Civil procedure in New South Wales [Fourth edition]
 9780455243467, 0455243468

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CIVIL PROCEDURE IN NEW SOUTH WALES

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CIVIL PROCEDURE IN NEW SOUTH WALES

FOURTH EDITION

MIIKO KUMAR Crown Prosecutor, Barrister at Law

PROFESSOR MICHAEL LEGG Faculty of Law University of New South Wales

ILIJA VICKOVICH Macquarie Law School Macquarie University

DR JAMES METZGER Faculty of Law University of New South Wales

LAWBOOK CO. 2020

Published in Sydney by Thomson Reuters (Professional) Australia Limited ABN 64 058 914 668 19 Harris Street, Pyrmont, NSW 2009 ISBN: 9780455243467

© 2020 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 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. Thomson Reuters (Professional) Australia Limited, and the authors, would like to thanks 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 owner in each case. Product Developer: Elizabeth Gandy Edited and typeset by Newgen Digitalworks 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 Ilija Vickovich dedicates his work on this edition to the health of his sons Aleks, Daniel and Damien James Metzger dedicates his chapters to Carol Metzger

v

FOREWORD The Hon John Basten Judge, NSW Supreme Court, Court of Appeal It may be that law students, and even neophyte lawyers, do not instinctively identify civil procedure as an intrinsically interesting, intellectually demanding or even an important topic. They would be wrong on each count. To know substantive law provides only half the picture. Some examples readily demonstrate why this is so. Take the plaintiff sleeping in the cabin of his prime mover while his co-driver undertakes a night time stretch of a rural highway. A black bull wanders in front of the vehicle. The fully laden road train hits the bull and overturns. The plaintiff is seriously injured. Who was at fault, and how should the plaintiff find out? Is there an applicable limitation period? If so, when will it expire? Resolutions of these procedural questions can be as complex and demanding as the tests of negligence and occupier’s liability which will underpin any claim. Other recent issues have concerned the power of the NSW Civil and Administrative Tribunal (NCAT) to deal with landlord and tenant disputes where the landlord of NSW premises resides interstate; the right of an unsuccessful party in bankruptcy proceedings in the Supreme Court to appeal to the New South Wales Court of Appeal; and whether a court hearing a class action could order that a portion of a putative award of damages be payable to the plaintiff’s litigation funder and lawyers, thus allowing security for their fees in the event the claim is successful. Can the same be done for creditors in a corporate liquidation? Sometimes courts exercise “inherent” powers which are not expressly conferred by statute or rules made under a statute; do tribunals enjoy similar inherent powers as a result of their establishment and constitution? In many disputes, one party will benefit from speedy resolution, while the other would prefer delay and procrastination. Sometimes the parties, or one of them, thinks that they can resolve the dispute if the court will answer separately and in advance of a full trial, one specific question. The party asks the judge to state a question for separate determination. When should that procedure be adopted? Will it really shortcut a potentially costly trial, or will it undermine the orderly resolution of the whole dispute? Usually the process will work only if the question is answered one way. Even if that occurs, will the losing party seek to appeal? Large forensic battles can be fought over such procedural steps. Are our procedures well attuned to delivery of just, quick and cheap justice? This book provides materials to allow any thoughtful reader to explore such questions and assess the justifications for the answers. Like most subjects in a modern law school curriculum, a proper understanding of procedure requires skills in statutory interpretation. All law students now receive, or should receive, specialised training in this intellectual discipline. In the past, courses on statutory interpretation, rather like courses on civil procedure, have been undervalued, or taught interstitially in substantive courses. Civil procedure requires skill in construing such materials in a special context. To understand a document, it is necessary to see the actual text, not just read what a judge has said about it. This book sets out the important statutory provisions and the relevant rules. It also provides key forms, which will help readers who do not have ready access to such materials. Finally, as the world grows in complexity, so do dispute settlement procedures. The efforts of the authors in keeping this valuable text up to date are much to be commended. This fourth edition is most welcome.

vii

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 (UNSW) and Macquarie University respectively over a number of years. They also have numerous years of experience as practitioners in New South Wales. For the fourth edition, they are joined by Dr James Metzger from UNSW who has convened and taught civil procedure at UNSW and the University of Sydney. This text draws on the authors’ combined experience. The text is aimed at 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 litigation and dispute resolution practitioners. 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 Hon John Basten for writing the Foreword. Thanks are also due to the Thomson Reuters staff who have shepherded this book to completion, including Elizabeth Gandy, and Nicholas Riley. Miiko Kumar, Michael Legg, Ilija Vickovich and James Metzger Sydney, December 2019

ix

CONTENTS Dedication............................................................................................................................................. v Foreword.............................................................................................................................................. vii Preface.................................................................................................................................................  ix Table of Cases..................................................................................................................................... xiii Table of Statutes.............................................................................................................................. xxvii

1

Introduction to Civil Procedure............................................................................  1

2

Case Management in New South Wales............................................................  67

3

Costs of Litigation................................................................................................  119

4

Alternatives to Litigation –​Negotiation and Mediation.............................  187

5

Alternatives to Litigation –​Arbitration, Referees and Expert Determination......................................................................................................  237

6

Before a Civil Action Commences.....................................................................  287

7

Causes of Action and Parties.............................................................................  357

8

Class Actions in New South Wales....................................................................  415

9

Initiating Proceedings and Pleadings..............................................................  487

