evidence and information to be obtained to support the bringing of proceedings against examinable officers and other persons in connection with the examinable affairs of the corporation;

(e) an examination assists in the regulation of corporations by providing a public forum for the examination of examinable officers of corporations.

Her Honour considered the meaning of “specified books” ([29] – [34]). She found that section 596D(2) requires no other construction than the ordinary meaning of “specified” (see [33]).   To that end she stated:

Where an order is made under s 596B, the summons must identify the books and records required to be produced with sufficient clarity to enable the recipient to know what the documents come within the terms of the summons to be able to form a reasonable view about what must be produced in order to comply with the summons. The inquiry, in each particular case, is the degree of specificity required to provide the clarity and precision that the section mandates.

Her Honour found the summonses were not too wide or oppressive noting that

1. the applicants, although not officers of the company had significant involvement in its affairs.  The onorous nature of the request is no reason not to comply provided it complies with the statutory requirements of section 596D.;
2. the appropriate test in determining whether the summons is oppressive is “.whether the summons makes “reasonably clear” what documents must be produced.” (see [37])

Issue

Courts take a broad view regarding liquidators summonses.  There is limited utility in taking issue with broad terminology typically used in framing such summonses.

]]> http://www.peteraclarke.com.au/2010/04/08/production-of-documents-summons-and-subpoena-re-bill-express-limited-in-liq-2010-vsc-101-31-march-2010-burchell-anor-v-hill-ors-2010-vsc-96-31-march-2010/feed/ 0 http://www.peteraclarke.com.au/2010/04/05/no-case-submission-operation-of-section-159-of-the-fair-trading-act-blackman-ors-v-gant-anor-2010-vsc-109-31-march-2010/ http://www.peteraclarke.com.au/2010/04/05/no-case-submission-operation-of-section-159-of-the-fair-trading-act-blackman-ors-v-gant-anor-2010-vsc-109-31-march-2010/#comments Mon, 05 Apr 2010 13:24:21 +0000 Peter Clarke http://www.peteraclarke.com.au/?p=635 In Blackman & Ors v Gant & Anor Vickery J considered a very interesting no case application by the Second Defendant.  This is a case that has drawn considerable press coverage, including in the Australian and the Age.

FACTS (pars 4 – 11)

The Plaintiffs are the artist Charles Blackman and his trustee, Robert Dickerson.  The Second Defendant is Peter Gant, an art dealer.  Gant originally supplied three works of art to a Helen Stewart , another art dealer, together with two valuations of the works.  She was the former First Defendant.  Stewart sold the works to a a Robert Blanche, giving him a copy of the valuations.  The evidence is that Blanche relied upon one of the valuations when purchasing the works and used the other for insurance valuation purposes.  When, later, Blanche was advised that the works were not authentic he returned them to Stewart who refunded his money.  Stewart then returned the works to Gant.   The Second Defendant maintains the works are authentic.  The issue before Vickery J was confined to the Second Defendant’s no case application.

ANALYSIS

The Plaintiffs claim, at [12], that the valuations impliedly represent that the works were authentic and consequently a breach of section 9 of the Fair Trading Act.  The Plaintiffs claim loss and damage (see [21] - [24], [27] and [33] – [36]).

No case submission – generally

Vickery J, as is his wont, set out the principles governing consideration of a no case submission, at [2], quoting Kaye in Oakley & Anor v Insurance Manufacturess of Australia:

1. Where a no case submission is made in a trial by jury, the role of the judge is to determine whether, on the view of the evidence most favourable to the party against whom such a submission has been made (“the respondent party”), the jury could (not would) find in favour of the respondent party.
2. The test which is applicable, where a judge is sitting without a jury, is less stringent. In such a case the judge may uphold a no case submission, notwithstanding that the evidence, on the view most favourable to the respondent party, could support a judgment in favour of the respondent party.
3. In such a case the judge may perform an assessment of the quality of the evidence which has been called on behalf of the respondent party. In some cases, such an assessment may involve the judge evaluating the credit of witnesses from whom such evidence has been called.
4. In determining a no case submission, the judge is entitled to draw inferences from the evidence.
5. On a no case submission, the judge cannot draw an inference against the party making the submission (“the moving party”) based upon the absence of evidence from that party.
6. Although the judge, sitting alone, may assess the quality of the evidence in determining a no case submission, nonetheless the test which is to be applied by the judge, at that stage, is different to the test which the judge would apply in determining the ultimate outcome of the case, at the conclusion of a trial. Notwithstanding that the judge, in determining the no case submission, may assess the quality of the evidence, nonetheless the test remains whether, on the evidence so assessed, the judge “could” (not would) find for the respondent party on the evidence so far led. In such a case, the judge would only find against the respondent party if the evidence, so far adduced, is so unsatisfactory or inherently unreliable or equivocal that he were to conclude that he could not be reasonably satisfied of the case made by the respondent party on the evidence thus far adduced.

(my emphasis)

No case application – misrepresentation.

Counsel for the Second Defendant submitted, (see [14 ] – [16]) that the valuations were opinions of market value, not representations of authenticity.  As such the valuations did not constitute a representation under section 9 of the Fair Trading Act.  A valuation is an opinion of worth, not statement of fact, and as such is not a representation or misrepresentation.

His Honour did not accept this submission stating at [18]:

18 However, I am satisfied that there is evidence from which it is open to conclude that the valuations served a dual purpose. True it is that they contained an opinion of value. However it is open to conclude that the valuations also contained an implicit representation of fact that each of the works in contention were authentic works, each having been created by one of the Plaintiffs.

(my emphasis)

No case application – loss and damage.

It was also submitted that the sole recipient of the representation was Blanche.  Blanche is not a Plaintiff.  There was no evidence that he suffered any loss or that the valuations were circulated in the market place.   Vickery J extracted the relevant paragraphs and found that the relief sought included future loss and damage if valuations were used in the future in conjunction with the sale of the works (see [27] – [28]).  That element of the claim justified the claim for permanent injunction regarding the use of the valuations.  In considering sections 149 and 149A of the Fair Trading Act, empowering the grant of injunctive relief, Vickery J stated, at [30]:

30 These sections of the Fair Trading Act are framed in broad terms. On their face they arguably do not depend upon any person being actually mislead by conduct which contravenes section 9 of the Act. Rather, it is the conduct in breach of section 9 which may give rise to a grant of relief under section 149 .. The relief sought by the Plaintiffs in this case under paragraphs 1-3 of the relief claimed, would appear to fall within the ambit of these statutory provisions.

While Vickery J found there was a case to answer regarding the claim for injunctive relief he found there was no case to answer regarding the Plaintiffs’ claim for $25,000 in damages.  Section 159 of the Fair Trading Act requires a causal link between the contravening conduct and the loss and damage claimed, [34].  After analysing the evidence thoroughly (at [37] – [43]) his Honour found while thre was considerable evidence going to authenticity of the works (though he noted no declaration was sought on same in the pleadings - [41]) there was no evidence that valuations or their use had any effect causing the loss claimed.  On that point Vickery J found there was no case to answer the claim for $25,000.

No case application – the election.

The usual rule in making a no case submission is:

1. a judge will not rule on a no case submission unless the applicant states it will not call evidence in the event that submission is unsuccessful [44]. It is however a matter of discretion whether the judge puts the applicant to his election.  The exercise of the discretion depends on “..depends on matters which go to the just and convenient disposition of the litigation and the interests of justice.”
2. a judge will rule on whether to put the the applicant to his election after the submission is made.

His Honour did not put the applicant to his election because of the serious allegations being made; that an art dealer represented that fakes were authentic and sold fakes.  This is particularly serious for a dealer continuing to operate in the art market. In the circumstances the Second Defendant should have the opportunity to put on evidence against the case put against him.  Curiously his Honour regarded the publicity associated with the case as a factor, stating (at [46]), “I cannot ignore the measure of publicity that this case has attracted.”

