Civil Procedure in New South Wales [3 ed.]
 97804552322607

Table of contents :
Civil_Procedure_in_New_South_Wales_----_(Pages_1_to_56)
Civil_Procedure_in_New_South_Wales_----_(Pages_57_to_112)
Civil_Procedure_in_New_South_Wales_----_(Pages_113_to_168)
Civil_Procedure_in_New_South_Wales_----_(Pages_169_to_224)
Civil_Procedure_in_New_South_Wales_----_(Pages_225_to_280)
Civil_Procedure_in_New_South_Wales_----_(Pages_281_to_336)
Civil_Procedure_in_New_South_Wales_----_(Pages_337_to_392)
Civil_Procedure_in_New_South_Wales_----_(Pages_393_to_448)
Civil_Procedure_in_New_South_Wales_----_(Pages_449_to_504)
Civil_Procedure_in_New_South_Wales_----_(Pages_505_to_560)
Civil_Procedure_in_New_South_Wales_----_(Pages_561_to_616)
Civil_Procedure_in_New_South_Wales_----_(Pages_617_to_672)
Civil_Procedure_in_New_South_Wales_----_(Pages_673_to_728)
Civil_Procedure_in_New_South_Wales_----_(Pages_729_to_784)
Civil_Procedure_in_New_South_Wales_----_(Pages_785_to_840)
Civil_Procedure_in_New_South_Wales_----_(Pages_841_to_896)
Civil_Procedure_in_New_South_Wales_----_(Pages_897_to_952)
Civil_Procedure_in_New_South_Wales_----_(Pages_953_to_1008)
Civil_Procedure_in_New_South_Wales_----_(Pages_1009_to_1064)
Civil_Procedure_in_New_South_Wales_----_(Pages_1065_to_1120)
Civil_Procedure_in_New_South_Wales_----_(Pages_1121_to_1139)

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CIVIL PROCEDURE IN NEW SOUTH WALES

Thomson Reuters (Professional) Australia Limited 100 Harris Street Pyrmont NSW 2009 Tel: (02) 8587 7000 Fax: (02) 8587 7100 [email protected] http://www.thomsonreuters.com.au For all customer inquiries please ring 1300 304 195 (for calls within Australia only)

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INTERNATIONAL AGENTS & DISTRIBUTORS

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CIVIL PROCEDURE IN NEW SOUTH WALES

THIRD EDITION

MIIKO KUMAR Faculty of Law University of Sydney

MICHAEL LEGG Faculty of Law University of New South Wales

ILIJA VICKOVICH

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Macquarie Law School Macquarie University

LAWBOOK CO. 2016

Published in Sydney by Thomson Reuters (Professional) Australia Limited ABN 64 058 914 668 19 Harris Street, Pyrmont, NSW First edition (Boniface, Kumar) 2009 National Library of Australia Cataloguing-in-Publication entry Miiko Kumar, Michael Legg, Ilija Vickovich. 3rd edition. ISBN 978-0-455-232260-7 (pbk) Includes Index. Subjects: Civil Procedure—New South Wales. Procedure (Law)—New South Wales. Court Rules—New South Wales. 347.95504

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© 2016 Thomson Reuters (Professional) Australia Limited This publication is copyright. Other than for the purposes of and subject to the conditions prescribed under the Copyright Act, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Inquiries should be addressed to the publishers. All legislative material herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permits certain reproduction and publication of Commonwealth legislation. In particular, s 182A of the Act enables a complete copy to be made by or on behalf of a particular person. For reproduction or publication beyond that permitted by the Act, permission should be sought in writing. Requests should be submitted online at http:// www.ag.gov.au/cca, faxed to (02) 6250 5989 or mailed to Commonwealth Copyright Administration, Attorney-General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600. Editor: Nadine Kleinsimon Indexer: Puddingburn Publishing Services Product Developer: Natasha Naude Publisher: Robert Wilson Printed by Ligare Pty Ltd, Riverwood, NSW This book has been printed on paper certified by the Programme for the Endorsement of Forest Certification (PEFC). PEFC is committed to sustainable forest management through third party forest certification of responsibly managed forests. For more info: http://www.pefc.org

DEDICATION

Miiko Kumar dedicates her chapters to Marco, Lenny and Heidi Michael Legg dedicates this book to Laetitia, Maxime and Alexandre

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Ilija Vickovich dedicates his work on this edition to the health of his sons Aleks, Daniel and Damien

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FOREWORD The Hon Gabrielle Upton Attorney-General of NSW 800 years ago, the Magna Carta proclaimed that “to no one will we sell, to no one deny or delay right or justice”. The Magna Carta shaped the development of the law in many countries, including our own, and its emphasis on access to justice is as relevant today as it was for past generations. Civil law is fundamental to the maintenance of social stability and economic growth. It is the framework that regulates all manner of social and business relationships, including when people gain employment, buy or rent a place to live, form partnerships, raise children, purchase goods and services, enter contracts, set up businesses and engage in trade. This book provides a clear and balanced guide to how civil law, procedure and practice are used on an everyday basis by practitioners and judges to ensure there is due process and disputes are resolved justly, quickly and cheaply. Most disputes are settled without litigation, and this book gives welcome emphasis to the importance of negotiation, mediation and arbitration to giving people access to justice. While only a small fraction of disputes requires adjudication by the courts, courts are the only institution that can administer justice. As this book demonstrates, New South Wales courts are committed to reducing unnecessary cost and delay and have been willing adopters of innovative approaches to case management. This includes using technology to minimise the need for personal attendance, through e-lodgement, e-callovers and, most recently, the on-line court pilot in the District Court. The new frontier in dispute resolution is on-line and there is little doubt that civil procedure will evolve to ensure that litigation is just, quick and cheap. I commend the authors of this book for providing a comprehensive resource for students, practitioners and those with an interest in civil law and procedural reform.

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Sydney, 17 November 2015

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PREFACE Civil Procedure in New South Wales provides a scholarly yet accessible account of the New South Wales civil justice system. The text addresses the key procedures prior to the commencement of proceedings and throughout the life cycle of litigation by way of both a principled and practical approach – from the initiation of proceedings through key steps such as pleadings, service, discovery and evidence to enforcement. Explanations and commentary are provided with reference to relevant provisions of the Civil Procedure Act 2005 (NSW), the Uniform Civil Procedure Rules 2005 (NSW), the Evidence Act 1995 (NSW), the Legal Profession Uniform Law and extracts of illustrative cases. The text also deals with fundamental principles of our civil justice system such as open justice, fair trial, case management and lawyers’ ethical requirements. Miiko Kumar, Michael Legg and Ilija Vickovich have convened and taught the compulsory civil procedure courses at the University of Sydney, University of New South Wales and Macquarie University respectively over a number of years. They also have numerous years of experience as practitioners in New South Wales. This text draws on that combined experience. The text was previously titled Principles of Civil Procedure in New South Wales but has become much more than a text outlining principles. Over time it has expanded, dealing with material in greater detail and with an eye to practice. The text is still dedicated to the novice and those recently initiated but seeks to take students and practitioners alike into some of the more advanced or practical areas such as interim preservations orders, service overseas, class actions, commercial arbitration, electronic discovery, the preparation of witnesses and expert evidence. It is hoped that the text will not only perform its primary teaching role but also assist students as they make the transition to dispute resolution practitioners.

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The authors would like to make special mention of, and thank, former author and senior lecturer at UNSW Law, Dorne Boniface, who was a driving force behind the original concept for this book and was a valuable source of knowledge on teaching civil procedure. The authors would also like to thank past students, lecturers and other users of previous editions of the text whose questions and suggestions have assisted in revising the content of the text. The authors would like to express their appreciation to the Attorney-General of New South Wales, Gabrielle Upton for writing the Foreword. Thanks are also due to the Thomson Reuters staff who have shepherded this book to completion, including Natasha Naude, Belinda Drake and Nicholas Riley. Miiko Kumar, Michael Legg and Ilija Vickovich Sydney, 12 November 2015

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ACKNOWLEDGMENTS The following extracts attributed herein were reproduced with the kind permission of: Annual Judges’ Conference The Honourable JJ Spigelman AC, Chief Justice of New South Wales (Paper presented at the Annual Judges Conference, Kuala Lumpur, Malaysia, 22 August 2006) Attorney General’s Department (New South Wales): www.lawlink.nsw.gov.au Form 3A UCPR 6.2 – Statement of Claim Form 4A UCPR 6.2 — Summons Form 6A UCPR 6.9 – Appearance Form 7A UCPR 14.3 – Defence Form 11 UCPR 21.3 and 21.4 – List of Documents Form 14 UCPR 15.12 – Statement of Particulars – Personal Injury Proceedings Form 17 UCPR 17.3 and 17.4 – Notice to Admit Facts Form 18 UCPR 17.3 and 17.4 – Notice Disputing Facts Form 19 UCPR 21.10 – Notice to Produce for Inspection Form 20 UCPR 18.1 and 18.3 – Notice of Motion Form 21 UCPR 22.1 – Interrogatories Form 22 UCPR 22.3 – Statement in Answer to Interrogatories Form 25 UCPR 33.3 – Subpoena to Attend to Give Evidence Form 26A UCPR 33.3 – Subpoena to Produce Form 41 UCPR 35.8 – Affidavit of Service Form 44 UCPR 36.1A – Consent Order Hamilton, J, The 2008 Judges Series, Lawyer-Client Privilege in Litigation, College of Law, Continuing Professional Education Department NSWCA cases Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

NSWCCA cases NSWDC cases NSWSC cases The Honourable Justice John P Hamilton, Containment Of Costs: Litigation And Arbitration, Supreme Court of New South Wales (1 June 2007) The Honourable JJ Spigelman AC, Chief Justice of New South Wales, Case Management in New South Wales (Paper presented for the Judicial Delegation from India, Sydney, 21 September 2009) The Honourable Justice P McClellan, Concurrent Expert Evidence, Medicine and Law Conference, Law Institute Victoria (29 November 2007) Justice RW White, Overview of the Evidence Act (30 October 2010) Australian Centre for International Commercial Arbitration http://acica.org.au/news/FinancialReview-International-Dispute-Resolution-Conference-2010-Session The Honourable PA Keane Chief Justice, Federal Court of Australia, Judicial support for arbitration in Australia Opening address, Financial Review International Dispute Resolution Conference, Sydney, 15 October 2010 Australian Government Attorney-General’s Department http://www.ag.gov.au How to prepare a request for service using diplomatic channels How to prepare a request for service using the Hague Service Convention xi

Civil Procedure in New South Wales

Australian Law Reform Commission: www.alrc.gov.au Legg, M “Discovery in the Information Age” Guest Blog posted 29 October 2010 Managing Discovery: Discovery of Documents in Federal Courts, Report No 115 (2011) Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (1999) Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System, Issue Paper 20 (April 1997) Australian Lawyers Alliance: www.lawyersalliance.com.au The Honourable Justice M J Beazley AO, Calderbank Offers (Paper presented to the Australian Lawyers Alliance, Hunter Valley Conference, 14-15 March 2008) Australian Legal Convention The Honourable JJ Spigelman AC, Chief Justice of New South Wales, Address to the 35th Australian Legal Convention, Sydney, 24 March 2007 Cambridge University Press www.cambridge.org Dame Hazel Genn, “Introduction: what is civil justice for?” in Hazel Genn (ed), Judging Civil Justice, 2008 Hamlyn Lecture Council of Law Reporting for New South Wales www.nswlr.com.au New South Wales Law Reports (NSWLR) © Council of Law Reporting for New South Wales Council of Law Reporting in Victoria Victorian Reports (VR) Federal Court of Australia: www.fedcourt.gov.au FCA cases Fordham Law Review http://law.fordham.edu/fordham-law-review/lawreview.htm Moffitt, M “Three Things to be Against (‘Settlement’ Not Included)”, (2009) 78 Fordham Law Review 1203

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Georgetown Law Journal http://georgetownlawjournal.org/ Menkel-Meadow, C “Whose Dispute is it Anyway? A Philosophical and Democratic Defense of Settlement (in Some Cases)”, (1995) 83 Georgetown Law Journal 2663 Judicial Commission of New South Wales: www.judcom.nsw.gov.au Hamilton J, The New Procedure Nuts and Bolts for Judicial Officers, Judicial Commission of NSW (16 August 2005) Law Council of Australia http://www.lawcouncil.asn.au/ The Honourable R French, Chief Justice, Perspectives on Court Annexed Alternative Dispute Resolution, Law Council of Australia – Multi-Door Symposium, Canberra, 27 July 2009 LexisNexis Australia Bryson, JP QC, “How to draft an affidavit” (1985) 1 Australian Bar Review 250 Justice Arthur R Emmett “Practical litigation in the Federal Court of Australia: Affidavits” (2000) 20 Australian Bar Review 28 The Honourable Justice K R Handley, “Res Judicata: General Principles and Recent Developments” (1999) 18 Australian Bar Review 214 The Honourable JJ Spigelman AC, Chief Justice of New South Wales “Access to justice and access to lawyers” (2007) 29 Australian Bar Review 136 Stuart Clark, S and Harris, C “Class actions in Australia: (Still) a work in progress” (2008) 31 Australian Bar Review 63 xii

Acknowledgments

NADRAC (National Alternative Dispute Resolution Advisory Council): www.nadrac.gov.au Dispute Resolution Terms in (Alternative) Dispute Resolution (September 2003) New South Wales Judicial Scholarship The Hon Justice PA Bergin, “The Objectives, Scope and Focus of Mediation Legislation in Australia”, “Mediate First” Conference, Hong Kong International Arbitration Centre and The Hong Kong Mediation Council, Hong Kong Convention and Exhibition Centre, 11 May 2012 New South Wales Law Reform Commission: www.lawlink.nsw.gov.au/lrc Expert Witnesses, Report 109 (2005) Set-Off, Report 94 (2000) Security for costs and associated costs orders – Consultation Paper 13 (May 2011) New South Wales Supreme Court: The Hon Justice PA Bergin, “The Right Balance Between Trial and Mediation: Visions, Experiences and Proposals”, Aula Magna, Court of Cassation, Rome, 19 October 2012 Pepperdine University School of Law Dispute Resolution Journal http://law.pepperdine.edu/ dispute-resolution-law-journal/ Armstrong, P “Why We Still Litigate”, (2008) 8 Pepperdine Dispute Resolution Law Journal 379 Productivity Commission Access to Justice Arrangements, Inquiry Report No 72, Volume 1 Sydney Law Review http://sydney.edu.au/law/slr/ Kumar, M “Admissibility of Expert Evidence: Proving the Basis for an Expert’s Opinion” (2011) 33(3) Sydney Law Review 427. Sweet & Maxwell (a Thomson Reuters (Professional) UK Ltd business) www.sweetandmaxwell.co.uk

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Legg, M “High Court of Australia employs case management and ’overiding purpose’ to resolve dispute over mistaken provision of privileged documents in discovery” (2014) 33 Civil Justice Quarterly 115 Legg, M “Reconciling the goals of minimising cost and delay with the principles of a fair trial in the Australian civil justice system” (2014) 33(2) Civil Justice Quarterly 157 Legg, M “Reconciling Litigation Funding and the Opt Out Group Definition in Federal Court of Australia Class Actions – The Need for a Legislative Common Fund Approach” (2011) 30 Civil Justice Quarterly 52 Thomson Reuters (Professional) Australia Limited: www.thomsonreuters.com.au Cooper D“Representing clients from courtroom to mediation settings: Switching hats between adversarial advocacy and dispute resolution advocacy ” (2014) 25 Australasian Dispute Resolution Journal 150 Legg, M “Mediation of complex commercial disputes prior to litigation: The Delaware Court of Chancery approach” (2010) 21 Australasian Dispute Resolution Journal 44 Legg, M “Judge’s role in settlement of representative proceedings: Lessons from United States class actions” (2004) 78 ALJ 58 Legg, M and Boniface, D “Pre-action protocols in Australia” (2010) Journal of Judicial Administration 39 Legg, M and Turner, N “When discovery and technology meet: The pre- discovery conference”, (2011) 21 Journal of Judicial Administration 54 The Honourable JJ Spigelman AC, Chief Justice of New South Wales “The Truth can Cost too Much: The Principle of a Fair Trial” (2004) 78 ALJ 29 Justice PW Young and Curtis, C “Oral or Written Evidence” (1997) 71 Australian Law Journal 459 xiii

Civil Procedure in New South Wales

Australian Criminal Reports (A Crim R) Australian Law Journal Reports (ALJR) Commonwealth Law Reports (CLR) Federal Court Reports (FCR) University of British Columbia Press www.ubcpress.ca Macfarlane, J The New Lawyer: How Settlement is Transforming the Practice of Law, (2008) UBC Press University of Nevada Law Journal http://law.unlv.edu/nevada-law-journal.html Subrin, S “A Traditionalist Looks at Mediation: It’s Here to Stay and Much Better Than I Thought”, (2002–2003) 3 Nevada Law Journal 196 University of New South Wales Law Journal www.unswlawjournal.unsw.edu.au Legg, M “Shareholder Class Actions in Australia - The Perfect Storm?” (2008) 31(3) UNSW Law Journal 669 University of New South Wales Australia Continuing Legal Education Legg, M “Ethical and Effective Witness Preparation” CLE presentation Vine, M and Simons, D “Debt Recovery in the Local Court” CLE presentation Vathek Publishing http://www.vathek.com/clwr/home.php Boniface, D and Legg, M “Cost, Delay and Justice: The High Court of Australia Recognizes the Importance of Case Management in Civil Litigation”– Aon Risk Services Australia Limited v Australian National University, Common Law World Review 39 (2010) 157–180. Victorian Law Reform Commission: www.lawreform.vic.gov.au Civil Justice Review: Report 14 (2008) Yale Law Journal http://yalelawjournal.org/

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Fiss, O “Against Settlement”, (1984) 93 Yale Law Journal 1073 Thomson Reuters (Professional) Australia Limited, and the authors, would like to thank the publishers, agents, and authors who have allowed the reproduction of extracts of their work in this book. Every effort has been made to contact copyright holders and/or their agents, however, we tender our apology for any accidental infringement. The publisher would be pleased to come to a suitable agreement with the rightful owners in each case.

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CONTENTS

Dedication......................................................................................................................................... v Foreword ............................................................................................................................................. vii Preface ............................................................................................................................................. ix Acknowledgments ............................................................... ............................................................ xi Table of Cases ............................................................................................................................... xvii Table of Statutes .......................................................................................................................... xxix

1 Introduction to Civil Procedure ............................................................................. 1 2 Case Management in New South Wales .............................................................. 71 3 Costs of Litigation ................................................................................................ 129 4 Alternatives to Litigation – Negotiation and Mediation ............................... 205 5 Alternatives to Litigation – Arbitration, Referees and Expert Determination ..................................................................................... 255 6 Before a Civil Action Commences ...................................................................... 305 7 Causes of Action and Parties .............................................................................. 393 8 Class Actions in NSW ........................................................................................... 443 9 Initiating Proceedings and Pleadings ............................................................... 511

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10 Amendment, Mistakes and Adjournments .................................................... 553 11 Service of Documents ........................................................................................ 601 12 Discovery, Subpoenas and Interrogatories .................................................... 651 13 Preparing and Presenting Evidence ................................................................ 773 14 Privilege ............................................................................................................... 867 15 Concluding Proceedings ................................................................................... 961 16 Civil Procedure in Context .............................................................................. 1043 Index ..................................................................... .................................................................. 1087

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TABLE OF CASES

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A A & N Holding NSW Pty Ltd v Andell Pty Ltd [2006] NSWSC 55 ................................................. 2.20 A Goninan & Co v Atlas Steels (Aust) Pty Ltd [2003] NSWSC 956 ............................................. 7.450 A v Bird; C v Bird [2015] NSWSC 570 ....................................................................................... 1.298 ACP Magazines Pty Ltd v Motion [2000] NSWSC 1169 ............................................................. 3.390 AFP Commissioner v Propend (1997) 188 CLR 501 ..................................................... 14.90, 14.100 ASIC v Rich [2006] NSWSC 712 ................................................................................................ 9.110 ASIC v Sweeney (No 2) [2001] NSWSC 477; 38 ACSR 743 ..................................................... 11.220 Agar v Hyde (2000) 201 CLR 552; 173 ALR 665; 74 ALJR 1219; 2000] HCA 41 .......... 11.400, 11.410 Ainsworth v Redd (1990) 19 NSWLR 78 ................................................................................. 11.120 Air Link Pty Ltd v Paterson (2005) 218 ALR 700; (2005) 79 ALJR 1407; [2005] HCA 39 ........... 10.155 Air Link Pty Ltd v Paterson (No 2) [2003] NSWCA 251 ............................................................ 10.130 Aiton v Transfield [1999] NSWSC 996 ...................................................................................... 4.340 Alderman v Zurich Australian Insurance Ltd [2011] NSWSC 754 ............................................... 14.40 Alister v The Queen (1984) 154 CLR 404 ................................................................................ 14.300 Allesch v Maunz (2000) 203 CLR 172 ..................................................................................... 15.300 Allianz Australia Insurance Ltd v Newcastle Formwork Constructions Pty Ltd [2007] NSWCA 144 ...................................................................................................................................... 9.330 Altarama Ltd v Forsyth [1981] 1 NSWLR 188 ............................................................................ 15.30 Amos Removals & Storage Pty Ltd v Small (1981) 2 NSWLR 525 ............................................ 11.190 Annetts v McCann (1990) 170 CLR 596 ................................................................................... 11.70 Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55 ................................................ 6.220 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 ............................................................................................................ 2.10, 2.250, 10.40 Apple Inc v Samsung Electronics Co Ltd [2011] FCA 1164 ........................................................ 6.163 Arenson v Casson Beckman Rutley & Co [1977] AC 405 ............................................................. 5.20 Arhill Pty Ltd v General Terminal Company Pty Ltd (1990) 23 NSWLR 545 ............................. 11.220 Arthur Stanley Smith (1996) 86 A Crim R 309 ........................................................................... 1.200 Attorney-General v Scott I [1905] 2 KB 160 ................................................................................ 7.30 Attorney-General (NSW) v Chidgey (2008) 182 A Crim R 536; [2008] NSWCCA 65 ............... 12.400, 12.420 Attorney-General (NSW) v Mayas Pty Ltd (1988) 14 NSWLR 342 .............................................. 1.170 Attorney-General (NSW) v Nationwide News Pty Ltd (2007) 73 NSWLR 635; [2007] NSWCCA 307 .................................................................................................................... 14.300 Attorney General for NSW v Stuart (1994) 34 NSWLR 667 ............................. 14.40, 14.290, 14.300 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; 229 ALR 457; [2006] HCA 46 ................................................................................................................................ 6.166 Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL [2011] FCA 938 .................................................................................................... 14.300, 14.330 Australian Iron & Steel Pty Ltd v Jumbo Scheepvaart Maatschappij (Curacao) NV (1988) 14 NSWLR 507 ....................................................................................................................... 11.370 Australian Securities & Investments Commission v Sweeney (No 2) (2001) 38 ACSR 743; [2001] NSWSC 477 ........................................................................................................... 11.370 Austress Freyssinet Pty Ltd v Joseph [2006] NSWSC 77 ............................................................. 6.250 Azzi v Volvo Car Australia Pty Ltd (2007) 71 NSWLR 140 ......................................................... 14.410

B BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400 ......................................... 6.40, 6.50 BUSB v R [2011] NSWCCA 39 ........................................................................................ 1.170, 1.200 BWK Elders Australia Pty Ltd v Westgate Wool Company Pty Ltd (No 2) [2002] FCA 87 ............. 9.320 Baggs v University of Sydney Union [2013] NSWCA 451 .......................................................... 6.138 Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214 ...................... 9.280 Baker v Campbell (1983) 153 CLR 52 .......................................................................... 14.90, 14.100 xvii

Civil Procedure in New South Wales

Baker-Morrison v New South Wales [2009] NSWCA 35; (2009) 74 NSWLR 454 ........................ 6.120 Bank of Western Australia Ltd v Callipari [2011] NSWSC 138 .................................................. 10.250 Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279 .................... 1.320, 9.100 Barnes v Commissioner of Taxation (2007) 242 ALR 601; [2007] FCAFC 88 ............................ 14.120 Barton v Minister for Foreign Affairs (1984) 2 FCR 463; 54 ALR 586 .......................................... 3.450 Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; 227 ALR 425; [2006] HCA 27 ................................................................................................. 1.40, 15.100 Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2006] NSWSC 583 .......... 3.210 Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 .......... 1.140 Beck v Weinstock; Beck v L W Furniture (Consolidated) Pty Ltd [2012] NSWCA 289 .................. 7.160 Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228 ............................. 5.270 Bendir v Anson [1936] 3 All ER 326 ........................................................................................... 7.210 Bhagat v Murphy [2000] NSWSC 892 ........................................................................... 3.410, 3.480 Bi v Mourad [2010] NSWCA 17 ..................................................................................... 2.50, 15.160 Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926 ........................................................................ 14.230 Birtles v Commonwealth [1960] VR 247 ................................................................................... 7.240 Blair v Curran (1939) 62 CLR 464 ............................................................................................... 7.60 Blue Oil Energy Pty Limited v Tan [2014] NSWCA 81 ................................................................ 3.410 Boral Bricks Pty Ltd v Cosmidis [2013] NSWCA 443 .................................................................. 9.300 Bradken Resources Pty Ltd v The ANI Corp Ltd [2002] NSWSC 463 .......................................... 5.300 Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 ...................................................................... 8.890 Bray v F Hoffmann-La Roche Ltd (2003) 130 FCR 317; [2003] FCAFC 153 ........ 7.415, 8.300, 8.1000 Bright v Femcare Ltd (2002) 195 ALR 574; [2002] FCAFC 243 .............................. 8.40, 8.394, 8.420 Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 ........... 6.60, 6.70 British American Tobacco Australia Limited v Secretary, Department of Health and Ageing (2011) 195 FCR 123; [2011] FCAFC 107 .............................................................................. 14.20 Building Insurers’ Guarantee Corporation v Touma [2010] NSWSC 4 ..................................... 15.170 Bulldogs Rugby League Club Ltd v Williams [2008] NSWSC 822 ............................................. 11.240 Bullock v London General Omnibus Co [1907] 1 KB 264 .......................................................... 3.320 Burwood Council v Ralan Burwood Pty Ltd (No 2) [2014] NSWCA 179 .................................... 8.190 Buzzle Operations Pty Ltd (In Liq) v Apple Computer Australia Pty Ltd (No 2) [2010] NSWSC 490 .................................................................................................................................... 13.640

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C Cachia v Hanes (1994) 179 CLR 403 ............................................................................. 3.190, 3.360 Cadence Australia Pty Ltd v Chew [2008] NSWSC 1076 ......................................................... 13.710 Cain v Glass (No 2) (1985) 3 NSWLR 230 .................................................................... 1.200, 14.300 Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; [2006] HCA 41 ............. 8.130, 8.1040 Campbelltown-Minto Merchants Association Inc v Campbelltown City Council [2009] NSWLEC 70 ....................................................................................................................... 13.490 Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 1151 .......................................................... 14.40 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; 73 ALJR 657; [1999] HCA 18 .......... 6.170, 6.190 Carnie v Esanda (1995) 182 CLR 398 ....................................................................................... 8.130 Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398 ................................................. 8.130, 8.470 Carnie v Esanda Finance Corp Ltd (1996) 38 NSWLR 465 ......................................................... 8.130 Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246 ............................................ 15.350 Carroll v Attorney General (NSW) (1993) 70 A Crim R 162 ..................................................... 12.400 Carus-Wilson & Greene, Re (1886) 18 QBD 7 ............................................................................. 5.20 Cash Converters International Limited v Gray [2014] FCAFC 111 ................................... 8.300, 8.330 Cassanti v Paragalli (2006) 229 ALR 416 ................................................................................... 14.40 Cave v Allen Jack and Cottier Pty Ltd [2014] NSWSC 1365 ....................................................... 5.230 Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245; [2010] NSWCA 33 ............. 7.130, 7.150 Chapman v Chapman [2007] NSWSC 1109 ........................................................................... 13.440 Chapman v Luminis Pty Ltd (No 2) (2000) 100 FCR 229; [2000] FCA 1010 ............................ 14.300 Chappell v Coyle (1985) 2 NSWLR 73 ....................................................................... 11.190, 11.220 Charafeddine v Morgan [2014] NSWCA 74 .............................................................................. 7.160 xviii

Table of Cases

Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413 ................................................................................................ 9.150 Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 ........... 5.260 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 ............................................................................................................................. 15.290 Cochran v Sutton [2014] NSWCA 185 .................................................................................... 11.345 Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735 ............................ 5.150, 5.160 Collier v Lancer (No 2) [2013] NSWCA 186 ............................................................................ 15.140 Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 ........ 14.110, 14.120 Commissioner for Railways, The v Small (1938) 38 SR 654 ..................................................... 12.390 Commonwealth Bank of Australia v ZYX Learning Centres Ltd [2014] NSWSC 1676 ............... 15.140 Commonwealth of Australia v Bank of New South Wales (1949) 79 CLR 497 .......................... 15.285 Commonwealth of Australia, The v Northern Land Council (1993) 176 CLR 604 .................... 14.300 Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 ...................................................................................................................................... 12.180 Cornelius v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65 ................................. 3.410 Cosmos E-C Commerce Pty Ltd v Bidwell & Associates Pty Ltd [2005] NSWCA 81 .................... 15.90 Coulter v R (1988) 164 CLR 350 ............................................................................................. 15.340 Courtney v Medtel Pty Ltd [2001] FCA 1037 ............................................................................ 8.830 Covell Matthews & Partners v French Wools Ltd [1997] 1 WLR 876 ........................................ 15.270

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D D v National Society for the Prevention of Cruelty to Children [1978] AC 171 ........................ 14.300 Da Hui Wu v Statewide Developments Pty Ltd [2009] NSWSC 587 ......................................... 13.480 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 ........................................................................................ 14.90 Dare v Pulham (1982) 148 CLR 658; 57 ALJR 80; 44 ALR 117; [1982] HCA 70 ............... 9.130, 9.360 Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388 ....................... 8.715 Dasreef Pty Ltd v Hawchar [2011] HCA 21 .............................................................................. 13.270 Daya v CNA Reinsurance Co Ltd [2004] NSWSC 795 ................................................................ 4.270 Dean-Willcocks v Air Transit International (2002) 55 NSWLR 64; [2002] NSWSC 525 ............... 7.270 Debis v Allied Bellambi Collieries [2000] NSWCA 274 ............................................................. 15.350 Dennis v Australian Broadcasting Corp [2008] NSWCA 37 ........................................................ 2.210 Deveigne v Askar (2007) 69 NSWLR 327; (2007) 239 ALR 370; [2007] NSWCA 45 ................. 10.210 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 ...................................................... 15.70 Dietrich v R (1992) 177 CLR 292 .............................................................................................. 1.320 Dimitrovski v Australian Executor Trustees Limited [2014] NSWCA 68 ....................................... 7.160 Director-General, Dept of Community Services v D (2006) 66 NSWLR 582; [2006] NSWSC 827 ....................................................................................................................... 14.240, 14.260 Director of Public Prosecutions (DPP) v Marijancevic (2011) 33 VR 440; [2011] VSCA 355 ...... 13.220 Director of Public Prosecutions v Smith (1996) 86 A Crim R 308 ............................................. 14.300 Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd v Lane Industries Pty Ltd) (1993) 26 IPR 261 ............................................................................................................... 3.200 Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394 ..................................................... 8.630 Douglas v John Fairfax & Sons Ltd [1983] 3 NSWLR 126 .......................................................... 9.350 Dow Jones & Co v Gutnick (2002) 210 CLR 575 ........................................................................ 7.60 Dr Bronte Douglass v Lawton Pty Ltd (No 2) [2007] NSWCA 90 .................................... 3.100, 3.110 DuPont Nutrition Biosciences ApS v Novozymes A/S (UK) [2013] EWHC 155 .......................... 14.230 Duke of Bedford v Ellis [1901] AC 1 ............................................................................................ 8.80 Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 ...................................................... 15.60

E Egan v Chadwick (1999) 46 NSWLR 563 ................................................................................ 14.300 Environment Protection Authority v Queanbeyan City Council [2011] NSWLEC 159 ................. 14.40 Esanda v Carnie (1992) 29 NSWLR 382 .................................................................................... 8.130 Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 .............................................. 8.130 xix

Civil Procedure in New South Wales

Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49; 168 ALR 123; [1999] HCA 67 ............................................................ 14.30, 14.40, 14.90, 14.120, 14.140 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 ............................ 2.255, 14.215, 14.230

F Falls Creek Ski Lifts Pty Ltd v Yee (1995) 37 NSWLR 344 ......................................................... 11.220 Fastlink Calling Pty Ltd v Macquarie Telecom Pty Ltd [2008] NSWSC 299 ............................... 13.140 Fawcett v Cannon [2007] NSWSC 1267 ................................................................................. 15.130 Femcare Ltd v Bright (2000) 100 FCR 331 .................................................................................. 8.40 Fenwick v Wambo Coal Pty Ltd (No 2) [2011] NSWSC 353 .................................................... 14.200 Fexuto v Lombe and Yates [2006] NSWSC 981 ......................................................................... 10.40 Fiduciary v Morningstar Research [2004] NSWSC 664 .............................................................. 3.410 Field v Commissioner for Railways (1957) 99 CLR 285 ............................................................ 14.400 Filipowski v Frey [2005] NSWLEC 166 ..................................................................................... 11.220 Films and Casting Temple v Malla [2013] NSWCA 377 ...................................................... 9.70, 9.80 Flo Rida v Mothership Music Pty Ltd [2013] NSWCA 268 ........................................... 11.210, 11.220 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 ...................................................... 15.290, 15.320 Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 ................ 4.340 Frizelle v Bauer [2009] NSWCA 239 .......................................................................................... 6.130

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G Gardiner v The Queen (2006) 162 A Crim R 233 .................................................................... 14.300 Garsec v His Majesty The Sultan of Brunei (2008) 250 ALR 682; [2008] NSWCA 211 .............. 11.440 General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 ............... 15.70 Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 .............................................................. 15.350 Gibbs & McAllion Lloyd Pty Ltd v Kinna [1999] 2 VR 19; [1998] VSCA 52 ................................. 7.100 Giles v Commonwealth of Australia [2014] NSWSC 83 .................................................... 8.40, 8.430 Giles v Commonwealth of Australia (No 2) [2014] NSWSC 1531 ............................................ 12.240 Gillett v Robinson [2011] NSWSC 863 .................................................................................... 13.570 Glover v Australian Ultra Concrete Floors Pty Ltd [2003] NSWCA 80 ......................................... 9.230 Goater v Commonwealth Bank of Australia [2014] NSWCA 382 ............................................. 15.410 Goldberg v Ng (1995) 185 CLR 83 ........................................................................................... 14.90 Goldsmith v Sandilands (2002)190 ALR 370; [2002] HCA 31 .................................................... 9.140 Goold & Porter Pty Ltd v Housing Commission [1974] VR 102 ................................................. 7.180 Graczyk v Graczyk [1955] SLR (CN) 1077 ............................................................................... 11.120 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 ........................... 8.860 Grant v Downs (1976) 135 CLR 674; [1976] HCA 63 ................................................ 14.120, 14.140 Graphite Energy Pty Ltd v Lloyd Energy Systems Pty Ltd [2014] NSWSC 1326 ........... 12.240, 12.280 Grassby v R (1989) 168 CLR 1 ........................................................................................... 1.40, 1.50 Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529 ....................................... 14.90 Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148 ......... 3.430 Greenwood v Papademetri [2007] NSWCA 221 ......................................................... 10.160, 10.170 Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 WLR 1027; [1987] 2 All ER 716 .......................................................................................................................... 14.230

H HIH Insurance Ltd, Re [2007] NSWSC 498 ..................................................................... 1.240, 1.260 Hall v Nominal Defendant (1966) 117 CLR 423 ......................................................... 15.350, 15.370 Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265; [2009] NSWCA 372 ................. 2.230 Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 ............................ 2.220, 10.40, 15.375 Harris v Bellemore [2009] NSWSC 1497 ................................................................................. 13.340 Hart Security Australia Pty Ltd v Boucousis (No 2) [2014] NSWSC 1815 ................................. 15.255 Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 ..................... 12.90 Hearne v Street (2008) 235 CLR 125 ......................................................................... 12.490, 12.500 Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646 .................................................... 5.280 xx

Table of Cases

Henry v Henry (1996) 185 CLR 57; 70 ALJR 480 ..................................................................... 11.430 Hertsmere Primary Care Trust v Administrators of Balasubramanium’s Estate [2005] 3 All ER 274 .................................................................................................................................... 14.230 Higgins v Higgins [2002] NSWSC 455 ...................................................................................... 4.290 High Court in Agar v Hyde (2000) 201 CLR 552 ..................................................................... 11.390 Hill v Reglon Pty Ltd [2007] NSWCA 295 ................................................................................ 10.100 Hill v W & F Lechner Pty Ltd [2006] NSWSC 440 ...................................................................... 2.310 Hillier v Sheather (1995) 36 NSWLR 414 ................................................................................ 15.230 Hobbs Anderson Investments Pty Ltd v Oz Minerals Ltd [2011] FCA 801 .................................. 8.715 Hogan v Hinch (2011) 243 CLR 506; [2011] HCA 4 .................................................................. 1.180 Hooper Bailie Associated Ltd v Natcan Group Pty Ltd (1992) 28 NSWLR 194 ............................ 4.340 House v R (1936) 55 CLR 499 ................................................................................................. 15.375 Howard v Telstra Corp Ltd [2003] NSWCA 188 ........................................................................... 5.30 Hudson v Howes [2010] NSWSC 1503 ................................................................................... 13.550 Hudson, Re; Ex parte G E Crane & Sons Ltd (1990) 25 FCR 318 ............................................. 11.120 Hughes Aircraft Systems International v AirServices Australia (1997) 76 FCR 151 ....................... 1.380 Hunter v Hanson [2014] NSWCA 263 ....................................................................................... 11.70

I ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 .......................... 12.400 Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 427 ............................................. 4.270 Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 ............................................. 3.440 Investmentsource v Knox Street Apartments [2007] NSWSC 1128 .......................................... 13.380 Irish Shipping Ltd v Commercial Union Assurance Co Plc [1991] 2 QB 206 ................................ 8.80

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J J P Morgan Trust Australia Ltd v Kapetanovic [2007] NSWSC 1423 ......................................... 12.450 Jackamara v Krakouer (1998) 195 CLR 516 ................................................................................. 2.30 Jackson v Sterling Industries Ltd (1987) 162 CLR 612 .................................................... 6.170, 6.180 Jacobsen v Rogers (1995) 182 CLR 572 .................................................................................. 14.280 Jago v District Court of New South Wales (1989) 168 CLR 23 .......................................... 1.40, 1.320 Jameel (Yousef) v Dow Jones & Co Inc [2005] EWCA Civ 75; [2005] Q.B. 946 ........................ 14.230 Jameson v Professional Investment Services Pty Ltd [2009] NSWCA 28 ............... 8.680, 8.690, 8.700 Jamieson v R (1993) 177 CLR 574; [1993] HCA 48 ................................................................... 9.240 Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2011] FCA 671 ..................................... 8.784 Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43 ...... 8.1010, 8.1040, 15.100 Jeray v Blue Mountains City Council [2010] NSWCA 281 ........................................................ 15.285 John Fairfax & Sons Pty Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 ...................... 1.60, 1.170 John Fairfax Group Pty Ltd v Local Court of New South Wales (1991) 26 NSWLR 131 .... 1.60, 1.170, 1.200 John Fairfax Publications Pty Ltd v District Court of NSW (2004) 61 NSWLR 344; [2004] NSWCA 324 ............................................................................................................. 1.150, 1.200 John Fairfax Publications Pty Ltd v Ryde Local Court (2005) 62 NSWLR 512 ............................. 1.170 John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 ................................. 5.80 John Nelson Developments Pty Ltd v Focus National Developments Pty Ltd [2010] NSWSC 150 ...................................................................................................................................... 5.330 John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 ...................... 1.20, 6.85, 6.90 Johnston v Endeavour Energy [2015] NSWSC 1117 ....................................................... 8.285, 8.920 Judd v Warwick [2007] NSWDC 299 ....................................................................................... 10.180

K Kasupene v Ajax Foundry Pty Ltd [2006] NSWCA 309 .............................................................. 9.210 Katsilis v Broken Hill Pty Ltd (1978) 52 ALJR 189 ....................................................................... 9.260 Kelly v Mina [2014] NSWCA 9 .................................................................................................. 10.70 Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44; (2002) 54 NSWLR 135 ........................... 9.180 xxi

Civil Procedure in New South Wales

Knight v FP Special Assets Ltd (1992) 174 CLR 178; 66 ALJR 560 .............................................. 3.390 Koompahtoo Local Aboriginal Land Council v KLALC Property & Investments Pty Ltd (No 2) [2006] NSWSC 169 ............................................................................................................. 2.310 Kosciusko Thredbo Pty Ltd v State of New South Wales [2002] NSWSC 96 ............................... 7.460 Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32 ........................................................... 15.300

L LRSM Enterprise Pty Ltd v Zurich Australian Insurance Limited [2014] NSWCA 88 .................... 3.410 Lacey v Attorney-General of Queensland [2011] HCA 10 ........................................................ 15.285 Lam v Rolls Royce Plc [2013] NSWSC 805 ................................................................................ 8.650 Lambert v Dean (1989) 97 FLR 352 ............................................................................................ 6.50 Lang v Australian Coastal Shipping Commission [1974] 2 NSWLR 70 ..................................... 12.460 Larkden Pty Ltd v Lloyd Energy Systems Pty Ltd [2011] NSWSC 1331 ....................................... 5.160 Larkden Pty Ltd v Lloyd Energy Systems Pty Ltd [2011] NSWSC 268 ......................................... 5.100 Latoudis v Casey (1990) 170 CLR 534 ...................................................................................... 3.190 Laurie v Carroll (1958) 98 CLR 310; [1958] HCA 4 .......................................... 11.70, 11.220, 11.370 Lawindi; Re Elkateb v Elkateb (2001) 187 ALR 479; [2001] FCA 1527 ...................................... 11.120 Lawrence v Nikolaidis [2003] NSWCA 129 ................................................................................ 3.380 Leach v The Nominal Defendant [2014] NSWCA 391 ................................................ 15.230, 15.250 Lee v Carlton Crest Hotel (Sydney) Pty Ltd (No 2) [2014] NSWSC 1586 ................................. 15.266 Leighton International v Hodges [2012] NSWSC 458 ............................................................. 12.240 Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163 .................... 4.340 Lipton v R [2010] NSWCCA 175 ............................................................................................. 12.400 Liristis v Gadelrabb [2009] NSWSC 441 .................................................................................. 12.430 Lowery v Insurance Australia Ltd [2015] NSWCA 303 ............................................................. 12.445 Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388 .............................................................. 8.890 Lucas v Yorke (1983) 50 ALR 228 .............................................................................................. 3.450

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M MacDougall v Curleveski (1996) 40 NSWLR 430 ........................................................................ 5.30 Macatangay v New South Wales (No 2) [2009] NSWCA 272 .................................................. 15.350 Maclaine Watson & Co Private Ltd v Chen [1983] 1 NSWLR 163 ............................................ 11.370 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 3) [2010] NSWSC 1139 ....................................................................................................... 3.400 Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 ........................................................ 15.230 Mann v Carnell (1999) 201 CLR 1 .................................................................. 14.90, 14.170, 14.190 Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd’s Rep 509 ............ 6.170 Markisic v Department of Community Services of New South Wales (No 2) [2006] NSWCA 321 ........................................................................................................................... 9.190, 9.400 Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021 ................................................... 8.80 Martin v Martin & Co [1897] 1 QB 49 ............................................................................................... Mastronardi v New South Wales [2007] NSWCA 54 ....................................................... 1.360, 1.370 Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 ..................................... 8.394, 8.715 Matthews v SPI Electricity Pty Ltd (Ruling No 2) [2011] VSC 168 .............................................. 8.850 McGrath as Liquidators of HIH Insurance Ltd, Re [2008] NSWSC 780 ..................................... 11.370 McGuirk v University of New South Wales [2010] NSWCA 104 ................................................. 2.240 McKain v RW Miller & Co (SA) Pty Ltd (1991) 174 CLR 1 ........................................................... 1.20 McPherson v McPherson [1936] AC 417 .................................................................................. 1.200 Melbourne Steamship Co v Moorehead (1912) 15 CLR 333 ..................................................... 1.380 Mempoll Pty Limited, Anakin Pty Ltd and Gold Kings (Australia) Pty Ltd, Re [2012] NSWSC 1057 .................................................................................................................................. 12.270 Meriton Apartments Pty Limited v Industrial Court of New South Wales (2009) 263 ALR 556; [2009] NSWCA 434 ..................................................................................................... 7.130 Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; 193 CLR 502 .......................................................................................................... 3.450 Metropolitan Petar v Mitreski [2008] NSWSC 293 .................................................................... 2.160 Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 ............................................... 15.375 xxii

Table of Cases

Mirror Newspapers Ltd v Waller (1985) 1 NSWLR 1 .................................................................. 1.200 Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 ............. 14.120 Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 60 ALJR 277; 65 ALR 155 .... 11.150 Morgan v Johnson (1998) 44 NSWLR 578 ..................................................................... 5.30, 15.230 Morris v Hanley [2000] NSWSC 957 ......................................................................................... 3.410 Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200 .............................................................................. 8.440, 8.450, 8.640, 8.650 Mummery v Irvings Pty Ltd (1956) 96 CLR 99; [1956] HCA 45 ................................................. 9.260 Munkarra v Fischer (1980) 5 NTR 3 ........................................................................................ 11.190 Murphy v Young & Co Brewery [1997] 1 WLR 1591 ................................................................. 3.390

N NSW Commissioner of Police v Tuxford [2002] NSWCA 139 ..................................... 12.390, 12.410 Naken v General Motors of Canada Ltd (1983) 144 DLR (3d) 385 ............................................ 8.130 Nash v Stewart [2010] NSWSC 513 ........................................................................................ 11.260 National Crime Authority v Gould (1989) 90 ALR 489 ............................................................ 14.290 Nationwide News Pty Ltd v Naidu; ISS Security Pty Ltd v Naidu (No 2) [2008] NSWCA 71 ....... 3.330 New Idafe Inc v Barnard [2007] NSWSC 1107 ............................................................... 4.270, 7.350 New South Wales v Gillett [2012] NSWCA 83 ........................................................................... 6.135 New South Wales v Mulcahy [2006] NSWCA 303 ..................................................................... 10.40 New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 ............. 14.40, 14.70, 14.85, 14.290, 14.300, 14.320 New South Wales v Public Transport Ticketing Corporation (No 3) [2011] NSWCA 200 .......... 14.340 New South Wales v Williams [2014] NSWCA 177 .............................................. 9.380, 9.440, 15.140 New South Wales Commissioner of Police v Nationwide News Pty Ltd (2007) 70 NSWLR 643 .................................................................................................................................... 14.300 News Ltd v Australian Rugby Football League Ltd (1996) 139 ALR 193 ..................................... 7.370 Norwich Pharmacal Co v Commissioners of Customs and Excise [1974] AC 133] ..................... 12.70 Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 ...................................................... 1.130

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O O’Brien v Little; Walsh v Little [2007] NSWSC 64 .................................................................... 12.460 O’Shane v Harbour Radio Pty Ltd [2014] NSWSC 93 .............................................................. 12.440 O’Sullivan v Challenger Managed Investments Limited [2007] NSWSC 383 ............................. 8.150 Oasis Fund Management v ABN Amro [2009] NSWSC 967 ....................................................... 4.310 Oasis Fund Management Ltd v Royal Bank of Scotland Nv [2010] NSWSC 584 ............... 8.80, 8.470 Ohn Fairfax Publications Pty Ltd v District Court of NSW (2004) 61 NSWLR 344 ...................... 1.200 Old v McInnes [2011] NSWCA 410 ........................................................................................ 15.230 Oshlack v Richmond River Council (1998) 193 CLR 72; 72 ALJR 578; 152 ALR 83; [1998] HCA 11 ..................................................................................................................... 3.200, 3.450

P P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 ...................... 8.730 PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36 .......................................... 6.217 Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406 ........................................ 13.620 Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 ........................................................... 12.220 Palmer v Walesby (1868) LR 3 Ch App 732 ............................................................................... 3.390 Pascoe v Divisional Security Group Pty Ltd (2007) 209 FLR 197; [2007] NSWSC 211 ................ 9.250 Payne v Young (1980) 145 CLR 358 ......................................................................................... 7.180 Payne v Young (1980) 145 CLR 609 ......................................................................................... 7.250 Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 ........................................... 1.60, 1.70 Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182 ............................................... 12.130 Percy v General Motors Holden Pty Ltd [1975] 1 NSWLR 289 .................................... 12.150, 12.230 Petrusevski v Bulldogs Rugby League Club Ltd [2003] FCA 61 .................................................. 8.380 Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia [2011] FCA 1111 .................. 8.784 Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 6) [2011] FCA 277 ......... 8.780 xxiii

Civil Procedure in New South Wales

Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487; [2000] FCA 229 ......... 8.250, 8.290, 8.300 Philips Electronics Australia Pty Ltd v Matthews (2002) 54 NSWLR 598 ..................................... 3.480 Pinebelt Pty Ltd v Bagley [2000] NSWSC 655 ........................................................................... 3.220 Police New South Wales, Commissioner of v Nationwide News Pty Ltd (2007) 70 NSWLR 643 .................................................................................................................................... 14.300 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 ............................................ 7.90 Premier Travel v Satellite Centres of Australia [2004] NSWSC 864 .............................. 12.490, 12.510 Preston v Nikolaidis [2010] NSWSC 427 ................................................................................. 10.170 Priest v New South Wales [2006] NSWSC 12 ............................................................... 9.410, 12.340 Priest v New South Wales [2007] NSWSC 41 ............................................................... 3.140, 12.350 Principal Registrar of the Supreme Court v Tastan (1994) 75 A Crim R 498 ............................. 12.400 Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 ........................................................... 10.130 Prudential Assurance Co Ltd v Newman Industries Ltd [1981] Ch 229 ........................................ 8.80

Q Qantas Airways Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34 ....................................................... 7.390 Quach v Mustafa (unreported, NSWCA, Kirby P, 15 June 1995) .................................................. 5.30 Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; 141 ALR 353 ....................................... 2.120

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R R v Bell; Ex parte Lees (1980) 146 CLR 141 ............................................................................. 14.170 R v CAL (1993) 67 A Crim R 562 ............................................................................................... 1.200 R v Hawi (No 2) [2011] NSWSC 1648 ...................................................................................... 14.40 R v Kwok (2005) 64 NSWLR 335 .............................................................................................. 1.220 R v Macfarlane; Ex parte O’Flanagan (1923) 32 CLR 518 .......................................................... 1.320 R v Meissner (1994) 76 A Crim R 84 ....................................................................................... 14.290 R v Mosely (1992) 28 NSWLR 735 .............................................................................................. 1.60 R v Richards & Bijkerk (1999) 107 A Crim R 318 ....................................................................... 1.150 R v Saleam (1989) 16 A Crim R 14 .......................................................................................... 12.400 R v Saleam [1999] NSWCCA 86 .............................................................................................. 12.400 R v Savvas (1989) 43 A Crim R 331 ........................................................................................... 1.200 R v Socialist Worker Printers & Publishers Ltd; Ex Parte Attorney-General [1975] QB 637 .......... 1.200 R v Tait (1979) 46 FLR 386 ....................................................................................................... 1.200 R v Yooyen, Tait & Poompiriyapinte (1991) 57 A Crim R 226 .................................................. 14.290 Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 ........................ 3.410, 3.480 Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 ................................................................ 1.200 Rayscan Management Pty Ltd v Siv Nandan Moodliar [2008] NSWSC 857 ............................... 10.60 Redowood Pty Ltd v Link Market Services Pty Ltd (formerly known as ASX Perpetual Registrars Ltd) [2007] NSWCA 286 ...................................................................................... 7.140 Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 ........................................ 15.230 Regent Holdings Pty Ltd v State of Victoria (2012) 36 VR 424 ................................................... 8.715 Remuneration Planning Corporation Pty Limited v Fitton [2001] NSWSC 1208 ................................. Rinehart v Nine Entertainment Co Holdings Ltd [2015] NSWSC 239 ...................................... 12.100 Rinehart v Welker [2011] NSWCA 403 ...................................................................................... 1.290 Rippon v Chilcotin (2001) 53 NSWLR 198; [2001] NSWCA 142 ..................................... 7.110, 7.120 Ritter v Godfrey [1920] KB 47 ................................................................................................... 3.200 Roads & Traffic Authority of NSW v Australian National Car Parks Pty Ltd (2007) 47 MVR 502; [2007] NSWCA 114 ..................................................................................................... 12.70 Roads and Traffic Authority of New South Wales v Care Park Pty Limited [2012] NSWCA 35 ..... 12.80 Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority [2014] NSWSC 1565 ..... 8.392, 8.394, 8.630 Rowlands v State of NSW [2009] NSWCA 136 ........................................................................ 13.690 Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516 ...................................................... 8.1040 Russell v Russell (1976) 134 CLR 495 ........................................................................................ 1.200 Ryan v Watkins [2005] NSWCA 426 ........................................................................................ 14.300 xxiv

Table of Cases

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S S v State of New South Wales (No 3) [2009] NSWCA 248 ...................................................... 14.300 Salzke v Khoury (2009) 74 NSWLR 580; [2009] NSWCA 195 .................................................. 13.400 Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156 ...................................................... 6.163 Sanderson v Blyth Theatre Co [1903] 2 KB 533 ........................................................................ 3.320 Sankey v Whitlam (1978) 142 CLR 1 ......................................................................... 14.280, 14.300 Scott v Scott [1913] AC 417 ..................................................................................................... 1.170 Sedrak v Starr [2009] NSWSC 996 ............................................................................................ 2.310 Seven Network (Operations) Ltd v Warburton (No 1) [2011] NSWSC 385 ................................ 1.230 Seven Network Ltd v News Ltd [2007] FCA 1062 ...................................................... 12.180, 12.190 Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102 ........ 6.215, 6.217 Shaw v Gadens Lawyers; Shaw v Rigby Cooke Lawyers [2014] VSCA 74 ................................... 7.160 Shaw v New South Wales (2012) 219 IR 87; [2012] NSWCA 102 ................................... 9.380, 9.430 Sheahan v Slattery (No 2) [2006] NSWSC 711 ......................................................................... 2.310 Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 305 ................... 5.320 Silverside Superfunds Pty Ltd v Silverstate Developments Pty Ltd [2008] NSWSC 904 ............... 9.420 Singh v Singh [2002] NSWSC 852 ............................................................................................ 4.270 Singtel Optus Pty Limited v Weston [2011] NSWSC 1083 ......................................................... 14.40 Siskina v Distos Compania Naviera SA [1979] AC 210 ............................................................. 11.220 Skalkos v T & S Recoveries Pty Ltd (2004) 65 NSWLR 151; [2004] NSWCA 281 .......................... 3.20 Sneddon v State of New South Wales [2012] NSWCA 351 ........................................................ 7.160 Southland Coal Pty Ltd (recs and mgrs apptd) (in liq), Re (2006) 203 FLR 1 ........................... 14.160 Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 ...................................... 15.30 Spencer v NSW Minister for Climate Change and the Environment [2010] NSWCA 75 ........... 10.220 Spencer v The Commonwealth [2010] HCA 28 ...................................................................... 15.140 Stanton v Abernathy (1990) 19 NSWLR 656 ............................................................................... 1.60 State Central Authority & Blyth [2010] FamCA 90 .................................................................. 14.170 Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54 ......... 1.340, 1.350, 1.360 Stollznow v Calvert [1980] 2 NSWLR 749 .......................................................................................... Street v Luna Park Sydney Pty Ltd [2006] NSWSC 95 ............................................................. 12.380 Subway Systems Australia Pty Ltd v Ireland [2014] VSCA 142 ..................................................... 5.70 Suncorp Insurance and Finance, Re [1991] 2 Qd R 704 .............................................................. 7.30 Survival & Industrial Equipment (Newcastle) Pty Ltd v Owners of the Vessel “Alley Cat” (1992) 36 FCR 129 .............................................................................................................. 12.30 Sydney Airports Corporation Ltd v Singapore Airlines Ltd & Qantas Airways Ltd [2005] NSWCA 47 ........................................................................................................................ 14.120 Sydney City Council v Geftlick [2006] NSWCA 280 .................................................................... 5.30 Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164 ........................................... 8.290 Sze Tu v Lowe (No 2) [2015] NSWCA 91 .................................................................................. 3.340

T TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83 ............ 5.130 TKWJ v The Queen (2002) 212 CLR 124; [2002] HCA 46 ............................................................ 1.60 Tabet v Mansour [2005] NSWSC 908 ..................................................................................... 13.560 Taff Vale Railway Co v Amalgamated Society of Railway Servants [1901] AC 426 ......................... 8.80 Taxation, Federal Commissioner of v Spotless (1996) 186 CLR 404 ........................................ 14.120 Templeton v Leviathan Pty Ltd (1921) 30 CLR 34 ..................................................................... 8.470 Thai Airways International Public Co Ltd v FaragMenzies Aviation Group (Ground Services) Australia Pty Ltd [2011] NSWCA 172 ................................................................................. 15.210 Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 ..................................................... 7.70 Tonab Investments Pty Ltd v Optima Developments Pty Ltd [2015] NSWCA 205 ...................... 3.410 Tongue v Council of the City of Tamworth [2004] FCA 1702 .................................................... 8.720 Tony Hassan Noun v Margaret Pavey [2014] NSWSC 429 ........................................................ 4.320 Trade Practices Commission v Arnotts Limited (No 2) (1989) 21 FCR 306 .............................. 12.390 Treadwell v Hickey [2010] NSWSC 1119 ................................................................................... 3.270 xxv

Civil Procedure in New South Wales

Tripple Take Pty Ltd v Clark Rubber Franchising Pty Ltd; Brooks v Clark Rubber Franchising Pty Ltd [2005] NSWSC 1169 ................................................................................................ 2.170 Tropical Shine Holdings Pty Limited v Lake Gesture Pty Limited (1993) 45 FCR 457 ................. 8.290 Truth About Motorways v Macquarie (2000) 200 CLR 591; 169 ALR 616; 74 ALJR 604; [2000] HCA 11 ....................................................................................................................... 7.40 Truthful Endeavour Pty Ltd v Condon (Trustee) Re Rayhill (Bankrupt) [2015] FCAFC 70 ............ 7.160 Tugrul v Tarrants Financial Consultants Pty Ltd [No 5] [2014] NSWSC 437 ............................... 2.260 Turnbull v New South Wales Medical Board [1976] 2 NSWLR 281 .......................................... 15.290

U United Group Rail Services Ltd v Rail Corporation NSW [2009] NSWCA 177 ............................. 4.350

V Van Der Lee v State of NSW [2002] NSWCA 286 .................................................................... 15.120 Vanacom Pty Ltd v Morgan Brooks Pty Ltd [2006] NSWSC 46 ................................................ 12.460 Vella v Australia & New Zealand Banking Group Ltd [2008] NSWSC 209 .................................... 3.90 Venacom Pty Ltd v Morgan Brooks Pty Ltd [2006] NSWSC 46 ................................................ 12.480 Violi v Commonwealth Bank of Australia [2015] NSWCA 152 .................................................. 11.190 Vlasic v Federal Capital Press of Australia Pty Ltd (1976) 9 ACTR 1 ............................................ 9.340 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 ......................................................... 11.430

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W WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489 .................................. 5.310 Waind v Hill & National Employers Mutual General Association Ltd [1978] 1 NSWLR 372 ...... 12.380, 14.40 Wainohu v New South Wales (2011) 243 CLR 181; (2011) 278 ALR 1; [2011] HCA 24 ............. 1.300, 1.310 Wakim, Re; Ex parte McNally (1999) 198 CLR 511 ...................................................................... 6.30 Walker v Commonwealth Trading Bank of Australia (1985) 3 NSWLR 496 ................................ 7.390 Wang v Farkas (No 6) [2015] NSWCA 116 ................................................................................ 3.410 Waterhouse v Perkins [2001] NSWSC 13 ....................................................................... 4.270, 4.300 Waugh Asset Management v Merrill Lynch [2010] NSWSC 197 ........................ 14.40, 14.80, 14.210 Weber v Ankin [2007] NSWSC 263 ........................................................................................... 7.380 Weldon v Neal (1887) 19 QBD 394 ........................................................................................ 10.130 Welzel v Francis [2011] NSWSC 477 .............................................................................. 3.480, 3.490 Wentworth v Wentworth (2001) 179 ALR 406; [2001] NSWCA 350 .......................................... 3.390 Wepar Nominees Pty Ltd v Schofield (No 2) [2014] FCA 225 .................................................... 8.715 WesTrac Pty Ltd v Eastcoast OTR Tyres Pty Ltd [2008] NSWSC 894 ............................................. 5.30 Western Export Services Inc v Jireh International Pty Limited [2008] NSWSC 601 ................... 13.440 Westpac Banking Corp v Thurairajah [2009] NSWSC 442 ....................................................... 11.150 Westport Insurance Corp v Gordian Runoff Ltd (2011) 244 CLR 239; [2011] HCA 37 ................ 5.120 Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 .................................... 15.230, 15.265 Witness v Marsden (2000) 49 NSWLR 429 ..................................................................... 1.200, 1.210 Wollongong City Council v Legal Business Centre Pty Limited [2012] NSWCA 245 ................... 3.420 Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48 ....................................... 8.130, 8.370 Workplace Safety Australia Pty Ltd v Simple OHS Solutions Pty Ltd [2014] NSWCA 55 .............. 3.410 Wright Rubber Products Pty Ltd v Bayer AG [2010] FCAFC 85 .................................................. 8.390

Y Yi Cheng Jiang v Wan Ze Property Development (Aust) Pty Ltd (in Liq) [2014] NSWCA 350 ..... 3.410 Ying v Song [2010] NSWSC 1500 ........................................................................................... 13.180 Young v Hones [2014] NSWCA 337 ................................................................................. 9.90, 9.115 Young v Quin (1985) 4 FCR 483 ..................................................................... 14.40, 14.290, 14.300 xxvi

Table of Cases

Z Zanella v Madden [2007] NSWSC 559 ....................................................................................... 3.70 Zhang v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384 ....... 8.350

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“Mr C” (1993) 67 A Crim R 562 .................................................................................... 1.180, 1.200 “X” v Sydney Children’s Hospitals Specialty Network [2011] NSWSC 1272 .............................. 1.295

xxvii

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TABLE OF STATUTES COMMONWEALTH

s 33N(1): 8.440 s 33N(1)(d): 8.450 s 33Q: 8.530 s 33R: 8.550 s 33S: 8.560 s 33T: 8.480 s 33V: 8.770 s 33X: 8.790 s 33Y: 8.790 s 33Z: 8.850 s 33ZF: 8.910 s 33ZG(c)(v): 8.1000 s 33ZJ: 8.960 s 43(1A): 8.940, 8.1000 s 157(1)(a): 8.300 Pt IVA: 8.110, 8.440, 8.650

Australian Consumer Law s 18: 7.80 Australian Human Rights Bill 1985: 1.400 Commonwealth of Australia Constitution Act Ch III: 1.180 Commonwealth of Australia Constitution Act 1901: 1.610, 1.620 s 71: 1.610 s 73: 1.610 s 75: 1.610 s 76: 1.610 s 77: 1.610 Ch III: 1.610, 6.30 Corporations Act 2001: 9.20 s 109X(1)(a): 11.130 s 1335: 3.410 Crimes Act 1914 s 3ZQR: 14.90 Criminal Code Act 1995 s 11.5: 1.220 s 270.6(1): 1.220

Freedom of Information Act 1982: 12.10, 12.70, 14.20 Human Rights Bill 1973: 1.400 International Arbitration Act 1974: 5.40

Family Law Act 1975: 1.630

Judiciary Act 1903 s 34: 1.610 s 35: 1.610 s 35A: 1.610 s 35AA: 1.610 s 38: 1.610

Federal Court Rules O 6, r 8: 7.360 O 62A: 3.510

Jurisdiction of Courts (Cross-vesting) Act 1987: 6.30 s 4: 6.30

Federal Court Rules 2011 r 9.05: 7.360 r 9.21: 8.190 r 10.43: 14.330 O 8, r 3(2): 14.330

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015: 2.270

Evidence Act 1995: 14.20, 14.40 Evidence Amendment Act 2008: 14.20

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Federal Court of Australia Amendment Act 1991: 8.110

Federal Court of Australia Act 1976: 1.620, 8.120, 8.150, 8.170, 8.250, 8.890, 8.1000 s 23: 6.163 s 31A: 15.140 s 33C: 8.150, 8.250 s 33C(1)(a): 8.300 s 33D: 8.250 s 33H: 8.270 s 33H(1)(a): 8.390 s 33H(2): 8.290 s 33J: 8.440 s 33L: 8.400 s 33M: 8.150, 8.400 s 33N: 8.150, 8.400, 8.450, 8.470

National Security Information (Criminal and Civil Proceedings) Act 2004: 14.300, 14.350 s 3(1): 14.350 s 38D: 14.360 s 38F: 14.360 s 38G: 14.360 Service and Execution of Process Act: 11.220 Service and Execution of Process Act 1901: 11.300 Service and Execution of Process Act 1992: 11.220, 11.300, 11.320 s 9: 11.300 s 15: 11.310 s 16: 11.320 s 17: 11.320 xxix

Civil Procedure in New South Wales

s 29: 4.270 s 29(2): 14.370 ss 29 to 31: 14.390 s 30: 4.270, 14.370 s 31: 4.270 s 33: 4.270 s 37: 5.30 s 38: 5.30 ss 42 to 47: 5.30 s 43: 5.30 s 46: 5.30 s 49: 5.30 s 50: 5.30 s 51: 5.30 s 52: 5.30 s 53: 5.30 s 56: 1.80, 2.150, 3.10, 3.130, 7.220, 7.400, 7.430, 8.1050, 9.70, 9.340, 10.40, 10.50, 10.240, 14.290, 15.30, 15.160 s 56(1): 8.650, 10.240, 13.710 s 56(3): 2.130 s 56(4): 1.80, 3.120 ss 56 to 59: 3.20 ss 56 to 60: 2.140, 7.170, 15.160 ss 56 to 61: 10.50 s 57: 1.80, 2.130, 2.140, 7.220, 7.430, 10.40, 10.50, 10.240, 13.570, 15.30 s 58: 1.80, 2.130, 10.40 s 58(1): 2.130 s 58(1)(a)(ii): 10.240 s 58(2): 2.170, 2.220, 2.230, 2.250, 10.240, 14.215 s 58(2)(a): 2.130 s 58(2)(b): 1.80, 2.130 s 59: 1.80, 2.130 s 60: 1.80, 2.130, 3.20, 3.30, 3.60, 3.80 s 61: 10.40 s 61(1): 12.240 ss 61 to 63: 2.190 s 63: 10.180, 10.190, 10.200, 11.70, 11.80 s 64: 7.420, 10.20, 10.40, 10.50, 10.110, 10.130 s 64(3): 7.420, 10.90, 10.110 s 64(5): 10.110 s 65: 7.420, 10.110, 10.120, 10.130 s 66: 10.230, 10.240 s 67: 3.410, 3.470 s 68: 14.30 s 71: 1.160, 1.240, 1.250, 2.310, 9.20 s 73: 15.210, 15.220 s 87: 14.10 s 91: 15.190 s 98: 3.10, 3.160, 3.390, 15.230 s 99: 3.10, 3.260 s 102: 15.460 s 104: 15.440, 15.460 s 105: 15.440, 15.460 s 106: 15.440, 15.450 s 106(1)(a): 15.460 s 106(2): 15.480

Service and Execution of Process Act 1992 — cont s 18: 11.320 s 20(4): 11.320 Pt 3: 11.300 Div 1, Pt 2: 11.300 Service and Execution of Process Regulations 1993 Sch 1, Form 1: 11.320 The Legal Profession Uniform Conduct (Barristers) Rules 2015 r 23: 2.270 r 42: 2.270 r 43: 2.270 Trade Practices Act 1974: 7.90, 14.330 s 52: 6.180 Uniform Civil Procedure Rules 2005 Pt 21: 14.30 Uniform Civil Procedure Rules (Amendment No 63) 2013 Pt 3: 2.310

AUSTRALIAN CAPITAL TERRITORY Evidence Act 2011: 14.20 Human Rights Act 2004: 1.400 s 21: 1.420 s 28: 1.440 s 30: 1.440 s 32: 1.440

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Arbitration (Civil Actions) Act 1983: 5.30 Civil Justice Review: Report (2008): 1.440 Civil Liability Amendment (Personal Responsibility) Act 2002: 6.100 Civil Procedure Act 2005: 1.30, 1.80, 1.240, 1.470, 2.10, 2.130, 2.180, 3.10, 3.20, 3.500, 4.250, 10.10, 10.180, 10.200, 15.440 s 3: 9.10 s 8: 1.30, 2.330 s 9: 1.30, 2.330 s 14: 10.40, 10.50 ss 14 to 16: 2.330 s 15: 2.280 s 16: 10.40, 10.50 s 21: 7.290, 7.300 s 21(4): 7.300 s 22: 7.290 s 22(2): 7.310 s 25: 4.270, 14.390 ss 25 to 34: 4.280 s 26: 4.270 s 27: 4.270 xxx

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Table of Statutes

Civil Procedure Act 2005 — cont s 107: 15.570 s 108: 15.600 ss 117 to 125: 15.510 s 133: 15.420 s 134: 15.410, 15.420 s 157: 8.220, 8.250 s 158: 8.240, 8.250 s 158(2): 8.250, 8.340 s 161: 8.270 s 161(2): 8.290 s 162: 8.590, 8.600 s 164: 8.400 ss 164 to 167: 8.410 s 165: 8.400 s 166: 8.394, 8.400 s 166(1)(d): 8.470 s 166(1)(e): 8.660 s 166(2): 8.660, 8.700 s 168: 8.530 ss 168 to 170: 8.394 s 169: 8.550 s 170: 8.560 s 171: 8.480 s 173: 8.760 s 174: 8.760 s 175: 8.790, 8.800 s 175(4): 8.770 s 176: 8.790, 8.800 s 177: 8.840, 8.850 s 179: 8.870 s 181: 8.930, 8.940 s 182: 8.880, 8.890 s 183: 8.900, 8.910 s 184: 8.960 Pt 4: 4.270 Pt 5: 5.20 Pt 6: 15.230 Pt 9: 11.345 Pt 10: 8.170, 8.650 Civil Procedure Rules 1998: 1.110 Civil and Administrative Tribunal Act 2013: 1.530 s 82 to 84: 15.390 Commercial Arbitration Act 2010: 4.340, 5.20, 5.30, 5.40, 5.90, 5.340 s 7: 5.70 s 8: 5.70 s 10: 5.90 s 11: 5.90 s 12: 5.90 s 13: 5.90 s 16: 5.90 s 18: 5.110 s 19: 5.110 s 20: 5.90 s 22: 5.90 ss 23 to 25: 5.110

s 28: 5.110 s 29: 5.110 s 31: 5.110 s 32: 5.110 s 33B: 5.110 s 34: 5.140 s 34(2): 5.130 s 34(3): 5.130 s 34A: 5.130, 5.140 s 35: 5.160, 5.300 s 36: 5.160 Contracts Review Act 1980: 15.60 Court Suppression and Non-Publication Orders Act 2010: 1.160, 1.270, 1.280, 9.20, 14.300 s 3: 1.280 s 4: 1.280 ss 6 to 12: 1.280 s 7: 1.270, 9.20 s 8: 1.270, 9.20 s 16: 1.280 Courts Legislation Miscellaneous Amendments Act 2002: 2.300 Courts and Crimes Legislation Further Amendment Act 2010: 8.170, 8.1050 Sch 6.2: 2.150 Sch 6.4: 8.190 Courts and Other Legislation Further Amendment Act 2013: 2.150 Crimes (Criminal Organisations Control) Act 2009: 1.310 ss 5 to 13: 1.310 s 9(1): 1.310 s 12: 1.310 s 13(2): 1.310 ss 14 to 18: 1.310 ss 19 to 25: 1.310 s 39: 1.310 Pt 2: 1.310 Pt 3: 1.310 Criminal Appeal Act 1912 s 5F: 12.420 Criminal Procedure Act 1986 s 126H: 14.10 Ch 6, Pt 5: 14.10 Pt 5, Div 2: 14.10 Div 1B: 14.10 District Court Act 1973: 1.30, 2.130 s 44: 11.220 s 47: 11.220, 11.300 s 127: 15.300 s 127(2): 15.330 s 134: 6.20 s 140: 6.163 s 141: 6.163 s 142N: 15.300 xxxi

Civil Procedure in New South Wales

s 131A: 14.30, 14.40, 14.50, 14.70, 14.140 s 131A(1): 14.40 s 131A(2): 14.40 s 132: 14.40, 14.50 s 133: 14.40, 14.50 s 136B(4): 14.240 s 138(1)(b): 12.420 s 187: 14.10 Pt 3.10: 14.40 Div 1C: 14.270

District Court Rules 1973: 1.30 Dust Diseases Tribunal Act 1989: 1.560

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Electronic Transactions Act 2000: 2.300 ss 14A to 14R: 2.300 cl 3: 2.300 cl 14: 2.310 Sch 1, cl 3: 2.300 Evidence Act 1995: 1.30, 6.260, 13.50, 14.20, 14.270 s 76: 13.260 s 117: 14.120 ss 117 to 120: 14.130 s 118: 14.40, 14.90, 14.120, 14.140, 14.200 s 119: 14.40, 14.90, 14.120, 14.140 s 120: 14.120 s 121: 14.170, 14.180 s 121(2): 14.170 ss 121 to 126: 14.170 s 122: 14.170, 14.180 s 122(1): 14.170 s 122(2): 14.170, 14.200 s 122(3)(5): 14.170 s 122(3)(a): 14.170 s 122(3)(b): 14.170 s 122(4): 14.170 s 122(5): 14.170 s 123: 14.170 s 124: 14.170 ss 124 to 126: 14.180 s 125: 14.170 s 125(1)(a): 14.170 s 125(1)(b): 14.170 s 126: 14.170 s 126A: 14.240 ss 126A to 126E: 14.250 s 126B: 14.240, 14.260 s 126B(2): 14.240 s 126B(3): 14.240 ss 126G to 126I: 14.10 s 126J: 14.270, 14.275 s 126K: 14.270, 14.275 s 126K(1): 14.270 s 126K(2): 14.270 s 126K(2)(a): 14.270 s 126K(2)(b): 14.270 s 127: 14.10 s 128: 14.10 s 128A: 6.265, 14.10 s 129: 14.40, 14.300, 14.310 s 129(5): 14.300 s 130: 14.40, 14.280, 14.300, 14.310 s 130(1): 14.290, 14.300 s 130(4): 14.300 s 130(5): 14.300 s 130(5)(d): 14.300 s 130(5)(e): 14.290 s 131: 14.40, 14.370, 14.380 s 131(2)(a): 14.370

Evidence Act 2005 s 7: 14.40 Evidence Amendment Act 2007: 14.20, 14.30 Government Information (Public Access) Act 2009: 12.10, 12.70 Home Building Act 1989: 6.20 Independent Commission Against Corruption Act 1988: 1.550 Industrial Relations Act 1996: 1.480 Interpretation Act 1987 s 21: 14.40 Pt 6: 2.280 Jurisdiction of Courts (Cross-vesting) Act 1987 s 5: 6.30 Land and Environment Court Act 1979: 1.490 s 57: 15.300 s 58: 15.300 Law Enforcement (Controlled Operations) Act 1997: 12.420 Law Enforcement (Powers and Responsibilities) Act 2002 s 3: 13.130 s 19B: 13.130 Legal Profession Act 2004: 3.190 Legal Profession Uniform Conduct (Barristers) Rules 2015 r 36: 4.10 Legal Profession Uniform Law: 3.190 ss 181 to 183: 8.960 Legal Profession Uniform Law Application Act 2014 s 193: 3.220 Sch 2: 3.220, 9.20, 9.30 Legal Profession Uniform Law Application Regulation 2015 reg 59: 3.190 Pt 6: 3.190 Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 r 7.2: 4.10 xxxii

Table of Statutes

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Limitation Act 1969: 6.60, 6.100, 7.420, 10.130 s 11(3): 6.140 s 13: 6.60 s 14: 6.96 s 14(1)(a): 6.80, 6.93 s 14(1)(b): 6.80, 6.93, 6.100 s 14B: 6.80, 6.96 s 16: 6.80, 6.93, 6.96 s 17: 15.410 s 18A(1)(b): 6.100 s 18A(2): 6.80, 6.100 s 27(2): 6.80 s 48: 6.80 s 50C: 6.100 s 50C(1)(a): 6.80 s 50C(1)(b): 6.80 ss 50C to 50F: 6.110 s 50D: 6.100 s 50F: 6.140 s 52: 6.140 ss 52 to 56: 6.145 s 55: 6.140 s 56: 6.140 s 56A: 6.80 s 57: 6.100 s 57A: 6.100 s 58: 6.100 s 60C: 6.100 s 60E: 6.100 s 62A: 6.100 ss 62A to 62B: 6.110 s 62B: 6.100 s 62D: 6.110 Limitation Act 1969 s 50C: 6.80 s 57: 6.80 s 57A: 6.80 s 58: 6.80 s 60C: 6.80 s 60E: 6.80 s 62A: 6.80 s 62B: 6.80 Local Court Act 2007: 1.30 s 29: 1.510 s 34: 11.300 s 39: 15.390 ss 39 to 41: 15.400 s 40: 15.390 Local Court Rules 2009: 1.30 Local Courts (Civil Claims) Act 1970: 2.130 Mental Health Act 2007: 1.570 Motor Accidents Compensation Act 1999 s 109: 6.80 Oaths Act 1900: 13.50, 13.60 s 26: 13.110 s 26B: 13.110

s 27: 13.110 s 27A: 13.110 ss 29 to 31: 13.190 s 32: 13.110 s 33: 13.190 s 34: 13.110 Oaths Regulation 2011 regs 3 to 7: 13.120 Sch 1: 13.120 Professional Conduct and Practice Rules 2013 r 31: 14.220 Revised Professional Conduct and Practice Rules 1995 r 17: 13.200 Road Transport (Vehicle Registration) Act 1997: 12.70 Road Transport (Vehicle Registration) Regulation 1998: 12.70 reg 15: 12.70 Supreme Court Act 1970: 1.30, 1.470, 2.130, 15.300 s 38: 15.330 s 44: 15.300 s 46A: 15.300 s 46B: 15.300 s 48: 15.300 s 66(4): 6.163 s 75A: 15.300 s 75A(5): 15.300 s 101: 15.300, 15.310 s 101(1): 15.330 s 101(2): 15.330 s 102: 15.300 Supreme Court Rules 1970: 1.30, 10.130, 12.340 r 1(1): 2.130 r 2 (1): 12.130 r 13: 8.80, 8.130 Pt 51, r 23: 1.360, 1.370 Transport Administration Act 1988: 14.70 s 35R: 14.70 Uniform Civil Procedure Rule 2005: 8.170 Uniform Civil Procedure Rules 2005: 1.30, 2.10, 2.130, 2.180, 2.280, 2.320, 3.10, 3.500, 5.210, 8.80, 10.10, 10.40, 10.180, 10.200, 11.10, 11.300, 11.320, 11.370, 12.10, 12.20, 12.30, 12.50, 12.110, 12.230, 13.50, 13.80, 14.30, 14.40, 15.10, 15.20, 15.200, 15.210 s 39: 5.30 s 40: 5.30 s 42: 5.30 r 25.2((1)c): 6.150 r 1.5: 11.345 r 1.8: 14.40, 14.60 xxxiii

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Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 — cont r 1.9: 14.40, 14.60 r 1.9(3): 14.40 r 1.9(4): 14.40 r 1.9(5)(b): 14.40 r 1.9(5)(c): 14.40 r 1.12: 11.70 r 2.1: 3.410, 3.460 rr 2.1 to 2.3: 2.200 rr 3.1 to 3.15: 2.310 r 3.3: 2.310 r 3.8: 2.310 r 3.9: 2.310 rr 4.2 to 4.9: 9.20 rr 5.1 to 5.8: 12.60 r 5.2: 12.20, 12.70 r 5.3: 12.20, 12.40 r 5.4: 12.20, 12.40, 16.10 r 5.8: 12.50 r 6.1: 9.60 r 6.2: 9.20, 11.90 r 6.2(3): 9.55 r 6 2(3A): 9.55 r 6.2(4): 9.50, 11.70 r 6.2(5): 9.50 r 6.3: 9.20 r 6.4: 9.20 r 6.5: 9.20 r 6.6: 9.20 r 6.9: 9.60 r 6.9(2): 9.60 r 6.10: 9.60 r 6.10(1)(a): 7.310 r 6.11(1): 9.60 r 6.11(2): 9.60 r 6.12: 9.20 r 6.13: 9.20 r 6.14: 9.20 r 6.17: 9.20 r 6.18: 7.60, 7.190, 7.400, 7.410 rr 6.18(1)(a) to (c): 7.400 r 6.18(1)(d): 7.400 r 6.19: 7.170, 7.180, 7.190, 7.200, 7.260, 7.400 r 6.19(2): 7.320 rr 6.19 to 6.28: 7.60 r 6.20: 7.190 r 6.21: 7.190 r 6.21(2): 7.190 r 6.22: 7.60, 7.170, 7.190, 7.210, 7.220, 7.230, 7.400 r 6.24: 7.180, 7.190, 7.320, 7.330, 7.340, 7.360, 7.390 r 6.25: 7.180 r 6.27: 7.180, 7.340 r 6.28: 7.320, 7.330, 7.420, 10.20, 10.110 r 6.29: 7.170, 7.190, 7.330, 7.340, 7.350 r 7.1: 9.20 r 7.4: 8.80, 8.150, 8.190, 8.680 r 7.5: 8.190 xxxiv

r 7.13: 7.50 r 7.14: 7.50 r 7.22: 15.30 r 9.1: 7.310 r 9.6(1): 11.70 r 10.1: 11.20, 11.30 r 10.1(2): 15.30 r 10.2: 11.20 r 10.3: 11.320, 11.330 r 10.4: 11.330 r 10.5: 11.40, 11.50, 11.100 r 10.6: 11.150, 11.160 r 10.9: 11.130 rr 10.9 to 10.12: 11.140 r 10.10: 11.130 r 10.11: 11.130 r 10.12: 11.130 r 10.13: 11.180 r 10.14: 11.200, 11.220 r 10.14(3): 11.120 r 10.19: 11.280 r 10.20: 11.110, 11.300 r 10.20(2): 11.70, 11.100 r 10.20(2)(d): 11.100 r 10.21: 11.100, 11.110 r 10.22: 11.130, 11.140 r 10.23: 11.130 r 10.24: 11.130 r 10.25: 11.130 r 10.26: 11.130, 11.140 r 11.1: 11.345 rr 11.1 to 11.6: 11.380 r 11.2: 11.350, 11.400 r 11.3: 11.345 r 11.4: 11.345, 11.370 r 11.6: 11.350 r 11.7: 11.410, 11.420 r 11.8A: 11.450 rr 11.9 to 11.11: 11.460 r 11A.1: 11.480, 11.490 rr 11A.3 to 11A.8: 11.490 r 11A.4: 11.480 r 12.1: 15.270, 15.280 r 12.3: 15.280 r 12.4: 15.280 r 12.5: 9.60 r 12.6: 9.60 r 12.7: 15.150, 15.160, 15.180 r 12.9: 15.180 r 12.11: 9.60, 11.410, 11.420 r 13.1: 15.70, 15.80, 15.100 r 13.4: 15.100, 15.110, 15.180 r 14.2: 9.70 r 14.3: 9.60, 15.30 rr 14.6 to 14.11: 9.120 r 14.7: 9.160 r 14.9: 9.160 r 14.14: 9.117, 9.120, 9.200, 15.20 rr 14.17 to 14.20: 9.120 r 14.19: 9.170

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Table of Statutes

r 23.8: 13.700 rr 25.1 to 25.9: 6.160 r 25.3: 6.150 r 25.4: 6.150 rr 25.5 to 25.6: 6.150 r 25.7: 6.150 rr 25.10 to 25.17: 6.200 r 25.11: 6.150 r 25.14: 6.150 rr 25.18 to 25.24: 6.230 r 25.19: 6.150, 11.70 r 28.2: 7.460, 7.470 r 28.5: 7.430, 7.440 r 29.7(3): 9.20 r 31.1: 13.30 r 31.2: 13.30, 15.70 r 31.4: 13.90, 13.100 r 31.18: 13.250 r 31.19: 13.310 r 31.20: 13.310 r 31.22: 13.370 r 31.23: 13.370 rr 31.24 to 31.26: 13.530 r 31.27: 13.370 rr 31.28 to 31.30: 13.390 r 31.36: 13.390, 13.400 rr 31.37 to 31.45: 13.420 rr 31.46 to 31.54: 13.510 rr 33.1 to 33.13: 12.370 r 33.4: 12.380 r 33.4(1): 12.380 r 33.5: 11.100 rr 34.1 to 34.3: 12.140 r 35.2: 13.20 r 35.3: 13.80, 15.70 rr 35.3 to 35.7B: 13.100 r 35.8: 11.20, 11.60, 11.70 r 36(3): 13.400 r 36.4: 15.430 r 36.11: 15.430 r 36.15: 15.70 rr 36.15 to 36.16: 15.40 r 36.16: 15.70 r 36.16(2)(a): 15.50 r 36.16(2)(b): 15.50 r 37.1A: 15.560 rr 37.1A to 37.7: 15.580 r 38.1: 15.590 rr 38.1 to 38.7: 15.620 r 38.2: 15.590 r 39: 15.480 r 39.1: 15.470 rr 39.2 to 39.20: 15.490 r 39.34: 15.500 rr 39.34 to 39.43: 15.520 r 40.7: 11.100 r 42.1: 3.200 r 42.2: 3.190 r 42.3: 3.390 r 42.5: 3.190

Uniform Civil Procedure Rules 2005 — cont r 14.20: 9.117 r 14.22: 9.120 r 14.23: 9.120, 9.240 r 14.26: 9.70 r 14.27: 9.70, 9.130 r 14.28: 9.390, 15.100 r 15.1: 9.270, 9.370 r 15.3: 9.270, 9.370 r 15.5: 9.270, 9.370 r 15.6: 9.270 r 15.9: 9.270 r 15.10: 9.270, 9.370 r 16.1: 15.30 rr 16.1 to 16.3: 15.40 r 16.2: 9.70, 15.30 r 16.3: 9.70, 15.30 r 16.3(3): 15.30 r 16.6: 9.20, 15.30 rr 16.6 to 16.8: 15.40 r 16.7: 15.30 rr 17.1 to 17.4: 13.630 r 18.5: 11.100 r 19.1: 10.20, 10.30 r 19.2: 7.420, 10.20, 10.30 r 19.2(4): 10.110 r 19.4: 10.20 r 20.2: 4.270 r 20.6: 4.270 r 20.8: 5.30 r 20.12: 5.30 rr 20.13 to 20.24: 5.220 rr 20.25 to 20.30: 15.240 r 20.26(2): 15.230 r 20.26(2)(c): 15.230 r 20.26(3)(a): 15.230 r 20.26(3)(b): 15.230 r 20.26(12): 15.230 r 20.30: 15.230 r 21.1: 12.230 rr 21.1: 12.250 r 21.2: 12.180, 12.230 r 21.3: 12.230, 14.30 r 21.3(1): 12.230 r 21.3(2)(d): 14.30 r 21.4(2): 12.230 r 21.4(3): 12.230 r 21.5: 12.230 r 21.6: 12.230 r 21.7: 12.230 r 21.8: 12.230 rr 21.9 to 21.13: 12.120 r 21.10: 12.150 r 21.10(1): 12.130 r 21.12: 12.110 r 22.1(4): 12.460 rr 22.1 to 22.6: 12.470 r 22.2: 12.460 r 22.2(c): 14.30 rr 23.1 to 23.5: 13.680 xxxv

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Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 — cont r 42.6: 10.20 r 42.8: 13.650 r 42.9: 13.660 r 42.10: 3.100 rr 42.13A to 42.15A: 15.240 r 42.14: 15.230 r 42.15: 15.230 r 42.15A: 15.230 r 42.17: 15.240 r 42.19: 15.280 r 42.21: 3.410, 3.450, 3.460 r 44.7: 11.345 r 45.6: 9.20 r 45.7: 9.20 rr 47.1 to 47.4: 5.180 r 47.5: 5.190 rr 47.6 to 47.8: 5.180 r 47.10 to 47.20: 5.190 r 51.53: 1.360, 1.370 r 58.2: 8.710, 8.810 Pt 4: 9.117 Pt 5: 12.50 Pt 6, Div 5: 7.60, 11.370 Pt 10: 11.220, 11.300 Pt 11: 11.220, 11.345, 11.480 Pt 11, Div 1: 11.340 Pt 11, Div 2: 11.340, 11.450 Pt 11A: 11.340, 11.450, 11.480 Pt 14: 9.70 Pt 15: 9.370 Pt 17: 9.130 Pt 18: 10.20 Pt 24: 5.190 Pt 25: 6.260 Pt 37,r 8: 12.380 Pt 40, Div 1: 15.440 Pt 42: 3.10 Pt 42, Div 3: 15.230 Pt 51: 15.380 Pt 58: 8.170 Div 1: 11.345 Div 2: 11.345, 11.480 Div 4: 11.480 Sch 1: 11.345 Sch 6: 11.345, 11.350, 11.360, 11.400 Sch 6, para (i): 11.370 Sch 6, para (w): 11.370 Sch 7: 13.370

Uniform Civil Procedure Rules (Amendment No 59) 2013: 15.230

Uniform Civil Procedure Rules (2005) r 31.1: 13.20 r 31.2: 13.20

Supreme Court Act 1986 Pt 4A: 8.120

Workers Compensation Act 1987 s 151D: 6.80 Workplace Injury Management and Workers Compensation Act 1998: 1.520

NORFOLK ISLAND Evidence Act 2004: 14.20

NORTHERN TERRITORY Evidence (National Uniform Legislation) Act 2011: 14.20

QUEENSLAND Uniform Civil Procedure Rules 1999 rr 75 to 77: 8.190

TASMANIA Evidence Act 2001: 14.20

VICTORIA Charter of Human Rights and Responsibilities Act 2006: 1.400 s 7: 1.440 s 24: 1.430 s 32: 1.440 s 36: 1.440 Criminal Procedure Act 2009 s 56(3): 3.120 s 56(4): 3.220 s 98(1)(a): 3.200 s 99: 3.220 Evidence Act 2008: 14.20 Legal Profession Uniform Law Application Act 2014 Sch 2, cl 2: 3.220 Serious Sex Offenders Monitoring Act 2005 s 42: 1.180 s 42(1): 1.180

Uniform Civil Procedure Rules (Amendment No 19) 2007: 8.150

Supreme Court (General Civil Procedure) Rules 2005 O 8, r 2: 8.190

Uniform Civil Procedure Rules (Amendment No 30) 2009: 8.150

WESTERN AUSTRALIA

Uniform Civil Procedure Rules (Amendment No 41) 2011: 8.170

Rules of the Supreme Court 1971 O 18, r 12: 8.190 xxxvi

Table of Statutes

UNITED KINGDOM Civil Procedure Rules: 2.20

TREATIES AND CONVENTIONS

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Agreement on Judicial Assistance in Civil and Commercial Matters and Co-operation in Arbitration between Australia and the Kingdom of Thailand: 11.480

Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters: 11.480 International Covenant on Civil and Political Rights: 1.400 Art 14: 1.410 Art 14(1): 1.400, 1.410

xxxvii

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CHAPTER 1

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Introduction to Civil Procedure [1.10]

INTRODUCTION ......................................................................................................... 2

[1.20]

PROCEDURAL LAW .................................................................................................... 3

[1.25]

Judging Civil Justice ........................................................................................................ 4

[1.30]

SOURCES OF PROCEDURAL LAW .............................................................................. 5

[1.30]

Powers provided by statute ........................................................................................... 5

[1.40]

Inherent and implied jurisdiction .................................................................................. 5

[1.50]

Grassby v R ................................................................................................................... 5

[1.70]

Pelechowski v Registrar, Court of Appeal .......................................................................... 7

[1.80]

GUIDING PRINCIPLES FOR PROCEDURE .................................................................. 9

[1.90]

ADVERSARIAL SYSTEM OF CIVIL LITIGATION ....................................................... 10

[1.90]

Main features of adversarial and inquisitorial systems ................................... 10

[1.100]

Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System .......................................................................................................... 10

[1.110]

Reforms of the adversarial system of litigation ................................................ 13

[1.120]

Civil Justice Review ....................................................................................................... 13

[1.130]

Cards on the table approach to litigation ......................................................... 15

[1.140]

Baulderstone Hornibrook Engineering v Gordian Runoff ................................................... 15

[1.150]

THE PRINCIPLE OF OPEN JUSTICE .......................................................................... 16

[1.170]

Common law power to depart from the open justice principle ..................... 17

[1.180]

Hogan v Hinch ............................................................................................................. 18

[1.200]

Common law categories of cases that are exceptions to the open justice principle ...................................................................................................... 24

[1.210]

Witness v Marsden ....................................................................................................... 25

[1.220]

R v Kwok ..................................................................................................................... 26

[1.230]

Seven Network (Operations) Ltd v Warburton (No 1) ...................................................... 27

[1.240]

Statutory power to close the court in civil proceedings .................................. 30

[1.250]

Civil Procedure Act 2005 (NSW) s 71 ............................................................................. 30

[1.260]

Re HIH Insurance ......................................................................................................... 30

[1.270]

Statutory power to make suppression and non-publication orders .............. 31

[1.280]

Court Suppression and Non-Publication Orders Act 2010 ss 3, 4, 6–13, 16 ..................... 31

[1.290]

Rinehart v Welker ......................................................................................................... 34

[1.295]

X v Sydney Children’s Hospitals Specialty Network ......................................................... 44

[1.298]

A v Bird; C v Bird .......................................................................................................... 47 1

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Civil Procedure in New South Wales

[1.300]

The provision of reasons for decision ................................................................. 49

[1.310]

Wainohu v New South Wales ........................................................................................ 49

[1.320]

PRINCIPLE OF A FAIR TRIAL .................................................................................... 51

[1.330]

The Truth can Cost too Much ........................................................................................ 51

[1.350]

Stead v State Government Insurance Commission .......................................................... 54

[1.370]

Mastronardi v New South Wales ................................................................................... 56

[1.380]

THE CROWN AS THE MODEL LITIGANT ................................................................. 58

[1.390]

Model Litigant Policy for Civil Litigation ......................................................................... 58

[1.400]

THE RIGHT TO A FAIR TRIAL RECOGNISED IN HUMAN RIGHTS LEGISLATION .... 60

[1.410]

International Covenant on Civil and Political Rights ........................................................ 60

[1.420]

Human Rights Act 2004 (ACT) Article 14 ....................................................................... 60

[1.430]

Charter of Human Rights and Responsibilities Act 2006 (Vic) s 24 ................................... 61

[1.450]

Civil Justice Review – human rights considerations .......................................................... 62

[1.460]

THE NEW SOUTH WALES COURT SYSTEM: AN OVERVIEW .................................. 64

[1.470]

Supreme Court of New South Wales .................................................................... 64

[1.480]

Industrial Relations Commission and the Industrial Court of New South Wales ............................................................................................................. 64

[1.490]

Land and Environment Court of New South Wales ........................................... 64

[1.500]

District Court of New South Wales ...................................................................... 65

[1.510]

Local Court of New South Wales .......................................................................... 65

[1.520]

Workers’ Compensation Commission .................................................................. 65

[1.530]

NSW Civil and Administrative Tribunal (NCAT) ................................................. 65

[1.550]

Independent Commission Against Corruption .................................................. 65

[1.560]

Dust Diseases Tribunal ........................................................................................... 66

[1.570]

Mental Health Review Tribunal ............................................................................ 66

[1.610]

FEDERAL COURT STRUCTURE ................................................................................. 66

[1.610]

High Court of Australia ......................................................................................... 66

[1.620]

Federal Court of Australia ..................................................................................... 68

[1.630]

Family Court of Australia ...................................................................................... 68

[1.640]

Federal Circuit Court of Australia ........................................................................ 68

INTRODUCTION [1.10] This book is about civil procedure in New South Wales. It is confined to considering

the procedures by which civil disputes are processed in the Supreme, District and Local Courts of New South Wales. This chapter will consider the following introductory issues: • the meaning and sources of procedural law; • features of an adversarial system of litigation; 2

[1.10]

Introduction to Civil Procedure

CHAPTER 1

• the principle of open justice; • the principle of a fair trial; and, • an overview of the various court systems in New South Wales.