10 Amendment, Mistakes and Adjournments.....................................................  527 11 Service of Documents..........................................................................................  575 12 Discovery, Subpoenas and Interrogatories.....................................................  615 13 Preparing and Presenting Evidence.................................................................  741 14 Privilege.................................................................................................................  835 15 Concluding Proceedings.....................................................................................  929 16 Civil Procedure in Context...............................................................................  1011 Index..............................................................................................................................................  1055

xi

TABLE OF CASES A A v Bird; C v Bird [2015] NSWSC 570 ..................................................................................... [1.298] 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] 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] AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234 .............................................. [14.165] Ada Evans Chambers Pty Ltd v Santisi [2014] NSWSC 538 ...................................................... [3.380] Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503 ........................................................ [15.60] Agar v Hyde (2000) 201 CLR 552; 173 ALR 665; 74 ALJR 1219; [2000] HCA 41 ................... [11.430] Ahmad v South Western Sydney Local Health District [2018] NSWSC 1327 .......................... [12.480] Ahmed El Hayek v Josslyn Vasic & Anor; QBE Insurance (Australia) Limited v Wesfarmers Federation Insurance Pty Ltd [2010] NSWSC 1498 ........................................ [12.480] 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] Anglo-​Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 .............. [3.110] 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], [3.110], [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] Attorney-​General (NT) v Maurice (1986) 161 CLR 475 ......................................................... [14.218] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; 229 ALR 457; [2006] HCA 46 .................................................................................................................. [6.166] Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 ...................................................................................................... [8.750] Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL [2011] FCA 938 ..........................................................................................[14.300], [14.330] Azzi v Volvo Car Australia Pty Ltd (2007) 71 NSWLR 140 ...................................................... [14.410] xiii

Civil Procedure in New South Wales

B B v Auckland District Law Society [2003] 2 AC 736 ............................................................... [14.218] BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400 .....................................[6.40], [6.50] BUSB v King [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] 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] Bechara v Bates [2018] FCA 460 ............................................................................................. [3.380] 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] Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29 ...................................................................... [3.380] Bendir v Anson [1936] 3 All ER 326 ......................................................................................... [7.210] Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd [2018] NSWSC 298 ............... [3.250] Best v Samuel Fox & Co Ltd [1952] AC 716 ............................................................................ [3.380] 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] Bleyer v Google Inc [2014] NSWSC 897 ................................................................................... [3.57] Blue Oil Energy Pty Limited v Tan [2014] NSWCA 81 .............................................................. [3.410] Board of Examiners v XY [2006] VSCA 190; (2006) 25 VAR 193 .............................................. [3.110] Boral Bricks Pty Ltd v Cosmidis [2013] NSWCA 443 ................................................................ [9.300] Bostock v Ramsey Urban District Council [1900] 2 QB 616 ..................................................... [3.110] Botany Bay City Council v Minister for Local Government (No 2) [2016] NSWCA 127 .......... [15.268] Bradken Resources Pty Ltd v The ANI Corp Ltd [2002] NSWSC 463 ........................................ [5.300] Bray v F Hoffmann-​La Roche Ltd (2003) 130 FCR 317; [2003] FCAFC 153; [2003] FCA 1505 ..................................................................... [7.415], [8.300], [8.890], [8.1000] Breen v Williams (1996) 186 CLR 71 ..................................................................................... [14.218] 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]

C CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1; [2005] HCA 64 ........................................ [3.380] xiv

Table of Cases

Cachia v Hanes (1994) 179 CLR 403 ............................................................ [3.380], [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] Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 .........................[15.260], [15.265], [15.268] 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 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] Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 ................................................ [14.218] 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] Cassegrain v Gerard Cassegrain & Co Pty Ltd [2011] NSWSC 241 ........................................ [12.480] Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027 ................................................... [3.380] 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] 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 ..............................................................................................[5.255], [5.260] Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 ........................................................................................................ [15.290] Colgate-​Palmolive Pty Ltd v Cussons [1993] FCA 536; (1993) 46 FCR 225 .............................. [3.400] 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], [14.218] Commissioner for Railways, The v Small (1938) 38 SR 654 ....................................[12.145], [12.390] Commonwealth v Mewett (1997) 191 CLR 471; [1997] HCA 29 ............................................ [3.110] 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 The Queen (1988) 164 CLR 350 ............................................................................ [15.340] Courtney v Medtel Pty Ltd [2001] FCA 1037 .......................................................................... [8.830] Cox v Joumeaux (1935) 52 CLR 713 ..................................................................................... [15.130] Cronau v Vavakis (No 2) [2018] NSWSC 1644 ........................................................................ [15.60] Cronau v Vavakis (No 3) [2018] NSWSC 1973 ........................................................................ [15.60] xv

Civil Procedure in New South Wales

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] Da Silva Moore v Publicis Groupe, 287 FRD 182 (SDNY 2012) .............................................. [12.356] Dai v Zhu [2013] NSWCA 412 ................................................................................................ [15.60] Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 .......................................................................[14.90], [14.218] Dank v Cronulla-​Sutherland District Rugby League Football Club (No 3) [2013] NSWSC 1850 ......................................................................................................... [15.60] Dank v Cronulla Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 ........................................................................................................... [15.60] Dank v Whittaker (No 1) [2013] NSWSC 1062 ....................................................................... [15.60] 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] David Brown v BCA Trading [2016] EWHC 1464 (Ch) ........................................................... [12.357] Dawdy, Re (1885) 15 QBD 426 .............................................................................................. [5.340] Daya v CNA Reinsurance Co Ltd [2004] NSWSC 795 .............................................................. [4.270] De Jong v Carnival PLC (No 3) [2016] NSWSC 1461 ............................................................. [8.1003] 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] Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 262 ...................... [3.57] 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 King (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] Donald Campbell & Co v Pollak [1927] AC 732 ...................................................................... [3.110] 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] Douglas Corporation v Currico Nominees [2007] NSWSC 113 ............................................. [12.145] 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] Duke of Bedford v Ellis [1901] AC 1 .......................................................................................... [8.80] Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 .................................................... [15.60] DuPont Nutrition Biosciences ApS v Novozymes A/​S (UK) [2013] EWHC 155 ........................ [14.230]

E Egan v Chadwick (1999) 46 NSWLR 563 .............................................................................. [14.300] Eades v Endeavour Energy [2018] NSWSC 801 ..................................................................... [8.1007] Edwards v Hornsby Shire Council [2014] NSWSC 600 .......................................................... [12.480] Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 ....................... [5.85] Environment Protection Authority v Queanbeyan City Council [2011] NSWLEC 159 ............... [14.40] Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 ............................................ [8.130] 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], [14.130], [14.140] xvi