ISSUE

No case applications are, not surprisingly,  infrequently made.  In a matter where the facts are actively contested the prospect of being put to an election rightly warrants a conservative approach.  If an application is contemplated it is critical to carefully analyse the Plaintiff’s evidence against the pleadings.  In this case the  Second Defendant was partially successful because the Plaintiff’s evidence focused on authenticity claims rather than evidence of actual loss.  As Vickery J made clear, one does not equate with the other.

Sanelli v Sanelli & Anor

Mukhtar AsJ in Sanelli considered a very full throated application by the plaintiff for indemnity costs.  At [29] Mukhtar AsJ set out the broad principles

29 An order for indemnity costs is a departure from the Court’s usual course and special circumstances must be shown. In my experience, applications for such orders are increasing in modern litigation but overall they are difficult to obtain, certainly in borderline cases. Great care must be taken in reaching a conclusion at the urging of a victorious litigant that the losing litigant somehow conducted itself delinquently as litigant so as to attract an indemnity order, as if it were an expression of the Court’s admonition. Such an order may be made where proceedings are commenced or continued in wilful disregard of known facts or clearly established law, or where there is undue prolongation of a case by groundless claims, or conduct of proceedings for an ulterior motive, or where a litigant acts dishonestly in the litigation or flouts or abuses rights and privileges. They tend to be cases where a Court might think that a litigant properly advised had no hope of success and therefore must be taken to have proceeded for some illicit motive or chosen to wilfully disregard the law. That would require a strong finding to sustain a judicially exercised discretion.

The Plaintiff claimed indemnity costs arguing that the second defendant never had a case [2], more technically described wilful disregard of the law, and a Calderbank letter where the Plaintff offered to bear her own costs if the second defendant would consent to monies held in Court being released to her.  The second defendant, notwithstanding withdrawing its defence 5 days from the scheduled commencement of the trial date argued that there should be no order as to costs because of the Plaintiff’ obstructionist behaviour.  The plaintiff’s claim was grounded on the equity of exoneration (usefully described at [23] – [27]) however the Plaintiff did not plead her case in those terms until approximately half way through the proceeding.  Mukhtar did not regard the extensive discovery and enquiry as being evidence of a lack of a defence.  Similarly he regarded some of the defences as being dubious.  Against this he noted that the ultimately successful claim was formulated lateish in the piece [34].  His Honour in analysing whether the rejection of the offer was unreasonable in the circumstances noted that the Calderbank offer was made 2 months before the Plaintiff amended her claim and at the time the offer was made the second defendant still had not “.. had all the relevant objective material to enable a litigator to give definite advice, or at least could say to their client that they had exhausted all means to dutifully investigate the case.” [40].  Timing of an offer an offer  is critical in determining the reasonableness in rejecting it.

O’Reilly v TS & B Retail Systems Pty Ltd

This was an appeal regarding a costs ruling made at the conclusion of a County Court trial.  The Court set out in some detail the exchange of offers and related correspondence.  A Defendant’s offer was made on Friday 16 May 2009 and left open until 5pm Monday 19 May 2009.  The plaintiff rejected that offer just before noon on 19 May and made a counter offer, leaving it open until 5pm the next day.  The court noted the very short period within which the offers were left open but regarded it as significant that even with such a short time frame the Plaintiff was sure enough  to reject the defendant’s offer with 6 hours to spare. The trial judge found it was unreasonable to reject the 16 May offer.  The Court approved of the trial judge’s analysis, recounted at [31],  including the haste of the Plaintiff’s response without properly considering the risks. The Court also highlighted the fact, at [20], that “..An order for indemnity costs does not entitle the party in whose favour it is made to recover whatever sums he incurs. Costs incurred unreasonably are not recoverable, nor are those of an unreasonable amount.”  The Plaintiff’s figures lacked credibility. It is very important for the offeree to be as temperate and resaonable as possible in any correspondence and couteroffers.

Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2)

As is his wont Croft J undertook a very detailed analysis of the operation of Order 26 [12] – [16],  Calderbank offers [17] – [20] and orders for non party costs [40] – [53].

Croft cited the factors of reasonableness set out in Hazeldne’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2):

(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 compromise offered;

(d) the offeree’s prospects of success, 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 an indemnity costs in the event of the offeree’s rejecting it.

His Honour made the point that in exercising its discretion it must judge the conduct of the offeree at the time of the offer but not with the benefit of hindsight.  To that end his Honour considered the offers in the context of the stage of the litigation process.  The authorities make it clear there is no rule requiring the maker of an offer to set out the reasons why the offer should be accepted.  It depends upon the circumstances.  In Tenth Vandy the Court did consider the analysis set out in the various Calderbank offers.  In his considerations the Court also noted the intemperate and “quite ridiculous offers to settle with the defendants on payment of sums in the millions of dollars..” [38]. The Court found that the plaintiff’s correspondence indicates that it was not behaving reasonably. Interestingly the Court in O’Reilly referred to some quite pungent correspondence. All the more reason for an author to remove as much emotion from correspondence as possible.  In considering the reasonableness of the refusal one should assume a court will be unimpressed by an offeree making serious allegations of misconduct or allegations relating to the proceeding unless it is relevant to the offer.

The Court ordered costs against a non party in this case.  It is an unusual order to make.  The basis for making an order was set out in [51] where Croft J said:

51 The jurisdiction to award costs against a non-party is not enlivened unless the non-party has a sufficient connection to the proceeding.  Elaborating on this requirement, and by reference to Burns Philp & Co v Bhagat, Bischof v Adams and also Guss v Geelong Building Society (in liq), Ashley J said:

“The Court’s power to award costs under s 24(1) of the Supreme Court Act is wide enough to order that costs be paid by a non-party. Focussing upon the general situation – that is, putting the circumstances raised by r.6323 to one side – it may be said that such an order is always exceptional. In the vast majority of cases it would be unjust to make an award of costs against a non-party. It may also be said that whilst certain categories of persons have been identified as persons against whom such orders may be made, the Court’s discretion is not confined to those categories of persons. A further proposition may be put, that is, that a non-party against whom an order is made must have a connection with the proceeding in question. Gobbo J dealt with the matter of connection in Bischof. His Honour concluded that in the exercise of the discretion it would be pertinent to take into account the extent of the connection between the non-party and the proceeding and the causal connection between the third party and the costs. His Honour pointed out, correctly in my respectful opinion, that in some cases the connection between the non-party and the proceeding may be slender, but there may be a close relationship between the non-party and costs (or increased costs) incurred. At the other extreme it may be that the non-party stands to benefit greatly from a proceeding, but may not have had any real part in supporting the proceeding, and so any real part in the incidence of costs.”

The court made the connection between the natural person and Tenth Vandy, his corporate vehicle, in the conduct of the litigation and incurring of costs by the defendant.  The Court was satisfied that the natural person was in effect the driving force behind the litigation and he had personal interest in the outcome.  It should be noted that just being a director is not a basis for a non party costs order. There must be a significant connection to the proceeding.

Interestingly, while  the Court made the non party jointly and severably liable for the costs the  non party’ s liability “…should be subject to the proviso that the liability … is not to arise unless and until the plaintiff fails to meet its obligations to pay the defendant’s costs” [56].  Such an order is indicative on the conservative approach of the Courts to make non party costs orders.

But there is a limit and there is propriety………….and Singh v Secretary, Department of Employment and Workplace Relations is a salutory lesson in overstepping the line.  