PROCEDURAL LAW [1.20] Procedural law is the law that governs the conduct of proceedings before the court.

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Procedural law is “rules which are directed to governing or regulating the mode or conduct of court proceedings”; McKain v RW Miller & Co (SA) Pty Ltd (1991) 174 CLR 1 at 26-27 per Mason CJ. It is the mode or method of proceeding to enforce a right, it is not concerned with the law that establishes or defines the particular right. Thus it is described as “adjectival” law. Procedural law is distinguished from substantive law in that procedural law regulates the way in which substantive rights and obligations are claimed and enforced, without impacting on the definition of those particular substantive rights. Substantive law is the law that defines legal rights, duties, powers and liabilities. In tort claims, the substantive law is governed by the lex loci delicti which means that the applicable law is the law of the place where the wrongful act took place. Procedural law is governed by the lex fori which means that the applicable laws of procedure and evidence will be the laws of the forum, that is the laws of the court which is hearing the claim. This means in a claim of negligence that occurred in Victoria which is litigated in the Supreme Court of NSW, the law of negligence is governed by the common law and any applicable Victorian statutes, however the procedural law (meaning the way in which the case is litigated) is governed by the law of NSW. The distinction between substantive and procedural law was stated by the majority in John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 where Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said at [99]: Two guiding principles should be seen as lying behind the need to distinguish between substantive and procedural issues. First, litigants who resort to a court to obtain relief must take the court as they find it. A plaintiff cannot ask that a tribunal which does not exist in the forum (but does in the place where a wrong was committed) should be established to deal, in the forum, with the claim that the plaintiff makes. Similarly, the plaintiff cannot ask that the courts of the forum adopt procedures or give remedies of a kind which their constituting statutes do not contemplate any more than the plaintiff can ask that the court apply any adjectival law other than the laws of the forum. Secondly, matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in McKain [[1991] HCA 56; (1991) 174 CLR 1 at 26–27], “rules which are directed to governing or regulating the mode or conduct of court proceedings” are procedural and all other provisions or rules are to be classified as substantive [Stevens v Head [1993] HCA 19; (1993) 176 CLR 433 at 445 per Mason CJ]. [footnotes inserted in the text in square brackets]

The purpose of procedural law is to provide rules to facilitate dispute resolution. The basis of the rules lies in the need to provide procedural fairness or due process to the parties in litigation (for example, the rules ensure that the parties are aware of the case that they have to meet and allow the parties to be heard). The rules are also concerned with promoting access to justice. Better access to the courts is facilitated by ensuring that the rules address issues of cost and delay. [1.20]

3

Civil Procedure in New South Wales

Judging Civil Justice [1.25] Dame Hazel Genn, “Introduction: what is civil justice for?” in Hazel Genn (ed), Judging Civil Justice, 2008 Hamlyn Lecture (Cambridge University Press, 2010) pp 12-16 The significance of procedure The civil justice “system” then comprises the substantive law, the civil procedure rules, courts and the judiciary. Although I do not want to focus on the detail of civil procedure, it is necessary to think about the purpose of civil procedural rules, since it is these rules that have been the main target of civil justice reformers. There seems to be common agreement around the world that a critical challenge in solving the problems of cost, complexity and delay in civil justice is that of getting the rules right. But why are the procedural rules so important? The answer is that the rules guarantee procedural fairness, and procedural fairness is important both in its own right and through its link with substantive justice. It has been argued that legal procedure is “a ritual of extreme social significance” and that the characteristics of “a civilized country” are revealed not so much through the substantive law as in the practice and procedure of the courts. Jeremy Bentham saw the rules of procedure as being central to the machinery of civil justice. For Bentham, the power of procedure was in the link between evidence and correct decisions (rectitude) and the role of procedure in achieving accuracy in decision making continues to be seen as central today by procedural scholars. The system of procedure is designed to ensure that judges have all of the appropriate evidence available so that they can find the material facts and apply the substantive law to those facts. In this way, procedural rules reflect a sense of justice. Procedure is the means by which substantive rights are enforced.

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Indeed, it has recently been argued that rather than being mere rules, the procedures devised for adjudicating civil cases are essentially “the means by which society expresses its underlying meaning”. Procedure is important because of its link to substantive outcome. If substantive justice lies in the correct application of legal principles to a factual situation, then procedures that increase the likelihood of a correct decision being reached are vital. It is also argued that procedure is important to litigants. There is a relatively substantial body of literature in social psychology that provides firm empirical evidence first, that those involved in legal decision-making processes are able to distinguish procedure from outcome and second, that fair procedures make losing more acceptable and contribute to the legitimacy of the decision-making body. According to this research, the critical elements that contribute to perceptions of fairness are the opportunity to be heard, the opportunity to influence the decision maker, even-handedness of the decision maker, and being treated with courtesy and respect. Thus procedural justice is not only theoretically important as the route to substantively correct decision making but is an important influence on user perceptions of the fairness of legal processes. In considering the significance of procedural justice, Lawrence Solum argues that it is fundamentally about participation: Procedural justice is deeply entwined with the old and powerful idea that a process that guarantees rights of meaningful participation is an essential prerequisite for the legitimate authority of action-guiding legal norms. Solum further suggests that while meaningful participation in legal proceedings requires parties to have notice of the case against them and the opportunity to be heard, it also requires a reasonable balance between cost and accuracy. However, the challenge facing any civil justice system is where to find the balance between efficiency and substantive justice. How much justice can we afford? Or, as I argue in the next chapter, perhaps it is more a question of how much justice can we afford to forego? How much procedural justice do you need to achieve an appropriate degree of substantive justice? Even in the early part of the nineteenth century, Bentham was concerned about the burden on both parties involved in litigation. He argued that it was important to reduce the delays, vexations and expenses involved in pursuing civil litigation. In Bentham’s terminology “vexation” is an amalgam of the frustrations, distresses and irritations involved in pursuing legal action. The challenge, then, is to 4

[1.25]

Introduction to Civil Procedure

CHAPTER 1

Judging Civil Justice cont. find the balance between procedures that are seen as fair, that contribute to substantive justice and that provide reasonable access to justice so that rights can be enforced, but are not so complicated or expensive as to make proceedings inaccessible. But what is the correct measure of procedure? Litigant satisfaction with process and outcome? Correct decisions and substantive justice? How accurate do we need to be? When we say the outcome was “correct”, what does that mean? Adrian Zuckerman has argued that in the end, measuring the success of procedures in doing justice is a complex judgement relating to rectitude of decision, time and cost. “There is no perfect rectitude of decision, justice cannot be dispensed instantly without some delay, and justice cannot be absolutely free of cost constraints. Each system has had to balance the competing demands and strike a compromise.” [footnotes omitted]

SOURCES OF PROCEDURAL LAW Powers provided by statute

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[1.30] The sources of procedural law in the New South Wales Supreme, District and Local

Courts are mainly found in the Civil Procedure Act 2005 (NSW) (CPA) and the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). Both the CPA and the UCPR apply in the Supreme, District and Local Courts (they also apply in the Land and Environment Court and the Dust Diseases Tribunal). The CPA provides that a Uniform Rules Committee may make rules that are consistent with the CPA (see ss 8 and 9). Some procedural rules can also be found in the various court rules; for example, the Supreme Court Rules 1970, the District Court Rules 1973 and the Local Court Rules 2009. The specific court Acts deal with jurisdictional matters, the constitution of the court and delegation of powers, however they also enable the power of a rules committee to make procedural rules: the Supreme Court Act 1970 (NSW), the District Court Act 1973 (NSW) and the Local Court Act 2007 (NSW). Procedure can also be set out in a practice note that is delivered by the particular court, for example see Practice Note SC Gen 7 Supreme Court – Use of Technology in Chapter 12. It should also be noted that the rules of evidence which regulate the information that can be used as evidence in the hearing of the substantive cause of action (and also in interlocutory hearings such as non-disclosure of documents due to privilege) are mainly found in the Evidence Act 1995 (NSW) and the common law. Inherent and implied jurisdiction [1.40] There is also inherent jurisdiction (or inherent power) in superior courts of record

(such as the Supreme Court) to regulate their processes and prevent an abuse of process: Jago v District Court of New South Wales (1989) 168 CLR 23 and Batistatos v Roads and Traffic Authority of NSW (2006) 226 CLR 256; 227 ALR 425; [2006] HCA 27. The District Court and Local Court have a limited jurisdiction which arises expressly under statute or is derived by implication from statutory provisions conferring particular jurisdiction: Grassby v R (1989) 168 CLR 1 at 16-17.

Grassby v R [1.50] Grassby v R (1989) 168 CLR 1 DAWSON J (MASON CJ, BRENNAN, DEANE AND TOOHEY JJ AGREEING) 21. … [I]t is undoubtedly the general responsibility of a superior court of unlimited jurisdiction for the administration of justice which gives rise to its inherent power. In the discharge of that [1.50]

5

Civil Procedure in New South Wales

Grassby v R cont. responsibility it exercises the full plenitude of judicial power. It is in that way that the Supreme Court of New South Wales exercises an inherent jurisdiction. Although conferred by statute, its powers are identified by reference to the unlimited powers of the courts at Westminster. On the other hand, a magistrate’s court is an inferior court with a limited jurisdiction which does not involve any general responsibility for the administration of justice beyond the confines of its constitution. It is unable to draw upon the well of undefined powers which is available to the Supreme Court. However, notwithstanding that its powers may be defined, every court undoubtedly possesses jurisdiction arising by implication upon the principle that a grant of power carries with it everything necessary for its exercise (ubi aliquid conceditur, conceditur et id sine quo res ipsa esse non potest). Those implied powers may in many instances serve a function similar to that served by the inherent powers exercised by a superior court but they are derived from a different source and are limited in their extent. The distinction between inherent jurisdiction and jurisdiction by implication is not always made explicit, but it is, as Menzies J points out, fundamental.

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22. The point may be illustrated by reference to the power to punish summarily for contempt not committed in the face of the court. Such a power is inherent in a superior court but forms no part of the powers of an inferior court: see Reg v Lefroy (1873) LR 8 QB 134. A superior court, however, not only has power to punish contempt against itself committed out of court, but in the exercise of its inherent jurisdiction it may prevent and punish summarily as a contempt any interference with the due course of justice in an inferior court. In John Fairfax & Sons Pty Ltd v McRae [1955] HCA 12; (1955) 93 CLR 351 this Court pointed out that the jurisdiction over contempts committed against inferior courts was inherited by the superior court as “custos morum of all the subjects of the realm” (at p 365) and was but an aspect of “the traditional general supervisory function of the King’s Bench, the function of seeing that justice was administered and not impeded in lower tribunals” (at p 363). The immediate basis for the exercise of such a function is to be found in the absence of any inherent jurisdiction in inferior courts similarly to protect themselves: see R v Davies (1906) 1 KB 32, at pp 47-48. A magistrate’s court in New South Wales now has, of course, a statutory power to punish for contempt: Justices Act, s 152. 23. It would be unprofitable to attempt to generalize in speaking of the powers which an inferior court must possess by way of necessary implication. Recognition of the existence of such powers will be called for whenever they are required for the effective exercise of a jurisdiction which is expressly conferred but will be confined to so much as can be “derived by implication from statutory provisions conferring particular jurisdiction”.

[1.60] An implied power may be found where a court has jurisdiction under its statute but no

provision is made in the statute for the making of an order which is necessary to carry out the court’s statutory powers: R v Mosely (1992) 28 NSWLR 735 at 739 referring to Stanton v Abernathy (1990) 19 NSWLR 656. In the case of a court whose powers are defined by statute, such as the District Court and the Local Court, “there is an implied power to do that which is required for the effective exercise of its jurisdiction”: TKWJ v The Queen (2002) 212 CLR 124; [2002] HCA 46 at [44] per Gaudron J. (In TKWJ it was not necessary for the effective exercise of jurisdiction for a trial judge to give an “advance ruling” on evidence). A statutory court has the power to do that which is “really necessary to secure the proper administration of justice in the proceedings before it”: see John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 476 and John Fairfax Group Pty Limited v Local Court of NSW (1991) 26 NSWLR 131 at 161. The term “necessary” does not mean “essential” but rather it 6

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is to be “subjected to the touchstone of reasonableness”: Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 451 per Gaudron, Gummow and Callinan JJ.

Pelechowski v Registrar, Court of Appeal [1.70] Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 GAUDRON, GUMMOW AND CALLINAN JJ [1] The appellant, Karl Pelechowski, appeals against his conviction and sentence by the New South Wales Court of Appeal on a charge of contempt in respect of an order made against him in the District Court of that State. The facts [2] At all material times, Mr Pelechowski and Ms Penelope Jane Stephens have been and are, as joint tenants, the registered proprietors of Lot 2033 in Deposited Plan No 255371. This Lot (“the Land”) constitutes 9 Kippax Place, Erskine Park, an outer suburb of Sydney, and is land under the provisions of the Real Property Act 1900 (NSW) (“the Real Property Act”). [3] On 18 January 1983, Michael Rahme (on the one part) and “Karl & Penny Pelechowski” (on the other part) entered into an “AGREEMENT FOR LOAN” (“the Agreement”). The Agreement provided that Mr Rahme would lend $50,000 to the borrowers for a period of 12 months from 18 January 1983 and that the borrowers would repay the principal with interest of $7,000. The Agreement stated that, should repayment of the loan exceed “the expiry date”, the borrowers agreed to pay “14% monthly interest until settlement of property”. The Agreement indicated that “Karl & Penny Pelechowski” were “Real Estate Licensee” [sic]. [4] The parties had become acquainted during a period leading up to January 1983 when Mr Rahme purchased a property through a real estate business conducted by Mr Pelechowski and Ms Stephens at Mount Druitt. Mr Rahme provided the loan moneys to the borrowers from cash held by him in a bank safe deposit box.

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The main proceedings [5] On 20 February 1990, Mr Rahme caused a Statement of Liquidated Claim to be issued out of the District Court of New South Wales at Penrith. Mr Rahme claimed the sum of $92,439.95 plus interest from Mr Pelechowski and “Penny Pelechowski”, alleged to be owing as a result of the Agreement. On 5 April 1993, an Amended Statement of Liquidated Claim was issued out of the District Court at Penrith which, among other things, indicated that Ms Pelechowski was also known as “Penelope Jane Stephens”. [6] On 2 February 1994, the proceedings reflected in the Amended Statement of Liquidated Claim began before Christie DCJ at Parramatta. On that occasion, evidence was led on behalf of Mr Rahme from a person who witnessed the Agreement. At the conclusion of that evidence, the proceedings were adjourned until 15 April 1994 at Sydney. [7] On 29 March 1994, Mr Rahme filed a notice of motion seeking an order against “the Defendants Karl Pelechowski and Penny Pelechowski (also known as Penelope Jane Stephens)” restraining them from selling, disposing, encumbering, further encumbering or otherwise dealing with their interest in the Land. The restraining order was sought “pending further order of this Honourable [District] Court”. In the alternative, Mr Rahme sought that “Karl Pelechowski and Penny Pelechowski (also known as Penelope Jane Stephens)” be restrained from dealing with a portion of the proceeds of sale of the property “pending final determination of the Hearing of [Mr Rahme’s] Claim as against the Defendants”. [8] On 15 April 1994, Christie DCJ heard the balance of the evidence in the main proceedings as well as the notice of motion. Mr Rahme was represented by counsel, Mr Pelechowski appeared in person and Ms Stephens did not appear, whether by counsel or personally. On the same day, [1.70]

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Civil Procedure in New South Wales

Pelechowski v Registrar, Court of Appeal cont. Christie DCJ provided oral reasons for judgment. His Honour gave judgment for Mr Rahme against Mr Pelechowski and Ms Stephens in the sum of $105,090 and made a limited order as to costs. Christie DCJ then dealt with the notice of motion and stated: That motion seeks to protect [Mr Rahme’s] interest in a verdict which he now has against the defendants of $105,090 with the exception of the costs. … Having regard to the view that I have of the defendants’ evidence in this matter I propose to accede to the orders sought in [the] notice of motion and I order that the defendants Karl Pelechowski and Penny Pelechowski also known as Penelope Jane Stephens be restrained from selling or otherwise disposing of, encumbering or further encumbering or otherwise dealing with their interest in any way in the property situate and known as 9 Kippax Place, Erskine Park. I order that that order shall continue until further order or payment of the verdict. Mr Pelechowski was, but Ms Stephens was not, in court when Christie DCJ gave judgment for Mr Rahme and made the order restraining any dealing in the Land. [9] It can be seen that the order granted by Christie DCJ had the effect of restraining any dealing in the Land until further order or payment of the verdict. … [50] Some guidance in the matter is provided by the decision of this Court in Grassby v The Queen. It was there held that specific provision upon the subject made in the Justices Act 1902 (NSW) left no room for the implication of a discretionary power to terminate proceedings in a manner other than that provided. The result was that a magistrate had no power to order a stay of committal proceedings as an abuse of process. The leading judgment was given by Dawson J. … Dawson J concluded that recognition of the existence of the powers which an inferior court must possess by way of necessary implication will be called for:

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whenever they are required for the effective exercise of a jurisdiction which is expressly conferred but will be confined to so much as can be “derived by implication from statutory provisions conferring particular jurisdiction”. [51] The term “necessary” in such a setting as this is to be understood in the sense given it by Pollock CB in The Attorney-General v Walker [(1849) 3 Ex 242; 154 ER 833 at 255-256 (Ex), 838-839 (ER)], namely as identifying a power to make orders which are reasonably required or legally ancillary to the accomplishment of the specific remedies for enforcement provided in Div 4 of Pt 3 of the District Court Act. In this setting, the term “necessary” does not have the meaning of “essential”; rather it is to be “subjected to the touchstone of reasonableness”. [52] In the present case, an asset preservation order might properly have restrained any dealing by the judgment debtors with the Land for such period as was appropriate for the judgment creditor to move promptly to utilise the provisions with respect to writs of execution in subdiv 5 of Div 4 of Pt 3 of the District Court Act. Such an order may reasonably have been required as ancillary to the proper objective of preventing the recording of adverse dealings in the register before the recording of a writ of execution against the Land on the application of the judgment creditor. Other examples may be imagined. [53] However, the order made in this case was different in its nature and effect. The effect was to give Mr Rahme something in the nature of an additional security for payment of the judgment debt, by denying to Mr Pelechowski and Ms Stephens the exercise of their proprietary rights which otherwise had not been diminished by the recovery of a judgment itself. The order operated without receipt of any undertaking by Mr Rahme expeditiously to pursue the remedies provided by the District Court Act or the Bankruptcy Act. The importance, in such a situation, of an undertaking to proceed expeditiously is emphasised in the joint judgment in Cardile v LED Builders Pty Ltd. 8

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Pelechowski v Registrar, Court of Appeal cont. [54] The restraint imposed by the District Court was to continue “until further order or payment of the verdict”. The order was not so expressed as to operate in aid of recovery of so much of the judgment debt as might be recouped upon a sale under a writ of execution. Nor, should Mr Rahme have decided to pursue his rights under the Bankruptcy Act, was the order expressed as subjected to rights of creditors under an insolvent administration of the affairs of the judgment debtors. The submissions by the Registrar with respect to implied power should be rejected. [footnotes omitted]

GUIDING PRINCIPLES FOR PROCEDURE [1.80] The CPA sets out that the “overriding purpose of this Act and of the rules of court, in

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their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings”: s 56. The court must seek to give effect to the overriding purpose when it exercises any power given to it by the CPA or by rules of court. A party to proceedings is under a duty to assist the court to further the overriding purpose and a solicitor or barrister must not, by his or her conduct, cause his or her client to be put in breach of this duty: s 56(4). The court is to act in accordance with the dictates of justice in deciding whether to make any order or direction for the management of proceedings, including orders for amendment or adjournment: s 58. For the purpose of determining what are the dictates of justice in a particular case, the court must have regard to the overriding purpose and the objects of case management (ss 56 and 57) and may have regard to the matters set out in s 58(2)(b). These matters include: (i)

the degree of difficulty or complexity to which the issues in the proceedings give rise;

(ii)

the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities; and

(iii)

the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction. In addition, the CPA requires the court to implement its practices and procedures with the object of eliminating delay. Section 59 requires the court to implement its practices and procedures with the object of eliminating any lapse of time between the commencement of proceedings and their final determination beyond that which is reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial. Finally, the CPA requires the court to implement its practices and procedures with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute: s 60. These principles are discussed in more detail in Chapter 2.

[1.80]

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Civil Procedure in New South Wales

ADVERSARIAL SYSTEM OF CIVIL LITIGATION Main features of adversarial and inquisitorial systems [1.90] The civil justice system exists in an adversarial model of litigation. The main features of

an adversarial model are: • a party controlled dispute (that is the parties define the dispute and present evidence and argument); • the use of precedent, procedural rules and laws of evidence; • a reactive, impartial judge who acts as an umpire; • a reliance on oral testimony which is adduced from witnesses and is subject to cross examination. In addition, advocates use oral argument in the presentation of their case; • the trial is the climactic end of the litigation process (and is distinct from the pre-trial stages of proceedings); and • use of the trial transcript for an appeal. The adversarial model is commonly contrasted to the inquisitorial model. An inquisitorial model’s features are: • the judge’s role is both proactive and inquisitive; • the main sources of law are codes with commentary from legal scholars; • there are minimal rules of courtroom practice; • the emphasis is on documentary proof and not on cross-examination;

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• there is no rigid separation between trial and pre-trial phases; and • there is no use of transcript to record court proceedings. The features of an adversarial model are discussed in the following extract from an issues paper prepared by the Australian Law Reform Commission when it conducted its Managing Justice Inquiry: Australian Law Reform Commission Report 89, Managing Justice, A Review of the Federal Civil Justice System, Sydney 2000. This paper also recognises that, in practice, both the adversarial and inquisitorial models have hybrid features. For example, coronial inquests and commissions set up to inquire into a particular issue are inquisitorial models within the New South Wales adversarial justice system.

Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System [1.100] Australian Law Reform Commission, Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System, Issues Paper 20 (1997) Legal “families” 2.2 There are a number of dominant legal families that distinguish the various legal systems of the world. Some derive from religion (for example, the Islamic and Talmudic legal systems), others are associated with particular political and social ideologies (for example, common law, civil law and socialist law). These families are not rigidly distinguished from each other but there are sufficiently significant differences between them to define them, based on the following basic characteristics: • objectives of the legal system • source of law • legal method. 10

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Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System cont. The “adversarial”/“inquisitorial” dichotomy 2.3 The two legal families that have dominated, and continue to dominate, “western” legal systems are the civil law and common law systems. The origins of the first lie in Roman Law and the code civil of nineteenth century France, while the common law derives from medieval English civil society. The transplantation of both legal families throughout the western world and beyond was assured by the French and British empires. 2.4 Many of the cardinal features of the two legal families are different: their separate developments spanned many centuries. However, even as “ideal types” they are far from polar opposites. Both have as their overall objective the establishment of systems for the just resolution of disputes and the maintenance of social order. It is their means of achieving such ends which differ. 2.5 In the legal systems of today there is no pure example of either the civil law or common law system. All relevant legal systems in the western world are to greater or lesser degrees hybrids of these two models or of other legal families. Nonetheless in order to be able accurately to characterise the legal system that presently operates in Australia it is useful to outline some of the features that distinguish the common law and civil law families. 2.6 The essential features of the common law family include • A concern to determine legal disputes according to their individual circumstances and related judge-made case law, rather than applying general statements of legal principle. • Common law orthodoxy dictates that the source of law is to be found in the texts of individual judgments. Modern common law legal systems however have substantial bodies of highly detailed legislation which comprise the primary source of law. • Common law applies to all legal persons including the state. Traditionally there is no division between public and private law. • An inductive form of legal reasoning is adopted whereby legal principle derives from the texts of many single judgments. Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

• In the litigation system the trial is the distinct and separate climax to the litigation process. • Court-room practice may be subject to rigid and technical rules. • Proceedings are essentially controlled by the parties to the dispute and there is an emphasis on the presentation of oral argument by counsel. The role of the judiciary is more reactive than proactive. Given the parties’ opportunity and responsibility for mounting their own case the system is more participatory. • The judiciary possesses an inherent and separate power to adjudicate. • The expense and effort of determination of disputes through litigation falls largely on the parties. 2.7 The essential features of the civil law family include • A concern to determine legal disputes according to pre-determined legal principles established to maintain social order. • The source of law is to be found in authoritative statements of basic legal principles – for example, the Civil and Criminal Codes – issued by the state and propounded upon by legal scholars. • There is a separation of public law (concerning relations between the individual and the state) and private law (between individuals). • A deductive form of legal reasoning is adopted whereby pre-existing general statements of legal principle are applied to the specific circumstances of individual cases. [1.100]

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Civil Procedure in New South Wales

Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System cont. • In litigation no rigid separation exists between the stages of the trial and pre-trial in court cases. Legal proceedings are viewed as a continuous series of meetings, hearings and written communications during which evidence is introduced, witnesses heard and motions made. • Rules relating to court-room practice are intended to be minimal and uncomplicated. • The role played by lawyers is less conspicuous with an emphasis on written submissions rather than oral argument. The role of the judiciary is both proactive and inquisitive. The greater directorial role of the judiciary allows less room for the parties to direct their own case. In this sense the system is more hierarchical than participatory. • As officers of the state the judiciary possesses no separate and inherent power to adjudicate. • A greater proportion of the effort and expense of dispute determination through litigation falls on the state. 2.8 It is the combination of these elements within each of the two families of common law and civil law and their respective court procedures and practices which permit the short-hand descriptors of “adversarial” and “inquisitorial” to be used. In the classical adversarial form of trial: the judge sits to hear and determine the issues raised by the parties, not to conduct an investigation or examination on behalf of society at large …. So firmly is all this established in our law that the judge is not allowed in a civil dispute to call a witness whom he thinks might throw some light on the facts. He must rest content with the witnesses called by the parties. 2.9 The common law courtroom trial is a forum in which arguments of the disputing parties are pitted against each other. As the trial is the climax to the litigation process, the “shadow” of the trial affects the form and content of pre-trial proceedings. The defining characteristic of adjudication in common law systems is its adversarial nature, reflected in the practice and culture of litigation. The origins of the Australian litigation system

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2.10 The origins of the legal system in Australia lie in medieval English civil society. The basic elements of our legal system evolved during the reign of the Plantagenet Kings. There was no deliberate act of creation of the system nor any defined moment of its coming into being. The common law system of England took its form from a coalition of established practices and procedures. 2.11 The fledgling common law system was flexible. The lawyers, judges and court officials who administered it were pragmatists. These were instrumental factors in the resistance of the common law system to infiltration of the structured Roman law system. The common law system developed in isolation from the civil law system in continental Europe. Through the expansion of the British Empire the insular and arcane learning of the small band of lawyers who argued cases in the great hall of Westminster became the law by which a third of the people on the earth were governed and protected, the second of the two great systems of jurisprudence known to the world. 2.12 A significant development in the formative decades of the common law system was the institution of pleading. This feature of cases before common law courts is typical both of the adaptability of the system and the prominent role played by the lawyers. At its simplest pleading consisted of the defendant appearing at the bar of the court and the plaintiff stating the complaint. This practice became more formal and professional “counters” or “narrators” the precursors to today’s barristers practised the art of pleading. The nature of their professional expertise and the extent of their assistance to the court and their “client” changed from the mere preparation and recitation of the “count” (pleading) to more detailed argument and amplification of their “client’s” case. The narrators’ expertise and guidance was now required not only by the bench but by non-legally trained jurors increasingly used in civil and criminal trials. 2.13 Australia inherited the adversarial common law system of England. In conformity with the laws of settlement at the time. 12

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Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System cont. as soon as the original settlers had reached the colony, their invisible and inescapable cargo of English law fell from their shoulders and attached itself to the soil on which they stood. The colony’s court systems, if not replicas of England’s, displayed their obvious parentage. [footnotes omitted]

Reforms of the adversarial system of litigation

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[1.110] There has been criticism of the adversarial system model on the grounds that it

prevents access to justice due to its cost (both private and public) and its delay. The system has been criticised for being unjust, unequal and producing inaccurate results. These criticisms resulted in a major review of the civil justice system in England and Wales by Lord Woolf: Lord Woolf, Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales (1995) and Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (1996). Lord Woolf’s main finding was that the primary problem of the unrestrained civil adversarial culture was that it restricted access to justice. Lord Woolf’s review recommended a number of reforms, such as early settlement of disputes; greater use of alternative dispute resolution, single expert witnesses; encouraging cooperation amongst lawyers; identification and reduction of issues as a basis for case preparation; moving to trial as quickly as possible if settlement is not possible; and use of overriding objectives in court rules. Lord Woolf’s central recommendations came into effect with the enactment of the Civil Procedure Rules 1998. In 2009, Sir Rupert Jackson was asked to review and make recommendations in respect of case management and costs in order to promote access to justice at proportionate cost. Sir Rupert Jackson produced his final report in 2009. 1 His main recommendations were implemented in 2013. In Australia, the criticisms resulted in the Australian Law Reform Commission conducting its own inquiry into the adversarial system: “Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System”, ALRC 89 (1999). Reforms of the civil justice system can be seen in for example the greater use of case management (see Chapter 2) and alternative dispute resolution (see Chapter 4). However, the level of reform of the civil justice system is regulated by the level of funding of the operation of the system. The Victorian Law Reform Commission recently considered the impact of resource allocation.

Civil Justice Review [1.120] Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008) p 71 3.3 Resource allocation and distribution of civil and criminal cases Funding is a critical factor affecting the operation of the civil justice system. The quantity of judicial and other resources available to deal with cases will be an important determinant of the capacity of the civil justice system to deal with the demands of litigants. The manner in which judicial and other resources are deployed to deal with the competing demands of criminal cases will also directly impact on the available resources to deal with civil cases. All three Victorian courts, and many judicial officers 1

R Jackson, Review of Civil Litigation Costs: Preliminary Report (May 2009) and R Jackson, Review of Civil Litigation Costs: Final Report (December 2009). [1.120]

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Civil Procedure in New South Wales

Civil Justice Review cont. within each court, deal concurrently with both civil and criminal cases. In a number of other jurisdictions there have been moves to create separate specialist criminal and civil courts. Apart from its impact on the level of judicial and other resources, funding will influence the quality of judicial and other court personnel. Levels of remuneration and other factors, such as judicial pensions, have a bearing on the calibre of candidates for judicial office and on the duration of their period in office. The remuneration entitlements of judicial officers are significantly less than what may be earned in private practice. However, non-contributory judicial pensions may have an influence in both attracting people to judicial office and accelerating their retirement. In considering the level of public funding for the civil courts it is necessary to have regard to the fact that the courts generate income, including through court fees and other charges for services. According to the Productivity Commission, in the 2005–06 financial year recurrent expenditure on court administration for the civil courts in Victoria amounted to $86.3 million. In the same period, income derived through the civil courts in Victoria, excluding fines, amounted to $33.9 million. In the 2006–07 financial year, the respective figures were $86.5 million and $34.6 million. In recent times there have been increasing calls for users of the court system to pay more for the services provided, including in commercial disputes between resourceful commercial entities. Although the level of judicial and other resources available to deal with civil cases, and the allocation of judicial and other resources between civil and criminal matters, are important factors influencing the civil justice system these matters are outside the scope of stage one of the present review. However, the commission accepts that “access to justice” is a qualified right. Governments cannot reasonably be expected to provide unlimited publicly funded resources for the adjudication of disputes, particularly private disputes that do not have significance beyond the interests of the individual parties. From a policy perspective, there is a need to balance the “government’s duty to use public funds responsibly”, including by making difficult decisions between competing priorities, and the obligation of parties in dispute to “bear some responsibility for resolving their differences”.

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The following observations of Professor Zuckerman have met with judicial approval in the UK (See, eg, Sir Anthony Clarke, The Importance of Civil Justice: Nationally and Internationally (paper presented at the American Bar Association Conference, London, 3 October 2007) 5 (quoting Zuckerman)). The right of access to court does not, however, entitle litigants to demand the best possible law enforcement process regardless of cost, any more than they are entitled to demand unlimited health support or boundless educational facilities. The only reasonable demand that members of the community can make with respect to any public service is that its funding should be commensurate with available public resources and with the importance of the benefits that it has to deliver. In addition, members of the community have a right to expect that, within available resources, the service should provide adequate benefits to the community. The test of whether a given public service is adequate is fairly straight forward. A public service is adequate if it is effective, efficient and fair. A service is effective if it meets the reasonable expectations of the community, be they appropriate health service, a satisfactory education system or, indeed, adequate court assistance for the enforcement of rights. A service is efficient if its resources are used to maximise benefit output and are not unreasonably wasted on unproductive activities. A service is fair if the resources available to it are justly distributed between those entitled to the service, whether their needs are present or merely contingent. The requirements of effectiveness, efficiency and fairness are easily translated to the provision of court dispute resolution. Court adjudication is effective if it determines claims with reasonable accuracy, within a reasonable time and with proportionate investment of litigant and public resources. Court adjudication is efficient if public and litigant resources are employed to maximise effectiveness and are not wasted unnecessarily. Lastly, court adjudication is fair if the system ensures that its resources and facilities are justly distributed between all litigants seeking court help and between 14

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Civil Justice Review cont. present and future litigants (Adrian Zuckerman, “Civil Litigation: A Public Service for the Enforcement of Civil Rights” (2007) 26 Civil Justice Quarterly 1, [3]). It would appear to be generally accepted that the goals of the civil justice system cannot be pursued without some moderation, or pursued by unfair means or by exhausting every avenue of inquiry. As Knight Bruce VC has noted: “Truth … may be loved unwisely – may be pursued too keenly – may cost too much” (Pearse v Pearse (1846) 63 ER 950, 957) [footnotes generally omitted].

“Cards on the table” approach to litigation [1.130] Conducting litigation as if it were a card game is now discouraged in the adversarial

system. In Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116, Heydon JA said at [26]: The conduct of litigation as if it were a card game in which opponents never see some of each other’s cards until the last moment is out of line with modern trends. Those trends were developed because the expense of Courts to the public is so great that their use must be made as efficient as is compatible with just conclusions. Civil litigation is too important an activity to be left solely in the hands of those who conduct it.

Baulderstone Hornibrook Engineering v Gordian Runoff [1.140] Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243

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ALLSOP P (BEAZLEY AND CAMPBELL JJA AGREEING) 160. Giving due weight to the realities of life in running a long and complex trial and the vicissitudes of the appreciation of the evidence given, it cannot be emphasised too strongly that it is the responsibility of the parties, through their legal representatives, to exercise a degree of co-operation to express the issues for trial before and during the trial. Such co-operation can now be taken as an essential aspect of modern civil procedure in the running of any civil litigation, including hard-fought commercial cases. The need for clarity, precision and openness as part of this co-operation has been emphasised in the context of ambush or surprise: White v Overland [2001] FCA 1333 at [4], expressly approved in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116 (Heydon JA, with whom Mason P and Young CJ in Eq agreed); Glover v Australian Ultra Concrete Floors Pty Ltd [2003] NSWCA 80 at [59]-[60] (Ipp JA, with whom Sheller and Hodgson JJA agreed); Sutton v Erect Safe Scaffolding (Aust) Pty Ltd [2006] NSWCA 265 at [4] (Bryson JA with whom Basten JA agreed); and Hooker v Gilling [2007] NSWCA 99 at [52] (McColl JA, with whom Ipp and Basten JJA agreed). 161. The need for clarity, precision and openness in the conduct of litigation and the responsibility of parties and their legal representatives therefor flows most clearly from the statutory duty of a party and his, her or its legal representatives in civil proceedings to assist the Court to further the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in dispute and to participate in the processes of the Court to that end: see Civil Procedure Act 2005 (NSW), 56. It may be that the provision no more than restates the proper approach of the modern law of procedure reflected in cases such as Nowlan v Marson Transport. It places the proper approach, however, on a firm statutory foundation. These principles can be seen to be reflected in the longstanding rules of pleading requiring any matter that may cause surprise to be pleaded. 162. An enhanced requirement of clarity and disclosure in modern civil litigation can be seen in Australia and England from at least the early 1990s: see the discussion of the “cards on the table” [1.140]

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Civil Procedure in New South Wales

Baulderstone Hornibrook Engineering v Gordian Runoff cont. approach by Ipp J (as his Honour then was) in Boyes v Colins [2000] WASCA 344; 23 WAR 123 (with whom Pidgeon and Wallwork JJ agreed), citing Mercer v Chief Constable of the Lancashire Constabulary [1991] 1 WLR 367 and Khan v Armaguard Ltd [1994] EWCA Civ 19; [1994] 1 WLR 1204. Indeed, from the late 1970s and early 1980s, the Commercial List of this Court (in which List this hearing took place) has been sought to be run on the strict basis of the clear and full enunciation of issues for trial, in a way that has always demanded the fullest co-operation among parties and legal practitioners to delineate and illuminate the real issues in dispute. 163. The clear statutory duty to assist the Court, and, in a practical way, to co-operate to bring forward the real issues in dispute, encompasses the requirement to be clear and precise in the illumination of the issues for trial. The occasion for this is not merely pleading (using the word broadly to encompass the modern commercial list summons and defence), it extends to all aspects of the engagement in the Court’s processes. For similar responsibilities in the conduct of references, see Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228 at [55]-[56]. 164. This does not deny the possibility, as occurs in real life in litigation, that issues will develop. Litigation is a dynamic human activity. Changes in how a case is put can be expected. This often occurs in large commercial cases. Such change, and the potential for it, makes it, however, all the more important that legal practitioners and parties ensure that the clear enunciation of issues keeps pace with that growth and change. This responsibility will encompass parties and their legal representatives making clear what is being put and also what they regard as not legitimately part of the controversy, if it is apparent to them that an issue not pleaded or presented is being relied on.

THE PRINCIPLE OF OPEN JUSTICE [1.150] The principle of open justice is essential to the criminal and civil justice systems. Chief

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Justice Spigelman said in John Fairfax Publications Pty Ltd v District Court of NSW (2004) 61 NSWLR 344; [2004] NSWCA 324 at [18]: It is well established that the principle of open justice is one of the most fundamental aspects of the system of justice in Australia. The conduct of proceedings in public … is an essential quality of an Australian court of justice. There is no inherent power of the court to exclude the public.

In R v Richards & Bijkerk (1999) 107 A Crim R 318 at 324, Spigelman CJ (James J and Smart AJ agreeing) dismissed an appeal of a trial judge’s order that proceedings be held in camera and stated: 37. The paramount duty of the courts in administering justice according to law is to ensure that justice is done. All else is subservient to the discharge of this duty. In the ordinary course, court proceedings are conducted in public and exposed to the catharctic glare of publicity. Publicity of proceedings is one of the great protections against the exercise of arbitrary power and a reassurance that justice is administered fairly and impartially. As Lord Hewart put it in R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256, “Justice must not only be done but be seen to be done”. 38. The courts should be open to all, so that anyone who wishes may see how justice is done. The privilege belongs to the public generally and no special privilege is conferred on those who report proceedings. In this regard I refer to the observations of Samuels JA in the case of David Syme & Co Limited v General Motors Holden Limited (1984) 2 NSWLR 294 at 310 where his Honour said: It is well established that in the ordinary course the courts will conduct their proceedings in public. It is fundamental that the courts should be open to all, in order that all who are minded to do so may see how justice is administered … that entitlement is not limited to 16

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those who have business in the courts as litigants; nor, I myself would add, does it confer any special privilege upon those who report proceedings for the press or electronic media. The privilege to see what the courts do and say belongs to the public generally. 39. It is only in wholly exceptional circumstances, where the presence of the public or public knowledge of the proceedings is likely to defeat the paramount duty of the courts, that the courts may proceed in camera. [1.160] The court can depart from the principle of open justice in various ways. The court can

close the court to the public (that is, the proceedings are held in camera); or it can prohibit publication of all or part of the proceedings. The court can also make orders permitting a witness to give evidence behind a screen or via encrypted video-link or closed circuit television from a remote point; such orders can prevent the public and also the litigant/s from identifying a witness by sight and/or sound. The court also has the power to make pseudonym orders to protect the true identity of a witness. The power to make orders to “close” justice can be the subject of specific legislation, for example s 71 of the CPA permits a judge to close the court to the public (see [1.250]) and the Court Suppression and Non-publication Orders Act 2010 provides for the making of suppression and non-publication orders (see [1.280]). Prior to the commencement of the 2010 Act the power to make such non-publication and/or suppression orders was due to the court’s inherent or implied jurisdiction (see [1.70]). The power to close proceedings in civil cases is still due to the court’s inherent or implied jurisdiction and s 71 of the CPA.

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Common law power to depart from the open justice principle [1.170] In Scott v Scott [1913] AC 417 at 437, Viscount Haldane said in the House of Lords that the “chief object of the courts of justice must be to secure that justice is done” and that “it may well be that justice could not be done at all if it had to be done in public”. The power to make orders to “close” justice is an inherent power of a superior court and in statutory courts the power to make orders that depart from the principle of open justice can be implied as necessary to the proper function of the court: John Fairfax Group Pty Ltd v Local Court of NSW (1991) 26 NSWLR 131 at 161; BUSB v R [2011] NSWCCA 39 at [24]–[41]. The power of the court to depart from the principle of open justice and make the orders described in [1.160] is on the basis that such orders are “really necessary to secure the proper administration of justice” in the proceedings: John Fairfax & Sons Pty Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 477 per McHugh JA. The necessity for such measures would arise only in “wholly exceptional” circumstances, not merely where such measures would be useful or desirable (John Fairfax Publications Pty Ltd v Ryde Local Court (2005) 62 NSWLR 512 at 523 [45] per Spigelman CJ), and would save embarrassment, distress or financial loss: Attorney-General (NSW) v Mayas Pty Ltd (1988) 14 NSWLR 342 at 347 per Mahoney JA. The phrase “really necessary to secure the proper administration of justice” was considered in John Fairfax Group Pty Ltd v Local Court of NSW (1991) 26 NSWLR 131 where the Court of Appeal held that a Local Court magistrate hearing committal proceedings had the implied power to make pseudonym orders protecting the identity of an alleged victim of extortion. In that case Mahoney JA said at 161: This leads to the consideration of what is meant by “necessary to secure the proper administration of justice” in this context. The phrase does not mean that if the relevant order is not made, the proceedings will not be able to continue. Plainly they can. If the name of an informer is not hidden under a pseudonym, the proceeding will go on: at least, the instant [1.170]

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proceeding will. And if the name of a security officer is revealed, the administration of justice or of the country will not collapse. The basis of the implication is that if the kind of order proposed is not made, the result will be – or at least will be assumed to be – that particular consequences will flow, that those consequences are unacceptable, and that therefore the power to make orders which will prevent them is to be implied as necessary to the proper function of the court. The kinds of consequences that, in this sense, will be seen as unacceptable may be gauged by those involved in the cases in which statutory courts have been accepted as having restrictive powers. Thus, there will be hardship on the informer or the security officer or the blackmail victim; the future supply of information from such persons will end or will be impeded; and it will be more difficult to obtain from such persons the evidence necessary to bring offenders before the courts and deal with them.

Hogan v Hinch [1.180] Hogan v Hinch (2011) 243 CLR 506; [2011] HCA 4 [Derryn Hinch, a radio broadcaster, was responsible for a website designated “HINCH.net”. In September 2008 he was charged in the Magistrates Court of Victoria with five counts of contravening three suppression orders made under s 42 of the Serious Sex Offenders Monitoring Act 2005 (Vic) (“the Act”) in the County Court at Melbourne. The suppression orders prohibited publication of any information that might enable the identification of certain persons, convicted of sex offences, who were the subject of post-custodial extended supervision orders under the Act. Mr Hinch’s offences were said to have been committed when he named the persons on his website and at a public rally in Melbourne. By way of defence to the charges, Mr Hinch unsuccessfully raised a constitutional challenge to the validity of s 42. Mr Hinch submitted that s 42 was invalid because: (i)

the jurisdiction or power conferred by s 42(1), to make “suppression orders” impermissibly diminishes the “institutional integrity” of the courts of Victoria, contrary to the implied requirements of Ch III of the Constitution; and

(ii)

the prohibitions imposed by the orders made under s 42 were contrary to an implication derived from Ch III of the Constitution that all State and federal courts must be open to the public and carry out their activities in public.]

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FRENCH CJ [20] An essential characteristic of courts is that they sit in public. [Daubney v Cooper [1829] EngR 48; (1829) 10 B & C 237 at 240 [109 ER 438 at 440]; Dickason v Dickason (1913) 17 CLR 50; [1913] HCA 77; Scott v Scott [1913] AC 417; Russell v Russell [1976] HCA 23; (1976) 134 CLR 495 at 520 per Gibbs J; [1976] HCA 23.] That principle is a means to an end, and not an end in itself. Its rationale is the benefit that flows from subjecting court proceedings to public and professional scrutiny [Russell v Russell [1976] HCA 23; (1976) 134 CLR 495 at 520 per Gibbs J]. It is also critical to the maintenance of public confidence in the courts. Under the Constitution courts capable of exercising the judicial power of the Commonwealth must at all times be and appear to be independent and impartial tribunals. The open-court principle serves to maintain that standard. [Forge v Australian Securities and Investments Commission [2006] HCA 44; (2006) 228 CLR 45 at 76 [64], 81 [78] per Gummow, Hayne and Crennan JJ; [2006] HCA 44.] However, it is not absolute. [Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 359 [56] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ; [1999] HCA 9, adopting the remarks of Gaudron J in Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84 at 150; [1991] HCA 9, referring to “limited exceptions” to the open and public inquiry involved in the exercise of judicial power.] [21] It has long been accepted at common law that the application of the open justice principle may be limited in the exercise of a superior court’s inherent jurisdiction or an inferior court’s implied powers. [Inferior courts lack the “inherent jurisdiction” of superior courts, but have analogous implied powers: Grassby v The Queen [1989] HCA 45; (1989) 168 CLR 1 at 15–17 per Dawson J; [1989] HCA 18

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Hogan v Hinch cont. 45; John Fairfax Publications Pty Ltd v District Court (NSW) [2004] NSWCA 324; (2004) 61 NSWLR 344 at 354 [28] per Spigelman CJ, Handley JA and M W Campbell A-JA agreeing at 368. In federal courts created by statute implied incidental powers also take the place of “inherent jurisdiction”: DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226 at 240–241 [25] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; [2000] HCA 17; Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 at 618–619 per Wilson and Dawson JJ, 623–624 per Deane J, Mason CJ agreeing at 616, 630–631 per Toohey J; [1987] HCA 23.] This may be done where it is necessary to secure the proper administration of justice. [John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 476–477 per McHugh JA, Glass JA agreeing at 467.] In a proceeding involving a secret technical process, a public hearing of evidence of the secret process could “cause an entire destruction of the whole matter in dispute”. [Andrew v Raeburn (1874) LR 9 Ch 522 at 523. See also Nagle-Gillman v Christopher (1876) 4 Ch D 173 at 174 per Jessel MR; Mellor v Thompson (1885) 31 Ch D 55; Scott v Scott [1913] AC 417 at 436–437 per Viscount Haldane LC, 443 per Earl of Halsbury, 445 per Earl Loreburn, 450–451 per Lord Atkinson, 482–483 per Lord Shaw of Dunfermline.] Similar considerations inform restrictions on the disclosure in open court of evidence in an action for injunctive relief against an anticipated breach of confidence. In the prosecution of a blackmailer, the name of the blackmailer’s victim, called as a prosecution witness, may be suppressed because of the “keen public interest in getting blackmailers convicted and sentenced” and the difficulties that may be encountered in getting complainants to come forward “unless they are given this kind of protection”. [R v Socialist Worker Printers and Publishers Ltd; Ex parte Attorney-General [1975] QB 637 at 644 per Lord Widgery CJ, Milmo and Ackner JJ agreeing at 653, referred to with apparent approval in Attorney-General v Leveller Magazine Ltd [1979] AC 440 at 452 per Lord Diplock, 458 per Viscount Dilhorne, 471 per Lord Scarman. See also John Fairfax Group Pty Ltd v Local Court (NSW) (1991) 26 NSWLR 131 at 141 per Kirby P.] So too, in particular circumstances, may the name of a police informant or the identity of an undercover police officer. [Cain v Glass (No 2) (1985) 3 NSWLR 230 at 246 per McHugh JA; John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 472 per Mahoney JA, 480 per McHugh JA, Glass JA agreeing at 467; John Fairfax Group Pty Ltd v Local Court (NSW) (1991) 26 NSWLR 131 at 141 per Kirby P, 159 per Mahoney JA, Hope A-JA agreeing at 169; Herald & Weekly Times Ltd v Medical Practitioners Board (Vic) [1999] 1 VR 267 at 293 [85]; R v Lodhi [2006] NSWCCA 101; (2006) 65 NSWLR 573 at 584 [25]–[26] per McClellan CJ at CL.] The categories of case are not closed, although they will not lightly be extended. [R v Kwok [2005] NSWCCA 245; (2005) 64 NSWLR 335 at 340–341 [12]–[14] per Hodgson JA, 343–344 [29]–[31] per Howie J, 345–346 [38]–[39] per Rothman J; Commissioner of Police (NSW) v Nationwide News Pty Ltd (2008) 70 NSWLR 643 at 648 [32]–[38] per Mason P, Ipp JA agreeing at 657, 658 [90]–[91] per Basten J; P v D1 [No 3] [2010] NSWSC 644 at [11]–[20].] Where “exceptional and compelling considerations going to national security” require that the confidentiality of certain materials be preserved, a departure from the ordinary open justice principle may be justified. [A v Hayden [1984] HCA 67; (1984) 156 CLR 532 at 599 per Deane J; [1984] HCA 67; John Fairfax Group Pty Ltd v Local Court (NSW) (1991) 26 NSWLR 131 at 141 per Kirby P; R v Lodhi [2006] NSWCCA 101; (2006) 65 NSWLR 573 at 584–585 [26] per McClellan CJ at CL; R v Governor of Lewes Prison; Ex parte Doyle [1917] 2 KB 254 at 271–272 per Viscount Reading CJ; Taylor v Attorney-General [1975] 2 NZLR 675.] The character of the proceedings and the nature of the function conferred upon the court may also qualify the application of the open-court principle. The jurisdiction of courts in relation to wards of the State and mentally ill people was historically an exception to the general rule that proceedings should be held in public because the jurisdiction exercised in such cases was “parental and administrative, and the disposal of controverted questions … an incident only in the jurisdiction.” [Scott v Scott [1913] AC 417 at 437 per Viscount Haldane LC. See also John Fairfax Publications Pty Ltd v Attorney-General (NSW) [2000] NSWCA 198; (2000) 181 ALR 694 at 723 [165] per Meagher JA.] Proceedings not “in the ordinary course of litigation”, such as applications for leave to appeal, can also [1.180]

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Hogan v Hinch cont. be determined without a public hearing. [Coulter v The Queen [1988] HCA 3; (1988) 164 CLR 350 at 356 per Mason CJ, Wilson and Brennan JJ; [1988] HCA 3] [22] It is a common law corollary of the open-court principle that, absent any restriction ordered by the court, anybody may publish a fair and accurate report of the proceedings, including the names of the parties and witnesses, and the evidence, testimonial, documentary or physical, that has been given in the proceedings. [Attorney-General v Leveller Magazine Ltd [1979] AC 440 at 450 per Lord Diplock, 459 per Lord Edmund-Davies, 469 per Lord Scarman; Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 at 55 per Kirby P, 61 per Samuels JA; John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 476–477 per McHugh JA, Glass JA agreeing at 467; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 43 per Toohey J; [1995] HCA 19; J v L & A Services Pty Ltd (No 2) [1995] 2 Qd R 10 at 44 per Fitzgerald P and Lee J; Rogers v Nationwide News Pty Ltd [2003] HCA 52; (2003) 216 CLR 327 at 335 [15] per Gleeson CJ and Gummow J; [2003] HCA 52; John Fairfax Publications Pty Ltd v District Court (NSW) [2004] NSWCA 324; (2004) 61 NSWLR 344 at 353 [20] per Spigelman CJ, Handley JA and MW Campbell A-JA agreeing at 368.] [23] The existence and nature of the common law or implied power in a court to make orders restricting the publication of proceedings in open court has been the subject of considerable judicial exegesis. The question whether the power extends to orders purporting to bind the world at large is contentious. As the Law Reform Commission of New South Wales said in 2000: [New South Wales Law Reform Commission, Contempt by publication, Discussion Paper No 43, (2000) at [10.20]]:

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the common law regarding suppression orders is relatively unclear and unsettled. However unsettled it may be, a consideration of the common law position with respect to suppression orders is relevant to the question whether s 42 confers a function on courts of the State of Victoria which is inconsistent with the essential characteristics of a court. [24] On one view courts have no general authority to make orders binding non-parties in their conduct outside the courtroom. [Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 at 55, 57 per Kirby P; John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 477 per McHugh JA, Glass JA agreeing at 467; “Mr C” (1993) 67 A Crim R 562 at 563 per Hunt CJ at CL, Smart and James JJ agreeing at 566.] It has nevertheless been accepted that conduct outside the courtroom deliberately frustrating the effect of an order made to enable a court to act effectively within its jurisdiction can constitute a contempt of court. [John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 at 477 per McHugh JA, Glass JA agreeing at 467; Attorney-General (NSW) v Mayas Pty Ltd (1988) 14 NSWLR 342 at 355–356 per McHugh JA, Hope JA agreeing at 344; Savvas (1989) 43 A Crim R 331 at 334 per Hunt J; United Telecasters Sydney Ltd v Hardy (1991) 23 NSWLR 323 at 333–334 per Samuels AP, Clarke and Meagher JJA agreeing at 348.] [25] In 2004 the Privy Council held that there is no common law power to make orders against the public at large prohibiting the reporting of open court proceedings. Such a power, it was said, must be conferred by legislation. [Independent Publishing Co Ltd v Attorney-General of Trinidad and Tobago [2004] EWCA Civ 844; [2005] 1 AC 190 at 216 [67].] On the other hand, it has been said in Australia that there is at common law a limited power to prohibit publication of proceedings conducted in open court. In Ex parte The Queensland Law Society Inc, [[1984] 1 Qd R 166 at 170] McPherson J, after reviewing the authorities, said: the power of the court under general law to prohibit publication of proceedings conducted in open court has been recognized and does exist as an aspect of the inherent power. That does not mean that it is an unlimited power. The only inherent power that a court possesses is power to regulate its own proceedings for the purpose of administering justice; and, apart from securing that purpose in proceedings before it, there is no power to prohibit publication of an accurate report of those proceedings if they are conducted in open court, as in all but exceptional cases they must be. 20

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Hogan v Hinch cont. That statement was quoted with apparent approval by McHugh JA in John Fairfax & Sons Ltd v Police Tribunal (NSW). [(1986) 5 NSWLR 465 at 479.] It was also approved in John Fairfax Publications Pty Ltd v District Court (NSW). [[2004] NSWCA 324; (2004) 61 NSWLR 344 at 357 [42] per Spigelman CJ, Handley JA and M W Campbell A-JA agreeing at 368.] Doubts about the existence of such a power as an element of the inherent jurisdiction or implied powers of courts have been expressed in Victoria. [Re Applications by Chief Commissioner of Police (Vic) [2004] VSCA 3; (2004) 9 VR 275 at 288 [29]; General Television Corporation Pty Ltd v Director of Public Prosecutions [2008] VSCA 49; (2008) 19 VR 68 at 77 [29]; Herald and Weekly Times Pty Ltd v A [2005] VSCA 189; (2005) 160 A Crim R 299 at 305–306 [27]–[29].]

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[26] In my opinion the better view is that there is inherent jurisdiction or implied power in limited circumstances to restrict the publication of proceedings conducted in open court. The exercise of the power must be justified by reference to the necessity of such orders in the interests of the administration of justice. Such an order may be made to and bind the parties, witnesses, counsel, solicitors and, if relevant, jurors and media representatives, or other persons present in court when the order is made, or to whom the order is specifically directed. It is not necessary for present purposes to reach a concluded view on the full extent of the power in relation to the general public. [27] Beyond the common law, it lies within the power of parliaments, by statute, to authorise courts to exclude the public from some part of a hearing or to make orders preventing or restricting publication of parts of the proceeding or of the evidence adduced. [Russell v Russell [1976] HCA 23; (1976) 134 CLR 495 at 520 per Gibbs J.] An example of such a law in the federal context is s 50 of the Federal Court of Australia Act 1976 (Cth), recently considered by this Court in Hogan v Australian Crime Commission [(2010) 240 CLR 651; [2010] HCA 21.] Specific powers to make suppression orders or orders for the exclusion of the public, where such orders are in the interest of security or defence of the Commonwealth, can be found in the Crimes Act 1914 (Cth) [Crimes Act 1914 (Cth), s 85B] and the Criminal Code (Cth) [Criminal Code (Cth), s 93.2]. There are many other examples of such provisions enacted by State parliaments. [Court Suppression and Non-publication Orders Act 2010 (NSW), ss 7, 8 (yet to commence); Civil Procedure Act 2005 (NSW), s 72; Witness Protection Act 1995 (NSW), s 26; Supreme Court Act 1986 (Vic), s 18; County Court Act 1958 (Vic), s 80; Magistrates’ Court Act 1989 (Vic), s 126; Evidence Act 1929 (SA), ss 69, 69A; Witness Protection Act 1996 (SA), s 25; Children’s Protection Act 1993 (SA), s 59A; Supreme Court of Queensland Act 1991 (Q), s 128; Child Protection Act 1999 (Q), ss 99ZG, 192, 193; Criminal Procedure Act 2004 (WA), s 171; Children’s Court of Western Australia Act 1988 (WA), s 35; Family Court Act 1997 (WA), s 243; Evidence Act 1906 (WA), s 36C; Justices Act 1959 (Tas), s 106K; Terrorism (Preventative Detention) Act 2005 (Tas), s 50; Evidence Act 2001 (Tas), s 194J.] Where it is left by statute to a court’s discretion to determine whether or not to make an order closing part of a hearing or restricting the publication of evidence or the names of parties or witnesses, such provisions are unlikely to be characterised as depriving the court of an essential characteristic of a court and thereby rendering it an unfit repository for federal jurisdiction. [See however, John Fairfax Publications Pty Ltd v Attorney-General (NSW) [2000] NSWCA 198; (2000) 181 ALR 694 in which the Court of Appeal held that a provision of the Supreme Court Act 1970 (NSW) mandating in-camera hearings of appeals against acquittals for contempt was consistent with the principles enunciated in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; [1996] HCA 24, but infringed the implied freedom of political communication. The question whether such a provision could survive Ch III scrutiny today may be regarded as open.] Nevertheless, a statute which affects the open-court principle, even on a discretionary basis, should generally be construed, where constructional choices are open, so as to minimise its intrusion upon that principle. That approach, which accords with the principle of legality, informs the construction of s 42 in this case. The section must also be construed so as to minimise its intrusion upon common law freedom of speech. The Charter requires that so far as it is possible to do so consistently with their purpose, such provisions “must be interpreted in a way that [1.180]

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Hogan v Hinch cont. is compatible with human rights” [Charter, s 32(1)]. Relevant human rights set out in Pt 2 of the Charter include the right to freedom of expression [Charter, s 15(2)] and the right to participate in public life [Charter, s 18(1)]. There are other rights which may be affected by a suppression order. They include the right of children to be protected [Charter, s 17(2)] and the right of privacy [Charter, s 13(a)]. …

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[45] The power conferred by s 42 to make suppression orders is conferred upon the Supreme and County Courts of Victoria. They are, pursuant to Ch III of the Constitution and laws made under it, part of a national integrated court system. They cannot validly be empowered or required to do things which are “repugnant to or incompatible with the exercise of the judicial power of the Commonwealth” [Kable v Director of Public Prosecutions (NSW) [1996] HCA 24; (1996) 189 CLR 51 at 104 per Gaudron J, quoted with approval in Fardon v Attorney-General (Qld) [2004] HCA 46; (2004) 223 CLR 575 at 617 [101] per Gummow J, Hayne J agreeing at 648 [198]]. That broad criterion of invalidity encompasses functions which would be inconsistent with or inimical to the defining characteristics of a court, or which deprive a court of one or other of those defining characteristics. A law which deprives a court of the capacity to accord procedural fairness would fall into that category. [Leeth v The Commonwealth [1992] HCA 29; (1992) 174 CLR 455 at 470; [1992] HCA 29; International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49; (2009) 240 CLR 319 at 355 [55] per French CJ, 366–367 [97]–[98] per Gummow and Bell JJ; [2009] HCA 49.] So too would a law which places the court at the behest of the executive or recruits the judicial function of the court to an essentially executive process. [South Australia v Totani [2010] HCA 39; (2010) 85 ALJR 19; 271 ALR 662.] [46] The open hearing is an essential characteristic of courts, which supports the reality and appearance of independence and impartiality. Its corollary is the freedom to make a fair and accurate report of what transpires in court proceedings, including the orders made by the court. However, at common law the open justice principle has, consistently with the judicial function, long been subject to qualifications reflected in the inherent jurisdiction of courts or their implied incidental power to hear part of their proceedings in camera and to restrict the publication of evidence or the names of witnesses. Chapter III does not impose on federal courts or the courts of the States a more stringent application of the open justice principle than that described above. The extent at common law of a power to prohibit publication of evidence or information disclosed in proceedings in open court may be contentious. The existence of a power to make such orders to bind the world at large is doubtful. Debate on that issue goes to the common law and implied powers of courts. Its resolution does not conclude the question whether such a power is one which cannot be conferred by statute. Having regard to the existence of analogous common law powers, albeit powers not as far reaching as s 42, it cannot be said that that section confers upon the court functions inconsistent with its essential curial characteristics or deprives it of those characteristics. Importantly, the section confers a discretion on the court to decide whether or not to prohibit publication of certain information derived from proceedings before it. It requires the court to apply familiar criteria in reaching that decision. There is nothing in the nature of the power conferred upon the court by s 42, properly construed, which is repugnant to or incompatible with the judicial function or otherwise incompatible with any implication derived from Ch III. GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ … Institutional integrity [80] As indicated earlier in these reasons, the power to make a “suppression order” is enlivened by the satisfaction of the court that it is “in the public interest” to do so. That expression derives content from the main purpose of the Act, which is identified in s 1(1). Section 42(3) does not present to the 22

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Hogan v Hinch cont. court a criterion which is “so indefinite as to be insusceptible of strictly judicial application”. [R v Commonwealth Industrial Court; Ex parte The Amalgamated Engineering Union, Australian Section [1960] HCA 46; (1960) 103 CLR 368 at 383 per Kitto J; [1960] HCA 46.] Examples of criteria for the exercise of the judicial power of the Commonwealth which have been stated in broad terms and held valid are collected in Thomas v Mowbray [[2007] HCA 33; (2007) 233 CLR 307 at 344–348 [71]–[79], 509 [600], 526 [651]]. The criterion for the exercise of power under s 42 is not such as to impair impermissibly the character of the State courts as independent and impartial tribunals and thus to render them inappropriate repositories of federal jurisdiction. … Open justice [85] However, the defendant then contends in his second submission that the restrictions imposed by the three County Court orders could not be supported by s 42 because that law empowered the court acting thereunder to act contrary to a requirement derived from Ch III that “all Federal and State Courts must be open to the public”. [86] In Dupas v The Queen [[2010] HCA 20; (2010) 241 CLR 237 at 243 [15]; [2010] HCA 20] the Court observed:

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Having regard both to the antiquity of the power and its institutional importance, there is much to be said for the view that in Australia the inherent power to control abuse of process should be seen, along with the contempt power, as an attribute of the judicial power provided for in Ch III of the Constitution. [87] An understanding of those and other attributes of the federal judicial power may be assisted by the remarks of Isaacs J in R v Macfarlane; Ex parte O’Flanagan and O’Kelly [[1923] HCA 39; (1923) 32 CLR 518 at 549; [1923] HCA 39. See also Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 359 [56]; [1999] HCA 9]: The final and paramount consideration in all cases is that emphasized in Scott v Scott [[1913] AC 417 at 437], namely, “to do justice” (Viscount Haldane LC). All other considerations are means to that end. They are ancillary principles and rules. Some of them are so deeply embedded in our law as to be elementary and axiomatic, others closely approach that position. Of the latter class is publicity, which can only be disregarded where necessity compels departure, for otherwise justice would be denied to those whom Earl Loreburn [[1913] AC 417 at 446] termed “the parties entitled to justice”. [88] Some care is required here. First, the present issue does not concern the authority of the courts by further decision to add to those situations where the necessity spoken of by Isaacs J compels departure from the requirement that justice be administered publicly. In Scott v Scott [[1913] AC 417 at 437–438], Viscount Haldane LC recognised the diverse and special cases which arose in the wardship and lunacy jurisdictions and in disputes respecting trade secrets. Secondly, there are to be distinguished from the power of courts to close their proceedings, rules of evidence which confer an immunity against disclosure in court of certain communications made in the public interest [See Cain v Glass (No 2) (1985) 3 NSWLR 230 at 246–248 per McHugh JA]. Thirdly, in order to resolve the present issue it is unnecessary to accept that there is an inherent jurisdiction or implied power in some circumstances to restrict the publication of proceedings conducted in open court. Fourthly, the focus of the present case is not upon the inherent powers of the courts or exclusionary rules of evidence, but upon the competence of the Victorian legislature to confer upon Victorian courts the power provided in s 42 of the Act. [89] It is here that the argument by the defendant breaks down. The powers of the Parliament of the Commonwealth are conferred by the Constitution subject to Ch III. They extend to furnishing courts exercising federal jurisdiction with authorities incidental to the exercise of the judicial power [R v Kirby; Ex parte Boilermakers’ Society of Australia [1956] HCA 10; (1956) 94 CLR 254 at 269–270; [1.180]

23

Civil Procedure in New South Wales

Hogan v Hinch cont. [1956] HCA 10; APLA Ltd v Legal Services Commissioner (NSW) [2005] HCA 44; (2005) 224 CLR 322 at 407-408 [234]-[235]; [2005] HCA 44]. Thus, while s 17 of the Federal Court of Australia Act 1976 (Cth) requires the jurisdiction of that Court to be exercised in open court, that is qualified by s 50, which empowers the Court in certain circumstances to forbid or restrict the publication of evidence. [See Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651.] [90] A further example of federal legislation of that character was s 97(1) of the Family Law Act 1975 (Cth) (“the Family Law Act”), held invalid in Russell v Russell [(1976) 134 CLR 495; [1976] HCA 23]. The sub-section required the hearing in closed court of all proceedings under that statute, whether in the Family Court of Australia or the Supreme Court of a State or Territory. The High Court was dealing with pending causes removed from the Supreme Courts of Victoria and South Australia. Gibbs J said that to require a court invariably to sit in closed court was to alter an essential aspect of its character [[1976] HCA 23; (1976) 134 CLR 495 at 520]. But his Honour added [[1976] HCA 23; (1976) 134 CLR 495 at 520]: Of course there are established exceptions to the general rule that judicial proceedings shall be conducted in public; and the category of such exceptions is not closed to the Parliament. The need to maintain secrecy or confidentiality, or the interests of privacy or delicacy, may in some cases be thought to render it desirable for a matter, or part of it, to be held in closed court. If the [Family Law Act] had empowered the Supreme Courts when exercising matrimonial jurisdiction to sit in closed court in appropriate cases I should not have thought that the provision went beyond the power of the Parliament. In requiring them to sit in closed court in all cases – even proceedings for contempt – the Parliament has attempted to obliterate one of their most important attributes. This it cannot do. [91] This reasoning should be followed here and has three consequences. First, it denies any restriction drawn from Ch III which in absolute terms limits the exercise of the legislative power of the Parliament. Secondly, it indicates that a federal law to the effect of s 42 would be valid and would not deny an essential characteristic of a court exercising federal jurisdiction. Thirdly, this being so, as a State law s 42 does not attack the institutional integrity of the State courts as independent and impartial tribunals in the sense discussed in International Finance Trust and Totani.

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[The High Court declared that s 42 of the Serious Sex Offenders Monitoring Act 2005 (Vic) is not invalid upon any of the grounds asserted in submissions to this Court.]

Common law categories of cases that are exceptions to the open justice principle [1.200] Exceptions to the principle of open justice are valid in few categories of cases in the

common law. The exceptions are “strictly defined”: R v Tait (1979) 46 FLR 386 at 401; McPherson v McPherson [1936] AC 417 at 200; Russell v Russell (1976) 134 CLR 495; John Fairfax Group Pty Ltd v Local Court of NSW (1991) 26 NSWLR 131 at 141; John Fairfax Publications Pty Ltd v District Court of NSW (2004) 61 NSWLR 344 at 353 [19], 357 [45], and courts are loathe to expand the field: Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 at 55. The well-established categories are: • to protect the identity of an informer (see Cain v Glass (No 2) (1985) 3 NSWLR 230; Arthur Stanley Smith (1996) 86 A Crim R 309; Witness v Marsden (2000) 49 NSWLR 429 (see extract at [1.210] below)). The reason for allowing exceptions to open justice in cases of victims or informers is not out of tenderness towards the victim or the informer but 24

[1.200]

Introduction to Civil Procedure

CHAPTER 1

because experience has shown that such complainants or witnesses will not come forward unless they are given some protection: R v Savvas (1989) 43 A Crim R 331 at 336; R v CAL (1993) 67 A Crim R 562 at 564. • to protect the identity of victims of blackmail (see R v Socialist Worker Printers & Publishers Ltd; Ex Parte Attorney-General [1975] QB 637). • to protect matters of national security (see generally Mirror Newspapers Ltd v Waller (1985) 1 NSWLR 1 at 19D per Hunt J; John Fairfax Group Pty Ltd v Local Court of NSW (1991) 26 NSWLR 131 at 159F per Mahoney JA; John Fairfax Publications Pty Ltd v District Court of NSW (2004) 61 NSWLR 344 at 357-358 [45]-[48] per Spigelman CJ; BUSB v R [2011] NSWCCA 39 at [36]).

Witness v Marsden [1.210] Witness v Marsden (2000) 49 NSWLR 429 [A witness attending a defamation trial, pursuant to a subpoena to give evidence, applied for a pseudonym order because he held fears for his physical safety if his identity was made public. The witness was a gaol inmate. The witness’ fear arose from his belief that if it became known in the prison population that he gave evidence in the trial he would be subject to adverse and hostile treatment.]

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HEYDON JA (MASON P AND PRIESTLY JA AGREEING) [125 ] … The cases about “informers” which have developed since Marks v Beyfus (1890) 25 QBD 494 generally related to orders preventing the tender of documents, or testimony by persons other than the informer, which could reveal the name of an informer. It does not matter that here the Witness is not a person whose testimony might reveal the name of some other informer as distinct from his own. Nor, though the plaintiff contended that the “informer” cases only applied to “registered informants” as distinct from a person who informs in a general sense against another person (cf McHugh JA in Cain v Glass (No 2) (1985) 3 NSWLR 230 at 251, who said the principle extended beyond “people who are in effect professional informers and who provide information on a regular basis”), does it matter whether the Witness is an informer in the narrow or the general sense. The point is that the informer cases recognise the reality of the risks faced by those who give information to police, whether they do so as professional informers or merely do so in isolated instances, like those giving evidence in extortion or blackmail cases. Normally the informers the subject of those risks are outside gaol. The risks are obviously greater for those inside gaol. The Witness’s evidence about his fears and their basis gave exceptionally concrete and vivid support for the inferences which, according to Mahoney JA, the law draws in any event. In short, Levine J’s Judgment has not given sufficient weight to the fact accepted by the cases that informers generally are placed in dangerous positions by their activities. “Dogs” in gaols are in a worse position than other informers. … … [144] It is necessary that there be a minimalist interference with open justice to the extent of pseudonym orders in favour of the Witness. That is because without them the Witness reasonably fears death or physical injury, or alternatively an unnecessary loss of liberty. These are evils which it is necessary to avoid by that degree of minimalist interference. Without the orders, the Witness is exposed to hurt, and the party calling him is faced with the risk of testimony proceeding from a person who is reluctant, but in a particular sense. Many witnesses, as the plaintiff pointed out, are reluctant, but few are reluctant because of fears for their lives, safety or liberty. [145] It is perhaps unnecessary to say that the conclusion that pseudonym orders should be made in relation to the Witness does not entail the further conclusion that they should be made in relation to [1.210]

25

Civil Procedure in New South Wales

Witness v Marsden cont. any prisoner serving a sentence whom it is desired to call as a witness in proceedings. Each case must turn on its own circumstances, and the circumstances affecting the Witness in relation to these unusual proceedings are out of the ordinary. … [153] The orders of the court are as follows: … 4.

The Witness is to be addressed and referred to in the court only by a pseudonym.

5.

Any matter which is likely to lead to the identification of the Witness is not to be reported by those in court.

6.

No photographs, film or video recording is to be taken of the Witness in the court or within its precincts, and no drawings or other likenesses are to be made of the Witness either in the court or within its precincts.

[The above order would now be sought under the Court Suppression and Non-publication Orders Act 2010.]

R v Kwok [1.220] R v Kwok (2005) 64 NSWLR 335

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[Four accused men were on trial for conspiracy to cause various females to be placed into sexual servitude, pursuant to ss 11.5 and 270.6(1) of the Criminal Code Act 1995 (Cth). The prosecution commenced as a result of a number of Indonesian females reporting to police, that they had been deceptively recruited to travel to Australia to work in the catering or public relations industries, and upon arrival had been informed that they were in fact to be engaged in sex work, specifically the performance of 800 sexual acts, for no payment and pursuant to a “contract debt” of which they had no prior knowledge. The Crown proposed to call evidence from nine female complainants. At the District Court trial, the Crown made an application for a non-publication order in respect of the name and identity of each of the complainant witnesses. The application was unsuccessful and was the subject of appeal. The Court of Appeal held that the District Court had the implied power to make orders for the non-publication of the names and identities of the alleged victims. The position of victims of such offences was regarded as closely analogous to victims of blackmail.] HODGSON JA (HOWIE, ROTHMAN JJ AGREEING) [19] I accept that the Court will not freely invent new categories of cases, but in my opinion the Court may identify categories that, while not coinciding exactly with the existing categories, are very closely analogous to them and have the same rationale for the making of non-publication orders. [20] … [T]he Commonwealth Government has taken unusual and significant steps to protect victims of this kind of crime, notwithstanding that they would otherwise be liable for deportation as illegal immigrants. Clearly, this is because it is considered that otherwise victims would be unlikely to report this kind of crime. The Crown contends that, in addition to fear of deportation, the perception of victims that they will be disgraced and ostracised if they report the crime is a further strong impediment to the detection and punishment of this kind of crime, and in that way supports and furthers the criminal activity of the perpetrators. [21] In my opinion, in this respect there is an extremely close analogy with the crime of blackmail, which is included in the categories referred to by Spigelman CJ in John Fairfax v District Court at [49]; 26

[1.220]

Introduction to Civil Procedure

CHAPTER 1

R v Kwok cont. and in my opinion, it is appropriate to assimilate the newly legislated crimes associated with sexual servitude to the established category of blackmail. In both cases, victims will be discouraged from reporting the crime and giving evidence against alleged perpetrators because doing so will bring to light matter that could be considered damaging to the victim’s reputation: in the case of blackmail, the discreditable information that is the subject of the blackmail, and in cases such as this, the engaging in prostitution. However wrong it may be for people to think badly of another because that other has engaged in prostitution, particularly if this is under some kind of compulsion, I think the Court can recognise that there is a real danger that victims will fear that this will happen, and that this circumstance could be a powerful disincentive against victims coming forward, just as in the case of blackmail. [22] The assimilation of this kind of crime to the existing established categories is not primarily to protect the victims from shame or embarrassment, but is rather to reduce the disincentive upon victims against reporting such crimes and thereby to reduce the support given by this disincentive to this kind of criminal activity. [23] The situation is very different from a case where a witness to a crime is, at the time, engaging in some disgraceful conduct unconnected with the crime. It is not considered appropriate to give anonymity to witnesses in those circumstances, because it cannot be suggested that the withholding of anonymity in any way promotes the success of any particular type of crime. On the other hand, the success of the crime of blackmail is promoted by the victim’s fear of publicity of some discreditable information; and the success of the crime of causing another to be placed into sexual servitude is promoted by the victim’s fear of being stigmatised through publicity. [The above order would now be sought under the Court Suppression and Non-publication Orders Act 2010.]

Seven Network (Operations) Ltd v Warburton (No 1) Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

[1.230] Seven Network (Operations) Ltd v Warburton (No 1) [2011] NSWSC 385 PEMBROKE J [1] This is an application by the plaintiffs to restrict access to confidential information contained in four documents. It involves consideration of a fundamental tenet upon which our system of justice operates, namely, the principle of open justice. That principle is one of the most important aspects of our system of justice and an essential feature of the judicial process: John Fairfax Publications Pty Limited v The Attorney-General for the State of New South Wales [2000] NSWCA 198 at [52]–[57] (Spigelman CJ). It informs and vitalises numerous specific rules and practices. Principle of Open Justice [2] The reason for the principle of open justice is that, if the proceedings of courts of justice are fully exposed to public and professional scrutiny and criticism, and interested observers are able to follow and comprehend the evidence, the submissions and the reasons for judgment, then the public administration of justice will be enhanced and confidence in the integrity and independence of the courts will be maintained: Russell v Russell; Farrelly v Farelly [1976] HCA 23; (1976) 134 CLR 495 at 520 (Gibbs J). Not only does the conduct of proceedings publicly and in open view assist in removing doubts and misapprehensions about the operation of the system, but it also limits the opportunity for abuse and injustice by those involved in the process, by making them publicly accountable. Equally, public scrutiny operates as a disincentive to false allegations and as a powerful incentive to honest [1.230]

27

Civil Procedure in New South Wales

Seven Network (Operations) Ltd v Warburton (No 1) cont. evidence: J v L & A Services Pty Ltd (No 2) [1995] 2 Qd R 10 at 45 (Fitzgerald P and Lee J). For all those reasons, the principle of open justice is not only an indispensable feature of our system, but it is also a healthy feature. [3] There are limited exceptions to the principle of open justice. Where those exceptions apply, the courts will restrict access where appropriate. But departure from the principle of open justice is only justified where observance of the principle would in fact frustrate the administration of justice by unfairly damaging some material private or public interest. To that end, an order restricting the public availability of information will only be made if it is really necessary to secure the proper administration of justice. Such an order must be clear in its terms and do no more than is necessary to achieve the due administration of justice. Furthermore, there must be some material before the Court upon which it can reasonably reach the conclusion that it is actually necessary to make an order of that type: John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476–7 (McHugh JA); Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 4) [2010] NSWLEC 91 (Preston CJ); Idoport Pty Ltd v National Australia Bank [2001] NSWSC 1024 (Einstein J). [4] The consequence of the principle of open justice is that embarrassing, damaging and inconvenient facts may occasionally come to light. That consideration has never been regarded as a reason in itself for the suppression of evidence or for an order restricting access to documents: John Fairfax Group Pty Ltd (Receivers & Managers Appointed) v Local Court of New South Wales & Ors (1991) 26 NSWLR 131 at 142 (Kirby P). Equally, it is common for sensitive issues to be litigated and for information that is extremely personal or confidential to be disclosed. This is sometimes an unavoidable by-product, and a necessary consequence, of the application of the principle. [5] To avoid the consequences that sometimes follow from the conduct of proceedings publicly and in open view, parties can, and frequently do, choose to litigate their disputes by private commercial arbitration. But if they choose to litigate in court, they must accept the necessity for the Court to conduct its proceedings openly and with transparency.

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Confidential Information [6] Nonetheless, as I have mentioned, there are established exceptions to the principle of open justice and transparency. One of those exceptions is the protection of trade secrets and genuinely confidential information that might assist competitors. If it were otherwise, the operation of the system of justice may result in injustice to a person or entity whose legitimate confidentiality is exposed and infringed. [7] Whether information is confidential is a question of fact. Some of the criteria that are frequently relevant to the resolution of that factual question include whether the employee has acknowledged that the information is confidential or whether it was plainly made known to him that the employer regarded it as confidential; whether skill and effort were expended to acquire the information; whether the information is jealously guarded by the employer and not made readily available to all employees; and whether the usages and practices of the industry support the assertion of confidentiality: Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 334 (Kirby P). Sometimes, of course, the sensitive and confidential nature of the information, and the advantage to competitors if it is disclosed, will be immediately apparent on the face of the document. [8] If it is proved that documents were created in circumstances of confidentiality and that the confidentiality has been retained and is maintained, and if it is clear that the publication of the information in the documents will provide an advantage to competitors and be damaging to the party seeking to restrict access, then the case for invoking one of the exceptions to the principle of open justice will be made out. But the onus of demonstrating the confidentiality of the information rests squarely on the party seeking to restrict access. And as I said, the restriction must be no more than is necessary to avoid an injustice. 28

[1.230]

Introduction to Civil Procedure

CHAPTER 1

Seven Network (Operations) Ltd v Warburton (No 1) cont. The Documents [9] In this case the plaintiffs seek to impose restrictions on access to four commercial documents. The first is a management equity participation deed dated 10 December 2007. The plaintiffs seek to restrict access to the whole of that document except for sections 1, 2, 3, 4, 17, 18, 20 and 22. Only those sections have been referred to in the openings and, I have been informed, only those sections will be referred to in the course of cross-examination or submissions. It follows that it will only be necessary for me to refer to those sections in my judgment. It will not be necessary for interested persons to have access to other sections in order to understand my reasons. [10] The content of the deed deals with the detail of the equity participation scheme which operates for the benefit of senior executives and management in the Seven Network Group. Each of the parties to the deed has expressly agreed that it is confidential. Each agreed not to disclose its contents or its effect except in limited circumstances. It is obvious that if the deed were not kept confidential, it could enable competitors of the Seven Network Group to understand the incentive arrangements which operate with the group and the remuneration levels of senior management. This private information might facilitate the poaching of staff - an apparent feature of the industry. For those reasons it seems to me appropriate that I accede to the application and restrict access to all but the sections which have been identified.

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[11] The second document is a proprietary document of Kohlberg Kravis Roberts & Co L P (KKR). It is unique to that firm. KKR is a private equity investment firm that has a substantial economic interest in the Seven Network Group. The document is described as an illustrative management equity plan dated 12 December 2006. It is a statement of the factors and considerations that KKR uses in connection with the standard form of management equity participation plan which it customarily proposes when making investments as part of its global business as a private equity investor. In this case, the illustrative plan belonging to KKR has no direct relevance to the issues in dispute, other than that it preceded, and formed the basis of, certain provisions of the management equity participation deed to which senior management subscribed. I accept that this document should be kept confidential. No useful purpose would be served by making it available and harm to KKR may result if access to it were not restricted. [12] The third document is a term sheet dated 15 December 2006. It is not in final form. It preceded the management equity participation deed and sets out certain principal terms which were proposed to be implemented in the final deed. Those principal terms were included for discussion purposes prior to any binding agreement being made. The term sheet is indicative, among other things, of the importance placed by KKR on the inclusion in a management equity plan of non-compete restraints on senior executives preventing any post-employment competition against their employer. What is of primary importance in this case are the terms of the restraints against competition as they were finally agreed and included in Seven’s management equity participation deed. The term sheet by itself is of no particular relevance, but its contents are confidential and should remain so. [13] The fourth document is a list of 53 employees of the Seven Network’s management team who were proposed to be approached to become participants in the management equity plan. The list of employees includes reference to the total remuneration of each of them and their management equity participation level. No useful purpose would be served by making this confidential information publicly available. Unwarranted harm may well ensue if it were made available. Nearly all of the names on the list are not persons involved in the issues in this case. But even the information in relation to Mr Leckie, Mr Warburton and one or two others who are witnesses is of limited relevance and need not be made available in the interests of justice.

[1.230]

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Civil Procedure in New South Wales

Seven Network (Operations) Ltd v Warburton (No 1) cont. Conclusion [14] For those reasons I will make the orders for confidentiality sought by the plaintiffs in relation to those four documents. [The above order would now be sought under the Court Suppression and Non-publication Orders Act 2010.]