Table of Cases

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], [14.218], [14.230]

F FPM Constructions Pty Ltd v City of the Council of the Blue Mountains [2005] NSWCA 340 ........................................................................................................... [3.400] 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] Findex Group Ltd v McKay [2019] NSWCA 93 ........................................................................ [6.250] 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] Franks & Anor v Berem Constructions Pty Ltd (unreported, NSWCA 2 December 1998, BC 9806367) ........................................................................................................... [5.260] Frizelle v Bauer [2009] NSWCA 239 ........................................................................................ [6.130]

G Gardiner v The Queen (2006) 162 A Crim R 233 .................................................................. [14.300] 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] Glencore International AG v Commissioner of Taxation [2019] HCA 26 ................................ [14.218] 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] Goddard v Nationwide Building Society [1987] QB 670 ....................................................... [14.218] Goold & Porter Pty Ltd v Housing Commission [1974] VR 102 ............................................... [7.180] Graczyk v Graczyk [1955] SLR (CN) 1077 ............................................................................. [11.120] Graham v Minister for Immigration and Border Protection [No 2] [2018] FCA 1116 ............... [3.110] 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], [14.165], [14.218] Graphite Energy Pty Ltd v Lloyd Energy Systems Pty Ltd [2014] NSWSC 1326 .......[12.240], [12.280] Grassby v The Queen (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] Greenacre Business Park Pty Ltd v Deliver Australia Pty Ltd (in liq) [2014] NSWSC 1646 ......... [3.400] 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] Guss v Veenhuizen [No 2] [1976] HCA 57; (1976) 136 CLR 47; [1976] HCA 57 ...................... [3.380] xvii

Civil Procedure in New South Wales

H HIH Insurance Ltd, Re [2007] NSWSC 498 .................................................................[1.240], [1.260] Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 ............................................................ [3.57] 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] Harold v Smith [1860] EngR 516; (1860) 5 H & N 381 .......................................................... [3.110] Harris v Bellemore [2009] NSWSC 1497 ............................................................................... [13.340] Hartford Holdings Pty Ltd v CP (Adelaide) Pty Ltd [2004] SASC 161 ....................................... [3.380] Hart Security Australia Pty Ltd v Boucousis (No 2) [2014] NSWSC 1815 ................................ [15.255] Hassid v Queensland Bulk Water Supply Authority t/​as Seqwater (No 2) [2017] NSWSC 1064 ..................................................................................................................... [8.475] Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305 .......................................................... [14.165] Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 ................... [12.90] Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 ................................................... [3.400] Hearne v Street (2008) 235 CLR 125 .....................................................................[12.490], [12.500] Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646 .................................................. [5.280] 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 ................................................................... [11.420] 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] Hollier v Australian Maritime Safety Authority [No 2] [1998] FCA 975 ..................................... [3.110] Hooper Bailie Associated Ltd v Natcan Group Pty Ltd (1992) 28 NSWLR 194 .......................... [4.340] House v The King (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] ISTIL Group Inc v Zahoor [2003] 2 All ER 252 ....................................................................... [14.218] 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 Bank Resolution Corporation Ltd v Quinn [2015] IEHC 175 ........................................... [12.357] Irish Shipping Ltd v Commercial Union Assurance Co Plc [1991] 2 QB 206 ............................... [8.80]

J J P Morgan Trust Australia Ltd v Kapetanovic [2007] NSWSC 1423 ....................................... [12.450] Jabulani Pty Ltd v Walkabout II Pty Ltd [2016] NSWCA 267 .................................................... [5.255] 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] xviii

Table of Cases

Jameel (Yousef) v Dow Jones & Co Inc [2005] EWCA Civ 75; [2005] QB 946 ........................ [14.230] Jameson v Professional Investment Services Pty Ltd [2009] NSWCA 28 ........ [8.680], [8.690], [8.700] Jamieson v King (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 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] Johnston v Endeavour Energy [2016] NSWSC 1132 ................................................................ [8.780] Jones v Bradley (No 2) [2003] NSWCA 258 ........................................................................... [15.268] 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] Keating v South East Sydney Illawarra Area Health Service (unreported, Supreme Court (NSW), 7 July 2006) ............................................................................................... [12.480] Kebaro Pty Ltd v Saunders [2003] FCAFC 5 ............................................................................. [3.400] Kelly v Mina [2014] NSWCA 9 ................................................................................................ [10.70] Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44; (2002) 54 NSWLR 135 ......................... [9.180] Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178; 66 ALJR 560 .................[3.390], [3.400] 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] Lane v Registrar of the Supreme Court [1981] HCA 35; (1981) 148 CLR 245 ........................ [12.145] 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] HCA 59; (1990) 170 CLR 534 ..............................................[3.110], [3.190] Laurie v Carroll (1958) 98 CLR 310; [1958] HCA 4 ...................................................[11.70], [11.220] Lawindi; Re Elkateb v Elkateb (2001) 187 ALR 479; [2001] FCA 1527 ................................... [11.120] Leach v The Nominal Defendant [2014] NSWCA 391 ............................................[15.230], [15.250] Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 ....................... [5.340] Leichardt Municipal Council v Green [2004] NSWCA 341 ..................................................... [15.268] Leighton International v Hodges [2012] NSWSC 458 ............................................................ [12.240] Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163 .................. [4.340] Lipton v King [2010] NSWCCA 175 ...................................................................................... [12.400] xix

Civil Procedure in New South Wales

Liristis v Gadelrabb [2009] NSWSC 441 ................................................................................ [12.430] London Scottish Benefit Society v Chorley (1884) 13 QBD 872 .............................................. [3.380] 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]