The Full Court’s commentary on the merits of the appeal are uncontroversial and the path of the litigation, with a determined and somewhat obsessive self represented litigant  is fairly predictable.  The Full Court however was less than impressed when the Respondent, effectively the Commonwealth Government, embarked on communications with the bench after the conclusion of the hearing. The two issues Sparke Helmore raised was:

• a correction to the Appeal Book and Respondent’s submissions as to the name of the Respondent differed from the terms of the Order by Goldberg (par [63]).
• correcting a statement made by a witness in an affidavit (par [64])  

The bench quoting Mason J in Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246, and Branson J in  Jackson v Conway [2000] FCA 1530 made it clear that Sparke Helmore should not have sent the letter without the court’s leave (par [68]).  Part of that irritation was no doubt because shortly thereafter the appellant, a tough customer by any measure, put in further submissions without leave.  When the door is opened all sorts walk through.     

One is fairly sure some judges are less than impressed when a decision contains comments such as:

73 The respondent’s solicitors’ letter not only should not have been written but it is not helpful.

74 The respondent’s solicitors suggest that the respondent should be described as “Secretary, Department of Employment and Workplace Relations” “as the proceeding was commenced in that name and the Court has not made an order changing the name”.

75 We do not agree. The respondent should be correctly described.

The general principle is pithily and pointedly set out at paragraphs [70] – [71]:

70 Legal practitioners and the parties, represented or not, must understand that they should not make supplementary submissions to the Court after an appeal has been heard, and whilst judgment is under consideration, without first obtaining the Court’s permission. The parties must make their written submissions before the hearing of the appeal. The hearing of the appeal is for oral submissions. It is not designed to provide the parties with material for further written submissions.

71 At the completion of the hearing of the appeal the parties’ right to make submissions on the appeal is exhausted. If it were otherwise and a party could simply present a further submission, the appeal could go on interminably. Such would be inconsistent with the maintenance of the administration of justice.

The fact situation in Woy Woy Promenade Pty Ltd v Nu Squeeze Cafe Pty Ltd  involved a determination on whether a lease was enforceable and the respondents liable as guarantors for the lessee against the respondent’s claim that there had been a valid termination on the basis that the building works were not concluded by a specified date.   The appellant did not either election or waiver, presumably in a reply, or in oral submissions.  On appeal the appellant wanted to raise election or waiver for the first time. Giles J dealt with the late submissions in every bit a snippy way was the Federal Court in Singh when he said:

48 Election and waiver were not pleaded below. Nor were they raised in submissions, save that counsel for the respondents observed that there had been no suggestion of waiver or estoppel or any conduct that would otherwise prevent them from relying on cl 2.5(b) of the deed.

49 The appellant submitted that it should be permitted to raise election and waiver on appeal. It said that the first respondent’s payment of rent after 30 June 2004 and until October 2004 was a clear election and founded a clear waiver, and that other evidence could not reasonably have been given to negate election or waiver. It said that election and waiver were always relevant to the question of valid termination, as indicated by the observation made by the respondents’ counsel.

50 These last submissions were rather remarkable. Even if relevant, election and waiver were not relied on, and that was the point of counsel’s observation. Pointing out that something is not an issue does not make it an issue.

51 There had to be conduct unequivocally affirming the deed, with knowledge of the facts entitling termination. While the evidence of it was sketchy, the payment of rent was accompanied by complaints about access to the ramp; in substance, about the absence of the kerb scoop and the marked pedestrian crossing, affecting access by potential customers to shop 4. It is not clear that the respondents knew of the consent plans, or of condition 22; some knowledge may be inferred from the letter of 29 October 2004, which referred to inquiries indicating “that the work in accordance with the development consent has not been complied with and Council has now issued an order requiring compliance”, but when any knowledge was acquired is unclear. Neither other communications with the appellant nor knowledge of construction of the ramp contrary to the development consent was explored at the trial, as matters bearing upon whether there was election or waiver by the payment of rent. This could well have been done if election or waiver had been pleaded. In my opinion, the appellant should not now be permitted to rely on election or waiver: it is sufficient to refer to Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438 and Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7-8.      

(My emphasis)

The current movement for intensive case management puts pressure on that parties to plead only that upon which they intend to rely.  That seems trite given that is as it should be.  But not to raise waiver and election in a case like this does make one check his or her P & I policy.