Statutory power to close the court in civil proceedings [1.240] The CPA makes provision for the court to make an order to close the court (s 71) in

civil proceedings. Section 71 was applied by Justice Barrett in Re HIH Insurance Ltd [2007] NSWSC 498 to close the court on the application of the liquidators of insolvent HIH companies (extracted at [1.260]).

Civil Procedure Act 2005 (NSW) [1.250] Civil Procedure Act 2005 (NSW) s 71 71 Business in the absence of the public

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Subject to any Act, the business of a court in relation to any proceedings may be conducted in the absence of the public in any of the following circumstances: (a)

on the hearing of an interlocutory application, except while a witness is giving oral evidence,

(b)

if the presence of the public would defeat the ends of justice,

(c)

if the business concerns the guardianship, custody or maintenance of a minor,

(d)

if the proceedings are not before a jury and are formal or non-contentious,

(e)

if the business does not involve the appearance before the court of any person,

(f)

if, in proceedings in the Equity Division of the Supreme Court, the court thinks fit,

(g)

if the uniform rules so provide.

Re HIH Insurance [1.260] Re HIH Insurance Ltd [2007] NSWSC 498 BARRETT J 1 I have before me an application under s 71 of the Civil Procedure Act 2005 for an order that the applications in the HIH matters listed for hearing this morning be dealt with in the absence of the public. The application is made on the basis of s 71(b) which permits such an order to be made “if the presence of the public would defeat the ends of justice”. 2 The substantive applications involve directions to liquidators and other relief concerned with the progress of and steps to be taken in litigation, in which the companies in liquidation are involved. Both Mr McGrath and Mr Honey, as the liquidators of all the companies, and Mr Parbery as the special purpose liquidator of the two FAI companies, have formed and conveyed to the court a view that if the evidence intended to be adduced by them was made available to any of the defendants to the litigation concerned, the ability of the liquidators to advantageously pursue or conclude the claims for the benefit of the creditors of the relevant companies would be likely to be significantly prejudiced. … 4 … The liquidators accept that there is a strong and clear public interest in open justice and that except in exceptional circumstances, proceedings should take place in public. 30

[1.240]

Introduction to Civil Procedure

CHAPTER 1

Re HIH Insurance cont. 5 Today, as on the previous occasions, there are two other public interests competing with the public interest in open justice. The first is the public interest in the due and beneficial administration of the estates of insolvent companies by liquidators appointed by and answerable to the court, that administration being for the benefit of creditors. I previously observed that the public interest in the due administration of the insolvent estates of the HIH companies is particularly pronounced when there are many thousands of creditors from all walks of life. 6 The second competing or countervailing public interest arises from the fact that applications before me relate to the pursuit of litigation. There is a clear public interest in the due administration of justice, in that in litigation in the normal course an ordinary litigant would keep close to the chest, as it were, the matters that the liquidators, because of their position, see fit to bring to court. The liquidators, because of their position, should not be set aside from other litigants and be placed to a disadvantage when, as I say, they are acting for the benefit of many thousands of creditors whose interests are very much to the fore. 7 As I have said, the position now before me is the same as that which was before me on 20 July 2005. In each of the proceedings in the list today therefore I make an order, pursuant to s 71 of the Civil Procedure Act 2005, that the hearing of the interlocutory process listed for hearing be conducted in the absence of the public.

Statutory power to make suppression and non-publication orders [1.270] The Court Suppression and Non-publication Orders Act 2010 (NSW) commenced on

1 July 2011 and provides for the making of suppression and non-publication orders by courts. Sections 7 and 8 set out the power and grounds for making such orders. Contravention of a suppression order or non-publication order constitutes an offence.

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Court Suppression and Non-Publication Orders Act 2010 [1.280] Court Suppression and Non-Publication Orders Act 2010 (NSW) ss 3, 4, 6 – 12, 16 3 Definitions In this Act: “court” means: (a)

the Supreme Court, Land and Environment Court, Industrial Court, District Court, Local Court or Children’s Court, or

(b)

any other court or tribunal, or a person or body having power to act judicially, prescribed by the regulations as a court for the purposes of this Act.

“information” includes any document. “news media organisation” means a commercial enterprise that engages in the business of broadcasting or publishing news or a public broadcasting service that engages in the dissemination of news through a public news medium. “non-publication order” means an order that prohibits or restricts the publication of information (but that does not otherwise prohibit or restrict the disclosure of information). “party” to proceedings includes the complainant or victim (or alleged victim) in criminal proceedings and any person named in evidence given in proceedings and, in relation to proceedings that have concluded, means a person who was a party to the proceedings before the proceedings concluded. “proceedings” means civil or criminal proceedings. [1.280]

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Civil Procedure in New South Wales

Court Suppression and Non-Publication Orders Act 2010 cont. “publish” means disseminate or provide access to the public or a section of the public by any means, including by: (a)

publication in a book, newspaper, magazine or other written publication, or

(b)

broadcast by radio or television, or

(c)

public exhibition, or

(d)

broadcast or publication by means of the Internet.

“suppression order” means an order that prohibits or restricts the disclosure of information (by publication or otherwise). 4 Inherent jurisdiction and powers of courts not affected This Act does not limit or otherwise affect any inherent jurisdiction or any powers that a court has apart from this Act to regulate its proceedings or to deal with a contempt of the court. 5 Other laws not affected This Act does not limit or otherwise affect the operation of a provision made by or under any other Act that prohibits or restricts, or authorises a court to prohibit or restrict, the publication or other disclosure of information in connection with proceedings. Part 2 – Suppression and non-publication orders 6 Safeguarding public interest in open justice In deciding whether to make a suppression order or non-publication order, a court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice. 7 Power to make orders

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A court may, by making a suppression order or non-publication order on grounds permitted by this Act, prohibit or restrict the publication or other disclosure of: (a)

information tending to reveal the identity of or otherwise concerning any party to or witness in proceedings before the court or any person who is related to or otherwise associated with any party to or witness in proceedings before the court, or

(b)

information that comprises evidence, or information about evidence, given in proceedings before the court.

8 Grounds for making an order (1)

(2)

32

A court may make a suppression order or non-publication order on one or more of the following grounds: (a) the order is necessary to prevent prejudice to the proper administration of justice, (b)

the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security,

(c)

the order is necessary to protect the safety of any person,

(d)

the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in criminal proceedings involving an offence of a sexual nature (including an act of indecency),

(e)

it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice.

A suppression order or non-publication order must specify the ground or grounds on which the order is made. [1.280]

Introduction to Civil Procedure

CHAPTER 1

Court Suppression and Non-Publication Orders Act 2010 cont. 9 Procedure for making an order (1)

A court may make a suppression order or non-publication order on its own initiative or on the application of: (a) a party to the proceedings concerned, or (b)

(2)

any other person considered by the court to have a sufficient interest in the making of the order.

Each of the following persons is entitled to appear and be heard by the court on an application for a suppression order or non-publication order: (a) the applicant for the order, (b)

a party to the proceedings concerned,

(c)

the Government (or an agency of the Government) of the Commonwealth or of a State or Territory,

(d)

a news media organisation,

(e)

any other person who, in the court’s opinion, has a sufficient interest in the question of whether a suppression order or non-publication order should be made.

(3)

A suppression order or non-publication order may be made at any time during proceedings or after proceedings have concluded.

(4)

A suppression order or non-publication order may be made subject to such exceptions and conditions as the court thinks fit and specifies in the order.

(5)

A suppression order or non-publication order must specify the information to which the order applies with sufficient particularity to ensure that the order is limited to achieving the purpose for which the order is made.

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10 Interim orders (1)

If an application is made to a court for a suppression order or non-publication order, the court may, without determining the merits of the application, make the order as an interim order to have effect, subject to revocation by the court, until the application is determined.

(2)

If an order is made as an interim order, the court must determine the application as a matter of urgency.

11 Where an order applies (1)

A suppression order or non-publication order applies only to the disclosure or publication of information in a place where the order applies, as specified in the order.

(2)

A suppression order or non-publication order is not limited to applying in New South Wales and can be made to apply anywhere in the Commonwealth.

(3)

However, an order is not to be made to apply outside New South Wales unless the court is satisfied that having the order apply outside New South Wales is necessary for achieving the purpose for which the order is made.

12 Duration of orders (1)

A suppression order or non-publication order operates for the period decided by the court and specified in the order.

(2)

In deciding the period for which an order is to operate, the court is to ensure that the order operates for no longer than is reasonably necessary to achieve the purpose for which it is made.

(3)

The period for which an order operates may be specified by reference to a fixed or ascertainable period or by reference to the occurrence of a specified future event. [1.280]

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Civil Procedure in New South Wales

Court Suppression and Non-Publication Orders Act 2010 cont. 16 Contravention of order (1)

A person commits an offence if the person engages in conduct that constitutes a contravention of a suppression order or non-publication order and is reckless as to whether the conduct constitutes a contravention of a suppression order or non-publication order. Maximum penalty: 1,000 penalty units or imprisonment for 12 months, or both, for an individual or 5,000 penalty units for a body corporate.

(2)

Conduct that constitutes an offence under this section may be punished as a contempt of court even though it could be punished as an offence.

(3)

Conduct that constitutes an offence under this section may be punished as an offence even though it could be punished as a contempt of court.

(4)

If conduct constitutes both an offence under this section and a contempt of court, the offender is not liable to be punished twice.

Rinehart v Welker [1.290] Rinehart v Welker [2011] NSWCA 403 BATHURST CJ AND MCCOLL JA 2 In this judgment we refer to, the applicants for review, Hope Rinehart Welker, John Langley Hancock, Bianca Hope as the “plaintiff beneficiaries”, the interveners, the Australian Broadcasting Commission; Fairfax Media Publications; and Nine Network; Nationwide News, as the “media interests” the first respondent, Gina Hope Rinehart, as the trustee and the second respondent, Ginia Hope Frances Rinehart, as the “defendant beneficiary” where necessary.

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3 The plaintiff beneficiaries seek a review pursuant to s 46 of the Supreme Court Act 1970 of Tobias AJA’s decision granting a suppression order under the Court Suppression and Non-publication Orders Act 2010 (the “CSPO Act”): Rinehart v Welker and Ors [2011] NSWCA 345 (the “primary judgment”). The orders were made on the application of the trustee and the defendant beneficiary. The media interests have intervened in the proceedings both at first instance and on appeal to advance the proposition that no suppression order should be, or should have been, made. Legislative framework … 5 The CSPO Act is based on draft model provisions formulated as part of the process of harmonising the laws of Australia which were endorsed at the May 2010 Standing Committee of Attorneys-General meeting. New South Wales is the first jurisdiction to adopt the model provisions: Second Reading Speech, Court Suppression and Non-publication Orders Bill, New South Wales Legislative Council, Parliamentary Debates (Hansard) 23 November 2010. 6 No other State or Territory has yet adopted the model provisions. However, the Commonwealth has introduced the Access to Justice (Federal Jurisdiction) Amendment Bill 2011 which has been read a second time and was referred on 25 November 2011 to the Legal and Constitutional Affairs Legislation Committee for report by 22 March 2012. If passed the Bill will have the effect of inserting the model provisions into the Family Law Act 1975 (Cth), the Federal Court of Australia Act 1976 (Cth), the Federal Magistrates Act 1999 (Cth) and the Judiciary Act 1903 (Cth). Background 7 The background to the controversy appears in two decisions of Brereton J: Welker & Ors v Rinehart [2011] NSWSC 1094 (the “Suppression Order decision”) and Welker & Ors v Rinehart & Anor (No 2) [2011] NSWSC 1238 (the “Deed Decision”). In short, as the proceedings were commenced, the 34

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Rinehart v Welker cont. plaintiff beneficiaries sought orders pursuant to the Trustees Act 1962 (WA) varying a Deed of Settlement made by Langley George Hancock as amended by a subsequent Deed of Amendment (the “Trust Deed”), varying the Trust Deed by splitting the trust into separate trusts and removing the trustee from one of the newly created trusts (the “Second Trust”) and appointing themselves as trustees of that Second Trust. 8 The relief sought was subsequently amended. It is not apparent to what extent the amendments superseded or supplemented any of the original claims for relief, although it appears that claims dealing with the vesting of trust property have been abandoned: primary judgment (at [6], [17]). In the amended relief the plaintiff beneficiaries also sought orders in the Court’s inherent equitable jurisdiction and/or under the Trustees Act removing the trustee as Trustee of the Second Trust and a declaration that she had misconducted herself in the administration of the Trust established under the Trust Deed within the meaning of s 77(2)(b) of the Trustees Act: Deed Decision (at [1], [4]). 9 The proceedings were commenced by ex parte application. From her first appearance, the trustee sought a stay of the proceedings and a suppression order on the basis that the proceedings were an abuse of process, having been commenced without prior compliance with the confidential alternative dispute resolution (“ADR”) procedures for which the Trust Deed provided: Suppression Order decision (at [3]). The defendant beneficiary supported that application. In particular the trustee relied on cl 20.8 of the Deed which provided as follows: Confidentiality of Proceedings The dispute the subject of the mediation/arbitration, the mediation and arbitration hearing and the submissions thereto and the decision of the mediation and/or arbitration shall be kept confidential.

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10 Brereton J originally acceded to the application pending determination of the stay application: Suppression Order decision (at [25]). 11 However, his Honour subsequently held that the plaintiff beneficiaries’ claims, in substance to remove the trustee and replace her with another family member, did not entail a “dispute under the [Trust] Deed” – the operative expression in the confidentiality provisions, cl 20: Deed Decision (at [7], [32]–[41]). As to matters the defendant beneficiary sought to raise in defence, his Honour held that even if they “might independently found a ‘dispute under this Deed’, in the present context they are but aspects of a larger dispute, pertaining to removal of the trustee, which as a whole is not accurately characterised as a ‘dispute under this Deed’”: Deed Decision (at [49]). 12 The consequence was that the basis for the suppression order was removed (Deed Decision (at [52])); however, his Honour (at [54]) decided to grant an interim suppression order pending the determination of the application for leave to appeal from his decision to prevent prejudice to the proper administration of justice. In this respect he said: If such an order is not made, an arguable appeal – as I find the application for leave to appeal is – would be rendered nugatory and the right to confidentiality under the Deed which the defendants seek to vindicate by their application for leave to appeal would be defeated before it could be heard in the Court of Appeal. 13 His Honour ordered: Pursuant to (NSW) Court Suppression and Non-Publication Orders Act 2010, s 10, and alternatively pursuant to the inherent jurisdiction of the court, I make an interim suppression order upon the ground referred to in s 8(1)(a) of that Act, that such order is necessary to prevent prejudice to the administration of justice, prohibiting disclosure by publication or otherwise of information as to any relief claimed in the proceedings or any pleading evidence or argument filed read or given in the proceedings. This order has effect, subject to revocation by this Court, until the expiration of 7 days from the date on which my written reasons for judgment given orally on 7 October 2011 are published on the Court’s website, and [1.290]

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Civil Procedure in New South Wales

Rinehart v Welker cont. thereafter if within that period the first defendant or second defendant has filed a summons for leave to appeal until the determination of that application or further order of this Court or of the Court of Appeal. Pursuant to (NSW) Court Suppression and Non-Publication Orders Act 2010, s 11, it is specified that this order applies throughout the Commonwealth of Australia. Pursuant to (NSW) Court Suppression and Non-Publication Orders Act 2010, s 9(4), this order does not prohibit: (a) Disclosure or publication of any judgment given in these proceedings to date nor of any orders made in the proceedings. (b) Disclosure to Hancock Prospecting Pty Ltd nor to the professional advisers and potential witnesses or funders of any party to the proceedings (including Hancock Prospecting Pty Ltd), in every case only for the purposes of the proper conduct of these proceedings and/or the proposed appellate proceedings and provided that prior to such disclosure the person to whom the disclosure is to be made has been informed of this order and has acknowledged that they are bound by this order. Tobias AJA’s decision 14 On 28 October 2011 the trustee and the second beneficiary filed summonses seeking leave to appeal from his Honour’s order dismissing the motions for a stay. They also filed notices of motion seeking, among other orders, “a further order pursuant to the [CSPO] Act prohibiting the disclosure by publication or otherwise of any information as to ‘the relief claimed or any pleading, including the Summary of Argument, the Summons, the draft Notice of Appeal, evidence or argument filed read or given in’ the proceedings the subject of the summons for leave to appeal”: primary judgment (at [5]). It appears that relief was intended to embrace and build upon the suppression order Brereton J had granted pending determination of the summons seeking leave to appeal and extend it to documents brought into existence for the purpose of the appeal. 15 The notices of motion came before Tobias AJA in the referrals list on 31 October 2011 on which occasion his Honour delivered an ex tempore judgment.

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16 The trustee and the second beneficiary based their application for relief on s 8(1)(a) of the CSPO Act: primary judgment (at [13]). They submitted (primary judgment (at [25] - [26])): as a matter of certainty, publication of the material that would be filed in the present appeal would negate the purpose of the confidentiality provisions in the Deed and would circumvent the rights of the applicants to have such disputes resolved by confidential mediation or arbitration in the event the leave to appeal was granted and the appeal succeeded [and that] … not to grant such an order, as his Honour himself had observed at [54] of the second judgment, would render any appeal (if leave was granted) nugatory. 17 His Honour recorded counsel for the plaintiff beneficiaries’ contentions, including: 29 In one sense it was accepted that this was a family dispute about the interests in, and the governance of, a family trust. However, Dr Bell submitted that the public had an interest in the determination of a dispute such as the present that involved alleged misconduct on behalf of a trustee. He contended that unacceptable conduct on behalf of a trustee should be the subject of a public hearing, and normally is, where the Court will lay down what is acceptable conduct of a trustee and what is not. 18 Of this submission, his Honour said: 30 On its face that submission may well be true but of itself I do not regard it as carrying any particular weight when determining whether an order is necessary to prevent prejudice to the proper administration of justice in the context of the present case. 19 His Honour dealt with Dr Bell’s next submissions as follows: 31 It was also submitted by Dr Bell that if the primary judge was correct and if I did grant an order pursuant to the Act, its effect would be that open justice would be trumped by any 36

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Rinehart v Welker cont. agreement entered into between parties that provided for the confidential resolution of their disputes outside the ordinary court system. However, it does not seem to me that the public interest referred to should in every case be permitted to trump the provisions of an agreement by parties closely related to each other that their family disputes should be determined in confidence and out of the public eye. 32 It was further submitted that in the event that his Honour’s dismissal of the stay application was reversed by this Court, there would then be a stay and the dispute between the parties would then proceed on a confidential basis in accordance with the Deed and, therefore, no harm would be caused. The difficulty with that argument is that given the terms of the amended summons, the situation would then be that the allegations against Mrs Rinehart would be in the public domain but because of the grant of a stay, her response thereto and the ultimate resolution of those allegations would be kept confidential. It does not seem to me that the administration of justice would be advanced in such an event. 33 Thus in the circumstances postulated there would be significant pressure upon Mrs Rinehart to make public her response to the allegations which are in the public domain and to the ultimate resolution of the dispute, particularly if it was in her favour. 20 Tobias AJA (at [35]) approached the issue of the strength of the case on appeal on the basis of Brereton J’s observation that it was “arguable”, while recognising (at [36]) that that “may still mean that its prospects of success are not particularly strong.”

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21 His Honour then, after referring to s 6 of the CSPO Act, said in passages of which the plaintiff beneficiaries and the media interests are both highly critical: 38 It cannot be gainsaid that it is necessary for the Court in determining whether to exercise the discretion to grant a suppression or non-publication order in the event that one of the grounds referred to in s 8(1) is made out, to take account of the fact that “a primary objective of the administration of justice is to safeguard the public interest and open justice.” It is noteworthy, however, that the public interest in open justice is not said by s 6 to be either the primary objective of the administration of justice or the only objective thereof. It is a primary objective, meaning that there are other primary objectives of the administration of justice, or may well be, which should be taken into account. One of these is that parties should be held to their bargain. … 41 However, as submitted by the applicants, the administration of justice is a multi-faceted concept. There is no doubt, and it was not disputed, that it is generally in the interests of the administration of justice that parties should be held to their bargain. Furthermore, and in the present day and age, disputing parties are encouraged to provide in their commercial agreements for a form of alternative dispute resolution which would take the pressure off the courts. The administration of justice in my view is capable of including the encouragement of parties to make such agreements and to abide by them where they otherwise apply to the dispute in question. 42 The parties in the present case have entered into such an agreement and subject to the issue as to whether the agreement applies to the present dispute, it should be given effect to with the result that a stay of the respondents’ proceedings would likely be granted. If a stay is granted then it is difficult to see why the public should be made aware of the nature of the dispute which is required to be kept confidential, let alone the nature of the allegations that are made by one party or the other against another. 44 Mr Dawson adopted Dr Bell’s submissions and added some submissions of his own. In particular, like Dr Bell, he sought to advance the proposition that there was a tension, as clearly there is, between the protection of a private right of contract on the one hand and the objective referred to in s 6 of the Act of safeguarding the public interest in open justice on the other. However, accepting that open justice is a primary objective of the administration of justice does not necessarily lead in every case to that objective being given determinative [1.290]

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Civil Procedure in New South Wales

Rinehart v Welker cont. weight. The proper administration of justice has other objectives than that of open justice although it cannot be gainsaid that the latter is of fundamental importance, as this Court has made clear on numerous occasions. 45 However, taking that into account, if otherwise it is necessary to make an order to prevent prejudice to the administration of justice then the Court should not shrink from doing so. The Parliament has spoken and the common law must take second place to the provisions of the statute. Although there was some suggestion by his Honour that the statute provided a more strict criteria than existed at common law, I am not convinced that that is so. In my view the purpose of the legislation is to permit of the making of a suppression or non-publication order in circumstances which would not necessarily conform to the exceptions which the common law has recognised to the principle of open justice. However, there is no doubt that the strict words of the statute in terms of the grounds which must be established before an order is made, must be adhered to. 22 The terms of the order Tobias AJA made were: 1. Pursuant to s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW) (Act), and on the grounds referred to in s 8(1)(a), a suppression order is made prohibiting the disclosure by publication or otherwise of any information as to the relief claimed or any pleading, the Summary of Argument, submissions, the draft Notice of Appeal, evidence or argument filed, read or given in these proceedings, and including the contents of the red book, blue book, black book and orange book but not including the Summons seeking Leave to Appeal or the pronounced or published judgment of Tobias AJA. 2. Pursuant to s 12 of the Act, the suppression order in paragraph 1 above operates until determination of the Applicant’s application for leave to appeal is determined or until further order of the Court. 3. Pursuant to s 11 of the Act, the suppression order in paragraph 1 above applies throughout the Commonwealth. 23 At the time his Honour made the suppression order, he also made orders expediting the summonses for leave to appeal which are to be heard concurrently with the appeals. Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

Consideration 24 We have set out the entirety of s 8 to give context to s 8(1)(a) upon which the trustee and defendant beneficiary rely to support the making of the suppression order. 25 Underlying the enactment of the CSPO Act was, in part, a concern to resolve the question whether a court’s inherent or implied power to make orders restricting the publication of any aspect of proceedings before it extended to orders purporting to bind the world at large: see Hogan v Hinch [2011] HCA 4; (2011) 85 ALJR 398 (at [23]–[27], [46]) per French CJ; Attorney-General (NSW) v Mayas Pty Ltd (1988) 14 NSWLR 342 (at 355) per McHugh JA, Hope JA agreeing; Second Reading Speech, Court Suppression and Non-publication Orders Bill, New South Wales Legislative Council, Parliamentary Debates (Hansard) 23 November 2010. 26 The principle of legality favours a construction of legislation such as the CSPO Act which, consistently with the statutory scheme, has the least adverse impact upon the open justice principle and common law freedom of speech and, where constructional choices are open, so as to minimise its intrusion upon that principle: Hogan v Hinch (at [5], [27]) per French CJ; see also Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 (at 55) per Kirby P. The meaning of “necessary” 27 The operative condition for making a suppression order under s 8 of the CSPO Act is that it be “necessary” to do so, which “… is a strong word [which, in] collocation [with] necessity to prevent 38

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Rinehart v Welker cont. prejudice to the administration of justice … ‘suggests Parliament was not dealing with trivialities’”: Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 (at [30]). The observations in Hogan v Australian Crime Commission were made in relation to a legislative scheme which, while it required the jurisdiction of the Court to be exercised in open court (s 17, Federal Court of Australia Act) did not contain a provision in like terms to s 6 of the CSPO Act. That provision, in our view, reinforces the legislative intention that CSPO Act orders should only be made in exceptional circumstances, a position which prevailed at common law: John Fairfax Publications Pty Ltd v District Court of NSW (at [21]). 28 The word “necessary” was adopted as the test for making a suppression order on the recommendation of the NSW Law Reform Commission: see NSW Law Reform Commission, Contempt by Publication, Report 100, (June 2003), at [10.20]; see also NSW Law Reform Commission, Contempt by Publication, Discussion Paper 43, (July 2000) at Chapter 10, where the principal discussion leading to the recommendation in the final Report appears. Similar language appears in s 50 of the Federal Court of Australia Act and s 4(2) and s 11 of the Contempt of Court Act 1981 (UK). It was the test applied by courts with an inherent jurisdiction to make non-publication orders: John Fairfax Publications Pty Ltd v District Court of NSW (at [38]).

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29 A number of authorities are cited in the Discussion Paper (at [10.92]) as authority for the proposition that the test for making a suppression or non-publication order should be that it be “necessary”. Of those authorities, the clearest statement, and that which appears to underlie the form of s 8, appears in John Fairfax & Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 (at 476–477) per McHugh JA (Glass JA agreeing): The fundamental rule of the common law is that the administration of justice must take place in open court. A court can only depart from this rule where its observance would frustrate the administration of justice or some other public interest for whose protection Parliament has modified the open justice rule. The principle of open justice also requires that nothing should be done to discourage the making of fair and accurate reports of what occurs in the courtroom. Accordingly, an order of a court prohibiting the publication of evidence is only valid if it is really necessary to secure the proper administration of justice in proceedings before it. Moreover, an order prohibiting publication of evidence must be clear in its terms and do no more than is necessary to achieve the due administration of justice. The making of the order must also be reasonably necessary; and there must be some material before the court upon which it can reasonably reach the conclusion that it is necessary to make an order prohibiting publication. Mere belief that the order is necessary is insufficient. (emphasis added) John Fairfax & Sons Ltd v Police Tribunal (NSW) was the principal authority on the subject of making non-publication orders in New South Wales prior to the enactment of the CSPO Act: John Fairfax Publications Pty Ltd & Anor v District Court of NSW (at [38]). French CJ referred to this passage with approval in Hogan v Hinch (at [21]). 30 The necessity requirement may also be stated by quoting Isaacs J’s statement in R v Macfarlane; Ex parte O’Flanagan and O’Kelly [1923] HCA 39; (1923) 32 CLR 518 (at 549) (approved by the plurality (Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ) in Hogan v Hinch (at [87]): The final and paramount consideration in all cases is that emphasized in Scott v Scott namely, “to do justice” (Viscount Haldane LC). All other considerations are means to that end. They are ancillary principles and rules. Some of them are so deeply embedded in our law as to be elementary and axiomatic, others closely approach that position. Of the latter class is publicity, which can only be disregarded where necessity compels departure, for otherwise justice would be denied to those whom Earl Loreburn termed “the parties entitled to justice.” 31 Significantly, an order is not “necessary” if it appears to the court “to be convenient, reasonable or sensible, or to serve some notion of the public interest, still less that, as the result of some ‘balancing exercise’, the order appears to have one or more of those characteristics”: Hogan v [1.290]

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Civil Procedure in New South Wales

Rinehart v Welker cont. Australian Crime Commission (at [31]). Further, it is not a sufficient basis for such an order that the information is inherently confidential as distinct from personal or commercial information the value of which as an asset would be seriously compromised by disclosure: Hogan v Crime Commission (at [38]). Open justice 32 By way of reinforcement of the proposition in [31], s 6 of the CSPO Act requires the court when considering whether to make an order under the Act to “take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice”. The principle of open justice is one of the most fundamental aspects of the system of justice in Australia: John Fairfax Publications Pty Ltd v District Court of NSW [2004] NSWCA 324; (2004) 61 NSWLR 344 (at [18]) per Spigelman CJ (Handley JA and Campbell AJA agreeing). Open justice ensures public confidence in the administration of justice: see Moti v R [2011] HCA 50 (at [100]) per Heydon J; Hogan v Hinch (at [20]) per French CJ; R v Tait (1979) 46 FLR 386 (at 401–403) per Brennan, Deane and Gallop JJ. It is unnecessary to add to the large body of judicial opinions discussing the concept. It is sufficient, in our view, to illustrate the proposition embedded in s 6 by referring to Lord Atkinson’s statement in Scott v Scott [1913] AC 417 (at 463), that “in public trial is [to be] found, on the whole, the best security for the pure, impartial, and efficient administration of justice, the best means of winning for it public confidence and respect.”

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33 “The entitlement of the media to report on court proceedings is a corollary of the right of access to the court by members of the public”: John Fairfax Publications Pty Ltd v District Court of NSW (at [20]). Media interests had standing at common law to be heard on the making of orders affecting the publication of court proceedings (see generally John Fairfax Group Pty Ltd (Receivers and Managers appointed) v Local Court of New South Wales (1992) 26 NSWLR 131) a position now enshrined in s 9(2)(d), CSPO Act at least insofar as a “news media organisation” is concerned. 34 A number of exceptions to the principle of open justice are recognised. Viscount Haldane VC referred to two in Scott v Scott (at 437) as being “cases of wards of Court and of lunatics [where] the Court is really sitting primarily to guard the interests of the ward or the lunatic [and] [i]ts jurisdiction is … parental and administrative, and the disposal of controverted questions is an incident only in the jurisdiction” and “litigation as to a secret process, where the effect of publicity would be to destroy the subject-matter … which stands on a different footing [and] [t]here it may well be that justice could not be done at all if it had to be done in public”. (See also the Earl of Halsbury (at 441)–(443); Earl Loreburn (at 446); Lord Atkinson (at 450)–(451), (462); Lord Shaw of Dunfermline (at 482)–(483)). His Lordship then said (at 437–438): As the paramount object must always be to do justice, the general rule as to publicity, after all only the means to an end, must accordingly yield. But the burden lies on those seeking to displace its application in the particular case to make out that the ordinary rule must as of necessity be superseded by this paramount consideration. The question is by no means one which, consistently with the spirit of our jurisprudence, can be dealt with by the judge as resting in his mere discretion as to what is expedient. The latter must treat it as one of principle, and as turning, not on convenience, but on necessity. I think that if the principle in cases of secret process be what I have stated, it affords guidance in other cases. … [U]nless it be strictly necessary for the attainment of justice, there can be no power in the Court to hear in camera either a matrimonial cause or any other where there is contest between parties. He who maintains that by no other means than by such a hearing can justice be done may apply for an unusual procedure. But he must make out his case strictly, and bring it up to the standard which the underlying principle requires. He may be able to [show] that the evidence can be effectively brought before the Court in no other fashion. He may even be able to establish that subsequent publication must be prohibited for a time or altogether. But this further conclusion he will find more difficult in a matrimonial case than in the case of the secret process, where the objection to publication is not confined to the mere 40

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Rinehart v Welker cont. difficulty of giving testimony in open Court. In either case he must satisfy the Court that by nothing short of the exclusion of the public can justice be done. The mere consideration that the evidence is of an unsavoury character is not enough, any more than it would be in a criminal Court, and still less is it enough that the parties agree in being reluctant to have their case tried with open doors. (emphasis added) 35 Lord Loreburn said (at 446): in all cases where the public has been excluded with admitted propriety the underlying principle, as it seems to me, is that the administration of justice would be rendered impracticable by their presence, whether because the case could not be effectively tried, or the parties entitled to justice would be reasonably deterred from seeking it at the hands of the Court. Lord Loreburn’s statement was regarded as indicating the general approach by Viscount Dilhorne in Attorney General v Leveller Magazine Ltd [1979] AC 440 (at 457). 36 As Brereton J said (Suppression Order decision (at [11]), referring to John Fairfax Group Pty Ltd (Receivers and Managers Appointed) and Another v Local Court of New South Wales (1991) 26 NSWLR 131 (at 141) per Kirby P), another “well-established illustration was in blackmail and extortion cases”, where: If the very openness of court proceedings would destroy the attainment of justice in the particular case (as by vindicating the activities of the blackmailer) or discourage its attainment in cases generally (as by frightening off blackmail victims or informers) or would derogate from even more urgent considerations of public interest (as by endangering national security) the rule of openness must be modified to meet the exigencies of the particular case. 37 A further exception is where disclosure of the information would seriously affect its commercial value: Australian Broadcasting Commission v Parish [1980] FCA 33; (1980) 43 FLR 129 at 133; Hogan v Crime Commission (at [42]). 38 None of these exceptions apply in the present case.

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The administration of justice 39 The concept of the administration of justice is multi-faceted. We doubt whether a single statement can capture the connotation it carries in a range of contexts. As Young JA has said (at [86]) as used in s 50 of the Federal Court of Australia Act, “it is … a reference to the public interest that the court should endeavour to achieve effectively the object for which it was appointed to do justice between the parties”: Australian Broadcasting Commission v Parish (at 133) per Bowen CJ. 40 Mahoney JA (with whom Hope AJA agreed) captured the concept in John Fairfax Group Pty Ltd v Local Court of New South Wales (1991) 26 NSWLR 131 (at 161), when (after referring to McHugh JA’s statement in John Fairfax & Sons Ltd v Police Tribunal (NSW) (at 355)) he said: This leads to the consideration of what is meant by “necessary to secure the proper administration of justice” in this context. The phrase does not mean that if the relevant order is not made, the proceedings will not be able to continue. Plainly they can. If the name of an informer is not hidden under a pseudonym, the proceedings will go on: at least the instant proceeding will. … The basis of the implication is that if the kind of order proposed is not made, the result will be – or at least will be assumed to be – that particular consequences will flow, that those consequences are unacceptable, and that therefore the power to make orders which will prevent them is to be implied as necessary to the proper function of the court. The kind of consequences that, in this sense, will be seen as unacceptable may be gauged by those involved in the cases in which statutory courts have been accepted as having restricted powers. Thus, there will be hardship on the informer or the security officer or the blackmail victim; the future supply of information from such persons will end or will be impeded; and it will be more difficult to obtain from such persons the evidence necessary to bring offenders [1.290]

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Rinehart v Welker cont. before the courts and deal with them. It is not necessary to attempt to state exhaustively the considerations relevant in this regard: it is to considerations of this kind or of an analogous kind on which the principle stated by McHugh JA is based. The effect of parties’ agreements 41 The parties to the proceedings entered into a Deed pursuant to cl 20 of which they agreed that “disputes arising under this deed” should be dealt with first by confidential mediation and, if that failed, by confidential arbitration. It also contained cl 20.8. 42 Party autonomy is said to be “fundamental in modern arbitration law” and, to find reflection in legislative recognition of parties’ right “to agree about how their commercial disputes are to be resolved subject to, inter alia such safeguards as are necessary in the public interest”: s 1C, Commercial Arbitration Act 2010; s 1 Arbitration Act 1996 (UK). “[P]arties value English arbitration for its privacy and confidentiality”: Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co [2004] EWCA Civ 314; [2005] QB 207 (at [1], [30]) per Mance LJ (Carnwath LJ agreeing); see also Fiona Trust & Holding Corp v Privalov [2007] UKHL 40; [2008] 1 Lloyd’s Rep 254 (at [6]) per Lord Hoffman; Thoroughvision Pty Ltd v Sky Channel Pty Ltd [2010] VSC 139 (at [16]–[17]). 43 The private character of the arbitration hearing is “something that inheres in the subject matter of the agreement to submit disputes to arbitration”. It is said that “[t]he efficacy of a private arbitration will be damaged, even defeated, if proceedings in the arbitration are made public by the disclosure of documents relating to the arbitration”: Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) [1995] HCA 19; (1995) 183 CLR 10 (at 26, 27) per Mason CJ, Brennan and McHugh J agreeing.

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44 However, as Mason CJ explained in Esso Australia Resources Ltd v Plowman (Minister for Energy & Minerals) (at 27ff) in rejecting the view that confidentiality is an essential characteristic of a private arbitration, privacy is not synonymous with confidentiality. To secure confidentiality an express provision may be necessary, although even that may not bind persons such as witnesses not parties to the arbitration agreement. It is no doubt for that reason that cl 20.8 appears in the Trust Deed. 45 According respect to party autonomy does not mean that everything associated with a private arbitration wears a mantle of confidentiality. Even where an arbitration hearing has been conducted in private pursuant to a court order and even recognising that “[p]arty autonomy requires the court so far as possible to respect the parties’ choice of arbitration”, once a court’s supervisory jurisdiction is invoked, the fact the arbitration was held in private is only a factor relevant to the question whether the proceedings should be heard in open court: Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co (at [28], [30], [34]–[36]). 46 Scott v Scott, it will be recalled, was a case where the parties to a nullity suit had agreed that it should be heard in camera. The House of Lords held that the Probate, Divorce and Admiralty Division had no power to hear the suit (or other matrimonial suit) in camera in the interest of public decency. Viscount Haldane VC (at 439) said, “the order was made in reality for the benefit of the parties who concurred in asking for it, and was therefore made under a mistaken impression as to the law”. 47 In R v Legal Aid Board; Ex parte Kaim Todner (a firm) [1998] EWCA Civ 958; [1999] QB 966 (at 977) Lord Woolf MR emphasised the proposition that the parties’ agreement that proceedings, or particular aspects of them, should be heard in camera or be subject to a non-publication order was not determinative, saying: (4) … Sometimes the importance of not making an order, even where both sides agree that an inroad should be made on the general rule, if the case is not one where the interests of justice require an exception, has been overlooked. Here a comment in the judgment of Sir Christopher Staughton in Ex p P (1998) Times, 31 March, is relevant. In his judgment, Sir Christopher Staughton states: “When both sides agreed that information should be kept 42

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Rinehart v Welker cont. from the public that was when the court had to be most vigilant.” The need to be vigilant arises from the natural tendency for the general principle to be eroded and for exceptions to grow by accretion as the exceptions are applied by analogy to existing cases. This is the reason it is so important not to forget why proceedings are required to be subjected to the full glare of a public hearing. It is necessary because the public nature of proceedings deters inappropriate behaviour on the part of the court. It also maintains the public’s confidence in the administration of justice. It enables the public to know that justice is being administered impartially. It can result in evidence becoming available which would not become available if the proceedings were conducted behind closed doors or with one or more of the parties’ or witnesses’ identity concealed. It makes uninformed and inaccurate comment about the proceedings less likely. If secrecy is restricted to those situations where justice would be frustrated if the cloak of anonymity is not provided, this reduces the risk of the sanction of contempt having to be invoked, with the expense and the interference with the administration of justice which this can involve. Conclusion 48 We are conscious of the heavy burden a party seeking a s 46(4) review has to discharge to have a Judge of Appeal’s order set aside. Such an application is not an appeal: s 19(2), Supreme Court Act; Uniform Civil Procedure Rules 2005 51.2. In order to succeed, the plaintiff beneficiaries must demonstrate that the judge erred in principle or that the judge’s decision was plainly wrong: Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2004] NSWCA 136; (2004) 60 NSWLR 143 (at [4], [6]); Kiri Te Kanawa v Leading Edge Events Australia Pty Ltd [2007] NSWCA 274 (at [14]) (per Giles JA, Ipp and Basten JJA agreeing); Lo v Iverach [2009] NSWCA 92 (at [29]) (Allsop P, Giles and Macfarlan JJA). Although these tests bear similarities to those applied in reviewing a discretionary decision (House v R [1936] HCA 40; 55 CLR 499), a decision to make a suppression order is not a discretionary one: Hogan v Australian Crime Commission (at [33]).

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49 In our view, with respect, Tobias AJA relevantly erred. His Honour failed to approach the question whether a suppression order should be granted on a basis which has the least adverse impact upon the open justice principle: see [26] above. 50 Tobias AJA made the order under s 8, at least in part, to give effect to the maxim pacta sunt servanda (agreements are to be kept). He also held that publication would render any appeal nugatory presumably on the basis set out in pars [32] and [33] of his judgment that if a stay was granted the trustee’s response and the ultimate resolution of the proceedings would be confidential and there would be significant pressure on Mrs Rinehart to make public her response and the ultimate resolution of the proceedings. 51 It is well accepted that the Court will, in appropriate circumstances, give effect to agreements to arbitrate by ordering a stay of proceedings brought in breach of the arbitration agreement. That jurisdiction recognises the party autonomy to which we have referred. However, as is apparent from the foregoing discussion, that is not determinative of the question whether, on an application for such a stay, it is necessary for the proper administration of justice for the Court to make a suppression order to give effect to a provision such as cl 20.8 prohibiting disclosure of the nature of the dispute both before, during and after the arbitration proceedings. Tobias AJA, with respect, appears to have treated it as such. In our view, his Honour erred (at [19]) in treating the fact that the parties had agreed to the cl 20.8 clause as effectively determining the question whether a suppression order should be made. 52 His Honour, with respect, was somewhat dismissive (at [30]) of the plaintiff beneficiaries’ submission about the public interest in the determination of a dispute involving the alleged misconduct of a trustee. As we have said, the plaintiff beneficiaries make allegations of breach of trust and seek that the Court invoke its statutory power to remove a trustee. It is not suggested that proceedings were brought for a collateral purpose or that the disclosure of the materials would […] have any effect on the value of the assets of the trust or other assets of the parties. The proper conduct [1.290]

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Rinehart v Welker cont. of trustees is a matter which warrants close public scrutiny. It was a proper factor to take into account in determining whether a suppression order was necessary. 53 Tobias AJA also erred in our opinion in concluding that the failure to make a suppression order would render the proceedings nugatory. Disclosure of the information the subject of the suppression order will not “cause an entire destruction of the whole matter in dispute”: Hogan v Hinch (at [21]). The trustee, if successful in obtaining a stay, will have the benefits of the substance of the allegations and matters concerning the trust being considered in a private arbitration rather than a public forum. This would seem to us to be the primary purpose of the arbitration/mediation provisions in the Deed. Such advantages remain irrespective of the fact that the allegations made against her have been publicly disclosed. 54 Tobias AJA’s concern that if a suppression order was not made the allegations against the trustee would be in the public domain but her response would be confidential did not, in our view, demonstrate the order was necessary: “In general … parties and witnesses have to accept the embarrassment and damage to their reputation and the possible consequential loss which can be inherent in being involved in litigation”: R v Legal Aid Board; Ex parte Kaim Todner (a firm) (at 978). It is true that Lord Woolf MR went on to say that: “[t]he protection to which they are entitled is normally provided by a judgment delivered in public which will refute unfounded allegations”, but that does not, in our view, detract from the force of his previous observation. It is the price of open justice that allegations about individuals are aired in open court. Such individuals, particularly if they are parties, can make their response to such allegations public in the same forum. The media, the vehicle by which such allegations are usually published to the world would be obliged to publish any response to ensure any report of the proceedings was fair: s 29, Defamation Act 2005.

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55 In our view, having regard to the nature of the proceedings it was neither “necessary to prevent prejudice to the administration of justice” and, further contrary to the requirement to treat open justice as “a primary objective” referred to in s 6 of the Act for the Court to exercise its power under s 8 to suppress information of the nature of that caught by Tobias AJA’s orders. Suppression of such information would undermine, rather than ensure, public confidence in the administration of justice. 56 It is unnecessary to deal with the question of the construction of s 7 both because of the conclusion we have reached and because it may not have been clearly articulated before either Brereton J or Tobias AJA.

“X” v Sydney Children’s Hospitals Specialty Network [1.295] “X” v Sydney Children’s Hospitals Specialty Network [2011] NSWSC 1272 ADAMSON J 3.

The order sought by the Plaintiff is that her name and other identifying information not be published, including the identity of members of her family in so far as that would identify her. The grounds for making an order under s 7 are set out in s 8 of the Act …

4.

Ms Sant, Junior Counsel, who made the application on behalf of the Plaintiff, relied on subparagraphs (a), (c) and (e) of subsection (1) of s 8.

5.

The Act commenced on 1 July 2011 and specifically provides, by s 4, that it does not limit or otherwise affect any inherent jurisdiction or any powers that a Court has apart from the Act to regulate its proceedings or to deal with a contempt of the Court. Accordingly, assistance can be obtained from authorities decided prior to the commencement of the Act.

44

[1.295]

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“X” v Sydney Children’s Hospitals Specialty Network cont. 6.

Ms Sant has referred me to decisions made under the now repealed s 72 of the Civil Procedure Act 2005 (NSW) or like provisions in other jurisdictions. Ms Sant has referred me to pseudonym orders such as those sought by the Plaintiff in the instant case which have been made in cases of particular sensitivity. Examples include litigation brought by HIV infected people against the Red Cross because of the stigma attaching to HIV and AIDS: E v Australian Red Cross Society and Ors (1991) 27 FCR 310 at 313; TK v Australian Red Cross Society (1989) 1 WAR 335; and more recently in BT v Oei [1999] NSWSC 1082, another case in which the plaintiff had HIV. In TK, Malcolm CJ considered plaintiffs might be reasonably deterred from bringing proceedings because of the embarrassment that they might suffer if their condition were known generally.

7.

The Plaintiff submits that non-publication orders have also been fairly regularly made in fertility cases to ensure that the child in question did not later happen upon circumstances discussed in the case. Examples including Sydney South West Area Health Service v MD [2009] NSWCA 343; Ax v Stern [2008] VSC 400 have been instanced. Although Ms Sant put the Plaintiff’s application on the basis, as I have said above, of subparagraphs (a), (c) and (e) of s 8, the evidence adduced principally concerned subparagraph (c), namely the order is necessary to protect the safety of any person.

8.

Nonetheless, I accept that where disclosure of the Plaintiff’s identity carries with it a risk of harm, there is a potential prejudice to the administration of justice and to the public interest in people being able to exercise their legal rights. It would potentially prejudice the administration of justice were the parents of a child who had suffered harm, allegedly as a result of negligence, to be deterred from bringing proceedings for damages because of concern for the harm that disclosure of the child’s identity could cause the child.

9.

Ms Sant submitted that the Plaintiff has suffered a psychiatric illness and that she is a particularly vulnerable person who is liable to decompensate or become depressed or anxious if her identity is revealed. Ms Sant contends that her impairment is serious and severe and that her insight is sufficient for her to appreciate the extent of her impairment and disability.

10.

The affidavit of Mr Curtis referred to above, which is filed in support of the application, deposes to his instructions from the Plaintiff’s father and next friend to the following effect: [The Plaintiff] is a very private person who demands a low profile and becomes visibly upset and angry with those responsible if she is put in a position where she stands out from the crowd. [The Plaintiff] likes to think of herself as being normal and tries to be normal. If [the Plaintiff’s] brain damage came to be in the public domain I believe it would be soul destroying for her. I believe it would destroy her psychologically. I am concerned that [the Plaintiff] will find reference to herself and this case on the internet and if that were to occur such a discovery would be devastating for her. Her self esteem is already incredibly low.

Annexed to Mr Curtis’ affidavit are three reports of Dr Peter Krabman, the Plaintiff’s treating psychiatrist, dated 9 June 2001, 18 September 2001 and 23 October 2001 respectively. Ms Sant has drawn my attention to the following passage in the report of 9 June 2001: It is my impression that she likely met criteria for an emotional disorder with mixed anxiety and depression for significant periods of her childhood, associated with the frustrations of her patchy developmental (and particularly communication) difficulties and the struggles of adapting to the school environment. 11.

Dr Krabman, in the same report, sets out his current diagnosis for the Plaintiff, namely “Axis One Pervasive Development Disorder Not Otherwise Specified”. Dr Krabman opines that the Plaintiff uses denial and narcissistic defences to avoid the pain of disability by pretending that it does not exist and putting on a tough front. He says that she wants to feel normal and pretend to be normal, and comments that her mother and teachers have learned that they [1.295]

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Civil Procedure in New South Wales

“X” v Sydney Children’s Hospitals Specialty Network cont. must give guidance in small bursts repeatedly and expect some “attitude” in response. Ms Sant contends, and I accept her contention, that these matters are highly relevant to the risk of harm to the Plaintiff were her name to become publicly known to her school mates, or were she to be privy to details about her case, for example, through access through the internet or other media. 12.

In his second report dated 18 September 2001, Dr Krabman opines that the diagnostic and prognostic opinions expressed in his earlier report of 9 June 2001 remain current with the addition of a likely progression to a current depressive disorder. Ms Sant emphases the prognosis of a likely progression to current depressive disorder in support of her application for a suppression and non-publication order, and her submission that the order is necessary to protect the Plaintiff’s safety, which includes psychiatric safety.

13.

Finally, Ms Sant drew my attention to the final report of Dr Krabman dated 23 October 2001 in which he specifically addresses the question of the need for preservation of the Plaintiff’s privacy during the Court hearing. Dr Krabman said:

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It is my impression that if [the Plaintiff] were to be named in press reporting of her case it is likely that this would cause significant distress for [the Plaintiff] and personal, interpersonal and developmental disruption. Specifically, there would be a high likelihood that [the Plaintiff] herself and/or [the Plaintiff’s] media savvy peers at school and/or their parents would discover [the Plaintiff’s] link to the Court case, hear a reference to brain damage, in addition to other matters relating to the case, and discuss these matters with [the Plaintiff] in a way which she would find distressing and to which she is likely to react with either aggression/denial or need clinginess. In addition to [the Plaintiff’s] over-reaction to peers or others who might enquire about what they had heard in the media, the content of media reports trigger insecurity or an instability in [the Plaintiff’s] sense of self, and disrupt the sensitive process which [the Plaintiff’s] parents and I are involved in of assisting [the Plaintiff] to come to terms with her history and her impairment. This insecurity will worsen depressive symptoms so I strongly support the de-identifying of media reports of the case if this is an option which is available. 14.

I note that here all the Plaintiff seeks is a pseudonym order which, if granted, will not affect the public nature of the proceedings nor the ability of the press to report on the proceedings fully, with the only restriction being that the Plaintiff may not be identified.

15.

I consider that pseudonym orders interfere with open justice only minimally and that such an order is warranted in the instant case. In my opinion, such an order is necessary to prevent prejudice to the proper administration of justice since, if the order were refused, the Plaintiff’s next friend might feel under undue pressure to resolve the proceedings to avert the risk of harm to the Plaintiff that would be occasioned were the final to proceed to final judgment and the reasons for decision to be available on the internet (as they commonly are). I also accept, for the reasons given by Ms Sant, that the order is necessary to protect the Plaintiff’s psychological safety. I consider that the public interest in permitting persons to exercise their right to have the question whether they are entitled to damages as a result of negligence determined outweighs the public interest in open justice in the circumstances of the instant case to which I have referred above.

16.

Section 11 of the Act provides that the order under s 7 may be made to apply to the Commonwealth, and not merely to New South Wales. However s 11(3) provides that an order is not to be made to apply outside New South Wales unless the Court is satisfied that having the order apply outside New South Wales is necessary for achieving the purpose for which the order is made. I am satisfied of that matter. Having regard to the reach of the internet and its considerable accessibility to the Plaintiff and her peers, I propose to make the order apply throughout the Commonwealth.

46

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“X” v Sydney Children’s Hospitals Specialty Network cont. 17.

Section 12 of the Act provides that a suppression or non-publication order operates for the period decided by the Court and specified in the order. Section 12(2) provides that the Court is to ensure that the order operates for no longer than is reasonably necessary to achieve the purpose for which it is made. Initially the Plaintiff contended that I should make the order “until further order”; however, the parties have since conferred and there is agreement that it would be appropriate for the order to be made until the conclusion of the evidence in the proceedings. It is said, and I accept, that when I have heard all the evidence in the case I will be in a better position to determine the appropriate length of the order. As will be seen from the orders set out below, I have added a period of seven days from the conclusion of the evidence to the duration of the order, in order that I may have sufficient time to consider the appropriate term of any further order. Orders 18.

Accordingly, I make the following orders, which, with the exception of the additional seven days to the term of the order, have been the subject of consideration by the parties: (1)

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(2)

(3)

Publication in Australia of the name of the Plaintiff and her next friend is prohibited, except that: (a)

the Court and court staff, the parties to the proceedings and their legal representatives and witnesses in the proceedings may identify the Plaintiff and her next friend for the purposes of or associated with the proceedings;

(b)

the parties to the proceedings may identify the Plaintiff and her next friend for the purposes of the administration of the public health system in the State of New South Wales; and

(c)

references to previous judgments of the Court are not in breach of this order.

Publication in Australia of other material that would be likely to identify the Plaintiff, such as the names of members of her family, is prohibited except that the Court and Court staff, the parties to the proceedings and their legal representatives and witnesses in the proceedings may identify them for the purposes of or associated with the proceedings. For the purposes of orders (1) and (2), “parties” includes: (a)

the Crown in right of the State of New South Wales, including but not limited to the New South Wales Minister for Health and the Ministry of Health; and

(b)

the parties’ insurers and indemnity organisations.

(4)

The Plaintiff be otherwise identified by the pseudonym, “X”.

(5)

The Plaintiff’s next friend be otherwise identified by the pseudonym, “Y”.

(6)

These orders have effect until seven days after the close of evidence in the present proceedings, subject to further order of the Court.

A v Bird; C v Bird [1.298] A v Bird; C v Bird [2015] NSWSC 570 MCCALLUM J [2] The first defendant in each proceeding is the alleged offender. In one set of proceedings, the first plaintiff is a child allegedly sexually assaulted by the first defendant and the second plaintiff is the mother of that child. The claim of the child alleges intentional assault by the first defendant and [1.298]

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Civil Procedure in New South Wales

A v Bird; C v Bird cont. negligence on the part of the second and third defendants in the conduct of the child care centre. The mother claims damages for psychiatric or psychological injury caused by the same alleged events. [3] In the other proceedings there is a single plaintiff, being the mother of a second child alleged to have been assaulted by the first defendant. That mother also claims damages for psychological or psychiatric injury caused by her becoming aware of the alleged assaults on her child. The child concerned in that case is not a party to the proceedings. … [11] Express power to make orders of the kind now sought may be found in the Court Suppression and Non-Publication Orders Act. As reflected in s 6 of that Act, a primary objective of the administration of justice is to safeguard the public interest in open justice. [12] My attention was drawn during argument to the decision of the Court of Appeal in D1 v P1 [2012] NSWCA 314. The discernment of the principles established by that decision is complicated by the fact that the judgment is published with substantial sections suppressed. As I read the judgment, it was a case in which suppression orders had been sought in circumstances tolerably similar to the present application, save for the fact the person seeking the orders and seeking to have his or her identity protected by the orders was the perpetrator rather than the alleged victims of assaults. Further, the basis for the application was s 8(1)(c) of the Act, which empowers the Court to make an order where it is necessary to “protect the safety of any person.” Whilst it is not entirely clear, having regard to the suppressed sections of the judgment, I apprehend that person was a person who had a connection with the defendants as to whom the evidence suggested he or she was at risk of self-harm if his or her identity were not suppressed. A different position exists in the present case, where the orders are sought to protect the identity of the alleged complainants rather than the alleged perpetrator.

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[13] In any event, in a discussion of the relevant authorities, the Court in D1 v P1 noted that courts will be solicitous to the effect litigation has on children. The judgment does not make clear whether the person referred to as “X” was a child, but that appears to be the context in which reference to those decisions was made. The Court also referred to the remarks of Mahoney JA in John Fairfax Group Pty Ltd (Receivers & Managers Appointed) v Local Court (NSW) (1991) 26 NSWLR 131 at 163 to 164: First, it is important to remember – because, in what is said about the open conduct of the courts, it appears sometimes to be forgotten – that the open conduct of the courts can cause great pain and loss to those touched by what is done and what is publicised. It is, in my opinion, the function of the law – and the obligation of the courts in administering it – to avoid such pain and loss to the extent that it is possible to do so. To the extent that this detriment to the individual is not avoided, the law is deficient and the courts have been less than fully effective. Secondly, the assumption which, I think, sometimes emerges from what is urged for the open conduct of courts is that that principle is to be upheld and the right to publish is to be unrestricted notwithstanding that the individual suffers for it. If this assumption underlies the submissions made in the present proceeding, it is an assumption which I would not accept. As I have said, the principle that the courts are to be open and that the media may publish what is done in them is not an end in itself. The principle is adopted because it is judged to be the means by which other and more fundamental goods will be achieved. The power which the community gives to any person, whether he be in Parliament, an official in government, or a judge is to be exercised properly and accountably. And, it is believed, that will be achieved if the power is exercised, as in the present case, in open court and subject to full publicity. [14] It was observed at the conclusion of that extract in D1 v P1 that those remarks must now be read subject to the provisions of the Court Suppression and Non-Publication Orders Act. I would, 48

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A v Bird; C v Bird cont. however, apprehend that the Court of Appeal did not intend in D1 v P1 to say anything contrary to the proposition that open justice is not to be seen as an end in itself, but rather as a boon to the administration of justice. [15] In my view it is appropriate, where the interests of a child are at stake in the manner in which litigation is conducted, to be solicitous to the effect such litigation may have on the child. It is in that context that the provisions of s 15A of the Children (Criminal Proceedings) Act should be considered. That Act evinces a plain intention that the identity of a child who is a victim of a sexual assault should be protected and that the publication of the identity of such a child should be prohibited. Subsection 5 recognises the obvious proposition that the identity of the mother of such a child ought also be prohibited if its publication may lead to the identification of the child. [16] It is appropriate, in my view, to read the provisions of the Court Suppression and Non-Publication Orders Act in a manner that gives coherence to those provisions of the Children (Criminal Proceedings) Act. Accordingly, I am persuaded it is appropriate to make orders prohibiting, or at least restricting, disclosure of the identity of the three plaintiffs and the child concerned in the second proceedings.

The provision of reasons for decision [1.300] The “provision of reasons for decision is also an expression of the open court

principle”: Wainohu v New South Wales (2011) 243 CLR 181; (2011) 278 ALR 1; [2011] HCA 24 at [58] per French CJ and Kieffel J

Wainohu v New South Wales

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[1.310] Wainohu v New South Wales (2011) 243 CLR 181; (2011) 278 ALR 1; [2011] HCA 24 [The plaintiff, a member and former President of the Sydney Chapter of the Hells Angels Motorcycle Club, sought a declaration that the Crimes (Criminal Organisations Control) Act 2009 (NSW) was invalid. Part 2 of the Act (ss 5 – 13) provided that the Commissioner of Police may apply to an “eligible Judge” of the Supreme Court for a declaration that a particular organisation is a “declared organisation” for the purposes of the Act. Section 9(1) provided that the eligible Judge may make a declaration if satisfied that: (a) members of the organisation associate for the purpose of organising, planning, facilitating, supporting or engaging in serious criminal activity, and (b) the organisation represents a risk to public safety and order in this State. Section 12 empowered an eligible Judge, on request by the Commissioner or on application by a member of the organisation the subject of the declaration, to revoke the declaration. Section 13(2) provided: If an eligible Judge makes a declaration or decision under this Part [ie Pt 2], the eligible Judge is not required to provide any grounds or reasons for the declaration or decision (other than to a person conducting a review under section 39 if that person so requests). Part 3 of the Act provided for the making of “interim control orders” (ss 14 – 18) and “control orders” (ss 19 – 25). Section 39 provided for the Ombudsman to scrutinise the exercise of powers conferred on police officers under the Act and to furnish reports to the Attorney-General and the Commissioner.]

[1.310]

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Civil Procedure in New South Wales

Wainohu v New South Wales cont. FRENCH CJ AND KIEFFEL J [1] On 6 July 2010, the Acting Commissioner of Police for New South Wales applied to a judge of the Supreme Court of New South Wales for a declaration under Pt 2 of the Crimes (Criminal Organisations Control) Act 2009 (NSW) (“the Act”) in respect of the Hells Angels Motorcycle Club of New South Wales (“the Club”). The declaration sought is an administrative, not a judicial act. The judge from whom it is sought is an “eligible judge” so designated under the Act by the Attorney-General of New South Wales. [2] If the eligible judge makes the declaration which is sought then, under Pt 3 of the Act, the Supreme Court will be empowered, on the application of the Commissioner of Police, to make control orders against individual members of the Club. A member against whom such an order is made is called a “controlled member”. It is an offence for controlled members to associate with one another. They are also barred from certain classes of business and occupation. [3] The plaintiff, Derek Wainohu, is a member of the Club and has been a member for 20 years. If the Club is declared as an organisation under the Act, he is at risk of being made subject to a control order. He has commenced proceedings in this Court seeking a declaration that the Act is, or particular provisions of it are, invalid. He challenges the Act’s validity on the basis that it confers functions upon eligible judges and upon the Supreme Court which undermine the institutional integrity of that Court in a way that is inconsistent with the national integrated judicial system for which Ch III of the Constitution of the Commonwealth provides. …

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[5] The Act creates two important functions, both of which are exercised by judges of the Supreme Court of New South Wales. It was not in dispute that a declaration under Pt 2 made by an eligible judge is an administrative act. Nor was it disputed that a control order under Pt 3 is a judicial act. Although the two functions are linked as part of the one statutory scheme, the making of a declaration under Pt 2 is neither an incident nor an element of the judicial function of making a control order under Pt 3. [6] An eligible judge may make a determination under Pt 2 upon information and submissions, without regard to the rules of evidence, partly based on information and submissions not able to be disclosed to the organisation or its members, and with no obligation to provide reasons for the determination which is made. The Act thus provides for the enlistment of judges of the Supreme Court to determine applications for declarations using processes which, if adopted by the Court itself, would be repugnant to the judicial function. … [58] The provision of reasons for decision is also an expression of the open court principle, which is an essential incident of the judicial function. A court which does not give reasons for a final decision or for important interlocutory decisions withholds from public scrutiny that which is at the heart of the judicial function: the judicial ascertainment of facts, identification of the rules of law, the application of those rules to the facts and the exercise of any relevant judicial discretion. [59] Section 13(2) of the Act exempts an eligible judge from any duty to give reasons for making or refusing to make a declaration, save for the purposes of a review by the Ombudsman under s 39 of the Act. That exemption marks a significant difference, among a number of significant differences, between the functions conferred upon the judge and those conferred on the court of which he or she is a member. The existence of that difference and the statutory context in which it arises are relevant to the question whether the function conferred upon the eligible judge impairs the institutional integrity of the Supreme Court of New South Wales. [Order: “The Crimes (Criminal Organisations Control) Act 2009 (NSW) is invalid”.] 50

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Wainohu v New South Wales cont. [footnotes omitted]

PRINCIPLE OF A FAIR TRIAL [1.320] The principle of a fair trial is recognised in criminal proceedings: see Dietrich v R

(1992) 177 CLR 292; Jago v District Court of New South Wales (1989) 168 CLR 23 and R v Macfarlane; Ex parte O’Flanagan (1923) 32 CLR 518 at 541-542. The principle of a fair trial is also recognised in the conduct of civil proceedings. For example, the function of providing proper notice is fundamental to the basic requirement of procedural fairness: Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 (which is discussed in Chapter 9).

The Truth can Cost too Much [1.330] J Spigelman, “The Truth can Cost too Much: The Principle of a Fair Trial” (2004) 78 ALJ 29 at 30 The principle of a fair trial now informs and energises many areas of the law. It is reflected in numerous rules and practices. It is continually adapted to new and changing circumstances. As will presently appear, the principle of a fair trial manifests itself in virtually every aspect of our practice and procedure, including the laws of evidence. There is, however, an overriding and, perhaps, unifying principle. As Deane J put it:

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it is desirable that the requirement of fairness be separately identified since it transcends the content of more particularized legal rules and principles and provides the ultimate rationale and touchstone of the rules and practices which the common law requires to be observed in the administration of the substantive criminal law. [Dietrich v R (1992) 177 CLR 292 at 326] As will appear from the cases to which I will refer, it is in the context of the criminal law that the principle receives its most complete exposition. However, the principle is, of course, equally applicable to civil proceedings. Over the course of the last fifteen years or so the significance of the principle of a fair trial has been characterised in numerous High Court judgments in the most forceful of terms: as “the central thesis of the administration of criminal justice” [McKinney v R (1991) 171 CLR 468 at 478]; as “the central prescript of our criminal law” [Jago v District Court of NSW (1989) 168 CLR 23 at 56]; as a “fundamental element” or a “fundamental prescript” [Dietrich v R (1992) 177 CLR 292 at 299, 326]; and as an “overriding requirement” [Dietrich at 330]. The High Court has, over about fifteen years, given the principle of a fair trial considerable emphasis and elaboration. It is not, however, a new principle. As Isaacs J put it in 1923, with reference to “the elementary right of every accused person to a fair and impartial trial”: Every conviction set aside, every new criminal trial ordered, are mere exemplifications of this fundamental principle. [See R v MacFarlane; Ex parte O’Flanaghan and O’Kelly (1923) 32 CLR 518 at 541-542.] It is not entirely accurate to refer to the principle in terms of a “right to a fair trial” [see Jago v The District Court of New South Wales (1989) 168 CLR 23 at 56–57]. Nevertheless it is convenient and “not unduly misleading” to do so [see Dietrich v The Queen (1992) 177 CLR 292 at 299, 326]. There are numerous jurisdictions in which a right to a fair trial is enshrined, in those terms, either in a Constitution or in a statute of general, and often overriding, application. That is not the case in [1.330]

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Civil Procedure in New South Wales

The Truth can Cost too Much cont. Australia. The terminology of “right” appears to be more appropriate in circumstances where something in the nature of a freestanding right is specifically enacted. I use the words “principle of a fair trial”, rather than “right to a fair trial”, in order to emphasise that what is involved in our jurisprudence is a standard of an inherently flexible character. A principle, as Ronald Dworkin has identified: states a reason that argues in one direction but does not necessitate a particular decision … There may be other principles or policies arguing in the other direction … If so, our principle may not prevail, but that does not mean that it is not a principle of our legal system, because in the next case, when these contravening considerations are absent or less weighty, the principle may be decisive. [Ronald Dworkin, Taking Rights Seriously, Duckworth, London (1977) p 26] Although issues of balancing and reconciliation of conflicting or intersecting rights also arise in a rights based system, the terminology of “principle” rather than of “right” identifies that in our legal system the significance and weight to be given to fair trial considerations will vary from one set of circumstances to another, perhaps to a greater degree than in a rights based system. … In Australian jurisprudence, the principle of a fair trial is based on the inherent power of a court to control its own processes and, particularly, on its power to prevent abuse of its processes. As the majority joint judgment said in Walton v Gardiner [(1993) 177 CLR 378 at 392-393 per Mason CJ, Deane and Dawson JJ]:

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The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice and unfairness. A court may become an “instrument of injustice and unfairness” in ways other than by infringement of the principle of a fair trial. The institution of proceedings or the reliance by a party, particularly the prosecution, on certain evidence, may involve the court in prior illegality or improper conduct. The court cannot turn a blind eye to vexatious and oppressive conduct that has occurred in relation to proceedings, even if a fair trial is still possible. Such conduct could, if tolerated by the courts, undermine the standing of the judges as impartial and independent adjudicators. In Jago, Mason CJ concluded that the power to prevent abuse of process extended to a power to prevent unfairness generally: The question is … whether the court, whose function is to dispense justice with impartiality both to the parties and to the community which it serves, should permit its processes to be employed in a manner which give rises to unfairness. [(1989) 168 CLR 23 at 28] Courts have an overriding duty to maintain public confidence in the administration of justice which, as Justice Gummow has said, “in present times, is the meaning of the ancient phrase ‘the majesty of the law’.” [Mann v O’Neil (1997) 191 CLR 204 at 245] … Constitutional significance The focus of constitutional jurisprudence of the High Court over recent years has been on Chapter III. It seems quite likely that certain aspects of the principle of a fair trial will be found to have a measure of constitutional protection. As Brennan, Deane and Dawson JJ pointed out in Chu Kheng Lim [Chu Kheng Lim v The Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 27, see also 37, 55 and 68], the legislative power of the Commonwealth does not extend: 52

[1.330]

Introduction to Civil Procedure

CHAPTER 1

The Truth can Cost too Much cont. to the making of a law which requires or authorizes the courts in which the judicial power of the Commonwealth is exclusively vested to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power. There is now a significant body of observations by different judges of the High Court to similar effect [see Polyukhovich v Commonwealth (1991) 172 CLR 501 at 607 per Deane J and 703–704 per Gaudron J; Nicholas v R (1998) 193 CLR 173 at 185 [13]-[14] per Brennan CJ, 208 [73] per Gaudron J, 220-221 [112] per McHugh J, 232 [146] per Gummow J. See also Justice McHugh, “Does Chapter III of the Constitution protect substantive as well as procedural rights?” (2001) 21 Aust Bar Rev 235 esp at 237-241; F Wheeler, “The Doctrine of Separation of Powers and Constitutionally Entrenched Due Process in Australia” (1997) 23 Monash L Rev 248; W Lacey, “Inherent Jurisdiction, Judicial Power and Implied Guarantees Under Chapter III of the Constitution” (2003) 31 Fed Law Rev 57]. Some identify particular matters as constituting essential characteristics of the judicial process which Parliament may not infringe [Harris v Caladine (1991) 172 CLR 84 at 150; Re Nolan; Ex parte Young (1991) 172 CLR 460 at 496; Polyukhovich v Commonwealth (1991) 172 CLR 501 at 703–704; Nicholas v R (1998) 193 CLR 173 at [73]–[74]]. One of the issues that has divided the Court in recent times, and which remains unresolved, is whether such constitutional protection as exists of the court’s power to protect the integrity of its processes, extends to the court acting on the basis that it should maintain public confidence in the administration of justice [see Nicholas v R (1998) 193 CLR 173 at 197 [37] per Brennan CJ and 276 [242] per Hayne J; contra at 209 [74] per Gaudron J, 226 [127] per McHugh J, 256 [201] per Kirby J; Grollo v Palmer (1995) 184 CLR 348 at 365; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 14, 17; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 98 per Toohey J, 107 per Gaudron J, 117, 118–19 and 124 per McHugh J, 113–34 per Gummow J].

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The dominant view now appears to be that some form of protection of procedural rights is inherent in Chapter III, although there is no clear majority decision to that effect. As the joint judgment of Mason CJ, Dawson and McHugh JJ said in Leeth [see Leeth v Commonwealth (1992) 174 CLR 455 at 470. See also Grollo v Palmer (1995) 184 CLR 348 at 365; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 98, 107, 117, 118-119, 121, 124 and 133-134; John Fairfax Publications Pty Ltd v Attorney General (NSW) (2000) 158 FLR 81 at 85-86 [19]-[27]]: It may well be that any attempt on the part of the legislature to cause a court to act in a manner contrary to natural justice would impose a non-judicial requirement inconsistent with the exercise of judicial power… Whatever the implications that may be found in Chapter III, it seems likely that the principle of a fair trial will be more readily discovered there than many others that have been suggested [see eg Dietrich v R (1992) 177 CLR 292 at 336 per Deane J and 362 per Gaudron J; Kruger v Commonwealth (1997) 120 CLR 1 at 63 per Dawson J and 112 per Gaudron J; Roberts v Bass (2003) 77 ALJR 292 at [145] per Kirby J; Wheeler, n 23]. … In the same way as has occurred with the principle of open justice [The Hon JJ Spigelman, “Seen to be Done: The Principle of Open Justice – Part I” (2000) 74 ALJ 290 esp at 293], the principle of a fair trial has become so fundamental an axiom of Australian law as to be entitled to constitutional significance. The subject of constitutional law should not be limited solely to the exegesis of the terminology of a written document called “The Constitution”. Our constitution, like the British constitution, includes a number of statutes and principles of the common law which are theoretically capable of amendment by Parliament. Nevertheless, the fundamental nature of these laws and principles, and the improbability of substantial modification by legislation, is such as to justify treating such laws and principles as part of our constitutional law in its broadest sense. This is so of the principle of a fair trial [see, eg, R v Brown (Winston) [1994] 1 WLR 1599 at 1606E]. [1.330]

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Civil Procedure in New South Wales

The Truth can Cost too Much cont. … Trial procedure … The obligation to obey the rules of natural justice, once referred to in terms of the duty to act judicially and now more frequently adverted to in terms of observing procedural fairness, applies with particular force to judicial proceedings. All of the requirements of a fair hearing, including reasonable notice of the case a person has to meet and the provision of a reasonable opportunity of presenting his or her case, as reflected in a series of detailed rules and practices, are manifestations of the principle with which I am concerned in this address. The basic building blocks of adversary proceedings in our legal system are similarly so informed. The imposition of an onus of proof and the differentiation of the standard of proof between civil and criminal proceedings, reflect an understanding of what fairness requires in the particular circumstances, relevantly, if the particular stigma of a criminal conviction is to be attached to a citizen. All of the detailed rules and practices with respect to when notice or disclosure is required, when an adjournment is appropriate and the order of proceedings, particularly the right of cross-examination, have as their source centuries of consideration by generations of judges of the interaction, sometimes synergistic, sometimes in conflict, between the search for truth and the requirements of a fair hearing.

[1.340] In Stead v State Government Insurance Commission (1986) 161 CLR 141, the High Court found that there was a miscarriage of justice caused by a failure of a trial judge to provide a fair trial.

Stead v State Government Insurance Commission

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[1.350] Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 [In an action for negligence arising out of a motor accident, an issue was whether the plaintiff [applicant] developed a neurotic condition from the accident. Whether the accident which resulted from the defendant’s [respondent] negligence was the cause or a material factor contributing to the condition was a major issue at the trial. Both sides relied on evidence. The defendant relied on medical evidence, including a report of a psychiatrist, Dr Scanlon. At the trial, when the plaintiff’s counsel came to his closing address, he submitted that his Honour should not accept Dr Scanlon’s evidence that the accident had nothing to do with the neurotic condition. This elicited from his Honour the comment, “Alright. I don’t accept Dr Scanlon on that. You needn’t go on as to that.” The plaintiff’s counsel did not develop the submission and addressed no further argument on the acceptability of Dr Scanlon’s evidence on the issue of causation. However, when the trial judge delivered judgment he specifically accepted Dr Scanlon’s testimony that there was “no relation between the subject accident and his behaviour” and therefore he found that the defendant’s negligence did not cause or materially contribute to the condition. The plaintiff appealed on the basis that by stopping the plaintiff’s counsel from addressing the topic of Dr Scanlon’s evidence with respect to causation, the trial judge had deprived the plaintiff of an opportunity of presenting argument on a vital issue in the case. The Full Court of the Supreme Court of South Australia (Bollen J with whom King CJ and Prior J agreed) dismissed the appeal and said: “the enquiry whether a miscarriage of justice has occurred involves asking whether the event said to cause a miscarriage could have made any difference to the result.” The plaintiff appealed to the High Court.]

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[1.340]

Introduction to Civil Procedure

CHAPTER 1

Stead v State Government Insurance Commission cont. MASON, WILSON, BRENNAN, DEANE AND DAWSON JJ 9. The general principle applicable in the present circumstances was well expressed by the English Court of Appeal (Denning, Romer and Parker LJJ) in Jones v National Coal Board (1957) 2 QB 55, at p 67, in these terms: There is one thing to which everyone in this country is entitled, and that is a fair trial at which he can put his case properly before the judge. … No cause is lost until the judge has found it so; and he cannot find it without a fair trial, nor can we affirm it. That general principle is, however, subject to an important qualification which Bollen J plainly had in mind in identifying the practical question as being: Would further information possibly have made any difference? That qualification is that an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility. 10. For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial.

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11. Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference. True it is that an appeal to the Full Court from a judgment or order of a judge is by way of rehearing and that on hearing such an appeal the Full Court has all the powers and duties of the primary judge, including the power to draw inferences of fact (Supreme Court Rules O 58, rr 6 and 14). However, when the Full Court is invited by a respondent to exercise these powers in order to arrive at a conclusion that a new trial, sought to remedy a denial of natural justice relevant to a finding of fact, could make no difference to the result already reached, it should proceed with caution. It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact. And this difficulty is magnified when the issue concerns the acceptance or rejection of the testimony of a witness at the trial. 12. This is just such a case. At the trial the critical question on the issue of causation was whether Dr Scanlon’s testimony should have been accepted in preference to the appellant’s expert witnesses, notably Dr Donsworth. It was an issue pre-eminently suitable for determination by the primary judge who had an advantage over the Full Court in seeing and assessing the witnesses. We do not see how the Full Court, denied the important advantage of seeing and assessing the witnesses, could satisfactorily conclude that had the appellant’s counsel been given a reasonable opportunity to present submissions on the issue, it could have made no possible difference to the result. …. 13. It is significant that Bollen J, after referring to “the forcefully and attractively presented arguments” of Mr Anderson for the appellant, made this comment: they were arguments fit for offering to the trial judge but not on appeal. There was evidence which could have led to the rejection of Dr Scanlon’s opinion. But it was for the trial judge to say. He had the inestimable advantage of seeing and hearing the witnesses. Later Bollen J said: In my opinion, the learned trial judge was perfectly entitled to accept the evidence of Dr Scanlon. It was his evidence which the learned trial judge found acceptable. It was entirely open for him to so find. 14. These statements do not suggest that his Honour considered that the primary judge was bound to find the issue of fact in favour of the respondent or that the finding of fact was the only [1.350]

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Civil Procedure in New South Wales

Stead v State Government Insurance Commission cont. finding reasonably open on the evidence. Instead they imply that the issue was rather finely balanced, an assessment which accords with the primary judge’s reaction. Initially he had been disposed to reject Dr Scanlon, but on mature reflection he had come to the opposite conclusion. 15. It is natural that Bollen J expressed himself as he did in the passages which we have quoted. He was conscious that, not having seen the witnesses, he could not evaluate their evidence in the way in which a trial judge can. It is for this very reason that, in our view, the Full Court was disabled in the circumstances of this case from reaching a sound conclusion that a new trial in which the applicant’s counsel would have an adequate opportunity of presenting submissions on the issue of causation could make no difference to the result. 16. Alternatively, if the Full Court is properly to be understood as saying no more than that a new trial would probably make no difference to the result, their Honours failed to apply the correct criterion. All that the appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result. … 19. The appeal should be allowed, and a new trial ordered limited, as was the first trial, to the issue of damages.

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[1.360] Stead v State Government Insurance Commission (1986) 161 CLR 141 was applied in Mastronardi v NSW [2007] NSWCA 54 where the New South Wales Court of Appeal found error and was required to consider the Supreme Court Rules 1970 (NSW) Pt 51, r 23 (now UCPR r 51.53) which provides that an appeal court can order a new trial if it appears to the court that “some substantial wrong or miscarriage” has been occasioned. The Court of Appeal found that the relevant miscarriage was a failure to provide a fair trial (see Mastronardi v NSW [2007] NSWCA 54 at [81]–[82]). The Court of Appeal found that the plaintiff did not have a fair trial according to law where part of the evidence was misapprehended and part was not relied upon.

Mastronardi v New South Wales [1.370] Mastronardi v New South Wales [2007] NSWCA 54 [Facts: On 29 November 1998 Mr Mastronardi, who was a prisoner in the Metropolitan Remand and Reception Centre, Silverwater, was seriously assaulted in his cell by a number of fellow prisoners. He gave evidence at trial that he had been assaulted because he was recognised as a former security guard. Mr Mastronardi brought proceedings in negligence against the State of New South Wales because prison officers failed to provide protection against a threat of physical attack. The trial judge rejected Mr Mastronardi’s claim. He appealed from this decision. The issues for the Court of Appeal were: … (iii) whether some substantial wrong or miscarriage had thereby been occasioned to allow for the ordering of a new trial pursuant to Supreme Court Rules Pt 51 r 23 (now UCPR 51.53). The Court set aside the judgment below and ordered a new trial. The power of the Court to order a retrial is constrained by the requirement of UCPR 51.53: (1)

56

The Court must not order a new trial on any of the following grounds: (a)

misdirection, non-direction or other error of law,

(b)

improper admission or rejection of evidence,

[1.360]

Introduction to Civil Procedure

CHAPTER 1

Mastronardi v New South Wales cont. (c)

that the verdict of the jury below was not taken on a question that the trial judge was not asked to leave to the jury,

(d) on any other ground, unless it appears to the Court that some substantial wrong or miscarriage has been thereby occasioned.] BASTEN JA (IPP AND CAMPBELL JJA AGREEING) 81 Given the requirement under Pt 51 r 23 for a court to be affirmatively satisfied that “some substantial wrong or miscarriage” has been occasioned, it is possible that a different result could obtain in demeanour-based assessments where the appellate court discerns error, but is unable to say whether a correct assessment could or would have led to a different result. That is precisely the kind of case where a new trial is a relevant option. It would mean that a new trial could rarely be obtained if the question of injustice is to be assessed by reference to the ultimate outcome of the case. 82 That dilemma can be avoided by identifying the relevant miscarriage as a failure to provide a trial in which, in a significant respect, the assessment of the evidence was not flawed. The important distinction between a trial with a jury and a trial with judge alone is that in the former case the error said to justify intervention will usually arise outside the process of assessing the evidence. The question of injustice or miscarriage then requires an evaluation of the effect of the error on the assessment process. (The principal exception, in a criminal case, arises where it is said that a verdict is “unreasonable, or cannot be supported, having regard to the evidence” – a claim which identifies an error in the actual assessment process, although that process is opaque, by comparing the evidence with the outcome.)

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83 In a trial with a judge alone, the assessment process is not opaque, but is (or should be) exposed in reasons for judgment. If a relevant and material error is revealed, as with an unreasonable criminal verdict, there will be little room for the operation of the constraint relating to a substantial miscarriage of justice. In such a case the Court should apply the principle established in Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141. … 86 In the present case, as in NAIS, it may properly be said that the Appellant did not have a fair trial according to law. In terms of procedural fairness, as applicable in judicial review proceedings, this was a hearing where part of the evidence was misapprehended and part was not relied upon, thereby constituting something other than “a hearing where the evidence given is to be given proper, genuine and realistic consideration in the decision subsequently to be made”: NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 77 at [171] (Callinan and Heydon JJ). Adapting the remarks of Gleeson CJ in Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at [4], albeit in a case where the Tribunal had taken into account material of which the prosecutor was not aware, it is possible that, even if the trial judge had given careful and accurate attention to all of the evidence, he would ultimately have come to the same conclusion. Gleeson CJ continued: But no one can be sure of that. Decisions as to credibility are often based upon matters of impression, and an unfavourable view taken upon an otherwise minor issue may be decisive. 87 … Because the Appellant did not have a trial untainted by material factual errors, he can properly complain that he has not had his case considered according to law. That in itself constitutes a substantial miscarriage of justice, a phrase which cannot be limited to an assessment of the ultimate outcome, particularly where it is not in the power of this Court to make that assessment for itself. In my view the Appellant is entitled to a retrial.

[1.370]

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Civil Procedure in New South Wales

Mastronardi v New South Wales cont. [The appellant was unsuccessful in the new trial and subsequent appeal: Mastronardi v State of New South Wales [2009] NSWCA 270.]

THE CROWN AS THE MODEL LITIGANT [1.380] Lawyers acting for the government are required to ensure their client acts as a model

litigant. In Melbourne Steamship Co v Moorehead (1912) 15 CLR 333, Griffith CJ at 342 observed that there was a “standard of fair play to be observed by the Crown in dealing with its subjects”. In Melbourne Steamship, the High Court found that the Crown should not take a “purely technical point of pleading”. The courts also expect the Crown to pursue the public interest when it appears as a litigant: Hughes Aircraft Systems International v AirServices Australia (1997) 76 FCR 151. In Hughes Aircraft Systems, Finn J observed at 196 that the Crown should act “fairly towards those with whom it deals at least insofar as this is consistent with its obligation to serve the public interest (or interests) for which it has been created”. The public interest that model litigants are to serve requires that they eschew technicality and pursue fairness in the conduct of proceedings. The Crown has its own policies for model litigant behaviour. The Commonwealth and all States have adopted model litigant rules. A model litigant is required to act with complete propriety, fairly and in accordance with the highest professional standards. In New South Wales, the Model Litigant Policy for Civil Litigation in NSW was endorsed by Cabinet on 8 June 2008. The Commonwealth’s model litigation policy is to similar effect. 2

Model Litigant Policy for Civil Litigation [1.390] New South Wales Model Litigant Policy for Civil Litigation

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Guidelines for the appropriate conduct of litigation by government agencies. This policy was approved for adoption by all government agencies on 8 July 2008. Introduction 1.1 This Policy has been endorsed by Cabinet to assist in maintaining proper standards in litigation and the provision of legal services in NSW. This Policy is a statement of principles. It is intended to reflect the existing law and is not intended to amend the law or impose additional legal or professional obligations upon legal practitioners or other individuals. 1.2 This Policy applies to civil claims and civil litigation (referred to in this Policy as litigation), involving the State or its agencies including litigation before courts, tribunals, inquiries and in arbitration and other alternative dispute resolution processes. 1.3 Ensuring compliance with this Policy is primarily the responsibility of the Chief Executive Officer of each individual agency in consultation with the agency’s principal legal officer. In addition, lawyers, whether in-house or private, are to be made aware of this Policy and its obligations. 1.4 Issues relating to compliance or non-compliance with this Policy are to be referred to the Chief Executive Officer of the agency concerned. 1.5 The Chief Executive Officer of each agency may issue guidelines relating to the interpretation and implementation of this Policy. 2

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Cl.4.2 of the Legal Services Directions imposes the model litigant obligation, and that obligation is set out in Appendix B to the Directions. [1.380]

Introduction to Civil Procedure

CHAPTER 1

Model Litigant Policy for Civil Litigation cont. 1.6 This Policy supplements but does not replace existing Premier’s Memoranda relating to Government litigation, in particular Premier’s Memoranda nos 94-25, 97-26, and 95-39. The obligation 2. The State and its agencies must act as a model litigant in the conduct of litigation. Nature of the obligation 3.1 The obligation to act as a model litigant requires more than merely acting honestly and in accordance with the law and court rules. It also goes beyond the requirement for lawyers to act in accordance with their ethical obligations. Essentially it requires that the State and its agencies act with complete propriety, fairly and in accordance with the highest professional standards. 3.2 The obligation requires that the State and its agencies, act honestly and fairly in handling claims and litigation by: a)

dealing with claims promptly and not causing unnecessary delay in the handling of claims and litigation;

b)

paying legitimate claims without litigation, including making partial settlements of claims or interim payments, where it is clear that liability is at least as much as the amount to be paid;

c)

acting consistently in the handling of claims and litigation;

d)

endeavouring to avoid litigation, wherever possible. In particular regard should be had to Premier’s Memorandum 94-25 Use of Alternative Dispute Resolution Services By Government Agencies and Premier’s Memorandum 97-26 Litigation Involving Government Agencies;

e)

where it is not possible to avoid litigation, keeping the costs of litigation to a minimum, including by: i) not requiring the other party to prove a matter which the State or an agency knows to be true; and

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ii)

not contesting liability if the State or an agency knows that the dispute is really about quantum;

f)

not taking advantage of a claimant who lacks the resources to litigate a legitimate claim;

g)

not relying on technical defences unless the interests of the State or an agency would be prejudiced by the failure to comply with a particular requirement and there has been compliance with Premier’s Memorandum 97-26;

h)

not undertaking and pursuing appeals unless the State or an agency believes that it has reasonable prospects for success or the appeal is otherwise justified in the public interest. The commencement of an appeal may be justified in the public interest where it is necessary to avoid prejudice to the interest of the State or an agency pending the receipt or proper consideration of legal advice, provided that a decision whether to continue the appeal is made as soon as practicable; and

i)

apologising where the State or an agency is aware that it or its lawyers have acted wrongfully or improperly.

3.3 The obligation does not require that the State or an agency be prevented from acting firmly and properly to protect its interests. It does not prevent all legitimate steps being taken in pursuing litigation, or from testing or defending claims made. 3.4 In particular, the obligation does not prevent the State or an agency from: a)

enforcing costs orders or seeking to recover costs;

b)

relying on claims of legal professional privilege or other forms of privilege and claims for public interest immunity; [1.390]

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Civil Procedure in New South Wales

Model Litigant Policy for Civil Litigation cont. c)

pleading limitation periods;

d)

seeking security for costs;

e)

opposing unreasonable or oppressive claims or processes;

f)

requiring opposing litigants to comply with procedural obligations; or

g)

moving to strike out untenable claims or proceedings.

THE RIGHT TO A FAIR TRIAL RECOGNISED IN HUMAN RIGHTS LEGISLATION [1.400] Australia, unlike most common law countries, does not have a national human rights

Act or Charter. However, it is noted that a Human Rights Bill 1973 (Cth) was introduced into the Australian Parliament by the then Commonwealth Attorney-General Lionel Murphy during the Whitlam government. The Bill sought to implement the International Covenant on Civil and Political Rights (ICCPR). The Bill lapsed in 1974 after being strongly opposed by the opposition. A second Bill was introduced as the Australian Human Rights Bill 1985 (Cth). Again, this Bill was defeated by the opposition. Australia does not have national human rights legislation and this could be isolating it from the jurisprudence that is rapidly developing in other common law countries such as England. See further J Spigelman, The Common Law Bill of Rights delivered at the University of Queensland in the 2008 McPherson Lectures, Brisbane, Australia, 11 March 2008. There are two statutory human rights Acts in two Australian jurisdictions. The Charter of Human Rights and Responsibilities Act 2006 (Vic) and the Human Rights Act 2004 (ACT). Both include a right to a fair hearing and follow Art 14(1) of the ICCPR.

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[1.410] International Covenant on Civil and Political Rights, Article 14 Article 14(1) All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law. The press and the public may be excluded from all or part of a trial for reasons of morals, public order (order public) or national security in a democratic society, or when the interest of the private lives of the parties so requires, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice; but any judgement rendered in a criminal case or in a suit at law shall be made public except where the interest of juvenile persons otherwise requires or the proceedings concern matrimonial disputes or the guardianship of children.

Human Rights Act 2004 (ACT) [1.420] Human Rights Act 2004 (ACT) s 21 21 Fair trial (1)

60

Everyone has the right to have criminal charges, and rights and obligations recognised by law, decided by a competent, independent and impartial court or tribunal after a fair and public hearing. [1.400]

Introduction to Civil Procedure

CHAPTER 1

Human Rights Act 2004 (ACT) cont.

(2)

(3)

However, the press and public may be excluded from all or part of a trial – (a)

to protect morals, public order or national security in a democratic society; or

(b)

if the interest of the private lives of the parties require the exclusion; or

(c)

if, and to the extent that, the exclusion is strictly necessary, in special circumstances of the case, because publicity would otherwise prejudice the interests of justice.