M MZARS v Minister for Immigration and Border Protection [2017] FCA 177 ............................. [3.110] MacDougall v Curleveski (1996) 40 NSWLR 430 ....................................................................... [5.30] Macatangay v New South Wales (No 2) [2009] NSWCA 272 ................................................ [15.350] Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 ...... [5.255] 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] Marango Investments Pty Ltd v Kingdom Towers 4 Pty Ltd [2019] NSWSC 801 ...................... [6.186] 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 .................................................................................... [7.450] Mastronardi v New South Wales [2007] NSWCA 54 ...................................................[1.360], [1.370] Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 .............................................. [8.715] Matthews v SPI Electricity Pty Ltd (Ruling No 2) [2011] VSC 168 ............................................ [8.850] May v Christodoulou [2011] NSWCA 75; 80 NSWLR 462 ....................................................... [3.400] McConnell Dowell Constructors v Santam (2016) 51 VR 421 .................................[12.357], [12.358] McGuire v Secretary for Justice [2018] NZSC 116 ................................................................... [3.380] McGuirk v University of New South Wales [2010] NSWCA 104 ............................................... [2.240] McIlraith v Ilkin (Costs) [2007] NSWSC 1052 .......................................................................... [3.380] 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] Midgley v Midgley [1893] 3 Ch 282 ....................................................................................... [3.380] 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] Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 .................................. [15.268] Mohareb v Palmer [2016] NSWCA 378 ................................................................................. [15.268] 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] “Mr C” (1993) 67 A Crim R 562 ................................................................................[1.180], [1.200] 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 Legal Services Commissioner [No 2] [2013] QSC 253 ............................................. [3.380] Murphy v Young & Co Brewery [1997] 1 WLR 1591 ............................................................... [3.390] xx

Table of Cases

N NSW Commissioner of Police v Tuxford [2002] NSWCA 139 ..................................[12.390], [12.410] Nadarajapillai v Naderasa (No 2) [2015] NSWCA 209 ............................................................. [3.250] 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] Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 ............................................................. [3.110] Norris v Kandiah [2007] NSWSC 1296 .................................................................................. [12.145] Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2008] QCA 160 ............. [5.340] Northern Territory v Sangare [2019] HCA 25 .............................................................[3.100], [3.110] 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]

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], [15.268] Oshlack v Richmond River Council (1998) 193 CLR 72; 72 ALJR 578; 152 ALR 83; [1998] HCA 11 ........................................................................ [3.110], [3.200], [3.450], [15.268] Owners Corporation -​Strata Plan 61732 v TR Druce Pty Ltd [2009] NSWSC 1024 .................... [3.57]

P P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 .................... [8.730] PGA v The Queen (2012) 245 CLR 355; [2012] HCA 21 ....................................................... [14.218] PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36 ........................................ [6.170] Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406 ....................................... [13.620] Palacath Ltd v Flanagan [1985] 2 All ER 161 ........................................................................... [5.340] 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] Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869 ................................................ [12.145] Payne v Young (1980) 145 CLR 609 ..........................................................................[7.180], [7.250] Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 .......................................[1.60], [1.70] Pennington v Russell [No 2] [1883] NSWLawRp 47; (1883) 4 LR (NSW) Eq 41 ....................... [3.380] Penrith Rugby League Club Limited v Brown [2004] NSWSC 1182 ....................................... [12.145] Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150 ............................................................... [3.380] Percy v General Motors Holden Pty Ltd [1975] 1 NSWLR 289 ................................[12.150], [12.230] xxi

Civil Procedure in New South Wales

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] 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] Pyrrho Investments Ltd v MWB Property Ltd [2016] EWHC 256 (Ch) .................................... [12.357]

Q Qantas Airways Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34 .................................................... [7.390] Quach v Mustafa (unreported, NSWCA, 15 June 1995) ............................................................ [5.30]

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 Derby Magistrates’ Court; Ex parte B [1996] AC 487 ....................................................... [14.218] R v Hawi (No 2) [2011] NSWSC 1648 ..................................................................................... [14.40] R v Kwok (2005) 64 NSWLR 335 ............................................................................................. [1.180] 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] R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563 ........ [14.218] 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] Redden v Chapman [1949] NSWStRp 28; (1949) 50 SR (NSW) 24 ......................................... [3.110] 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] Reinehr Industrial Lease & Finance Pty Ltd v Jordan ............................................................... [15.60] Remuneration Planning Corporation Pty Limited v Fitton [2001] NSWSC 1208 ...................... [4.260] Richards v Cornford (No 3) [2010] NSWCA 134 ..................................................................... [15.60] Richmond Valley Council v Jardine Lloyd Thompson Pty Ltd [2019] NSWSC 126 .................... [8.590] Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13 ............................................................ [5.85] Rinehart v Nine Entertainment Co Holdings Ltd [2015] NSWSC 239 ..................................... [12.100] xxii

Table of Cases

Rinehart v Welker [2011] NSWCA 403 .................................................................................... [1.290] Rinehart v Welker (2012) 95 NSWLR 221 .................................................................................. [5.85] Rio Tinto v Vale [2015 WL 872294 (SDNY), 14 Civ 3042 (RMP)(AJP) (2 March 2015) ........... [12.357] Rippon v Chilcotin (2001) 53 NSWLR 198; [2001] NSWCA 142 .................................[7.110], [7.120] Ritter v Godfrey [1920] 2 KB 47 .................................................................................[3.110], [3.200] Roads & Traffic Authority of NSW v Australian National Car Parks Pty Ltd (2007) 47 MVR 502; [2007] NSWCA 114 ........................................................................................... [12.70] Roads & 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], [8.630] Rowlands v State of NSW [2009] NSWCA 136 ...................................................................... [13.690] Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516 .................................................... [8.1040] Rozenbilt v Vainer (2018) 262 CLR 478; [2018] HCA 23 ......................................................... [2.258] Russell v Russell (1976) 134 CLR 495 ...................................................................................... [1.200] Ryan v Watkins [2005] NSWCA 426 ...................................................................................... [14.300]

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] Scott v Secretary, Department of Social Security [No 2] [2000] FCA 1450 ............................... [3.110] Scottish Gympie Gold Mines Ltd v Carroll [1902] St R Qd 311 ................................................ [3.110] Sedrak v Starr [2009] NSWSC 996 .......................................................................................... [2.310] Selliah v Minister for Immigration and Multicultural Affairs [1998] FCA 469 ............................ [3.110] Seven Network (Operations) Ltd v Warburton (No 1) [2011] NSWSC 385 .............................. [1.230] 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] Singapore Airlines Cargo Pte Limited v Principle International Pty Ltd (No 2) [2017] NSWCA 340 ......................................................................................................... [15.268] Silverside Superfunds Pty Ltd v Silverstate Developments Pty Ltd [2008] NSWSC 904 ............. [9.420] Singh v De Castro [2017] NSWCA 130 ................................................................................... [3.410] 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] Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2] [1953] 1 WLR 1481; [1953] 2 All ER 1588 ................................................................................................ [3.110] Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited (No 4) [2018] NSWSC 1584 .................................................................... [8.782] 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] xxiii

Civil Procedure in New South Wales

Stewart v Moore [1921] St R Qd 182 ...................................................................................... [3.110] Stollznow v Calvert [1980] 2 NSWLR 749 ............................................................................. [15.170] Street v Luna Park Sydney Pty Ltd [2006] NSWSC 95 ............................................................ [12.380] Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205 ................[5.330], [5.340] 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]

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] TW McConnell Pty Ltd as trustee for the McConnell Superannuation Fund v SurfStitch Group Ltd (subject to deed of company arrangement) (No 3) [2018] NSWSC 1749 ......................................................................................................... [8.713] 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] Three Rivers District Council v Governor and Company of the Bank of England [No 6] [2005] 1 AC 610 .............................................................................................................. [14.218] Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; [2016] HCA 44 .....................................................................................................[7.165], [8.873] Timbercorp Finance Pty Ltd (in liq) v Tomes [2016] HCA 44 ................................................... [7.165] 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] Tozier v Hawkins (1885) 15 QBD 680 ..................................................................................... [3.110] Trade Practices Commission v Arnotts Limited (No 2) (1989) 21 FCR 306 ............................. [12.390] Treadwell v Hickey [2010] NSWSC 1119 ................................................................................. [3.270] Treloar Constructions Pty Ltd v McMillan (No 2) [2017] NSWCA 146 ................................... [15.268] 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 UBS AG v Tyne [2018] HCA 45 ............................................................................................... [2.258] United Group Rail Services Ltd v Rail Corporation NSW [2009] NSWCA 177 ........................... [4.350]

xxiv

Table of Cases

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] 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]

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] Waterford v The Commonwealth (1987) 163 CLR 54 ........................................................... [14.218] 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] Wee Shuo Woon v HT SRL [2017] 2 SLR 94 .......................................................................... [14.218] 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], [15.268] Winn v Garland Hawthorn Brahe (Ruling No 1) [2007] VSC 360 ............................................. [3.380] 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]

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

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]

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

xxv

TABLE OF STATUTES 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] 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], [8.1003] s 33ZJ: [8.960] s 37M: [2.80] s 37N: [2.80] s 43(1A): [8.940], [8.1000] s 43(3)(f): [2.80] s 157(1)(a): [8.300]

COMMONWEALTH Australian Consumer Law s 18: [7.80] Australian Securities and Investments Commission Act 2001: [7.165] Australian Solicitors’ Conduct Rules r 17.1: [3.380] r 27.1: [3.380] Commercial Arbitration Act 2010: [11.390] Constitution: [1.610], [1.620] Ch III: [1.610], [6.30] s 71: [1.610] s 73: [1.610] s 75: [1.610] s 76: [1.610] s 77: [1.610] Corporations Act 2001: [7.165], [9.20] s 109X(1)(a): [11.130] s 459G: [12.145] s 1335: [3.410] Crimes Act 1914 s 3ZQR: [14.90] Evidence Act 1995: [14.20], [14.40] s 128A: [6.210]

Federal Court of Australia Amendment Act 1991: [8.110]

Evidence Amendment Act 2008: [14.20]

Freedom of Information Act 1982: [12.10], [12.70], [14.20]

Family Law Act 1975: [1.630]

International Arbitration Act 1974: [5.40], [11.390]

Family Law Rules 2004 r 1.07: [2.80] r 1.08: [2.80] r 19.10: [2.80]

Judiciary Act 1903 s 34: [1.610] s 35: [1.610] s 35A: [1.610] s 35AA: [1.610] s 38: [1.610] s 20: [11.330] s 20(3): [11.320], [11.330] s 20(4): [11.320] s 20(5): [11.320]

Federal Court Rules O 6, r 8: [7.360] O 62A: [3.510] Federal Court Rules 2011 O 8, r 3(2): [14.330] r 9.05: [7.360] r 10.43: [14.330]

Jurisdiction of Courts (Cross-​vesting) Act 1987: [6.30], [11.300], [11.330], [11.390] s 4: [6.30]

Federal Court of Australia Act 1976: [1.620], [8.120], [8.150], [8.170], [8.250], [8.890], [8.1000] Pt IVA: [8.110], [8.340], [8.440], [8.650] s 23: [6.163] s 31A: [15.140] s 33C: [8.150], [8.250]

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015: [2.270] Migration Act 1958: [3.110]

xxvii

Civil Procedure in New South Wales

National Security Information (Criminal and Civil Proceedings) Act 2004: [14.300] Service and Execution of Process Act: [11.220] Service and Execution of Process Act 1992: [11.220], [11.300] Pt 2, Div 1: [11.310] Pt 3: [11.310] ss 13–​16: [11.300] s 21: [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], [7.165], [14.330] s 52: [6.180] Trans-​Tasman Proceedings Act 2010 Pt 2, Div 2: [11.410] 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]