But each judgment in a criminal or civil proceeding must be made public unless the interest of a child requires that the judgment not be made public.

Charter of Human Rights and Responsibilities Act 2006 (Vic) [1.430] Charter of Human Rights and Responsibilities Act 2006 (Vic) s 24 24 Fair hearing (1)

A person charged with a criminal offence or a party to a civil proceeding has the right to have the charge or proceeding decided by a competent, independent and impartial court or tribunal after a fair and public hearing.

(2)

Despite subsection (1), a court or tribunal may exclude members of media organisations or other persons or the general public from all or part of a hearing if permitted to do so by a law other than this Charter.

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(3)

Note: For example, section 19 of the Supreme Court Act 1986 sets out the circumstances in which the Supreme Court may close all or part of a proceeding to the public. See also section 80AA of the County Court Act 1958 and section 126 of the Magistrates’ Court Act 1989. All judgments or decisions made by a court or tribunal in a criminal or civil proceeding must be made public unless the best interests of a child otherwise requires or a law other than this Charter otherwise permits.

[1.440] The Victorian and ACT legislation imposes an obligation on the judiciary to interpret

all legislation in a way that is compatible with protected human rights “so far as it is possible to do so consistently with its purpose” (see s 32 of the Charter of Human Rights and Responsibilities Act 2006 (Vic) and s 30 of the Human Rights Act 2004 (ACT)). Both Australian statutes allow for a strong rebuttable presumption in favour of rights-consistent interpretation of legislation, which is avoided only by clear legislative words or intention to the contrary. The Victorian Solicitor-General has observed that s 32 of the Charter of Human Rights and Responsibilities Act 2006 (Vic) “is likely to mean that where there is a range of interpretations to be adopted, all of which are equally consistent with the purpose of the legislation, the interpretation which is least restrictive of human rights should be adopted and assessed for compatibility”. (Pamela Tate SC, The charter of human rights and responsibilities, a practical introduction (paper presented to the Victorian Bar Association, Melbourne, 2 March 2007)). Where a judge determines that a statutory provision in some way limits a human right or is incompatible with the right, it is then necessary for the judge to consider whether “reasonable [1.440]

61

Civil Procedure in New South Wales

limits as can be demonstrably justified in a free and democratic society based on human dignity, equality and freedom” (s 7 of the Charter of Human Rights and Responsibilities Act 2006 (Vic) and s 28 of the Human Rights Act 2004 (ACT)). A judge is required to balance the following factors: (a) the nature of the right; (b) the importance of the purpose of the right; (c) the nature and extent of the limitation; (d) the relationship between the limitation and its purposes; and (e) any less restrictive means reasonably available to achieve the purpose that the limitation seeks to achieve. So where a statutory provision in some way limits a human right but can be demonstrably justified as a “reasonable limit” then the provision will not be incompatible with the right. If the Australian legislation cannot be read compatibly, the judiciary does not have power to invalidate it but instead may issue an enforceable “declaration of inconsistent application” (s 36 of the Charter of Human Rights and Responsibilities Act 2006 (Vic) and s 32 of the Human Rights Act 2004 (ACT)). A declaration does not affect the validity, operation or enforcement of the legislation, or create in any person any legal right or give rise to any civil cause of action. The declaration informs Parliament that it needs to review the rights assessment of the relevant legislation. Parliamentary sovereignty is retained, as it is for Parliament to decide whether or not, and how, to amend the impugned legislation. The Victorian Law Reform Commission in its Civil Justice Review: Report (2008) considered the Charter.

Civil Justice Review – human rights considerations [1.450] Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008) p 83 Human rights considerations are of increasing relevance to the law governing the conduct of civil proceedings and to legal conceptions of what amounts to a fair trial or a just decision [see generally Joseph M Jacob, Civil Justice in the Age of Human Rights (2007)].

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… Apart from the direct operation of the Charter, Article 14.1 of the ICCPR provides that “everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law.” Australia has ratified the ICCPR and also the supplementary Optional Protocol, which confers a right of persons affected to complain to the United Nations Human Rights Committee if Australian law does not comply with these human rights provisions. In Smits v Roach [(2006) 228 ALR 262], the High Court considered the question of whether the failure of a NSW Supreme Court judge to make early disclosure of the fact that his brother was a partner of the law firm which was a party to the proceedings before him gave rise to apprehended bias and, if it did, whether there had been waiver of the right to object to the proceedings being determined by that judge. In his judgment Justice Kirby referred to the significance of Australia’s obligations under international law and noted that the essential features of the due administration of justice sought to be protected by the ICCPR are also part of Australia’s domestic law [at [102] – [105]]. In the United Kingdom (UK), the introduction of the Human Rights Act 1998 has had a significant impact on civil procedure and on the Civil Procedure Rules. This is notwithstanding the concern of Lord Woolf to ensure that human rights law did not unduly affect case management decisions. [See Daniels v Walker, also known as D (a child) v Walker and D v Walker (Practice Note) [2000] 1 WLR 1382, Court of Appeal, 1387. The case arose out of concerns at the report prepared by a jointly appointed expert.] However, as Jacob observed, “[m]odern civil justice is concerned with expediency and efficiency” (at 2). He further remarked that the “concern now is not the pursuit of absolute justice but 62

[1.450]

Introduction to Civil Procedure

CHAPTER 1

Civil Justice Review – human rights considerations cont. of fairness and efficiency …[which] reflects a dominance of real-life commercial interests over less definitive ideas of justice” [at 6]. This may give rise to tension or conflict with fundamental human rights which seek to guarantee access to justice. Some of the areas where there may be tension or conflict between procedural reform and human rights protections include: • limitations on expert evidence • limitations on publicly funded legal services • excessive court fees and charges • limitations on the calling of witnesses • limitations on the time allowed for hearings or the cross-examination of witnesses • limitations on proceedings in public • compulsory referral to mediation or arbitration • cases where hearings are not held within a reasonable time • the nature of the assistance required to be given to self-represented litigants • restrictions on the right to a final hearing, including through provisions for striking out claims or defences • economic constraints on the right to a hearing, including security for costs • paper-based versus oral processes and hearings • applications for an adjournment • disclosure obligations and discovery • exclusion of evidence • requirements relating to “proportionality” • judicial appointment, tenure and bias

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• the funding of the civil justice system. As one English judge has noted: The tentacles of the Human Rights Act 1998 reach into some unexpected places. The Commercial Court, even when exercising its supervisory role as regards arbitration, is not immune [Mousaka v Golden Seagull Maritime [2002] 1 WLR 395]. The Human Rights Law Resource Centre submitted that the right to procedural fairness “ensures litigants have the opportunity to present their case in conditions without substantial disadvantage compared to the other party”. However, as noted in the context of European human rights jurisprudence, States “enjoy a free choice of the means to be used in guaranteeing a litigant the right to a fair trial” [Steel and Morris v UK, 68416/01 [2005] ECHR 103, 60 (15 February 2005)]. The right to a fair trial, such as that contained in Article 6.1 of the European Convention on Human Rights, is not absolute and “may be subject to restrictions, provided that these pursue a legitimate aim and are proportionate” [Ashingdane v United Kingdom, judgment of 28 May 1985, Series A no. 93, 24-5, 57]. Similarly, the rights conferred by the Victorian Charter are qualified by the provisions of the Charter itself.

[1.450]

63

Civil Procedure in New South Wales

THE NEW SOUTH WALES COURT SYSTEM: AN OVERVIEW [1.460] The basic structure of the court system in New South Wales is hierarchical with a

Local Court, a District Court and a Supreme Court. There are also two specialist courts: the Land and Environment Court and the Industrial Court, as well as a number of administrative tribunals.

Supreme Court of New South Wales [1.470] The Supreme Court of New South Wales is the highest State court in New South

Wales (http://www.lawlink.nsw.gov.au/sc). The court operates under the Supreme Court Act 1970 (NSW) and the Civil Procedure Act 2005 (NSW). The court has unlimited civil jurisdiction and deals with the most serious criminal matters. It can hear all matters that are not within the exclusive jurisdiction of the federal courts. The court is divided into the Common Law Division and the Equity Division. The Common Law Division deals with civil, criminal and administrative law matters where more than $750,000 is claimed. The Equity Division hears cases involving commercial law, corporations law, equity, trusts, probate and matters pursuant to family provisions legislation.

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The Supreme Court also has two appellate divisions: the Court of Appeal and the Court of Criminal Appeal. The Court of Appeal consists of judges appointed as appellate judges who hear civil appeals. The Court of Appeal hears appeals arising from civil matters from the Supreme Court, District Court, Land and Environment Court, and some tribunals. The appeal bench is usually three justices. In some cases dealing with very important principles of law, a full bench of five judges will sit in the Court of Appeal or Court of Criminal Appeal.

Industrial Relations Commission and the Industrial Court of New South Wales [1.480] The Industrial Relations Commission of New South Wales was established under the

Industrial Relations Act 1996 (http://www.lawlink.nsw.gov.au/irc). The Commission may be constituted as the Industrial Court of New South Wales and is of equivalent status to the Supreme Court. The Commission’s cases deal with employment law and industrial relations. It conciliates and arbitrates to resolve industrial disputes, sets conditions of employment, fixes wages and salaries by making industrial awards, approves enterprise agreements and decides claims of unfair dismissal. The Commission has an appellate jurisdiction.

Land and Environment Court of New South Wales [1.490] The Land and Environment Court of New South Wales’ jurisdiction is governed by

the Land and Environment Court Act 1979 (NSW) (http://www.lawlink.nsw.gov.au/lec). The court is vested with the power to determine environmental, development, building and planning disputes. It has the same status as the Supreme Court of New South Wales. 64

[1.460]

Introduction to Civil Procedure

CHAPTER 1

District Court of New South Wales [1.500] The District Court is the “intermediate court” in New South Wales (http://

www.lawlink.nsw.gov.au/dc). The District Court has jurisdiction in both civil and criminal matters. The civil jurisdiction of the District Court has a jurisdictional limit of $750,000. The court can deal with cases where larger amounts are involved if the parties to the case agree. The District Court has an unlimited jurisdiction in claims for damages for personal injuries arising out of a motor vehicle accident or a work injury.

Local Court of New South Wales [1.510] The civil jurisdiction of the Local Court has two divisions: the Small Claims Division

and the General Division. The Small Claims Division deals with claims up to the amount of $10,000 and the General Division deals with matters concerning a monetary value between $10,000 and $100,000. However, note that the Local Court has a jurisdictional limit of $60,000 for personal injury or death claims (see s 29 Local Court Act 2007 (NSW)). The Local Court also has jurisdiction to hear criminal summary prosecutions, committal hearings, matters concerning mental health issues, some family law matters, children’s criminal proceedings (the Children’s Court), juvenile prosecutions and care matters, licensing issues and coronial matters (Coronial Court); see http://www.lawlink.nsw.gov.au/lc.

Workers’ Compensation Commission [1.520] The Workers’ Compensation Commission determines disputes concerning workers’

compensation claims (with the exception of claims by coal miners) (http:// www.wcc.nsw.gov.au). The Commission was established by the Workplace Injury Management and Workers Compensation Act 1998 (NSW).

NSW Civil and Administrative Tribunal (NCAT) [1.530] NCAT was established by the Civil and Administrative Tribunal Act 2013. It is a Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

super tribunal that has consolidated a total of 22 tribunals which include: • the Consumer, Trader and Tenancy Tribunal; • the Guardianship Tribunal; • the Administrative Decisions Tribunal; and • the Victims Compensation Tribunal.

Independent Commission Against Corruption [1.550] The Independent Commission Against Corruption was created by the Independent Commission Against Corruption Act 1988 (NSW) (http://www.icac.nsw.gov.au). The Commission can investigate any matter involving public sector corruption in New South Wales. The scope of ICAC’s jurisdiction has been subject to challenge and amendment: see ICAC v Cunneen [2015] HCA 14; Duncan v ICAC [2015] HCA 32. Recent legislation was passed in respect of the powers and jurisdiction of the Commission: Independent Commission Against Corruption Amendment (Validation) Act 2015 (NSW) and the Independent Commission Against Corruption Amendment Act 2015. The Courts and Other Justice Portfolio Legislation Amendment Bill 2015 was also passed to amend the Criminal Procedure Act 1986 (NSW) to [1.550]

65

Civil Procedure in New South Wales

allow an officer of ICAC to commence proceedings for an offence provided that the Director of Public Prosecutions has advised ICAC that proceedings may be commenced by an officer of ICAC.

Dust Diseases Tribunal [1.560] The Dust Diseases Tribunal was established by the Dust Diseases Tribunal Act 1989

(NSW) and is a specialist court dealing with claims in tort for negligence relating to death or personal injury resulting from exposure to asbestos and other dusts resulting in dust diseases and other dust-related conditions (http://www.lawlink.nsw.gov.au/ddt).

Mental Health Review Tribunal [1.570] The Mental Health Review Tribunal is an independent body established by the Mental Health Act 2007 (NSW) (http://www.mhrt.nsw.gov.au).

FEDERAL COURT STRUCTURE High Court of Australia [1.610] The High Court of Australia was created in 1901 (http://www.hcourt.gov.au).

Section 71 of the Constitution provides that Commonwealth judicial power can only be exercised by the High Court, a federal court created by the Commonwealth Parliament (such as the Family Court), and State and Territory courts which are vested with jurisdiction pursuant to Ch III of the Constitution. Chapter III provides the judicial power of the Commonwealth to enforce its laws. 71 Judicial power and Courts

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The judicial power of the Commonwealth shall be vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction. The High Court shall consist of a Chief Justice, and so many other Justices, not less than two, as the Parliament prescribes.

The High Court has original jurisdiction pursuant to the Constitution. The jurisdiction of the High Court is derived from ss 75 and 76 of the Constitution. 75 Original jurisdiction of High Court In all matters: (i) arising under any treaty; (ii) affecting consuls or other representatives of other countries; (iii) in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party; (iv) between States, or between residents of different States, or between a State and a resident of another State; (v) in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth; the High Court shall have original jurisdiction. 76 Additional original jurisdiction The Parliament may make laws conferring original jurisdiction on the High Court in any matter: (i) arising under this Constitution, or involving its interpretation; 66

[1.560]

Introduction to Civil Procedure

CHAPTER 1

(ii) arising under any laws made by the Parliament; (iii) of Admiralty and maritime jurisdiction; (iv) relating to the same subject-matter claimed under the laws of different States. 77 Power to define jurisdiction With respect to any of the matters mentioned in the last two sections the Parliament may make laws: (i) defining the jurisdiction of any federal court other than the High Court; (ii) defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States; (iii) investing any court of a State with federal jurisdiction.

Section 38 of the Judiciary Act 1903 (Cth) is an exercise of the power provided in s 77 of the Constitution. Section 38 of the Judiciary Act 1903 (Cth) provides: 38 Matters in which jurisdiction of High Court exclusive Subject to sections 39B and 44, the jurisdiction of the High Court shall be exclusive of the jurisdiction of the several Courts of the States in the following matters: (a) matters arising directly under any treaty; (b) suits between States, or between persons suing or being sued on behalf of different States, or between a State and a person suing or being sued on behalf of another State; (c) suits by the Commonwealth, or any person suing on behalf of the Commonwealth, against a State, or any person being sued on behalf of a State; (d) suits by a State, or any person suing on behalf of a State, against the Commonwealth or any person being sued on behalf of the Commonwealth; (e) matters in which a writ of mandamus or prohibition is sought against an officer of the Commonwealth or a federal court.

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Note: Under the Jurisdiction of Courts (Cross-vesting) Act 1987, State Supreme Courts are, with some exceptions and limitations, invested with the same civil jurisdiction as the Federal Court has, including jurisdiction under section 39B of this Act.

The High Court has appellate jurisdiction conferred by s 73 of the Constitution. Section 73 provides that the High Court can hear and determine appeals from decisions of the High Court itself (in its original jurisdiction), federal courts, other courts exercising federal jurisdiction and State Supreme Courts. 73 Appellate jurisdiction of High Court The High Court shall have jurisdiction, with such exceptions and subject to such regulations as the Parliament prescribes, to hear and determine appeals from all judgments, decrees, orders, and sentences: (i) of any Justice or Justices exercising the original jurisdiction of the High Court; (ii) of any other federal court, or court exercising federal jurisdiction; or of the Supreme Court of any State, or of any other court of any State from which at the establishment of the Commonwealth an appeal lies to the Queen in Council; (iii) of the InterState Commission, but as to questions of law only; and the judgment of the High Court in all such cases shall be final and conclusive. But no exception or regulation prescribed by the Parliament shall prevent the High Court from hearing and determining any appeal from the Supreme Court of a State in any matter in which at the establishment of the Commonwealth an appeal lies from such Supreme Court to the Queen in [1.610]

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Civil Procedure in New South Wales

Council. Until the Parliament otherwise provides, the conditions of and restrictions on appeals to the Queen in Council from the Supreme Courts of the several States shall be applicable to appeals from them to the High Court.

Section 34 of the Judiciary Act 1903 (Cth) applies to appeals from justices exercising the original jurisdiction of the High Court. Sections 35 and 35AA provide that appeals shall not be brought from a judgment, whether final or interlocutory, from a State or Territory Supreme Court unless the High Court gives special leave to appeal. Section 35A sets out the matters relevant to the court granting special leave to appeal: 35A Criteria for granting special leave to appeal In considering whether to grant an application for special leave to appeal to the High Court under this Act or under any other Act, the High Court may have regard to any matters that it considers relevant but shall have regard to: (a) whether the proceedings in which the judgment to which the application relates was pronounced involve a question of law: (i) that is of public importance, whether because of its general application or otherwise; or (ii) in respect of which a decision of the High Court, as the final appellate court, is required to resolve differences of opinion between different courts, or within the one court, as to the state of the law; and (b) whether the interests of the administration of justice, either generally or in the particular case, require consideration by the High Court of the judgment to which the application relates.

Federal Court of Australia

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[1.620] The Federal Court of Australia was created by the Federal Court of Australia Act

1976 (Cth) (http://www.fedcourt.gov.au). The Federal Court of Australia has its jurisdiction conferred by various federal statutes. The Federal Court’s jurisdiction covers civil matters under federal law, including matters arising under the Constitution. The court deals with disputes under federal Acts such as industrial disputes, corporations, trade practices, judicial review and federal tax matters. The Federal Court has an appellate jurisdiction and sits as an appeal court with three judges to hear appeals from decisions of single judges of the court, decisions of the Supreme Court of Norfolk Island, decisions of the Federal Circuit Court in non-family law matters and certain decisions of the Supreme Courts of the States and Territories exercising federal jurisdiction.

Family Court of Australia [1.630] The Family Court of Australia has jurisdiction under the Family Law Act 1975 (Cth)

(http://www.familycourt.gov.au).

Federal Circuit Court of Australia [1.640] The Federal Circuit Court of Australia was formerly called the Federal Magistrates

Court which commenced operation in July 2000. It deals with a range of less complex federal disputes previously heard in the Federal Court and the Family Court of Australia. The jurisdiction of the Federal Circuit Court includes family law and child support, admiralty, 68

[1.620]

Introduction to Civil Procedure

CHAPTER 1

administrative law, bankruptcy, copyright, consumer protection law and trade practices, privacy law, migration, unlawful discrimination and industrial law. It also has a Fair Work Division. [1.650] There are other federal tribunals and commissions such as the Australian Industrial

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Relations Commission, the Fair Work Commission, the Fair Work Ombudsman, the National Native Title Tribunal, the Australian Competition Tribunal, the Copyright Tribunal, the Defence Force Discipline Appeal Tribunal, the Social Security Appeals Tribunal, the Migration Review Tribunal, the Refugee Review Tribunal, the Administrative Appeals Tribunal, the Australian Human Rights Commission and the Australian Competition and Consumer Commission. However as previously stated, this book is primarily concerned with civil procedure in New South Wales courts.

[1.650]

69

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CHAPTER 2

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Case Management in New South Wales [2.10]

INTRODUCTION ....................................................................................................... 72

[2.20]

JUSTICE DELAYED IS JUSTICE DENIED .................................................................... 72

[2.30]

Jackamara v Krakouer .................................................................................................. 73

[2.40]

BACKLOG REDUCTION ............................................................................................ 74

[2.40]

Case Management in New South Wales ......................................................................... 74

[2.50]

Bi v Mourad ................................................................................................................. 76

[2.60]

COSTS ....................................................................................................................... 76

[2.70]

Access to justice and access to lawyers ........................................................................... 76

[2.90]

Litigation costs ............................................................................................................. 79

[2.100]

CASELOAD MANAGEMENT AND MANAGERIAL JUDGING ................................... 80

[2.100]

Case Management in New South Wales ......................................................................... 80

[2.110]

Managerial Judging ...................................................................................................... 84

[2.120]

Queensland v JL Holdings .............................................................................................. 85

[2.130]

THE CIVIL PROCEDURE ACT 2005 AND THE UNIFORM CIVIL PROCEDURE RULES ........................................................................................................................ 86

[2.140]

Civil Procedure Act 2005 (NSW) ss 56 – 60 .................................................................... 87

[2.150]

Amendment of section 56 ..................................................................................... 89

[2.160]

HOW HAS PART 6 OF THE CPA AFFECTED CIVIL PROCEDURE? ........................... 89

[2.160]

Metropolitan Petar v Mitreski ........................................................................................ 89

[2.170]

Tripple Take v Clark Rubber Franchising ......................................................................... 90

[2.180]

DIRECTIONS .............................................................................................................. 91

[2.190]

Civil Procedure Act 2005 (NSW) ss 61 – 63 .................................................................... 92

[2.200]

Uniform Civil Procedure Rules 2005 (NSW) rr 2.1 – 2.3 .................................................. 94

[2.210]

THE APPLICATION OF THE CPA AND UCPR ........................................................... 95

[2.210]

Dennis v Australian Broadcasting Corp .......................................................................... 95

[2.220]

Hans Pet Constructions v Cassar ................................................................................... 95

[2.230]

Halpin v Lumley General Insurance .............................................................................. 103

[2.240]

McGuirk v University of New South Wales .................................................................... 107

[2.250]

Aon Risk Services Australia Ltd v ANU .......................................................................... 107

[2.255]

Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing .................................................................................................................. 110

[2.260]

Tugrul v Tarrants Financial Consultants ....................................................................... 112

[2.265]

Reconciling the goals of minimising cost and delay with the principle of a fair 71

Civil Procedure in New South Wales

trial in the Australian civil justice system ....................................................................... 115 [2.270]

ETHICAL REQUIREMENTS ...................................................................................... 119

[2.280]

PRACTICE NOTES ................................................................................................... 120

[2.290]

Practice Note SC CL 5 ................................................................................................. 121

[2.300]

ELECTRONIC CASE MANAGEMENT ...................................................................... 122

[2.320]

ADMINISTRATION OF THE UNIFORM CIVIL PROCEDURE RULES ....................... 126

[2.330]

Civil Procedure Act 2005 (NSW) ss 8, 9, 14 – 16 .......................................................... 126

INTRODUCTION [2.10] This chapter discusses case management in the civil jurisdiction of the New South

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Wales court system. Case management arose as a response to the twin evils of delay and excessive costs that could arise from leaving the control of litigation in the hands of the parties without judicial supervision. All New South Wales civil courts are now controlled by the same set of court management rules. The Civil Procedure Act 2005 (NSW) (CPA) and the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) commenced operation in August 2005. The CPA and the UCPR make very clear that the traditional version of the adversary system, where the court had virtually no part to play until the parties indicated that the case was prepared and ready for trial, no longer applies to civil litigation in New South Wales. In Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [113], the High Court stated, “In the past it has been left largely to the parties to prepare for trial and to seek the court’s assistance as required. Those times are long gone”. This chapter discusses the concerns of delay and excessive cost, development of case management in New South Wales and the overriding purpose principles contained in the CPA and the UCPR. Recent cases are explored to provide an insight into the pervasive effect that the overriding purpose principles have on all aspects of civil litigation. The chapter discusses the use of rules of court and practice directions as mechanisms designed to implement case management and highlights the advent of electronic case management.

JUSTICE DELAYED IS JUSTICE DENIED [2.20] Prior to the introduction of case management, many cases were allowed to take a long

time before they were ready for hearing. In 2001 former Chief Justice Spigelman said: There are at the moment almost two thousand trial cases in the Court – 1600 in the Common Law Division and about 300 in the Equity Division – which are over two years old and which are not ready for hearing. There are, of course, circumstances in which a delay of more than two years in preparing a case for trial can be justified. However, the overwhelming majority of these two thousand or so cases are not of that character. Obviously, if all of these cases suddenly became ready for hearing in the short term, then something like a holding list would re-emerge. I do not regard this as a serious threat. 1

His Honour was alluding to a legal culture that had developed in New South Wales. This legal culture accepted and had adapted to the fact that it took years to get a case on for trial in New South Wales civil courts. Delay had become a cultural norm and that had to be changed. 1

72

Address by the Honourable JJ Spigelman AC, Chief Justice of New South Wales, opening of the Law Term Dinner New South Wales Law Society Parliament House, Sydney 29 January 2001 http:// www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/pages/SCO_speech_spigelman_290101. [2.10]

Case Management in New South Wales

CHAPTER 2

From the 1980s judicial minds were being turned to ways of reducing delay and cost. Case management procedures were instituted in the Commercial Division of the New South Wales Supreme Court in 1986. 2 These became the driving force of changes to civil practice and procedure in New South Wales for individual case management and, to a lesser extent, caseload management. Throughout the common law world, over recent decades, the judiciary has accepted a considerably expanded role in the management of the administration of justice, both with respect to the overall caseload of the court and in the management of individual proceedings. For example, in the United Kingdom dramatic reforms to civil procedure were introduced by the Civil Procedure Rules (1998) as a result of Lord Woolf’s report Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (1995). 3 Judges now intervene in proceedings to a degree which was unheard of only two decades or so ago. Courts are no longer passive recipients of a caseload over which they exercise no control.

Jackamara v Krakouer [2.30] Jackamara v Krakouer (1998) 195 CLR 516 at 526–527

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GUMMOW AND HAYNE JJ Delays in the courts are a major cause of disquiet not only among those who resort to the courts but also among judges and all others associated with the courts. Delay will almost always impede the proper disposition of any case that does not come to trial promptly. Memories fade; records may be lost. The impediments are many, varied and obvious. Those impediments may be overcome but their presence is an added burden for both the litigants and the court that must try the case. Delay in a case will almost always add to the costs. The case takes longer to prepare and to try because the events are no longer fresh in the minds of those who will give evidence. Costs, therefore, increase. Delay in a case also adds to the overall burden on the judicial system. The case that has been delayed in coming to trial and therefore takes a day longer to try than otherwise would be needed, keeps another case out of the lists for that day. … Each day’s delay in bringing a case to trial and final judgment simply prolongs the uncertainty and worry felt by the litigants. No doubt there are other reasons for the disquiet felt by both litigants and lawyers about delay but the matters we have mentioned indicate why it is so important to avoid delays wherever possible.

2

See A & N Holding NSW Pty Ltd v Andell Pty Ltd [2006] NSWSC 55 at [24] per Bergin J and Rogers A, “The Managerial or Interventionist Judge” (1993) 3 Journal of Judicial Administration 96.

3

See Dwyer D, “Introduction” in Dwyer D (ed), The Civil Procedure Rules Ten Years On (Oxford University Press, 2009) p 5. [2.30]

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Civil Procedure in New South Wales

BACKLOG REDUCTION Case Management in New South Wales [2.40] The Honourable JJ Spigelman AC, Chief Justice of New South Wales, Case Management in New South Wales [Extract from a paper presented for the Judicial Delegation from India, Sydney, 21 September 2009, http://www.lawlink.nsw.gov.au] Two to three decades ago backlogs in both the District Court and the Supreme Court were substantial. Delays of more than five years, often substantially more, were common. The backlog has been reduced dramatically in the District Court and more gradually in the Supreme Court. The techniques for dealing with the substantial backlog were different from those required for ongoing case management. A range of techniques was required to achieve that position.

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The first measure to clear the backlog was an increase in the jurisdiction of the lower courts and the transfer of significant numbers of matters from the Supreme Court into the District Court. The jurisdiction of the District Court was increased and, in motor vehicle cases, was made unlimited. A Supreme Court judge sat for many days reviewing all of the files, identifying a large number of matters in which no issue of complexity or legal difficulty arose so that they could be handled, appropriately, at a District Court rather than a Supreme Court level. Hundreds of cases were transferred and were disposed of by the more expeditious procedures employed in the District Court. Getting the distribution of the caseload in the hierarchy of courts right is an important way of achieving the most effective use of limited resources. The second measure to tackle the accumulated backlog, was the appointment of additional judges, both full time judges and acting judges. The latter included the secondment of senior barristers as acting judges for limited periods of time, such as a few months. Questions of judicial independence arise in the case of active practitioners serving as judges. Once the initial breakthrough was made, the practice changed. Only retired judges are now appointed as acting judges. They continue to play a significant role in assisting the court to further reduce delays. The ability to call up experienced former judges, at comparatively short notice, also enables the whole list to be operated at a higher pressure so that when, as does happen from time to time, expected settlements do not eventuate, we do not need to vacate trial dates. Nevertheless, in the future the use of acting judges in our system will progressively diminish. Furthermore, a considerable number of personal injury cases were disposed of by referring out cases which did not raise complex issues to arbitrators, generally from the private bar, to determine the disputes. This arbitral determination by experienced practitioners may not have provided the quality of justice of a hearing by a judge, but the complaints were few. This mechanism helped clear the backlog but is now only employed to a limited extent. Acting judges played an important role in a particular technique of backlog reduction, which we called a “blitz”, in which a large number of cases of a particular character, especially personal injury cases, were listed together. Each “blitz” was preceded by a series of listing conferences designed to ensure that cases were prepared for hearing. Throughout this period the court imposed requirements for greater pre-trial disclosure and strictly enforced a no adjournments policy. The “blitz” technique involved sitting a substantial number of judges, including on occasions virtually the entire court, including appeal judges, to hear hundreds of cases in a short period of time. Cases were not listed for a particular day, but for a particular week, and were treated as a running list so that, whenever one case settled or was determined, the next case in the list was sent to the judge immediately. This approach provided considerable incentive for the profession to settle cases and enabled judges to dispose of substantial numbers of cases in a short period of time. 74

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Case Management in New South Wales cont. These days we only conduct “mini-blitzes” on particular kinds of cases when filings [build up]. The technique of a “blitz” is used on particular matters, e.g. disputes under our Family Provisions Act, concerning alleged inadequacy of provision for family members in wills are conducive to the blitz treatment. For similar reasons, we tend to group cases on appeals which are concerned with the same legislative regime, eg our workers compensation legislation, so that judges can focus on the common issues that often arise in such a specialist area in a concentrated manner. The combined effect of all these measures was such that, within a decade or so, the substantial delays of five years and more were reduced to a substantial degree. In the case of practitioners who genuinely want to get their cases on, there is no reason today why the case cannot be disposed of to final hearing within 12 months in the District Court and within two years in the Supreme Court. However, many cases are still taking longer than they should and the task of disposing of older cases requires continuing attention. Nevertheless, delay is no longer a significant concern for civil justice in New South Wales. Now the focus of our attention has shifted to reducing costs, both the cost to the court and the costs incurred by the parties. There is no doubt that case management, which was essential to overcome delay, can increase costs. Decisions have to be made about how much management a particular case, or a particular kind of case, requires. This is an ongoing process. Conclusion

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To summarise, the essential requirements for the efficient and expeditious administration of justice are now well known: (1)

A court must monitor and manage both its caseload and individual cases.

(2)

Management cannot be successful without judicial leadership and commitment.

(3)

Procedures must be clearly established in legislation, court rules and written practices.

(4)

Cases must be brought under court management soon after their commencement.

(5)

Different kinds of cases require different kinds of management.

(6)

The degree and intensity of management must be proportionate to what is in dispute and to the complexity of the matter.

(7)

The number of court appearances must be minimised.

(8)

Realistic but expeditious timetables must be set and, unless there is good reason, must be adhered to.

(9)

A key objective is to identify the issues really in dispute early in the proceedings.

(10)

Trial dates must be established as soon as practicable and must be definite, so as to ensure compliance with timetables.

(11)

Alternative dispute resolution should be encouraged and sometimes mandated.

(12)

Monitoring of the caseload must provide timely and comprehensive information to judges and court officers involved in management. Time standards may be useful in focussing the attention of all those involved.

(13)

Communication and consultation within the court and with others involved in the litigation process is an ongoing process.

Of all the requirements, one is overriding. Unless there is judicial commitment to the process, it will not work.

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Bi v Mourad [2.50] Bi v Mourad [2010] NSWCA 17 ALLSOP P [47] Delay is a feature of litigation intended to be eliminated as far as possible by the statutory enactment of the regime in the Civil Procedure Act. It cannot always be done. This purpose is not through some parliamentary authoritarian or over-prescriptive view of how people should lead their lives; rather, it is through the keen recognition of the conduct of the courts, in particular in the 20th century, of the need to deal with cases expeditiously if they are to be dealt with justly. Delay and case backlog are not merely factors affecting the costs of delivering justice; they corrode the ability of the courts to provide individual justice. The reforms that have taken place under the Civil Procedure Act and the evident attempt by courts to ensure efficiency can be seen not merely to reflect worthy efforts for efficiency but also to be steps vital for the provision of timely individual justice.

COSTS [2.60] Cost is of concern to the civil justice system because excessive costs may hamper access

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to justice because disputants cannot afford to commence litigation. The cost of litigation may also be employed as a tactical weapon to force a party with fewer resources to discontinue their proceedings or accept a settlement below what they may have been able to achieve through a court determination, or at least the threat of a court determination. Costs may be imposed through court fees, legal fees, lost time and diverted resources. A large part of the litigant’s costs are the lawyer’s revenue. The link between lawyer remuneration and the amount they can charge for their services may create an incentive to bill more hours (where the lawyer charges by the hour) which in turn may create an incentive to extend and complicate litigation. Case management is one tool by which attempts to minimise cost may be sought. However, case management may also generate or front-load costs as it requires parties to take additional or more comprehensive steps than what they may choose to undertake themselves.

Access to justice and access to lawyers [2.70] The Honourable JJ Spigelman AC, Chief Justice of New South Wales, Access to justice and access to lawyers [Extract from (2007) 29 Australian Bar Review 136] Costs For some decades one of the principal access to justice issues involving the administration of courts has been the problem of delay. Even two decades ago delays of five or more years were common. That is, generally, no longer the case. It is too early to declare victory, but by reason of, inter alia, the provision of additional resources and the widespread adoption of case management techniques, the problem of delay has been significantly attenuated. Of course delay must remain a priority. However, the principal focus of attention for those of us involved in the administration of justice must now be the costs of the process. … The task is, in large measure, still ahead of us. It requires a reconsideration of many case management practices adopted at a time when delay was the principal concern. Case management may impose disproportionate, indeed even unnecessary, costs on the parties. From the outset of 76

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Access to justice and access to lawyers cont. modern case management, concerns were expressed that the effect would be to frontload costs by bringing them forward, including in many matters that would in the normal course have settled without incurring any such costs at all. The new focus of attention must make us more sensitive to these concerns. This would, for example, require a diminution in the number of times a matter is brought before the court, in particular so as to reduce the frequency of attendance by lawyers at courts, often in long lists, where substantial costs are incurred in just waiting to get on. Extensive use of telephone directions hearings and electronic communications must be given a higher priority than in the past. These are examples of how the focus on costs requires us to continually review our practices. One of the matters to which it is particularly important to have regard is the tendency of any rational participant in the process to shift costs from themselves to other participants. This is true of courts as well as parties. A good example is the practice of overlisting which enables a court to make full use of its resources despite the occurrence of last minute settlements. However, when fewer matters settle than anticipated and some matters are therefore not reached, the costs imposed on the parties may well be greater than any cost savings to the court. As we shift focus from delay to costs, matters of this character should receive greater salience. Proportionality There is now widespread recognition that some sort of test of proportionality is required. The cost of dispute resolution must in some manner be proportionate to what is in dispute. That is difficult to achieve, particularly in circumstances where a civil dispute involves matters that are not able to be computed in terms of money, at least on any objective basis likely to be accepted by all parties. Nevertheless, the principle is a valid one.

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Following the English lead, New South Wales has expressly adopted, in s 60 of the Civil Procedure Act 2005 (NSW), a requirement that the practices and procedures of courts should be implemented with a view to resolving disputes “in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute”. [See Chapter 3]. Over recent decades there have been a number of major changes, notably in personal injury litigation, which have been driven to a substantial degree by what had come to be regarded as an unacceptable proportion of compensation awards that were taken up by the decision-making process. This has sometimes taken the form of no fault liability schemes. On other occasions it has taken the form of detailed requirements, including the exhaustion of alternative dispute resolution mechanisms, prior to the institution of proceedings. On yet other occasions it has taken the form of substituting comparatively informal arbitral mechanisms for the more formal hearing process of court adjudication. No one should be at all sanguine that this kind of intervention will be limited to personal injury cases reflected in what had come to be regarded as an unacceptably high level of insurance premiums borne by the community. Such a reaction is capable of being implemented in any area of legal disputation. For example, I know that concern has been expressed about the costs of many Family Provision Act 1982 (NSW) disputes, which appear to consume a significant proportion of the assets to be distributed. Similarly, in the area of commercial disputation, the costs of discovery are more than the commercial community is likely to tolerate. When senior partners of a law firm tell me, as they have, that for any significant commercial dispute the flag-fall for discovery is often $2 million, the position is simply not sustainable. Commercial disputes The cost structure of Australian commerce has been transformed over recent years by new management techniques, by technology and by the full gamut of micro-economic reform. The [2.70]

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Access to justice and access to lawyers cont. contemporary commercial community has an expectation that all areas of its cost structure are subject to similar review. Lawyers are not immune to this expectation. Commercial decision-makers are conscious that one of the few areas of business expenditure that has not diminished over recent decades is the cost of dispute resolution. Unless business lawyers are seen to deliver a cost-effective service, they may very well find themselves bypassed in the same way as some other sections of our profession have come to be bypassed. If the costs of commercial litigation are to be controlled, to be made proportionate to what is in dispute, and preferably to be minimised, the principal role in achieving that must be played by members of the profession. Judges are able to contribute to that process and, particularly in commercial litigation, there is a recognition that that must occur. As readers are well aware, the time billing system, appropriate as it may be in many contexts, has been questioned because of its virtually universal adoption. It creates a perverse incentive for lawyers to resist time saving measures. That incentive can be controlled by maintaining high standards of professionalism. The costs and delay of commercial litigation and corporate insolvency should be regarded as a drag on the economy. The amounts in dispute are, in effect, dead capital. Neither party to a commercial dispute can treat the amount in dispute, with confidence, as either working capital, capital for investment or capital for distribution to investors. A creditor with a claim on a company in liquidation is similarly constrained.

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The longer a commercial dispute continues, or the longer a corporate liquidation continues, the greater the loss to the community in terms of dead capital. At any point of time there are literally thousands of such commercial disputes and hundreds, perhaps thousands, of liquidations under way. It is impossible to compute, but if these processes could be reduced across the board by, say, one year, it would probably liberate hundreds of millions of dollars of capital into the Australian economy. This is capital that could be effectively deployed, rather than remain frozen. If we wish to maximise the positive social contribution of the legal profession, we must all seek to resolve commercial disputes and liquidations expeditiously. If we can restrict delays and costs in the commercial litigation process then we will make an even greater contribution to the society in which we live than we now make. It is a worthy objective. It will not occur unless the profession as a whole determines that it should occur.

[2.80] The impact of increasing costs on the affordability of seeking court-determined

resolution of disputes has been of considerable concern to a number of Law Reform Commissions and inquiries. See Australian Law Reform Commission, Costs Shifting – Who Pays for Litigation, Report No 75 (1995); Law Reform Commission of Western Australia, Review of the Criminal and Civil Justice System in Western Australia, Final Report No 92 (1999); Australian Law Reform Commission, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (1999); Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008); Access to Justice Taskforce, Federal Attorney-General’s Department, A Strategic Framework for Access to Justice in the Federal Civil Justice System (September 2009); Lord Justice Jackson, Civil Litigation Costs Review, Final Report (December 2009) (UK); and Productivity Commission, Access to Justice Arrangements, Inquiry Report No 72 (5 September 2014).

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Litigation costs [2.90] New South Wales Law Reform Commission, Security for costs and associated costs orders, Consultation Paper 13 (May 2011) 1.17. …The costs incurred during litigation fit broadly into two categories: • legal advice and assistance; and • disbursements. Legal advice and assistance 1.18 The category of advice and assistance includes fees payable by a litigant to his or her lawyer for legal services (barristers’ and solicitors’ fees). New South Wales previously had a scale of fees for lawyers, which gave an indication of the amount that litigants would pay their lawyers for services rendered in relation to litigation. In 1994 the scaled fees were abolished and replaced with a costs disclosure system. There is therefore no readily available source of information about the fees that lawyers charge in civil proceedings. Disbursements 1.19 The category of disbursements includes payments made to a third party on behalf of the client by the legal practitioner as agent, and expenses incurred on behalf of the client. Examples of disbursements include expert reports, witness’ expenses, interpreters’ service fees, printing and photocopying services, and court fees. 1.20 Court fees include court filing fees, the cost of issuing and obtaining court documents, the cost of starting proceedings, and fees incurred for costs assessment.

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1.21 In New South Wales the standard fee for filing an originating process [in 2011 was] $894 (or $2,142 for corporations) in the Supreme Court, $779 (or $1,558 for corporations) in the Land and Environment Court, $555 (or $1,110 for corporations) in the District Court, and $205 in the Local Court. [The standard fee for filing an originating process as at 1 August 2015 for the Supreme Court was $1,054 (or $2,886 for corporations), for the District Court $640 (or $1,280 for corporations) and for the Local Court $234 (or $468 for corporations) in the General Division and $95 (or $190 for corporations) in the Small Claims Division.] Other costs 1.22 It should be noted that there are a range of costs that litigants cannot recover through a costs order. These include the personal time and resources litigants expend in instructing lawyers and attending court, as well as the opportunity costs of not being able to attend work or other commitments due to involvement in litigation. Factors that impact on costs 1.23 The costs incurred by parties vary greatly because of a number of factors. In a 1999 study by the Australian Law Reform Commission (“ALRC”) of costs incurred in proceedings before the federal courts, it found that the factors which impact on legal costs involve the complexity of the case, settlement outcomes, the number and nature of case events, length of hearing, expenditure on discovery and experts, and the lawyer’s charging practices. 1.24 The ALRC identified the following to be significant drivers of costs in the Federal Court. It quantified the amount by which each factor affected the total costs: • Number of parties; $10,014 per party. • If the “end of discovery” was reached; $85,629. • Number of experts used; $28,817 per expert. • Number of court events (hearings); $2,761 per event. [2.90]

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Litigation costs cont. • Use of alternative dispute resolution by the parties, which on Federal Court figures had a high success rate for matters referred by a judge, reduced the costs by $63,552.26. Rising costs of litigation 1.32 There is a lack of current statistical information about the costs of civil litigation in Australia. However, there is some evidence that the costs of litigation have been increasing. The Law and Justice Foundation of NSW conducted a study that revealed that litigant costs in the District Court had “increased significantly”: the litigation costs for that jurisdiction rose by a quarter on average over the years 1994–1997. For example, the average litigation costs incurred by plaintiffs in non-motor accident proceedings increased from $12,193 to $14,781 during this period, while those of defendants increased from $8,241 to $13,864. 1.33 Multiple external factors have contributed to this broadly acknowledged rise in litigation costs. These include: • the rising costs of discovery procedures due to broader practices of electronic record-keeping; • the recent implementation of case management procedures and their focus upon reducing delay in the court system; • rising practitioner fees; • taxation incentives for businesses to litigate; and • rising costs of expert witnesses. 1.34 Court fees have also been rising steadily, which no doubt contributes to the overall increase in litigation costs. For example, in 2002 the fee for filing an initiating process in the Supreme Court was $574 for an individual and $1,148 for a corporation, compared with $638 for an individual and $1,276 for a corporation in 2005, and $894 for an individual and $2,142 for a corporation in 2011. Further, the fee in 2002 for a hearing allocation date in the Supreme Court was $1,092 for an individual and $2,318 for a corporation, compared with $1,786 for an individual and $3,569 for a corporation in 2011.

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1.35 Similar increases appear to have broadly occurred across Australia, which has led to a comment by the Western Australian Law Reform Commission that the cost of litigation is now “beyond the means of many members of the community”. 1.36 It should be noted, however, that some measures have been adopted in an attempt to address the rising costs of litigation. Most significantly, costs have been capped for personal injury claims of up to $100,000 at the lower of either 20% of the amount recovered or sought to be recovered, or $10,000.

CASELOAD MANAGEMENT AND MANAGERIAL JUDGING Case Management in New South Wales [2.100] The Honourable JJ Spigelman AC, Chief Justice of New South Wales, Case Management in New South Wales [Extract from a paper presented for the Judicial Delegation from India, Sydney, 21 September 2009, http://www.lawlink.nsw.gov.au] New South Wales Practice New South Wales practice with respect to civil case management has been a story of gradual development over a long period of time. There has never been a dramatic rearrangement of practice 80

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Case Management in New South Wales cont. and procedure of the character that followed Lord Woolf’s Access to Justice report in the United Kingdom. In New South Wales what happened was that a particular kind of practice developed in one specific area and was adopted in other areas. The principal driving force for case management – particularly caseload management – was the acceptance that delays in the system were too great. Justice delayed, as is often said, is justice denied. Of course, not all lapse of time can be called “delay”. In New South Wales we have now adopted, by statute, a formal objective of expedition which contains a definition of delay as the time beyond that which is reasonably required for the fair and just determination of the case. The New South Wales Courts do not have what the Americans call a “docket system” under which cases are assigned to the judge who will conduct the trial for management. Other courts in Australia [such as the Federal Court of Australia] use a docket system. There are arguments for and against the two approaches and what is right for one court is not right for another. In my opinion, if New South Wales were to adopt a docket system the productivity of our courts would significantly decline. Not all judges are as capable, or as willing, to manage a list as one would wish. In our system, case management is done by judges with an interest in, and an aptitude for, organisation. Judicial time is wasted if the gaps caused by settlements and adjournments are not filled quickly. Effective and efficient use of resources, in our experience, requires something more than managing individual cases for trial. It requires an overview which, in our experience, is best done by disaggregating the caseload into distinct categories which require different treatment based, to a significant degree, on specialised law and [specialisation] amongst legal practitioners. Most case management systems involve some system of differentiation, often called “tracks”. The New South Wales system involves a greater number of categories or “tracks”, but it works in our system because of our particular caseload. Each jurisdiction will differ in this respect. The Act and Rules

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The starting point for our caseload management and case management systems is comprehensive legislation and rules which enable the court to effectively manage its caseload. The rules have been progressively developed over the course of some two decades. The relevant statutes and court rules have been consolidated and applied uniformly to all three New South Wales courts by the Civil Procedure Act 2005 (NSW) and Uniform Civil Procedure Rules 2005. After a process of collaboration amongst the three courts, under judicial leadership with considerable input from departmental officers, we have adopted a uniform Act and uniform set of Rules of Civil Procedure applicable to all courts. These Rules are sufficiently flexible to allow for the differing requirements at the three levels of the hierarchy. The Act and Rules integrated existing practice. This did not involve significant change to past practice. The key reform was in the uniformity. This achievement would have been delayed if significant changes had been proposed. The Rules are backed up by detailed Practice Notes with respect to the conduct of proceedings, particularly the conduct of proceedings in specialist lists. Although the basic rules are uniform, at the three levels of the court hierarchy practices differ, so that matters are treated with greater expedition in the Local Court than in the District Court and in the District Court than in the Supreme Court. Cases of greater legal or factual complexity are distributed upwards in the hierarchy of courts, with a view to ensuring that those which do not justify elaborate procedures are dealt with in a less elaborate way and vice versa. Obviously there remains considerable overlap and drawing a clear line is not always possible. … The Civil Procedure Act 2005 and the Uniform Civil Procedure Rules confirm and re-enact the powers of courts to confine a case to issues genuinely in dispute and to ensure compliance with court orders, [2.100]

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Case Management in New South Wales cont. directions, rules and practices. When exercising any power a court is required to give effect to the overriding purpose expressed in the Act, namely: to facilitate the “just, quick and cheap” resolution of the real issues in the proceedings. Under our Civil Procedure Act, parties have a statutory duty to assist the court to further this overriding purpose and, therefore, to participate in the court’s processes and to comply with directions and orders. Furthermore, every legal practitioner has a statutory duty not to conduct himself so as to cause his or her client to breach the client’s duty to assist. The Act and Uniform Rules, which distil in a coherent manner the principles that have been developed over many years of practical operation of the previous legislation and court Rules, identify the objects of case management as follows: • The just determination of proceedings. • The efficient disposal of the business of the court. • The efficient use of available judicial and administrative resources. • The timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the parties. The Act also requires the practice and procedure of the court to be implemented with the object of eliminating unnecessary delay, as defined. Furthermore, court practices and procedures are required by the Act to be implemented with the object of resolving issues, so that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute. In order to serve the overriding purpose, and to meet the other objectives specified, the courts are given a comprehensive range of powers including:

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• Power to direct parties to take specified steps and to comply with timetables and otherwise to conduct proceedings as directed, with respect to discovery, admissions, inspection of documents or property, pleadings, particulars, cross-claims, affidavits or statements, time place and mode of hearing. • Powers with respect to the conduct of the hearing, including limiting the time that may be taken in cross-examination, limiting the number of witnesses, limiting the number of documents that may be tendered, limiting the time that may be taken by a party in presenting its case or in making submissions. • The exercise of such powers may identify certain matters required to be taken into account including the subject matter, complexity or simplicity of the case, the costs of the proceedings compared with the quantum of the subject matter in dispute and the efficient administration of court lists. • Powers have also been conferred to direct a solicitor or barrister for a party to provide to his or her client a memorandum stating the estimated length of the trial and estimated costs of legal representation, including costs payable to the other party if the client was unsuccessful. • Powers have also been conferred to order costs to be paid by a legal practitioner, where costs have been incurred by reason of some serious neglect in competence or impropriety. In Australia, the second largest cost after legal fees is expert evidence. The rules make special provision for such evidence in an endeavour to control those costs and to regulate the delay caused by unnecessary disputation on such matters. [Expert evidence is discussed in Chapter 13.] The courts encourage the use of alternative dispute resolution to resolve a dispute as early as possible and make detailed provision for mediation and arbitration. [Alternative dispute resolution is discussed in Chapters 4 and 5.] 82

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Case Management in New South Wales cont. Court Organisation of Management Different techniques are adopted for case management in different courts in New South Wales. The District Court, a high volume civil jurisdiction, significantly focused on matters involving personal injury, requires litigants not to commence an action unless they are ready to proceed with it, save in the case of a time limitation problem. Thereafter the court insists on strict compliance with a timetable lodged at the outset of proceedings, with a view to listing a matter for hearing within 12 months of its commencement. In the Supreme Court, cases are of a higher level of complexity and are managed in a number of different ways. Each of the divisions of the court, namely the Court of Appeal, the Court of Criminal Appeal, the Common Law Division and the Equity Division have their own registrars responsible to judges for case management. Building on our long experience with the success of our Commercial List, cases of similar character are grouped by subject category and specialised Practice Notes set out in detail the requirements of the particular field. Each of these lists is managed by a judge, in conjunction with a registrar. The specialist lists in the Common Law Division are the Administrative Law List, the Criminal List, the Defamation List, the General Case Management List, the Possession List and the Professional Negligence List. In the Equity Division the specialist lists are the Admiralty List, Adoption List, Commercial List, Corporations List, Probate List, Protective List and Technology and Construction List.

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The conduct of each of these lists is substantially assisted by the existence of user groups which are formed for consultation between the judges who administer the particular list and representatives of the profession who [practise] in the fields. The process of refinement of the Rules and Practice Notes is a continuing one, in which these user group consultations play a significant role. A key objective of our case management is to ensure trial date certainty, so that litigants and their representatives know that if a trial matter is listed for trial it will be heard. Some over-listing is done in anticipation of settlements, and there are unfortunate occasions when matters have not been able to get on. We regard it as critical, however, that that does not become a regular event, so that practitioners refuse to settle on the basis that there is a real possibility that a trial date will be vacated. The most important aspect of the ongoing management system is that it is conducted under judicial leadership with appropriate delegation to registrars. All cases are brought under court control at an early stage with an early return date. Most lists are managed by registrars who sit daily. Some specialist lists are managed primarily by judges who sit less frequently, generally weekly. Interlocutory matters requiring orders, rather than directions, are referred to judges, either those in charge of specialist lists or to the duty judge in each of the two Divisions of the court. The Registrar of the Court of Appeal manages cases and generally allocates hearing dates upon being satisfied of the state of readiness of an appeal. Cases that are likely to occupy more than two days of hearing time are referred to a judge for case management before a hearing date is allocated. The rules of Court specify the precise steps and timetables to be taken in the main categories of cases filed. Directions hearings are scheduled before the registrar to ensure compliance with and, where justified, any modification to those requirements. Pursuant to the rules of Court, the registrar may exercise the powers of a single judge to determine motions, except in contested applications for a stay or injunctive orders and, in practice, applications for expedition. Most proceedings determined by the registrar concern applications for extension of time, security for costs, challenges to the competency of proceedings, dismissal for want of prosecution and the giving of directions where default has occurred in compliance with the requirements of the rules or earlier directions. Motions where stays/injunctive orders are opposed and requests for expedition are sent to a referrals judge for determination. [2.100]

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Case Management in New South Wales cont. The registrar confers with the President of the Court on a regular basis to discuss listings and the rostering of judges. Calendaring of sittings and the identification of specialized lists is planned on an annual basis, having regard to available judicial resources and the requirements of Judges to sit in the Court of Criminal Appeal. The Registrar in Equity manages cases until they are ready for hearing and lists them for hearing before the judges of the Division. The judges usually hold a pre-trial directions hearing about five or six weeks before the trial to ensure that the parties are adhering to the real issues for trial. Matters are referred to associate judges and judges in the following circumstances: 1.

If a motion is beyond the delegated authority of the registrar it is referred to an associate judge, Duty Judge or Corporations Judge;

2.

If an associate judge has the power to deal with a matter and it is ready for hearing it is allocated to the associate judge call-over for a hearing date to be set;

3.

If a timetable has been breached on three previous occasions the matter is referred to the Duty Judge; and

4.

If a matter has not been finalised after having been stood over on four or more occasions in order to allow the parties to have settlement discussions, the matter is referred to the Duty Judge.

The registrar and Chief Judge in Equity hold a weekly meeting to discuss case management issues and the general conduct of the lists. In Common Law, except for the Professional Negligence List, the registrar manages cases in a similar way to the Equity Division. Similar criteria apply for referring matters to associate judges and judges of the Division.

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In the Professional Negligence List the registrar case manages all cases until they are ready to be allocated a hearing date. All opposed applications are sent to the Referrals Judge. Recalcitrant matters are referred to the List Judge after three timetable defaults.

Managerial Judging [2.110] Caseflow management focuses on the overall caseload and seeks to distribute and direct cases through the system in an efficient manner. Managerial judging focuses on the role of the judge in an individual case. The judge tailors the procedures to be employed to the needs of the individual case. Managerial judging requires the judge to take an active part in directing the proceedings through its interlocutory stages. As a result, the judge takes control of the case and through various directions and timetables specifies the steps to be taken and the time by which those steps must have occurred. As explained above by Chief Justice Spigelman, in NSW the role of managerial judge may be performed by registrars or list judges depending on the particular list. More generally, Justice French, as he then was, has observed: 4 No system of judicial decision-making is proof against the problems of cost and delay. The resolution of legal disputes is inescapably labour intensive. It requires careful consideration, by whatever means, of evidence, findings of fact and the application of the law, be it written or unwritten, to the facts as found. In recent years, however, in Australia and other countries increasingly well-educated and assertive consumers of judicial services have made greater demands on government and its institutions, including the judiciary, to be responsive to their 4 84

French RS, The Role of the Trial Court Judge in Pre-trial Management, (2004). [2.110]

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Managerial Judging cont. needs in terms of the costs and efficiency. In Australia there has been a wide range of reactions to such concerns which have been reflected in the movement to increased judicial supervision of litigation and also the development of non-judicial dispute resolution options. In a comparative analysis of the adversarial and civil code systems, A Zuckerman observed: Both Commonwealth countries and civil law countries display a shift towards the imposition of a stronger control by judges over the progress of civil litigation. In virtually all the systems reviewed here there is a perception that, when the process of litigation is left to the parties and their lawyers, its progress is impeded by narrow self-interest. Such self-interest may be that of recalcitrant defendants bent on exhausting and tormenting their plaintiffs or that of self-interest of lawyers determined to enhance their own incomes. The contemporary dominant view is that the disruptive self-interest of parties and their lawyers can only be kept at bay by an active judiciary that directs the litigation process and is able to prevent disruptive tactics. The USA has been leading the trend amongst common law countries. A culture of managerial judges is now well established there. In England and Australia the move towards judicial control is more recent but is equally dramatic. A similar trend is reported from the great majority of civil law countries. In France, Spain, Portugal, Italy and even in Japan and in Germany, moves are afoot to strengthen the judicial supervision of the litigation process. However, case management has the potential to impose increased costs on the parties by requiring an increased number of court appearances which the court determines are necessary to ensure cases are prepared expeditiously. An important role of case management is to try to ensure that court appearances are kept to a minimum and adjournments restricted. A tension exists between this important efficiency role and the essential prerequisite that the civil justice process should provide fair outcomes, arrived at by fair procedures, with fidelity to the law.

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“[P]re-occupation with disposal of cases may lead to compromises in the quality of justice.” It is of great significance “for the judiciary not to give individual litigants the impression that the case that really matters to the judge is the next one ... Some things take time. Justice is one of them. A focus on processing cases must not lead to the result that the quality of justice is compromised by the focus on quantity.” 5 Case management raises fundamental issues concerning efficiency and justice.

Queensland v JL Holdings [2.120] Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; 141 ALR 353 [In an action where JL Holdings claimed damages for failure of a building development to proceed after a change of government, the State of Queensland sought leave to amend its pleadings to allege non-compliance with the relevant legislation. The trial judge and the Full Federal Court refused leave to amend for the reasons that it should have been done years ago; it might have required joinder of JL Holdings’ solicitor; it would require more discovery and as a result probably a longer trial; and it would have delayed the start date of the trial. The members of the High Court did not accept this view and overturned the decision. It did not accept that the trial date would be delayed or that a longer trial was inevitable. Though case management was endorsed, individual justice was considered to be the dominant criterion.]

5

The Honourable JJ Spigelman AC, Chief Justice of New South Wales, Case Management in New South Wales, presented to the Annual Judges Conference, Kuala Lumpur, Malaysia, 22 August 2006, http:// www.lawlink.nsw.gov.au. [2.120]

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Civil Procedure in New South Wales

Queensland v JL Holdings cont. DAWSON, GAUDRON AND MCHUGH JJ In our view, the matters referred to by the primary judge were insufficient to justify her Honour’s refusal of the application by the applicants to amend their defence and nothing has been made to appear before us which would otherwise support that refusal. Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion.

THE CIVIL PROCEDURE ACT 2005 AND THE UNIFORM CIVIL PROCEDURE RULES

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[2.130] By 2000, Pt 1 r 1(1) of the Supreme Court Rules 1970 (NSW) had been modified to

expound the overall objective of practices and procedures in the New South Wales Supreme Court. The overriding purpose of the Rules was to facilitate the just, quick and cheap resolution of the real issues in civil proceedings. The Rule obliged the court to actively manage cases to achieve this overriding objective. However, these rules only affected the practice of the Supreme Court of New South Wales. In early 2003 the Uniform Civil Procedure project commenced. A working party was established and chaired by Hamilton J of the Supreme Court of New South Wales. The working party consisted of representatives of the District Court, the Local Court, the Bar Association, the Law Society of New South Wales and the Attorney General’s Department. The guiding philosophy for the work of the working party was to deliver a common set of rules simplified where possible, but without radical changes in substance or form, across the various levels of jurisdiction within the New South Wales judicial system. The CPA and the UCPR consolidated the existing provisions about civil procedure into a single Act and a set of rules that apply uniformly to all three New South Wales courts. For the first time a synchronisation of civil rules and civil forms between the three main jurisdictions existed. The CPA contains some provisions moved from the Supreme Court Act 1970 (NSW), the District Court Act 1973 (NSW) and the Local Courts (Civil Claims) Act 1970 (NSW). The UCPR needed to be sufficiently flexible to allow for the differing requirements of the three levels of the court hierarchy. For example simple debt claims in the Local Court should not be subject to the same requirements as complex proceedings in the Supreme Court. Confining a case to the issues genuinely in dispute and ensuring compliance with court orders, directions, rules and practices are court powers that the CPA and the UCPR re-enact and confirm. It should be noted that s 56(3) of the CPA provides that parties have a statutory duty to assist the court to further this overriding purpose and, accordingly, to participate in the processes of the court and to comply with directions and orders. A court, when exercising any power, is required to give effect to the overriding purpose expressed in s 56, that is, to facilitate the “just, quick and cheap” resolution of the real issues in the proceedings. The sections that follow s 56 are: s 57 Objects of case management, s 58 86

[2.130]

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Court to follow dictates of justice, s 59 Elimination of delay and s 60 Proportionality of costs. Sections 57 and 58 are congruent with “just”, s 59 with “quick” and s 60 with “cheap”. It is to be noted that s 57 and s 58(1) and (2)(a) are mandatory, whereas s 58(2)(b) is discretionary. The New South Wales Attorney General in the Civil Procedure Act 2005 Second Reading Speech 6 said: Civil Procedure Bill 2005 represents an important advance in how civil litigation is conducted in this State. … It is important to note that the dictates of justice will not be limited to the dictates of justice only as between the parties, which has been argued to be the effect of the majority judgment in one of the leading cases on case management – Queensland v JL Holdings Pty Ltd.

See generally M Kumar and M Legg (ed), Ten Years of the Civil Procedure Act 2005 (NSW) (Thomson Reuters, 2015).

Civil Procedure Act 2005 (NSW) [2.140] Civil Procedure Act 2005 (NSW) ss 56 – 60 Part 6 – Case Management and Interlocutory Matters Division 1 – Guiding principles 56 Overriding purpose

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(cf SCR Pt 1 r 3) (1)

The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2)

The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

(3)

A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.

(4)

Each of the following persons must not, by their conduct, cause a party to a civil dispute or civil proceedings to be put in breach of a duty identified in subsection (3): (a) any solicitor or barrister representing the party in the dispute or proceedings, (b)

any person with a relevant interest in the proceedings commenced by the party.

(5)

The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs.

(6)

For the purposes of this section, a person has a relevant interest in civil proceedings if the person: (a) provides financial assistance or other assistance to any party to the proceedings, and (b)

exercises any direct or indirect control, or any influence, over the conduct of the proceedings or the conduct of a party in respect of the proceedings. Note. Examples of persons who may have a relevant interest are insurers and persons who fund litigation.

6

The Hon Bob Debus, Attorney General, and Minister for the Environment, NSW, Legislative Assembly, Hansard and Papers, (Wednesday 6 April 2005). See http://www.parliament.nsw.gov.au/prod/parlment/ NSWBills.nsf/0/6a5e9d61a5437c11ca256fda002023ab/$FILE/A2805.pdf . [2.140]

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Civil Procedure Act 2005 (NSW) cont. 57 Objects of case management (1) For the purpose of furthering the overriding purpose referred to in section 56(1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b)

the efficient disposal of the business of the court,

(c)

the efficient use of available judicial and administrative resources,

(d)

the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(2)

This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). 58 Court to follow dictates of justice (1) In deciding: (a)

whether to make any order or direction for the management of proceedings, including: (i) any order for the amendment of a document, and (ii)

any order granting an adjournment or stay of proceedings, and

(iii)

any other order of a procedural nature, and

(iv)

any direction under Division 2, and

(b) the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice. (2)

For the purpose of determining what are the dictates of justice in a particular case, the court: (a) must have regard to the provisions of sections 56 and 57, and

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(b)

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[2.140]

may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii)

the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii)

the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv)

the degree to which the respective parties have fulfilled their duties under section 56(3),

(v)

the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi)

the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii)

such other matters as the court considers relevant in the circumstances of the case.

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Civil Procedure Act 2005 (NSW) cont. 59 Elimination of delay (cf Western Australia Supreme Court Rules, O 1 r 4A) In any proceedings, the practice and procedure of the court should be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial. 60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.

Amendment of section 56 [2.150] The Courts and Crimes Legislation Further Amendment Act 2010 (NSW),

Schedule 6.2 amended section 56 of the CPA to extend the obligations it imposes in two ways. First, to civil disputes rather than just litigation so as to support the addition of pre-action protocols in Part 2A of the CPA 7 and, second, to any person with a relevant interest in the proceedings, including litigation funders (see 8.1010). Part 2A was repealed by the Courts and Other Legislation Further Amendment Act 2013 (NSW), which also deleted the additions to s 56 that facilitated Part 2A.

HOW HAS PART 6 OF THE CPA AFFECTED CIVIL PROCEDURE? Metropolitan Petar v Mitreski Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

[2.160] Metropolitan Petar v Mitreski [2008] NSWSC 293 YOUNG CJ IN EQ 11 Under Part 6 of the Civil Procedure Act 2005, the guidelines for dealing with case management and procedural applications have changed considerably from the previous regime. How this came about was that for many years in New South Wales, judges in the Equity Division and the previous Commercial Division, now part of this Division, have been making orders directed to the just, quick and cheap resolution of real issues in proceedings. That practice and other considerations were adopted by the Woolf Report in England into civil procedure and as a result of the Woolf Report, the Civil Procedure Rules 1998, known by everybody as CPR, came into effect in England on 26 April 1999. 12 The very first rule, CPR 1.1(1), declared that the rules constituted a new procedural code with the overriding objective of enabling the court to deal with cases justly. Although this seems to be a last minute addition to the CPR from the original drafts, judges in England have put considerable emphasis on it. So much so that it is now said that when the rules deal with the just resolution of disputes in a court, this does not mean merely deciding the merits according to procedural fairness, there is now a new three dimensional concept of procedural justice. The principal goal of civil procedure, namely the 7

The provisions of Part 2A and the background to its introduction and subsequent repeal are set out in D Boniface, M Kumar and M Legg, Principles of Civil Procedure in NSW (2nd ed, Thomson Reuters, 2012) at [2.360]-[2.420]. [2.160]

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Civil Procedure in New South Wales

Metropolitan Petar v Mitreski cont. doing of substantive justice, is now overlaid with an overriding objective that establishes a procedural discipline so that the court reaches a substantially correct outcome by means of proportionate resources and in a reasonable time. See, for instance, Zuckerman, Civil Procedure (2003) at para 1.2. 13 Part 6 of the New South Wales Act obviously draws on the English experience and so uses the words “overriding purpose”. Section 56, referring to the overriding purpose of the Act and rules of court as facilitating the just, quick and cheap resolution of the real issues, is supplemented by ss 57 through to 60. Section 57 says that for the purpose of furthering the overriding purpose, proceedings in the court are to be managed having regard to the following objects: (a)

the just determination of the proceedings;

(b)

the efficient disposal of the business of the court;

(c)

the efficient use of available judicial and administrative resources;

(d)

the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

14 Section 58 then says that in deciding what orders to make in an application during the case management process, the court must seek to act in accordance with the dictates of justice. Subsection (2) then fleshes out what are the dictates of justice in any particular case. Accordingly, one is not now dealing with what in the old days was called “entitlements to an order” and focusing principally on the rights of a party in litigation, but one is now looking at a much broader picture, that is, the overall just disposal of the proceedings within a reasonable time. Accordingly, when a court is making case management orders, the court is required more to focus on sections 56 to 60 of the Uniform Civil Procedure Act than on utterances made under the old procedure which focused more on the rights of parties.

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Tripple Take v Clark Rubber Franchising [2.170] Tripple Take Pty Ltd v Clark Rubber Franchising Pty Ltd; Brooks v Clark Rubber Franchising Pty Ltd [2005] NSWSC 1169 EINSTEIN J 7 The Overriding Purpose of the Civil Procedure Act 2005 and of the rules of court, now enshrined in s 56 of the Civil Procedure Act 2005, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Each of the objects of case management now to be found in s 57 of the Act as well as the criteria concerning the determination of what are the dictates of justice in a particular case [to be found in s 58(2)] mandate the principled exercise of the material discretion being to dismiss the instant application for security for costs. S 58(2)(b) requires the Court to take into account, inter alia, the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, as well as the use that any party could have made of any opportunity that has been available to the party in the course of the proceedings, and of course also the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction. 8 None of these matters is particularly novel but one now has in statutory form, a signal emphasis on the significance of close attention being paid to the duty imposed upon parties to civil proceedings, to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court: here to ensure the efficient disposal of the business of the court and the timely disposal of 90

[2.170]

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Tripple Take v Clark Rubber Franchising cont. the proceedings at a cost affordable by the respective parties.

DIRECTIONS [2.180] The objects of case management identified in the CPA and the UCPR are the just

determination of proceedings; the efficient disposal of the business of the court; the efficient use of available judicial and administrative resources; and the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the parties. The CPA also requires the practice and procedure of the court to be implemented with the object of eliminating unnecessary delay, and court practices and procedures are required to be implemented with the object of resolving issues, so that the costs to the parties are proportionate to the importance and complexity of the subject matter in dispute. Former Chief Justice Spigelman in 2006 8 said: In order to serve the overriding purpose, and to meet the other specified objectives, the courts have a comprehensive range of powers including: • Power to direct parties to take specified steps and to comply with timetables and otherwise to conduct proceedings as directed.

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• Powers with respect to the conduct of the hearing, including limiting the time that may be taken in cross-examination, limiting the number of witnesses, limiting the number of documents that may be tendered, limiting the time that may be taken by a party in presenting its case or in making submissions. [For example Stop Watch Hearings where the parties agree about the total amount of time that will be allocated to a trial. The usual court order will allocate blocks of time to different aspects of the case, in accordance with the parties’ expectations but that is subject to variation as the trial continues. A party may allocate its time to whatever aspect it wishes, eg more time taken in cross-examination will leave less time for an opening or for oral submissions. The objective of a Stop Watch Hearing is to achieve a more cost effective resolution of the real issues between the parties.] • Powers are to be exercised subject to the requirements of procedural fairness and are to take into account a range of relevant matters, including the subject matter and the complexity or simplicity of the case, the efficient administration of court lists (including the interests of parties to other proceedings before the court) and the costs of the proceedings, compared with the quantum of the subject matter in dispute. • The court is empowered at any time to direct a solicitor or barrister for a party to provide to his or her client a memorandum stating the estimated length of the trial and estimated costs of legal representation including costs payable to the other party if the client was unsuccessful.

Case management is undertaken through a series of directions hearings before a judge or registrar. The date of the first directions hearing will be given by the registry in a notice issued at the time of filing the statement of claim. In the Supreme Court the first directions hearing will be appointed for approximately three months after proceedings are entered in the List. Directions given at the directions hearing are binding and a range of sanctions are available if they are breached. 8

The Honourable JJ Spigelman AC, Chief Justice of New South Wales, Case Management in New South Wales, presented to the Annual Judges Conference, Kuala Lumpur, Malaysia, 22 August 2006, http:// www.lawlink.nsw.gov.au. [2.180]

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Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) [2.190] Civil Procedure Act 2005 (NSW) ss 61 – 63 Part 6 – Case Management and Interlocutory Matters Division 2 – Powers of court to give directions 61 Directions as to practice and procedure generally (cf SCR Pt 23 r 4; Act No 9 1973, s 68A) (1)

(2)

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(3)

(4)

The court may, by order, give such directions as it thinks fit (whether or not inconsistent with rules of court) for the speedy determination of the real issues between the parties to the proceedings. In particular, the court may, by order, do any one or more of the following: (a) it may direct any party to proceedings to take specified steps in relation to the proceedings, (b)

it may direct the parties to proceedings as to the time within which specified steps in the proceedings must be completed,

(c)

it may give such other directions with respect to the conduct of proceedings as it considers appropriate.

If a party to whom such a direction has been given fails to comply with the direction, the court may, by order, do any one or more of the following: (a) it may dismiss the proceedings, whether generally, in relation to a particular cause of action or in relation to the whole or part of a particular claim, (b)

it may strike out or limit any claim made by a plaintiff,

(c)

it may strike out any defence filed by a defendant, and give judgment accordingly,

(d)

it may strike out or amend any document filed by the party, either in whole or in part,

(e)

it may strike out, disallow or reject any evidence that the party has adduced or seeks to adduce,

(f)

it may direct the party to pay the whole or part of the costs of another party,

(g)

it may make such other order or give such other direction as it considers appropriate.

Subsection (3) does not limit any other power the court may have to take action of the kind referred to in that subsection or to take any other action that the court is empowered to take in relation to a failure to comply with a direction given by the court.

62 Directions as to conduct of hearing (cf Act No 52 1970, s 87; Act No 9 1973, s 77(4); SCR Pt 34 rr 6 and 6AA) (1)

The court may, by order, give directions as to the conduct of any hearing, including directions as to the order in which evidence is to be given and addresses made.

(2)

The court may, by order, give directions as to the order in which questions of fact are to be tried.

(3)

Without limiting subsections (1) and (2), the court may, by order, give any of the following directions at any time before or during a hearing: (a) a direction limiting the time that may be taken in the examination, cross-examination or re-examination of a witness,

92

(b)

a direction limiting the number of witnesses (including expert witnesses) that a party may call,

(c)

a direction limiting the number of documents that a party may tender in evidence,

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Civil Procedure Act 2005 (NSW) cont.

(4)

(d)

a direction limiting the time that may be taken in making any oral submissions,

(e)

a direction that all or any part of any submissions be in writing,

(f)

a direction limiting the time that may be taken by a party in presenting his or her case,

(g)

a direction limiting the time that may be taken by the hearing.

A direction under this section must not detract from the principle that each party is entitled to a fair hearing, and must be given a reasonable opportunity: (a) to lead evidence, and

(5)

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(6)

(b)

to make submissions, and

(c)

to present a case, and

(d)

at trial, other than a trial before a Local Court sitting in its Small Claims Division, to cross-examine witnesses.

In deciding whether to make a direction under this section, the court may have regard to the following matters in addition to any other matters that the court considers relevant: (a) the subject-matter, and the complexity or simplicity, of the case, (b)

the number of witnesses to be called,

(c)

the volume and character of the evidence to be led,

(d)

the need to place a reasonable limit on the time allowed for any hearing,

(e)

the efficient administration of the court lists,

(f)

the interests of parties to other proceedings before the court,

(g)

the costs that are likely to be incurred by the parties compared with the quantum of the subject-matter in dispute,

(h)

the court’s estimate of the length of the hearing.

At any time, the court may, by order, direct a solicitor or barrister for a party to give to the party a memorandum stating: (a)

the estimated length of the trial, and the estimated costs and disbursements of the solicitor or barrister, and

(b)

the estimated costs that, if the party were unsuccessful at trial, would be payable by the party to any other party.

63 Directions with respect to procedural irregularities (cf Act No 52 1970, s 81; Act No 9 1973, s 159; Act No 11 1970, s 75A) (1)

(2)

This section applies to proceedings in connection with which there is, by reason of anything done or omitted to be done, a failure to comply with any requirement of this Act or of rules of court, whether in respect of time, place, manner, form or content or in any other respect. Such a failure: (a) is to be treated as an irregularity, and (b)

(3)

subject to subsection (3), does not invalidate the proceedings, any step taken in the proceedings or any document, judgment or order in the proceedings.

The court may do either or both of the following in respect of proceedings the subject of a failure referred to in subsection (1): (a) it may, by order, set aside the proceedings, any step taken in the proceedings or any document, judgment or order in the proceedings, either wholly or in part, [2.190]

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Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. (b) (4)

it may exercise its powers to allow amendments and to make orders dealing with the proceedings generally.

The court may not take action of the kind referred to in subsection (3)(a) on the application of any party unless the application is made within a reasonable time and, in any case, before the party takes any fresh step in the proceedings after becoming aware of the failure.

Uniform Civil Procedure Rules 2005 (NSW) [2.200] Uniform Civil Procedure Rules 2005 (NSW) rr 2.1 – 2.3 2.1 Directions and orders The court may, at any time and from time to time, give such directions and make such orders for the conduct of any proceedings as appear convenient (whether or not inconsistent with these rules or any other rules of court) for the just, quick and cheap disposal of the proceedings. Note: See also the guiding principles in relation to the conduct of court proceedings (set out in Division 1 of Part 6 of the Civil Procedure Act 2005) and the general powers of the court to give directions (set out in Division 2 of that Part). 2.2 Appointment for hearing The court may, at any time and from time to time, of its own motion, appoint a date for a hearing at which it may give or make the directions or orders referred to in rule 2.1. 2.3 Case management by the court

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Without limiting the generality of rule 2.1, directions and orders may relate to any of the following: (a)

the filing of pleadings,

(b)

the defining of issues, including requiring the parties, or their legal practitioners, to exchange memoranda in order to clarify questions,

(c)

the provision of any essential particulars,

(d)

the filing of “Scott Schedules” referred to in rule 15.2,

(e)

the making of admissions,

(f)

the filing of lists of documents, either generally or with respect to specific matters,

(g)

the delivery or exchange of experts’ reports and the holding of conferences of experts,

(h)

the provision of copies of documents, including their provision in electronic form,

(i)

the administration and answering of interrogatories, either generally or with respect to specific matters,

(j)

the service and filing of affidavits, witness statements or other documents to be relied on,

(k)

the giving of evidence at any hearing, including whether evidence of witnesses in chief must be given orally, or by affidavit or witness statement, or both,

(l)

the use of telephone or video conference facilities, video tapes, film projection, computer and other equipment and technology,

(m)

the provision of evidence in support of an application for an adjournment or amendment,

(n)

a timetable with respect to any matters to be dealt with, including a timetable for the conduct of any hearing,

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[2.200]

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Uniform Civil Procedure Rules 2005 (NSW) cont. (o)

the filing of written submissions.

THE APPLICATION OF THE CPA AND UCPR Dennis v Australian Broadcasting Corp [2.210] Dennis v Australian Broadcasting Corp [2008] NSWCA 37 SPIGELMAN CJ (BASTEN AND CAMPBELL JJA CONCURRING) [28] The respondent invoked the authority of Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 in support of its ability to amend, even for the fifth time. Case management practices in all Australian courts have changed significantly in the decade since that judgment. Although it remains binding authority with respect to the applicable common law principles, the circumstances of the case were significantly different from those in the present case and do not dictate its outcome. In any event, such principles can be, and have been, modified by statute both directly and via the statutory authority for Rules of Court. [29] In this State JL Holdings must now be understood as operating subject to the statutory duty imposed upon the courts by s 56(2) of the Civil Procedure Act 2005, which requires the Court in mandatory terms – “must seek” – to give effect to the overriding purpose – to “facilitate the just, quick and cheap resolution of the real issues in the proceedings” – when exercising any power under the Act or Rules. That duty constitutes a significant qualification of the power to grant leave to amend a pleading under s 64 of the Civil Procedure Act.

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[2.220] Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 ALLSOP ACJ The litigation in the Local Court [3] The appellant, Hans Pet Constructions Pty Ltd (“Hans Pet”), is a builder which subcontracted tiling work on a job to the respondents, Mr and Mrs Cassar. Hans Pet alleged that the work of the Cassars was defective. These assertions of Hans Pet were made in mid-2007 and substantiated at that time by the delivery of an expert’s report as to deficiencies in the work. [4] In November 2007, proceedings were commenced in the Local Court by way of statement of claim in which Hans Pet claimed unliquidated damages, but quantifying same in the sum of $55,884.74, being the asserted cost of removing the tiles laid by Mr Cassar and replacing them with new tiles. [5] On 3 January 2008, the Cassars filed a defence which was summarised by the primary judge at [4] of his reasons as follows: That defence, which is in evidence before this Court, denied the existence of a contract to perform tiling sub-contract work, admitted a duty to use reasonable care, skill and diligence if sub-contracting tiling work was performed for Hans Pet, admitted that they offered to undertake tiling sub-contract work, denied the terms of the contract and “admitted” that tiling services “on a labour only basis” were provided and otherwise denied faulty workmanship. Further, the defence claimed contributory negligence, estoppel, failure to [2.220]

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Hans Pet Constructions v Cassar cont. mitigate and the defence also put the quantum of damage in issue. As one would expect, Hans Pet bore the onus of proof in the proceedings before the Local Court, at least on the substantive question before the Local Court. [6] On 26 February 2008, directions were made by the Local Court, setting the matter down for hearing for three days by way of a special fixture commencing Monday 28 July 2008 and requiring the plaintiff to serve its evidence in chief (including expert evidence) by 18 April 2008, the defendants to serve their evidence by 30 May 2008 and the plaintiff to file evidence in reply by 20 June 2008. The matter was also listed for “review”, by way of pre-trial directions, on 1 July 2008. [7] … The reforms of the system of civil litigation in New South Wales in recent years, typified by the Civil Procedure Act and the Uniform Civil Procedure Rules reflect the deliberate governmental (Parliamentary, executive and judicial) aims of promoting and facilitating the speedy disposition of proceedings in order that citizens of the State can obtain prompt resolution of their complaints. These matters must be steadily borne in mind at all times. Though I am of the view that the learned Magistrate erred in making the order he did, nothing that I say in explication of my reasons for that view should be taken as undermining or weakening the considerable authority of judicial officers to control and manage litigation in order that it proceed with the utmost expedition in the interests of both private and public resources in the State. It is necessary, however, in managing and supervising litigation to that end to ensure that proper consideration is given to all factors identified by the Parliament of New South Wales as compulsory to consider and have regard to in the exercise of the powerful case management tools now given to judicial officers at all levels in the State.

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[8] The directions that had been given here also concerned further and better particulars. There was a complaint by the solicitors for the Cassars that these had not been provided by Hans Pet. The matter was brought back to the Court on 10 April 2008. Directions were made varying those made earlier on 26 February as to the provision of particulars and the timing of filing and service of evidence in chief, response and reply. The timetable was pushed back so that the evidence in reply was to be served no later than 11 July 2008 and the review date was moved to 22 July 2008. [9] The Cassars did not receive the answers to their requests for further and better particulars as directed or in the time directed. There was correspondence between the parties. The answers to particulars were provided on 5 June 2008 some seven weeks after the date provided by the court orders. Further, it was not until 16 June 2008 that Hans Pet served the remainder of evidence and indicated that it would not rely upon any further evidence. That evidence had been due on 23 May 2008. The expert evidence of Hans Pet, however, had been served on 23 May 2008 in accordance with the directions, and it should be recalled that a body of expert evidence had been provided the previous year. [10] On 23 June 2008 the solicitors on behalf of the Cassars wrote to the solicitors for Hans Pet noting the hearing date and asserting that Hans Pet’s delay in providing answers to the particulars had caused the Cassars not to be able to meet the present timetable and, necessarily, a new date was required. The letter sought consent to the matter being relisted before the Local Court for the purpose of securing a new timetable and, necessarily, a new date. The letter also informed Hans Pet that the particulars that had been provided had necessitated further investigation and that the expert who had been engaged by the Cassars would not be able to provide his report by the dates specified in the Court’s directions. An amended defence was filed which expanded on the grounds relied on for mitigation and repleaded the issue of quantum and raised causation. [11] There was a further exchange of correspondence between the solicitors and by 8 July 2008 it became apparent that there was no agreement to vacate the hearing dates. [12] On 9 July 2008 the solicitors for the Cassars advised the Local Court of the difficulties and sought a directions hearing date for the purpose of vacating the hearing date set. On 15 July 2008 the 96

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Hans Pet Constructions v Cassar cont. legal representatives of the Cassars once again rang the Registrar of the Local Court to follow up the letter of 9 July 2008 and to request a relisting before 22 July 2008. The evidence before the primary judge was that the Cassars solicitors were advised that it was likely that the matter would be dealt with on 22 July at the review date. No notice of motion was filed seeking the vacation of the dates. [13] It was in these circumstances that the matter came before the learned Magistrate on 22 July 2008. [14] Before turning to the transcript of what occurred it is perhaps appropriate to say the following. Any judge who has had experience in either running a list or in case managing litigation will be familiar with the kinds of dispute apparently raised by the parties and described above. It is often very difficult to ascertain the legitimacy of the complaints of both defendants and plaintiffs when they assert a failure to provide particulars and when they assert they are not able to put on evidence or pleadings until they have particulars. The legitimacy of those kinds of assertions are sometimes questionable and can, on occasions, be a diversion from the real reasons for timely preparation, which are sometimes a failure to attend to the task in hand because of either busyness or, in some cases, idleness. I am not concluding that any of these illegitimate considerations attended the conduct of the file by the Cassars’ solicitors. There was no detailed investigation of the legitimacy of these complaints by the learned Magistrate. That is not a criticism of him. Very often the time and trouble and expenditure of energy in resolving these kinds of dispute can outweigh any utility in doing so. That said, however, a judge or registrar will often act upon the sense or intuition of who is responsible in tailoring directions in circumstances where those directions are unlikely to prejudice irretrievably a party. Where, however, a party is to be prejudiced irretrievably in the conduct of its litigation by the failure to comply with a timetable it will rarely be appropriate so to affect the party without an investigation and a conclusion that it was the party involved who was at least in part responsible for the default, so as to justify such irretrievable prejudice. With those introductory remarks, I turn to the record of the hearing before the Magistrate. …

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[20] A matter was interposed. After the adjournment, the following exchange took place: Zickman: Your Honour, we’re somewhat in the court’s hands. I’ve made some inquiries as your Honour requested. The position is that we could probably have our lay evidence completed by the end of this week, but the expert has just returned from overseas and we would not be able to have our expert evidence completed by the end of this week. Your Honour, in regard to – your Honour was asking why you should not strike this matter out. My instructions are that particulars weren’t provided eighteen days late, but were some seven weeks late. We are in this position not because of choice. First of all, we are here because we’ve lost seven weeks in the programme, not through our fault. Maloney: My instructions are that they were eighteen days late as I submitted before. Having said that, as much as I want to accept your [Honour’s] urging that the matter proceed, in reality, the plaintiff accepts that if expert evidence is served upon my client on Friday, or lay evidence, the matter cannot proceed. My client will end up prejudiced, my client will end up running this matter with evidence it has received the last business day prior to the commencement of the hearing. As much as [I] don’t want to make this submission, I can’t place my client in a position where my client is going to be prejudiced by having all this material put on the last minute. I accept that the court wants these matters dealt with expeditiously, certainly in the spirit of the new Act. Having said that, I’m going to bite the bullet and say, this is a matter that probably cannot proceed on Monday, simply because my client will be put in a situation where my client will not be able to respond properly to this. We can’t really have a hearing that starts off dealing with some issues and then goes over for the balance of it; it just really doesn’t work. His Honour: As I understand it, the defendant is saying that they cannot have their evidence on by the hearing date. [2.220]

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Hans Pet Constructions v Cassar cont. Maloney: That’s the case. They say they can have some of it on, but they can’t have any of the expert evidence. It’s really, when it all boils down to it, I don’t think there’s really going to be a great issue on the facts of this case. The case relates to a tiling job, a whole house was tiled. The tiles started to lift. The expert for the plaintiff says, you know, it was caused by various things. It is going to be a case that is going to be dealt with by experts ultimately. What I’m saying to your Honour is, without the expert evidence, the matter cannot properly be determined by the court. … Zickman: Your Honour, the position is this. That when the directions were made, the hearing date was set. We had an extra seven weeks in that period. Experts were available to do certain things. We only received those, on my instructions, particulars, some seven weeks late. We foreshadowed to the other side and you will see when you look at the notice of motion and the orders that were made, that we were given leave to amend our defence because we just didn’t know what the case was we had to meet up to that point. So we are saying we will get the expert evidence, but what’s the answer to these twenty-five questions which they have been resisting. Once we finally got those particulars in June, we were able to brief our expert and say, well, here’s this, then we received their expert evidence. He started to prepare a response to this. Your Honour, we are completely mindful of the fact that your Honour is rightly annoyed about this. His Honour: The situation is this, as I understand it. The last communication where all the particulars were in, correct me if I’m wrong, all the particulars were in and all the evidence was in by 16 June. Maloney: That’s right. The final lay evidence for the plaintiff was filed, that was the last step that’s been done in the proceedings, it was on 16 June. Particulars pre-dated that. The expert evidence was a year ago. Zickman: Your Honour, the reality is that we have had an expert engaged in this matter who– His Honour: Do you agree with me that all evidence and all particulars were to you by 16 June? Zickman: Your Honour, that sounds about correct. But your Honour, if I can just say this– His Honour: In that case, what you have is from 16 June to 22 July, a period of six weeks, in which to get your evidence together, based on particulars and based on the expert’s report that, as I understand it, was served in May 2007. So you’ve had particulars for six weeks, but you’ve had the expert’s report, this is correct since May 2007? Maloney: March 2007, your Honour. His Honour: March 2007. So, you’ve had six weeks to completely prepare your case and you’re telling me now on the review date, that you can’t complete your evidence by the time the matter is set for hearing. Zickman: My instructions are that my expert went out when this matter first surfaced, so he was someone who went out and had a look before the remedial work was done, so we weren’t in a position to get any other expert. So he went out and he prepared a preliminary response, but not an expert report. Once we got the particulars, it became clear there was a lot of things that the expert failed to deal with. I wasn’t involved in this, but as I understand it, the expert has subsequently been away overseas for the best part of the protracted period. Your Honour, with respect, he couldn’t deal with it. We could not get another expert because he was the only person who went and looked before all the tiles were pulled up. Once the tiles had been pulled up, there wasn’t anyone else in a position to do that. His Honour: I will consider it over morning tea. I must say I am minded to simply strike out the defence. I just cannot justify a three-day hearing with a magistrate allocated to sit, being thrown away four days before the hearing is meant to start. It’s just an outrageous waste of public money. The courts are not that flexible that we can just – and I have at the forefront of my mind – that what we are effectively doing is throwing away three days of court time, because of non-compliance, when you’ve had six weeks since the particulars are in and you 98

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Hans Pet Constructions v Cassar cont. have had since March 2007 since the expert’s report is in. But I will re-read the correspondence on my file and I will give you a determination at, say, 12 o’clock. … [21] I have set out the debate at length because it reveals what might be said to be a not uncommon set of circumstances – almost an archetypal example of the tension between the need for compliance with timetables and the common experience of their not being complied with for reasons that are debatable. Here, there was a small building case, with the mechanics of its conduct reduced to a dispute about particulars, when in all likelihood, an exchange of views of experts early would have helped to resolve the matter. The protestations of counsel for the defendants might be thought, possibly, to cover a less than diligent application to the task at hand by the defendants. The Magistrate was less than impressed. He was fully entitled to take that view. Importantly, the Court’s resources and the speedy disposition of the matter had been compromised. Whether or not that consequence was one for which the defendants were solely to blame may, however, be open to question. Nevertheless, his Honour returned and delivered an oral judgment.