NEW SOUTH WALES Aboriginal Land Rights Act 1983 s 239A: [4.155] Administrative Decisions Tribunal Act 1997 (NSW) s 73(2), [14.370] Arbitration (Civil Actions) Act 1983: [5.30] Children and Young Persons (Care and Protection) Act 1998 s 65: [4.155] Civil Justice Review, Report (2008): [1.440] Civil Liability Act 2002 s 5O: [12.480] 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], [3.57], [3.500], [4.250], [7.50], [8.200], [10.10], [10.180], [10.200], [14.370], [15.60], [15.440] Pt 4: [4.270] Pt 5: [5.20] Pt 6: [15.230] Pt 10: [8.170], [8.650], [8.873] s 3: [9.10] s 3(1): [3.380] s 8: [1.30], [2.330] s 9: [1.30], [2.330] ss 14–​16: [2.330] s 14: [10.40], [10.50] 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] ss 25–​34: [4.280] s 25: [4.270], [14.390] s 26: [4.270] s 27: [4.270] ss 29–​31: [14.390] s 29: [4.270] s 29(2): [14.370] s 30: [4.270], [14.370] s 31: [4.270] s 33: [4.270] s 37: [5.30] s 38: [5.30] ss 42–​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], [2.80], [2.150], [3.10], [3.57], [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] ss 56–​58: [3.57] ss 56–​59: [3.20] ss 56–​60: [2.140], [7.170], [15.160] ss 56–​61: [10.50], [14.370] s 56(1): [8.650], [10.240], [13.710], [14.370] s 56(2), [14.370] s 56(3): [2.130] s 56(4): [1.80], [3.120] s 57: [1.80], [2.130], [2.140], [7.220], [7.430], [10.40], [10.50], [10.240], [13.570], [15.10], [15.30] s 58: [1.80], [2.130], [10.40] s 58(1): [2.130] s 58(1)(a)(ii): [10.240] xxviii

Table of Statutes

Civil Procedure Act 2005 — cont 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], [3.57], [3.60] ss 61–​63: [2.190] s 61: [10.40] s 61(1): [12.240] 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: [3.57], [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], [3.400], [15.230], [15.268] s 98(1): [3.380], [3.400] s 98(1)(c): [15.268] s 98(4)(c): [3.400] s 99: [3.10], [3.250], [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] s 107: [15.570] s 108: [15.600] ss 117–​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], [8.340] s 158(2): [8.250], [8.340] s 159: [8.590] s 159(1): [8.590] s 159(2): [8.590] s 161: [8.270] s 161(2): [8.290] s 162: [8.590], [8.600] s 162(1): [8.713] ss 164–​167: [8.410] s 164: [8.400] s 165: [8.400] s 166: [8.394], [8.400] s 166(1): [8.475] s 166(1)(d): [8.470] s 166(1)(e): [8.475], [8.660]

s 166(2): [8.660], [8.700] ss 168–​170: [8.394] s 168: [8.530] 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(1)(a): [8.713] s 175(2): [8.713] 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], [8.1007] s 182: [8.880], [8.890], [8.1007] s 183: [8.475], [8.713], [8.900], [8.910] s 184: [8.960] Civil and Administrative Tribunal Act 2013: [1.530] ss 82–​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 8(1): [5.85] 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–​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] Court Suppression and Non-​Publication Orders Act 2010: [1.160], [1.270], [1.280], [9.20], [14.300] s 3: [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] xxix

Civil Procedure in New South Wales

ss 121–​126: [14.170], [14.180] s 121: [14.170], [14.180] s 121(2): [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], [14.180] s 124: [14.170], [14.180] s 125: [14.170], [14.180] s 125(1)(a): [14.170] s 125(1)(b): [14.170] s 126: [14.170] ss 126A–​126E: [14.250] s 126A: [14.240] s 126B: [14.240], [14.260] s 126B(2): [14.240] s 126B(3): [14.240] ss 126G–​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] 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]

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] Pt 2: [1.310] Pt 3: [1.310] ss 5–​13: [1.310] s 9(1): [1.310] s 12: [1.310] s 13(2): [1.310] ss 14–​18: [1.310] ss 19–​25: [1.310] s 39: [1.310] Criminal Appeal Act 1912 s 5F: [12.420] Criminal Procedure Act 1986 Ch 6, Pt 5: [14.10] Pt 5, Div 2: [14.10] Div 1B: [14.10] s 126H: [14.10] District Court Act 1973: [1.30], [2.130] s 44: [11.220] s 47: [11.220] 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] District Court Rules 1973: [1.30] Dust Diseases Tribunal Act 1989: [1.560] Dust Diseases Tribunal Regulation 2013 cl 34: [4.155] Electronic Transactions Act 2000: [2.300] cl 14: [2.310] ss 14A–​14R: [2.300] Sch 1, cl 2: [2.330] Sch 1, cl 3: [2.300], [2.330] Evidence Act 1995: [1.30], [6.210], [6.260], [13.50], [14.20], [14.270] Pt 3.10: [14.40] Div 1C: [14.270] s 76: [13.260] ss 117–​120: [14.130] s 117: [14.120], [14.165], [14.190] s 118: [14.40], [14.90], [14.120], [14.140], [14.200] s 119: [14.40], [14.90], [14.120], [14.140], [14.165] s 120: [14.120]

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] xxx

Table of Statutes

s 48: [6.80] s 50C: [6.80], [6.100], [6.110] ss 50C–​50F: [6.110] s 50C(1)(a): [6.80] s 50C(1)(b): [6.80] s 50D: [6.100] s 50F: [6.140] ss 52–​56: [6.145] s 52: [6.140] s 55: [6.140] s 56: [6.140] s 56A: [6.80] s 57: [6.80], [6.100] s 57A: [6.80], [6.100] s 58: [6.100] s 60C: [6.80], [6.100] s 60E: [6.80], [6.100] s 62A: [6.80], [6.100], [6.110] s 62B: [6.80], [6.100], [6.110] s 62D: [6.110], [6.110]

Independent Commission Against Corruption Act 1988: [1.550] Industrial Relations Act 1996: [1.515] s 165: [12.370] s 207: [12.370] Interpretation Act 1987 s 21: [14.40] s 40: [2.330] s 41: [2.330] Pt 6: [2.280] Jurisdiction of Courts (Cross-​vesting) Act 1987 s 5: [6.30] Land and Environment Court Act 1979: [1.490] s 34AA: [4.155] 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]

Local Court Act 2007: [1.30] s 29: [1.510] ss 39–​41: [15.400] s 39: [15.390] s 40: [15.390]

Legal Profession Act 2004: [3.190]

Local Court Rules 2009: [1.30]

Legal Profession Uniform Conduct (Barristers) Rules 2015 r 36: [4.10]

Local Courts (Civil Claims) Act 1970: [2.130] Mental Health Act 2007: [1.570]

Legal Profession Uniform Law: [3.190] ss 181–​183: [8.960]

Motor Accidents Compensation Act 1999 s 109: [6.80]

Legal Profession Uniform Law Application Act 2014 s 193: [3.220] Sch 2: [3.220], [9.20], [9.30]

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–​31: [13.190] s 32: [13.110] s 33: [13.190] s 34: [13.110]

Legal Profession Uniform Law Application Regulation 2015 Pt 6: [3.190] reg 59: [3.190] Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 r 7.2: [4.10]

Oaths Regulation 2011 regs 3–​7: [13.120] Sch 1: [13.120]

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]

Privacy and Personal Information Protection Act 1998 s 49: [4.155] 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] xxxi

Civil Procedure in New South Wales

Pt 25: [6.260] Pt 25, Div 2: [6.210] 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] s 39: [5.30] s 40: [5.30] s 42: [5.30] r 25.2(1)(c): [6.150] r 1.8: [14.40], [14.60] 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] rr 2.1–​2.3: [2.200] r 2.1: [3.410], [3.460] rr 3.1–​3.15: [2.310] r 3.3: [2.310] r 3.8: [2.310] r 3.9: [2.310] rr 4.2–​4.9: [9.20] rr 5.1–​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)–​(c): [7.400] r 6.18(1)(d): [7.400] rr 6.19–​6.28: [7.60] r 6.19: [7.170], [7.180], [7.190], [7.200], [7.260], [7.400] r 6.19(2): [7.320] r 6.20: [7.190] r 6.21: [7.190]

Road Transport (Vehicle Registration) Regulation 1998: [12.70] reg 15: [12.70] Security Industry Act 1997 (NSW): 14.370 Strata Schemes Management Act 2015 s 218: [4.155] Succession Act 2006 s 98: [4.155] 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] Pt 51, r 23: [1.360], [1.370] r 1(1): [2.130] r 13: [8.80], [8.130] Transport Administration Act 1988: [14.70] s 35R: [14.70] Uniform Civil Procedure (Amendment No 83) Rule 2016: [11.380] Uniform Civil Procedure Rules 2005: [1.30], [2.10], [2.130], [2.180], [2.280], [2.320], [3.10], [3.57], [3.500], [5.210], [8.80], [8.170], [10.10], [10.40], [10.180], [10.200], [11.10], [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] Pt 4: [9.117] Pt 5: [12.50] Pt 6, Div 5: [7.60] Pt 10: [11.220] Pt 11: [11.220], [11.360] Pt 11, Div 2: [11.440] Pt 11A: [11.360], [11.410], [11.480] Pt 11A, Div 1: [11.460] Pt 11A, Div 2: [11.450], [11.460] Pt 11A, Div 3: [11.480] Pt 11A, Div 4: [11.500] Pt 14: [9.70] Pt 15: [9.370] Pt 17: [9.130] Pt 18: [10.20] Pt 21, r 10: [12.145] Pt 24: [5.190] xxxii

Table of Statutes

Uniform Civil Procedure Rules 2005 — cont 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 7.2: [7.50] r 7.4: [8.80], [8.150], [8.190], [8.680] r 7.5: [8.190] r 7.6(1): [7.50] r 7.10(1): [7.50] r 7.10(2): [7.50] r 7.13: [7.50] r 7.14: [7.50] r 7.19: [7.50] r 7.20: [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: [11.300], [11.310], [11.330] r 10.4: [11.330] r 10.5: [11.40], [11.50], [11.100] r 10.6: [11.150], [11.160], [11.340], [11.350] rr 10.9–​10.12: [11.140] r 10.9: [11.130] 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] 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: [11.410] r 11.2: [11.380], [11.430] r 11.4: [11.360], [11.390] r 11.5: [11.400] r 11.6: [11.400] r 11.7: [11.400] r 11.8A: [11.450]

r 11.10: [11.440] r 11.10(1)(a): [11.450] r 11.11: [11.450] r 11A.3: [11.460], [11.470] rr 11A.4–​11A.8: [11.460] r 11A.4: [11.470] r 11A.4(3): [11.470] r 11A.4(2)(d): [11.470] r 11A.4(3)(a): [11.470] r 11A.4(3)(c): [11.470] r 11A.5: [11.470] r 11A.6: [11.470] r 11A.6(2): [11.470], [11.490] r 11A.6(3): [11.470] r 11A.8: [11.470] r 11A.9: [11.490] r 11A.10: [11.480], [11.490] r 11A.11: [11.480] r 11A.12: [11.480] r 12.1: [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] r 13: [11.450] r 13.1: [15.70], [15.80], [15.100] r 13.4: [3.57], [15.100], [15.110], [15.180] r 14.2: [9.70] r 14.3: [9.60], [15.30] rr 14.6–​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–​14.20: [9.120] r 14.19: [9.170] 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] rr 16.1–​16.3: [15.40] r 16.1: [15.30] r 16.2: [9.70], [15.30] r 16.3: [9.70], [15.30] r 16.3(3): [15.30] rr 16.6–​16.8: [15.40] r 16.6: [9.20], [15.30] r 16.7: [15.30] rr 17.1–​17.4: [13.630] r 18.5: [11.100] xxxiii