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[22] His Honour first recited the facts, emphasising a three day special fixture. He noted that the plaintiff was at fault to some degree, but that the defendants had had since 16 June to deliver all their evidence. He noted the inappropriateness of seeking to vacate a date without a notice of motion, referring to Practice Note 1. The next point dealt with was the over-riding provisions of the Civil Procedure Act, s 56. Dennis v Australian Broadcasting Commission [2008] NSWCA 37 at [28] and [29] was referred to and quoted from. These paragraphs involved a specific point being made by the Court that Queensland v JL Holdings Pty Ltd [1997] HCA 1; 189 CLR 146 had been the subject of, at least partial, statutory change by s 56. The Magistrate emphasised the relevant case management considerations in the following passages: Such authority also applies to vacation of hearing dates where there is no notice of motion and where there has been a failure to comply with the orders of the court. After all, if the orders of the court are not complied with, it brings the law into disrepute. More than that, it delays matters; and more than that, where a magistrate has been specially allocated to a special fixture and three clear working days apply to that, a party who have been non-compliant seeks to vacate the hearing date without a notice of motion, without any warning by the way of appropriate process through the court, then the allocation of resources to the community of New South Wales must be … (not transcribable) … case management, must be able to take into account and determine whether the parties will have a further opportunity to comply with orders of the court. After all, if the party has not complied with an order of the court, that is if the matter has been listed since February for hearing in July, then one has to wonder whether there is ever going to be compliance. Of course when a matter is simply moved in court as it were, or more appropriately moved, of course, it is difficult for the court to know what evidence there is. All I can see is submissions as to why the matter ought to be vacated, and those submissions essentially seem to me from my notes that I took, that the expert is overseas and will not be returning in time, that because of the loss of some weeks because of the plaintiff’s failure to comply, nothing has been done. The defendant simply cannot get its evidence on within the timeframe that has been set by the court. Keep in mind that that timeframe was set by the court in February and there has been substantial compliance by the plaintiff in the sense that six weeks ago, they had completed all their particulars, over twelve months ago they had served their … (not transcribable) … statements. [23] The Magistrate returned to the question of the failure to file a motion. He then said the following: It is a question, in my view, of balancing the two obligations to the court. [2.220]

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Hans Pet Constructions v Cassar cont. (1) to provide a forum for parties, the fundamental duty as it is often described, provide a forum for the parties to resolve their disputes and giving them an opportunity to them to be heard and determined according to the rules and according to law. (2) is providing for the quick, just and cheap resolution of those problems … (not transcribable) … that compliance with the Practice Notes and compliance with directions of the court. Further, if necessary, with a view to ensuring that there is efficient and effective case management of these matters and in the case of … (not transcribable) … the magistrate is not left to pick up work or having to pick up other work or be reallocated other work if it is at all possible in such a short time-frame prior to the hearing date. [24] His Honour then referred to Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 and the effect of delay in denying justice and the decision of Campbell J (as his Honour then was) in Szczygiel v Peeku Holdings [2006] NSWSC 73 in support of his Honour’s emphasis on s 56. He then said: But in considering all of those factors, in my view, the defendant has had a … (not transcribable) … of complying within a very reasonable timetable, say, in particular, since 16 June 2008 it has not complied with the court’s directions, it has not complied with practice directions, it rises to seek a vacation of a hearing date without a notice of motion and thus in breach of not only the rules of the court, but also in breach … (not transcribable) … overriding obligation to ensure a quick, just and cheap resolution of matters, and its overriding obligation to ensure that the people of New South Wales are served by a system of justice that does not allow parties to simply obtain a vacation of hearing dates in such an expensive and wasteful manner as in this case. Taking into account all of those factors and the balance of tests that I must apply between the fundamental duty of this court to resolve disputes and the s 56 and … (not transcribable) … type considerations, in my view, it is … (not transcribable) … that the defence is to be struck out. [25] His Honour then went on to make the following order:

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The defence is struck out, the hearing is vacated. The hearing of 28, 29 and 30 July is vacated. [29] … [T]he hearing on liability was vacated but a hearing on damages was fixed. In effect, the defence was struck out and judgment on liability entered. This approach terminated the possibility of the defendants having their case heard once and for all, even if only on the plaintiff’s evidence. [30] The appeal to the Supreme Court in a large number of paragraphs raised three essential complaints: (a)

The first was that the Magistrate gave undue weight to case management and insufficient weight to the consequence of depriving the defendants of a hearing on the merits, in circumstances where Hans Pet had been partially to blame for the delay.

(b)

The second focused upon the weight given by the Magistrate to the failure to file a notice of motion to vacate the date and upon the proposition that striking out the defence was disproportionate to the default of the defendants.

(c)

The third was that the decision of the magistrate constituted a denial of procedural fairness.

[31] The learned primary judge recognised the caution that should be exercised in the review of exercises of discretion in practice and procedure, referring to House v R [1936] HCA 40; 55 CLR 499 at 504–507. The primary judge thought that the Magistrate had considered all relevant matters, [but found] [34]… Mr and Mrs Cassar have been denied natural justice, because they have been denied the opportunity of presenting their case based upon the defence filed and served in accordance with the court’s directions. It is not suggested that the defence is either embarrassing or does not disclose a 100

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Hans Pet Constructions v Cassar cont. proper defence. The refusal to grant an indulgence, where there has been adequate opportunity to comply with directions, is not a denial of procedural fairness. By the striking out of a defence, already filed, is such a denial. [35] The Cassars put forward a Notice of Contention supported by the same submissions put to the primary judge which included submissions that the Civil Procedure Act, ss 56–58 had not been applied in a judicial and proportionate manner. Disposition of the appeal [36] The arguments before this court illuminated the difficulty of review of a decision such as that made by the Magistrate. The Civil Procedure Act, ss 56–61 brings about a new statutory balance among various factors in litigation including court and party efficiency and the delivery of individual justice. Delay and case backlog are not merely factors affecting the public cost of delivering justice, they corrode the ability of the courts to provide individual justice. Especially in a court as busy as the Local Court, it is vital that the judicial system work in a way that denies, categorically, the party against whom a legitimate claim or grievance is brought the opportunity to say, with justification: “So I owe you $x, what are you going to do about it? Sue me in Court? That will take years.” The reforms that have taken place under the Civil Procedure Act and the evident attempt by the Local Court to ensure efficiency of service for the public can thus be seen not merely to reflect worthy governmental and judicial efforts for efficiency, but also to be vital for the provision of timely individual justice. To these salutary ends significant powers of case management have been placed in the hands of judicial officers which, if exercised, can often be seen to have sharp, and sometimes detrimental effects on the claims of parties. Such consequences can be seen in the very nature of the powers in the Civil Procedure Act, s 61(3) ….

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[37] The placing of the kinds of power found in the Civil Procedure Act, s 61 in the hands of all judicial officers has been made expressly subject to s 58, the terms of which are important. In s 58(1) it is made clear that the Court must seek to act “in accordance with the dictates of justice”. Section 58(2) then gives content to this phrase: […]. [38] What is vital to appreciate is that the regard to both ss 56 and 57 is statutorily compulsory: s 58(2)(a). They are considerations that are relevant in the sense discussed in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24. That is, they are relevant in the sense that the statute requires them to be taken into account. The factors in s 58(2)(b) may be taken into account but whether they are is a matter for the tribunal. [39] Section 57 is in the following terms: (1)

(2)

For the purpose of furthering the overriding purpose referred to in section 56(1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b)

the efficient disposal of the business of the court,

(c)

the efficient use of available judicial and administrative resources,

(d)

the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). [40] For the disposition of this appeal what appears in s 57(1), and in particular para (a), is vital.

[41] The content of the statutory requirement “to have regard to” a specific matter has been discussed often and is not in dispute. Spigelman CJ (with whom Macfarlan JA and Young JA agreed) [2.220]

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Hans Pet Constructions v Cassar cont. said the following in Commissioner of Police for New South Wales v Industrial Commission of New South Wales & Raymond Sewell [2009] NSWCA 198 at [73]: A statutory requirement to “have regard to” a specific matter, requires the Court to give the matter weight as a fundamental element in the decision-making process. (R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322 at 329; R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 333 and 337–338; Zhang v Canterbury City Council [2001] NSWCA 167; (2001) 51 NSWLR 589 at [71]–[73]). An equivalent formulation is that the matter so identified must be the focal point of the decision-making process. (See Evans v Marmont (1997) 42 NSWLR 70 at 79–80; Zhang supra at [73].) [42] Here the primary judge characterised the error of the Magistrate as the denial of natural justice. Of course, there was no denial of any opportunity to be heard at the procedural argument before the Magistrate. Rather, the Cassars had been denied an opportunity to be heard on the substantive claim. Yet, as Hans Pet pointed out on appeal, such is the very kind of consequence contemplated by s 61. For these reasons, the use of the phrase “natural justice” might be seen to have its difficulties: cf Palmer Tube Mills (Aust) Pty Ltd v Semi [1998] 4 VR 439 at 452. The primary judge’s conclusion as to a denial of procedural fairness can be seen to be a conclusion that the response of the Magistrate was disproportionate to the conduct of the Cassars. [43] In my view, the Magistrate did err for reasons that are advanced under the notice of contention. There is no record in the transcript of the Civil Procedure Act, s 57 being expressly referred to. It is possible that one of the “not transcribable” sections contained a reference to s 57. Practice Note 1 contains a reference s 57 and it (the practice note) was referred to. However, nowhere in the reasons of the Magistrate and discussion that preceded can one find the Magistrate having regard to s 57(1)(a) as a matter to be given weight as a fundamental element in the decision making process. If he had given it weight, it may well have been outweighed by other factors, though it is difficult to see how any proportionate response to a failure to file evidence could require more than a refusal to vacate the dates and a decision that the resolution of the parties’ controversy should proceed on the evidence then filed.

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[44] It was submitted that the Cassars had the opportunity to choose that course and rejected it. The transcript does not reveal this; and, in any event, it was not a matter of choice for them. [45] The effect of the Magistrate’s orders was not to vacate the dates but also to deny the Cassars the use of the dates even without evidence, except as to quantum. This order was made without giving the kind of weight Parliament has said was compulsory to the factor in s 57(1)(a). [46] As the Court of Appeal of Victoria said in British American Tobacco Australia Services Ltd v Cowell (Representing the Estate of McCabe (deceased)) [2002] VSCA 197; 7 VR 524 at 588 [178] about the power to strike out pleadings for default, the power is not intended to be used to punish the litigant. The proportional use of the powers in s 61 is brought about by giving the fundamental weight to the (sometimes competing) considerations in ss 56 and 57 required by s 58(2)(a) and bringing to bear such of the matters set out in s 58(2)(b) as the Tribunal thinks appropriate. [47] My reasons should not be taken as undermining, in the slightest, the authority and rigour ss 56–61 give to judicial officers in the just, quick and cheap disposal of controversies. This will often require the hacking away of a morass of technicalities and excuses for delays often put forward by less than diligent litigants. That said, the terms of s 58 (and the consequential importance of s 57, as well as s 56) should be borne in mind when exercising these case management powers. [48] The orders I propose are: (a)

leave to appeal granted;

(b)

the appellant to file a Notice of Appeal within 7 days;

(c)

appeal dismissed;

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Hans Pet Constructions v Cassar cont. (d)

appellant to pay the respondent’s costs.

Halpin v Lumley General Insurance [2.230] Halpin v Lumley General Insurance Ltd (2009) 78 NSWLR 265; [2009] NSWCA 372 BASTEN JA [3] The proceedings arose out of the refusal by the respondent to pay an insurance claim made by the applicants. The refusal was in part based upon concerns that the applicants had been untruthful in the making of the claim. The respondent, in investigating the claims, obtained certain materials and information with respect to which they sought to maintain confidentiality, until they were deployed in the course of the proceedings and, no doubt, initially in the cross-examination of the applicants. Hoeben J directed that the respondent not be required to serve certain affidavits: Halpin v Lumley General Insurance Ltd (2009) 258 ALR 588; [2009] NSWSC 644. [5] … [T]he applicants … contended that such a power no longer existed because it pre-dated procedural changes which were expressly designed to overcome those characteristics of civil litigation which rendered it liable to be “trial by ambush”. [6] … [T]he applicants submitted that there was no authority to support the proposition that material could be excluded from pre-trial disclosure where it necessarily formed evidence upon which a defendant would seek to rely in support of a pleaded defence. The fact that the material might also be used in cross-examination of the plaintiffs, or their witnesses, did not justify maintaining pre-trial confidentiality.

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[24] Sections 56, 57 and 58(1) and (2)(a) have an appearance of clarity and rigour, based on simplicity and repetition. As the Court (Allsop P, Campbell and Young JJA agreeing) noted in Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [38] both ss 56 and 57 are “statutorily compulsory” considerations. A court will act erroneously in law if it fails to take them into account. Furthermore, as explained by the Court in Commissioner of Police (NSW) v Industrial Relations Commission (NSW) [2009] NSWCA 198 at [73] (Spigelman CJ, Macfarlan and Young JJA agreeing): A statutory requirement to “have regard to” a specific matter, requires the Court to give the matter weight as a fundamental element in the decision-making process. (R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322 at 329; R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 333 and 337–338; Zhang v Canterbury City Council [2001] NSWCA 167; (2001) 51 NSWLR 589 at [71]–[73]). An equivalent formulation is that the matter so identified must be the focal point of the decision-making process. (See Evans v Marmont (1997) 42 NSWLR 70 at 79–80; Zhang supra at [73].) [25] It may be remarked by way of exegesis that a statutory requirement to “have regard to” a particular matter will obtain its force and effect from its context. The particular matter will become a fundamental element or focal point where it is the only matter, or one of a small number of identified matters, to be taken into account. Thus, in R v Toohey; ex parte Meneling Station [1982] HCA 69; 158 CLR 327, a matter, namely the “strength or otherwise of the traditional attachment by the claimants to the land claimed” was the sole matter to which the Commissioner was obliged to “have regard”, four other matters being identified as matters for comment, at 336 and 338 (Mason J). Similarly, in R v Hunt; Ex parte Sean Investments Pty Ltd [1979] HCA 32; 180 CLR 322 at 329, Mason J explained in relation to the operation of s 40AA(7) of the National Health Act 1953 (Cth), dealing with the fixing of fees charged for nursing home care: When subs (7) directs the Permanent Head to “have regard to” the costs, it requires him to take those costs into account and to give weight to them as a fundamental element in making [2.230]

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Halpin v Lumley General Insurance cont. his determination. There are two reasons for saying that the costs are a fundamental element in the making of the determination. First, they are the only matter explicitly mentioned as a matter to be taken into account. Secondly, the scheme of the provisions is that, once the premises of the proprietor are approved as a nursing home, he is bound by the conditions of approval not to exceed the scale of fees fixed by the Permanent Head in relation to the nursing home. In many cases it is to be expected that the scale of fees will be fixed by ascertaining the costs necessarily incurred and adding to them a profit factor. In the very nature of things, the costs necessarily incurred by the proprietor in providing nursing home care in the nursing home are a fundamental matter for consideration. However, the sub-section does not direct the Permanent Head to fix the scale of fees exclusively by reference to costs necessarily incurred and profit. [26] Similarly, the point made by Gleeson CJ and McClelland CJ in Eq in Evans v Marmont (1997) 42 NSWLR 70 was that a particular provision of the De Facto Relationships Act 1984 (NSW) permitting the Court to adjust interest with respect to property of the de facto partners, identified two factors which were “not merely two matters, or groups of matters, which take their place amongst any other relevant considerations”: at 79–80; applied in Zhang v Canterbury City Council [2001] NSWCA 167; 51 NSWLR 589 at [73]. [27] Those principles have a clear operation in relation to s 57(1) which identify four specific objects to which regard shall be had. How such a mandatory obligation operates in relation to s 56 is less clear.

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[28] Section 56 purports to identify a single “overriding purpose”, namely to facilitate “the just, quick and cheap resolution of the real issues in” civil proceedings. It is self-evident that what will be required in most cases is the resolution of a tension between speed (including avoidance of delay), reduction of costs and the proper consideration of the issues raised by the parties, especially in cases of complexity. Other provisions which appear to be intended to have a similar effect are more explicit in their recognition of the need to resolve such tensions: see, eg, Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 1.14; Uniform Civil Procedure Rules 1999 (Qld), r 5; Administrative Appeals Tribunals Act 1975 (Cth), s 2A; Access to Justice (Civil Litigation Reforms) Amendment Bill 2009 (Cth), cl 37M(3). In the explanatory memorandum accompanying the Commonwealth Bill, it is noted at para 21: The overarching purpose is not intended to prevent the exercise of judicial discretion in managing particular cases. In the NSW Civil Procedure Act 2005, s 56 uses the term “overriding purpose”. An “overriding purpose” would trump any other inconsistent purpose. For example, if a party required a certain number of witnesses or a certain number of hearing days, but this was inconsistent with the just, quick, and cheap resolution of the real issue in the proceedings, the Court would be required to give effect to the purpose, as it is overriding. [29] This remark appears to take a different view of the effect of s 56 to that suggested above. The purpose of the Act and rules, and the purpose to which the Court is required to give effect in the exercise of a power given by the rules, is to facilitate an outcome which fulfils, by an appropriate resolution of conflicting tensions, the attributes of being just, quick and cheap. The real question is how should the Court go about this exercise? [30] In part, the answer to that question must be found in s 57. The changes which are brought to pass by these provisions, taken in tandem, are primarily two-fold. The first change from traditional practice is that the Court is required to have regard to questions of cost and delay, and not merely the resolution of the issues in the manner and at a time sought by one or other party. As explained by the High Court in the context of the exercise of the power of amendment, a party seeking an indulgence cannot assume that an offer to pay the costs incurred will necessarily be sufficient either to overcome the potential prejudice to the other party, or to entitle it to a favourable exercise of a power of amendment: see Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 83 ALJR 951 at [25] (French CJ) and [98] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). Secondly, the Court is not only entitled but required now to take into account the effect of any exercise of power on the 104

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Halpin v Lumley General Insurance cont. efficient disposal of the business of the Court and the use of available judicial and administrative resources in other proceedings. To give effect to that object, it is clear that the parties cannot determine the management of their own cases in their own way and at their own speed. The Court is entitled, and in appropriate cases obliged, to interfere and give directions to ensure that the broader objects of case management within the Court are effected. SACKVILLE AJA [93] The application of the criteria laid down by ss 56–58 is not without difficulty. There is, or at least may be, a tension between the just resolution of the real issues in proceedings and the quick and cheap resolution of those issues. A reasonable opportunity to lead evidence, cross-examine witnesses and present a case (cf CP Act, s 62(4)), depending on the nature of the claim, may be very difficult to achieve quickly and cheaply. Similarly, the “just determination of the proceedings” (s 57(1)(a)) may detract from “the efficient use of available judicial … resources” (s 57(1)(c)), if the latter expression means minimising the judicial resources required to resolve a given number of cases. To some extent the tension is ameliorated by the concept of proportionality, introduced by ss 57(1)(d) and 60 of the CP Act. Nonetheless, the exercise of powers in conformity with the “overriding purpose” is likely to involve some balancing of competing objectives. [94] The CP Act does not expressly accord paramountcy to the just determination of the proceedings, although this is the first object stated in s 57(1) of the CP Act. In contrast, for example, the rule considered by the High Court in Aon Risk Services (Court Procedures Rules 2006 (ACT), r 21(1)) states that the purpose of the Rules is: to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense. Similarly, the Civil Procedure Rules 1998 (UK), made under the Civil Procedure Act 1997 (UK), state (r 1.1(1)) that the: Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly.

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The expression “deal with cases justly” includes, so far as practicable, the following considerations (r 1.1(2)): (a)

ensuring that the parties are on an equal footing;

(b) (c)

saving expense; dealing with the case in ways which are proportionate – (i) to the amount of money involved; (ii)

to the importance of the case;

(iii)

to the complexity of the issues; and

(iv)

to the financial position of each party;

(d)

ensuring that it is dealt with expeditiously and fairly; and

(e)

allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.

[95] Whatever difficulties there may be in reconciling the objectives embodied in the overriding purpose stated in s 56(1) of the CP Act, it is clear that the court has wide powers to make directions for the conduct of proceedings, including the directions relating to the disclosure or withholding of affidavits or reports on which a party intends to rely at a hearing. It is necessary, in the exercise of such powers for the court to take into account the mandatory considerations identified in the CP Act and the UCPR. Those considerations may suggest the exercise of caution before one party is given an apparent forensic advantage by being partially exempted from a requirement to exchange affidavits [2.230]

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Halpin v Lumley General Insurance cont. and reports prior to the trial. But it is impossible to say, irrespective of the justice of the particular case or the issues at stake, that the court’s powers can never be wide enough to make orders of the kind made in the present case. [96] Specifically, if the court considers that an order permitting one party to withhold affidavit or other material from the other party pending the trial is likely to assist in the speedy determination of the real issues between the parties (CP Act, s 61(1)) or is likely to advance the just, quick and cheap disposal of the proceedings (UCPR, r 2.1), it has power to make the order. Whether the order is appropriate in a particular case will depend on a number of considerations, including the application to the circumstances of the case of the criteria stated in CP Act, s 57(1) and the “dictates of justice” as defined in s 58(2). Policy Issues and Exercise of the Power [97] The policy reasons identified by Mr Pritchard in his submissions are likely to be relevant to the exercise of the powers conferred by the CP Act or the UCPR, where one party seeks an order of the kind made in the present case. The first of the matters identified by Mr Pritchard, the risk of an adjournment of the trial, would ordinarily be a matter relevant to the “overriding purpose” stated in s 56(1) of the CP Act. The risk of an adjournment, if realised, might diminish the likelihood of a “quick and cheap resolution of the real issues”. The risk might also be thought, depending on the circumstances, to jeopardise the efficient disposal of the business of the court and the efficient use of available judicial resources (ss 57(1)(b), (c), 58).

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[98] The second matter identified by Mr Pritchard, namely fairness to the party denied access to the material until after the trial has commenced, clearly must be taken into account before an order is made. Fairness to a party is, at the very least, important to the just resolution or determination of the proceedings (CP Act, ss 57(1)(a), 58(1); see too, s 58(2)(b)(v)). The likely impact of the order upon prospects for settlement (the third policy issue identified by Mr Pritchard) is likely to be relevant to the efficient use of available judicial resources and to the timely disposal of the proceedings (s 57(1)(b), (d)). [99] It is, however, one thing to say that these “policy” considerations may have to be taken into account in determining whether a power conferred by the CP Act or the UCPR should be exercised in a particular case. It is another to suggest that they lead to the conclusion that the court lacks power, regardless of the circumstances, to make directions authorising one party to withhold affidavits or reports from the other party until after the trial has commenced. There is nothing in the language of the relevant provisions of the CP Act or the UCPR that supports any such conclusion. [100] Mr Pritchard referred to authorities which emphasise the need for “clarity, precision and openness in the conduct of litigation” and the importance of a “cards on the table approach” which leads to the delineation and illumination of the real issues in dispute: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243, at [160]–[162], per Allsop P (with whom Beazley and Campbell JJA agreed); Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; 53 NSWLR 116, at [26]–[31] per Heydon JA (with whom Mason P and Young CJ in Eq agreed) (rejecting the “ambush theory of litigation” and endorsing the observations of Allsop J in White v Overland [2001] FCA 1333, at [4]: [I]n the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. [101] There is no inconsistency between these statements of principle and the existence of a power, exercisable for good cause in appropriate circumstances, to direct that a party may withhold affidavits until trial. The making of such a direction does not imply that the trial is to be conducted “by 106

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Halpin v Lumley General Insurance cont. ambush”, nor that the party seeking the direction has failed to co-operate in identifying and elucidating the issues in dispute. On the contrary, the statutory criteria that must be taken into account for a direction to be made should ensure that the issues are clearly defined and that the party seeking the directions demonstrates that the “dictates of justice” will be served by the direction. … Conclusion on Power [107] For these reasons I conclude that courts in New South Wales have power under the CP Act and the UCPR to make orders relieving one party to civil litigation from complying, in whole or in part, with directions that would otherwise require that party to disclose to the other in advance of the trial all affidavits and reports to be adduced in evidence at the trial. The sources of such a power include, (although they are not necessarily limited to) CP Act, s 61(1), (2)(c) and UCPR, rr 2.1, 2.3. In exercising the power, a court is required to take into account the overriding purpose of the CP Act and the UCPR stated in s 56(1) of the CP Act and the objects identified in s 57(1). It is also necessary to take into account, insofar as relevant, the object of minimising delay, within the limitations outlined in s 59 of the CP Act and the principle of proportionality embodied in s 60. The court may also have regard to the matters specified in s 58(2), to the extent it considers those matters relevant. As I have explained, a decision in a particular case is likely to require a weighing of considerations that will not always be easy to reconcile.

McGuirk v University of New South Wales [2.240] McGuirk v University of New South Wales [2010] NSWCA 104 SACKVILLE AJA

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[162] … The width of the power conferred by r 2.1 is striking. The court is given power at any time to give such directions and to make such orders for the conduct of any proceedings, whether or inconsistent with the rules of court, for the just, quick and cheap disposal of the proceedings. Rule 2.1 differs from s 61(1) in two important respects: • the power is not confined to making directions for the speedy determination of the real issues in the proceedings, but includes a power to make directions or orders as appear convenient for the just, cheap and quick disposal of the proceedings; and • the power is to give directions or orders “for the conduct of any proceedings”.

Aon Risk Services Australia Ltd v ANU [2.250] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 [ANU commenced proceedings in the Supreme Court of the ACT against three insurers, claiming an indemnity for losses it had suffered by reason of the destruction or damage to buildings at its Mount Stromlo Complex by fire in January 2003. Aon was the ANU’s insurance broker. On the third day of a 4-week trial of the action, ANU reached a settlement with the insurers. ANU sought an adjournment of the trial of its claim against Aon and foreshadowed an application for leave to amend that claim to add a new claim against Aon.] GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ [60] Rule 21 states the purposes of the Rules in Ch 2 and requires that they be applied to those ends. The Rule is in these terms: [2.250]

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Aon Risk Services Australia Ltd v ANU cont. (1)

The purpose of this chapter, and the other provisions of these rules in their application to civil proceedings, is to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense.

(2)

Accordingly, these rules are to be applied by the courts in civil proceedings with the objective of achieving – (a) the just resolution of the real issues in the proceedings; and (b)

the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(3)

The parties to a civil proceeding must help the court to achieve the objectives.

(4)

The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court. …

[92] The purposes stated in r 21 reflect principles of case management by the courts. Such management is now an accepted aspect of the system of civil justice administered by courts in Australia. It was recognised some time ago, by courts here and elsewhere in the common law world, that a different approach was required to tackle the problems of delay and cost in the litigation process. In its report in 2000, Managing Justice: A review of the federal civil justice system, the Australian Law Reform Commission noted that: “Over the last ten years Australian courts have become more active in monitoring and managing the conduct and progress of cases before them, from the time a matter is lodged to finalisation”. [93] Rule 21(2)(b) indicates that the rules concerning civil litigation no longer are to be considered as directed only to the resolution of the dispute between the parties to a proceeding. The achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the court and upon other litigants. In Sali v SPC Ltd Toohey and Gaudron JJ explained that case management reflected:

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[t]he view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court’s lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard … [94] It will be recalled that in JL Holdings the plurality said that nothing in Sali v SPC suggested that principles of case management might be employed “except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable”. Their Honours said that case management was not to be seen as an end to itself and that the ultimate aim of the court remained the attainment of justice, even in changing times. In Gale v Superdrug Stores Plc Millett LJ expressed a similar concern, regarding the need to ensure that justice is not sacrificed. Waller LJ, delivering the judgment of the Court of Appeal in Worldwide Corporation Ltd v GPT Ltd, said that such a concern did not pay sufficient regard to the fact that the courts are concerned to do justice to all litigants. Where a party had had a sufficient opportunity to plead his or her case, it may be necessary for the court to make a decision which may produce a sense of injustice in that party, for the sake of doing justice to the opponent and to other litigants. [95] The statement of Waller LJ identifies a fundamental premise of case management. What may be just, when amendment is sought, requires account to be taken of other litigants, not just the parties to the proceedings in question. The statement is consistent with what was said in Sali v SPC, which reflected a proper understanding of case management. The statements in JL Holdings do not reflect such an understanding and are not consistent with what was said in Sali v SPC. To say that case management principles should only be applied “in extreme circumstances” to refuse an amendment implies that considerations such as delay and costs can never be as important as the raising of an arguable case; and it denies the wider effects of delay upon others. 108

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Aon Risk Services Australia Ltd v ANU cont. [96] An important aspect of the approach taken by the plurality in JL Holdings was that it proceeded upon an assumption that a party should be permitted to amend to raise an arguable issue subject to the payment of costs occasioned by the amendment. So stated it suggests that a party has something approaching a right to an amendment. That is not the case. The “right” spoken of in Cropper v Smith needs to be understood in the context of that case and the Rule, which required amendment to permit the determination of a matter already in issue. It is more accurate to say that parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute. Subject to any rights to amend without leave given to the parties by the rules of court, the question of further amendment of a party’s claim is dependent upon the exercise of the court’s discretionary power. [97] The objectives of case management are now expressly stated in r 21 of the Court Procedures Rules. It cannot be overlooked that later rules, such as r 21, are likely to have been written with the decision in JL Holdings in mind. The purposes stated in r 21 cannot be ignored. The Court Procedures Rules make plain that the Rules are to be applied having regard to the stated objectives of the timely disposal of the proceedings at an affordable cost. There can be no doubt about the importance of those matters in litigation in the courts of the Australian Capital Territory.

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[98] Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a “just resolution” is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule’s reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. [99] In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party’s opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. Such a view may largely explain the decision of this court in Shannon v Lee Chun, which upheld a decision allowing the plaintiff to raise a new case at the second trial, but which imposed a condition as to costs. The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh. [100] The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd, that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted. In Bomanite Pty Ltd v Slatex Corp Aust French J said of Bowen LJ’s statements in Cropper v Smith: That may well have been so at one time, but it is no longer true today … Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary. [101] In Ketteman Lord Griffiths recognised, as did the plurality in JL Holdings, that personal litigants are likely to feel the strain more than business corporations or commercial persons. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, [2.250]

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Aon Risk Services Australia Ltd v ANU cont. have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings. [102] The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court’s discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.

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[103] The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in JL Holdings. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court’s attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case.

Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing [2.255] Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 [The interlocutory dispute before the High Court dealt with documents inadvertently provided by some of the defendants (ERA parties) to the plaintiffs (Armstrong parties) as part of discovery that were subject to client legal privilege. The solicitors for Armstrong reviewed the disclosed documents and came across 13 documents that appeared to be subject to client legal privilege (the “Privileged Documents”). Armstrong’s solicitors sent a letter to ERA’s solicitors seeking clarification as to the Privileged Documents. ERA’s solicitors then wrote to Armstrong’s solicitors stating that due to an “inadvertence on the part of one of the reviewers, [the Privileged Documents] were not marked as privileged” and sought the return of the Privileged Documents. Armstrong’s solicitors declined to return the Privileged Documents and claimed that whatever privilege the documents might have held had been waived upon disclosure. ERA sought an injunction to refrain Armstrong from using the Privileged Documents. In the courts below, the issue had been dealt with based on waiver of privilege and protection of confidential information. The High Court dealt with the issue by reference to the overriding purpose and the court’s power to give directions.]

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Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. THE COURT [7] Proceedings of this kind and length concerning a tangential issue should have been averted. There was no need to resort to an action in the equitable jurisdiction of the Supreme Court to obtain relief. That Court has all the powers necessary to deal with an issue relating to discovery and which required, essentially, that a party be permitted to correct a mistake. Those powers exist by virtue of the Court’s role in the supervision of the process of discovery and the express powers given by Pt 6 of the CPA to ensure the “just, quick and cheap resolution of the real issues in the dispute or proceedings.” 9 Those powers should have been exercised in relation to each of the 13 privileged documents for the reasons which follow. … The approach required by the CPA [51] In Aon Risk Services Australia Ltd v Australian National University [(2009) 239 CLR 175 at 211 [92]-[93], 213 [98]], it was pointed out that case management is an accepted aspect of the system of civil justice administered by the courts in Australia. It had been recognised some time ago by courts in the common law world that a different approach was required to tackle the problems of delay and cost in the litigation process. Speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. The achievement of a just but timely and cost-effective resolution of a dispute has effects not only upon the parties to the dispute but upon the court and other litigants. The decision in Aon Risk Services Australia Ltd v Australian National University was concerned with the Court Procedures Rules 2006 (ACT) as they applied to amendments to pleadings. However, the decision confirmed as correct an approach to interlocutory proceedings which has regard to the wider objects of the administration of justice. [52] Unsurprisingly, the case management rules with which the Court was concerned in Aon Risk Services Australia Ltd v Australian National University had essentially the same object as those stated in the CPA. … [The Court set out CPA ss 56-59.]

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[55] … The CPA provides some broad powers to the court to enable it to fulfil its duties with respect to the management of proceedings. Sections 56 to 59 appear in Pt 6 of Div 1 (“Guiding principles”) of the CPA. Division 2 of Pt 6 is entitled “Powers of court to give directions”. Section 61(1) provides generally that: The court may, by order, give such directions as it thinks fit (whether or not inconsistent with rules of court) for the speedy determination of the real issues between the parties to the proceedings. Sub-section (2) goes on to provide that the court may, inter alia, direct the parties to take specified steps and give such other directions with respect to the conduct of the proceedings as it considers appropriate. [56] The evident intention and the expectation of the CPA is that the court use these broad powers to facilitate the overriding purpose. Parties continue to have the right to bring, pursue and defend proceedings in the court, but the conduct of those proceedings is firmly in the hands of the court. It is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose. [57] That purpose may require a more robust and proactive approach on the part of the courts. Unduly technical and costly disputes about non-essential issues are clearly to be avoided. However, the powers of the court are not at large and are not to be exercised according to a judge’s individualistic idea of what is fair in a given circumstance. Rather, the dictates of justice referred to in s 58 require that in determining what directions or orders to make in the conduct of the proceedings, regard is to be had in the first place to how the overriding purpose of the CPA can be furthered, together with other 9

The version of section 56 that the High Court addressed was subsequently amended by the Courts and Other Legislation Further Amendment Act 2013 (NSW), which deleted the words “dispute or”. [2.255]

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Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. relevant matters, including those referred to in s 58(2). The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the CPA assume that its purpose, to a large extent, will coincide with the dictates of justice. The orders which should have been made [58] In addition to the general powers it gives to courts, the CPA also provides some more specific powers. The relevant power here is to be found in s 64 of the CPA, entitled “Amendment of documents generally”, which appears in Div 3 of Pt 6 (“Other powers of court”). Section 64(1)(a) empowers the court, at any stage in the proceedings, to order that any document in the proceedings be amended. Section 64(2) then provides that, subject to s 58 (the dictates of justice): all necessary amendments are to be made for the purpose of determining the real questions … correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. The direction which the Supreme Court should promptly have made in this case was to permit Norton Rose to amend the Lists of Documents, together with consequential orders for the return of the disks to enable the privileged documents to be deleted. Such a direction and orders would have obviated the need to resort to the more complex questions concerning the grant of relief in the equitable jurisdiction. It would have served to defuse the dispute and dissuaded the Armstrong parties from alleging waiver. It accords with the overriding purpose and the dictates of justice. [59] It could hardly be suggested that the pursuit of satellite interlocutory proceedings of the kind here in question in any way fulfils the overriding purpose of the CPA. To the contrary, it is the very kind of conduct which should be avoided if those purposes are to be achieved. It involved a relatively minor issue relating to discovery, the resolution of which appears to have offered little advantage to the Armstrong parties. Its determination went no way towards the resolution of the real issues in dispute between the parties. Instead, it has distracted them from taking steps to a final hearing, encouraged the outlay of considerable expense and squandered the resources of the Court. …

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Solicitors’ responsibilities [64] The question for a party to civil proceedings and its legal representatives is not just whether there is any real benefit to be gained from creating a dispute about whether a mistake in the course of discovery should be corrected. The CPA imposes a positive duty upon a party and its legal representatives to facilitate the CPA’s purposes. Requiring a court to rule upon waiver and the grant of injunctive relief in circumstances such as the present could not be regarded as consistent with that duty.

Tugrul v Tarrants Financial Consultants [2.260] Tugrul v Tarrants Financial Consultants Pty Ltd [No 5] [2014] NSWSC 437 KUNC J [An Amended Notice of Motion filed by the Third Defendant (Ms Seco) for security for costs was dismissed by Kunc J. The application was filed without Ms Seco’s solicitor first corresponding with the Plaintiffs’ solicitors concerning the Plaintiffs’ ability to meet any order for costs made against them. The application was subsequently not pressed against the plaintiffs that were natural persons. The principles governing security for costs are discussed in Chapter 3.] [63] There was no reason for the peremptory filing of Ms Seco’s application. To have done so was a departure from proper practice. That conduct, and the fact that this is my fifth (and, hopefully, final) judgment in the management and disposition of interlocutory applications in these proceedings over 112

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Tugrul v Tarrants Financial Consultants cont. several months, calls for reflection on how parties and their lawyers should approach interlocutory matters in the course of proceedings in this Court. I should also record that one party to these proceedings has informed the Court that the financial burden of the interlocutory hearings thus far has meant that he can no longer afford legal representation. [64] Having regard to s 56 of the CP Act, parties to proceedings in this Court and their lawyers are required to engage in prompt, courteous and genuine cooperation (including the provision of reasonably required information or explanations) with the firm intention of resolving interlocutory issues, as far as possible, without involving the processes of the Court. If complete resolution is not possible, then the parties’ conduct should at least ensure that only those issues that are really in dispute are submitted for adjudication. “Unduly technical and costly disputes about non-essential issues are clearly to be avoided”: Expense Reduction and Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 303 ALR 199; (2013) 88 ALJR 76 (“Expense Reduction”) at [57] per the Court. The approach I have identified should be followed in all cases except where there is a real basis for the urgent filing of a motion. … [66] Also relevant is s 59 of the CP Act, which applies with equal force to the parties and the Court:

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In any proceedings, the practice and procedure of the court should be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial. [67] Section 56 of the CP Act was considered by the High Court in Expense Reduction. These observations by the Court are especially pertinent (emphases added and citations omitted): Solicitors’ responsibilities 64. The question for a party to civil proceedings and its legal representatives is not just whether there is any real benefit to be gained from creating a dispute about whether a mistake in the course of discovery should be corrected. The CPA imposes a positive duty upon a party and its legal representatives to facilitate the CPA’s purposes. Requiring a court to rule upon waiver and the grant of injunctive relief in circumstances such as the present could not be regarded as consistent with that duty. 65. The position of solicitors who are in receipt of privileged documents has another dimension. Rule 31 of the Australian Solicitors’ Conduct Rules, which were adopted by the Law Council of Australia, deals with the duty of a solicitor to return material, which is known or reasonably suspected to be confidential, where a solicitor is aware that its disclosure was inadvertent. It involves notifying the other solicitor of the disclosures and returning that material. The rule has been adopted in Queensland and South Australia and the Law Society of New South Wales presently proposes to adopt it. 66. Such a rule should not be necessary. In the not too distant past it was understood that acting in this way obviates unnecessary and costly interlocutory applications. It permits a prompt return to the status quo and thereby avoids complications which may arise in the making of orders for the rectification of the mistake and the return of documents. 67. This approach is important in a number of respects. One effect is that it promotes conduct which will assist the court to facilitate the overriding purposes of the CPA. It is an example of professional, ethical obligations of legal practitioners supporting the objectives of the proper administration of justice. [68] How do these dicta and the requirements of ss 56 and 59 of the CP Act translate into practice when interlocutory issues arise, including such matters as amendments, strike outs, discovery and security for costs? Assuming compliance by the practitioner with the relevant professional conduct rules, nine points may be made by way of general, practical guidance. Nevertheless, the variety of circumstances confronted in practice means that what follows cannot be exhaustive. [2.260]

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Tugrul v Tarrants Financial Consultants cont. [69] First, it must be emphasised that s 56 of the CP Act and its related provisions are not just pious exhortations to be acknowledged and then ignored. They have real consequences for the clients and lawyers in this Court and are to be applied rigorously in the conduct of all litigation, great or small. [70] Second, solicitors and barristers are members of a profession. It is of the essence of a profession that relations between its members are characterised by civility, trust and mutual respect. The Court sees far too much correspondence between lawyers that bears none of those qualities. They must never be abandoned at the behest of clients or in the misguided belief that that is what successful representation of a client requires. [71] Third, many interlocutory issues can be solved or at least better understood by a simple telephone call. It has been suggested that some lawyers no longer speak to their opponents on the telephone for fear of being “verballed” in an affidavit. If that is true, then it is a retrograde development which the CP Act gives legislative authority to the profession to reverse. [72] Fourth, if one party requires information or an explanation from another, then the request should be reasonable and focused. A clear justification for the request should be given. [73] Fifth, faced with a reasonable request, the recipient should not automatically respond with an unthinking denial of legal entitlement to the information. The obligation to facilitate the overriding purpose will sometimes require information or an explanation to be given to which the party may not be “legally” entitled. Furthermore, if it is information which would be required to be produced in response to a subpoena or notice to produce then it is contrary to the s 56 obligations of a party and that party’s lawyers to resist providing it unless and until the Court’s process is invoked. If there is concern for the confidence of such material then an undertaking of the kind considered in Hearne v Street [2008] HCA 36; (2008) 235 CLR 125 (which would apply if the information were provided under compulsion) should be sought and given.

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[74] Sixth, the filing of a motion should be regarded as a last resort. It will inevitably add to costs, and delay the progress of the matter to hearing. [75] Seventh, no motion should be filed without the putative respondent being given final, written notice of the relief to be sought, the reason for it and a reasonable opportunity to respond. The Court sees far too many examples of deadlines of a day or less being set in correspondence. My own view, as a rule of thumb, is that three clear business days is reasonable to allow for a response on any matter of substance. If the recipient requires more time to obtain instructions, then they should send a prompt request with an explanation to that effect and an indication of when a proper reply will be provided. In relation to challenges to pleadings it was once the practice for opposing counsel to confer before a strike out motion was filed. To the extent that practice has been lost, it should resurrected. [76] Eighth, once a motion is filed, the parties are obliged to ensure that only the real or essential issues are litigated. This calls for discrimination in both the preparation of evidence and argument. As to the former, real thought must be given to the precise evidence required. The practice of exhibiting “everything” or “the file” to provide an evidentiary cornucopia from which only a few morsels are ultimately selected to be referred to in argument is completely unacceptable. Where it becomes apparent that an application or argument is unsustainable, it should be abandoned, and that abandonment notified to the other parties, at the earliest opportunity. [77] Ninth, where delay or unnecessary expense has been caused by conduct which is contrary to the obligations of parties and their lawyers under s 56 and its related provisions, parties and lawyers should not be in any doubt that in appropriate cases the Court will exercise its power in relation to

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Tugrul v Tarrants Financial Consultants cont. costs (see s 56(5) of the CP Act) to provide some measure of justice in response to such conduct.

Reconciling the goals of minimising cost and delay with the principle of a fair trial in the Australian civil justice system [2.265] Michael Legg, “Reconciling the goals of minimising cost and delay with the principle of a fair trial in the Australian civil justice system” (2014) 33(2) Civil Justice Quarterly 157 [footnotes omitted] I INTRODUCTION The concept of an overriding or overarching purpose that requires attention to justice, cost and delay (“Purpose Requirement”) now exists in almost all Australian jurisdictions. The concept is of major significance because of its status as an objective for the civil justice system, the fulcrum upon which case management pivots and a guide to the interpretation of rules of civil procedure. Another important concept for civil justice is the principle of a fair trial, which incorporates procedural fairness, also known as due process or natural justice. From a normative perspective fairness has been viewed as a desirable quality in its own right. Fairness has been found to be a critical factor in citizen satisfaction with, and endorsement of, institutions, including compliance with outcomes. Fair processes are central to public confidence in the justice system and, as the justice system is a component of the State, in the support of civil society and democracy. The main goal of this article is to consider the interaction and overlap between a statutory or rule-based Purpose Requirement and the principle of a fair trial because the interaction is of significance to not just litigants before the Courts, but due to their fundamental nature, to Australian society more generally. …

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VI THE OPERATION OF A PURPOSE REQUIREMENT … “Justice” in the context of the court system may be conceived of in at least two ways: arriving at the correct result and ensuring procedural fairness. However, the High Court in Aon Risk explained that a just resolution requires minimising cost and delay. Further, “justice” in civil litigation has also traditionally been viewed from the perspective of justice as between the parties to a particular case. However pressure on public resources and delay resulting from traditional civil procedures has meant “justice” has been broadened to include taking into account cost, delay and prejudice to other users of the civil litigation system. Justice, whether in terms of producing an accurate outcome or affording a fair process, and whether looked at from the perspective of the litigant before the court or the litigant standing in line waiting to access the court, has embedded within it time and cost elements. This conception of justice requires further consideration. If justice with its dimensions of cost and delay was widely accepted then there would be no need for a Purpose Requirement that expressly referred to cost and delay. The object of the Purpose Requirements discussed above must be to raise awareness of the cost and delay dimensions and alter the weight or significance given to them. The aim is to change the culture of civil litigation. A Purpose Requirement is a tool of interpretation that comes to the fore when there is a discretion to be exercised by the Court, especially in the context of case management. The High Court in Aon adopted this approach in deciding how a power of amendment was to be exercised. It follows that a Purpose Requirement does not trump other procedural provisions but instead informs how they should be interpreted or applied. The reference to cost and delay may change the traditional reference point where “doing justice” was a goal to be pursued without regard to delay and expense, but a Purpose Requirement does not operate alone or without regard to the requirements of other procedural provisions. [2.265]

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Reconciling the goals of minimising cost and delay with the principle of a fair trial in the Australian civil justice system cont. A Purpose Requirement also impacts on how a discretion is to be exercised by specifying those matters that must or may be considered. In exercising a discretion about whether to make a particular decision a Court must weigh the impact of that decision on each of justice, cost and delay. … The weighing or balancing exercise means that the waste of costs and some degree of delay do not necessitate that the request for an indulgence must be denied as the requirements of justice must also be weighed. … Of course where the need for the indulgence arises from non-compliance that is intentional, or no explanation is provided, the balancing exercise will be more straightforward. This process will be referred to further below as it is crucial to the fair trial requirement. Lastly, the parties need to assist the Court in the balancing of justice, cost and delay. This includes providing an explanation for any indulgence sought, and the impact of the indulgence on justice, cost and delay. It may also mean refraining from conduct that is contrary to a Purpose Requirement. Indeed, if the parties, but more likely their lawyers, do not assist the Court in furthering the objects of a Purpose Requirement they may be subject to a costs order. Moreover, being able to explain the reason for a delay and demonstrate that an indulgence is made in good faith may be necessary for a lawyer to be able to discharge their duty to the court. VII THE PRINCIPLE OF A FAIR TRIAL The former High Court Chief Justice Murray Gleeson explained the conundrum of seeking to address cost and delay in civil litigation as follows: It is characteristic of the judicial process that it seeks to be fair. Some people would say another characteristic is that the process is slow and expensive. How do you reverse the second and preserve the first? In the context of Parliament and courts widely adopting Purpose Requirements, which are a potential answer to Gleeson’s question, the focus of debate shifts to how does the principle of a fair trial and a Purpose Requirement interact? Has the express adoption of concerns about cost and delay compromised the principle in Australian law of a fair trial?

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[The content of procedural fairness is explained in Chapter 1. It includes that a court be and appear to be impartial, and provide each party to proceedings before it with an opportunity to be heard, to advance its own case and to answer, by evidence and argument, the case put against it.] B. Procedural Fairness May Conflict with Reducing Cost and Delay Purpose Requirements are supported by case management powers that “can often be seen to have sharp, and sometimes detrimental effects on the claims of parties”. A failure to comply with directions such as through the late filing of evidence or amendments to pleadings or repeated requests for adjournments can be met with not just denial of the applications but claims being struck out or costs orders imposed. Similarly, a court has power to give directions as to the conduct of any hearing, including limiting the time that may be taken in the examination or cross-examination of a witness, limits on witness numbers and the number of documents tendered. Case management aims to reduce cost and delay. However, refusing evidence, amendments and adjournments, or placing limits on oral and documentary evidence may prevent a party from advancing their case or answering the case made against them. In ASIC v Rich [[2009] NSWSC 1229], Austin J of the Supreme Court of New South Wales reviewed some of the techniques for reducing trial length but ultimately rejected them in general or in application to the specific case before him. In doing so Austin J raised the following “fundamental principle”: The course of this trial raises a general question as to how far the court can and should go in abbreviating hearing time in a case which, as formulated and defended, is destined to cover huge and difficult evidentiary ground and to consume a large quantity of judicial resources. ... 116

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Reconciling the goals of minimising cost and delay with the principle of a fair trial in the Australian civil justice system cont. Manufacturing special procedures simply to deal with the length of the trial seems to me to raise a real risk of injustice, and so I have not done so. The fundamental principle to be observed by a judge who is required to manage and hear a long case, indeed any case, is to strive to do justice, procedural and substantive, between the parties according to law. One part of the irreducible core of doing procedural justice according to law is (subject to some limitations, of course) to facilitate the plaintiff’s presentation of the case it has chosen to bring to court, and to facilitate the defendant’s answering of that case in court. It is not the judge’s function to stand in the way of the plaintiff or the defendant presenting their respective cases. A judge who restricts the presentation of a case on the ground that the case is too long, or too detailed, or too complex, runs the risk that his or her ruling will be tantamount to shutting down that party’s case. The same considerations apply to restricting cross-examination to such a degree that significant components of the evidence cannot be addressed by the cross-examiner. In short, procedural fairness entails cost and delay. The passing of time may be a side-effect of ensuring fairness because evidence must be gathered, argument put and both considered. A similar point may be made in relation to costs. Expenditure is needed to undertake fact-finding, hold a hearing and apply the law. Justice Sackville has illustrated the point by observing that providing a party with a reasonable opportunity to lead evidence, cross-examine witnesses and present a case may be difficult to achieve quickly and cheaply, as required by the overriding purpose in New South Wales.

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C. Reduction of Cost and Delay Promotes Procedural Fairness The pursuit of the reduction of cost/delay and provision of procedural fairness are goals that can conflict, but they may also be pursued together with consistency. Delay can see the loss of evidence, both documentary and testimonial, so that it is not available to be put in one’s case or defence. Cost can impact procedural fairness by making legal representation unattainable or limit a party’s ability to conduct the necessary forensic steps to make out or defend a claim. Moreover, delay can impact the accuracy of fact-finding and undermine the practical utility of judgments as matters move on outside the court room. A civil justice system that is too expensive may deny access to justice so that wrongs cannot be redressed or the system’s costs may consume the fruits of successful litigation. A fair process that incorporates excessive cost and delay is a process of little utility. In Bi v Mourad [[2010] NSWCA 17], Allsop P explained that dealing with cases expeditiously was necessary if they were to be dealt with justly because: Delay and case backlog are not merely factors affecting the costs of delivering justice; they corrode the ability of the courts to provide individual justice. The reforms that have taken place under the Civil Procedure Act and the evident attempt by courts to ensure efficiency can be seen not merely to reflect worthy efforts for efficiency but also to be steps vital for the provision of timely individual justice. Requirements to promote procedural fairness can also unnecessarily generate costs that undermine justice. The US Supreme Court in considering the requirements of the Due Process Clause of the US Constitution has pointed to the need to consider the risk of the deprivation of a due process right through the procedures used compared with the cost or value of additional or substitute procedural safeguards. It follows that additional steps to promote procedural fairness may have costs beyond any added protection. Similarly, a reduction in safeguards may not increase the risk of procedural fairness being compromised. To provide an example, in multi-defendant cases where the defendants’ interests are aligned it is common for a judge to only allow the defendants to call a single expert witness, or to require only one counsel from those representing the various defendants to cross-examine the plaintiff’s witnesses. Allowing each defendant to select their own expert or have all defendants have their chosen counsel cross-examine witnesses might better promote procedural fairness for each defendant but it would be at much greater cost and delay with probably marginal gains in terms of [2.265]

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Reconciling the goals of minimising cost and delay with the principle of a fair trial in the Australian civil justice system cont. procedural protections. Indeed the costs and delay associated with such an approach would not just impact the plaintiff and other court users it is also borne by the defendants. Procedural fairness is often seen as an individual right but allowing the right to be unbounded can impinge on the rights of others. In the UK the right to a fair trial under the Human Rights Act 1998 (UK) has been considered in relation to the enforcement of procedural requirements. It has been recognised that “the right to a fair trial is indivisible, in the sense that all parties are entitled to it”. It follows that a party that complies with procedural directions may justifiably feel aggrieved if a defaulting party is repeatedly allowed to avoid compliance. In the UK context the complying party may be able to complain about a contravention of its right to a fair trial. Indeed, a court’s ability to provide a fair trial would be seriously hampered if it could not enforce its rules and directions. In the Australian context, the plurality judgment in Aon Risk, referring to what Waller LJ said in Worldwide Corporation Ltd v GPT Ltd [1998] EWCA Civ 1894, recognised that where a party has had a sufficient opportunity to plead its case it may be necessary for the court to make a decision which may produce a sense of injustice in that party for the sake of doing justice to the opponent and other litigants. What is seen as doing justice to one party is the imposition of costs and delay to another party. At some point, those additional costs and delay may result in a denial of procedural fairness to the other party. The point may be illustrated by Justice Rogers’ observations about a lengthy family law case, In the Marriage of Collins:

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The proceedings throw up quite vividly the collision that exists between the traditional concept, that it is part of requirements of natural justice that a judge allow a party to present its case in full, no matter what, and the demands of ordinary justice that a litigant should not be allowed to be bled white, or to be oppressed by a wealthy party, taking as long as it likes in the conduct of the litigious process. It must be remembered that in some disputes, cost and delay are tactical weapons used to allow one side to obtain an advantage over another. One side will be anxious to bring the case on as quickly and cheaply as possible. The other may have an interest in avoiding resolution, especially where the outcome may create an unfavourable precedent or places a business in jeopardy. Requests for procedural steps needed to ensure procedural fairness may be an attempt to disguise the imposition of cost and delay on an opponent. Purpose Requirements aim to discourage such conduct through the imposition of duties on parties and legal representatives, and in some provisions even litigation funders and insurers, to promote the aims contained in a Purpose Requirement. Procedural steps aimed at reducing cost and delay can promote procedural fairness for the individual and for the court system as a whole. D. Balancing Procedural Fairness, Cost and Delay Even though reducing delay and cost can advance procedural fairness there remains an issue as to when the use of case management powers in aid of controlling cost and delay, and in taking account of other court users waiting in the cue to get before a judge, may go too far. Justice Austin is correct that there is an irreducible core of procedural justice which must be maintained. It is the essence of a court and of the judicial function. However, it does not equate to allowing parties and their lawyers free rein. As explained above, not imposing restrictions may compromise procedural justice for another party. Procedural fairness, like a Purpose Requirement, requires a balancing of factors. Procedural fairness is able to be accommodated within the requirements of a Purpose Requirement. The requirement of a fair trial must form part of that component of a Purpose Requirement that requires courts to act in a “just” manner or to seek to achieve a just resolution of proceedings. Fidelity to the principle of a fair trial means that concerns of cost and delay must be considered but they must be weighed against the steps that are necessary to ensure procedural fairness is provided. Time limits may be imposed on evidence and argument but it must be consistent with the basic requirements of 118

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Reconciling the goals of minimising cost and delay with the principle of a fair trial in the Australian civil justice system cont. fair process. Similarly, case preparation steps, such as discovery, may be abbreviated provided the core of procedural justice is preserved. Further, requests for indulgences such as amendments and adjournments need to weigh the procedural fairness to all parties with the costs and delay that will follow. A Purpose Requirement that mandates the balancing of justice, cost and delay makes what is required to do justice (in a multi-dimensional sense) in a particular case a more explicit consideration for the courts, parties and legal practitioners. It provides a framework for the exercise of judicial discretion and a guide for parties and their lawyers as to the matters they must address. The application of a Purpose Requirement and the principle of a fair trial to a specific case are likely to be difficult when there is a need to resolve a conflict between taking steps to accord fair process to one party that also involves the incurrence of cost and the occasioning of delay to another party. No universal outcome can be stated. Rather the process of carefully weighing the factors of justice, cost and delay, as mandated by a Purpose Requirement, must occur. Consideration of each factor, rather than a reflexive response to do justice, cut costs or prevent delay, is most likely to produce the best outcome. As the High Court has observed “the powers of the court are not at large and are not to be exercised according to a judge’s individualistic idea of what is fair in a given circumstance”. The framework provided by a Purpose Requirement provides for discretion so as to assist case management but also cabins that discretion by specifying the court’s considerations.

ETHICAL REQUIREMENTS

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[2.270] The requirements of the overriding purpose are reinforced by the duty to the court

and the requirement to exercise independent judgement, including limiting hearings to the real issues in dispute and presenting the client’s case as quickly and simply consistent with its robust advancement. The Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 provide: 3 Paramount duty to the court and the administration of justice 3.1 A solicitor’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty. 4 Other fundamental ethical duties 4.1 A solicitor must also: 4.1.1 act in the best interests of a client in any matter in which the solicitor represents the client, 4.1.2 be honest and courteous in all dealings in the course of legal practice, 4.1.3 deliver legal services competently, diligently and as promptly as reasonably possible, 4.1.4 avoid any compromise to their integrity and professional independence, and 4.1.5 comply with these Rules and the law. 17 Independence – avoidance of personal bias 17.1 A solicitor representing a client in a matter that is before the court must not act as the mere mouthpiece of the client or of the instructing solicitor (if any) and must exercise the forensic judgments called for during the case independently, after the appropriate consideration of the client’s and the instructing solicitor’s instructions where applicable. [2.270]

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17.2 A solicitor will not have breached the solicitor’s duty to the client, and will not have failed to give appropriate consideration to the client’s or the instructing solicitor’s instructions, simply by choosing, contrary to those instructions, to exercise the forensic judgments called for during the case so as to: 17.2.1 confine any hearing to those issues which the solicitor believes to be the real issues, 17.2.2 present the client’s case as quickly and simply as may be consistent with its robust advancement, or 17.2.3 inform the court of any persuasive authority against the client’s case. The Legal Profession Uniform Conduct (Barristers) Rules 2015 rule 23 provides that “[a] barrister has an overriding duty to the court to act with independence in the interests of the administration of justice”. Rules 42 and 43 equate with rules 17.1 and 17.2 above. The rules also deal with the efficient administration of justice as follows: 57. A barrister: (a)

must seek to ensure that the barrister does work which the barrister is briefed to do in sufficient time to enable compliance with orders, directions, rules or practice notes of the court; and

(b)

if the barrister has reasonable grounds to believe that the barrister may not complete any such work on time, must promptly inform the instructing solicitor or the client. 58. A barrister must seek to ensure that work which the barrister is briefed to do in relation to a case is done so as to: (a)

confine the case to identified issues which are genuinely in dispute;

(b)

have the case ready to be heard as soon as practicable;

(c)

present the identified issues in dispute clearly and succinctly;

(d)

limit evidence, including cross-examination, to that which is reasonably necessary to advance and protect the client’s interests which are at stake in the case; and

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(e)

occupy as short a time in court as is reasonably necessary to advance and protect the client’s interests which are at stake in the case. 59. A barrister must take steps to inform the opponent as soon as possible after the barrister has reasonable grounds to believe that there will be an application on behalf of the client to adjourn any hearing, of that fact and the grounds of the application, and must try, with the opponent’s consent, to inform the court of that application promptly.

PRACTICE NOTES [2.280] Section 15 of the CPA gives a statutory basis for the issue of practice notes and

regulates the relationship between itself and the UCPR. Each senior judicial officer of the Local, District and Supreme Courts will be able to issue practice notes to deal with specific aspects of civil proceedings in their respective courts. Under the operation of s 15 of the CPA the practice notes will be subject to the UCPR and they can be disallowable under Pt 6 of the Interpretation Act 1987 (NSW). Practice notes are a convenient way of indicating the practicalities of procedure in divisions and lists within the divisions of each court. For example, Practice Note SC Gen 1 Supreme Court – Application of Practice Notes indicates that all practice notes in the Supreme Court 120

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will begin with the letters “SC”. Practice notes that relate specifically to a court, a division or a divisional list will generally be numbered from the numeral 1 with an abbreviation for the court or division (ie “CA” for the Court of Appeal, “CL” for the Common Law Division and “Eq” for the Equity Division). As a result, the first practice note for the Court of Appeal will be numbered SC CA 1. Practice notes that relate to a general issue with application across one or more of the courts or divisions have an abbreviation of “Gen”. Where an amendment is made to a practice note, rather than issuing a fresh number to that practice note, a new version of the existing practice note is issued. The comprehensive list of Supreme Court practice notes can be found on the Supreme Court’s website at http://www.supremecourt.justice.nsw.gov.au. The text of relevant practice notes will be referred to throughout this text. An example of how a practice note may deal with case management is provided by Practice Note SC CL 5.

Practice Note SC CL 5 [2.290] Practice Note SC CL 5 Supreme Court Common Law Division – General Case Management List This practice note applies in the Common Law Division. It applies to proceedings mentioned in paragraph 5 of the practice note which are in, or to be entered in, the General Case Management List. It builds on a series of earlier practice notes and is regularly updated. General Case Management (GCM) applies to all active proceedings commenced by statement of claim in the Common Law Division or proceedings transferred from another court or division of the Supreme Court that are not proceedings in the Defamation List; the Professional Negligence List; the Possession List; or proceedings that are commenced in the Administrative Law List.

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Stated broadly, when a plaintiff files an originating process a notice is issued by the registry indicating a first directions hearing approximately three months later. At the same time as filing the originating process a plaintiff must file GCM documents and any other party must file GCM documents no later than one month before the first directions hearing. Respective parties’ GCM documents are identified in Appendix A of Practice Note SC CL 5. There are additional documentary obligations for different kinds of claims, however each party, at a minimum, is required to provide “a concise narrative of the facts the party intends to prove on the issue of liability, so drafted as to expose the specific matters of fact, but not law, upon which liability is likely to depend”. Such information would otherwise not have been made available until much later in the process. Before the first directions hearing, parties are expected to have: • discussed the case to narrow the issues and identify any matters of agreement; • agreed on suitable interlocutory (preliminary) orders, directions or arrangements; • prepared a draft timetable for the future management of the proceedings; • prepared draft short minutes of any orders or directions to be sought at the directions hearing; and • discussed the possibility of settling the dispute by alternative dispute resolution (ADR). The first directions hearing will be appointed for approximately three months after the proceeding is entered in the List and notice of it will be provided by the Supreme Court Registry at the time of filing the statement of claim ([15]). At the directions hearing the registrar or judge manages how the case will proceed eg transferring the case to another court; defining issues, including liability; directing that witness statements be filed or served; considering whether ADR is suitable; making consent orders for the completion of interlocutory steps such as discovery, interrogatories, medical examinations or expert reports. The plaintiff at the first directions hearing is to provide each party with an evidentiary statement and within [2.290]

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Practice Note SC CL 5 cont. 28 days the defendant(s) is to serve on the plaintiff a concise statement of issues in dispute and an indication of the parts of the evidentiary statement the defendant requires to be given orally. Then within 14 days of receipt of the statement of issues in dispute the plaintiff must provide a statement identifying issues that are agreed and not agreed ([26]–[31]). Directions Hearings, other than the first Directions Hearing for cases to be heard in Sydney, may be conducted by online court or by telephone. Parties who wish to use the online court are to do so in accordance with Practice Note SC Gen 12 (discussed below). Parties wishing to avail themselves of telephone facilities must advise the Sydney Registry in writing at least 7 days prior to the date scheduled for the Directions Hearing. Matters considered suitable for telephone directions hearing include consent matters (ie the parties agree on the orders to be sought) and matters where parties or their legal representatives are located outside the Sydney CBD. Information about telephone directions is available at http://www.supremecourt.justice.nsw.gov.au/Documents/ telephonedirections.v2.pdf. When damages claims for personal injury or disability are ready for trial, standard directions in the form of Appendix B are deemed to have been made, unless the court otherwise orders. These standard directions concern the separate and joint provision of chronologies of relevant events, draft schedules of damages and final schedules of issues in dispute.

ELECTRONIC CASE MANAGEMENT

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[2.300] Electronic case management holds great promise for reducing cost and delay. It is

anticipated that electronic innovations such as online lodgment of documentation, e-service of documents, e-callovers and 24/7 access to services will become available in the future. E-services will mean, for example, that any registry in NSW would be able to receive documents for each of the jurisdictions. For example, a legal practitioner in Yass could file a Supreme Court application at the Yass Local Court; a solicitor could also file a Local Court matter to be heard in Broken Hill and make inquiries about a matter in Goulburn. Such e-services would enhance flexible service delivery and the speed and quality of service delivery to both face-to-face and e-clients. 10 The legislative foundation for electronic case management is the Electronic Transactions Act 2000 (NSW) (ET Act). The Courts Legislation Miscellaneous Amendments Act 2002 (NSW) inserted Pt 2A entitled “Courts administration” (ss 14A to 14R) into the ET Act on 20 December 2002, which was subsequently moved to Schedule 1 in 2010. Schedule 1 clause 2 of the ET Act empowers the Attorney General to establish an electronic case management system (ECM system) to do any one or more of the following: (a)

to enable documents with respect to legal proceedings to be created in electronic form,

(b)

to enable documents with respect to legal proceedings to be filed in electronic form,

(c)

to enable documents with respect to legal proceedings to be issued in electronic form,

(d)

to enable documents with respect to legal proceedings to be used in electronic form,

(e)

to enable documents with respect to legal proceedings to be served in electronic form,

10

Glanfield L, Consistency in Court Rules - The NSW Partnership, 22nd AIJA Annual Conference Proportionality Cost-effective Justice? (17-19 September 2004).

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[2.300]

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(f)

to enable parties to legal proceedings to communicate in electronic form with other parties to the proceedings and with the court before which the proceedings are being taken,

(g)

to enable information concerning the progress of legal proceedings to be provided in electronic form to parties to the proceedings and to members of the public generally,

to enable information concerning legal proceedings to be exchanged in electronic form between such persons or bodies as are prescribed by rules of court. Schedule 1 clause 3 of the ET Act provides that the Attorney General may, by order published on the NSW legislation website, authorise the use of an ECM system by such courts (ECM courts), and for such purposes, as are specified in the order. On 28 October 2005, the Attorney General made the Electronic Transactions (ECM Courts) Order 2005 (ECM Courts Order), which has been amended on a number of occasions. In relation to civil litigation, the ECM Courts Order authorises the courts in column 1 below to use JusticeLink (an ECM system established by the Attorney General under Schedule 1 clause 3 of the ET Act) for the purposes in column 2 below.

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(h)

Column 1 Column 2 Court Purpose Supreme Court Use in civil proceedings in the Corporations List, but only so as to enable documents to be filed, issued, used and served in electronic form. Use in civil proceedings in the Possession List, but only so as to enable documents to be filed, issued, used and served in electronic form. Use in civil proceedings in the Equity Division, but only so as to enable parties to the proceedings to communicate in electronic form with the Supreme Court in connection with any business of the Court that is being conducted in the absence of the public. Use in civil proceedings in the Common Law Division, but only so as to enable parties to the proceedings to communicate in electronic form with the Supreme Court in connection with any business of the Court that is being conducted in the absence of the public. District Court Use in civil proceedings, but only so as to enable parties to the proceedings to communicate in electronic form with the District Court in connection with any business of the Court that is being conducted in the absence of the public.

[2.300]

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Local Court

Use in civil proceedings, but only so as to enable parties to the proceedings to communicate in electronic form with the Local Court in connection with any business of the Court that is being conducted in the absence of the public.

The ECM Courts Order authorises the Supreme Court, District Court and Local Court to use Online Registry (an ECM system established by the Attorney General under Schedule 1 clause 3 of the ET Act) in civil proceedings, but only so as (a) to enable documents to be created, filed, issued, used and served in electronic form, and (b) to enable parties to the proceedings to communicate in electronic form with other parties to the proceedings and with the Court, and (c) to enable information concerning the progress of the proceedings to be provided in electronic form to parties to the proceedings and to members of the public generally. [2.310] Schedule 1 clause 14 of the ET Act enables an ECM court to make rules, not

inconsistent with the Schedule, with respect to ECM matters. ECM matters are defined as: (a)

the kinds of proceedings in respect of which the ECM system may or must be used in relation to a court,

(b)

the kinds of documents that may or must be filed in a court by means of the ECM system,

(c)

the kinds of documents that may or must be issued by a court by means of the ECM system, the practice and procedure to be followed in connection with: (i) documents that are filed in a court, or issued by a court, by means of the ECM system, and

(d)

(ii)

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(e)

the conduct of hearings by electronic communication sent by means of the ECM system,

the persons to whom, the circumstances in which and the conditions on which access may be given to information contained on the ECM system in relation to the court and proceedings before a court,

(f)

any other matter with respect to the operation, use or control of the ECM system in relation to a court and proceedings before a court. The UCPR contain Pt 3 (rr 3.1 – 3.15) entitled “Electronic Case Management”. The entirety of Pt 3 was replaced by the Uniform Civil Procedure Rules (Amendment No 63) 2013, which commenced on 10 February 2014. Pt 3 makes provision for the registration of users, filing and service of a document, filing of affidavits and requests to issue a subpoena. Practice Note SC Gen 12 Supreme Court – Online Court Protocol commenced on 8 February 2007. It applies to the Court of Criminal Appeal where an application for extension of time or a notice of appeal has been lodged; matters in the Common Law Division and selected matters in the Equity Division. It does not apply to self-represented litigants. Online court is at the discretion of a judicial officer and may be used for any hearing permitted by s 71 of the CPA (see Chapter 1). It is available to legal practitioners who are registered users and who are invited to participate by a judicial officer in accordance with UCPR r 3.9 (now r 3.8). At the discretion of a judicial officer an order may be made that any or 124

[2.310]

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CHAPTER 2

all directions hearings of any case will be conducted via online court. If such an order is made all legal practitioners involved must ensure they are registered users. An online court is a virtual courtroom and it can only be used for issues requiring consideration by a judicial officer (ie it is not to be used for communications solely between the representatives of the parties). It is a place where the language used is the same as that used in an ordinary court and as in an ordinary court any undertakings given are binding. Contempt rules also apply. The practicalities of using an online court, such as getting registered and logging on, are dealt with in the Department of Justice and Attorney General’s OnLine Court User Guide. 11 The interaction between the lawyers and court is achieved through posting a message similar to sending an email as JusticeLink allows for a user to specify a subject, message and attach documents. The record or transcript of the interaction between the lawyers and court is similar to instant messaging in which each post appears in order. Justice Ian Gzell conducted a pilot program of online court in the Equity Division of the Supreme Court of New South Wales. 12 Two days after the commencement of Practice Note SC Gen 12, on 24 March 2006, his Honour delivered the judgment of Koompahtoo Local Aboriginal Land Council v KLALC Property & Investments Pty Ltd (No 2). 13 Justice Gzell outlined the statutory framework and the court’s power to open an ECM court and then held: [i]n order that future directions and interlocutory applications that it is appropriate to conduct in the absence of the public may be conducted by the ECM system, I will open an ECM Court. 14

His Honour also ordered:

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[P]ursuant to the Civil Procedure Act 2005, s 71(f) I direct that any future directions hearings and, unless otherwise ordered, any interlocutory applications in these matters be conducted in the absence of the public. In terms of the Electronic Transactions Act 2000, s 14I and the Uniform Civil Procedure Rules 2005, r 3.9 [now r 3.8], I direct that until further order such pre-trial directions and interlocutory applications be conducted by electronic communication sent and received by means of the ECM system.

Justice Gzell thereafter commenced using the virtual court for pre-trial directions hearings in suitable proceedings. 15 In addition to making similar orders as he made in Koompahtoo, his Honour has adopted the practice of issuing a short note to the solicitors on the record which reads as follows: ecmCourt Requirements by Justice Gzell Please note that Justice Gzell will no longer hold pre-trial direction hearings. Instead his Honour will conduct ecmCourts for all formal matters. All counsel and solicitors in any matter set down for hearing before his Honour are required to register for eServices and to advise his Associate when this is done. 11

Department of Justice and Attorney General, OnLine Court User Guide, 16 February 2009 available at http://www.lawlink.nsw.gov.au/lawlink/eservices/ll_eservices.nsf/vwFiles/eServices_OnLine_Court_ User_Guide_for_Practitioners.pdf/$file/eServices_OnLine_Court_User_Guide_for_ Practitioners.pdfhttp://www.lawlink.nsw.gov.au/lawlink/eservices/ll_eservices.nsf/vwFiles/ eServices_OnLine_Court_User_Guide_for_Practitioners.pdf/$file/eServices_OnLine_Court_User_Guide_for_ Practitioners.pdf

12 13

See The Sydney Morning Herald, 29 October 2006, Internet Court gets First Case. Koompahtoo Local Aboriginal Land Council v KLALC Property & Investments Pty Ltd (No 2) [2006] NSWSC 169 (24 March 2006).

14

Koompahtoo Local Aboriginal Land Council v KLALC Property & Investments Pty Ltd (No 2) [2006] NSWSC 169 (24 March 2006) at [8].

15

See, for example, the reference to the ECM court in Sheahan v Slattery (No 2) [2006] NSWSC 711 (13 July 2006) at [7]. [2.310]

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To register, please visit website: http://www.lawlink.nsw.gov.au/courtlink.

However the ECM court caused difficulty in Hill v W & F Lechner Pty Ltd 16 after Justice Gzell had opened the ECM court and directed the solicitors and counsel for the parties to become registered as users of the ECM system under UCPR r 3.3. The solicitor for the defendant despite repeated requests failed to cause counsel for the defendant to become a registered user and to notify his Honour’s Associate. Justice Gzell listed the matter for a hearing in the ordinary courtroom and delivered an ex tempore judgment which held: [10] As s 56(1) of the Civil Procedure Act 2005 states, the overriding purpose of the Act and the Uniform Civil Procedure Rules 2005 is to facilitate the just, quick and cheap resolution of the real issues in proceedings. The ECM Court facility for which provision is made in the Electronic Transactions Act 2000, s 14I and in the Uniform Civil Procedure Rules 2005, r 3.9 [now r 3.8] is one way of obtaining that objective. But it will not work if the legal representatives of the parties will not cooperate. [11] In view of the failure of the solicitor for the defendant to carry out my Associate’s requests I make these orders. I order the legal representatives of the defendant and any other legal representatives of the plaintiff to apply to the Registrar for registration of themselves and any person authorised by them as users of the ECM system in terms of the Uniform Civil Procedure Rules 2005, r 3.3 and inform my Associate of the names of the persons so registered by no later than 4.00 pm on Tuesday 16 May 2006. 17 [12] Again, because the system is new, I do not propose to order the solicitor for the defendant to pay the costs of this unnecessary hearing personally under the Civil Procedure Act 2005, s 99. I order the defendant to pay the plaintiffs’ costs of today’s hearing on an indemnity basis forthwith upon assessment or agreement. 18

Three years later in Sedrak v Starr Gzell J posted the following message in the ECM court: 19

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Non-compliance As the defendant alleges that the plaintiff has failed to comply with my orders and its representatives have failed to register to conduct proceedings in this matter by electronic communication sent and received by means of the ECM system, I have by the appended order stood this matter over before me in open court. The legal representatives are reminded that a costs order may be made against them personally under the Civil Procedure Act 2005, s 99 and that the rules in relation to contempt of court apply to ECM court proceedings.

ADMINISTRATION OF THE UNIFORM CIVIL PROCEDURE RULES [2.320] The UCPR are created by the Uniform Rules Committee.

Civil Procedure Act 2005 (NSW) [2.330] Civil Procedure Act 2005 (NSW), ss 8, 9, 14 – 16 Part 2 Administrative Matters Division 1 Rules, practice notes and forms 8 Uniform Rules Committee (1) There is to be a Uniform Rules Committee comprising 11 members, of whom: (a) one is to be the Chief Justice of the Supreme Court or a Judge of the Supreme Court nominated for the time being by the Chief Justice, and 16 17 18

Hill v W & F Lechner Pty Ltd [2006] NSWSC 440 (12 May 2006). Hill v W & F Lechner Pty Ltd [2006] NSWSC 440 (12 May 2006) at [10]-[12]. Hill v W & F Lechner Pty Ltd [2006] NSWSC 440 (12 May 2006) at [10]-[12].

19

Sedrak v Starr [2009] NSWSC 996 at [5].

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Civil Procedure Act 2005 (NSW) cont. (b)

one is to be the President of the Court of Appeal or a Judge of Appeal nominated for the time being by the President, and

(c)

two are to be Judges of the Supreme Court appointed by the Chief Justice, and

(c1)

one is to be the Chief Judge of the Land and Environment Court or a Judge nominated for the time being by the Chief Judge, and

(d)

one is to be the Chief Judge of the District Court or a Judge of the District Court nominated for the time being by the Chief Judge, and

(e)

one is to be a Judge of the District Court appointed by the Chief Judge, and

(f)

one is to be the Chief Magistrate or a Magistrate nominated for the time being by the Chief Magistrate, and

(g)

one is to be a Magistrate appointed by the Chief Magistrate, and

(h)

one is to be a barrister appointed by the Bar Council, and

(i)

one is to be a solicitor appointed by the Law Society Council.

9 Uniform rules (1)

The Uniform Rules Committee may make rules, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed by rules or that is necessary or convenient to be prescribed by rules for carrying out or giving effect to this Act. …

(4)

The rules made under this section may authorise or require the use of an electronic case management system established under section 14B of the Electronic Transactions Act 2000 in relation to any proceedings in a court in respect of which the use of such a system is authorised by an order in force under section 14C of that Act.

14 Court may dispense with rules in particular cases In relation to particular civil proceedings, the court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case.

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15 Practice notes (1)

Subject to rules of court, the senior judicial officer of the court may issue practice notes for that court in relation to civil proceedings to which this Act applies.

(2)

Part 6 of the Interpretation Act 1987 applies to a practice note issued under this section in the same way as it applies to a rule of court.

16 Court may give directions in circumstances not covered by rules (1)

In relation to particular civil proceedings, the court may give directions with respect to any aspect of practice or procedure for which rules of court or practice notes do not provide.

(2)

Anything done in accordance with such a direction (including the commencing of proceedings and the taking of any step in proceedings) is taken to have been validly done.

[2.330]

127

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CHAPTER 3

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Costs of Litigation [3.10]

INTRODUCTION ..................................................................................................... 130

[3.20]

PROPORTIONALITY OF COSTS .............................................................................. 131

[3.30]

Civil Procedure Act 2005 (NSW) s 60 ........................................................................... 131

[3.50]

Access to Justice and Access to Lawyers ........................................................................ 131

[3.70]

Zanella v Madden ...................................................................................................... 133

[3.90]

Vella v Australia & New Zealand Banking Group ........................................................... 134

[3.100]

THE PURPOSE OF COSTS ....................................................................................... 135

[3.110]

Dr Bronte Douglass v Lawton (No 2) ........................................................................... 135

[3.120]

DUTIES OF LITIGANTS AND COSTS ...................................................................... 137

[3.130]

Civil Procedure Act 2005 (NSW) s 56 ........................................................................... 137

[3.140]

Priest v New South Wales ............................................................................................ 138

[3.160]

Civil Procedure Act 2005 (NSW) s 98 ........................................................................... 140

[3.170]

PARTIES AND COSTS .............................................................................................. 140

[3.180]

Uniform law costs ..................................................................................................... 0

[3.190]

Ordered costs ........................................................................................................ 141

[3.200]

Costs follow the event – the usual costs order ................................................ 142

[3.210]

Baulderstone Hornibrook Engineering v Gordian Runoff ................................................. 142

[3.220]

LAWYERS AND COSTS ........................................................................................... 145

[3.230]

Legal Profession Uniform Law Application Act 2014 (NSW) Sch 2 .................................. 147

[3.260]

Civil Procedure Act 2005 (NSW) s 99 ........................................................................... 149

[3.270]

Treadwell v Hickey ...................................................................................................... 150

[3.280]

SPECIFIC COSTS ORDERS ...................................................................................... 156

[3.280]

No order as to costs ............................................................................................. 156

[3.290]

Costs of the day .................................................................................................... 157

[3.300]

Costs in any event ................................................................................................ 157

[3.310]

Costs in the cause ................................................................................................. 157

[3.320]

JOINING PARTIES AND COSTS ............................................................................... 157

[3.330]

Nationwide News v Naidu; ISS Security v Naidu (No 2) ................................................ 158

[3.340]

Sze Tu v Lowe (No 2) ................................................................................................. 160

[3.350]

COSTS AND SELF-REPRESENTED LITIGANTS ....................................................... 167

[3.360]

Cachia v Hanes .......................................................................................................... 168

[3.380]

Lawrence v Nikolaidis ................................................................................................. 169 129

Civil Procedure in New South Wales

[3.390]

COSTS AGAINST NON-PARTIES ............................................................................. 169

[3.400]

Macquarie International Health Clinic v Sydney South West Area Health Service (No 3) ....................................................................................................................... 169

[3.410]

SECURITY FOR COSTS ............................................................................................ 174

[3.420]

Wollongong City Council v Legal Business Centre .......................................................... 175

[3.440]

Idoport v National Australia Bank ................................................................................ 179

[3.460]

Uniform Civil Procedure Rules 2005 (NSW) rr 2.1, 42.21 .............................................. 184

[3.470]

Civil Procedure Act 2005 (NSW) s 67 ........................................................................... 185

[3.490]

Welzel v Francis .......................................................................................................... 185

[3.500]

PROPOSALS FOR CONTAINING COSTS ................................................................ 190

[3.510]

Containment of Costs: Litigation and Arbitration .......................................................... 190

[3.530]

Reforming the Structure of Costs Awards ...................................................................... 197

INTRODUCTION

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[3.10] Costs are a very important issue when considering the administration of civil justice.

Costs affect access to justice because costs can place litigation beyond the reach of those who cannot afford, or cannot afford to risk, the costs implications of resolving disputes. Costs of an action can be generated and experienced by the court, the parties (both in a personal and monetary sense), legal practitioners and other litigants whose proceedings are waiting to be heard. The point was made in Chapter 2 that reducing costs is an important focus for case management. The imposition of costs during the course of an action is at the total discretion of the court. According to s 98 of the Civil Procedure Act 2005 (NSW) (CPA), the court has full power to determine by whom, to whom and to what extent costs are to be paid. Section 99 imposes liability on neglectful or incompetent practitioners for unnecessarily incurred costs. Although the purpose of a costs order is ostensibly not to punish, such an order can be a powerful incentive to comply with the CPA, the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), court directions and practice notes. Of course, s 56 of the CPA allows the court to take into account any breach of duties towards the “overriding purpose” of the CPA by parties and practitioners when considering the making of costs orders. Costs of litigation have generated a voluminous amount of literature 1 and the provisions concerning costs in the CPA and the UCPR are detailed and extensive. This chapter is designed to provide an introduction to the rules, procedures and practices relating to costs in litigation.

1

See for example Hamilton JP, Lindsay G, Morahan M and Webster C (eds), NSW Civil Handbook (Lawbook Co, 2015) (UCPR Part 42 Commentary); Dal Pont DE, Law of Costs, (3rd ed, LexisNexis, 2013); Grace J and Ashe A, Legal Costs New South Wales Online, (LexisNexis); The Law Society of NSW, Costs Guidebook (6th ed); Quick R and Harris E Quick on Costs (Thomson Reuters, 2012); Cairns BC, Australian Civil Procedure, (10th ed, Thomson Reuters, 2013), Ch 17.

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[3.10]

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PROPORTIONALITY OF COSTS [3.20] In reducing costs, case management is greatly assisted by the concept of proportionality

of costs. Though this concept was explicitly recognised prior to the CPA, 2 s 60 of the CPA now gives it legislative force and the scheme of the legislation clearly intends that it is to be applied in conjunction with ss 56 – 59. 3

Civil Procedure Act 2005 (NSW) [3.30] Civil Procedure Act 2005 (NSW) s 60 Part 6 – Case management and interlocutory matters Division 1 – Guiding principles 60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.

[3.40] What does “proportionality” mean? Chief Justice Spigelman in March 2007 provided

the following explanation:

Access to Justice and Access to Lawyers [3.50] The Honourable JJ Spigelman, Chief Justice of New South Wales, Access to Justice and Access to Lawyers 35th Australian Legal Convention Sydney, 24 March 2007

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https://www.lawcouncil.asn.au/lawcouncil/images/LCA-PDF/speeches/SaturdayBusinessSession6–CJSpigelman.pdf (accessed 29 November 2015) There is now a widespread recognition that some sort of test of proportionality is required. The cost of dispute resolution must in some manner be proportionate to what is in dispute. That is difficult to achieve, particularly in circumstances where a civil dispute involves matters that are not able to be computed in terms of money, at least on any objective basis likely to be accepted by all parties. Nevertheless, the principle is a valid one. Following the English lead [Civil Procedure Rules r 1.1(2)(c)], New South Wales has expressly adopted, in s 60 of the Civil Procedure Act 2005, a requirement that the practices and procedures of courts should be implemented with a view to resolving disputes “in such a way that the costs to the parties is proportionate to the importance and complexity of the subject-matter in dispute”. I accept this is a statement of ambition, rather than a description of what occurs. There is, of course, a great deal of flexibility in the words “importance and complexity”. This objective, which I know is accepted in many jurisdictions which do not have the statutory mandate found in New South Wales, requires a continual process of collaboration between the profession and the courts in determining how the process of dispute resolution is to occur. 2

3

For example, in Skalkos v T & S Recoveries Pty Ltd (2004) 65 NSWLR 151; [2004] NSWCA 281 at [8] Ipp J indicated that it was relevant to consider whether the costs incurred bore a reasonable relationship to the value and importance of the subject matter of the case. Section 60 of the Civil Procedure Act 2005 (NSW) is contained with ss 56 – 59 in Part 6 – Case Management and Interlocutory Matters Division 1 – Guiding Principles. See also Brabazon M, “Proportionality of Legal Costs”, Law Society Journal, (February 2006) 44(1) Law Society Journal (NSW) 68. [3.50]

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Access to Justice and Access to Lawyers cont. The first step must be to review areas of practice in which the costs involved in the process sometimes bear no rational, let alone a proportionate, relationship to what is involved. This occurs more frequently than we care to admit. A classic case was the dispute over a property settlement following a divorce in an English case which went on appeal as far as the House of Lords. The total value of the property in issue was £127,400. The legal costs incurred by the English Legal Aid system, which assisted both parties about … how the property should be divided, was estimated to exceed £128,000. As Lord Hoffmann said: If one includes applications for leave, the facts of this case, by the time it reached the Court of Appeal had been considered by five differently constituted tribunals. This cannot be right. To allow successive appeals in the hope of producing an answer which accords with perfect justice is to kill the parties with kindness. [Piglowska v Piglowski [1999] 1 WLR 1360 at 1373.] Lord Hoffmann’s reference to the “quest for perfect justice” reminds us that, neither in result nor in process, does the word “justice” refer to an absolute. The objective of attaining fair outcomes arrived at by fair procedures does not require identical conduct in every conceivable kind of case. What is required is “appropriate” rather than “perfect” justice. The concept of “proportionality” is probably as good as we are able to do in terms of identifying a relevant qualification. We simply have to stop killing litigants with kindness. There are, of course, a significant number of cases which conclude with an identifiable dollar amount. Not all cases are like that but a substantial proportion are. It is at least theoretically possible to adopt rules, which must necessarily be flexible because of the contingencies of the litigation process, that operate as a default in such a manner as to control the costs recoverable by reference to the amount ultimately awarded. This is a matter that can be done in the exercise of the discretion to award costs.

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I am not directing attention to the costs chargeable to the client. I am referring to costs awarded to a successful litigant. The objective is to create cost incentives for parties to narrow the scope of disputation and to make serious attempts to settle, in the same way as the regime that has already been developed for recognising offers of compromise, including by way of indemnity costs, creates such incentives. There may be a case for adopting, perhaps arbitrary but definite, amounts or proportions of an award to be recovered as costs, by way of a table or formula which gives results capable of being computed in advance [see eg Bret Walker “Proportionality and Cost Shifting” (2004) 27 UNSWLJ 214]. There may also be a role for identifying, in a separate way, proportionate recovery for matters of particular significance in specific areas of jurisdiction, such as the costs of discovery in commercial litigation. Plainly there is a range of relevant considerations which can qualify the effect of any presumptive rules that are developed in this respect. The exercise of a discretion can be affected by the manner in which parties conduct proceedings, such as the extent of discovery upon which one party may have insisted, or the degree to which a party has made a serious effort to confine the issues and other such matters. It is, however, essential to ensure that we do not excite a wave of satellite litigation. Disputes about such matters have to be decided quickly and without excessive refinement. The English experience is salutary in this respect. The attempt to control and regulate proceedings by means of costs sanctions has spawned an enormous amount of disputation. This can only be controlled by summary disposition. There has been a growing literature on proportionality and many minds have been applied to this issue. The process of adaptation is underway, but without any definite resolution. Nevertheless, 132

[3.50]

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Access to Justice and Access to Lawyers cont. proportionality must be pursued as a matter of priority. If the legal profession does not do so, it is quite likely that the resolution of the issues will simply be taken out of its hands as has happened in other areas of practice. To the extent that the legal profession does not succeed in achieving the objective of proportionality, then it is likely that more areas of disputation will simply be taken away from legal decision-making processes. Over recent decades there have been a number of major changes, notably in personal injury litigation, which have been driven to a substantial degree by what had come to be regarded as an unacceptable proportion of compensation awards that were taken up by the decision-making process. This has sometimes taken the form of no fault liability schemes. On other occasions it has taken the form of detailed requirements, including the exhaustion of alternative dispute resolution mechanisms, prior to the institution of proceedings. On other occasions it has taken the form of substituting comparatively informal arbitral mechanisms for the more formal hearing process of court adjudication. No one should be at all sanguine that this kind of intervention will be limited to personal injury cases reflected in what had come to be regarded as an unacceptably higher level of insurance premiums borne by the community. Such a reaction is capable of being implemented in any area of legal disputation. For example, I know that concern has been expressed about the costs of many Family Provision Act disputes, which appear to consume a significant proportion of the assets to be distributed. Similarly, in the area of commercial disputation, the costs of discovery are more than the commercial community is likely to tolerate. When senior partners of a law firm tell me, as they have, that for any significant commercial dispute the flag-fall for discovery is often $2 million, the position is simply not sustainable.

[3.60] The concept of proportionality of costs in the CPA s 60 can influence the procedural

demands that the court places on the parties.

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Zanella v Madden [3.70] Zanella v Madden [2007] NSWSC 559 YOUNG CJ IN EQ 1 This is an application in respect of joint tenancy of a property at Glen Davis. The property is Torrens System land which is registered in the name of the plaintiff and the defendant as joint tenants. The problem is that the plaintiff now wishes to realise the land, but she has not heard of the defendant for many, many years. 2 The evidence from the plaintiff is to the effect that she has paid the majority of the purchase money by paying out the mortgage and that the defendant said to her when their relationship ceased about 25 years ago that she could have the property, but nothing was done about it to formalise that arrangement. 3 The evidence shows that no-one has seen or heard from the defendant since about 1980. The problem is that he came from Scotland originally and he may well have gone back to Scotland, but the plaintiff just does not know sufficient about his relations in Scotland to be able to make meaningful enquiries. 4 The defendant was a university lecturer in the School of Spanish at the University of New South Wales. The plaintiff has made enquiries through universities and has made an Internet search of American and British universities and has not been able to trace the defendant. [3.70]

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Zanella v Madden cont. 5 The property at Glen Davis is said to be worth about $150,000 and the defendant’s interest is a quarter, so that its value would be about $37,500. Section 56 of the Civil Procedure Act 2005 says that the overriding purpose of the Act and the Rules is to facilitate the just, quick and cheap resolution of the real issues in the proceedings, and that the court must seek to give effect to the overriding purpose when it exercises any power given to it under any Act. 6 The thrust of the application was that an order be made under s 21C of the Protected Estates Act 1983 which permits the court, where there is a missing person, to appoint a manager of the missing person’s estate and for the property to be dealt with and the resulting fund preserved. There is a backup application under section 66G of the Conveyancing Act 1919. 7 However, it seems to me that the balance of probabilities strongly favours the fact that the defendant is dead. He was a person who was over-addicted to alcohol. He lost his position in New South Wales, it would seem, over that. He has apparently not been hired by any overseas university. He would now be 63. He has not been heard of by his friends or anybody whom the plaintiff suspects might know him for over 20 years. He has taken no interest in his property here. 8 It may well be that in past times one would have organised advertisements in Scotland, but, when one is dealing with an estate of $37,500, bearing in mind s 56 of the Civil Procedure Act, the cost of doing so is proportionately too great. It seems to me that on the evidence before me there is sufficient material to show that the court can declare that the defendant is dead. 9 As I said in Grieve v The Registrar General (NSW) (1997) 8 BPR 15,729, it is the Registrar General who must be satisfied under s 101 of the Real Property Act 1900 that a person is dead so that a notice of death can be filed and registered. It would seem to me that the Registrar General, although not a party to these proceedings, would be justified in taking notice of this declaration of the court, however, in case there is some difficulty, I will give liberty to apply. 10 Accordingly, the court declares that the defendant is dead and gives liberty to apply on two days’ notice.

[3.80] The proportionality concept in CPA s 60 can affect litigation in many other ways. The Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

extract below is an example concerning a late request for documents to be produced.

Vella v Australia & New Zealand Banking Group [3.90] Vella v Australia & New Zealand Banking Group Ltd [2008] NSWSC 209 YOUNG CJ IN EQ 1 This is an application to have documents produced on a notice to produce bearing date 4 March 2008 directed to the ANZ Bank and an application for setting it aside. 2 I have said before and I will say again that particularly when one is dealing with a trial of multiple parties which must cost at least $100,000 a day, bearing in mind the provisions of ss 56 through to 60 of the Civil Procedure Act 2005 the court will not interrupt the trial to deal with late subpoenas or notices to produce. To do otherwise would cause large expenses to innocent parties in the proceedings. Apart from situations where something comes up by surprise, if a notice to produce is not given in the proper time before the proper person before the trial, it will be very, very difficult indeed for the court to be convinced that it should, at everyone else’s expense, deal with defaults by lawyers for not getting their cases ready in time. 3 In answer to that, Mr Burchett of counsel for Mr Annous (a person who allegedly received some of the disputed funds by way of a bank cheque) says that the solicitors and other lawyers for the ANZ Bank have given assurances which induced his solicitor not to act within due time. That is denied and 134

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Vella v Australia & New Zealand Banking Group cont. I would not accept it without evidence, but I will allow evidence to be filed by 10 o’clock on Monday 10 March to convince me that there is an arguable case. I treat it as a very serious allegation. 4 Mr Burchett has said that the material in the notice to produce is material which would give him a forensic advantage in dealing with para 12 of the defence to the amended second cross-claim on page 56 of bundle 1. 5 Mr Forster SC for the Bank has denied that and said that material is irrelevant. The allegation in para 12 alleges that by making public statements in advertisements and press releases that bank cheques were virtually “as good as cash”, the Bank has made representations to this cross-defendant as to what it would do about the bank cheque involved in the instant case. 6 I cannot, with great respect, see how that material could be relevant to that representation. I might be satisfied if I had some reference to authority but none has yet been provided. 7 Accordingly, at this stage I will not make any order on the notice to produce. The matter can be mentioned if anyone wants to mention it after all the live witnesses have given their evidence next Monday.

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THE PURPOSE OF COSTS [3.100] Costs are only intended to compensate the successful party for the solicitor’s professional costs and disbursements (which includes any barristers’ fees) in conducting the case. Costs do not compensate the litigant for lost time or travel expenses, and they are not awarded as a dividend or as punishment. However, costs can be used as an encouragement to comply with the rules or any judgment or order. For example, UCPR r 42.10 provides the court with power to order a party who fails to comply with the rules or any order of the court, to pay such of the other parties’ costs as are occasioned by the failure. However, as the New South Wales Court of Appeal made clear in Dr Bronte Douglass v Lawton Pty Ltd (No 2) [2007] NSWCA 90, an order for the payment of an opponent’s costs that is expressed to be “punishment” must amount to actual punishment before it will be overturned on appeal. Costs can also be a mechanism to encourage settlement: see Offers of Compromise and Calderbank letters discussed in Chapter 15.

Dr Bronte Douglass v Lawton (No 2) [3.110] Dr Bronte Douglass v Lawton Pty Ltd (No 2) [2007] NSWCA 90 BEAZLEY JA (HODGSON AND BASTEN JJA AGREEING) 1 This is a Summons for Leave to Appeal against an order made by her Honour Judge Gibson on 5 December 2005 in which her Honour ordered the appellant to pay the costs of the respondent thrown away by reason of an adjournment of the proceedings when first listed for hearing before her in the District Court. … 3 The hearing of the proceedings had been set down before her Honour for 4 days. On the first day of the hearing the appellant made an application to amend the defence. … 4 There was considerable argument as to the proposed amendment up until the luncheon adjournment, including, at one stage, the question whether the appellant in fact needed to amend, or whether these assertions could be made notwithstanding that they had not been expressly raised in the defence. [3.110]

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Dr Bronte Douglass v Lawton (No 2) cont. 6 After lunch, senior counsel for the respondent informed the Court that the respondent opposed the proposed amendment because the draft alleged conclusions rather than the facts upon which those conclusions were based. Senior counsel also informed her Honour that the respondent was prejudiced, but would be more prejudiced if the matter was to be adjourned. He informed her Honour that “his clients” (referring to principals of the respondent) were elderly and not well and that the case “had been around for a long time”. During the course of that discussion, her Honour made the comment “[w]hat about if there was a really big costs order?” 7 In a continuing long exchange with counsel, her Honour indicated that there were time constraints in her hearing the matter. She observed that the matter had been set down for four days and that most of the first day had been taken up with an argument about the amendment. She also indicated that she had in fact only three days of that week to deal with the matter and could have allocated some further time to it on the Monday and Tuesday of the following week, when she otherwise had a jury trial. 8 Her Honour expressed the view that she needed to balance the interests of both parties in determining what to do. … 9 During the course of expressing her thinking on these matters, her Honour added: [Counsel for the appellant] is going to have an uphill battle persuading me that he shouldn’t be facing a very large costs order if I have to adjourn the case. 10 Her Honour articulated the claim which she understood the appellant wished to make in the amended defence. Counsel for the appellant agreed with her Honour’s formulation. Her Honour then said: If that’s their argument, it’s disgraceful that they’re bringing it on the [day] of a trial and they should be punished firmly by a nasty costs order. (Emphasis added) 11 Senior counsel for the respondent continued to resist the amendment, but then asked for a short adjournment. Her Honour granted that request, making the comment:

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You can and you can have a serious talk to Mr Sneddon about what particularly painful costs order you would like in the event that he wants to persist with this amendment. (Emphasis added) … Did her Honour err in making the costs order? 21 The appellant accepted the broad statutory discretion which resides in the Court in making a costs order. However, he submitted that that discretion is not unqualified and it must be exercised judicially in accordance with established principle and factors directly connected with the litigation. In particular, it was submitted that the discretion cannot be exercised capriciously and that costs are not imposed by way of “punishment”: see Oshlack v Richmond River Council (1998) 193 CLR 72 at 96; [1998] HCA 11 at [65]. 22 In Oshlack, in a passage upon which the appellant particularly relies in this case, McHugh J, at [67], pointed out that costs are not awarded to punish an unsuccessful party. Rather, the primary purpose of an award of costs was to indemnify the successful party. That statement was made in circumstances where the Court was dealing with concluded litigation. However, the underlying principle remains valid for all costs orders. 23 The appellant submitted that the amended defence did not necessitate an adjournment and the adjournment of the matter was effectively forced upon the parties. Senior counsel submitted to this Court that the parties had agreed that the hearing could be concluded within four days, even if the amendment was allowed. It followed, on this submission, that in making a costs order against the appellant, her Honour’s discretion miscarried, because the costs order was based upon a wrong factual basis, namely, that the matter could not be heard within the allotted time, when in fact it could. 136

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Dr Bronte Douglass v Lawton (No 2) cont. 24 This submission does not accurately record her Honour’s explanation of the situation she considered had arisen. During the course of discussion between counsel and her Honour, her Honour said that if the amendment was allowed, then, as it had been indicated that there would be five extra witnesses, she considered that a realistic assessment of the hearing was probably five days. Counsel for the appellant agreed, as did senior counsel for the respondent. By that time, much of the first day allocated for the hearing had been lost. Her Honour considered that if she allowed the amendment and commenced the hearing, it was likely that the matter would have to go over part heard into the following year as she had no available time until then. She had indicated anyway that the practice in the Court was not to permit matters to become part heard. … 27 That then leaves the question whether her Honour applied a wrong principle in the exercise of her discretion to order costs against the appellant. This argument principally focussed upon her Honour’s use of language which indicated that there was some “punitive aspect” in the costs order that she was proposing. Whilst her Honour’s language to which I have referred above was unfortunate, in my opinion, it meant no more than an indication by her Honour that if a late application for amendment was made, there would be costs consequences. It would be fair to say, to coin another expression, that her Honour was “shaking her finger at an errant schoolchild”.

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28 The proof of the underlying approach of her Honour in making the costs order is to be found in the order actually made. It was not “punitive” in its terms. It was a typical order made by a court when one party makes an application such as was made here and which had a consequence such as flowed here, namely, the need for an adjournment because the time in which the case was to be heard was extended by reason of the amendment. 29 In my opinion, no error has been shown in the order for costs which was made. Her Honour’s comments, about which complaint is made, do not raise any question of principle, although as I have already noted, they do not appropriately reflect the principles upon which a court determines whether a costs order should or should not be made and what such order should be. However, in circumstances where no error has been shown in the orders which were made, I consider that her Honour’s statements should be seen as no more than “throw-away comments” made during the course of an application which was clearly going to cause hearing and/or listing difficulties. In those circumstances, I am of the opinion that leave should be refused on this aspect also.

DUTIES OF LITIGANTS AND COSTS [3.120] The CPA provides that parties have a statutory duty to assist the court to further the

overriding purpose to facilitate the just, quick and cheap resolution of the real issues in proceedings and, therefore, to participate in the court’s processes and to comply with directions and orders: s 56(3). In addition, every legal practitioner has a statutory duty not to cause his or her client to breach the client’s duty to assist the court: s 56(4). The court can take into account any failure of these duties by legal practitioners when determining cost orders.

Civil Procedure Act 2005 (NSW) [3.130] Civil Procedure Act 2005 (NSW) s 56 Part 6 – Case management and interlocutory matters Division 1 – Guiding principles [3.130]

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Civil Procedure Act 2005 (NSW) cont. 56 Overriding purpose (cf SCR Pt 1 r 3) (1)

The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2)

The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

(3)

A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.

(4)

A solicitor or barrister must not, by his or her conduct, cause his or her client to be put in breach of the duty identified in subsection (3).

(5)

The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs.

Priest v New South Wales [3.140] Priest v New South Wales [2007] NSWSC 41 [In the extract below, Category 27 refers to a category of documents described as containing reports of a police operation into the conduct of a former police assistant commissioner.] JOHNSON J

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Judgment (on outstanding discovery issue and costs) On 28 November 2006, I delivered judgment (see Priest v State of New South Wales [2006] NSWSC 1281) with respect to a number of applications then on foot of an interlocutory nature as between the parties. That judgment must itself be viewed against the background of an earlier judgment delivered by me in January 2006 concerning (in some respects) related interlocutory issues (see Priest v State of New South Wales [2006] NSWSC 12). … Proper Construction of Category 27 25 Category 27 is in the terms referred to earlier in this judgment. The Defendant seeks to construe that category as being a reference to a single report, that of Detective Inspector Cameron of 15 November 2002, with no other documents falling within the category. That submission is put on the basis that there is only one Operation Retz report and, in the Defendant’s submission, that is a complete response to Category 27. 27 I approach this matter as one of construction of the meaning of the words in Category 27. It is not a category that is confined to “a report”, being the final report of Detective Inspector Cameron of November 2002. It is apparent on a reading of that report that it is not a freestanding and self-contained document. … The Defendant’s Approach to the Application Concerning Category 27 … 33 The Civil Procedure Act 2005 contains a number of provisions which are relevant to the present application. Section 56 of that Act says that the overriding purpose of the Act, and the rules in their 138

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Priest v New South Wales cont. application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1). The Court must seek to give effect to that overriding purpose when it exercises any power given to it under the Act or by the rules: s 56(2). A party to civil proceedings is under a duty to assist the Court to further that overriding purpose and, to that effect, to participate in the processes of the Court and to comply with the directions and orders of the Court: s 56(3). A solicitor or barrister must not, by his or her conduct, cause his or her client to be put in breach of the duty identified in s 56(3): s 56(4). A Court may take into account any failure to comply with s 56(3) or s 56(4) in exercising a discretion with respect to costs: s 56(5). 34 In a sense, s 56 has the result that every litigant in civil proceedings in this Court is now a model litigant. However, there is ample authority that governmental bodies, including the Commonwealth of Australia or the State of New South Wales, ought be regarded as having model litigant obligations extending in the past, at least, beyond those of private litigants. In this respect, see decisions such as Scott v Handley (1999) 58 ALD 373; Wodrow v Commonwealth of Australia (2003) 129 FCR 182; Badraie v Commonwealth of Australia (2005) 195 FLR 119 at 135; [2005] NSWSC 1195 at paragraph 94. 35 I am not satisfied, given the history that I have recited in this judgment, that the Defendant has discharged its obligations under s 56 Civil Procedure Act 2005 or, indeed, under its model litigant obligations with respect to the Category 27 issue. 37 It seems to me there are real and significant issues remaining with respect to the discoverability of these documents. The problem is that I am in no better position to resolve the application now than I was on 28 November 2006. Indeed, I am in a worse position because 37 further boxes of documents, which have not been examined by counsel for the Defendant and which are not the subject of any evidence on the part of the Defendant beyond the fairly superficial affidavit of Mr McGillicuddy, now lie in my control. …

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Costs 41 I made clear in my judgment of 28 November 2006 (at paragraph 56) that whatever the outcome of the Defendant’s application to withdraw Category 27 from the order for discovery, it may have to bear the costs, bearing in mind the way in which the issue has arisen. I am satisfied, on the present state of this application, that an order should be made against the Defendant with respect to costs. I have in mind, in that regard, the provisions to which I have referred in s 56 Civil Procedure Act 2005, and what I regard to be failures on the part of the Defendant to comply with its obligations to the Court revealed in the approach to this litigation to date. 42 Section 98 Civil Procedure Act 2005 provides that costs are in the discretion of the Court. Costs may be ordered on an ordinary basis or on an indemnity basis. In my view, the approach of the Defendant to this application to date, and to compliance with orders of the Court, is such that there has not been just, quick and cheap resolution of the issues falling for determination. Indeed, there has been a continuing inability of the Court to discharge its functions because the Defendant has not complied with its obligations. I am satisfied, in the circumstances, that the history of this application to date is such that it is appropriate, in the exercise of discretion, to order that the Defendant pay the costs of the Plaintiff on an indemnity basis with respect to the Category 27 discovery issue. [3.150] Section 98 of the CPA provides the court with unlimited power to determine costs in a proceeding. The power is discretionary and subject to the rules of court. As we will see, s 98 and the rules of court (in particular UCPR Pt 42) affect all aspects of awards of costs by the court. However, it should be noted that unless the court makes an order, a party is not entitled to recover costs from any [3.150]

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Priest v New South Wales cont. other party: see s 98(2).

Civil Procedure Act 2005 (NSW) [3.160] Civil Procedure Act 2005 (NSW) s 98 Part 7 Judgments and orders Division 2 Costs of Proceedings 98 Courts powers as to costs

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(1)

(cf Act No 52 1970, s 76; SCR Pt 52A rr 5, 6, 7 and 8; Act No 9 1973, s 148B; Act No 11 1970, s 34) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b)

the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c)

the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

(2)

Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.

(3)

An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.

(4)

In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b)

a specified proportion of the assessed costs, or

(c)

a specified gross sum instead of assessed costs, or

(d)

such proportion of the assessed costs as does not exceed a specified amount.

PARTIES AND COSTS [3.170] In 2005 Hamilton J 4 said: Costs are dealt with in CPA Part 7 Div 2 and UCPR Part 42. … An attempt has been made to rationalise a confusion in terminology, which has arisen in respect of costs. Prior to 1987 the two principal bases for the quantification of costs were called the party and party basis and the (more ample) solicitor and client basis. After the enactment of the LPA 1987, the more ample basis came to be called the indemnity basis. Furthermore, “party/party” and “solicitor/client” came to have a new meaning under that legislation as referring respectively to assessments of costs under court orders and assessments of costs between solicitor and client. These expressions referred (and refer) to the parties between whom the assessment took place, rather than to the basis of quantification. Courts, however, go on making reference to “party and party” costs as the lower basis of quantification. An attempt has been made to remove this anomaly by defining the lower basis of quantification as the “ordinary basis”, so that 4

Hamilton JP, The New Procedure Nuts and Bolts for Judicial Officers, Judicial Commission of NSW (16 August 2005).

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“party/party” will be left to refer only to the identification of persons between whom an assessment under the LPA 1987 or the LPA 2004 is taking place. See CPA s 3(1). This is very logical but, in the face of the ingrained conservatism of lawyers in the use of language, I do not know how it will fare.

Uniform law costs [3.180] The professional fee a client is required to pay is dictated by the contract or costs

agreement between the solicitor and client. The fee together with disbursements amount to what are called “uniform law costs” (previously known as “client and practitioner costs” or “solicitor and client costs”), and are amounts which the client is liable to pay, whether or not the client is awarded “ordered costs” (previously known as “party and party costs”). Put another way, they are the costs that the lawyer charges the client. Note that a client may seek to have the court in which the litigation took place, or an independent costs assessor, assess the costs payable to the solicitor. If a court sets aside the costs agreement, the court may nevertheless order the payment of a different amount to the solicitor, such as one based on the court’s scale of costs. Note also that the client is not liable to pay such costs if the lawyer agrees to act on a “no win no fee” basis, unless the agreement with the solicitor includes a provision for payment of a success fee or “uplift fee”. Solicitor and client costs that are determined by a costs agreement entered into prior to 1 July 2015 are subject to assessment under the Legal Profession Act 2004 (NSW) and any assessment processes in its regulations that were extant at that time. However, uniform law costs in respect of proceedings that commenced on or after 1 July 2015 are subject to assessment processes under the Legal Profession Uniform Law and its regulations: Legal Profession Uniform Law (NSW) Schedule 4 cl 18.

Ordered costs

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[3.190] Ordered costs (previously known as “party and party costs”) are the costs the court

usually orders one party to pay to another party in litigation. Uniform law costs or client and practitioner costs are often greater than ordered costs, so ordered costs usually only partially indemnify 5 the client recipient against the costs that the client is contractually obligated to pay to his or her solicitor. Ordered costs are those costs that the court considers appropriate and reasonable for the successful party to receive in order to be compensated for the cost of achieving the outcome of the litigation. They can be awarded on an ordinary basis or an indemnity basis (which is a more generous costs scale). Costs awarded on an indemnity basis allow for all costs incurred, except those that appear to have been unreasonably incurred or those that appear to be an unreasonable amount: UCPR r 42.5. The court must specify if costs are awarded on an indemnity basis. If the costs basis is not specified by the court order, the costs are generally assessed on an ordinary basis: UCPR r 42.2. Parties that receive, or are ordered to pay, an unquantified costs order are entitled to apply for an assessment or taxation of costs. In New South Wales taxation or assessment of party and party costs for proceedings that commenced prior to 1 July 2015 are still governed by the Legal Profession Act 2004 (NSW) and any assessment processes in its regulations that were 5

Latoudis v Casey (1990) 170 CLR 534 and Cachia v Hanes (1994) 179 CLR 403. [3.190]

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extant at that time. However, ordered costs in respect of proceedings that commenced on or after 1 July 2015 are subject to assessment processes under the Legal Profession Uniform Law and its regulations: Legal Profession Uniform Law Application Regulation 2015 (NSW), reg 59). Costs assessments processes for matters commenced on or after 1 July 2015 are governed by the Legal Profession Uniform Law Application Regulation 2015 (NSW), Part 6 “Legal Costs – Costs Assessment”.

Costs follow the event – the usual costs order [3.200] Costs are at the discretion of the court and this is specified in s 98(1)(a) of the CPA.

UCPR r 42.1 recognises the general law presumption 6 that unless it appears to the court that some other order should be made, costs follow the event. Such an order acknowledges that a successful party has a “reasonable expectation” of being awarded costs against the unsuccessful party 7 and that fairness dictates that the unsuccessful party usually has the liability for costs. 8

Baulderstone Hornibrook Engineering v Gordian Runoff [3.210] Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2006] NSWSC 583 EINSTEIN J Costs The Civil Procedure Act 2005 … 5 Section 56(1) obliges the parties to conduct proceedings in a way which would facilitate the just, quick and cheap resolution of the real issues in the proceedings.

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6 The significance of s 56 to conduct in the commercial list was explained by Bergin J in A and N Holdings NSW Pty Limited v Andell Pty Limited [2006] NSWSC 55 (para 24) where her Honour described the Commercial List as a “fast track for litigation”. 7 Section 56 is a statutory enactment of the principles which have long applied to the conduct of commercial litigation (such as this case) in this State: Tripple Take Pty Limited v Clark Rubber Franchising Pty Limited [2005] NSWSC 1169. 8 Section 56 gives effect to Mahoney P’s observation that litigation is not a game. The section requires litigants at the risk of costs orders to concentrate on the real issues. A party may no longer put another to the proof of a fact which the first knows is true without a costs penalty where the party put to proof establishes the fact. The “fast track” of which Bergin J spoke should not stop once a plaintiff succeeds in having the hearing begin. General approach The usual order 9 The usual order is that costs follow the event (although there is no absolute rule to that effect): Oshlack v Richmond River Council (1998) 193 CLR 72, per McHugh J at [63]–[67]. The position will be otherwise if “it appears to the Court that some other order ought be made as to the whole or any part of the costs”: Credit Lyonnais Australia Limited v Darling (1991) 5 ACSR 703 at 710 per Kirby P. 6 7

Ritter v Godfrey [1920] KB 47 and Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd v Lane Industries Pty Ltd) (1993) 26 IPR 261. See Oshlack v Richmond River Council (1998) 193 CLR 72; 72 ALJR 578; 152 ALR 83; [1998] HCA 11 at [34].

8

Oshlack v Richmond River Council (1998) 193 CLR 72; 72 ALJR 578; 152 ALR 83; [1998] HCA 11 at [67].

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Baulderstone Hornibrook Engineering v Gordian Runoff cont. Apportionment 10 The effect of UCPR Part 42 r 42.1 is that an unsuccessful party may be ordered to pay the entirety of the costs of a successful party, even though the successful party did not succeed on all issues. Special circumstances are generally required to justify some other order being made. 11 Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those in which it failed: Waters v PC Henderson (Aust) Pty Ltd (unreported, Supreme Court of New South Wales Court of Appeal, Kirby P, Mahoney JA, Priestley JA, 6 July 1994, BC 9404952). 12 Whilst the general principle is that an ultimately successful party ought not be put at risk as to costs merely by having relied upon additional issues upon which it did not succeed (on the basis that the ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case), a successful party may only get a proportion of its costs if the unsuccessful party is able to identify clearly dominant or separable issues lost by the successful party. Multiple parties 13 The Court will not normally allow more than one set of costs to successful litigants where there was no possible conflict of interest between them in the presentation of their cases: Statham v Shephard (No 2) (1974) 23 FLR 244. The matter was put as follows at 246, per Woodward J:

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The principle which I deduce from these authorities, and which I believe I should follow in spite of the two cases earlier cited, is that the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases. I would add to this basic proposition three provisos. In the first place, if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquiries from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between defendants. (See In re Lyell [1941] VLR 207.) Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining at arm’s length during the general course of litigation. Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time. Indemnity costs 14 The Court has power to award indemnity costs under s 98(1)(c) of the Act. 15 The principles on which an indemnity costs order will be made, are well settled. The principles established by Sheppard J in Colgate Palmolive Co v Cussons Pty Limited (1993) 46 FCR 225, 233 are generally accepted. 16 Recent applications of those principles in this Court are Lahoud v Lahoud [2006] NSWSC 126, Campbell J; Stockland (Constructors) Pty Limited v Darryl I Coombs Pty Limited [2005] NSWSC 252, and by the Court of Appeal in Gray v Gray [2005] NSWCA 129 para 18. In Gray, Colgate (supra) was referred to as “the leading judgment”. 17 The High Court in Oshlack at 89, 90 (Gaudron and Gummow JJ) recorded that indemnity costs were appropriate where the case involved “some relevant delinquency on the part of the unsuccessful party”: see the observations quoted by those Justices from the judgment of Malcolm CJ’s in Smith, Re; ex parte Rundell (No 2) (1991) 6 WAR 299. [3.210]

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Baulderstone Hornibrook Engineering v Gordian Runoff cont. 18 The following factors include those listed by Sheppard J in Colgate Palmolive v Cussons (1993) 118 ALR 248, as accepted by the Court of Appeal in Leichhardt Municipal Council v Green [2004] NSWCA 341 at [48], as of relevance to the present application: • Evidence of particular misconduct that causes loss of time to the court and the other parties … • The fact that the proceedings were commenced in willful disregard of known facts …; • The making of allegations that ought never to have been made or the undue prolongation of a case by groundless contentions; [It is to be noted that CGU has submitted, that for the purposes of Sheppard J’s para (a), an allegation of bad faith may have a similar effect to an allegation of fraud.] 19 Section 56(5) of the Act expands the circumstances in which an indemnity costs order may be made. 20 In order to establish a basis for an indemnity costs order, it is necessary to establish by evidence relevant delinquency, abuse of process, ulterior purpose or unreasonableness on the part of BHE. 21 Evidence of unreasonable conduct on the part of the party ordered to pay costs is usually required: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616 per Mason P. 22 The difficulty or otherwise of the litigation cannot itself be the basis for the award of costs on a special basis, as the courts are constantly engaged in complex litigation, and the fact that a particular piece of litigation raises difficult questions of law necessitating elaborate preparation is not a novelty: cf, Marks, Kinross, McCullagh & Williamson v GIO Australia Holdings Ltd (No 2) (1996) 66 FCR 128 at 141. 23 The mere fact that a party fights the proceedings fiercely and that no stone is left unturned is not a ground for a special costs order: cf, Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 100 ALR 568 at 570; Berkeley Administration Inc v McClelland [1990] FSR 565 at 569–570.

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24 The mere fact that a case has been found to lack merit cannot be a basis for a special costs order, for in most litigation that comes to a concluded hearing, the claim of one of the parties will have been found lacking in merit: cf, Hurstville Municipal Council v Connor (1991) 24 NSWLR 724 at 735. [See the practical application of the above principles by Allsop J in DSE (Holdings) Pty Limited v InterTan Inc [2004] FCA 1251 and on appeal InterTan Inc v DSE (Holdings) Pty Limited [2005] FCAFC 54.] Prolonging a trial 25 Prolonging a trial by litigating issues which are known to the unsuccessful party not to be real issues, in breach of s 56 of the Act, is capable of constituting relevant delinquency. Section 56(5) would in an appropriate case permit this form of delinquency to be taken into account in the Court’s exercise of its discretion to award costs. Depending always upon the precise circumstances, the Court has power to order indemnity costs against an unsuccessful party whose conduct has breached s 56: and this in furtherance of the statutory object which the section embodies. Interest 26 The Court may order the payment of interest on the costs so awarded, such interest to be payable as from the date or dates on which the costs in question were paid [s 101(5)(a) of the Act]. The principles are set out by Campbell J in Lahoud at para 78 ff. There is no requirement that the Court be satisfied before making such an order that the case was out of the ordinary. The governing consideration is to compensate a party which is out of pocket by having to pay costs. A word of warning 27 Gordian (the respondent) contended as follows: 144

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Baulderstone Hornibrook Engineering v Gordian Runoff cont. i.

The Court is vigilant to ensure that successful parties who incur additional costs in litigating issues which would not have been litigated had only the real issues in dispute been litigated, should be effectively compensated for the costs incurred, otherwise an innocent party will bear the costs of the wrongdoers’ delinquency.

ii.

Parties who choose not to litigate the real issues should do so at their own cost.

28 These submissions may be accepted subject to an important rider, namely the need to accept that in any particular set of proceedings the parties are of course entitled to, in good faith, determine to litigate issues reasonably believed at the time to bear upon the real issues. The pendulum dictated by the Act should not be seen as a mechanism to deny parties their entitlement to litigate issues believed on proper grounds to be genuine issues even if, with the benefit of hindsight, the course of the evidence ultimately shows that the litigation of some of those issues may have been an incorrect call. Prescience is a rare commodity, particularly where very complex litigation is in play. 29 All of this simply serves to point up the instant specific nature of the principled exercise of the discretion. There are cases and there are cases. The trial judge will usually be in the best position to determine how the discretion should be exercised: cf Furber v Stacey [2005] NSWCA 242 at [126], [133].

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LAWYERS AND COSTS [3.220] The CPA and Schedule 2 of the Legal Profession Uniform Law Application Act 2014 (NSW) (LPULAA) provide for costs to be ordered against a legal practitioner personally. These powers are exercised in a context where the legal system remains adversarial. Nevertheless, their existence and their periodic exercise can promote cultural change amongst practitioners. It is to be noted that s 56(4) of the CPA provides a statutory duty on every legal practitioner not to conduct him or herself so as to cause his or her client to breach the client’s duty to assist the court. In addition cl 2 of Schedule 2 of the LPULAA requires a legal practitioner, before filing a pleading, whether for a plaintiff or for a defendant, to certify that, “there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law” that the claim or the defence has “reasonable prospects of success”. Costs sanctions in Schedule 2 and s 99 of the CPA reinforce the traditional professional obligation of legal practitioners to avoid the commencement or continuance of baseless proceedings. Legislation of this nature raises two important and competing public interests. Firstly, lawyers should not be deterred from fearlessly pursuing the interests of their clients. Secondly, financial prejudice occasioned by unjustified litigation should be discouraged. Hamilton J usefully summarised the danger of making a costs order against a legal practitioner and the consequent effect it might have on his or her perceived duty to their client in Pinebelt Pty Ltd v Bagley: 9 [T]here are grave dangers in the too ready imposition of personal costs orders against practitioners … A feeling of threat of personal liability arising from decisions, some rivalling in themselves and many necessarily taken in the sometimes white hot caldron of litigation, has the potential to paralyse the decisive and fearless conduct which advocates are daily called upon to engage in. 9

Pinebelt Pty Ltd v Bagley [2000] NSWSC 655 at [28]. [3.220]

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Practice Note SC Gen 5 Supreme Court – Costs Orders against Legal Practitioners commenced on 17 August 2005. Applying to new and existing civil proceedings in the Supreme Court, it provides a procedure designed to facilitate fairness. The practice note indicates that its purpose is to ensure compliance with directions and the rules of the court and that practitioners have regard to the “speedy and efficient administration of justice”. The practice note indicates that this will be confirmed by the use of costs sanctions in appropriate cases, including costs orders against legal practitioners personally and costs ordered on a payable forthwith basis. The court relies on legal practitioners, either directly or by giving appropriate advice to a client, to attend to the following: observe listing procedures, rules and court directions; ensure readiness for trial; provide reasonable estimates of the length of hearings; present written submissions on time; and give the earliest practicable notice of an adjournment application. Failure in any of these respects may be taken into account in exercising the jurisdiction to order costs against legal practitioners personally. The late amendment of pleadings may also attract a costs order against a legal practitioner. In appropriate cases, particularly those involving repeated defaults, the court may refer an incident or incidents of default to the Law Society, Bar Association or the Office of the Legal Services Commissioner. According to the “Procedural considerations” of Practice Note SC Gen 5, the procedure to be followed where the court is minded to make a costs order against a legal practitioner personally will be: • A practitioner will be given an opportunity to show cause why costs should not be ordered against him or her; • With the consent of the practitioner, the court may take the show cause submission orally at the conclusion of any trial, application or other appearance before the court;

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• The court may adjourn the matter to another day or date to be fixed, and may direct the practitioner to provide written submissions to the court within a period specified by the court; • The court may further direct that the matter proceed by written submission and by reference primarily to the materials that were before the court during the proceedings to which the costs order relates; • If it will assist the court, the other parties to the proceedings may be directed or invited to make submissions in relation to the question of costs or any ancillary matter; • If a practitioner informs the court that he has requested his or her client to waive legal professional privilege in a respect which the practitioner asserts is relevant to the court’s consideration of the costs order, the court will invite the client to make submissions on the matter and to indicate whether the client wishes an order to be made against the practitioner; • Upon a determination by the court that a legal practitioner shall be personally liable for the costs of a party to the proceedings or any part thereof and such costs are ordered to be payable forthwith, the court may order that a bill of costs relevant to the costs order be filed with the court and served on the party liable to pay within such time as the court orders and that such a bill of costs be in the form prescribed pursuant to s 193 of the Legal Profession Act; and 146

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• The judge or associate judge may determine and order the amount of costs payable under the costs order.

Legal Profession Uniform Law Application Act 2014 (NSW) [3.230] Schedule 2 Costs in civil claims where no reasonable prospects of success 1 Application of Schedule (1) Schedule extends to appeals This Schedule extends to legal services in connection with proceedings in a court on appeal as well as a court at first instance. (2) Legal services provided by both barrister and solicitor If legal services in relation to a particular matter are provided by both a solicitor and a barrister instructed by the solicitor, any function imposed by this Schedule on a law practice in respect of the provision of the services is to be read as imposing the function on both the solicitor and barrister.

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2 Law practice not to act unless there are reasonable prospects of success (1)

A law practice must not provide legal services on a claim or defence of a claim for damages unless a legal practitioner associate responsible for the provision of the services concerned reasonably believes on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success.

(2)

A fact is provable only if the associate reasonably believes that the material then available to him or her provides a proper basis for alleging that fact.

(3)

This Schedule applies despite any obligation that a law practice or a legal practitioner associate of the practice may have to act in accordance with the instructions or wishes of the client.

(4)

A claim has reasonable prospects of success if there are reasonable prospects of damages being recovered on the claim. A defence has reasonable prospects of success if there are reasonable prospects of the defence defeating the claim or leading to a reduction in the damages recovered on the claim.

(5)

Provision of legal services in contravention of this clause constitutes for the purposes of this Schedule the provision of legal services without reasonable prospects of success.

3 Preliminary legal work not affected This Schedule does not apply to legal services provided as a preliminary matter for the purpose of a proper and reasonable consideration of whether a claim or defence has reasonable prospects of success. 4 Restrictions on commencing proceedings without reasonable prospects of success (1)

The provision of legal services by a law practice without reasonable prospects of success does not constitute an offence but is capable of being unsatisfactory professional conduct or professional misconduct by a legal practitioner associate of the practice who is responsible for the provision of the service or by a principal of the practice.

(2)

A law practice cannot file court documentation on a claim or defence of a claim for damages unless a principal of the practice, or a legal practitioner associate responsible for the provision of the legal service concerned, certifies that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success.

(3)

Court documentation on a claim or defence of a claim for damages, which has been lodged for filing, is not to be filed in a court or court registry unless accompanied by the certification required by this clause. Rules of court may make provision for or with respect to the form of that certification. [3.230]

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Legal Profession Uniform Law Application Act 2014 (NSW) cont. (4)

In this clause:

“court documentation” means: (a)

an originating process (including for example, a statement of claim, summons or cross-claim), defence or further pleading, or

(b)

an amended originating process, defence or further pleading, or

(c)

a document amending an originating process, defence or further pleading, or

(d)

any other document of a kind prescribed by the local regulations.

“cross-claim” includes counter-claim and cross-action. 5 Costs order against law practice acting without reasonable prospects of success (1)

If it appears to a court in which proceedings are taken on a claim for damages that a law practice has provided legal services to a party without reasonable prospects of success, the court may of its own motion or on the application of any party to the proceedings make either or both of the following orders in respect of the practice or of a legal practitioner associate of the practice responsible for providing the services: (a) an order directing the practice or associate to repay to the party to whom the services were provided the whole or any part of the costs that the party has been ordered to pay to any other party,

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(b)

an order directing the practice or associate to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified.

(2)

The Supreme Court may on the application of any party to proceedings on a claim for damages make any order that the court in which proceedings on the claim are taken could make under this clause.

(3)

An application for an order under this clause cannot be made after a final determination has been made under Part 7 by a costs assessor of the costs payable as a result of an order made by the court in which the proceedings on the claim concerned were taken.

(4)

A law practice or legal practitioner associate of the practice is not entitled to demand, recover or accept from a client any part of the amount for which the practice or associate is directed to indemnify a party pursuant to an order under this clause.

6 Onus of showing facts provided reasonable prospects of success (1)

If the court (the “trial court”) hearing proceedings on a claim for damages finds that the facts established by the evidence before the court do not form a basis for a reasonable belief that the claim or the defence had reasonable prospects of success, there is a presumption for the purposes of this Schedule that legal services provided on the claim or the defence (as appropriate) were provided without reasonable prospects of success.

(2)

If the Supreme Court (when the Supreme Court is not the trial court) is satisfied, either as a result of a finding of the trial court or otherwise on the basis of the judgment of the trial court, that the facts established by the evidence before the trial court do not form a basis for a reasonable belief that the claim or the defence had reasonable prospects of success, there is a presumption for the purposes of this Schedule that legal services provided on the claim or the defence (as appropriate) were provided without reasonable prospects of success.

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Legal Profession Uniform Law Application Act 2014 (NSW) cont. (3)

A presumption arising under this clause is rebuttable and a person seeking to rebut it bears the onus of establishing that at the time legal services were provided there were provable facts (as provided by clause 2 (Law practice not to act unless there are reasonable prospects of success)) that provided a basis for a reasonable belief that the claim or the defence on which they were provided had reasonable prospects of success.

(4)

A law practice or legal practitioner associate of the practice may, for the purpose of establishing that at the time legal services were provided there were provable facts (as provided by clause 2 (Law practice not to act unless there are reasonable prospects of success)) that provided a basis for a reasonable belief that the claim or the defence on which they were provided had reasonable prospects of success, produce information or a document despite any duty of confidentiality in respect of a communication between the law practice or a legal practitioner associate of the practice and a client, but only if: (a) the client is the client to whom the legal services were provided or consents to its disclosure, or (b)

the court is satisfied that it is necessary for the law practice or associate to do so in order to rebut a presumption arising under this clause.

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[3.240] Schedule 2 may be presumed to apply where legal services were supplied in a claim for damages without reasonable prospects of success. 10 A costs award pursuant to this provision could require the legal practitioner to repay costs to a party who received the legal services in the proceedings (the client) or indemnify any party other than the party to whom the services were provided against costs payable by the indemnified party. The legal practitioner bears the onus of proving the facts to support a reasonable belief that a claim or defence had reasonable prospects of success. [3.250] Section 99 of the CPA also provides for costs to be ordered against a legal practitioner, where costs have been incurred by reason of serious neglect, incompetence or impropriety. The New South Wales Court of Appeal in Nadarajapillai v Naderasa (No 2) [2015] NSWCA 209 ordered that a legal practitioner pay to the respondent in the appeal the amount of the costs that the appellant, his client, was ordered to pay the respondent. Emmett JA (with McColl and Macfarlan JJA agreeing) in that case said: “Section 99 is described as applying where costs have been incurred ‘by the serious neglect, serious incompetence or serious misconduct of a legal practitioner’, or ‘improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible’ … I consider that the conduct of [the solicitor], in instituting and maintaining an appeal that had no prospects of success, and no merit, constituted serious incompetence on his part as a legal practitioner and that costs have been incurred improperly and without reasonable cause, in circumstances for which he is responsible.”

Civil Procedure Act 2005 (NSW) [3.260] Civil Procedure Act 2005 (NSW) s 99 Part 7 Judgments and orders Division 2 Costs of Proceedings 99 Liability of legal practitioner for unnecessary costs (cf Act No 52 1970, s 76C; SCR Pt 52A rr 43 and 43A) 10

The former s 348 of the Legal Profession Act 2004 (NSW) did so apply. See Legg M and Fai M, “Litigation: Court of Appeal clarifies “reasonable prospects of success””, (2005) 43(7) Law Society Journal (NSW) 55. [3.260]

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Civil Procedure Act 2005 (NSW) cont. (1)

This section applies if it appears to the court that costs have been incurred:

(2)

(a)

by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or

(b)

improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.

After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following: (a) it may, by order, disallow the whole or any part of the costs in the proceedings: (i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or (b)

(ii) in the case of a solicitor, as between the solicitor and the client, it may, by order, direct the legal practitioner: (i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or (ii)

(c)

in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,

it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.

Treadwell v Hickey

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[3.270] Treadwell v Hickey [2010] NSWSC 1119 [In unsuccessful proceedings brought by Treadwell against Hickey, the latter sought indemnity costs and an order pursuant to s 348(1)(b) of the Legal Profession Act 2004 (NSW) (now superseded by Schedule 2 of the Legal Profession Uniform Law Application Act 2014 (NSW)) or, alternatively, s 99(2)(c) of the Civil Procedure Act 2005 (NSW) against Treadwell’s solicitor Fitzpatrick.] BARRETT J The claim against the solicitor 16 The issue of whether a costs order should be made against Mr Fitzpatrick was the central issue in the costs argument before me. I shall address it first. 17 It is Mr Hickey’s contention that the case brought against him by Mr Treadwell was so lacking in merit and substance so as to be not fairly arguable and that Mr Fitzpatrick’s view about prospects of success did not have an objective foundation in the material available to him at the relevant time. Alternatively, it is submitted that if Mr Fitzpatrick did in fact believe that there was material which objectively justified proceeding with the case that belief fell outside the range of views which could be reasonably entertained. 18 The claim against Mr Fitzpatrick is made under s 348(1)(b) of the Legal Profession Act 2004 and s 99(2)(c) of the Civil Procedure Act 2005. Although the sections are framed differently and require separate consideration, there are a number of principles with equal application to each section. 150

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Treadwell v Hickey cont.

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19 In Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300, McColl JA set out at [92] a number of guiding principles which the court will take into consideration when exercising a power to order a legal practitioner to pay the costs of proceedings in which the practitioner has represented a party: (a)

The jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised “with care and discretion and only in clear cases”: Ridehalgh (at 229); Re Bendeich (No 2) (1994) 53 FCR 422; Deputy Commissioner of Taxation v Levick (1999) 168 ALR 383 at 389 [11]; 43 ATR 621 at 627 [11], per Hill J; Levick v Commissioner of Taxation (2000) 102 FCR 155 at 166 [44]; Gitsham v Suncorp Metway Insurance Ltd [2002] QCA 416 at [8], per White J (with whom Davies JA and Williams JA agreed); De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544; Money Tree Management Services Pty Ltd and Institute of Taxation Research v Deputy Commissioner of Taxation (No 3) (2000) 45 ATR 262;

(b)

A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail: Ridehalgh (at 233); Medcalf v Mardell [2003] 1 AC 120 at 143 [56], per Lord Hobhouse of Woodborough; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169; 29 ACSR 21 (affirmed on appeal; Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 87 FCR 134); Levick v Commissioner of Taxation; cf Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683;

(c)

The legal practitioner is not “the judge of the credibility of the witnesses or of the validity of the arguments”: Tombling v Universal Bulb Co Ltd [1951] 2 TLR 289 at 297; [1951] WN 247 at 238; the legal practitioner is not “the ultimate judge, and if he reasonably decides to believe his client, criticism cannot be directed to him”: Myers v Elman (at 304) per Lord Atkin; Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR 406 at 413 [34]; 47 ATR 1 at 8 [34], per Callinan J;

(d)

A judge considering making a wasted costs order arising out of an advocate’s conduct of court proceedings must make full allowance for the exigencies of acting in that environment; only when, with all allowances made, a legal practitioner’s conduct of court proceedings is quite plainly unjustifiable can it be appropriate to make a wasted costs order: Ridehalgh (at 236, 237);

(e)

A legal practitioner against whom a claim for a costs order is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it: Myers v Elman (at 318); Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at 229);

(f)

Where a legal practitioner’s ability to rebut the complaint is hampered by the duty of confidentiality to the client he or she should be given the benefit of the doubt: Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at 229); in such circumstances “[t]he court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so”: Medcalf (at 134 [23]) per Lord Bingham of Cornhill;

(g)

The procedure to be followed in determining applications for wasted costs must be fair and “as simple and summary as fairness [(2005) 63 NSWLR 300 at 322] permits … [h]earings should be measured in hours, and not in days or weeks … Judges … must be astute to control what threatens to become a new and costly form of satellite litigation”: Ridehalgh (at 238-239); Harley v McDonald [2001] 2 AC 678 at 703 [50]; Medcalf (at 136 [24]). [3.270]

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Treadwell v Hickey cont. The Legal Profession Act 2004 20 The relevant provisions of the Legal Profession Act 2004 are ss 345 and 348, contained in Pt 3.2, Division 10: [these provisions were thereafter provided]. “Reasonable prospects of success” 21 Under s 348(1), an order may be made against a legal practitioner if it appears to the court that the practitioner has provided legal services to a party to proceedings upon a claim for damages “without reasonable prospects of success”. The threshold question, whether the proceedings were “taken on a claim for damages” was not in issue as between the parties to this case. 22 The onus remains upon the costs applicant throughout to demonstrate that the legal practitioner had provided legal services without reasonable prospects of success: per McColl JA in Lemoto at [137]. 23 The construction of the phrase “without reasonable prospects of success” has been considered in a number of cases. In Degiorgio v Dunn (No 2) [2005] NSWSC 3; (2005) 62 NSWLR 284, I accepted at [26] that the predecessor statutory provision imposed upon legal practitioners a standard that is more demanding than that applicable in cases where, by reference to general law principles, a costs order is sought against a party’s lawyer. I expressed the view that “without reasonable prospects of success” means “so lacking in merit or substance as to be not fairly arguable”. 24 At [17] of the judgment, I said that one of the elements of the statutory standard imposed upon practitioners is that “the reasonable belief” as to the prospects of success “must have its objective foundation in material available to the practitioner at the relevant time”. This construction was subsequently approved by McColl JA in Lemoto at [131]–[132], the leading judgment in the area. 25 The authorities show that a costs order under s 348 of the Legal Profession Act is not to be lightly imposed upon a practitioner who has represented an unsuccessful party to a proceeding. Indeed there is a high threshold, which must be satisfied before the court will consider exercising its discretion to make such an order.

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26 The language of the statutory formulation is permissive rather than mandatory. If it is shown that a law practice has provided legal services to a party without reasonable prospects of success a discretion as to the exercise of the power remains. The Civil Procedure Act 2005 27 The relevant section, relied upon by Mr Hickey, is as follows: [s 99 Liability of legal practitioner for unnecessary costs was thereafter provided] 28 In Whyked Pty Ltd v Yahoo!7 Pty Ltd [2008] NSWSC 477 at [12], McDougall J, while noting that the general law provided valuable guidance as to the exercise of the discretion to award costs against a legal practitioner, held that the discretion must be exercised by reference to the statutory formulation of the power. His Honour remarked: Further, and more generally, it is necessary to bear in mind that the power to order costs against a legal practitioner is that now found in s 99 of the Civil Procedure Act, and to be exercised in accordance with the terms of that section. There is a danger in substituting analyses of, or glosses upon, the section for the language employed in it. 29 The central concepts in s 99(1), namely “neglect”, “incompetence”, “misconduct”, “improperly” or “without reasonable cause” are not defined in the section or otherwise in the Civil Procedure Act. 30 The court’s power to make a costs order against a legal practitioner pursuant to s 99 was considered by Sully J in Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd [2006] NSWSC 155. His Honour concluded at [17] that s 99 should be applied consistently with the principles stated in Ridehalgh v Horsefield [1994] Ch 205. This approach was subsequently supported by Windeyer J in 152

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Treadwell v Hickey cont. Karwal v Skrzypczak [2007] NSWSC 931 at [9]; McDougall J in Whyked Pty Ltd v Yahoo!7 Pty Ltd [2008] NSWSC 477 at [17]–[19] and Bryson AJ in European Hire Cars Pty Ltd v Beilby Poulden Costello [2009] NSWSC 526 at [59].

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31 Ridehalgh (above) concerned aspects of the proper construction and application of s 51(6) and (7) of the English Supreme Court Act 1981 (UK), provisions which generally correspond with the terms of s 99 of the Civil Procedure Act. The judgment of Bingham JR, Rose LJ and Waite LJ in Ridehalgh is particularly useful because of the consideration given to the meaning of “improper”, “unreasonable” and “negligent” in respect to the jurisdiction to award costs against legal practitioners. Their Lordships said at 223-233: “Improper” means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code. “Unreasonable” also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but it is not unreasonable. The term “negligent” was the most controversial of the three. It was argued that the Act of 1990, in this context as in others, used “negligent” as a term of art involving the well known ingredients of duty, breach, causation and damage. Therefore, it was said, conduct cannot be regarded as negligent unless it involves an actionable breach of the legal representative’s duty to his own client, to whom alone a duty is owed. We reject this approach. … But for whatever importance it may have, we are clear that “negligent” should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession. In adopting an untechnical approach to the meaning of negligence in this context, we would however wish firmly to discountenance any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence: “advice, acts or omissions in the course of their professional work which no member of the profession who was reasonably well-informed and competent would have given or done or omitted to do”; an error “such as no reasonably well-informed and competent member of that profession could have made”: see Saif Ali v Sydney Mitchell & Co [1980] AC 198, 218, 220, per Lord Diplock. We were invited to give the three adjectives (improper, unreasonable and negligent) specific, self-contained meanings, so as to avoid overlap between the three. We do not read these very familiar expressions in that way. Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended. 32 The Court of Appeal said, in relation to the pursuit of a hopeless case: A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he acts for a party who pursues a claim or a defence which is plainly doomed to fail … It is not entirely easy to distinguish by definition between the hopeless case and the [3.270]

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Treadwell v Hickey cont. case which amounts to an abuse of the process, but in practice it is not hard to say which is which and if there is doubt the legal representative is entitled to the benefit of it. 33 Two additional principles were referred to by Sully J in Ideal Waterproofing. The first body of principle which his honour referred to was said to be taken from Dal Pont: Lawyers’ Professional Responsibility in Australia and New Zealand (2nd ed.) at 375: Importantly, the jurisdiction to order costs against a lawyer personally is one to be exercised sparingly, “with care and discretion and only in clear cases”, especially where the order sought is one for indemnity costs. This is because, inter alia, it will often be difficult for a court to know all the details and circumstances of the lawyer’s instructions. There is no cause for the jurisdiction to be exercised merely because the litigation is decided adversely to the litigant, for otherwise “those seeking to advance legitimate claims, or pursue legitimate defences might well be deprived of legal representation and access to justice, in consequence, would be impeded”. Nor should the jurisdiction be attracted merely because of the lawyer’s bona fide mistake or error of judgment, or where the client has misled the lawyer as to the facts which would otherwise not have justified the action … To attract this jurisdiction, the lawyer’s conduct must have involved a serious dereliction of duty or gross negligence. 34 The proposition that the jurisdiction is to be exercised with caution and sparingly cannot be contentious. Indeed it is the first principle referred to by McColl JA in [92] of Lemoto. The principle was held to be applicable to the s 99 jurisdiction in Kelly v Jowett [2009] NSWCA 278 at [60]. Also, in Whyked Pty Ltd McDougall J said: [T]he exercise of the power given by s 99 of the Civil Procedure Act should be undertaken in such a way as to deter legal practitioners from advancing difficult cases, or from accepting instructions from impecunious clients. As a matter of general policy, someone with a case that is not manifestly hopeless should not be denied the opportunity to litigate it.

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35 The second body of principle referred to by Sully J was taken from a decision of the Court of Appeal of New Zealand: Harvey v McDonald [1999] 3 NZLR 545 at [59], [60] and [61]: [59] An officer of the Court, whose role is to assist in the administration of justice, cannot properly perform that role if falling below minimum levels of competence and care. There is therefore a duty resting on such officers to achieve and maintain appropriate levels of competence and care. If in serious dereliction of such duty, the officer is properly amenable to the costs jurisdiction of the Court. This duty is reinforced by the fact that Parliament has decreed that practitioners, both barristers and solicitors, must perform at a certain level of competence and care, otherwise sanctions are available in terms of ss 106 and 112 of the Law Practitioners Act 1982. That level is prescribed by giving the disciplinary tribunals power to make orders if of opinion that the practitioner has been guilty of negligence or incompetence in a professional capacity, and that the negligence or incompetence has been of such a degree or so frequent as to reflect on the practitioner’s fitness to practise as a barrister or solicitor or as to tend to bring the profession into disrepute. [60] It is neither necessary nor desirable to attempt to define the level of incompetence or negligence at which the costs jurisdiction can be invoked beyond saying that such incompetence or negligence must amount to a serious dereliction of duty to the Court. There is no necessary correspondence between the level at which disciplinary sanctions are possible under the Law Practitioners Act 1982 and the level required to constitute a serious dereliction of duty to the Court. It can be said, however, that the levels will often coincide, and incompetence or negligence falling short of a disciplinary level under the Act, will not ordinarily amount to a serious dereliction of duty to the Court. [61] The English “wasted costs” legislation gives the Court jurisdiction if the legal representative has acted “improperly, unreasonably, or negligently”. The United Kingdom Parliament has determined that standard to be appropriate, but in terms of the inherent jurisdiction of the High Court in New Zealand we do not consider the standard should 154

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Treadwell v Hickey cont. ordinarily be set lower than that adopted by our Parliament for the purposes of the Law Practitioners Act 1982. For this Court to adopt the United Kingdom approach would come close to legislating … 36 The applicability of any “test of serious dereliction” was questioned both by Windeyer J in Karwal and McDougall J in Whyked Pty Ltd. As stated at paragraph [31] above, the statutory formulation must be adhered to. It is for that reason that I agree that any “test of serious dereliction” is irrelevant when considering exercising the statutory jurisdiction. … Assessment of the claim 114 This was not a case where proceedings were commenced in circumstances where they were doomed to fail. Mr Fitzpatrick relied to a large extent on his client’s evidence in relation to an oral agreement being accepted by the court. The respective versions of events were in conflict. It was inevitable that one version would have to be preferred by the court on the balance of probabilities. A party cannot be said to have commenced proceedings without reasonable cause simply because the party’s argument proved to be unsuccessful. 115 True it is that there were pieces of evidence available to Mr Fitzpatrick which were inconsistent with Mr Treadwell’s version of the retainer. However there were also pieces of evidence which adversely impacted upon the version of events put forward by Mr Hickey. The argument put forward by Mr Treadwell was not unworthy of consideration, it was not an application that should not have been brought.

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116 The ultimate decision that Mr Treadwell’s case should fail was based upon the balance of probabilities having regard to submissions made on behalf of the parties and the totality of the evidence before the court, which in turn was the result of forensic decisions made by legal representatives, rulings as to the admissibility of evidence, matters elicited in cross-examination and impressions gained of witnesses who were cross-examined. 117 It is also relevant that the statement of claim in the discontinued proceedings had been prepared by other counsel and carried a certificate of reasonable prospects given by another solicitor. It pleaded a case materially similar to that in the statement of claim in these proceedings - indeed the only difference related to the subsequent assignment of the causes of action. 118 It was said by counsel for Mr Hickey that Mr Fitzpatrick had merely assumed that there was material to support the allegations of material fact. However Mr Fitzpatrick says, and I accept, that his instructions from Mr Treadwell and his inspection of the relevant documents convinced him on the basis of provable facts and a reasonably arguable view [of] the law, that the claim against Mr Hickey had reasonable prospects of success at all material times. I also find that such a belief was within reason and based upon objective evidence. 119 It is likely that the catalyst for this application for a costs order pursuant to s 348 was the abandonment of a large proportion of Mr Treadwell’s case on the morning of the fourth day of the proceedings. It is relevant, however, that no summary dismissal or strike out applications had been made beforehand. 120 The evidence makes it clear that Mr Fitzpatrick was surprised and disappointed by the events of that morning. Mr Fitzpatrick, on his own account, relied to a large extent on counsel in the way the matter was run at trial, with particular reference to the conduct of cross-examination and final submissions. That was an entirely appropriate attitude for a solicitor to take. The performance of Mr Treadwell’s counsel, in the eyes of Mr Fitzpatrick, was poor and significantly weakened Mr Treadwell’s case. Mr Fitzpatrick took steps to address some of the problems and counsel sought an adjournment when it became clear that he was at cross-purposes with his instructing solicitor. [3.270]

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Treadwell v Hickey cont. 121 I am satisfied that, at the time the proceedings were commenced and at all material times thereafter, Mr Fitzpatrick was in a position where he held, on the basis of his own appraisal of matters, a genuine subjective opinion, based upon objective facts, that it was incorrect and inappropriate to regard Mr Treadwell’s case as so devoid of merit or substance as to be not fairly arguable. The fact that, as the hearing evolved, elements of the original pleaded case were abandoned does not entail that there was never reasonable prospects of success in regard to these claims. There were reasonable grounds on the objective evidence for the belief held by the solicitor. The alternative claim against the solicitor 122 There is nothing in the present case to suggest that Mr Fitzpatrick commenced or continued these proceedings with a deliberate ulterior purpose or with disregard of any proper consideration of his professional duties in relation to prospects of success. The evidence given by Mr Fitzpatrick is that he was at all times conscious of his professional responsibilities both to his client and to the court and gave appropriate attention to these responsibilities. 123 In response to the motion seeking a costs order, Mr Fitzpatrick swore a detailed affidavit which set out his beliefs and thought processes throughout the proceedings and the items of evidence which he says supported such beliefs. Counsel for Mr Hickey, in closing submissions, described the process as very “unreal”, in essence artificial, and questioned, in the abstract, whether the material was actually represent [sic] in Mr Fitzpatrick’s mind at the relevant time and whether the evidence put forward was a fair indication as to the true state of affairs.

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124 The jurisdiction under s 99 is enlivened where costs have been incurred as a result of serious neglect, serious incompetence or serious misconduct or costs have been incurred improperly, or without reasonable cause. As the authorities make clear, this is a high threshold to satisfy. It is not enough simply to question the actions taken and beliefs held by an instructing solicitor, the evidentiary burden must be satisfied. The defendant has failed to satisfy the burden in these proceedings. 125 The findings and conclusions already outlined in relation to the claim under s 348 of the Legal Procedure Act are sufficient to dispose of Mr Hickey’s claim against Mr Treadwell’s solicitor. This is because, on the view I take, supported by authority, the standard of conduct required by the forementioned provisions is more stringent, from the lawyer’s perspective, than that involved in the procedure contained in the Civil Procedure Act.

SPECIFIC COSTS ORDERS No order as to costs [3.280] Where the court indicates that it makes no order as to costs, this means that no party

is ordered to pay the costs of the other party and each party is to pay its own costs. Such an indication might be made where proceedings are determined without a hearing on the merits of the action and where it cannot be said that one party has simply catipulated or one party has acted unreasonably in initiating or defending the proceedings. 11

11

See generally Hamilton J & Lindsay G, NSW Civil Practice & Procedure (Thomson Reuters, subscription service), UCPR Part 42, Commentary, r 42.1.50.

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Costs of the day [3.290] This order refers to costs of a particular day. Those costs can include the costs for

work “reasonably connected” with the issues dealt with on that day, for example, preparation and taking out the order which resulted from the hearing. 12 A similar but different order is “costs thrown away” which are costs that are wasted because of one party’s mistake including, but not limited to, not complying with a court direction or rule of court.

Costs in any event [3.300] This order usually concerns the costs of an interlocutory application. This kind of

costs order indicates that the party who is ordered to pay the costs is responsible for those costs irrespective of the outcome of the proceedings where, without another specific order, costs would follow the event. Therefore, a party who is ordered to pay the costs of a particular day or days, or pay the costs in relation to a particular application or issue “in any event”, would be required to pay those costs even if that party were successful in the proceedings.

Costs in the cause [3.310] This order also usually concerns the costs of an interlocutory application. Who

should pay the costs of the application is not determined at the time of the application. The order that the costs of the interlocutory application become costs in the cause means that the party that will ultimately be liable for the costs of the proceedings (usually the loser) will have to pay the costs of that interlocutory application as well. 13

JOINING PARTIES AND COSTS

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[3.320] Costs orders can vary where there are multiple parties and mixed results eventuate.

For example, the plaintiff may succeed against one defendant but be unsuccessful against another defendant. Costs are at the discretion of the court, but the court must decide whether to order that the plaintiff pay the costs of the successful defendant or order the unsuccessful defendant to pay some or all of the costs of the successful defendant. Special costs orders are available to meet costs issues arising where there is joinder of parties. These orders are known as “Bullock orders” 14 and “Sanderson orders”. 15 Where a Bullock order is made, the plaintiff pays the costs of the successful defendant directly to that defendant, but then adds those costs as a disbursement to the plaintiff’s costs which are to be paid by the unsuccessful defendant. A variation of the Bullock order is the Sanderson order, by which an unsuccessful defendant is ordered to pay the costs of both the plaintiff and the successful defendant. Where the unsuccessful defendant is impecunious, the choice of a Bullock or Sanderson order is important. If the unsuccessful defendant lacks sufficient resources to pay the costs, it is to the advantage of the successful defendant to receive a Bullock order. This is because the 12 13 14

See also Hamilton JP, Lindsay G, Morahan M and Webster C (eds), NSW Civil Procedure Handbook (Lawbook Co, 2015) (UCPR Part 42 Commentary, r Pt 42.160. See also Cairns BC, Australian Civil Procedure, (10th ed, Thomson Reuters, 2014), Ch 17. This order takes its name from Bullock v London General Omnibus Co [1907] 1 KB 264.

15

This order takes its name from Sanderson v Blyth Theatre Co [1903] 2 KB 533. [3.320]

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plaintiff must pay the successful defendant’s costs directly and then attempt to recover those costs as well as his or her own costs, from the impecunious unsuccessful defendant. The plaintiff on the other hand would prefer a Sanderson order. Whether to make a Sanderson or Bullock order, or any costs order at all, is in the discretion of the court. Bullock and Sanderson orders are convenient when the court takes the view that the unsuccessful defendant should pay the costs of the proceeding. The court must be satisfied that it was reasonable for the plaintiff to join the successful defendant and there must generally be some conduct on the part of the unsuccessful defendant that contributed to the plaintiff’s decision to join the successful defendant. This could be, for example, where the unsuccessful defendant blamed the successful defendant.

Nationwide News v Naidu; ISS Security v Naidu (No 2) [3.330] Nationwide News Pty Ltd v Naidu; ISS Security Pty Ltd v Naidu (No 2) [2008] NSWCA 71 SPIGELMAN CJ, BEAZLEY AND BASTEN JJA 2 The original proceedings in the Common Law Division were brought by Mr Naidu against his former employer, ISS Security Pty Ltd (“ISS”) and the company with which he was placed as a security officer, namely Nationwide News Pty Ltd (“Nationwide”). At trial Mr Naidu obtained judgment against ISS and Nationwide, though in differing amounts, reflecting the operation of s 151Z of the Workers Compensation Act 1987 (NSW). On appeal, ISS was successful in setting aside the judgment against it, but Nationwide News was unsuccessful. … Sanderson costs order

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14 The final issue raised by the further submissions concerned an application by Mr Naidu for an order that Nationwide pay the costs of ISS, pursuant to Sanderson v Blyth Theatre Co [1903] 2 KB 533. Nationwide resists such an order. 15 As a result of its success on the appeal, ISS is entitled to receive its costs of the trial. The question is who should pay them. Pursuant to a Sanderson order, the unsuccessful defendant, namely Nationwide, may be ordered to pay the costs of the successful defendant, namely ISS. It is well-established that such an order may be made where two preconditions are satisfied, namely that it was reasonable for the plaintiff to proceed against the successful defendant and, secondly, that the conduct of the unsuccessful defendant made it fair to impose liability on it for the costs of the successful defendant: see Gould v Vaggelas (1985) 157 CLR 215 at 230 (Gibbs CJ). 16 Those preconditions operate where the costs are required to be paid directly by one defendant to the other (in the case of a Sanderson order) or indirectly, where the plaintiff is ordered to pay the costs of the successful defendant, but is entitled to recover his or her costs, including those paid to the successful defendant, from the unsuccessful defendant (a Bullock order). In the present case, Mr Naidu did not seek a Bullock order and Nationwide did not oppose the proposed costs order on the basis that there was any distinction in the preconditions to such an order. Nationwide did, however, contend that there was an additional precondition, namely that the claim against ISS should have been either inter-dependent with, or in a real sense alternative to, the claim against Nationwide. That was said to follow from a comment made in Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) 157 CLR 149 at 163. 17 It is by no means clear that the joint judgment in Norwest Refrigeration intended to lay down such an additional requirement. If that had been intended, it is surprising that the decision was not referred to in Gould, a case involving three of the four authors of the joint judgment in Norwest Refrigeration including Gibbs CJ whose statement of principle in Gould is now treated as authoritative. Further, it is not entirely clear what their Honours meant by saying that the unsuccessful action by Norwest against its insurer on the insurance policy was not in any real sense alternative to the claim 158

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Nationwide News v Naidu; ISS Security v Naidu (No 2) cont. against the Co-operative, on which it succeeded. Norwest had taken out insurance in relation to a fishing vessel which was subsequently destroyed by fire. Under the insurance policy, the vessel was required to have a current certificate of survey, which it did not. The insurer was found not to be liable on that basis. The claim against the Co-operative was based upon its failure to take reasonable care to arrange insurance of the type requested or to warn Norwest of any exclusions or limitations in the policy. On its face, the claim against the Co-operative was in a real sense an alternative to the claim against the insurer: if the policy covered the claim, the insurer was liable and the Co-operative was not; the exclusion provided the basis for the insurer’s success and the Co-operative’s failure. 18 The joint judgment in Norwest Refrigeration was not seeking to settle some general principle, but was dealing with an appeal from a discretionary decision with respect to costs in the court below. Properly understood, the inter-dependence of claims against two defendants or the need to join both in circumstances where one only may be liable but the plaintiff is unable to determine which, are examples of circumstances which may demonstrate the reasonableness of the plaintiff in joining the successful defendant. These examples may be borne in mind, but the test should be understood as that set out by Gibbs CJ in Gould. (An example of inter-dependent and alternative claims is to be found in State of Victoria v Horvath (No 2) [2003] VSCA 24 at [9] where the plaintiffs had sued both police officers and the State in circumstances where the State would be liable, but not the police officers, if the officers were acting within the scope of their authority but the police officers alone would [be] liable if they were not.)

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19 It is difficult to deny that the first precondition in Gould was established in the present case. Both the trial judge and one member of this Court thought that the claim against ISS was not merely reasonable, but should succeed. Further, it will frequently be reasonable to join an employer, even if the clearer liability is that of a third party defendant, because of the requirement, in assessing damages, to take account of any entitlement of the plaintiff to recover from his or her employer as a joint tortfeasor or otherwise, pursuant to s 151Z(2)(c) of the Workers Compensation Act. Although the joinder of the employer is not necessary to allow the necessary calculation to take place, there are difficulties for a court determining the entitlement as against the employer in circumstances where the employer is not party to the proceedings and the plaintiff is seeking to deny any entitlement to recover from the employer. That is not to say that it will always be reasonable to join an employer in such circumstances; rather, in the present circumstances it was a reasonable step for the plaintiff to take. 20 The real question is whether there was anything in the conduct of Nationwide which would make it just to impose upon it liability for the plaintiff’s costs as against the successful defendant. As explained by Gibbs CJ in Gould (at p 229): Obviously a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff’s error or overcaution. 21 In some circumstances, one or other of two defendants may be liable, where the identity of the correct defendant depends on matters known to the defendants but not the plaintiff. Coombes v Roads and Traffic Authority (No 2) [2007] NSWCA 70 provides an example. In that case an order was appropriate because the plaintiff had taken express steps to have the Council indicate which of it or the RTA was responsible for particular aspects of road construction works about which complaint was made and the unsuccessful Council failed to concede that it bore responsibility and not the RTA. 22 This case is, however, different. The potential liability of ISS did not depend, for example, upon the contractual relationship between nationwide and ISS. Nationwide’s defence was that its liability depended upon whether its senior officers knew or ought reasonably to have known of Mr Chaloner’s treatment of Mr Naidu. That defence failed. Mr Naidu bore the burden of proof in respect of his claim [3.330]

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Nationwide News v Naidu; ISS Security v Naidu (No 2) cont. against ISS. To a significant extent, his success depended upon acceptance of his own evidence as to matters of complaint to Mr Blinkworth or others in authority with ISS. His joinder of ISS involved an assessment of his prospects in establishing such knowledge, actual or constructive. In that he failed, but neither his decision to join ISS nor his failure to prove its liability resulted from any particular conduct of Nationwide. Indeed, the strongest submission made in that respect was that, had Nationwide admitted liability, as properly it should have, he would not have been forced to engage in lengthy litigation against either Nationwide or ISS. That, however, is not the test. Nationwide was entitled to defend itself even while not defending Mr Chaloner’s conduct. Its defence did not in any relevant sense suggest that his conduct was the responsibility of ISS. Nationwide was ultimately unsuccessful and must bear the plaintiff’s costs as a result. However, its conduct, whether by omission or commission, did not provide a basis upon which it could fairly be said that it should bear the costs of the plaintiff’s action against ISS. Accordingly the appropriate order in relation to the costs of the trial, as between Mr Naidu and ISS, is that he should pay the trial costs incurred by ISS, assessed on the ordinary basis.

Sze Tu v Lowe (No 2) [3.340] Sze Tu v Lowe (No 2) [2015] NSWCA 91 [The appeal concerned a partnership dispute between family members relating to events dating back over three decades. The appellants were four children of the late Kut Sze Tu, while the active respondents were another child of his and her husband (the Lowes). There were other respondents, including a further child, the administrator of Kut Sze Tu’s estate, and a representative of the deceased’s second wife. The New South Wales Court of Appeal made certain orders in favour of the appellants, reserved all remaining questions of costs and directed the active appeal parties to make submissions as to costs. The Court also granted leave to the deceased’s estate to make submissions as to costs.] GLEESON JA (MEAGHER AND BARRETT JJA AGREEING) Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

Decision 37 Costs are not awarded by way of punishment of the unsuccessful party but, rather, “are compensatory in the sense that they are awarded to indemnify to [sic] successful party against the expense to which he or she has been put by reason of the legal proceedings”: Latoudis v Casey [1990] HCA 59; 170 CLR 534 at 543 (Mason CJ); Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]; Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 (Mahenthirarasa (No 2)) at [8] (Basten JA; Giles and Bell JJA agreeing). It follows that the inquiry as to what costs order should be made is primarily directed to the position of the successful party: Latoudis v Casey at 542; Mahenthirarasa (No 2) at [9]. 38 The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including by whom, to whom and to what extent costs are to be paid. Reference should also be made to r 42.1, Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that if the Court makes any order as to costs, it should be in terms that costs follow the event unless it appears to the Court that some other order should be made as to the whole or part of the costs. 39 How “the event” should be defined will depend upon the nature of the litigation. Generally the “event” refers to the event of the claim and may be understood as referring to the practical result of a particular claim: Windsurfing International Inc v Petit [1987] AIPC 90-441 at 37,861 – 37,862 (Waddell J). 160

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Sze Tu v Lowe (No 2) cont. 40 In a proper case, the party that is successful overall may be deprived of part of its costs, or ordered to pay the costs of a discrete issue. The circumstances in which this may occur are not limited to cases where it was unreasonable for the successful party to raise the issue on which it failed: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615D. The relevant principles were reviewed by this Court in Elite Protective Service Pty Ltd v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), as follows: • Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1996, unreported). • In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. • If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick (No 2) [2006] NSWCA 374 at [27]. • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

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• A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. • Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272. 41 In approaching the question of apportionment where there are multiple issues, it has also been recognised that there is a basis for distinguishing between the position of successful defendants and successful plaintiffs. In Griffith at [19] Hodgson JA explained the distinction as follows: In the former case, the defendant has been caused to incur costs in defending a claim which the decision in the case has wholly rejected, and has thus determined should not have brought about the incurring of any costs at all. In those circumstances, it may be considered appropriate that the defendant have costs associated with reasonable defences, even if they ultimately proved to be unsuccessful and severable. In the latter case, the plaintiff has chosen to bring the whole proceedings and thereby to incur costs and cause costs to be incurred which otherwise would not have been incurred; and in those circumstances, it may be seen more readily as appropriate that the plaintiff be liable for the costs of unsuccessful severable claims or issues, even if it was reasonable to include those claims or issues. 42 A similar view was expressed in Griffith by Basten JA at [38]-[39]. After referring, with apparent approval, to the statement of Burchett J in Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169 that: [3.340]

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Sze Tu v Lowe (No 2) cont. A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably he may suffer in costs. Ultimately, the question is one of discretion and judgment. Basten JA said (at [39]): Even were it otherwise, caution should be taken in allowing an unsuccessful plaintiff to resist payment of costs in respect of particular independent defences which are unsuccessful or need not be addressed. Costs of the appeals (a) What costs order should be made in favour of the appellants? 43 Each of the appellants has succeeded in setting aside the relief awarded against them in the Court below. Ordinarily costs should follow the event. Are there circumstances which justify some other order on the appeals? 44 If one looks at the appeals, there were multiple issues and more than one “event”. The grounds of appeal relied upon by the appellants and the relief sought by them on appeal were directed to setting aside both the relief awarded against the appellants and the relief awarded against the Estate in which they had an interest on intestacy.

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45 With respect to the Estate, Margaret sought to characterise all of the claims made by Geoffrey and Mary as, in substance, claims for partnership accounts, with the consequence that all claims were said to be barred by s 15 of the Limitation Act. Sunly and Gordon (and Helen) made a similar submission to this effect. These appeal grounds had mixed success. The grounds failed insofar as Geoffrey and Mary’s claims against the Estate were to recover trust property for the partnership. Sunly and Gordon (and Margaret and Helen) also challenged the findings of Gzell J that KST had used partnership funds in the purchase of the three properties and the consequential relief by way of constructive trust in favour of the partnership over the Estate’s interest in the three properties. These appeal grounds also failed. 46 To the extent that the appellants failed on issues argued in the interests of the Estate, some allowance in favour of Geoffrey and Mary should be made to reflect Geoffrey and Mary’s success on appeal in maintaining their distinct claim against the Estate, except for the variation to the orders by Gzell J to limit the terms of the scope of the inquiry. 47 The process of apportioning costs as between different issues with respect to the Estate and the appellants can only be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: James v Surf Road Nominees Pty Ltd (No 2) at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. Related to this assessment is the issue whether the appellants should be deprived of part of their costs on appeal because they otherwise raised issues in their own interests on which they were unsuccessful. I now turn to this issue. 48 In my view, in the circumstances of these appeals, the Court should not attempt to differentiate between the issues raised in their own interests on which the appellants were successful and those on which they failed. The appellants succeeded on the central or dominant issue being the question of whether they had indefeasible title to their interests in the three properties. That success also involved success on a number of related issues including issues raised by Geoffrey and Mary in resisting the appeals such as the fraud exception to indefeasibility; the attempts to uphold the orders of Gzell J on the grounds of either an express trust, or a resulting trust or a statutory trust; and the attempt to rely upon s 55 of the Limitation Act as a postponement of the limitation period. (This last contention was ultimately abandoned by Geoffrey and Mary as against the appellants). 162

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Sze Tu v Lowe (No 2) cont. 49 The issues on which the appellants failed on appeal, were raised defensively in answer to Geoffrey and Mary’s claims as plaintiffs. It is important to bear in mind at all times the overall outcome of the proceedings on appeal as between the parties. The costs orders should reflect a just and fair outcome on appeal, without isolating and weighing individual issues with minute precision: Bullabidgee Pty Ltd v McCleary (No 2) [2011] NSWCA 343 at [10]. 50 I do not consider that this is an appropriate case where one party’s failure on what might be viewed as a separable issue, such as the appellants’ failure on the defences based on delay and conventional estoppel, should be treated as justifying an order for costs in respect of that particular issue. The failure of some of the defences raised by the appellants needs to be considered in the light of their position as defendants who have achieved complete success in setting aside the relief awarded against them at first instance. 51 Finally, this is not a case where the appellants acted unreasonably in the pursuit of their appeals. The appellants properly abandoned a number of grounds of appeal including their challenge to the finding of Smart AJ that there was a partnership. The focus of the appellant’s arguments on appeal was largely directed to the issues critical to their ultimate success – the nature of the trust claim advanced by Geoffrey and Mary; the indefeasibility defence; and the applicable limitation period to Geoffrey and Mary’s various claims. Accordingly, I reject any implicit submission by Geoffrey and Mary (who complained that the appellants adopted a “scatter gun” approach to the appeals) that the appellants acted unreasonably.

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52 The separate arguments of Margaret and Helen (concerning the date of dissolution of the partnership and the applicable limitation period for claims for the taking of partnership accounts) were also properly focused on the issues critical to their separate success in setting aside the accounting relief awarded against them as partners and in obtaining a variation to the accounting relief awarded against the Estate. 53 Geoffrey and Mary describe this separate “success” by Margaret and Helen as a minor variation of the orders made below. I reject this contention. The variation to the accounting order was significant in terms of the outcome for the appellants and also the respondents who were partners. As a result of the variation, the partners do not have to provide an account with respect to the partnership in respect of a period of approximately thirty years. The practical significance of this outcome for the affected partners in terms of obtaining finality in their dealings with Geoffrey and Mary, and avoiding further costs and expense of ongoing litigation cannot be understated. 54 In my view, looking at the matter globally, an overall assessment reflecting the respective success of the parties on appeal where the appellants were wholly successful in their own interests and only partly successful to a limited extent in the interests of the Estate, leads to the conclusion that Geoffrey and Mary should pay 85% of the respective appellants’ costs of the appeals. (b) Should a Bullock order be made on appeal against the Estate in favour of Geoffrey and Mary? 55 The power to make a Bullock order is found in the Court’s statutory discretion as to costs: Civil Procedure Act, s 98. In G E Dal Pont, Law of Costs …, the author suggests at [11.18] the following rationale for a Bullock order: At a basic level, the rationale for a Bullock order is that in some circumstances it will be just for a successful plaintiff who has sued two (or more) defendants to be indemnified by the unsuccessful defendant for the costs he or she incurred in proceeding against the successful defendant. This may be a just outcome where the allocation responsibility between the potential defendants is uncertain, making it a reasonable course for the plaintiff to proceed through to trial against more than one defendant. [3.340]

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Sze Tu v Lowe (No 2) cont. 56 In support of the making of a Bullock order, Geoffrey and Mary relied upon the following passage in Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176 at [15], in which this Court (Beazley, Hodgson and McColl JJA) said, in the context of the making of a Sanderson order, but relevantly also for a Bullock order: In determining whether it is fair to make such an order, two matters are usually considered to be relevant. First, it must have been reasonable for the plaintiff to have brought the proceedings against the successful defendant: see Gould v Vaggelas [1985] HCA 85 [sic]; (1985) 157 CLR 215 per Gibbs CJ (at 230); Wilson J (Murphy J agreeing) (at 247); Brennan J (at 260); Lackersteen v Jones (No 2)[1988] NTSC 72; (1988) 93 FLR 442 (at 449); Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179; (2000) NSWCCR 417 (at [128]) per Mason P (Stein and Heydon JJA agreeing). … Secondly, there must be some conduct on the part of the unsuccessful defendant which would make it fair to impose liability on it for the costs of the successful defendant: Gould v Vaggelas (at 230; 247 and 260). 57 What constitutes relevant “conduct” of the unsuccessful defendant which makes it a proper exercise of discretion to make a Bullock order may be seen from Gould v Vaggelas [1985] HCA 75; 157 CLR 215 and the other cases referred to in Council of the City of Liverpool v Turano (No 2) at [16]-[22]. It is sufficient to refer to one of the cases. 58 In Almeida v Universal Dye Works Pty Ltd (No 2) [2001] NSWCA 156, the plaintiff’s husband was injured on a building site. The defendants were under common control and the plaintiff was unable to ascertain who was the occupier or head contractor in charge of the work on the site. These matters were denied by the defendants in the proceedings. Priestley JA at [8] stated the relevant consideration in these terms: [A]ny conduct by the defendant or state of affairs in which the defendant is an integral part which makes it fair and reasonable for other parties to be joined as defendants will be relevant to deciding on fair costs orders.

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59 His Honour (at [13]) considered that the denials of occupation and the head contract, of themselves, would have been sufficient conduct to warrant the making of a Bullock order in that case. 60 Here, it was the appellants who joined both the Estate and Geoffrey and Mary as respondents to the appeal. The basis of the application by Geoffrey and Mary for a Bullock order on appeal had to be different from that in relation to the costs at trial, where Geoffrey and Mary were the moving party: Bostik Australia Pty Ltd v Liddiard (No 2) at [32]. Yet the written submissions of Geoffrey and Mary did not address this distinction with respect to the appeals. 61 Aside from the difficulty that Geoffrey and Mary were not the moving party on the appeals, no conduct of KST caused Geoffrey and Mary to resist the appeals in the face of the protection of indefeasibility available to the appellants. Nor did the Estate engage in any relevant conduct which might attract the exercise of the discretion to make a Bullock order. The Estate did not bring any appeal or seek to disturb the orders below; and it did not actively participate in the appeals brought by the successful appellants, save for making certain written submissions which ultimately were not pressed. 62 In resisting the appeals, Geoffrey and Mary should be taken to have made and acted upon their own decision. The application for a Bullock order in respect of their costs of the appeal is misconceived and must be refused. Costs of proceedings below 63 The costs position below must now be assessed as if the result before Gzell J had been as this Court has found. The focus of the competing submissions was on three matters. 64 First, whether Geoffrey and Mary should pay the whole of the successful appellants’ costs of the proceedings at first instance, as the appellants contended, or only a proportion of those costs, namely 50%, as Geoffrey and Mary contended. 164

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Sze Tu v Lowe (No 2) cont. 65 The second issue is whether Geoffrey and Mary should obtain a costs order against the Estate, against whom they succeeded at first instance and largely maintained this position on appeal. 66 The third issue is whether a Bullock order should be made against the Estate insofar as Geoffrey and Mary are ordered to pay the costs of the successful appellants at first instance. (a) What costs order should be made in favour of the successful defendants? 67 The proceedings below, like the appeals, involved multiple issues and more than one “event”. Geoffrey and Mary have failed against the appellants but succeeded (with some modification) in their claim against the Estate for proprietary and accounting relief with respect to KST’s interest in the three properties. The mixed outcome for Geoffrey and Mary is best approached by considering the costs position of the Estate and the successful appellants separately. 68 The starting position with respect to the appellants is that they are to be treated as having succeeded at first instance in resisting all relief sought against them by Geoffrey and Mary. The question is whether there should be some apportionment of costs on an issue-by-issue approach, or an award of only a proportion of the appellants’ total costs, by reason of their lack of success on particular issues. This raises similar issues to those already considered above in relation to the appeals. 69 The appellants’ ultimate success has been achieved in circumstances where there is no suggestion that the appellants acted unreasonably in their defence of the proceedings at first instance. None of the unsuccessful defences raised by the appellants were clearly dominant as between Geoffrey and Mary and the appellants. On a number of issues, such as the trust based claims and the limitation issues, the parties had mixed success. As with the appeals, I do not consider that this is an appropriate case where one party’s failure on what might be viewed as a separable issue, such as the defendant’s failure on the defences based delay and conventional estoppel, justifies an order for costs in respect of that particular issue.

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70 In the circumstances of the proceedings at first instance involving significant claims for proprietary and accounting relief in respect of events occurring between 20 to 30 years earlier, where there was no allegation of personal wrongdoing by the appellants, it was not unreasonable for the appellants to have raised all arguable defences to those claims. Again, as with the appeals, it is important to bear in mind at all times the overall outcome of the proceedings at first instance as between the parties. 71 Having successfully resisted all claims for relief, the appropriate order in the present case is that Geoffrey and Mary pay the appellants’ costs at first instance. (b) Should a costs order be made against the Estate? 72 Whilst Geoffrey and Mary have enjoyed substantial success in their claim against the Estate, their entitlement to costs is modified by a number of matters: the multiplicity of parties, actions and issues, the various issues on which they had mixed success, the extent to which those issues were clearly dominant or separate, their overall significance to the outcome, and the time they occupied during the hearing and preparation, so far as can be discerned. As to these matters, the following observations can be made. 73 Whilst Geoffrey and Mary were successful on their principal claims for relief against the Estate they failed on their various claims for accounting relief against the Estate as a partner, which were barred by s 15 of the Limitation Act. Some allowance in favour of the Estate should be made in respect of these unsuccessful claims. 74 Nor should the Estate have to bear the costs burden of issues raised unsuccessfully by Geoffrey and Mary, such as whether the subject matter of the partnership concerned the investment in real property, the alternative trust based claims against the Estate (of which only the constructive trust claim succeeded), and by contesting some issues, such as the reopening application before Smart AJ, at great length only to be unsuccessful. [3.340]

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Sze Tu v Lowe (No 2) cont. 75 Further, Geoffrey and Mary should not have the whole of their costs of the proceedings in circumstances where there were multiple parties, actions and issues, and they have succeeded only against the Estate. This has two aspects. One is that the Estate should not be required to bear the costs at first instance which relate to matters against other defendants which were separate and distinct from matters concerning the Estate. The separate matters concerning the successful defendants included the resulting trust claim; the indefeasibility defences; Margaret’s asserted contribution to the Maroubra Road property; and the re-opening application before Smart AJ. The other aspect is that there should be some allowance for the extent of the Estate’s participation in the proceedings at first instance relative to the participation of the successful defendants who were the active defendants at first instance. It is common ground that the Estate was not an active party at first instance. Insofar as Geoffrey and Mary incurred costs in pursuing their claims against the Estate and claims against the successful defendants, the greater proportion of Geoffrey and Mary’s costs would have related to the later claims. 76 The manner in which the above matters can be best accommodated is by allowing Geoffrey and Mary a proportion of their costs at first instance. 77 It is also relevant to take into account that any costs order against the Estate would burden parties who played a passive role in the proceedings and have an interest in the Estate. This matter can be accommodated by imposing a condition, as sought by the Estate, as to the source from which any costs order may be satisfied. 78 Although the Court was not provided with any information as to the quantum of Geoffrey and Mary’s costs, it may be inferred from the form of orders proposed by them that the orders they seek against the Estate, if made, may substantially, if not wholly, erode the assets of the Estate. In those circumstances the successful appellants would, in effect, be paying or contributing to Geoffrey and Mary’s costs. This is a further reason for imposing a condition as to the source from which any costs order may be satisfied.

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79 Against this it must be accepted that the Estate took an adversarial position, at least to the point of filing a defence in which it did not admit the basis for Geoffrey and Mary’s claims for relief, and also pleaded a number of defences which were ultimately rejected. 80 In my view, an order for costs should be made against the Estate in favour of Geoffrey and Mary subject to two limitations. The first limitation is that Geoffrey and Mary should receive only a proportion being 35% of their costs at first instance having regard to the matters identified above. 81 The second limitation relates to the source from which such costs should be paid. I accept the Estate’s submission that the costs order should be subject to the condition that it is payable only to the extent that the costs can be satisfied from KST’s 20% share of the partnership assets currently held by the Estate. The effect of this condition is that the inactive defendants and the successful appellants will not be required to fund Geoffrey and Mary’s costs. 82 As Geoffrey and Mary have succeeded against the Estate in relation to their principal claim for proprietary relief, it is appropriate, as they contended, that their costs in respect of that success should be paid forthwith. No submissions to the contrary were made by either the Estate or the appellants. 83 I reject however the contention of Geoffrey and Mary that any costs order against the Estate should have priority over the constructive trust declared by this Court in favour of the partnership in respect of 90% of any profits (if any) derived by the late KST from his interest in the three properties, subject to any just allowances: see [16] above. No basis for conferring such priority was suggested in submissions. 166

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Sze Tu v Lowe (No 2) cont. (c) Should a Bullock order be made against the Estate in favour of Geoffrey and Mary? 84 On the findings of Gzell J at first instance, which have been upheld on appeal, KST was an “errant fiduciary”. However, this finding, without more, does little to advance Geoffrey and Mary’s contention that a Bullock order should be made against the Estate at first instance. 85 There are a number of matters which tend against making a Bullock order. First, the present case is not one in which the allocation of responsibility between potential defendants was uncertain, making it a reasonable course for Geoffrey and Mary to join additional defendants beyond the Estate. Nor did the Estate deny liability in such a way as to expressly or impliedly attribute liability to the successful defendants. This is not a case where the claims against the successful defendants are properly characterised as alternatives to the claims against the Estate. Although the claims were based on some of the same facts, it was never a case of one or the other, but not both, being liable to the partnership. 86 Nor does the fact that KST’s conduct involved a breach of fiduciary duty make it fair to impose liability on the Estate for the costs of the successful defendants. Those defendants succeeded on their indefeasibility defences which were independent of the wrongful conduct engaged in by KST. 87 Finally, the suggested analogy between the present proceedings and the administration of a fund in probate litigation where the deceased’s conduct has been the cause of the litigation which has occurred, is inapt. Both in form and as a matter of substance, the litigation in the Court below was adversarial. It did not involve the Court deciding questions relating to the administration of a fund. There is no analogy to cases where costs of all parties are paid from the fund for non-adversarial proceedings. Orders

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88 The costs orders which I propose in each of the appeals are as follows: (1)

The first and second respondents (Geoffrey and Mary) pay 85% of the respective appellant’s costs of the appeals.

(2)

In lieu of orders 9 and 11 of the orders made by Gzell J on 13 March 2013, substitute the following orders: 9 (a) The first and second plaintiffs (Geoffrey and Mary) pay the second, third, fifth and sixth defendants’ costs of the proceedings at first instance, including the proceedings before Smart AJ. (b) Subject to (c) below, the first defendant (the Estate) pay 35% of the plaintiffs’ costs of the proceedings at first instance, including the proceedings before Smart AJ. (c) The costs order referred to in (b) above is payable only to the extent that the costs can be satisfied from the late Kut Sze Tu’s 20% share of the net proceeds of sale of the assets of the partnership currently held by the Estate (being the partnership declared by Smart AJ on 25 June 2010). 11 The Court notes that the costs ordered to be paid by paragraph 9(a), (b) and (c) above and paragraph 10 of the orders made by Gzell J on 13 March 2013 are payable now (subject to assessment) and shall not be deferred until the completion of the taking of the inquiry provided for in paragraph 3(iv) of the orders made by this Court on 23 December 2014.

COSTS AND SELF-REPRESENTED LITIGANTS [3.350] If a costs order is awarded to a self-represented litigant the costs award will generally

only be an entitlement to recover out-of-pocket expenses. This is because costs are meant to compensate for professional legal fees, which a self-represented litigant does not incur. [3.350]

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Cachia v Hanes [3.360] Cachia v Hanes (1994) 179 CLR 403 MASON CJ, BRENNAN, DEANE, DAWSON AND MCHUGH JJ (TOOHEY AND GAUDRON JJ DISSENTING) 20. Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.

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… 22. Whilst the right of a litigant to appear in person is fundamental, it would be disregarding the obvious to fail to recognize that the presence of litigants in person in increasing numbers is creating a problem for the courts ((16) The problem is well documented in the United States: see Mueller, “Abusive pro se Plaintiffs in the Federal Courts: Proposals for Judicial Control” (1984) 18 Journal of Law Reform 93 at 101; Rubin, “The Civil Pro Se Litigant v The Legal System” (1989) 20 Loyola University Law Journal 999; Gillies, “Who’s Afraid of the Sanction Wolf: Imposing Sanctions on pro se Litigants” (1989) 11 Cardozo Law Review 173). It would be mere pretence to regard the work done by most litigants in person in the preparation and conduct of their cases as the equivalent of work done by qualified legal representatives. All too frequently, the burden of ensuring that the necessary work of a litigant in person is done falls on the court administration or the court itself. Even so, litigation involving a litigant in person is usually less efficiently conducted and tends to be prolonged ((17) See Powles, “Litigant in Person – Discussion Paper” in Australian Institute of Judicial Administration, The Litigant in Person (1993) 7 at 10–11). The costs of legal representation for the opposing litigant are increased and the drain upon court resources is considerable. On the other hand, there is no doubt that the inability of a litigant in person to obtain recompense for time spent in the conduct of successful litigation must on occasions be a significant deterrent to the exercise of his right to come to court in person ((18) cf British Columbia, Law Reform Commission, Report on Civil Procedure: Pt 1 – Costs of Successful Unassisted Lay Litigants (1975); South Australia, Law Reform Committee, Report Relating to the Award of Costs to a Litigant Appearing in Person (1974)). We mention these matters not to express any view, but merely to indicate that there are considerations which must be weighed before any reasoned conclusion can be reached. A court engaged in litigation between parties, even if it were not constrained by the legislation and rules, is plainly an inappropriate body to carry out that exercise or to act upon any conclusion by laying down the precise nature of any change required.

[3.370] If the self-represented litigant is a legal practitioner, he or she is entitled on receipt of

a costs order to recover costs in regard to professional work undertaken in the litigation, including counsel’s fees and witness expenses.

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Lawrence v Nikolaidis [3.380] Lawrence v Nikolaidis [2003] NSWCA 129 HODGSON JA (BEAZLEY JA AGREEING AND MEAGHER JA DISSENTING) 1. A litigant, whether represented or not, may, though not as a matter of course, be entitled to some witnesses’ expenses, in addition to expenses for time actually spent giving evidence in court. 2. Expenses may be allowed to represented litigants for a conference with a solicitor and/or barrister, in so far as this is necessary to prepare for giving oral evidence or to prepare an affidavit. In the case of a solicitor litigant, the same expenses may be allowed in connection with such a conference had with a barrister. 3. Where the self-represented litigant is a solicitor, the solicitor can recover the reasonable costs of doing what is truly professional work in relation to the case. However, just as a represented litigant cannot recover expenses incurred in attending to give instructions as a party (as opposed to a witness) or to observe and/or superintend the conduct of the case, neither can a self-represented solicitor recover expenses in respect of those matters. 4. Unrepresented litigants who are not solicitors are extremely limited in the costs they can recover, and the exception favouring solicitors is regarded as anomalous. The exception should be applied carefully rather than loosely. Solicitor litigants should not be allowed witness’s expenses on a more accommodating basis than other litigants. Thus, if a solicitor litigant is seeking witness’s expenses additional to those occasioned by actually giving evidence or attendance at court for that purpose, and (where a barrister is instructed) a conference with the barrister for that purpose, it is necessary to provide material to show that this is justified.

COSTS AGAINST NON-PARTIES

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[3.390] Section 98 of the CPA is broad enough to provide power to make costs orders against

non-parties. 16 Under the general law the principle is that a costs order should only be made against a party to the proceedings. However, a reasonable and just costs award against a non-party could be justified in exceptional circumstances. 17 For example, in the case of nominal parties or next friends, where a person who is a non-party is closely connected to the proceedings, 18 or when a person appears in the proceedings for a specific and limited purpose, such as to maintain a claim of privilege 19 or to obtain a costs order. 20

Macquarie International Health Clinic v Sydney South West Area Health Service (No 3) [3.400] Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 3) [2010] NSWSC 1139 [One of the issues in this case was the extent to which a medical practitioner was the real and effective party standing behind the unsuccessful party to civil proceedings, a corporate entity, such that a costs order could properly be made against the practitioner.] 16

Note that UCPR r 42.3 was repealed on 7 May 2010.

17 18 19

See Murphy v Young & Co Brewery [1997] 1 WLR 1591. Knight v FP Special Assets Ltd (1992) 174 CLR 178; 66 ALJR 560 and Palmer v Walesby (1868) LR 3 Ch App 732. ACP Magazines Pty Ltd v Motion [2000] NSWSC 1169.

20

Wentworth v Wentworth (2001) 179 ALR 406; [2001] NSWCA 350. [3.400]

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Macquarie International Health Clinic v Sydney South West Area Health Service (No 3) cont. New South Wales Supreme Court Equity Division NICHOLAS J Principles 93 I now turn to the principles which guide the court in the exercise of the discretion under s 98(1) Civil Procedure Act 2005. In Knight v FP Special Assets Ltd (1992) 174 CLR 178, Mason CJ and Deane J said (p 192, 193): Obviously, the prima facie general principle is that an order for costs is only made against a party to the litigation. As our discussion of the earlier authorities indicates, there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party … For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made. and Dawson J said (p 199): When it is said that as a general principle costs ought not be awarded against a person who is not a party to the proceedings, what is really being asserted is, not that there is no jurisdiction to do so, but that there is no justification for it because generally speaking persons who are not parties lack a sufficient connection with the litigation to provide a proper basis upon which to award costs against them … and (p 202):

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The cases therefore establish a long-asserted jurisdiction to award costs in appropriate cases against a person who is not a party to the proceedings where that person is the effective litigant standing behind an actual party or where there has been a contempt or abuse of the process of the court … and (p 203): True it is that in general costs are not awarded against non-parties, but that is because it is generally inappropriate to do so. But I see nothing in the rule to prevent it being done in the exceptional case where it is appropriate to do so. 94 In Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613 the Court of Appeal considered the question whether an order for costs should be made against a liquidator personally where he had commenced proceedings on behalf of a company in liquidation. Millett LJ said (p 1619, 1620): It is not an abuse of the process of the court or in any way improper or unreasonable for an impecunious plaintiff to bring proceedings which are otherwise proper and bona fide while lacking the means to pay the defendant’s costs if they should fail. Litigants do it every day, with or without legal aid. If the plaintiff is an individual, the defendant’s only recourse is to threaten the plaintiff with bankruptcy. If the plaintiff is a limited company, the defendant may apply for security for costs and have the proceedings dismissed if the plaintiff fails to provide whatever security is ordered. The court has a discretion to make a costs order against a non-party. Such an order is, however, exceptional, since it is rarely appropriate. It may be made in a wide variety of circumstances where the third party is considered to be the real party interested in the outcome of the suit. It may also be made where the third party has been responsible for bringing the proceedings and they have been brought in bad faith or for an ulterior purpose 170

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Macquarie International Health Clinic v Sydney South West Area Health Service (No 3) cont. or there is some other conduct on his part which makes it just and reasonable to make the order against him. It is not, however, sufficient to render a director liable for costs that he was a director of the company and caused it to bring or defend proceedings which he funded and which ultimately failed. Where such proceedings are brought bona fide and for the benefit of the company, the company is the real plaintiff. If in such a case an order for costs could be made against a director in the absence of some impropriety or bad faith on his part, the doctrine of the separate liability of the company would be eroded and the principle that such orders should be exceptional would be nullified. 95 In Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39 a summary of the principles governing the proper exercise of the discretion included the following passage: 25… (1) Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against. …

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(2) Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party’s costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is “the real party” to the litigation, a concept repeatedly invoked throughout the jurisprudence (see, for example, the judgments of the High Court of Australia in Knight v FP Special Assets Ltd (1992) 107 ALR 585, (1992) 174 CLR 178 and Millett LJ’s judgment in Metalloy Supplies Ltd (in liq) v MA (UK) Ltd [1997] 1 All ER 418, [1997] 1 WLR 1613). 96 Their Lordships referred with approval to the following passage from Arklow Investments Ltd v MacLean (High Court of New Zealand, Unreported, 19 May 2000): [19] The guiding principle here is that costs orders against third parties are exceptional but that they are warranted in cases where there would otherwise be a situation in which a person could fund litigation in order to pursue his or her own interests and without risk to himself or herself should the proceedings fail or be discontinued. [20] … [W]here a person is a major shareholder and dominant director in a company which brings proceedings, that alone will not justify a third party costs order. Something additional is normally warranted as a matter of discretion. The critical element will often be a fresh injection of capital for the known purpose of funding litigation. [21]… [T]he overall rationale [is] that it is wrong to allow someone to fund litigation in the hope of gaining a benefit without a corresponding risk that that person will share in the costs of the proceedings if they ultimately fail. 97 In FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 Basten JA (Beazley, Giles JJA agreeing) held: 210 … It is clear that the categories of case which may attract the exercise of the power are by no means closed, nor should they be. Nevertheless, the requirements of justice should not be allowed to expand an exception to the general rule, so as to undermine the rule itself. What is significant from a survey of the cases in which orders have been made against non-parties is that they tend to satisfy at least some, if not a majority, of the following criteria: [3.400]

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Macquarie International Health Clinic v Sydney South West Area Health Service (No 3) cont. (a) the unsuccessful party to the proceedings was the moving party and not the defendant; (b) the source of funds for the litigation was the non-party or its principal; (c) the conduct of the litigation was unreasonable or improper; (d) the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest, and (e) the unsuccessful party was insolvent or could otherwise be described as a person of straw … … 214 The criteria identified in Knight v FP Special Assets should not ultimately be treated as separate and independent factors. Each requires an evaluative assessment of factors which will clearly tend to interact. Nor should it be forgotten that the power is only to be exercised in exceptional cases. In many cases involving individuals in the superior courts the parties may lack the resources to meet the costs of the litigation if unsuccessful. Similarly, there will frequently be a non-party, be it a company officer or solicitor, who will be active in the conduct of the litigation and who will obtain some direct or indirect financial benefit from its success. The fact that it is entirely proper for legal practitioners to runs cases on a speculative basis [[sic]], so long as satisfied that they have reasonable prospects of success, demonstrates that care must be taken not to apply the criteria mechanically. Careful attention is required to the conduct of the party said to be involved in the litigation and the nature of the “interest” in its outcome or subject-matter. 98 In Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75 the High Court of Australia said:

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43. The proposition that those who fund another’s litigation must put the party funded in a position to meet any adverse costs order is too broad a proposition to be accepted. As stated, the proposition would apply to shareholders who support a company’s claim, relatives who support an individual plaintiff’s claim and banks who extend overdraft accommodation to a corporate plaintiff. But not only is the proposition too broad, it has a more fundamental difficulty. It has no doctrinal root. 99 A relevant consideration in the exercise of the discretion in the case where a plaintiff is an insolvent or impecunious corporation is that ordinarily an order for security for costs would be the appropriate remedy (Knight per Dawson J, p 204, McHugh J, p 217). Although not decisive, a failure to make an application for security for costs is a factor to be taken into account in determining whether it would later be just to make an order that a non-party to the proceedings pay the costs of a successful party (Vestris v Cashman (1998) 72 SASR 449, par 100). In Knight, it was said (Mason CJ, Deane J, p 191): The availability of an order for security for costs at an earlier stage of the litigation would, in many situations, be a strong argument for refusing to exercise a discretion to order costs against a nonparty … Determination 100 The authorities show that although the categories of cases in which a non-party will be ordered to pay costs are not closed, the power is to be exercised in exceptional cases, that is to say, where the interests of justice requires departure from the prima facie general principle that an order for costs is only made against a party to the litigation. It is necessary to show that non-parties have a sufficient connection with the litigation which provides a proper basis upon which to award costs against them (Knight p 199). “… Careful attention is required to the conduct of the party said to be involved in the litigation and the nature of the ‘interest’ in its outcome or subject-matter” (FPM Constructions par 214). 172

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Macquarie International Health Clinic v Sydney South West Area Health Service (No 3) cont. 101 The principles direct the enquiry towards the nature and extent of the non-party’s involvement in the litigation. Although the impecuniosity of the plaintiff might explain such involvement, it is relevant to keep in mind that its inability to pay costs goes only to questions of security, there being no general rule that to prosecute proceedings without reasonable prospects of being able to meet an adverse costs order is an abuse of process (Jeffery, par 42). Accordingly, without discarding it as irrelevant, I have given little weight to the evidence of the conduct of Dr Wenkart and MHC, including the payment of Macquarie’s liabilities, in relation to the carrying out of the project under the 96 agreements. 102 I turn first to the claim against Dr Wenkart. It cannot be disputed that he was the driving force behind Macquarie, and was its representative for the purpose of the litigation. I have earlier found that he was the chief executive and a director of Macquarie and related companies which, effectively, were his alter ego. He played a vigorous and active part throughout the litigation. Doubtless it was at his direction that MHC paid Macquarie’s legal costs. He was an important witness. He effectively controlled Traknew Holdings Pty Ltd, Macquarie’s ultimate holding company.

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103 However, in my opinion the evidence of Dr Wenkart’s involvement in the proceedings does not establish that he was, in substance, a real and effective party standing behind Macquarie. His conduct was consistent with the discharge of his duty as a director. Merely because, as a director, he was active, not supine, cannot be determinative, there being no scale of participation by which liability to a costs order may be ascertained. In my opinion, Dr Wenkart’s involvement is properly described as of the kind commonly experienced in cases in which the litigation of a company with a sole director and shareholder is controlled by that person, who is ordinarily accepted as its alter ego. 104 Furthermore, it cannot be said that Macquarie was a nominal party to the claim and cross-claim. Had Macquarie been successful it would have been restored to possession of the sites under the leases. Had it obtained an award of damages or succeeded in its claim for payment under the cross-claim, the proceeds of judgment would have been the property of Macquarie. The proceedings overall concern disputed issues confined to the rights and obligations of Area Health and Macquarie under the 96 agreements. The benefit of a successful outcome for Macquarie would not, in law, flow to anyone else. The evidence did not support a finding that Dr Wenkart was using the litigation for his own purposes. In my assessment, the nature of the interest or benefit which he would have had in a successful outcome for Macquarie may reasonably be seen to be that of a director of Macquarie and of the other members of the group. 105 Accordingly, Area Health has failed to show that the involvement of Dr Wenkart in the litigation and the nature of his interest in its outcome were of such a kind as to justify the making of an exceptional order that the costs ordered against Macquarie be paid by him. Area Health’s claim against Dr Wenkart is rejected. 106 With regard to the claim against MHC, the evidence was that MHC was Macquarie’s parent, was a party to the 96 agreements as the guarantor of Macquarie’s performance, paid the substantial part of Macquarie’s costs and expenses incurred under the agreement, and paid Macquarie’s legal costs in these proceedings. MHC and Macquarie operated as separate entities. A proposition that Macquarie entered into the 96 agreements, not on its own behalf, but on behalf of its parent MHC, would be untenable. As explained in eg Briggs v James Hardy & Co Pty Ltd (1989) 16 NSWLR 549, pp 556, 573–577; Al-Shennag v Statewide Roads Ltd [2008] NSWCA 300, pars 37–44, the fact that MHC was Macquarie’s parent could not of itself create any relationship of agency, and the mere potential for, or fact of, the exercise of control by the parent over its subsidiary is insufficient. Also, in my opinion, the fact that its parent paid off Macquarie’s liabilities from time to time does not support the conclusion that Macquarie operated as MHC’s agent, and on MHC’s account. It follows that, in my opinion, the relationship between MHC and Macquarie was not one of principal and agent. Area Health’s submission to that effect is rejected. [3.400]

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Macquarie International Health Clinic v Sydney South West Area Health Service (No 3) cont. 107 I now turn to Area Health’s submission that MHC was a real party by reason of an association with Macquarie akin to a co-venturer. It is undisputed that the relationship was close, and the driving force behind each was Dr Wenkart. Doubtless they had a common purpose in ensuring a successful outcome for Macquarie under the 96 agreements, and in these proceedings. 108 However these considerations, in my opinion, do not establish that MHC was the effective party in the conduct of these proceedings, and Macquarie was merely its nominee. The fact that Macquarie relied upon its parent to pay its legal costs does not alter that conclusion. As observed in Jeffery (par 42) a plaintiff’s inability to pay costs goes only to questions of security. 109 MHC’s involvement in the proceedings was dictated by Dr Wenkart, and extended to the payment of its subsidiaries’ costs. It involved no impropriety. It could derive no benefit from the successful prosecution by Macquarie of its claims, or from any amounts recovered under the cross-claim. The prospect that, if Macquarie was unsuccessful, MHC may have been at risk under the guarantees is, in my opinion, not a reason for concluding that Macquarie was not the real party bringing the action. 110 It follows, in my opinion, that in the circumstances of this case it would not be appropriate to make an order that the costs ordered against Macquarie be paid by MHC. Area health’s claim against MHC is rejected. 111 Additional considerations weigh heavily against a favourable decision for Area Health.

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112 On 29 May 2003, three years after commencement of the proceedings, the making of an application for an order for security for costs was foreshadowed. However, no application was ever made. Area Health explained (T p 250, 251) that this was because it took the view that, under the guarantees and indemnities, MHC would be liable for any costs ordered against Macquarie, and thus it was questionable whether an order for security would provide additional comfort. 113 Of course, it was open to Area Health to seek an order for security for costs at any time during the running of the proceedings. The fact is that, at a relatively early stage, Area Health made a commercial and forensic decision to allow Macquarie to proceed with the litigation without provision of security on the basis that it was sufficiently protected under MHC’s guarantees and indemnities should it obtain a costs order against Macquarie. So be it. In my opinion, there is no unfairness in leaving Area Health to make its claim against MHC under the guarantees and indemnities should Macquarie fail to pay the costs awarded against it. In these circumstances the interests of justice do not require that costs be ordered against the non-parties.

SECURITY FOR COSTS [3.410] The court has power to order a plaintiff to give security for the defendant’s cost of

defending the plaintiff’s claim and can order a stay of proceedings until the security is given. An application for security for costs should be made promptly. If there is non-compliance with the security for costs order the court may order that the plaintiff’s proceedings be dismissed: see UCPR r 42.21. The source of the power comes from rules such as r 2.1 and r 42.21 of the UCPR, s 67 of the CPA and, in respect of corporations, from s 1335 of the Corporations Act 2001 (Cth). The

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Supreme Court also has inherent jurisdiction to order security for costs 21 which are necessary for the due administration of justice and to prevent abuse of the court’s processes. 22 Recent New South Wales Court of Appeal decisions that addressed the criteria for the ordering of security for costs include Tonab Investments Pty Ltd v Optima Developments Pty Ltd [2015] NSWCA 205; Wang v Farkas (No 6) [2015] NSWCA 116; Yi Cheng Jiang v Wan Ze Property Development (Aust) Pty Ltd (in Liq) [2014] NSWCA 350; LRSM Enterprise Pty Ltd v Zurich Australian Insurance Limited [2014] NSWCA 88; Blue Oil Energy Pty Limited v Tan [2014] NSWCA 81; Cornelius v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65; Workplace Safety Australia Pty Ltd v Simple OHS Solutions Pty Ltd [2014] NSWCA 55; Levy v Bablis [2012] NSWCA 128.

Wollongong City Council v Legal Business Centre [3.420] Wollongong City Council v Legal Business Centre Pty Limited [2012] NSWCA 245 [The appellant, Wollongong City Council, sought leave to appeal from an interlocutory order dismissing its application for an order for security for costs against the respondent, Legal Business Centre Pty Ltd (LBC). The New South Wales Court of Appeal granted leave to appeal and held that the trial judge erred in his assessment of LBC’s financial circumstances and also erred in refusing the application for security for costs.] BEAZLEY JA (MEAGHER AND BARRETT JJA AGREEING) Legal principles governing the making of an order for security for costs 26 The Uniform Civil Procedure Rules 2005 (UCPR), r 42.21 provides: 42.21 Security for costs (1) If, in any proceedings, it appears to the court on the application of a defendant: …

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(d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so … the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant’s costs of the proceedings and that the proceedings be stayed until the security is given. (2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct. (3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff’s claim for relief in the proceedings be dismissed. (4) This rule does not affect the provisions of any Act under which the court may require security for costs to be given. 27 The Corporations Act 2001 (Cth), s 1335(1) is in relevantly the same terms: 1335 Costs (1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to 21

Fiduciary v Morningstar Research [2004] NSWSC 664 at [34]; Morris v Hanley [2000] NSWSC 957; Bhagat v Murphy [2000] NSWSC 892; and Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 at 447-8 per Holland J.

22

Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 at 447-8 per Holland J. [3.420]

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Wollongong City Council v Legal Business Centre cont. believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given. 28 Both sources of power involve the exercise of a discretionary judgment. In approaching its task in the case of a corporation, the court should adopt a practical commonsense approach to the examination of the financial affairs of the corporation: Livingspring Pty Ltd v Kliger Partners [2008] VSCA 93; 20 VR 377 at [15]. 29 The principles governing the exercise of the discretion are well established and are relevantly the same in respect of each source of power: see Livingspring v Kliger Partners at [10]. The party seeking an order for security for costs (who, for convenience I will refer to as the defendant) bears the onus of establishing that there is reason to believe that the other party to the litigation will be unable to pay the costs of the litigation if unsuccessful: see KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] FCA 76; 56 FCR 189; Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972; Pioneer Park Pty Ltd (in liq) v Australian and New Zealand Banking Corporation [2007] NSWCA 344; Prynew Pty Ltd v Nemeth [2010] NSWCA 94. 30 There is no predisposition to the making of an order: see Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at 509; Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 at 623-624; KP Cable Investments v Meltglow. Once the defendant has discharged the onus of establishing that there is reason to believe that the other party to the litigation will be unable to pay the costs of the litigation if unsuccessful, the onus shifts to the party against whom the order is sought (who I will refer as the plaintiff) to establish a reason why security should not be granted: KP Cable Investments v Meltglow; Equity Access Ltd v Westpac Banking Corporation; Pioneer Park v Australia and New Zealand Banking Corporation; Prynew Pty Ltd v Nemeth.

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31 In Staff Development & Training Centre Pty Ltd v Commonwealth of Australia [2005] FCA 1643, Spender J, at [9], summarised the factors that have been identified in the case law as governing the exercise of discretion, namely: (a)

The quantum of risk that a costs order will not be satisfied;

(b)

Whether the making of an order would be oppressive in that it would stifle a reasonably arguable claim;

(c)

Whether any impecuniosity of the applicant arises out of the conduct complained of;

(d)

The prospects of success;

(e)

Whether there are aspects of public interest which weigh in the balance against such an order;

(f)

Whether there are any particular discretionary matters peculiar to the circumstances of the case.

32 Delay is also a relevant factor in determining whether an application for security for costs is to be made: Commonwealth v Cable Water Skiing (Australia) Ltd (1994) 14 ACSR 760 at 762; Crypta Fuels Pty Ltd v Svelte Corporation Pty Ltd (1995) 19 ACSR 68 at 71; KP Cable Investments v Meltglow. However, delay is not of itself a disentitling factor: see Bryan E Fencott v Eretta; Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114. 33 If the plaintiff’s adverse financial circumstances are alleged to be due to the effect of the defendant’s alleged conduct subject of the claim, the plaintiff bears the onus of establishing the adequacy of its financial position before the dealings with the defendant and that the defendant’s conduct either caused, or at least materially contributed to, the plaintiff’s inability to meet an order for costs: see Fiduciary v Morningstar Research [2004] NSWSC 664; 208 ALR 564 at [100]; Jazabas Pty Ltd v Haddad [2007] NSWCA 291. Further, where the plaintiff’s claim is based upon a loss of profit, the court 176

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Wollongong City Council v Legal Business Centre cont. will take a more cautious approach in its consideration of the cause of impecuniosity than where the claim is based on the infliction of damage: Fat-sel Pty Ltd v Brambles Holdings Ltd (1985) 3 ACLC 312; ATPR 40-544 at 46, 428; Jazabas v Haddad at [33]. 34 There is a further matter to which reference should be made. In some cases, persons who stand behind a plaintiff corporation, or who otherwise stand to benefit from the litigation, may offer to be responsible for the costs. Should that occur, it may provide a reason for the court to exercise its discretion in a plaintiff’s favour and not order security: see KP Cable Investments v Meltglow; Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306; Prynew v Nemeth at [33]-[45]. 35 In the present case, it is apparent that Amir Harb and Habib Harb stand to benefit should the litigation be successful. However, neither have offered to be responsible in the event a costs order is made against LBC. In any event, on the evidence, they would not have the financial capacity to be responsible for the costs. Reasons of the trial judge 36 The trial judge’s reasons were relatively brief. His Honour noted that LBC had a total paid-up share capital of $4, but commented that that was not of great significance in terms of assessing the corporate worth of an entity. His Honour noted that LBC owned buildings the subject of the proceedings and that although the land was the subject of a mortgage and encumbered by a caveat, he was not convinced at that stage that LBC did not have the capacity to meet an order for costs. 37 His Honour observed that LBC appeared to be a trust company, the beneficiaries of which were Amir Harb and Habib Harb. His Honour then concluded: In all of the circumstances, and they include the significant period that has already elapsed in these proceedings and the effect of the alleged conduct on the applicant, I am not minded to exercise the discretion to order security for costs. 38 His Honour added that his decision might change depending on two matters: first, should there be further evidence relevant to a security for costs application; and secondly, should there be a continuation of conduct engaged in by Amir Harb in incurring costs beyond what would normally be expected. In this regard, his Honour cited correspondence by Amir Harb directly to the Council, contrary to professional practice, in circumstances where the Council had solicitors acting for it. Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

The Council’s submissions on the appeal 39 The Council contended that his Honour, in refusing the application for security, erred in the following essential respects. First, that he failed to pose and determine the threshold question required by UCPR, r 42.21 and the Corporations Act, s 1335(1). Secondly, that his Honour failed to correctly assess the evidence. Thirdly, that his Honour erred in concluding that there were discretionary considerations that stood against an order for security for costs. Finally, that his Honour failed to give legally adequate reasons for his decision. 40 As I have indicated, his Honour’s reasons were brief. His Honour did not engage in any dissertation of the legal principles but rather dealt directly with the basis upon which the Council made its application, namely, LBC’s impecuniosity. It was not inappropriate for his Honour to approach the application in a summary way. He was dealing with the matter during the course of a busy court day and there is no basis to infer that his Honour misunderstood the legal principles he applied. Accordingly, I would not uphold the Council’s first complaint. For the same reason, I would reject the complaint that his Honour did not give legally adequate reasons. 41 However, I am satisfied that his Honour erred in his assessment of LBC’s financial position and its ability to meet any costs order made against it. The effect of the evidence to which I have referred is that LBC, as trustee for the Harb Family Trust, has a net asset value of virtually nil. In other words, its assets and liabilities are approximately equal. There is no evidence of income other than rental income but its expenses, most particularly in the form of interest payments, have in most years exceeded, in a [3.420]

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Wollongong City Council v Legal Business Centre cont. small amount, the amount of income earned from all sources. To the extent that the real beneficiaries of the proposed development application in respect of the land are Amir Harb and Habib Harb, the evidence as to their financial position is such that they would not be able to pay any order for costs made against LBC and neither have made an offer to do so.

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42 Accordingly, I am of the opinion that the Council has satisfied the onus of establishing that there is reason to believe that LBC and the parties who stand to benefit from any success in the proceedings will be unable to pay its costs, should the proceedings fail, or should LBC for any reason be made liable for an order for costs. 43 LBC submitted that even if the Council had satisfied the preliminary onus under the section, his Honour correctly exercised his discretion, given the delay in the making of the application and the fact that it was the conduct of the Council which has caused its impecuniosity. 44 In the present case there was delay in bringing the application for security for costs. The amended statement of claim, which was the first legal process served upon the Council, was served in November 2009. The application for security for costs was not made until 13 January 2012. The Council submitted, however, that the mere passage of time did not provide a reliable guide as to the actual delay in the matter. It is submitted that much of the two years delay since the service of the amended statement of claim upon it was due to inactivity or vacillation on the part of LBC. 45 In its written submissions to the trial judge, the Council set out a chronology of the procedural steps in the matter and submitted that the case had not progressed in any substantive way due to LBC’s conduct. In particular, it is submitted that some 13 months elapsed from the time the Council filed its defence to the amended statement of claim until LBC served its further amended statement of claim. During that period of time, LBC was in breach of two procedural court orders. The Council contended that LBC wasted the totality of 2010 and a significant portion of 2011 in advancing its claim. The Council pointed out that it first notified its intention to bring an application for security for costs in September 2011. The same submissions were advanced before this Court. 46 In my opinion, the Council has delayed in bringing this application. However, delay itself is not a disentitling factor. In the present case, given that the claim is still at the pleadings stage, I am satisfied that the delay involved is not such that an order ought not to be made. However, LBC ought not to be prejudiced by the delay that has in fact occurred. Accordingly, any order for security should be one in respect of future costs, and not those that have been incurred prior to the bringing of the application. It should be noted that, subject to including in its assessment those costs in respect of which orders have already been made in its favour, the Council’s application was in respect of costs to be incurred in the future. 47 The final question for determination was whether LBC had discharged its onus of satisfying the Court that it was the Council’s conduct which caused or materially contributed to its inability to meet an order for costs. In my opinion, that onus was not discharged. LBC became the registered proprietor of the land in July 2005. At that time, the development application was subject to proceedings in the Land and Environment Court. Those proceedings concluded successfully in favour of either Amir Harb and Habib Harb or LBC on 31 May 2006. It is likely, therefore, that any loss sustained by LBC, assuming the existence of a duty of care and a breach of that duty by the Council as alleged, is limited to a period of less than 12 months. Further, there was no evidence to satisfy the Court of the adequacy of LBC’s financial position before its dealings with the Council. This is true regardless of whether one considers LBC’s claim as being confined to the period to which I have referred or whether LBC is able to establish that it was an assignee of any rights that Amir Harb and Habib Harb had against the Council. Order for security 48 It follows, in my opinion, that an order for security should be made. The Court in the exercise of its discretion is able to make that order itself, or it may remit the matter to the trial court for 178

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Wollongong City Council v Legal Business Centre cont. determination. In making an order for security, a court will frequently order that security be provided in tranches, particularly where the case is of some complexity and it is likely to be lengthy, as appears to be the case here. 49 In my opinion, the proper course for this Court to take is to make an initial order and to otherwise remit the matter to the trial court for the making of further orders for security as and when required. 50 Having regard to the Council’s assessment of the costs likely to be incurred, I am of the opinion that an appropriate order is for the payment of $100,000 by way of security for costs. This amount is to provide security for costs for the future conduct of the matter only and excludes any costs orders made to date. As I have indicated, the Council may approach the Court in the Common Law Division for a further order should it be so advised. 51 Accordingly, I propose the following orders in the matter: 1.

Grant leave to appeal;

2.

Appeal allowed;

3.

Quash orders made by the trial judge;

4.

Order that the respondent, Legal Business Centre Pty Limited provide security for costs as follows: (1) by payment of the sum of $100,000 to the Registrar of the Supreme Court (Common Law Division) or in such other manner as may be agreed by the parties; (2)

5.

liberty to the appellant, Wollongong City Council, to apply to the Supreme Court for such further order for security as it sees fit on the giving of 21 days notice;

Order the respondent to pay the appellant’s costs at first instance and on the appeal.

[3.430] Unlike corporations, the fact that a natural person lacks resources is not a sufficient

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reason for a security for costs order. The impecuniosity of the plaintiff is a factor to be weighed in the exercise of the discretion and is neither a sufficient condition for the ordering of security nor a sufficient condition for the Court to decline the order for security: Lucas v Yorke (1983) 50 ALR 228 at 228–9 (Brennan J); Morris v Hanley [2000] NSWSC 957 at [15]–[18] (reversed on appeal but not on this point [2001] NSWCA 374). 23

Idoport v National Australia Bank [3.440] Idoport Pty Ltd v National Australia Bank Ltd; Idoport Pty Ltd & Market Holdings Pty Ltd v Argus [2001] NSWSC 744 EINSTEIN J Security for costs 47 It is clear that the discretion to award security for costs requires to take into account all of the relevant facts matters and circumstances and is a judicial discretion to be exercised following the adducing of all evidence by each party to an application seeking to have such an award made. As Giles J (as His Honour then was) made plain in Rosenfield Nominees Pty Ltd v Bain and Co (1988) 14 ACLR 467 at 470, in exercising the discretion as to whether or not to make an order for costs, the Court must have a concern to achieve a balance between ensuring that adequate and fair protection is 23

Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148 at [6]. [3.440]

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Idoport v National Australia Bank cont. provided to the defendant, and avoiding injustice to an impecunious plaintiff by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings [cf Street CJ in Buckley v Bennell (1974) 1 ACLR 301 at 304]. Giles J referred to the debate over whether the discretion should be exercised with some predisposition in favour of the defendant and expressed the view with which I agree, that the debate is largely semantic. The principle which his Honour identified at 470 was that: the discretion must be exercised having regard to all the circumstances of the case, but the inability of the plaintiff to meet the costs of the successful defendant, being the occasion for invoking the exercise of the discretion, is likely to play an important if not decisive role. 48 Because the discretion to be exercised by the Court is a wide one which should remain unfettered, the circumstances in which the discretion should be exercised in favour of making the order cannot and should not be stated exhaustively: Spiel v Commodity Brokers Australia Pty Ltd at 415. In Gentry Bros Pty Ltd v Wilson Brown and Associates Pty Ltd (1992) 8 ACSR 405, Cooper J stated: (i)t is not possible or appropriate to list all of the matters relevant to the exercise of the discretion. The factors will vary from case to case. The weight to be given to any circumstance depends upon its own intrinsic persuasiveness and its impact on other circumstances which have to be weighed: PS Chellaram and Mr Courtney v Chine Ocean Shipping Co [1991] HCA 36; (1991) 65 ALJR 642 at 643. (at 415)

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49 Notwithstanding the unfettered nature of the discretion, Beazley J in KP Cable Investments set out 7 guidelines which the Court is said to typically take into account when determining such an application: 1.

That such applications should be brought promptly. This is a principle of longstanding: see Grant v The Banque Franco-Egyptienne Egyptienne (1876) 1 CPD 143; see also Smail v Burton (1975) VR 776 per Gillard J at 777; Caruso Australia Pty Ltd v Portec (Aust) Pty Ltd (1984) 8 ACLR 818 at 820; Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 514…

2.

That regard is to be had to the strength and bona fides of the applicant’s case are relevant considerations: see MA Productions Pty Ltd v Austarama Television Pty Ltd (1982) 7 ACLR 97 at 100; Bryan E Fencott Pty Ltd at 514. As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success. (Bryan E Fencott at 514).

3.

Whether the applicant’s impecuniosity was caused by the respondent’s conduct subject of the claim: see MA Productions Pty Ltd v Austarama Television Pty Ltd at 100.

4.

Whether the respondent’s application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate: see MA Productions v Austarama Television at 100; Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542 per Clarke J at 545; Bryan E Fencott at 513. In Yandil Holdings at 545 Clarke J stated the principle in these terms: (t)he fact that the ordering of security will frustrate the plaintiff’s rights to litigate its claim because of its financial condition does not automatically lead to the refusal of an order. Nonetheless it will usually operate as a powerful factor in favour of exercising the court’s discretion in the plaintiff’s favour.

This factor is related to the next, namely: 5.

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Whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security: see Memetu v Lissenden (1983) 8 ACLR 364; Sent v Jet Corporation (1984) 2 FCR 201; Bell Wholesale Co Pty Ltd v Gates Export Corporation (1984) 2 FCR 1; Hession v Century 21 South Pacific Ltd (1992) 28 NSWLR [3.440]

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Idoport v National Australia Bank cont. 120 at 123; Bryan E Fencott at 513; Yandil Holdings at 545. The combined effect of these two principles was summarised by Meagher JA in Hession at 123 as follows: [A] company in liquidation against whom an order for security for costs is sought cannot successfully resist such an order merely by proving that it cannot fund the litigation from its own resources if an order for security is made; it must prove that it cannot do so even if it relies on the other resources available to it (the company’s shareholders or creditors) … Finally, whilst it is both true and important that poverty must be no bar to litigation, what that means is that the courts must be astute to see that no person pursuing a claim which is not frivolous is precluded from doing so by the erection of obstacles which poverty is unable to surmount; it does not mean that proof of insolvency automatically confers an immunity from statutory provisions which deal with insolvent plaintiffs. 6.

An issue related to the last guideline is whether persons standing behind the company have offered any personal undertaking to be liable for the costs and if so, the form of any such undertaking: see Cameron’s Unit Services Pty Ltd v Kevin R Whelpton and Associates (Aust) Pty Ltd (1986) 13 FCR 46 at 53; Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304; Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325.

7.

Security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against parties who are defending themselves and thus forced to litigate: see Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 at 626; Heller Factors Pty Ltd v John Arnold’s Surf Shop Pty Ltd (in liq) (1979) ACLC 32,446; Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480; Weily’s Quarries v Devine Shipping Pty Ltd (1994) 14 ACSR 186 where Zeeman J stated at 189:

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(t)he general proposition that security ought not to be ordered where the proceedings are defensive in the sense of directly resisting proceedings already brought or seeking to halt self-help procedures is no more than that, a general proposition. It ought not to be elevated to being a rule of law. In many cases of that nature it could be considered oppressive to require security and that in itself may be sufficient to refuse to make an order… (see) Sydmar Pty Ltd v Statewise Developments (supra) and Interwest Ltd v Tricontinental (supra). (at para 39) 50 Clearly as Beazley J recognised, the possibility of stultification is a “powerful” factor to be taken into account by the Court in exercising its discretion as to whether an order is appropriate: Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542. However, Clarke J in Yandil observed that the fact that a plaintiff is financially unable to provide security does not lead to the inevitable conclusion that the making of the order will stultify the plaintiff’s claim nor does it lead to the automatic refusal of an order. He went on to cite a line of authorities (see Tulloch v Walker, Yeldham J, 8 December 1976, unreported; Bell Wholesale Co Pty Ltd v Gates Export Corp (No 2) (1984) 8 ACLR 588) in support of the view that it is generally inappropriate to refuse an order for security where: the personnel behind the corporate plaintiff, or other parties who will benefit if the plaintiff succeeds, are financially able to provide adequate security. (at 545) In other words, without fettering the Court’s discretion, it was said to be unlikely that a plaintiff could successfully resist a security order on the grounds of their own impecuniosity in the absence of evidence of the financial status of those who stand behind it (see Yandil at 545). 51 McHugh J in Oshlack also made plain at 97 that: [T]he jurisdiction to award security for costs should thus be seen as protecting the efficacy of the exercise of the jurisdiction to award costs. The discretion should be exercised with the same rationales in mind, namely that, to the extent it can be avoided, the court should not permit a situation to arise where a party’s success is pyrrhic. 52 The purpose of a security for costs order is therefore a protective jurisdiction to ensure that the primary purposes for having costs orders themselves, can be achieved. A defendant is protected [3.440]

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Idoport v National Australia Bank cont. against the risk that a costs order obtained at the end of the day may turn out to be of no value by reason of the impecuniosity of the plaintiff. The jurisdiction therefore assists both the compensation purpose as well as the public interest objective. Plaintiffs: natural persons vs corporations 53 In relation to natural person plaintiffs, the mere fact that the plaintiff is impecunious does not provide a gateway into security for costs. However with respect to a corporation it has long been established in terms of the Corporations Act and its predecessors, and the rules of court as well as the inherent jurisdiction, that if there is good reason to believe that the corporation may be unable to pay costs at the end of the day, this provides a gateway by which an application for security for costs may be made. 54 Giles CJ in Rugby Union Players Association [30/7/1997, SCNSW, 50225/96, unreported] described the rationale behind the exceptions to the general rule that the impecuniosity of a plaintiff should not be a ground for making an order for security for costs (this principle having been well established by the authorities in relation to plaintiffs who are natural persons: Cowell v Taylor (1885) 31 Ch D 34), in the following terms: In both cases the rationale is that those who will benefit from success in the proceedings, as shareholders in or creditors of a corporation or as third parties for whose benefit the plaintiff (whether a natural person or a corporation) sues, should not be able to litigate and expose the defendant to the risk of irrecoverable costs while themselves shielded, by reason of the interposition of the impecunious plaintiff, from the burden of an adverse order for costs. (at 11) 55 The Court in Harpur v Ariadne [1984] 2 Qd.R 523 at 532 described the rationale behind this principle in the following terms:

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The mischief at which the provision is aimed is obvious. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play. 56 The inability of a plaintiff company to pay the costs of the defendant not only opens the jurisdiction for the giving of security, but also provides a substantial factor in the decision whether to exercise it: Pearson v Naydler [1977] 1 WLR 899 at 906; cited with approval in Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201 at 215. 57 Where a winding-up order has been made in relation to the plaintiff company on account of its insolvency, the company will not prima facie be in a position to pay any costs ordered against it. The Court will generally treat this circumstance as a special factor justifying the making of an order for security for costs: Tricorp Pty Ltd (in liq) v Deputy Commissioner of Taxation (WA) 10 ACLC 474 at 475. 58 In considering an application under s 1335, the Court is required to form an opinion about what the financial position of the plaintiff will be at the time of judgment and immediately after. An important consideration will be the financial position of the plaintiff at the time of the application, however this is not the sole consideration. Other factors may include the outcome of the trial, the costs associated with the trial and the success or otherwise of its business and investments in the meantime. When the Court is required to make a judgment involving the anticipation of future events, it must consider the degree of probability that a particular event might occur: Beach Petroleum NL v Johnson (1992) 10 ACLC 525 at 526–527. 59 With specific regard to security for costs against corporations, the Court in Pearson v Naydler recognised that the basic notion of security for costs empowers the Court to order the plaintiff to do something that it will likely find difficult to do, ie to provide security for the costs which ex hypothesi it 182

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Idoport v National Australia Bank cont. is likely to be unable to pay. Despite this, the Court noted that this discretionary power should not be used as an instrument of oppression “by shutting out a small company from making a genuine claim against a large company” (see also Equity Access Limited v Westpac Banking Corporation (1989) 11 ATPR 40-972 at 50,635). The Court must thereby strike a balance between this consideration and the notion that: the court must not show such a reluctance to order security for costs that this becomes a weapon whereby the impecunious company can use its inability to pay costs as a means of putting unfair pressure on a more prosperous company. Litigation in which the defendant will be seriously out-of-pocket even if the action fails is not to be encouraged. While I accept that there is no burden of proof one way or the other, I think that the court ought not to be unduly reluctant to exercise its power to order security for costs in cases that fall squarely within the section. Pearson v Naydler at 906–907. Burden of proof 60 Whilst from one point of view it may seem inappropriate to approach the matter in terms of the strictures of burden of proof whether of a legal or forensic character [cf discussion in Mummery v Irvings [1956] HCA 45; (1956) 96 CLR 99 at 118ff], there is certainly substantial authority which is followed in these reasons, to the effect that the defendants, as applicants for security for costs, have an evidentiary burden of leading evidence to establish a prime facie [sic] entitlement to such an order and to such an order in relation to a particular amount. Normally, in any court, the party who asserts must prove in order to succeed: Scott Fell v Lloyd (Official Assignee) [1911] HCA 34; (1911) 13 CLR 230 at 241; Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 717 per Kirby P. In Warren Mitchell Pty Ltd v Australian Maritime Officers Union (1993) 12 ACSR 1 the word “credible” in s 1335 was said to suggest that an evidentiary burden is undertaken by the party seeking the order who must show:

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that the material before the Court is sufficiently persuasive to permit a rational belief to be formed that, if ordered to do so, the corporation would be unable to pay the costs of that party upon disposal of the proceedings. 61 The evidence to be relied on must have some characteristic of cogency. Furthermore, speculation as to the insolvency or financial difficulties experienced by the plaintiff company is insufficient to ground the exercise of the discretion: Warren Mitchell Pty Ltd v Australian Maritime Officers Union. 62 The approach followed in these reasons is that once the defendants have led evidence to establish the above described entitlement, an evidentiary onus falls upon the plaintiffs to satisfy the Court that taking into account all relevant factors, the Court’s discretion ought be exercised by either refusing to order security or by ordering security in some lesser amount than was sought by the defendants.

[3.450] A security for costs order is discretionary and though such discretion is absolute and

unfettered, 24 it will not be made automatically. 25 It must not be made “arbitrarily, capriciously or so as to frustrate the legislative intent”. 26 It must be exercised judicially. 27 24 25

Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; 193 CLR 502 at [26] and Lucas v Yorke (1983) 50 ALR 228 at 228-9. Barton v Minister for Foreign Affairs (1984) 2 FCR 463; 54 ALR 586.

26

Oshlack v Richmond River Council (1998) 193 CLR 72; 72 ALJR 578; 152 SLR 83; [1998] HCA 11 at [22].

27

See generally Hamilton JP, Lindsay G, Morahan M and Webster C (eds), NSW Civil Procedure Handbook (Lawbook Co, 2015) (UCPR Part 42 Commentary). [3.450]

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UCPR r 42.21 provides the circumstances in which a plaintiff can be ordered to pay security for costs. The establishment of one of the circumstances is not necessarily sufficient by itself to justify an order.

Uniform Civil Procedure Rules 2005 (NSW) [3.460] Uniform Civil Procedure Rules 2005 (NSW) rr 2.1, 42.21 Case management generally 2.1 Directions and orders (cf SCR Pt 26, r 1) The court may, at any time and from time to time, give such directions and make such orders for the conduct of any proceedings as appear convenient (whether or not inconsistent with these rules or any other rules of court) for the just, quick and cheap disposal of the proceedings. Note: See also the guiding principles in relation to the conduct of court proceedings (set out in Division 1 of Part 6 of the Civil Procedure Act 2005) and the general powers of the court to give directions (set out in Division 2 of that Part). Division 6 Security for Costs 42.21 Security for costs (cf SCR Pt 53, rr 2, 3, 4 and 5; DCR Pt 40, r 1; LCR Pt 31, r 11A, Pt 31A, r 11)

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(1)

If, in any proceedings, it appears to the court on the application of a defendant: (a)

that a plaintiff is ordinarily resident outside Australia, or

(b)

that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or

(c)

that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or

(d)

that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or

(e)

that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so, or

(f)

that there is reason to believe that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings, the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant’s costs of the proceedings and that the proceedings be stayed until the security is given. (1A)

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In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant: (a) the prospects of success or merits of the proceedings, (b)

the genuineness of the proceedings,

(c)

the impecuniosity of the plaintiff,

(d)

whether the plaintiff’s impecuniosity is attributable to the defendant’s conduct,

(e)

whether the plaintiff is effectively in the position of a defendant,

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Uniform Civil Procedure Rules 2005 (NSW) cont. (f)

whether an order for security for costs would stifle the proceedings,

(g)

whether the proceedings involves a matter of public importance,

(h)

whether there has been an admission or payment in court,

(i)

whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant,

(j)

the costs of the proceedings,

(k)

whether the security sought is proportionate to the importance and complexity of the subject matter in dispute,

(l)

the timing of the application for security for costs,

(m)

whether an order for costs made against the plaintiff would be enforceable within Australia,

(n)

the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff.

(1B)

If the plaintiff is a natural person, an order for security for costs cannot be made merely on account of his or her impecuniosity.

(2)

Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct.

(3)

If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff’s claim for relief in the proceedings be dismissed.

(4)

This rule does not affect the provisions of any Act under which the court may require security for costs to be given.

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[3.470] Civil Procedure Act 2005 (NSW) s 67 67 Stay of proceedings (cf Act No 9 1973, s 156) Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day.

[3.480] The Supreme Court has inherent jurisdiction to order security for costs, although the

powers of the District Court and Local Court in this regard are restricted to statute. 28 The following case extract of Welzel v Francis [2011] NSWSC 477 illustrates an occasion when inherent jurisdiction was used as the power to make a security for costs order.

Welzel v Francis [3.490] Welzel v Francis [2011] NSWSC 477 BALL J 28

Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443; Bhagat v Murphy [2000] NSWSC 892; Philips Electronics Australia Pty Ltd v Matthews (2002) 54 NSWLR 598 at [50]–[53]. [3.490]

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Welzel v Francis cont. Background 1 By a notice of motion dated 3 March 2011, the defendant, Mr Francis, seeks an order that the first plaintiff, Mr Welzel, provide further security for his costs in these proceedings. 2 The proceedings arise out of an agreement reached between Mr Welzel and Mr Francis some time in the second half of 2001… 4 On 30 October 2009, Mr Francis filed a notice of motion seeking, among other things, an order that Mr Welzel provide security for Mr Francis’s costs. That motion was heard by Bergin CJ in Eq on 27 November 2009, at which time her Honour ordered that Mr Welzel provide security in the sum of $25,000… 5 The current application is made primarily on the basis that Mr Francis has become aware of facts that were not known at the time Bergin CJ in Eq ordered security which suggest that Mr Welzel had taken other steps to divest himself of assets so that they will not be available to meet any judgment in relation to costs and that Bergin CJ in Eq was misled in that regard. However, Mr Francis also relies on evidence that the estimated costs of the case have increased substantially since security was ordered by Bergin CJ in Eq… Relevant legal principles 7 Before dealing with the application, it is necessary to say something about the relevant legal principles. The notice of motion seeks an order that Mr Welzel provide additional security. That order is sought pursuant to UCPR r 42.21 or alternatively s 1335(1) of the Corporations Act or alternatively the court’s inherent jurisdiction. Section 1335(1) of the Corporations Act can be put to one side. It only gives power to the court to order security against a corporation. Here, however, security is sought from Mr Welzel. 8 UCPR r 42.21(1) provides: [the rule thereafter extracted]:

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None of (a) to (e) applies in this case. Consequently, security for costs cannot be awarded under UCPR r 42.21. 9 However, in Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443, Holland J held that the court retained its inherent jurisdiction to order security for costs against a plaintiff notwithstanding legislative provisions which permitted a defendant to obtain security for costs in certain circumstances. In particular, the inherent jurisdiction to order security against a plaintiff was not affected by Pt 53 r 2(1) of the Supreme Court Rules, which has now been superseded by, but which was in substantially the same terms as, UCPR r 42.21. That jurisdiction was an aspect of the court’s inherent power to regulate its own practice and procedure “to procure proper and effective administration of justice and prevent abuse of process” (at 447). In Rajski, proceedings had been brought by Dr Rajski and Raybos Pty Ltd, a company controlled by him, against the defendant. The defendant sought security for its costs. That application was contested on the basis that the court had no power to order security against Dr Rajski, or against Raybos in circumstances where its co-plaintiff was a natural person. Holland J rejected that submission. There was evidence that Dr Rajski had denuded Raybos of approximately $275,000 before the proceedings were commenced and that most of that money had gone to Dr Rajski’s mother, with whom Dr Rajski resided. In those circumstances, his Honour thought that it was appropriate to order security against both Raybos and Dr Rajski. 10 The decision of Holland J was affirmed on appeal (see Rajski v Computer Manufacture & Design Pty Ltd [1983] 2 NSWLR 122) and has been applied in a number of subsequent cases: see, for example, Bhagat v Murphy [2000] NSWSC 892; Byrnes v John Fairfax Publications Pty Ltd [2006] NSWSC 251. In the former case, there had been a large number of interlocutory applications and, although Young J thought that Mr Bhagat had a glimmer of a good case, that glimmer was “very much obscured by the vast amount of irrelevancies thrown up around it” (at [19]). The defendant made an application for security for costs. Mr Bhagat originally refused to give any evidence concerning his personal assets in 186

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Welzel v Francis cont. opposition to that application. When he was informed by Young J that, in those circumstances, his Honour would award security against him, Mr Bhagat gave evidence that he had no assets. However, under cross-examination he conceded that he lived with his wife in an apartment in the Connaught, although he gave evidence that he had no idea who owned the apartment or how his occupation of it was funded. He also conceded that he had been the beneficial owner of 760,000 units in Estate Mortgage Depositors Trust No 4, although he had disposed of most of those units to his wife, and that he owned some property in Poona, India. Taking those matters into account Young J ordered that Mr Bhagat provide security in the sum of $300,000. In the latter case, Simpson J (at [17]) observed that the adoption of the Uniform Civil Procedure Rules did not affect the conclusions reached by Holland J in Rajski in relation to the existence of the inherent power to order a plaintiff to provide security or the principles that should be applied by the court in determining whether to exercise that power. Clearly, one type of case where it may be appropriate for the court to order security in exercise of its inherent power is where the plaintiff has taken steps to divest himself or herself of assets to avoid the consequences of an adverse costs order. … 12 Several other principles are relevant in this case.

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13 First, one matter that is very relevant to the exercise of the court’s power to order security is whether the effect of the order would be to stultify the proceedings. Generally, a court should not make an order for security that would have that consequence: Hession v Century 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120. However, it is for the party resisting an order for security to establish that the order is likely to have that effect, and in doing so that party must establish that those who stand behind the party in the proceedings are not in a position to contribute to any order for security. As the Full Federal Court said in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 52 ALR 176 at 179–80: In our opinion a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means. It is not for the party seeking security to raise the matter; it is an essential part of the case of a company seeking to resist an order for security on the ground that the granting of security will frustrate the litigation to raise the issue of the impecuniosity of those whom the litigation will benefit and to prove the necessary facts. As Austin J pointed out in Fiduciary Ltd v Morningstar Research [2004] NSWSC 664; (2004) 208 ALR 564 at [77], that statement of principle was approved by McHugh J in PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36; (1991) 102 ALR 321 at 3 23 and by the New South Wales Court of Appeal in Hession v Century 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120. There is no reason why it should not apply equally to an application for security against a natural person. 14 Second, a court will not generally order a plaintiff to provide security where the plaintiff’s impecuniosity has been brought about by the defendant’s conduct: Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133. There must, however, be “a real causal connection between the conduct and the impecuniosity which, in the exercise of the Court’s discretion, would make it unjust to require security”: Dalma Formwork Pty Limited (Administrator Appointed) v Concrete Constructions Group Limited [1998] NSWSC 472 per Rolfe J. 15 Third, it is relevant to take into account whether the plaintiff’s claim has reasonable prospects of success. Generally, however, it is the absence of reasonable prospects of success that provides a reason for ordering security. The existence of reasonable prospects does not of itself provide a reason for refusing security; and the court will not embark on a detailed consideration of the merits of the case in determining whether an order for security is appropriate: see Fiduciary Ltd v Morningstar Research [2004] NSWSC 664; (2004) 208 ALR 564 at [37]–[38] per Austin J. Other matters may also be relevant, [3.490]

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Welzel v Francis cont. such as delay in making the application and the conduct of the parties in connection with the proceedings: see Bhagat v Murphy [2000] NSWSC 892. 16 Fourth, different principles apply depending on whether the application is a fresh application for additional security or an application to vary an existing order granting security: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 5) [2006] NSWSC 255 at [9]ff per McDougall J. Where the application is an application to vary an existing order, the applicant must satisfy the requirements identified by McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44. An obvious example is where an application is made to set aside the original order for security. Another example is where it is clear that the original order was in respect of the total costs of the case. However, I do not think that it follows from that that the respondent to the application for additional security is limited to raising arguments in opposition to the application that were raised at the time security was sought originally. For example, there is no reason why a respondent should be prevented from submitting that further security will stultify the proceedings or that the respondent’s impecuniosity was brought about by the applicant, even if those grounds were not raised in opposition to the original application. Should additional security be ordered?

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17 Mr Welzel resists an application for further security on three main bases. First, he says that security should not be awarded against him as a personal plaintiff. Second, he says that any award of security will stultify the proceedings. Third, he says that Mr Francis’s conduct has caused the impecuniosity of the corporate plaintiffs. During the course of the hearing, Mr Gration, who appeared for the plaintiffs, also placed considerable emphasis on the allegations against Mr Francis and, in particular, what was said to be a strong case that Mr Francis had appropriated what was meant to be a joint business to himself and had gone to considerable lengths to put that business out of the reach of the plaintiffs. He also submitted that Mr Francis had been guilty of extraordinary delay in the proceedings - in particular, in giving discovery, and that that should affect the court’s attitude to security. 18 In my opinion, the critical question in this case is whether Mr Welzel has taken steps to put his assets out of Mr Francis’s reach in the event that Mr Francis is successful in the case and obtains a costs order in his favour. If Mr Welzel has done that, then I do not think that the other factors provide a reason for refusing an order for further security, although they may be very relevant to the amount of security that should be ordered. I say that for several reasons. 19 First, there is obviously a connection between the stultification argument and the question whether a plaintiff has disposed of assets to avoid the consequences of a costs order. In principle, the amount of any security should reflect the assets that it might have been expected the plaintiff would have had available to meet a costs order but for the disposition of those assets to avoid having to meet the costs order from them. The purpose of an order for security for costs is not to punish the plaintiff for disposing of the assets to avoid the consequences of a costs order. It is to put the defendant in the position it could have expected to be in if the assets had not been disposed of. The assumption underlying this approach is that, if the assets were disposed of to avoid the consequences of a costs order, then those to whom they were disposed ought to be willing to make them available to enable the action to continue. Two other points should be made in this context. The first is that difficulties may arise in determining the amount of security that is appropriate where the plaintiff has not given a full account of the assets that he or she owns. However, those difficulties cannot prevent the court from fixing an appropriate sum. If they were permitted to do so, the plaintiff would have achieved the very object that the order for security was intended to prevent. The second is that, in fixing the amount of security, it is necessary to make allowance for the fact that some of the assets in question may be needed to pay the plaintiff’s own legal costs. 188

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Welzel v Francis cont. 20 Second, so far as the impecuniosity argument is concerned, the relevant question is whether Mr Francis’s alleged conduct caused Mr Welzel’s impecuniosity, since it is from him that security is sought. Once that is accepted, impecuniosity becomes an irrelevant factor. If Mr Welzel is impecunious because he disposed of his assets, then he should provide security; and the amount of that security should fairly reflect the position the parties would have been in if Mr Welzel had not disposed of those assets. Mr Welzel should not be required to supply more security than that. Consequently, whether Mr Welzel would have been better off but for Mr Francis’s alleged breaches, even assuming that could be described as a form of impecuniosity for the purpose of the principle, is irrelevant. 21 Third, it cannot be disputed that Mr Welzel has a reasonably arguable case. Moreover, there is evidence to suggest that Mr Francis has engaged in the very activities that he accuses Mr Welzel of engaging in. In particular, it seems at least arguable that Mr Francis dissolved OpenIN Limited and set up alternative companies through which to conduct his business as a means of defeating Mr Welzel’s claim. However, the fact that Mr Welzel has a reasonably arguable case is, as I have said, not a reason for refusing security if it should otherwise be ordered and I do not think Mr Francis’s conduct is a ground on which Mr Welzel can justify his own. If Mr Francis has sought to avoid the consequences of a judgment against him, then that may justify other orders, but it does not provide a reason for not making an order for security if one otherwise should be made. On the other hand, in my opinion, Mr Francis’s conduct in the litigation is relevant to the amount of any security that should be ordered. There is evidence that Mr Francis has delayed excessively in complying with the court’s orders - in particular, the order in relation to discovery. That is likely to have increased the costs of the proceedings. That is one matter that the court should take into account in determining the amount of any security.

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… 25 In my opinion, there is sufficient evidence to conclude that Mr Welzel has disposed of assets in order to avoid the consequences of a costs judgment. It is unclear whether Mr and Mrs Welzel have separated or not. However, even if they have, it is clear that their financial affairs are closely connected and that they have co-operated closely in relation to them. Mr Welzel has disposed of all of the significant assets that he concedes he once had an interest in - in the case of the house at Dural, to a discretionary trust of which he is a beneficiary. He has also effectively disposed of his income to a company controlled by his wife. He did so shortly before the proceedings were commenced. Even assuming that he and his wife separated at that time, the timing of the transactions and the extent to which Mr Welzel alienated his assets and income strongly suggest that an important reason for doing so was to insulate them from a costs order against him. Moreover, neither Mr Welzel nor his wife have given any explanation of how FIAP, as trustee of the 3B Property Trust 2, had funds to acquire the property at Buddina. In circumstances where Mr Welzel is a discretionary beneficiary of that trust, it would have been necessary to disclose that fact to Bergin CJ in Eq in order to give a full picture of his financial position. The fact that he did not do so together with the fact that neither he nor his wife have offered any explanation of the source of the funds strongly suggest that, directly or indirectly, the source of some or all of the funds was Mr Welzel. That inference is reinforced by the fact that Mrs Welzel earns no income of her own. It is also reinforced by the fact that amounts that Mr Welzel admits are due to the corporate plaintiffs appear to have been paid to Welzel Systems and then disbursed to Mrs Welzel and the fact that neither Mr nor Mrs Welzel have offered any explanation for the margin lending account with Macquarie Bank. Taking these matters together, in my opinion, the only conclusion is that Mr Welzel contributed a substantial proportion of the funds used to buy the Buddina property. 26 It follows, in my opinion, that Mr Welzel ought to provide further security in respect of Mr Francis’s costs. I will hear the parties in relation to the amount of that security and the costs of the [3.490]

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Welzel v Francis cont. motion.

PROPOSALS FOR CONTAINING COSTS [3.500] In 2007 Hamilton J 29 discussed measures available under the CPA and the UCPR for

containing costs. The following is an extract from his Honour’s paper.

Containment of Costs: Litigation and Arbitration [3.510] Justice John P Hamilton, Containment of Costs: Litigation and Arbitration 2 The power to cap party/party costs [T]here are three sets of provisions now available in NSW courts. I shall also refer to the English experience and a local proposal for costs capping which require consideration under this head. … 2.1 Cost capping: UCPR r 42.4

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This power has been available for some time in the NSW courts but has been little used. The central provision in r 42.4(1) is that the Court may, of its own motion or on the application of a party, make an order specifying the maximum costs that may be recovered by one party from another. Its ambit was discussed by Palmer J in Re Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003. That case involved three claims for provision under the Family Provision Act 1982 (“the FPA”). Two were successful and one failed. There was a multiplicity of issues about costs. The defendant alleged that the costs of the successful plaintiffs were excessive, and sought a cost capping order under r 42.4 to limit the costs that the successful plaintiffs could recover. His Honour ruled that a costs capping order under r 42.4 was available only prospectively and not in respect of costs already incurred. His Honour said at [23]–[26] and [31]: [23] This Rule reproduces the former SCR 52A r 35A. Neither Counsel’s researches nor my own have found any case in which this rule has been discussed or applied. [24] While UCPR 42.4(1), read in isolation, would seem to empower the Court to fix a maximum sum recoverable by one party under a costs order to be made against another party, the terms of sub-rules (2) and (3) suggest that an order under sub-rule (1) may be made only in advance of a hearing, in order to set limits to what parties may ultimately expect to recover in costs at the end of the day if the proceedings are conducted with due economy and in accordance with the Court’s directions. This intention emerges from the fact that a maximum costs order under sub-rule (1) is not to limit costs occasioned by breaches of the Court’s directions, amendments to pleadings AND applications to extend time nor costs resulting from what may generally be described as vexatious conduct by a party in the progress of a matter to trial or during the course of a trial: sub-rule (2). [25] Further, sub-rule (3) envisages that an order under sub-rule (1) will be made at the same time as directions for the progress of the matter towards trial. Sub-rule (4) envisages that a maximum costs order may be varied by reason of circumstances which have occurred after the date that the order was first made. Such a change of circumstances could rarely, if ever, occur at the time that the Court was pronouncing a final costs order at the conclusion of the proceedings. [26] I conclude that UCPR 42.4 is intended as a means whereby the Court may, if the need arises, curb the tendency of one or all parties to engage in disproportionate expenditure on 29

The Honourable Mr Justice John P Hamilton, Containment of Costs: Litigation and Arbitration, (Supreme Court of New South Wales, 1 June 2007).

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Containment of Costs: Litigation and Arbitration cont. legal costs by making it clear, at an early stage of the proceedings, that beyond a certain limit the parties will have to bear their own costs – win or lose. … … [31] … the remedy provided by UCPR 42.4 is prophylactic: it cannot be used as a cure for excessive expenditure at the time of making a final costs order at the conclusion of proceedings: other powers of the Court must be engaged. I cannot trace a subsequent case in which the NSW cost capping rule has been put to the use anticipated as valid by Palmer J. However, there are similar provisions in the rules of the Federal Court of Australia and the Federal Magistrates Court: see FCR O 62A r 1; FMCR r 21.03. The use of the Federal Court rule was discussed by Drummond J in Hanisch v Strive Pty Ltd (1997) 74 FCR 384. His Honour ruled that the Court was not empowered by O 62A r 1 to fix the maximum costs recoverable by one party only, should it succeed, but must fix the maximum costs recoverable by both. His Honour said at 387–388: The principal object of O 62A is to arm the Court with power to limit the exposure to costs of parties engaged in litigation in the Federal Court which involves less complex issues and is concerned with the recovery of moderate amounts of money, although it may be appropriate for an order to be made under O 62A in other cases, of which Woodlands v Permanent Trustee Co Ltd (1995) 58 FCR 139 is an example. See Sacks v Permanent Trustee Australia Ltd (1993) 45 FCR 509 at 512. In the particular case his Honour declined to fix maximum amounts recoverable by reference to an amount. But, being of the view that the action should have been brought in the District Court, his Honour limited the costs recoverable to those that would be recoverable on a party/party taxation in an action in that Court. In the Federal Magistrates Court, application was made in Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818 under r 21.03 to limit the costs recoverable as between the parties in a disability discrimination case to $5000. Barnes FM declined to make the order. His Honour referred to the limited scale on which costs in the Federal Magistrates Court are usually allowed. In short, his Honour ruled that there was nothing to take this case out of the ordinary run.

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2.2 Cost capping: the English experience In England of recent times there has been a bold endeavour developed in the courts relating to the capping of costs. This is not based on any direct provision of legislation or rules to that effect, but upon powers spelt out of the policy of modern procedural legislation. Interestingly, the cases in which the power was first discussed were group proceedings. For those interested, cases in which orders of this sort have been considered or made include: Griffiths v Solutia UK Ltd [2001] All ER (D) 196 (Apr); [2001] EWCA Civ 736; AB v Leeds Teaching Hospitals NHS Trust, In the matter of the Nationwide Organ Group Litigation [2003] 3 Costs LR 405; [2003] EWHC 1034 (QB); Various Ledward Claimants v Kent and Medway Health Authority [2003] All ER (D) 12 (Nov); [2003] EWHC 2551 (QB); Smart v East Cheshire NHS Trust [2003] EWHC 2806 (QB); Leigh v Michelin Tyre Plc [2004] 1 WLR 846; [2004] 2 All ER 175; [2003] EWCA Civ 1766; King v Telegraph Group Ltd [2005] 1 WLR 2282; [2004] EWCA Civ 613; Eirikur Mar Petursson v Hutchinson 3G UK Ltd [2004] EWHC 2609 (TCC); Armstrong v Times Newspapers Ltd [2004] All ER (D) 283; [2004] EWHC 2928 (QB); Campbell v MGN Ltd (No 2) [2005] 1 WLR 3394; [2005] 4 All ER 793; [2005] UKHL 61; Sheppard v Mid Essex Health Authority [2006] 1 Costs LR 8; Henry v BBC [2005] EWHC 2503 (QB); Weir v Secretary of State for Transport [2005] All ER (D) 274 (Apr); [2005] EWHC 812 (Ch); Tierney v Newsgroup Newspapers Ltd [2006] EWHC 50 (QB); Knight v Beyond Properties Pty Ltd [2007] 1 WLR 625; [2007] 1 All ER 91; [2006] EWHC 1242 (Ch). The existence of the power was first suggested in the Court of Appeal in Griffiths v Solutia supra. It was applied by single Judges in AB v Leeds Teaching Hospitals supra and Ledward supra and its existence [3.510]

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Containment of Costs: Litigation and Arbitration cont. was confirmed in the Court of Appeal in King v Telegraph Group Ltd supra in the judgment of Brooke LJ (with whom Jonathan Parker and Maurice Kay LJJ agreed). It received approval in the House of Lords in Campbell v MGN supra: see at [33], [34] per Lord Hoffmann. In AB v Leeds Teaching Hospitals Gage J said at [19]: In my judgment, in cases where GLOs [group litigation orders] are concerned the desirability of ensuring that costs are kept within bounds makes it unnecessary for the court to require exceptional circumstances to be shown before exercising its discretion to make a costs cap order. …. I see no reason for such a requirement where a costs cap order is sought in a GLO, particularly where there is a risk that costs may become disproportionate and excessive. At [23] his Lordship said in relation to formulating an appropriate cost capping order: Firstly, the order for costs must be proportionate with the amount at stake and the complexity of the issues. Proportionality is to be judged by a two-fold test namely, initially, whether the global sum is proportionate to the amount at stake. Next, if the global sum is disproportionate the court should look at the component parts in order to determine if they are proportionate (see Lownds v Home Office [2002] EWCA Civ 365). The general principles as they have emerged were summarised by Mann J in the Chancery Division of the High Court of Justice in Knight’s case. There his Lordship said at [12]:

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However, the costs-capping jurisdiction has been exercised in other areas [than defamation actions], notably personal injury litigation. Guidance as to the exercise of the jurisdiction in that area can be had from one such case, namely the decision of Gage J in Smart v East Cheshire NHS Trust [2003] EWHC 2806 (QB), (2003) 80 BMLR 175. That was an application made in the context of an inquiry as to damages in a clinical negligence case. The learned judge rejected (at [17]) the submission that costs-capping orders should be made only in the case of group litigation orders. He said they could be made in other cases. He considered (at [22]) the question of whether a test of “exceptional circumstances” should apply before the jurisdiction is invoked. He held it should not. He said: Having considered all these factors, my conclusion is that whilst each case must be dealt with on its own facts the test for the court when exercising its discretion on whether to make a costs cap order in cases such as the instant one is closer to that proposed by Mr Moran QC than that proposed by Mr Hutton. In my judgment, the court should only consider making a costs cap order in such cases where the applicant shows by evidence that there is a real and substantial risk that without such an order costs will be disproportionately or unreasonably incurred; and that this risk may not be managed by conventional case management and a detailed assessment of costs after a trial; and it is just to make such an order. It seems to me that it is unnecessary to ascribe to such a test the general heading of exceptional circumstances. I would expect that in the run of ordinary actions it will be rare for this test to be satisfied but it is impossible to predict all the circumstances in which it may be said to arise. Low value claims will inevitably mean a higher proportion of costs to value than high value claims. Some high value claims will involve greater factual and legal complexities than others. From this extract I can and do extract two propositions: (i) it must be established on evidence that there is a real risk of disproportionate or unreasonable costs being incurred; and (ii) it must be shown that that risk cannot be satisfactorily provided for by more conventional means (and in particular the usual costs assessment after the trial). 2.3 The global costs power: CPA s 98(4)(c) Section 98 of the CPA is the NSW provision that is common to modern court statutes committing costs in proceedings to the discretion of the court. In subs (4)(c) it provides that it may be ordered that the party entitled to costs receive “a specified gross sum instead of assessed costs”. An alternative submission made to Palmer J in the Sherborne Estate case supra was that his Honour should award 192

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Containment of Costs: Litigation and Arbitration cont. costs to the successful plaintiffs only in global sums considerably less than the costs which they had incurred, because of the excessive nature of those costs. This his Honour declined to do. … 2.4 Local Courts Practice Note The NSW Local Courts have embarked on a new endeavour this year to contain the costs of small cases. The endeavour is embodied in Practice Note No 2 of 2007, which affects proceedings where the amount claimed is $20,000 or less. In those cases, unless the Court otherwise determines, the Court’s ultimate discretion as to costs will be exercised as if a cost capping order had been made under UCPR r 42.4 effective from the time of filing of the first defence. Costs up to that time will not be affected, but the costs to be awarded in respect of work done thereafter shall not exceed, where the plaintiff succeeds, 25% of the amount recovered and, where the defendant succeeds, 25% of the amount claimed by the plaintiff. The Practice Note also applies to cases transferred to the General Division of a Local Court from the Small Claims Division (where claims up to $10,000 are determined) limiting recoverable costs to a maximum of $2,500. This is a bold endeavour and it remains to be seen how it will work out. But at least it is a real endeavour to achieve proportionality in respect of the costs of small monetary claims. 2.5 Bret Walker’s proposal The Local Court Practice Note is a partial implementation of a larger proposal by Bret Walker SC contained in his article mentioned above as to a prima facie imposition of costs limits applicable at various stages of proceedings. He describes it as a “ratchet”. The table he gives as an example at 218 is as follows: State of litigation when result reached Before 1 week after

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Before 1 week after 1 month before date fixed for hearing Thereafter

Fraction of stake (or minimum) payable by loser Date for defence (P wins) 2% or $2,000 Service of defence (D wins) Service of P’s evidence (P wins) 5% or $5,000 Service of D’s evidence (D wins) 10% or $10,000 15% or $15,000

This table is an illustration of a credible form for a wider or universal prima facie cost capping regime. 3 The power to cap solicitor/client costs In Woolf v Snipe (1933) 48 CLR 677 at 678 Dixon J said: The superior Courts of law and equity possess a jurisdiction to ascertain, by taxation, moderation, or fixation, the costs, charges, and disbursements claimed by an attorney or solicitor from his client, and that jurisdiction is derived from three sources and falls under three corresponding heads. First, a jurisdiction exists founded upon the relation to the Court of attorneys and solicitors considered as its officers. This jurisdiction, commonly called the general jurisdiction of the Court, enables it to regulate the charges made for work done by attorneys and solicitors of the Court in that capacity, and to prevent exorbitant demands. That such a jurisdiction was exercised by the Court of Chancery was never doubted. … The Courts of law appear to have exercised a like jurisdiction. In Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 94 FCR 167 Merkel J in the Federal Court relied in part on these statements by Dixon J in enjoining the plaintiffs’ solicitors in proceedings in a class action under Part IVA of the Federal Court of Australia Act 1976 from giving effect to fee agreements with class [3.510]

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Containment of Costs: Litigation and Arbitration cont. members otherwise than in accordance with the order or direction of the Court. This power does not appear to have had recent use otherwise than in this context. 4 Global sum orders s 98(4)(c) I have noted above the potential difficulties of using global sum orders under CPA s 98(4)(c) as a retrospective cost capping or costs moderation device to which Palmer J referred in the Sherborne Estate case as noted above. However, that does not mean that a global award of costs considerably less than those incurred could not be made if there were reasons for the exercise of the discretion in that way, which related to the parties’ conduct of the litigation or by reference to other relevant criteria. However, whether or not the process of global assessment can or should be used to control excessive expenditure on costs, the making of global sum orders can be used as a device to save the very considerable costs of the costs assessment process itself. Its use in this way has been given a fillip by the recent decision of Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23. This case was notable not only for the amount in which costs were assessed, which was $50 million, but also for its clarification of the circumstances and manner in which the power may be used. His Honour at [10] rejected a submission that the adoption of a broad brush approach to assessment would mean that the exercise of the discretion under s 98(4)(c) would be arbitrary rather than judicial. As to the principles on which the discretion is to be exercised, his Honour said at [9]: For present purposes it seems convenient to commence with a recitation of the principles which inform the exercise of the discretion: i. the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119, Von Doussa J page 265: [following Purchase J in Leary v Leary [1987] 1 All ER 261 who described the purpose of the rule allowing the fixing of a gross sum as “the avoidance of expense, delay and aggravation involved in protracted litigation arising out of taxation” (All ER page 265)]

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ii. the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable: Beach Petroleum at [16]; iii. the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available: Harrison v Schipp (2002) 54 NSWLR 738, per Giles JA at para [22]; [following (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA) and adopted in Sony Entertainment v Smith (2005) 215 ALR 788; [2005] FCA 228; BC200500963 at para [199]; iv. a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place: Harrison v Schipp at para [22]; v. the gross sum “can only be fixed broadly having regard to the information before the Court”: Beach Petroleum at 124; [In Hadid v Lenfest Communications Inc [2000] FCA 628 at [35] it was said that the evidence enabled fixing a gross sum “only if I apply a much broader brush than would be applied on taxation, but that … is what the rule contemplates”.] vi. nevertheless the power to award a gross sum must be exercised judicially, and after giving the parties an adequate opportunity to make submissions on the matter: Leary v Leary [1987] 1 WLR 72 at 76, and Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120;

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Containment of Costs: Litigation and Arbitration cont. vii. in terms of the necessity for the approach taken to be logical, fair and reasonable, Von Doussa J in Beach Petroleum NL v Johnson (1995) 57 FCR 119, put the matter as follows, at paras [16]: On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary “fail safe” discount on the cost estimates submitted to the Court: Leary v Leary at 265. … In relation to the application of a broad brush approach by the application of a discount to the claim made for costs, his Honour said at [13]: In adopting a broad-brush approach to gross sum awards the Courts have invariably applied a discount to the amounts claimed and in many cases a substantial such discount. The authorities treating with discount amounts include: i. In Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd [1998] 23 FCA; BC9800050, Canvas Graphics sought a gross sum costs order from Kodak. Canvas Graphics had prepared three draft bills, which were said to have been prepared on a party/party basis, which totalled $610,069, against which the sum of $18,325 had to be set off. Ultimately O’Loughlin J made gross sum costs orders totalling $233,325. The solicitor client bills had totalled $1,181,564.50. O’Loughlin J stated: It would defeat the exercise of assessing a lump sum if one were to make an individual analysis of the many entries in this draft bill that justify criticism. However, examples can be given in order to show that there must be a substantial mark down …. [The reduction applied to Canvas Graphics’ solicitor client bills was just over 80%.] …

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I have recently used the power in much more modest circumstances in an FPA case: Lo Surdo v Public Trustee [2005] NSWSC 1290. It also merits greater use in relation to interlocutory costs, for example, the costs of motions or costs thrown away by adjournments, where the determination of amount is comparatively simple. It is to be hoped that the use of this power will expand. I suggest that judicial officers should consider bestirring themselves out of traditional attitudes, leaving their safety zone and making greater use of this power to save money. 5 Interlocutory costs unnecessarily incurred This is another area where courts have undoubted powers which, however, they are reluctant to use. It is easier to postpone interlocutory costs and their determination to the end of proceedings rather than to make the additional effort of determining them now. Postponement is encouraged by rules such as UCPR r 42.7, which provides that unless the court otherwise orders, interlocutory costs do not become payable until the conclusion of the proceedings. Even where there is extensive disobedience of court directions by one side, adding to the other side’s costs of the proceedings, courts do not often exercise the power to make immediate orders for such costs in global sums and to order immediate payment of those sums. The principles on which immediate payment may be ordered were set out by Barrett J in Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1. This exposition is still relevant, despite the removal from the rules of a partial specification of the applicable criteria. There is no doubt that unreasonable conduct by a party is a relevant criterion. Delinquency as relevant to costs issues in other contexts was discussed in Leidreiter v Rae [2006] NSWSC 1043; Tobin v Ezekiel [2006] NSWSC 694; Brittain v Commonwealth of Australia [No2] [2006] NSWSC 528.

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Containment of Costs: Litigation and Arbitration cont. 6 Stopwatch trials There are now provisions in CPA s 62(3) to limit the length of hearings, the number of witnesses and the time to be taken in examining witnesses and making oral submissions. This has led to some experimentation in NSW in relation to stopwatch trials. The provisions of Practice Note SC Eq 3 Commercial List and Technology and Construction List relating to stopwatch hearings are as follows: Stopwatch hearings 39. An option for matters that are heard by the Court and/or referred to Referees is the stopwatch method of trial or reference hearing. In advance of the trial or reference, the Court will make orders in respect of the estimated length of the trial or reference and the amount of time each party is permitted to utilise. The orders will allocate blocks of time to the aspects of the respective cases for examination in chief, cross-examination, re-examination and submissions. If it is in the interests of justice, the allocation of time will be adjusted by the Court or the Referee to accommodate developments in the trial or reference. 40. This method of hearing is aimed at achieving a more cost effective resolution of the real issues between the parties. It will require more intensive planning by counsel and solicitors prior to trial including conferring with opposing solicitors and counsel to ascertain estimates of time for cross-examination of witnesses and submissions to be built in to the estimate for hearing. 41. Any party wishing to have a stopwatch hearing must notify the other party/parties in writing prior to the matter being set down for hearing or reference out. At the time the matter is set down for hearing or referred out to a Referee it is expected that solicitors or counsel briefed on hearing will be able to advise the Court: • whether there is consent to a stopwatch hearing; • if there is no consent, the reasons why there should not be a stopwatch hearing. 42. If there is consent to a stopwatch hearing counsel and/or solicitors must be in a position to advise the Court of: • the joint estimate of the time for the hearing of the matter; and • the way in which the time is to be allocated to each party and for what aspect of the case.

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In a further innovative move in the Local Courts, stopwatch provisions have now been incorporated in Practice Note No 3 of 2007 in those Courts. 7 The power to limit expert evidence This is another area in which there has recently been reform in NSW by the insertion of a new Division 2 of Part 31 into the UCPR (rr 31.18–31.53). Some of these rules replace rules already in force, but there are a number of important innovations. While these provisions do not deal with costs directly, the potential is obvious for diminution of costs by limiting the use of expert evidence. Before I summarise the purport of these rules it should be said that there must be potential under r 42.4 to cap the amounts to be expended on expert evidence in particular cases. See the address by The Chief Judge at Common Law of the Supreme Court of NSW, The Hon Peter McClellan, The New Rules, delivered at a seminar held by the Expert Witness Institute of Australia and the University of Sydney Faculty of Law on 16 April 2007. See also the same author’s “Expert Witnesses – The Recent Experience of the Land and Environment Court” (2005) 17 Judicial Officers’ Bulletin 83. [3.520] In December 2014 the Productivity Commission released a report based on its inquiry

into Australia’s system of civil dispute resolution. Titled Access to Justice Arrangements, it was focused on constraining costs and promoting access to justice and equality before the law. Chapter 13.3 of the report addressed possible reforms for the awarding of court costs with a view to their containment and more equitable structuring. 196

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Reforming the Structure of Costs Awards [3.530] Productivity Commission, Access to Justice Arrangements, Inquiry Report No 72, Volume 1 (5 September 2014) 13 Costs awards … 13.3 Reforming the structure of costs awards Ideally, costs awards would be structured in a way that: • improves certainty for risk averse litigants • does not encourage parties to spend more than is necessary on legal costs • maintains some degree of indemnity for winning parties. Activity-based scales of costs, as currently used in many Australian jurisdictions, fail to deliver this outcome and result in an increased level of litigation spending and a loss of certainty for all litigants. The flaws in activity-based scales have long been recognised: [U]nless activity based scales are replaced with a cost shifting method with better incentives, improvements to court systems will founder. (Cannon 2002, p. 208) The Commission considers that a range of reforms to costs awards are required. Fixed, event-based scales for lower-tier courts One approach to remedy the flaws in current arrangements is to use scales of costs that prescribe fixed amounts for each stage reached in the process. Under fixed scales, parties can determine with a high degree of certainty the amount of any potential adverse costs award. This will mean that parties no longer have to face the possibility of a costs order that exceeds what they might have expected to pay. The Australian Law Reform Commission (1995) previously concluded that costs award rules should enable parties to accurately estimate their potential exposure to costs at the beginning of proceedings.

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The Federal Circuit Court, which currently uses an event-based scale, argued that such scales provide greater transparency: [A]n event based scale was more appropriate for a court such as the FCC and was seen to provide a greater degree of transparency for litigants. (sub. DR258, p. 8) Fixed scales also reduce the incentive for parties to over-service, as the costs a party can recover are unrelated to activity. In response, the NSW Bar Association has argued: [T]he Association rejects notions of overservicing in the context of a party-party costs regime where by definition costs are assessed at the level of what is reasonable. Costs assessment processes are in place to ensure oversight of costs awarded. If one or both parties engaged in overservicing (or “gold plating” to adopt the current economic jargon) then any such excess preparation would not be recoverable as “reasonable” party-party costs. (sub. DR206, p. 5) However, in the Commission’s view, costs assessment processes are not an appropriate mechanism to discourage excessive litigation costs in lower-tier courts for a number of reasons. First, in lower-level disputes, parties are less likely to be willing to expend the costs, time and effort involved in obtaining a costs assessment. Second, as identified in submissions to a review of the NSW Costs Assessment Scheme, assessment processes often lack transparency and consistency, and determinations can vary widely between assessors, even on identical issues (Law Society of NSW 2011; NSW OLSC 2011). One concern is that a fixed, event-based costs amount may not provide sufficient indemnity to some successful litigants whose necessary legal expenses exceed the fixed amount. This may occur when there is a wide range of necessary legal costs required by different cases of the same length and amount in dispute: [3.530]

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Reforming the Structure of Costs Awards cont. A fixed scale should not be used because it fails to take into account the individual complexity of cases. Scale rates can also present problems where the nature of the proceedings and the legal representation of the parties varies widely. (Law Council of Australia, sub. DR266, p. 67) Indeed, any system of scales that chooses a single, representative costs amount for cases of a given length and amount will not fully indemnify a proportion of the cases in that bracket, and will over-indemnify in others. However, activity-based scales currently used in most courts already fail to provide successful litigants with full indemnity for costs. Further, as discussed in chapter 3, the spread of legal costs incurred across cases in lower-tier jurisdictions is relatively small compared to superior jurisdictions. Thus there are likely to be fewer outlying cases that are not sufficiently indemnified. The Federal Circuit Court has noted that few criticisms of event-based scales have been borne out in reality (sub. DR258). In some cases, a fixed scale of costs will provide greater indemnity than activity-based scales. For example, a fixed scale can afford full indemnity to a party that undertakes less activity than is expected. This essentially rewards parties that are efficient and do not over-spend on litigation. However, this should not lead to incentives to “under-service”, as parties must still undertake sufficient activity to win the case in order to be awarded costs. Fixed scales also reduce the need for courts to settle disputes regarding the amount of costs to be paid between parties when costs are awarded. This may lead to significant savings for parties and the courts. As noted by the Federal Circuit Court of Australia: [W]ith the event based scale there is no role for taxation or assessment. (sub. DR258, p. 8)

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Fixed scales also address issues concerning how costs amounts should be calculated for self-represented litigants and consumers purchasing “unbundled” legal services (section 13.4). At present, activity-based scales only compensate a party using unbundled legal advice for the work undertaken by their lawyer. This essentially discourages unbundling if a party believes they are likely to recover most of the costs of work being carried out by their lawyer, but not if they do the work themselves. In contrast, a fixed, event-based scale is based on outcomes, rather than inputs. This means that a party is equally compensated regardless of whether work is performed entirely by a lawyer or shared between lawyer and client on an unbundled basis. Fixed scales should be proportionate to the amount in dispute The fixed, event-based amounts awarded in costs by lower-tier courts should also be set in proportion to the amount that is in dispute. The amount in dispute can be defined as the amount awarded in the judgment sum for successful plaintiffs, and the amount claimed by the plaintiff for successful defendants. By tying the amount of costs awarded to the size of the claim or judgment sum, courts can encourage legal costs to remain in reasonable proportion to the dispute. This principle can also discourage overly ambitious claims, as increasing the amount claimed also increases the plaintiff’s costs liability. Variants of this approach are employed in Germany, England and Wales. The South Australian Magistrates Court uses an event-based scale, where the costs awarded for each stage in the process are a percentage of the amount claimed. The percentage is altered for each stage in the process, as well as for some dispute types, and is not tied directly to the work undertaken by either side (table 13.3).

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Reforming the Structure of Costs Awards cont.

TABLE 13.3 An example of a percentage scale of costs

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For selected events in the South Australian Magistrates Court, for a claim worth $100 000, as at 26 April 2013 Event Action type Rate $100 000 claim 1. Pre-action notice other than for personal 1% $1 000 injury personal injury 2% $2 000 2. Filing an action or defence, liquidated sum 3% $3 000 including directions hearing other than for a 5% $5 000 liquidated sum liquidated sum 10% $10 000 3. Activity after the first directions hearing until the trial date is set other than for a 12% $12 000 liquidated sum 4. Activity from trial date set until 10% $10 000 trial 5. Preparing and filing a trial plan 2.5% $2 500 6. Fees for counsel at trial first day 3% $3 000 subsequent days 2.5% $2 500 7. Court ordered mediation 2% $2 000 Source: Magistrates Court (Civil) Rules 2013 (SA). In England and Wales, fixed costs regimes have recently been adopted to determine the amount of costs to be awarded in particular dispute types, such as fast track trials and cases within the Road Traffic Accident Protocol. Parties are awarded costs based on a fixed lump sum plus an amount equal to a percentage of the awarded damages. Both the lump sum amount and the percentage of damages awarded increase as a case proceeds through each stage of litigation (Taylor 2013). An evaluation one year after introduction of the Road Traffic Accident Protocol found that average costs in low value traffic claims had reduced by between 3 and 4 per cent, along with small reductions in general damages and delays before settlement (Fenn 2012). Putting it into practice – the amounts to be contained in fixed scales Calculating costs as a direct percentage of the value of the claim may not be the most effective means of estimating reasonable and necessary legal costs. As the Commission has shown in chapter 3, the costs of litigation currently do not increase in direct proportion with amounts in dispute. Rather, costs appear to comprise a larger proportion of lower value claims, as there will be some necessary costs of litigation that do not vary with the dispute amount. As such, a scale based on direct percentages of claim values may not sufficiently indemnify lower value claims. Another option, and the Commission’s preferred response, is for the costs awarded to reflect the costs typically paid in a case of similar value reaching each given stage of a trial. Where the monetary value of a dispute cannot be specified, or an economic value not reasonably imputed, the scale should set amounts based on the type and length of the case. The Commission has constructed a practical example of a fixed scale in table 13.4. This illustrative scale is based on data from previous surveys of litigation costs for cases of varying length and dispute type in the County Court of Victoria in 1993. In practice, any scale would draw on a wider range of more recent costs data. [3.530]

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Reforming the Structure of Costs Awards cont.

TABLE 13.4 Illustrative example of a fixed, event-based proportional scale of costs a 1993 dollars, by stage & amount in dispute, for the County Court of Victoria Stage of process Less than $20 000 to $40 000 to $100 000 $20 000 $39 999 $99 999 or more

Nonmonetary dispute $1 950

Event 1: Pre-trial $1 065 $1 420 $1 775 $3 550 conferencing to trial Event 2: Trial $1 278 $1 704 $2 130 $4 260 $2 350 Event 3: Verdict $1 917 $2 556 $3 195 $6 390 $3 500 Total $4 260 $5 680 $7 100 $14 200 $7 800 a This scale has been put together entirely for illustrative purposes. The figures above do not reflect estimates of the costs of litigation at present. Sources: Commission estimates using figures from studies of costs in the County Court of Victoria from Worthington and Baker (1993) and Williams and Williams (1994). Some stakeholders have argued that the complexity and data requirements involved in constructing such a scale make its implementation unfeasible (Law Society of South Australia, sub. DR219; Law Society of Tasmania, sub. DR227). Others also noted that there are concerns as to whether fixed scale rates will adequately reflect market costs:

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Experience shows that scale rates are inevitably set too low and the process for review and increase of those rates is too slow. (Law Council of Australia, sub. DR266, p. 67) The profession generally considers such regimes too arbitrary, and not being able to keep pace with market charges, and are not reflective of the costs actually incurred. (Federal Circuit Court, sub. DR258, p. 8) However, this merely underscores the importance of more rigorous and consistent data collection in the courts system (chapter 24). These concerns can be addressed by requiring scales to be periodically reviewed to ensure they continue to reflect the costs incurred by parties. For example, the Law Society of Tasmania suggested a two year period may be appropriate (sub. DR227). In the Commission’s view, the benefits of moving to a fixed, event-based scale in lower-tier courts would outweigh the short term costs of its construction. As noted previously, legal costs appear to be more stable and certain – and thus easier to set out in a fixed scale – in lower-tier courts. While the Federal Circuit Court noted that there were some difficulties in setting events and amounts for its costs scale, the court nonetheless believes that its use of an event-based scale has been appropriate (sub. DR258). Further, while the construction of such a scale might be complicated, its application need not be. Indeed, to the user, the concept is relatively straightforward. Litigants need only know two things – the amount in dispute and the stage of proceedings they have reached – in order to identify their potential liability for costs. RECOMMENDATION 13.2 In Magistrates’ courts and the Federal Circuit Court, costs awarded to parties on a standard basis should be set according to fixed amounts contained within court scales. Scale amounts should vary according to the: • type of dispute 200

[3.530]

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CHAPTER 3

Reforming the Structure of Costs Awards cont. • stage reached in the trial process • amount that is in dispute (where relevant). For plaintiffs awarded costs, the relevant amount in dispute should be the judgment sum awarded. For defendants awarded costs, the amount in dispute should be the amount claimed by the plaintiff. The fixed scale amounts should reflect the typical market cost of resolving a dispute of a given type, value and length. Data collection and analysis should be undertaken to facilitate a public review of the amounts and costs categories every three years. The amounts should be indexed to the relevant capital city Consumer Price Index increase in other years. The public reviews should be undertaken concurrently with those contained in recommendations 16.1 and 17.3 to minimise consultation burdens on interested parties. Costs in superior courts require greater flexibility and discretion While fixed, event-based costs may be appropriate for some superior court cases, in superior courts there can also be a “long tail” of complex cases for which the required legal costs may be relatively high and variable (chapter 3). As noted by the Law Society of South Australia: Matters in [superior courts] are vastly variable and complex and the discretion of the court in awarding costs in that context is crucial. (sub. DR219, Attachment, p. 66) It may therefore be appropriate to maintain activity-based cost scales in superior courts, while introducing reforms for courts to manage and limit costs awards to improve the incentives of disputants. One approach is for courts to set a maximum amount of recoverable costs at the outset of litigation (often referred to as costs budgeting). This can confer many of the benefits of fixed scales, by giving litigants greater certainty at the outset of litigation, while offering sufficient discretion and flexibility in the amount set to provide reasonable indemnity for atypical cases. As argued by the Public Interest Advocacy Centre (PIAC):

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[This] has the potential to remove uncertainty about the level of risk of an adverse costs order, thereby allowing the applicant to proceed in cases where they otherwise might be unfairly inhibited from doing so. (sub. 45, p. 31) While acknowledging that placing a cap on recoverable costs at the outset of litigation may be beneficial in some circumstances, the NSW Bar Association has argued that its use should be court led, and should form part of the discretionary powers available to judges for case management (sub. DR206; trans., p. 120). Indeed, this appears to already be the case in some jurisdictions. For example, parties in the Federal Court of Australia currently have the ability to seek an order from the Court specifying a maximum cap on the costs that can be awarded in a case, under rule 40.51 of the Federal Court Rules 2011 (Cth). 30 Similar discretionary powers to cap recoverable costs also exist in some other courts, such as rule 21.03 of the Federal Circuit Court Rules 2001 (Cth), and rule 42.4 of the Uniform Civil Procedure Rules 2005 (NSW). However, there is some evidence to suggest that, where they exist, discretionary powers to cap costs are currently underutilised. For example, Watters (2010) noted that, since the introduction of order 62A in the Federal Court in 1992, less than ten reported decisions on its application have been made. It has been suggested to the Commission that the existing rules for capping costs are underutilised for a number of reasons:

30

Formerly order 62A of the Federal Court Rules (Cth). [3.530]

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One problem with the Order (and other similar costs-limiting orders in other jurisdictions) is its infrequent use, due to a lack of awareness by practitioners and judges, and in cases where applications have been made, the reticence of judges to make orders limiting costs. (PIAC, sub. 45, p. 31) This raises the question as to whether capping recoverable costs should generally be a standard process at the outset of litigation, rather than an order at the court’s discretion that must be sought by a party in each matter. Widespread use of costs budgeting was recently introduced in the County and High Courts in England and Wales. This system of costs management generally requires parties to file costs budgets with the court early in the proceedings (UK Ministry of Justice 2013a). Each party’s costs budget provides a breakdown of each stage of the litigation, identifying costs already incurred and those estimated to be incurred thereafter (Kennedys 2013). While parties are encouraged to reach agreement on their budgets, in the absence of agreement the court may make a costs management order to determine the maximum costs recoverable by the parties. These maximum amounts can be updated during litigation on agreement, or if updates are warranted by significant developments in the case. In the draft report, the Commission recommended that superior courts in Australia introduce costs budgeting regimes similar to those of English and Welsh courts. In response, some stakeholders have argued that requiring parties to undertake additional preparation and pre-trial processes in submitting and negotiating on such budgets may lead to additional costs being incurred by parties (NSW Bar Association, sub. DR206; Law Society of Tasmania, sub. DR227).

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Other stakeholders suggested that at the outset of litigation practitioners are unable to accurately predict many factors that may affect costs budgets (Law Council of Australia, sub. DR266; Australian Lawyers Alliance, sub. DR298). The NSW Bar Association also noted that this may be particularly challenging if the Commission’s recommendation to abolish formal pleadings was adopted (sub. DR206; trans., pp. 118–119). However, such concerns may be addressed by allowing budgeted amounts to be varied where the court deems unforeseeable circumstances to have arisen, as is currently the case in England and Wales (Flemington and Kensington Community Legal Centre, sub. DR225). The Commission recognises that while costs budgeting appears to have merit in principle, the relative costs and benefits of its recent implementation as a standard process in some English and Welsh courts are still largely unknown at this stage. This echoes the views of a number of stakeholders, who suggested that it is too early to conclude whether such processes are of benefit to parties and the courts (Law Society of South Australia, sub. DR219; Eqalex Underwriting, sub. DR278). In the short term, the Commission recommends that superior courts, and those intermediate courts with unlimited civil jurisdiction, should adopt costs budgeting as a discretionary power for use in case management. However, given the potential for these discretionary powers to be underutilised, there remains merit in further exploring the costs and benefits of more systematic use of costs budgeting. Eqalex Underwriting proposed that: Australia could learn a great deal by adopting a “wait and see” position on how costs budgets evolve in the UK, particularly when they are the most contentious subject which the UK courts, law firms, bar and litigants are grappling with at the moment. (sub. DR278, p. 9) There appears to be merit in waiting for the English and Welsh reforms to be fully implemented for a sufficient period before evaluating whether such a regime is warranted in Australia. The Commission considers that the Australian Law Reform Commission (ALRC), and its state and territory counterparts, would be best placed to evaluate the merits of adopting such a regime. Consideration should also be given as to whether such a regime would also be appropriate where intermediate courts have unlimited civil jurisdiction, for example the District Court of South Australia. 202

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Any future implementation of widespread costs budgeting may require additional court resources – such reforms should be funded accordingly, as noted by the NSW Bar Association (sub. DR206).

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RECOMMENDATION 13.3 Judicial officers in all superior courts in Australia should, at their discretion, have the power to require parties to submit costs budgets at the outset of litigation. Where parties do not agree upon a budget, the court may make an order to cap the amount of awarded costs that can be recovered by the successful party. Courts should publish guidelines informing parties and the judiciary as to how costs budgeting processes should be carried out. By 30 June 2016, the Australian Law Reform Commission (in consultation with its State and Territory counterparts) should examine the performance of the costs budgeting regime of the English and Welsh courts, and recommend in which Australian courts the application of such a regime would be appropriate.

[3.530]

203

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CHAPTER 4

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Alternatives to Litigation – Negotiation and Mediation [4.10]

INTRODUCTION ..................................................................................................... 206

[4.20]

ALTERNATIVE DISPUTE RESOLUTION .................................................................. 207

[4.30]

GROWTH OF ADR .................................................................................................. 208

[4.40]

Review of the Adversarial System in Litigation ............................................................... 208

[4.50]

The New Lawyer: How Settlement is Transforming the Practice of Law ........................... 209

[4.70]

Civil Justice Review ..................................................................................................... 211

[4.80]

Uncertainty in Litigation ............................................................................................. 212

[4.90]

The New Lawyer: How Settlement is Transforming the Practice of Law ........................... 213

[4.100]

Why We Still Litigate ................................................................................................... 213

[4.110]

Against Settlement ..................................................................................................... 214

[4.130]

Whose Dispute is it Anyway? ....................................................................................... 215

[4.135]

Courts as the Third Branch of Government ................................................................... 216

[4.140]

Three Things to be Against (Settlement Not Included) ................................................... 217

[4.160]

TYPES OF ADR PROCESSES ................................................................................... 218

[4.170]

Dispute Resolution Processes ....................................................................................... 218

[4.180]

Dispute Resolution Terms ............................................................................................ 218

[4.190]

NEGOTIATION ......................................................................................................... 220

[4.200]

Comparison of positional and interest-based negotiation ........................... 223

[4.210]

What role does the law play in interest based negotiation? ........................ 223

[4.220]

MEDIATION ............................................................................................................. 224

[4.230]

Why choose mediation? ...................................................................................... 226

[4.240]

Role of the lawyer ................................................................................................ 226

[4.244]

Representing clients from courtroom to mediation settings ............................................ 228

[4.248]

Position Statements ............................................................................................. 232

[4.250]

Compulsory mediation ........................................................................................ 233

[4.260]

Civil Justice Review ..................................................................................................... 233

[4.280]

Civil Procedure Act 2005 (NSW) ss 25 – 34 .................................................................. 235

[4.290]

Higgins v Higgins ....................................................................................................... 237

[4.300]

Waterhouse v Perkins .................................................................................................. 240

[4.304]

Good faith .............................................................................................................. 242

[4.304]

The Right Balance Between Trial and Mediation: Visions, Experiences and Proposals ................................................................................................................... 242 205

Civil Procedure in New South Wales

[4.306]

The ripeness of a dispute for mediation .......................................................... 243

[4.310]

Oasis Fund Management v ABN Amro ......................................................................... 243

[4.320]

Tony Hassan Noun v Margaret Pavey .......................................................................... 246

[4.330]

The Objectives, Scope and Focus of Mediation Legislation in Australia ............................ 248

[4.340]

ENFORCEABILITY OF AGREEMENTS TO USE ADR ................................................ 249

[4.350]

United Group Rail Services v Rail Corporation NSW ...................................................... 250

INTRODUCTION [4.10] This chapter provides an introduction to the alternatives to litigation. It provides an

overview of alternative dispute resolution (ADR) processes and then looks in more detail at negotiation and mediation. Particular attention is paid to court-ordered ADR and the enforceability of agreements to use ADR. Chapter 5 then examines domestic arbitration, referral to a referee and expert determination. This chapter also seeks to highlight the differences between litigation and ADR so as to explain the advantages and disadvantages of each with a view to identifying the factors that need to be weighed in determining which is more suitable for a particular dispute. As one American text on ADR explained: 1

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From a professional point of view, a working knowledge and understanding of all dispute processing mechanisms is simply good lawyering. Every client with a dispute deserves a two-step analysis – a determination of the substantive law that applies to the facts and an evaluation of the dispute processing mechanisms that will achieve a just and fair resolution for the client.

Lawyers are often dispute resolution gatekeepers leading Chief Justice Bathurst to observe that “it is essential that lawyers understand the nature and role of alternative, or additional, dispute resolution when advising a client as to the appropriate legal recourse”. 2 For many clients their day in court in which a judge announces that they are right is their idealised view of dispute resolution. Mediation or arbitration may be unheard of or not well understood. Accordingly, it falls to the lawyer to educate the client as to the options for dispute resolution. This responsibility is recognised by the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 rule 7.2 which provides: A practitioner must inform the client or the instructing practitioner about the alternatives to fully contested adjudication of the case which are reasonably available to the client, unless the practitioner believes on reasonable grounds that the client already has such an understanding of those alternatives as to permit the client to make decisions about the client’s best interests in relation to the litigation.

The Legal Profession Uniform Conduct (Barristers) Rules 2015 rule 36 is in almost identical terms. Similar obligations exist by force of the overriding purpose discussed in Chapter 2. This chapter does not discuss the theories of ADR in depth nor seek to teach the skills necessary to conduct it effectively. For further reading, see Hilary Astor and Christine Chinkin, Dispute Resolution in Australia (2nd ed, Butterworths, Sydney, 2002); David Spencer and 1

Yarn DH and Jones GT, Alternative Dispute Resolution: Practice And Procedure In Georgia (3d ed, Thomson West 2006) at [1:7].

2

The Hon TJ Bathurst, Chief Justice of New South Wales, Opening Address, 2011 Advanced Alternative Dispute Resolution Workshop, Sydney, 13 August 2011 p 11.

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CHAPTER 4

Samantha Hardy, Dispute Resolution in Australia; Cases, Commentary and Materials (3rd ed, Thomson, Sydney, 2014) and Samantha Hardy and Olivia Rundle, Mediation for Lawyers (CCH, Sydney, 2010).

ALTERNATIVE DISPUTE RESOLUTION [4.20] For many cultures litigation is not the dominant method of resolving disputes. For

example, traditional Aboriginal groups engaged in consensual resolution of conflict over 40,000 years ago; for further reading see Larissa Behrendt, Aboriginal Dispute Resolution (Federation Press, Sydney, 1995) at 7. ADR is defined by the National Alternative Dispute Resolution Advisory Council (NADRAC) 3 as:

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an umbrella term for processes, other than judicial determination, in which an impartial person assists those in a dispute to resolve the issues between them.

ADR was originally used as an abbreviation for “alternative dispute resolution”. However, the word “alternative” is misleading as it suggests that ADR, as opposed to litigation, is the less common form of dispute resolution. This is not the case as most disputes are resolved without a judicial decision. ADR is increasingly referred to as “appropriate dispute resolution” in “recognition of the fact that such approaches are often not just an alternative to litigation, but may be the most appropriate way to resolve a dispute”: see Victorian Law Reform Commission, Civil Justice Review, Report (2008) at 212. ADR can be utilised by the parties and it can be the subject of a referral by the court. ADR is also part of case management (see Chapter 2). The Jackson ADR Handbook that was produced as a result of Lord Jackson calling for a single authoritative handbook that explained clearly and concisely what ADR is, as part of his review into the cost of litigation in England & Wales, employs the phrase ADR “to cover the full range of alternatives to litigation potentially available to resolve a civil dispute. It therefore covers any option where there is a dispute between two (or more) parties; that dispute relates to civil legal rights and/or duties; and the dispute could potentially go to court for resolution”. 4

3

4

NADRAC was an independent non-statutory body established in October 1995 that provided expert policy advice to the Attorney-General on the development of ADR and promoted the use of ADR. The Australian government disestablished NADRAC in late 2013. NADRAC’s publications are available from http:// www.ag.gov.au/LegalSystem/AlternateDisputeResolution/Pages/NADRACpublications.aspx Blake S, Browne J and Sime S, The Jackson ADR Handbook (Oxford University Press, 2013) at [1.02]. [4.20]

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GROWTH OF ADR [4.30] There has been substantial growth of ADR in the past 30 years. The Victorian Law

Reform Commission reports that “settlement rates for ADR are often very high, usually between 50% and 85%”. 5 The 2014 Annual Review for the Supreme Court of NSW reported the following referrals to mediation for the period 2010 to 2014: Year Cases Referred to Mediation Mediation Referral Index

2010 1144

2011 902

2012 1092

2013 1088

2014 839

23.5%

19.4%

23.9%

23.7%

19.0%

The mediation referral index records the number of cases referred to mediation compared to the number of cases lodged with the court that are suitable for mediation. The 2014 year was reduced due to the piloting of informal settlement conferences in family provision cases where the estate was valued at less than $500,000. Without the pilot it was estimated that referrals to mediation would have been 996 or 22.5%. 6 The above figures can be compared with 2005 when the mediation referral rate was 9% of the filing rate for applicable cases. 7 The 2014 Annual Review also reported that in relation to court-annexed mediation (where the mediator is a court registrar) the settlement rate for the above five years was 50-55%. However, ADR occurs in a setting where lawyers have traditionally held a “litigation mindset”. The Australian Law Reform Commission has observed that there is a litigation mindset of lawyers who operate in an adversarial system of litigation.

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Review of the Adversarial System in Litigation [4.40] Australian Law Reform Commission, Review of the Adversarial System in Litigation; Rethinking the Federal Civil Litigation System, Issues Paper No 20 (1997), [11.10–11.11] The adversarial “mind-set” extends beyond the conduct of litigation to inform most areas of legal practice. Most lawyers are not litigators. There is nevertheless a pervading consciousness in legal practice that litigation is the possible conclusion of any contract, trust or deed of conveyance drawn up or any legal advice tendered. The attitude of the lawyer is one of precaution and anticipation of litigation. While the aim is to avoid litigation not to invite it, such a perspective necessarily brings with it a time-consuming, complex and costly regime directed at covering every circumstance and eventuality. This is the service that lawyers most often provide and it is one that is expected of them by clients who

5 6

Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008) p 213, quoting NADRAC, ADR Research: A Resource Paper (2004) 32 [120]. Supreme Court of NSW, Annual Review 2014, pp 34 and 54.

7

Supreme Court of NSW, Annual Review 2009, p 28.

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Review of the Adversarial System in Litigation cont. seek legal assistance.

The New Lawyer: How Settlement is Transforming the Practice of Law [4.50] Julie Macfarlane, The New Lawyer: How Settlement is Transforming the Practice of Law, (2008) UBC Press The Default to Rights Rights strategies are characteristically presented as the default or sometimes the only appropriate approach for a lawyer to take to conflict resolution. The practical consequence of this belief is that the basis of the lawyer’s role is rights-based advocacy. Although such a belief is critical to the function of a legal professional, adherence to this model often means that other forms and styles of advocacy and the promotion of client goals and interests are overlooked or rejected. Western justice systems emphasize an individualist approach, in which the rights of the individual will be recognized and upheld, or the converse, in which the individual will be protected against the oppressive assertion of the rights of others (including the state). This commitment to individual rights means that the primary responsibility of the lawyer is the furtherance of her clients’ goals framed as legal ends. The rights-based model assumes that the source of conflict is in all circumstances an uncompromisable moral principle or an indivisible good. Once the conflict becomes “objectified” in this way (sustained by an appeal to allegedly objective moral standards and beyond merely partisan preferences), it becomes inevitable that the aggrieved party will press her moral claim.

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Focusing only on a rights-based analysis assumes the essential moral basis of any conflict, since rights arguments are couched in terms of right and wrong rather than in terms of what is expedient, feasible, or wise. Over-reliance on and dedication to a rights-based approach carries the risk of blindness to alternative strategies or the dismissal of these as being less than “real” lawyering strategies. In the characteristic single-mindedness of adversarial rights talk, there is no midway point in the making of arguments. Rights claims are never asserted as “maybe” or “perhaps” but are always put forward with unwavering certainty, even when counsel knows better. This (public) commitment to one’s asserted position is a core, unshakable belief for many lawyers. More troubling still, it generally overwhelms a consideration of other sometimes more appropriate ideologies of practice (such as business or commercial considerations). In reality, many disputes are brought to lawyers that simply do not require, and are not suitable for, a rights-based argument or solution, and they may escalate unnecessarily if viewed exclusively through this prism. Despite the limitations on problem solving in a rights-based model, the danger of exploitation of superior resources, and the risks of over-commitment, a rights-based approach to legal disputing remains essential to the rule of law. It is an appropriate approach for dispute resolution over “public goods” and a critical means of reinforcing and extending principled protections and entitlements. Lawyers work within a system of rule-based adjudication, and they are charged with the stewardship of rights by their education and training. Lawyers must understand, respect, and promote rights entitlements. In some cases that implicate rights, negotiation or compromise may be a sign of failure or an unjustified or coerced accommodation. [4.50]

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The New Lawyer: How Settlement is Transforming the Practice of Law cont. Instead of assuming that disputes will be resolved by an argument over rights before a third-party decision maker or judge, lawyers should recognize that they will usually be resolved through negotiation, which will take place in the shadow of the law and rights entitlements but not be determined by it. Sustaining and reinforcing the dominance of rights-based approaches to conflict is a second value set regarding the authority and respect that attaches to the formal legal process. There are detailed procedural rules and regulations (civil, criminal procedure), which require each and every disputant to follow the same steps in pursuing or defending a claim. This notion of procedural equality is sacred to the adjudicative system, which assumes that a significant component of fair process is the sameness of procedures for each disputant, including filing requirements, timelines, and appearances. Play to Win (Legal Negotiations Are a Zero-Sum Game) Legal negotiations are about winning and playing to win. Playing to win means regarding negotiation as a zero-sum game. A zero-sum game is a conception of bargaining in which one side’s loss is the other side’s gain. This approach to negotiation means that all or both parties are assumed to want the same thing and that the only way to settle is to divide up this so-called “fixed pie” (money, market share, intellectual property rights, child custody, and so on) in some acceptable way. Lawyers understand legal negotiations as zero-sum because they approach negotiation as an adjunct of litigation, usually preparing in the same way for each. This means that their conception of the outcome of negotiation is the same as their conception of the outcome of adjudication: that there will be a single winner who takes all and that the rest will be losers. The norms surrounding a zero-sum approach to bargaining fit perfectly with the belief in a default to a rights-based approach, driven by legal expertise.

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In many legal disputes, the parties want different things, in different ways, and for different reasons, and there is plenty of potential for intelligent and strategic bargaining that recognizes the differing priorities and goals of the parties. In reality, the substance of and issues at stake in legal disputes are rarely zero-sum, just as few disputes, or few elements of some disputes, are truly about indivisible values. Instead of arguing “for” or “against” certain outcomes, lawyers provide better service to their clients when they examine the various possible benefits that they could negotiate on their behalf. Information Is for Winning The zero-sum assumptions of legal negotiations have many implications for the way in which information is understood and valued in legal negotiations. The acquisition and development of information is regarded as being primarily about winning rather than about understanding and elaborating the clients’ needs, developing shared facts, or understanding more about the other side and possible mutual gains. When information is only about winning, a culture of secrecy and non-disclosure develops in legal negotiations that borders on the paranoid. Disclosure of almost any information is assumed to give an advantage to the other side.

[4.60] This litigation mindset means that there is a tendency for lawyers when confronted

with a problem to consider it in terms of the applicable law, the likely court outcome and the cost of litigation. This mindset may also be fostered by the teaching of substantive law in law schools which focuses on litigated cases (usually appeals) to teach legal principles. The growth of ADR has been attributed to the difficulties that litigants have with accessing justice in the adversarial system of litigation. The adversarial system’s disadvantages, such as 210

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delay and cost, support the use of ADR. The detrimental effect of the adversarial process on the relationships between the parties, especially where the litigants have an ongoing commercial relationship, is also responsible for parties adopting ADR. However, the courts’ unique position means they should not be disregarded as a forum for resolving disputes. The courts wield the power of the State, they interpret the laws, ensure procedural fairness and render binding decisions in public that authoritatively state the law for the parties and society at large. The benefits and disadvantages of ADR were considered by the Victorian Law Reform Commission in its 2008 inquiry on civil justice.

Civil Justice Review [4.70] Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008), p 214 1.4 Benefits and disadvantages of ADR Benefits Some of the benefits of ADR include: ADR can allow access to justice. For example, as there can be cost and time savings in ADR, it can be more accessible to those of limited financial means. ADR can be faster. A dispute can often be resolved in a matter of months, even weeks, through ADR, while a legal proceeding can take years. ADR can save time and money. Court costs, lawyers’ fees and experts’ fees can be saved. There can also be savings for the courts and government. ADR can permit more participation. The parties may have more chances to tell their side of the story than in court and may have more control over the outcome.

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ADR can be flexible and creative. The parties can choose the ADR process that is best for them. For example, in mediation the parties may decide how to resolve their dispute. This may include remedies not available in litigation (eg a change in the policy or practice of a business). ADR can be cooperative. The parties may work together with the dispute resolution practitioner to resolve the dispute and agree to a settlement that makes sense to them, rather than work against each other in an adversarial manner. This can help preserve relationships. ADR can reduce stress. There are fewer court appearances. In addition, because ADR can be speedier and save money, and because the parties are normally cooperative, ADR is less stressful. ADR can remain confidential. Unlike the court system where everything is on the public record, ADR can remain confidential. This can be particularly useful, for example, for disputes over intellectual property which may demand confidentiality. ADR can produce good results. Settlement rates for ADR processes are often very high, generally between 50% and 85%. ADR can be more satisfying. For the above reasons, many people have reported a high degree of satisfaction with ADR. Disadvantages Some of the disadvantages of ADR include: Suitability. ADR may not be suitable for every dispute, for example, if a party wishes to have a legal precedent or it is a public interest case, judicial determination may be more appropriate. Lack of court protections. If ADR is binding, the parties normally give up most court protections, including the right to a decision by a judge or jury, based on admissible evidence, and appeal rights; also, in the case of judicial decisions, the right to reasons for the decision. [4.70]

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Civil Justice Review cont. Lack of enforceability. The durability of ADR agreements can be an issue if they lack enforceability. Disclosure of information. There is generally less opportunity to find out about the other side’s case with ADR than with litigation. ADR may not be effective if it takes place before the parties have sufficient information about the strengths and weaknesses of their respective cases. Cost of ADR. Dispute resolution practitioners may charge a fee for their services. If a dispute is not resolved through ADR, the parties may have to put time and money into both ADR and a court hearing. Delay. ADR adds an extra step, which may increase delay. Fairness. ADR processes may not be as fair as court proceedings. Procedural rules and other laws governing the conduct of court proceedings contain many safeguards to ensure the fairness of the process and the outcome. These are not necessarily included in ADR. In addition, there may be power imbalances if a party is not represented. Delaying tactics. ADR processes can be used as a delaying tactic or to obtain useful intelligence on an opponent before proceeding with litigation. Inequality. Effective ADR requires that parties have the capacity to bargain effectively for their own needs and interests. A party may be vulnerable where there is an unequal power relationship, particularly if the party is not represented. [footnotes omitted]

Uncertainty in Litigation [4.80] Stephen Subrin, “A Traditionalist Looks at Mediation: It’s Here to Stay and Much Better Than I Thought”, (2002–2003) 3 Nevada Law Journal 196

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Can you guess who wrote the following? The uncertainty of legal proceedings is a notion so generally adopted, and has so long been the standing theme of wit and good humor, that he who would attempt to refute it would be looked upon as a man who was either incapable of discernment himself, or else meant to impose on others. [William Blackstone, Commentaries of the Law of England, Book III, Chapter XXII 1098 (4th ed. James Dewitt Andrews, 1898).] This uncertainty has, I think, been exacerbated by modern procedure, which raises wide-open questions at every turn: what is the scope of a claim, transaction, or occurrence; what is a common question of law or fact; what is a sufficient statement of a claim; when does justice require an amendment; … what is relevant for discovery purposes; … There is also evidentiary uncertainty: … For many, the legal uncertainties pale next to the factual ones. Blackstone put it this way: But, notwithstanding so vast an accession of legal controversies, arising from so fertile a fund as the ignorance and willfulness of individuals, these will bear no comparison in point of number to those which are founded upon the dishonesty, and disingenuity of the parties …. And experience will abundantly show, that above a hundred of our law-suits arise from disputed facts, for one where the law is doubted. The lawyer must deal with witnesses (including one’s own) who forget, lie, misperceive, or are otherwise mistaken. Much behavior is ambiguous, as are many documents. One does not know in advance which evidence will be admitted, yet alone which evidence will be believed, or which tiny shred of evidence the fact finder might latch on to as the most important. With the increasing use of experts, one has the added uncertainty of whether one’s experts will survive the [admissibility] test, let alone whether the expert will be believed … 212

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Uncertainty in Litigation cont. Lawyers represent clients who want to know what the result will be if the case reaches final judgment. Given the multiple points of uncertainty, it is very difficult to advise the client with any degree of precision. At best, the attorney can advise as to a range of possible results, some of them extremely unpleasant to the client. Settlement is a rational means of avoiding the risk of the possible results that would be worse than settlement.

The New Lawyer: How Settlement is Transforming the Practice of Law [4.90] Julie Macfarlane, The New Lawyer: How Settlement is Transforming the Practice of Law, (2008) UBC Press Corporate and Institutional Clients Signs of change in client expectations are most evident in corporate and institutional practice. Like personal clients, corporate and institutional clients have historically chosen to nominate their legal representatives to be both managers and agents in disputing. In this traditional paradigm, the expertise of the lawyer was seen as being sufficient and appropriate to resolve the problem, requiring minimal input from the business client. This assumption has been changing over the past thirty years, as corporate clients have shed the deference traditionally afforded to counsel in favour of a more “business-like” and hands-on approach to legal services.

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The sensitivity of institutional and corporate clients to rising legal costs has led to demands for less costly and more efficient methods of dispute resolution and, specifically, to an increasing appetite for early reporting, strategic settlement planning, and early dispute resolution. Maintaining competitiveness in the business world means avoiding the absorption of corporate energy and monies in litigation and instead finding a smart route to settlement. The ballooning costs of litigation mean that experienced commercial clients are less prepared to be passive and more inclined to assert their expectations for the efficient management of conflict. Some clients feel that they can do better in moving toward a business solution if they participate more actively and directly in the discussions and welcome - and even create - opportunities to participate more directly. Another significant factor in tracking the movement toward greater client involvement in file management is the growth of in-house or “inside” counsel. Many commercial lawyers now work directly with “inside” counsel. Corporate counsel are generally valued and rewarded for their abilities to resolve disputes efficiently in a manner that allows the organization to continue to be productive.

Why We Still Litigate [4.100] Phillip Armstrong, “Why We Still Litigate”, (2008) 8 Pepperdine Dispute Resolution Law Journal 379 The benefits of Alternative Dispute Resolution (“ADR”), particularly mediation, are well documented and often touted. Some of these benefits are: cost savings, confidentiality, preservation of business relationships, finality, better outcomes, and more control … Cases which should be litigated: Another major reason business organizations continue to litigate is because certain cases should be litigated. Every large business organization could furnish a list of those [4.100]

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Why We Still Litigate cont. matters that, for various reasons, it prefers to litigate rather than settle through negotiation or use of ADR. The following list is representative, but certainly not all encompassing. Generally, companies tend to litigate rather than employ ADR when: (a)

an important principle is involved, eg, the credibility of one’s product;

(b)

there is a need for legal precedent;

(c)

there is a need to send a message to the marketplace;

(d)

settlement would open the floodgates to frivolous litigation;

(e)

the claim is so large that the “discipline of litigation” is called for;

(f)

the claim is bogus, eg, the business organization is in the case solely because of its deep pockets, or perhaps because it made a product in the chain of distribution even though the product had nothing to do with the alleged harm;

(g)

the law is heavily weighted in its favour …;

(h)

senior management is unalterably opposed to settlement;

(i)

there are multiple parties such that consensus on settlement will be difficult to achieve.

Against Settlement [4.110] Owen Fiss, “Against Settlement”, (1984) 93 Yale Law Journal 1073 Justice Rather Than Peace

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The dispute-resolution story makes settlement appear as a perfect substitute for judgment, as we just saw, by trivializing the remedial dimensions of a lawsuit, and also by reducing the social function of the lawsuit to one of resolving private disputes: In that story, settlement appears to achieve exactly the same purpose as judgment – peace between the parties – but at considerably less expense to society. The two quarrelling neighbours turn to a court in order to resolve their dispute, and society makes courts available because it wants to aid in the achievement of their private ends or to secure the peace. In my view, however, the purpose of adjudication should be understood in broader terms. Adjudication uses public resources, and employs not strangers chosen by the parties but public officials chosen by a process in which the public participates. These officials, like members of the legislative and executive branches, possess a power that has been defined and conferred by public law, not by private agreement. Their job is not to maximize the ends of private parties, nor simply to secure the peace, but to explicate and give force to the values embodied in authoritative texts such as the Constitution and statutes: to interpret those values and to bring reality into accord with them. This duty is not discharged when the parties settle. In our political system, courts are reactive institutions. They do not search out interpretive occasions, but instead wait for others to bring matters to their attention. They also rely for the most part on others to investigate and present the law and facts. A settlement will thereby deprive a court of the occasion, and perhaps even the ability, to render an interpretation … To be against settlement is only to suggest that when the parties settle, society gets less than what appears, and for a price it does not know it is paying. Parties might settle while leaving justice undone.

[4.120] For similar concerns to those raised by Owen Fiss see David Luban, “Settlements and

the Erosion of the Public Realm”, 83 Georgetown Law Journal 2619 (1995) (arguing that 214

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settlement deprives the public of the litigation-driven articulation of public norms); Laura Nader, “Controlling Processes in the Practice of Law: Hierarchy and Pacification in the Movement To Re-Form Dispute Ideology”, 9 Ohio State Journal on Dispute Resolution 1 (1993) (arguing that settlement favours harmony over justice); Stephen C Yeazell, “The Misunderstood Consequences of Modern Civil Process”, 1994 Wisconsin Law Review 631 (arguing that settlement erodes the justice system by decreasing appellate review opportunities).

Whose Dispute is it Anyway? [4.130] Carrie Menkel-Meadow, “Whose Dispute is it Anyway? A Philosophical and Democratic Defense of Settlement (in Some Cases)”, (1995) 83 Georgetown Law Journal 2663

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The difficulty with the debate about settlement vs adjudication is that there are many more than two processes, as well as other variables that affect the processes, to consider. The diverse interests of the participants in the dispute, the legal system, and society may not be the same. Issues of fairness, legitimacy, economic efficiency, privacy, publicity, emotional catharsis or empathy, access, equity among disputants, and lawmaking may differ in importance for different actors in the system, and they may vary by case – this is the strength of our common law system … The concern that settlements deprive both litigants and the larger public realm of normatively based solutions lies at the core of Luban’s and Fiss’s criticisms. Yet I would argue that a settlement process may actually be more “just” in the need for both less compromise and less narrowing of legally cognizable issues. … Noncompromise settlements offer the promise that more than money can be at stake and that the parties can negotiate such other items as future relationships and conduct, apologies, in-kind trade, new contracts, etc. In my view, it is litigation, not settlement, that has led to monetization of disputes, for money has become the proxy for all legal harms and hurts. … More often and more troubling to those who are concerned about justice, a litigated outcome will produce binary win-lose results that often do not capture the “just reality.” … Thus, for me, until litigation is permitted to recognize the ambiguities and contradictions in modern life by developing a broader “remedial imagination,” settlement offers the opportunity to craft solutions that do not compromise, but offer greater expression of the variety of remedial possibilities in a postmodern world … [P]eople may choose settlement precisely because legislatively enacted “legal” solutions do not meet the underlying needs or interests of parties in particular cases. Through individually adaptive solutions in settlement we may see the limits of law and explore avenues for law reform. [P]arties may use settlement precisely to have other, nonlegal, principles structure their disputes and relationships. I have argued extensively elsewhere that people and entities in disputes may have a wide variety of interests (of which legal principles may be one class) and may decide that, in any given case, social, psychological, economic, political, moral, or religious principles should govern the resolution of their dispute. This does not mean that such dispute resolution is not principled – it is just not law-principled. Much of the critique of settlement rests on claims that negotiated settlements, more than adjudicated claims, will be determined by the raw bargaining power of one party over another. Assumptions abound here that power imbalances do not occur at trial, or if they do, they can be corrected by the neutral third party cloaked in a judge’s robe … I have here tried to make the following arguments on behalf of the “best” aspects of settlement: 1.

Settlements that are in fact consensual represent the goals of democratic and party-initiated legal regimes by allowing the parties themselves to choose processes and outcomes for dispute resolution.

2.

Settlements permit a broader range of possible solutions that may be more responsive to both party and system needs. [4.130]

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Whose Dispute is it Anyway? cont. 3.

What some consider to be the worst of settlement, that is, compromise, may actually represent a moral commitment to equality, precision in justice, accommodation, and peaceful coexistence of conflicting interests.

4.

Settlements may be based on important nonlegal principles or interests, which may, in any given case, be as important or more important to the parties than “legal” considerations. Laws made in the aggregate may not always be appropriate in particular cases, and thus settlements can be seen as yet another “principled” supplement to our common law system.

5.

Settlement processes may be more humanely “real,” democratic, participatory, and cathartic than more formalized processes, permitting in their best moments, transformative and educational opportunities for parties in dispute as well as for others.

6.

Some settlement processes may be better adapted for the multiplex, multiparty issues that require solutions in our modern society than the binary form of plaintiff-defendant adjudication.

7.

Despite the continuing and important debates about discovery and information exchange in the litigation process, some settlement processes (mediation and some forms of neutral case evaluation and scheduling) may actually provide both more and better (not just legally relevant) information for problem-solving, as well as “education” of the litigants.

8.

When used appropriately, settlement may actually increase access to justice, not only by allowing more disputants to claim in different ways, but also by allowing greater varieties of case resolutions.

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Thus, in its most idealized forms, settlement can be defended as being participatory, democratic, empowering, educative, and transformative for the parties … [I]t is important to consider settlements that depart from the ideal form that I have sought to defend here. If settlements are not consensually arrived at (through mandatory and coercive court programs, or because lawyers dominate decisionmaking, or because the choice is not real when one cannot afford to wait to litigate, or because there are such vast disparities between the parties that “consent” cannot be given), then we must question whether such a settlement should be enforced. As ADR becomes institutionalized in courts, there is a danger that people will “consent” to settlements because they feel they have no real alternative. If there is no consent, an important value justifying settlement is absent.

Courts as the Third Branch of Government [4.135] Chief Justice Robert French, Perspectives on Court Annexed Alternative Dispute Resolution, Law Council of Australia – Multi-Door Symposium, Canberra, 27 July 2009 The concept of court-annexed ADR is well established and worthy of development in a way that better integrates the various options and provides a principled basis for their connection to the judicial process. I must, however, express a reservation about the use of the “multi-door courthouse”. It is the courts and only the courts which carry out the adjudication function involving the exercise of judicial power. Their special position as the third branch of government is made explicit in the Commonwealth Constitution and is a matter of convention in the States. Importantly, the courts are not to be seen simply as one species of provider among a number of providers of ADR services … In my opinion, the term “multi-door courthouse” may have the connotation that behind each door is a different mechanism for achieving the same or similar outcomes. But there is no doubt that the door into a courtroom is rather unique. In the Commonwealth Constitution it is the courts of the Commonwealth, including the High Court, and the courts of the States invested with federal jurisdiction which exercise federal judicial power. It is 216

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Courts as the Third Branch of Government cont. the third branch of government of which we speak. This is not just another provider of dispute resolution services in a market of different providers. The courthouse door is not just one door among many. I support, and have long supported, the provision of court-annexed ADR services. It is not only an aid to the earlier resolution of litigation, but can also be used as a case management tool to help the parties reduce the matters in issue between them. Nevertheless, it is in the public interest that the constitutional function of the judiciary is not compromised in fact or a matter of perception by blurring its boundaries with non-judicial services. So long as the clarity of the distinction is maintained, and appropriate quality controls, including evaluative and cost-benefit assessments undertaken, then ADR has much to offer in connection with the judicial process.

Three Things to be Against (Settlement Not Included) [4.140] Michael Moffitt, “Three Things to be Against (“Settlement” Not Included)”, (2009) 78 Fordham Law Review 1203

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Treating litigation and settlement as though they were entirely distinct processes is, of course, an oversimplification. In practice, the two are intertwined. The fundamental rules and structure of each clearly acknowledge the importance of the other. Modern civil procedure is structured to facilitate the interaction between litigation and settlement. For example, many court systems require, as part of the routine cadence of litigation, consultation with opposing parties for the purpose of exploring settlement. Similarly, settlement takes place within the confines of the parameters established by the prospect of litigation. Robert Mnookin and Lewis Kornhauser suggested years ago that disputants “bargain in the shadow of the law”. [Robert H. Mnookin & Lewis Kornhauser, “Bargaining in the Shadow of the Law: The Case of Divorce” (1979) 88 Yale Law Journal 950]. I am not convinced, as an empirical matter, that assessments of legal entitlements always drive disputants’ settlement behavior. But certainly, in at least many cases, disputants compare what they might receive through a settlement with what they expect might happen in litigation. Furthermore, each disputant’s settlement behavior is bounded by the prospect of postsettlement litigation. In this manner, private law concepts like fraud, unconscionability, and duress affect negotiators’ behaviors precisely because litigation exists as a possible adjunct to settlement negotiations. The prospect of litigation shapes settlement behaviors and settlement outcomes.

[4.150] The above extracts provide a number of reasons for and against choosing some form

of ADR mechanism over litigation, such as reducing uncertainty, greater client control and developing better solutions to a dispute. Moffitt also explains that frequently there is a symbiotic relationship between ADR and litigation. ADR has undoubtedly had an impact on litigation and the court system as shown by mandatory mediation (see [4.250]). However, there is also a concern that Courts and lawyers have co-opted or colonised ADR. The Courts use of ADR as a case management tool or less charitably a docket-clearing tool may focus on promoting settlement without seeking to achieve the benefits of developing options for producing better quality processes and outcomes. Further “[l]awyers may use ADR not for the accomplishment of a ‘better’ result, but as another weapon in the adversarial arsenal to manipulate time, methods of discovery, and rules of procedure for perceived client [4.150]

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advantage.” 8 This can mean that settlements are arrived at in adversarial context and simply reflect a decision that the expected costs of trial (fees, expenses, inconvenience, and risk) exceed the expected benefits.

TYPES OF ADR PROCESSES [4.160] There are four broad categories of dispute resolution processes: facilitative, advisory,

determinative and hybrid. The four processes are explained by the National Alternative Dispute Resolution Advisory Council (NADRAC):

Dispute Resolution Processes [4.170] NADRAC, Dispute Resolution Terms, The Use of Terms in (Alternative) Dispute Resolution (September 2003) Facilitative dispute resolution processes are processes in which a dispute resolution practitioner assists the parties to a dispute to identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement about some issues or the whole dispute. Examples of facilitative processes are mediation, facilitation and facilitated negotiation. Advisory dispute resolution processes are processes in which a dispute resolution practitioner considers and appraises the dispute and provides advice as to the facts of the dispute, the law and, in some cases, possible or desirable outcomes, and how these may be achieved. Advisory processes include expert appraisal, case appraisal, case presentation, mini-trial and early neutral evaluation. Determinative dispute resolution processes are process in which a dispute resolution practitioner evaluates the dispute (which may include the hearing of formal evidence from the parties) and makes a determination. Examples of determinative dispute resolution processes are arbitration, expert determination and private judging.

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Combined or hybrid dispute resolution processes are processes in which the dispute resolution practitioner plays multiple roles. For example, in conciliation and in conferencing, the dispute resolution practitioner may facilitate discussions, as well as provide advice on the merits of the dispute. In hybrid processes, such as med-arb, the practitioner first uses one process (mediation) and then a different one (arbitration).

Dispute Resolution Terms [4.180] NADRAC, Dispute Resolution Terms, The Use of Terms in (Alternative) Dispute Resolution (September 2003) This glossary is a resource for agencies, legislators and policy makers. It explains common usage of terms used in dispute resolution in Australia. This glossary is not intended to be as a set of definitions. Agencies, practitioner and legislators may use these terms in different ways. Readers should therefore check how terms are used in any particular situation … ADR is an umbrella term for processes, other than judicial determination, in which an impartial person assists those in a dispute to resolve the issues between them. ADR is commonly used as an abbreviation for alternative dispute resolution, but can also be used to mean assisted or appropriate dispute resolution. Some also use the term ADR to include approaches that enable parties to prevent or manage their own disputes without outside assistance. See also PDR. 8

Menkel-Meadow C, “Pursuing Settlement in an Adversary Culture: A Tale of Innovation Co-Opted or “The Law of ADR”” (1991) 19 Florida State University Law Review 1 at 3.

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Dispute Resolution Terms cont. Adjudication is a process in which the parties present arguments and evidence to a dispute resolution practitioner (the adjudicator) who makes a determination which is enforceable by the authority of the adjudicator. The most common form of internally enforceable adjudication is determination by state authorities empowered to enforce decisions by law (for example, courts, tribunals) within the traditional judicial system. However, there are also other internally enforceable adjudication processes (for example, internal disciplinary or grievance processes implemented by employers). Arbitration is a process in which the parties to a dispute present arguments and evidence to a dispute resolution practitioner (the arbitrator) who makes a determination … Case appraisal is a process in which a dispute resolution practitioner (the case appraiser) investigates the dispute and provides advice on possible and desirable outcomes and the means whereby these may be achieved. Case presentation (or Mini-trial) is a process in which the parties present their evidence and arguments to a dispute resolution practitioner who provides advice on the facts of the dispute, and, in some cases, on possible and desirable outcomes and the means whereby these may be achieved. See also mini-trial … Conciliation is a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the conciliator), identify the issues in dispute, develop options, consider alternatives and endeavour to reach an agreement. The conciliator may have an advisory role on the content of the dispute or the outcome of its resolution, but not a determinative role. The conciliator may advise on or determine the process of conciliation whereby resolution is attempted, and may make suggestions for terms of settlement, give expert advice on likely settlement terms, and may actively encourage the participants to reach an agreement. Note: There are wide variations in meanings for “conciliation”, which may be used to refer to a range of processes used to resolve complaints and disputes including: Informal discussions held between the parties and an external agency in an endeavour to avoid, resolve or manage a dispute Combined processes in which, for example, an impartial party facilitates discussion between the parties, provides advice on the substance of the dispute, makes proposals for settlement or actively contributes to the terms of any agreement. Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

… Dispute resolution refers to all processes that are used to resolve disputes, whether within or outside court proceedings. Dispute resolution processes may be facilitative, advisory or determinative (see descriptions elsewhere in this glossary). Dispute resolution processes other than judicial determination are often referred to as ADR. Dispute resolution practitioner is an impartial person who assists those in dispute to resolve the issues between them. A practitioner may work privately as a statutory officer or through engagement by a dispute resolution organisation. A sole practitioner is a sole trader or other individual operating alone and directly engaged by clients … Early neutral evaluation is a process in which the parties to a dispute present, at an early stage in attempting to resolve the dispute, arguments and evidence to a dispute resolution practitioner. That practitioner makes a determination on the key issues in dispute, and most effective means of resolving the dispute without determining the facts of the dispute. Expert appraisal is a process in which a dispute resolution practitioner, chosen on the basis of their expert knowledge of the subject matter (the expert appraiser), investigates the dispute. The appraiser then provides advice on the facts and possible and desirable outcomes and the means whereby these may be achieved. Expert determination is a process in which the parties to a dispute present arguments and evidence to a dispute resolution practitioner, who is chosen on the basis of their specialist qualification or experience in the subject matter of the dispute (the expert) and who makes a determination. [4.180]

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Dispute Resolution Terms cont. Facilitated negotiation is a process in which the parties to a dispute, who have identified the issues to be negotiated, utilise the assistance of a dispute resolution practitioner (the facilitator), to negotiate the outcome. The facilitator has no advisory or determinative role on the content of the matters discussed or the outcome of the process, but may advise on or determine the process of facilitation. Facilitation is a process in which the parties (usually a group), with the assistance of a dispute resolution practitioner (the facilitator), identify problems to be solved, tasks to be accomplished or disputed issues to be resolved. Facilitation may conclude there, or it may continue to assist the parties to develop options, consider alternatives and endeavour to reach an agreement. The facilitator has no advisory or determinative role on the content of the matters discussed or the outcome of the process, but may advise on or determine the process of facilitation … Indigenous dispute resolution refers to wide range of processes used to resolve dispute involving Indigenous people, including the various processes described in this glossary. Other examples include elder arbitration, agreement-making and consensus-building. In the Australian context the term Indigenous (capital “I”) refers specifically to the Aboriginal and Torres Strait Islander peoples. Judicial dispute resolution (or judicial ADR) is a term used to describe a range of dispute resolution processes, other than adjudication, which are conducted by judges or magistrates. An example is judicial settlement conference. Mediation is a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the mediator), identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement. The mediator has no advisory or determinative role in regard to the content of the dispute or the outcome of its resolution, but may advise on or determine the process of mediation whereby resolution is attempted. Mediation may be undertaken voluntarily, under a court order, or subject to an existing contractual agreement. An alternative is “a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the mediator) negotiate in an endeavour to resolve their dispute”.

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Mini-trial is a process in which the parties present arguments and evidence to a dispute resolution practitioner who provides advice as to the facts of the dispute, and advice regarding possible, probable and desirable outcomes and the means whereby these may be achieved. See also case presentation. Ombudsman (or Ombud) is a person who “functions as a defender of the people in their dealings with government … In Australia, there is a Commonwealth Ombudsman as well as state and territory ombudsmen … In addition, a number of industry ombudsmen have been appointed, whose responsibility it is to protect citizens’ interests in their dealings with a variety of service providers, especially in industries previously owned or regulated by governments, for example telecommunications, energy, banking and insurance”. Private judging is a process in which the parties to a dispute present arguments and evidence to a dispute resolution practitioner chosen on the basis of their experience as a member of the judiciary (the private judge) who makes a determination in accordance with their opinion as to what decision would be made if the matter was judicially determined.

NEGOTIATION [4.190] Negotiation is a common activity that is undertaken in everyday life – family, social

and business interactions frequently involve negotiation. However, it is also an area of study that has been examined from an economics, sociology, psychology and legal perspective. Those perspectives consider negotiation in terms of strategies, processes, styles, personalities and skills. 220

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The distinguishing feature of negotiation, compared to the other forms of dispute resolution that will be examined, is that negotiation involves no third party whose role is to facilitate, advise or determine the resolution of the dispute. The parties are very much left to their own devices as to how the negotiation process should proceed and what the substance of the negotiation should be about. Negotiation is of special interest to legal practitioners as they will often find themselves acting as the agent or adviser to a party who is involved in negotiations. This may occur in the context of an existing dispute or it may be part of facilitating business or personal transactions. Indeed, in some contexts the lawyer may become the representative for the party out of necessity, such as where the party is a corporation or some other organisation involving numerous individuals such as a union or the group members in a class action that require a representative with particular knowledge or skills. The Jackson ADR Handbook summarises the advantages and disadvantages of negotiation. 9 The main advantages are: • It is very flexible and can be conducted by parties and/or by lawyers; • It is relatively cost effective, as only a limited amount of special preparation may be required; • Clients retain complete control of the outcome through conducting the process themselves or by giving instructions to their lawyer and the need for their approval of any agreement reached. The main drawbacks are: • Success depends to a significant extent on how well the dispute has been researched and analysed; • Success can depend on the skill of the negotiator, and the strategy and tactics employed; • Negotiation may lead to a weak or poor outcome for a person if the strengths of a case are not properly exploited; Copyright © 2015. Thomson Reuters (Professional) Australia Pty Limited. All rights reserved.

• The informality of negotiation can lead to confusion over the process; • A negotiation may fail if party expectations are unrealistic, or the parties are too entrenched in their positions. Negotiation may take many forms. 10 The main issue to be discussed here is the positional versus interest-based negotiation strategies as these are the dominant approaches encountered in practice. The negotiation strategy adopted can have a major impact on both the processes used and the result achieved. It can also be part of the way other forms of ADR such as mediation are conducted. Positional negotiation is traditionally associated with lawyers and is also referred to as a zero-sum game approach to negotiation as it mirrors litigation in the sense that one party’s gains are another party’s losses, resources are limited and must be divided, and information is precious and must be protected. 11 The parties engage in distributive bargaining whereby “one 9

Blake S, Browne J and Sime S, The Jackson ADR Handbook (Oxford University Press, 2013) at [2.16].

10

See eg Dickinson M, “An Evaluation of Non-Adversarial Models of Negotiation” (2009) 20 ADRJ 212 and Leventhal L, “The Foundation and Contemporary History of Negotiation Theory” (2006) 17 ADRJ 70.

11

See above at [4.50] and Menkel-Meadow C, “Toward Another View of Legal Negotiation: The Structure of Problem Solving” (1983-4) 31 University of California Los Angeles Law Review 754 at 756-757. [4.190]

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for me is minus one for you”. 12 A focus on distributing value can prevent a negotiated outcome or result in an outcome that is suboptimal (ie the outcome does not serve a party’s interests as well as possible or involves cost and delay as negotiations are protracted) because the parties don’t share information for fear of being exploited or communicate information or misinformation to shape the other’s perceptions rather than reveal what is actually desired, eg extreme opening demands. 13 In contrast to positional negotiation is interest-based negotiation which has been the subject of the Harvard Negotiation Programme and the “Getting to Yes” text by Roger Fisher, William Ury and Bruce Patton. To provide a brief overview of interest based negotiation it is necessary to step through a number of elements. Firstly, interest based negotiation focuses on exploring and satisfying interests rather than focusing on competing positions, such as who is right or wrong. Interests has a broad meaning as it refers to why the person wants a particular outcome thus encompassing needs, desires, fears and concerns which can be reflected in both the substance of the dispute as well as the procedure (an opportunity to be heard) used in the dispute. Positional negotiation tends to focus on what a person wants as compared to interest based negotiation which focuses on why they want it. When the focus is shifted to why something is desired then it may be possible to create solutions beyond that originally envisaged. The classic illustration of this is the example of two people who both require a single orange. The positional approach would simply focus on each person getting some or all of the orange. An interest based approach looks at why they want the orange. In the example, one person wants the rind of the orange for a cake and the other wants the juice of an orange for a drink. If the focus is switched to interests it is possible to satisfy both persons, and indeed to potentially satisfy them in a better manner than under a positional negotiation approach. 14 The focus on interests then leads to a number of other steps. The parties must seek to develop a range of options that satisfy their interests. This can be thought of as a “brain-storming” or options creating step in which the parties seek to expand the pie and therefore move beyond the idea of resources being limited. To evaluate the options or alternatives that are put forward Fisher, Ury and Patton have developed the concept of “Best Alternative to a Negotiated Agreement” or a person’s BATNA. Developing a BATNA requires a person to consider what their best position would be if the negotiation fails. The aim of the negotiation is to improve on the BATNA but also to be realistic about the position they will find themselves in without an agreed solution. Interest based negotiation also requires that there be independent criteria for assessing the options that are developed so that the parties have a way in which to evaluate the fairness of options. Overlaying the interest based approach to negotiation are various skills or approaches that facilitate it. These include developing co-operation rather than competition, promoting collaboration including the sharing of information, and effective communication to ensure that interests and options are clearly expressed and understood. Further the negotiator in trying to adopt or give effect to an interest based approach must be alive to the fact that another negotiator may take a different approach, including a positional approach. As a result skills, such as building trust and reciprocity, determining what information is needed, what 12 13

White J, “Review Essay: The Pros and Cons of “Getting to YES” by Roger Fisher & William Ury” (1984) 34 Journal of Legal Education 115 at 116. Mnookin R, Peppet S and Tulumello A, Beyond Winning – Negotiating to Create Value in Deals and Disputes (The Belknap Press of Harvard University Press, 2000) pp 18-25.

14

Alexander N & Howieson J, Negotiation – Strategy Style Skills (2nd ed, LexisNexis, 2010) p 40.

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information can be shared at various stages and being able to use questioning and listening to develop the interest based approach, become crucial. It has also been argued that in many negotiations at some point the pie cannot be expanded further and there must be a resort to distributional bargaining, ie the pie must be split up as part of the resolution of the dispute. 15 Even one of the authors of “Getting to YES” accepted that positional bargaining was an effective way to proceed in some categories of negotiations: 16 On single-issue negotiations among strangers where the transaction costs of exploring interest[s] would be high and where each side is protected by competitive opportunities, haggling over positions may work better than joint problem solving. A typical case would be negotiating a sale on the New York Stock Exchange.

Consequently a “skilful negotiator moves nimbly between imaginative strategies to enlarge the pie and conservative strategies to secure an ample slice no matter what size the final pie turns out to be”. 17 Negotiation skills need to be learnt and developed just as much as advocacy, drafting or other “legal” skills for a person to be an effective lawyer.

Comparison of positional and interest-based negotiation [4.200]

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Positional Negotiation parties are opponents or adversaries goal is to win or give up as little as possible assert correctness of position/demand make minimal concessions in relation to position/demand avoid disclosure of information – communication is limited assert rights that support position/demand disagree with opponents position make concessions slowly and incrementally to try and obtain agreement

Interest-based Negotiation parties are collaborative problem solvers goal is to satisfy all parties’ interests identify interests develop options – expand the pie share and seek out information – communication is enhanced determine independent criteria for assessing options listen to parties explication of their interests evaluate options to satisfy interests

What role does the law play in interest based negotiation? [4.210] In positional bargaining the law is often put forward as recognising the rights that

support the position taken by a party. For example, the law supports a right to be compensated for the breach of contract. In interest-based negotiation the law may be utilised to determine a person’s BATNA and to develop independent criteria. A person’s BATNA may be recourse to litigation with its costs, delay and uncertainty or the BATNA may be another outcome informed by litigation. The independent criteria may include reference to substantive law in the sense of precedent or legal principals that may provide guidance as to how a court 15 16 17

White J, “Review Essay: The Pros and Cons of “Getting to YES” by Roger Fisher & William Ury” (1984) 34 Journal of Legal Education 115 at 116. Fisher R, “Comment on James White’s Review of “Getting to YES”” (1984) 34 Journal of Legal Education 120 at 123. Mnookin R, Peppet S and Tulumello A, Beyond Winning – Negotiating to Create Value in Deals and Disputes (The Belknap Press of Harvard University Press, 2000) p 9. [4.210]

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would resolve the dispute but law is but one criteria that may be relevant. 18 However, too ready a resort to the result the legal system would produce may prevent innovative and idiosyncratic solutions. 19

MEDIATION [4.220] Mediation is the most widely used form of ADR. It involves a facilitated negotiation

aimed at reaching an agreement. A neutral third party (the mediator) assists and facilitates an agreement between the parties. Unlike litigation where the parties must convince the judge of the correctness of their position, the parties do not seek to convince the mediator but rather to persuade the other party. The mediator is chosen by parties unless mediation is connected to a court (eg family law mediation). The mediator chosen will depend on the type of mediation that the parties wish to undertake. The mediator usually directs process but has no advisory or determinative role. However, the flexibility of mediation means that the mediator may adopt a number of roles. This has given rise to attempts to classify types or models of mediation. One leading example is Nadja Alexander’s Mediation Metamodel which contains six models: 20 • Expert advisory mediation – the mediator employs specialist legal or technical skills to guide the parties towards a settlement within a positional bargaining framework. • Settlement mediation – the mediator specialises in process but aims to guide the parties towards a settlement within a positional bargaining framework. • Facilitative mediation – the mediator specialises in process but employs interest-based negotiation thus encouraging the parties to develop their own solutions.

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• Wise counsel mediation – the mediator is usually selected because of their standing in the community which may result from their specialist legal, technical or diplomacy skills but they adopt interest-based negotiation to encourage the parties to develop their own solutions. • Tradition-based mediation – similar to wise counsel mediation but with a greater concern for interests beyond the parties such as the community or society. It is frequently associated with indigenous societies. • Transformative mediation – the mediator specialises in process, not just of negotiation but of psychology and reconciliation, and goes beyond interest-based negotiation with a view to restoring relationships. In legal practice in NSW mediations are most likely to be some combination or variation on the first four models described above. Facilitative mediation is the norm or goal that most mediations are thought to aspire to but in seeking to achieve a resolution mediators may adopt more expert advisory roles or facilitate positional bargaining. The Jackson ADR Handbook contrasts facilitative mediation and evaluative mediation. The latter equates with Alexander’s expert advisory or settlement mediation models. While 18

Astor H and Chinkin C, Dispute Resolution in Australia (2nd ed, Butterworths, 2002) pp 118-119.

19

Menkel-Meadow C, “Toward Another View of Legal Negotiation: The Structure of Problem Solving” (1983-4) 31 University of California Los Angeles Law Review 754 at 790-791.

20

Alexander N, “The Mediation Metamodel: Understanding Practice” 26(1) Conflict Resolution Quarterly, 2008, 97. See also Wade J, Representing Clients at Mediation and Negotiation, (Bond University School of Law, 2003); and Riskin L, “Who Decides What? Rethinking the Grid of Mediator Orientations” (2003) Dispute Resolution Magazine 22.

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facilitative mediation involves the mediator assisting the parties to solve their own problems, the mediator’s role is not passive. The facilitative mediator will: • Ask questions that test the strengths and weaknesses of each side’s case; • Explore each party’s situation and help them to identify what they really need or want to achieve from the dispute; • Encourage the parties to think about the likely outcome of litigation and costs of obtaining that outcome; • Focus each party’s attention on his or her underlying objectives and needs, rather than on a strict analysis and evaluation of the merits of the case; • Help the parties to work on a creative solution that is in their best interests;

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• Assist the parties to negotiate more effectively by formulating offers in a way that may be more attractive to the other side, and consider the timing and staging of offers and concessions. A facilitative mediator will not express a view on the merits of a party’s case or evaluate the likely outcome of the dispute or put forward his or her own proposals for settlement. An evaluative mediator will employ some or all of the above steps to facilitate resolution but will also go further if asked and evaluate issues or claims, and suggest settlement options. The evaluation will usually be from a legal perspective, which may necessitate a mediator who was a former judge or experienced legal practitioner. The authoritative statement from such a person may assist in resolution. However, other areas of expertise may be required if the underlying dispute requires that expertise to evaluate the claims and settlement options. The disadvantage of evaluative mediation is that it may require the mediator to side with one of the parties threatening the mediator’s independence, the evaluation may harden positions and reduce the scope for compromise, and the mediator may be asked to evaluate the dispute with only partial information. The mediation process is flexible but usually involves the following steps over one or more days: 21 • Mediators, parties and any legal representatives introduce themselves and the mediator explains the process and “ground rules” for the mediation. • Opening statements by each party in turn, in which they express their view of the dispute and the issues involved. • Identification of issues and development of an agenda. • Mediators support the exploration of the issues identified by the participants by encouraging and guiding discussion between them. • Confidential private sessions in which the mediator can test or develop options, while the other party has time to consider their options and discuss options with advisors. • Evaluation of options or offers. • Parties negotiate an agreement or terminate the mediation. • If participants agree on some or all of the issues an agreement is prepared and signed. In some mediations there may be a preliminary conference. This is an opportunity for the mediator to deal with administrative arrangements such as the date and location of the 21

See Spencer D, Principles of Dispute Resolution (Thomson Reuters, 2011) pp 53-68 and Astor H and Chinkin C, Dispute Resolution in Australia (2nd ed, Butterworths, 2002) pp 139-145. [4.220]

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mediation, who will attend, and to set a timetable for the exchange of position papers and/or documents. In other mediations these matters may be dealt with in a formal mediation agreement.

Why choose mediation? [4.230] Many of the reasons for choosing ADR also apply to choosing mediation. In brief

they may be summarised as: 22 • The parties are required to mediate by law or contract; • It can be faster and cheaper than litigation, assuming a resolution is reached; • It can narrow the issues for litigation if unsuccessful; • It provides confidentiality; • It can provide broader or more flexible remedies than a court;

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• It maintains relationships; and • It provides greater client satisfaction through increased involvement and ability to communicate directly with an opponent. Alternatively mediation may be examined from the perspective of what it offers in comparison to negotiation. Two main advantages arise, First, the process is more structured and so a framework for exploring resolution is able to be followed. In particular a mediator who adopts a facilitative approach and employs interest-based negotiation techniques will take the parties through particular steps aimed at identifying interests and options for resolution. Second, there is an independent third party who can break impasses, facilitate the devising of solutions and generally keep the parties focussed and moving forward. The mediator can seek to diffuse strong feelings or antagonism between the parties. The mediator can test suggested solutions put forward by a party. However, mediation may be unsuitable where a party desires to create a precedent, urgent interlocutory injunctions are needed to protect a party’s position, the other party is not trustworthy or prepared to participate in good faith, resolution cannot be achieved by agreement amongst the participating parties (ie it requires actions outside their control) or the power imbalances make the process unlikely to work or removes consensuality.

Role of the lawyer [4.240] Although mediation provides for greater client involvement and introduces the

mediator who has a role to play in facilitating resolution, the lawyer still has important functions to fulfil. For example a lawyer may: 23 • Advise if the dispute is suitable for mediation; • Describe the process of mediation to the client; • Contact the other party and/or mediator for the client; • Negotiate on the client’s behalf; 22 23

Hardy S and Rundle O, Mediation for Lawyers (CCH, 2010) Ch 1. See eg Law Society of NSW website: http://www.lawsociety.com.au/community/publicationsandfaqs/ legalquestions/Whatismediation/index.htm and Hardy S and Rundle O, Mediation for Lawyers (CCH, 2010) Ch 5.

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• Prepare the matter for mediation which may include legal analysis, fact gathering and drafting of position interest papers; • Attend the mediation with the client in order to advise during the course of the mediation; • Reduce power imbalances and seek to protect the client’s interests; • Draft a settlement agreement; and • If necessary, obtain the appropriate court order to put an end to court proceedings. However, in some mediations no lawyers may be present. The presence of lawyers may create a focus on legal rights and an adversarial approach to the dispute that can be counterproductive. Of course lawyers are able to conduct themselves in a manner that avoids this. The role the lawyer plays has been explained by Olivia Rundle who devised a spectrum of roles that lawyers may play in mediation, differentiated by their levels of involvement: 24 Absent advisor

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Less Involvement

Advisor observer Expert contributor

Supportive professional participant

Spokesperson

More Involvement

The absent advisor assists the client to prepare for the mediation but does not attend the mediation session itself. The absent advisor’s role is to support the client to participate effectively in the process. This is a cost-effective approach to mediation provided the client is able to adequately represent themselves. The advisor observer performs the same role as the absent advisor, but the lawyer attends the mediation. The lawyer observes but does not interact directly with the mediator, other party or other lawyer. The lawyer advises the client as requested during the mediation. The expert contributor performs all of the tasks of the advisor observer. In addition, the lawyers engage with one another during the mediation about the legal issues ie views on the applicable law. The supportive professional participant works with the client to prepare for the mediation and supports the client through the mediation process, by working collaboratively towards an acceptable outcome. The lawyer and client work as a team. There is no clear partitioning of the roles of lawyer and client. The lawyer provides legal advice but may also assist in determining the client’s interests and settlement offers. The lawyer “spokesperson” speaks on behalf of her or his client throughout the mediation. The client has a very limited role in the process. The parties merely observe rather than participate directly and obtain legal advice from and provide instructions to their lawyers outside the joint mediation sessions. This model may be appropriate when mediation would otherwise be inappropriate because of capacity or power imbalance issues. As Rundle concludes, there is no correct model that lawyers must follow. Rather, the model will depend on the needs of the client, including his or her financial resources and abilities to negotiate effectively.

24

Rundle O, “A spectrum of contributions that lawyers can make to mediation” (2009) 20 Australasian Dispute Resolution Journal 220 . See also The Law Council of Australia’s Guidelines for Lawyers in Mediation (August 2011). [4.240]

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Representing clients from courtroom to mediation settings [4.244] Donna Cooper, “Representing clients from courtroom to mediation settings: Switching hats between adversarial advocacy and dispute resolution advocacy”, (2014) 25 Australasian Dispute Resolution Journal 150 Similarities in the knowledge and skills that adversarial and non-adversarial advocates have to demonstrate Many lawyers in the course of their working lives will be engaged in representing clients in both adversarial court hearings and non-adversarial contexts. Some knowledge and skills will overlap and some will be distinct to their non-adversarial and adversarial roles. The following are a few of the key areas that can be drawn upon in both roles. Understanding of the law and legal rights In both litigation and evaluative mediations, lawyers will ensure that their clients understand their legal rights. At the outset, lawyers will take detailed instructions to become fully appraised of both the legal issues and their clients’ personal situations. After taking instructions, and gathering any necessary information, legal advice can be provided, including as to the likely range of judicial outcomes if a case proceeds to court. Such initial advice provides clients with an honest assessment of their legal rights and encourages realistic expectations as to the settlement or litigation outcomes that can be achieved. If clients are hopeful of a result well outside of the expected range, lawyers can work towards these expectations becoming more reasonable. Such advice provides clients with a foundation upon which to make informed decisions when considering offers during mediation. It also assists clients to assess whether it will be worthwhile going to the expense of taking matters to court.

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Lawyers now have a duty to advise clients of settlement options before taking a case to court. The Australian Solicitors Conduct Rules state that: A solicitor must inform the client or the instructing solicitor about the alternatives to fully contested adjudication of the case which are reasonably available to the client, unless the solicitor believes on reasonable grounds that the client already has such an understanding of those alternatives as to permit the client to make decisions about the client’s best interests in relation to the litigation. … Although a discussion of legal rights is not strictly necessary in the context of facilitative mediations, in practice clients often want to be appraised of their legal rights and what may be a “fair” outcome before participating in mediation and before entering into any agreement. Understanding of procedure and client roles When attending a court hearing or mediation, lawyers will be appraised of the process they will be engaged in and of any procedural requirements, such as court rules or the particular model of mediation and the steps in the process. They will also educate their clients about their participation in the process. Clients need to understand the objectives, the steps that will be followed and, perhaps most importantly, what role they will be expected to play. In a court hearing, a client may be required to give evidence and will need information about the context in which this occurs and the manner in which questions will be asked. In a mediation process (particularly in facilitative mediation) the client will be expected to provide an opening statement, participate in integrative negotiations, and generate settlement options. The client will need to have some time beforehand to prepare for these activities. The parties in a facilitative mediation will need to appreciate that they are expected to play an active role during the session and they will be asked to think of options and solutions. In fact, it is often the party’s active participation in the content and outcome of a process that is the key to client satisfaction and perceived “fairness” of the process. Thorough preparation and gathering of relevant information. 228

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Representing clients from courtroom to mediation settings cont. Gathering information relevant to the dispute and having it available on the day of the court hearing or mediation is extremely important. In a litigation context, information must be placed before the court in a manner that complies with procedural requirements and the rules of evidence. Information will be contained in written form in court documents and may also be available via evidence obtained by subpoenas. It may also be presented orally via the evidence of the parties and their witnesses and in the form of legal submissions. In mediation, lawyers and clients need to have organised all information relevant to making an informed decision in relation to settlement. Valuations may need to be obtained for financial disputes or medical reports for personal injury cases. For a family law parenting dispute, a lawyer can assist the client to organise information relevant to the issues in dispute, such as school holiday dates, public transport timetables, options for age-appropriate parenting schedules, appropriate supervisors, and information about the availability and suitability of contact centres. In both settings lawyers can encourage the other side to ensure that all relevant information they have in their possession is available prior to the mediation. However, a difference is the extent to which both parties can be compelled to produce relevant information if one or both are not willing to voluntarily make it available. For example, if a party is not willing to make full disclosure and participate in “good faith”, mediation may not be appropriate at all and court proceedings might be necessary so that orders can be obtained to compel the party to produce the relevant documents.

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An understanding of the client In both adversarial and non-adversarial processes, legal representatives will need to acquire an understanding of their clients. For example, what is the client seeking to achieve in terms of the outcome of the dispute? What is his or her personal and financial situation and will he or she be able to cope with and afford the court process? If oral evidence is required, a party’s credibility may become important, as well as how the client may perform when giving evidence in the witness box and what sort of impression he or she may make on the judicial officer. Similarly, a lawyer preparing for mediation will have an understanding of the background to the dispute and how his or her client may cope with the mediation process. An assessment will need to be made of how articulate the client is and, for example, whether lawyer assistance will be required during the opening statement at the mediation. Communication skills Whether representing clients in court or in mediation, high-level communication skills are essential. Lawyers need to be able to listen actively to clients and provide them with clear information and legal advice in plain English. In a court setting, lawyers will require effective written communication skills so that court documents are drafted in a clear and concise way, containing all relevant and admissible information. When appearing in court, they need to demonstrate effective oral communication skills so that their submissions are made in a logical fashion and they can respond appropriately to any questions or directions made by the judicial officer. In both contexts, lawyers can use skills such as paraphrasing, summarising and reframing to gather the necessary information from their clients and to deal with those clients who may be upset or emotional. Duty to follow the client’s instructions In both processes, lawyers have a duty to follow the client’s instructions. This duty can cause challenges, particularly where clients may have unrealistic expectations about settlement outcomes. In both contexts, lawyers can work with clients to provide them with legal advice and a realistic idea of what outcomes they may achieve if their cases go to court. They can also discuss with clients the benefits of settlement and this will be explored further below in relation to the ethical duty to act in the client’s best interests. [4.244]

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Representing clients from courtroom to mediation settings cont. In mediation this duty can sometimes conflict with lawyers encouraging clients to take collaborative and problem-solving approaches if clients have not been educated in these strategies. Clients need to be coached as to the goals of mediation and how to engage in integrative negotiations. However, in the end, lawyers have a duty to comply with their clients’ instructions even if in some cases they may perceive them to be unrealistic. Differences in the knowledge and skills that non-adversarial advocates are required to demonstrate As discussed above, whether operating in court or mediation settings, there is a common set of knowledge and skills that lawyers can draw upon. However, there is also a set of knowledge and skills that, it could be argued, are specifically relevant to non-adversarial advocacy. Lawyers can apply this knowledge when representing clients in mediations and when acting in a non-adversarial capacity, whether in negotiations, conciliations or less adversarial processes. The following are a few of these distinct areas which will be discussed in the context of lawyers representing clients in mediations. Understanding underlying interests and the causes of conflict When preparing for mediation it will assist to have an understanding of the underlying causes of conflict and of the client’s underlying interests. Lawyers can prepare clients to participate in integrative negotiations in mediation by encouraging them to think about their underlying concerns, needs and interests and some of the possible causes of conflict. The client can be encouraged to consider some suitable options which lie outside his or her legal positions, since remaining entrenched in positions once the session has commenced will usually mean that settlement cannot be achieved. They can also prepare their clients to engage in collaborative problem-solving. …

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Assessment of power imbalances Before organising mediation, a discussion needs to take place with the client as to whether there are any factors that could lead to an inequality of bargaining power. In particular, it is important to discover whether there are any power imbalances that may impact to such an extent that the client will be unable to negotiate assertively and effectively with the other party. Circumstances that can impact upon the ability to negotiate include where the client has a psychiatric or psychological disorder or physical disability, where there are cultural issues, and/or language difficulties. In family disputes, the source of an overwhelming power imbalance might be where there has been a history of (or current) family violence, particularly coercive or controlling violence. In some cases, concerns as to the level of assertiveness that a client could achieve with a former partner and/or safety concerns may mean that mediation is inappropriate, and negotiation between lawyers and litigation are the only suitable options. In some scenarios, it might be appropriate to assess whether power imbalances can be addressed by structuring the dispute resolution process in an appropriate way or by the use of certain strategies. For example, the lawyer can inform the mediator of the relevant issues and history. In turn, the mediator can structure the process in such a way that the power imbalances are minimised, for example, by way of shuttle or telephone link-up so that the parties will have no face-to-face contact. In this context, the benefits of legal representation in mediation are highlighted. A lawyer can provide support to the less powerful party and assist him or her to participate effectively, put concerns and interests forward, and help the party to remain assertive throughout the process. Understanding the different negotiation models An understanding of different negotiation models also assists in preparation for, and participation in, the mediation process. Lawyers can assist their clients to prepare to participate in integrative negotiations, which include interest-based strategies and the use of trade-offs and concessions, termed “logrolling”. They also require an understanding of distributive negotiation because this model is often used in the mediation of legal disputes. However, it can assist if clients are encouraged 230

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Representing clients from courtroom to mediation settings cont. to attempt settlement at the outset using integrative negotiation strategies. A discussion of the possible options outside of a client’s initial position will assist with option generation. To be adequately prepared, clients will need to gather necessary information to enable them to consider and develop more creative options. This type of knowledge is also important for litigators to discuss with their clients because they will continually be looking to see if settlement can be achieved without the need for a judicial officer to make a decision for the clients. Understanding the different mediation models In legal settings, there are two key models of mediation that tend to be used: “advisory” and “facilitative”. Advisory processes are those in which the mediator is not independent of the content of the dispute. He or she can give information and advice as to the range of likely court outcomes if the case proceeds to court and will actively encourage the participants to reach an agreement within this anticipated range. Evaluative mediation falls into this category. This role can be contrasted with that of a facilitative mediator who is more independent, assisting parties to generate their own options and come to a resolution, without offering views about appropriate settlement options. When organising mediation, legal representatives can make an informed choice as to which type of model might be appropriate for a particular client in a particular dispute. For example, high conflict cases that have been unresolved for some time may more likely benefit from an evaluative as opposed to a facilitative mediation model where parties need to be committed to settlement and able to generate their own options and solutions. In contrast, the facilitative model often suits family law parenting cases because it assists parents to come up with their own options and solutions that will be tailor-made to suit both their needs and the best interests of their children. An appreciation of the spectrum of roles that lawyers play in mediation

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In litigation, the role of lawyers tends to be fairly fixed. They should present their clients’ cases in the best possible light and seek to highlight the negative aspects of the other parties’ cases. The adversarial role is clearly defined in that the lawyer will negotiate on the client’s behalf, answer the opposing lawyer’s correspondence, draft documents, organise witnesses, organise subpoenas if needed, and appear in court. In mediation, the lawyer representative’s role is not as distinct. In some forums there is guidance for lawyers as to what role they should play; in others, it needs to be negotiated with the client and mediator. Rundle has identified a spectrum of roles that lawyers may play in mediation, differentiated by their levels of involvement: “absent advisor”, “advisor observer”, “expert contributor”, “supportive professional participant”, and “spokesperson”. For example, in a facilitative mediation where the client is expected to deliver an opening statement and develop options and solutions, it might be appropriate for a lawyer to play the “advisor observer”, adopting a fairly neutral role but being available to support the client and provide advice and negotiation assistance in private meetings. In an evaluative mediation, the role of “supportive professional participant” might be suitable – if the mediator requires the parties to provide opening statements, lawyers can then provide support, negotiation assistance and drafting skills in the event that agreement is reached. For a client subject to strong power dynamics, such as problems with family violence in a family mediation, it may be appropriate for the lawyer to act as “spokesperson”, talking on behalf of the client and taking a very active role. This may be necessary where clients do not feel confident enough to speak on their own behalf and request that the lawyer provide this extra assistance. The appropriate role for lawyers to play will depend on their clients and cases and will need to be negotiated with

[4.244]

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Representing clients from courtroom to mediation settings cont. clients prior to the mediation.

Position Statements [4.248] While the mediation process is largely about dialogue and oral communication, the

position statement is an important written form of communication between the parties and the mediator that takes place prior to the mediation. The position statement is not a court form or formal document so that there are not set rules for drafting a position statement. Lawyers or parties can structure the document in the manner which they best believe will assist in resolving the dispute or at least provide for a constructive dialogue. This usually means the following: • Plain English that can be understood by the parties and the mediator; • Clear and concise expression; • Logically ordered with headings and use of bullet points; • Respectfully worded; • Persuasive. This is an opportunity to communicate directly with an opponent and a mediator. In relation to content there are, again, no set rules. However, the Jackson ADR Handbook offers the following guidance as to matters that it regards as “essential” to include in a position statement:

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• Heading: it should be headed up with the names and description of the parties [eg plaintiff, lessor or sub-contractor] and marked “Without Prejudice and for use in the Mediation only”. [In Australia it is common for a mediation paper to be marked confidential as well as without prejudice.] It should clearly identify the party on whose behalf the statement is made. • Formalities: it should also include the date and time of the mediation, the name of the mediator, a list of the individuals attending the mediation on behalf of the party on whose behalf the statement is made, and their connection with the dispute [eg solicitor for the plaintiff or chief executive officer of the plaintiff]. • Facts: it should briefly outline the key facts of the case and the nature of the matters in complaint. • Issues: it should identify the issues in the case, both legal and factual. The statement should also identify the key issues that are of vital importance to the parties at the date of the mediation. This may be different from the list of factual and legal issues that arise in the case as it involves focusing on the matters that are of primary concern to the party. If these issues are resolved, all else tends to follow or fall away, so the mediation will primarily focus on these issues. • Outline of the party’s case on issues: the statement needs to clearly set out the party’s position in relation to each of the issues. The statement may make brief reference to statements of case, key documents or evidence, and matters of law that support the party’s position. It is important that this document persuades the other side of the merits of the 232

[4.248]

Alternatives to Litigation – Negotiation and Mediation

CHAPTER 4

case, and therefore the strength of the party’s negotiating position in relation to the disputed issues of fact or law. However, it should be written in a non-confrontational style. • The party’s interests and objectives: the key objectives that the party wants to achieve at the mediation should be identified. This section can draw attention to the costs of proceeding to trial, the element of irrecoverable costs, the desire to preserve relationships, the time it will take to resolve the dispute if mediation is unsuccessful or any other factors that influenced the party to mediate rather than litigate the dispute. It should also make clear the party’s commitment to resolving the dispute, if possible, at the mediation. … It may also be helpful to include in a position statement, or as an annexure, a chronology of events and a list of the main actors/parties involved in the dispute. The term “position statement” can be misleading where the aim is to employ interest-based negotiation which is synonymous with facilitative mediation. A position statement does not have to be limited to use with positional negotiation. As the Jackson ADR Handbook observes, the position statement should address a party’s interests and objectives. The position statement should facilitate rather than hinder interest-based negotiation.

Compulsory mediation [4.250] Compulsory mediation refers to mediation ordered by a court which has power to refer a matter to mediation without the parties consent. The development of compulsory mediation has seen an increase in the use of mediation but has also prompted questions about the efficacy of mandating mediation against a party’s wishes and the likelihood of success of such mediations. The CPA permits the court to make orders for compulsory mediation. The Victorian Law Reform Commission considered support for compulsory mediation in its 2008 report into the Civil Justice system.

Civil Justice Review

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[4.260] Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008) pp 258–259 It is already possible for courts to refer parties to mediation, even without their consent. However, as noted above, there are divided views over the desirability of making such compulsory referrals. There is considerable support for judicial referral of parties to mediation without consent. In Remuneration Planning Corporation Pty Limited v Fitton [2001] NSWSC 1208, at [3], Justice Hamilton of the NSW Supreme Court noted that mediations ordered over the objection of the parties might often be successful: Since the power was conferred upon the Court, there have been a number of instances in which mediations have succeeded, which have been ordered over opposition, or consented to by the parties only where it is plain that the Court will order the mediation in the absence of consent. It has become plain that there are circumstances in which parties insist on taking the stance that they will not go to mediation, perhaps from a fear that to show willingness to do so may appear a sign of weakness, yet engage in successful mediation when mediation is ordered. More recently, Justice Spigelman, Chief Justice of NSW, commented: One matter that appears somewhat counter intuitive is the conferral upon courts of a power to order mediation. This was once thought to be pointless because it appeared unlikely that a party who was ordered to mediate would be prepared to enter such negotiations in a co-operative manner. That has proven to be false. Reluctant starters have often proved to be willing participants in the negotiation process. It appears that many litigants have either not understood, or not been advised by their lawyers about, the weakness in their case, or have [4.260]

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Civil Procedure in New South Wales

Civil Justice Review cont. adopted a negotiating posture from the outset that they could not possibly lose. A formal order of the court requiring mediation has overcome such inhibitions and has proven particularly successful in a number of spheres of jurisdiction. [The Hon James J Spigelman, Chief Justice of New South Wales, Commercial Litigation and Arbitration: New Challenges (paper presented at the First Indo Australian Legal Forum, New Delhi, 9 October 2007).] NADRAC’s view is that: [T]he potential benefits, both in providing parties with a further opportunity to resolve their dispute and in ensuring publicly funded and scarce judicial resources are used only in determining intractable disputes, justify the continued use of court ordered ADR.

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[4.270] Section 26 of the CPA empowers the court to refer proceedings to mediation.

Section 25 defines mediation as “a structured negotiation process in which the mediator, as a neutral and independent party, assists the parties to a dispute to achieve their own resolution of the dispute”. Section 26 provides that all or part of a proceeding may be referred to mediation if the court “considers the circumstances appropriate”, even if the parties do not consent. The court can make directions “regulating the practice and procedure to be followed in a mediation, including the preparation and service of documents”: UCPR r 20.2. The parties have a duty to participate in the mediation in “good faith”: CPA s 27. The duty to act in good faith was considered in Waterhouse v Perkins [2001] NSWSC 13. The procedure in a mediation session requires that a person who attends the mediation has authority to settle the proceedings and they may attend with legal representatives: UCPR r 20.6. Statements made in the course of mediation are protected (as they are in judicial proceedings) in that they cannot give rise to an action in defamation: CPA s 30. A mediator cannot disclose information obtained in the mediation unless authorised by the CPA: s 31 (see discussion of privilege in Chapter 14 at [14.370] – [14.410]). A mediator to whom the court refers a proceeding has the same protection and immunity as a judicial officer: CPA s 33. The court can make orders to give effect to any agreement or arrangement arising out of a mediation session: CPA s 29. The particular circumstances may warrant an order for mediation. For example, the litigation is complex and protracted: Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 427 and Daya v CNA Reinsurance Co Ltd [2004] NSWSC 795. Or it may be ordered where the court is satisfied that the parties’ approach to the resolution of the proceedings is being unduly influenced by subjective considerations and may benefit from a skilled conciliator: Singh v Singh [2002] NSWSC 852. An order has been made where the parties have served all their evidence and would therefore not be disadvantaged by a mediation: New Idafe Inc v Barnard [2007] NSWSC 1107. The Supreme Court’s approach to mediation is further elaborated on in Practice Note SC Gen 6 Supreme Court – Mediation, 15 March 2010 which states (in part): Referrals generally 5. Part 4 of the CPA permits the Court at any stage of the proceedings, by order, to refer parties to mediation where, in the opinion of the Court, mediation appears appropriate. The Court’s power does not depend on the consent of the pa