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 — cont 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–​20.24: [5.220] rr 20.25–​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–​21.13: [12.120] r 21.10: [12.150], [12.145] r 21.10(1)(b): [12.145] r 21.12: [12.110] rr 22.1–​22.6: [12.470] r 22.1(4): [12.460] r 22.1(3): [12.480] r 22.2: [12.460] r 22.2(c): [14.30] rr 23.1–​23.5: [13.680] r 23.8: [13.700] rr 25.1–​25.9: [6.160] r 25.3: [6.150] r 25.4: [6.150] rr 25.5–​25.6: [6.150] r 25.7: [6.150] rr 25.10–​25.17: [6.200] r 25.10: [6.210] r 25.11: [6.150] r 25.14: [6.150], [6.210] r 25.14(1)(b): [6.186] r 25.14(4)(b)(ii): [6.186] rr 25.18–​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–​31.26: [13.530] r 31.27: [13.370] rr 31.28–​31.30: [13.390] r 31.36: [13.390], [13.400] rr 31.37–​31.45: [13.420] rr 31.46–​31.54: [13.510] r 33: [12.145] rr 33.1–​33.13: [12.370] r 33.3(4)(a): [12.145] r 33.4: [12.380] r 33.4(1): [12.380] r 33.5: [11.100] rr 34.1–​34.3: [12.140] r 34.1: [12.145] r 35.2: [13.20] rr 35.3–​35.7B: [13.100] r 35.3: [13.80], [15.70] r 35.8: [11.20], [11.60], [11.70] r 36(3): [13.400] r 36.4: [15.430] r 36.11: [15.430] rr 36.15–​36.16: [15.40] r 36.15: [15.70] r 36.16: [15.60], [15.70] r 36.16(2)(a): [15.50], [15.60] r 36.16(2)(b): [15.50] rr 37.1A–​37.7: [15.580] r 37.1A: [15.560] rr 38.1–​38.7: [15.620] r 38.1: [15.590] r 38.2: [15.590] r 39: [15.480] r 39.1: [15.470] rr 39.2–​39.20: [15.490] rr 39.34–​39.43: [15.520] r 39.34: [15.500] r 40.7: [6.210], [11.100] r 42.1: [3.200] r 42.2: [3.190], [15.268] r 42.3: [3.390] r 42.5: [3.190], [15.268] r 42.6: [10.20] r 42.8: [13.650] r 42.9: [13.660] r 42.10: [3.100] rr 42.13A–​42.15A: [15.240] r 42.14: [15.230] r 42.15: [15.230] r 42.15A: [15.230] r 42.16: [15.40] r 42.17: [15.240] r 42.19: [15.280] r 42.21: [3.410], [3.450], [3.460] r 42.35: [15.268] xxxiv

Table of Statutes

Uniform Civil Procedure Rules 2005 — cont r 44.7: [11.360] r 45.6: [9.20] r 45.7: [9.20] rr 47.1–​47.4: [5.180] r 47.5: [5.190] rr 47.6–​47.8: [5.180] r 47.10–​47.20: [5.190] r 51.53: [1.360], [1.370] r 58.2: [8.710], [8.810] Sch 6: [11.380], [11.390], [11.400], [11.410], [11.430]

s 24: [1.430] s 32: [1.440] s 36: [1.440] Civil Procedure Act 2010 s 7: [2.80] s 28: [2.80] s 37M: [2.80] s 37N: [2.80] s 43(3)(f): [2.80] Criminal Procedure Act 2009 s 56(3): [3.120] s 56(4): [3.220] s 98(1)(a): [3.200] s 99: [3.220]

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

Evidence Act 2008: [14.20]

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

Fair Trading Act 1999: [7.165] Legal Profession Uniform Law Application Act 2014 Sch 2, cl 2: [3.220]

Uniform Civil Procedure Rules (Amendment No 30) 2009: [8.150] Uniform Civil Procedure Rules (Amendment No 41) 2011: [8.170]

Serious Sex Offenders Monitoring Act 2005 s 42: [1.180] s 42(1): [1.180]

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

Supreme Court Act 1986 Pt 4A: [8.120], [8.873] s 33C: [8.873] s 33C(1): [8.873] s 33H: [8.873] s 33Q: [8.873] s 33R: [8.873] s 33ZB: [8.873]

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

NORFOLK ISLAND

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

Evidence Act 2004: [14.20]

NORTHERN TERRITORY Defamation Act 2006: [3.110]

UNITED KINGDOM

Evidence (National Uniform Legislation) Act 2011: [14.20]

Civil Procedure Rules 1998: [1.110], [2.20] r 1.1: [3.57] Human Rights Act 1998: [14.370]

QUEENSLAND

Special Immigration Appeals Commission s 6(1): [14.370]

Limitation of Actions Act 1974 s 10(1): [8.475]

TREATIES AND CONVENTIONS

TASMANIA

International Covenant on Civil and Political Rights: [1.400] Art 14: [1.410] Art 14(1): [1.400], [1.410]

Evidence Act 2001: [14.20]

VICTORIA Charter of Human Rights and Responsibilities Act 2006: [1.400] s 7: [1.440] xxxv

CHAPTER 1

Introduction to Civil Procedure [1.10] INTRODUCTION............................................................................................................. 2 [1.20] PROCEDURAL LAW.......................................................................................................... 2 [1.25] Judging Civil Justice............................................................................... 3 [1.30] Sources of procedural law............................................................................... 4 [1.30] Powers provided by statute..................................................................... 4 [1.40] Inherent and implied jurisdiction.............................................................. 5 [1.50] Grassby v The Queen............................................................................ 5 [1.70] Pelechowski v Registrar, Court of Appeal.................................................... 6 [1.80] GUIDING PRINCIPLES FOR PROCEDURE.......................................................................... 8 [1.90] ADVERSARIAL SYSTEM OF CIVIL LITIGATION................................................................... 9 [1.90] Main features of adversarial and inquisitorial systems...................................... 9 [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............................................... 12 Civil Justice Review.............................................................................. 13 [1.130] “Cards on the table” approach to litigation................................................... 14 [1.140] Baulderstone Hornibrook Engineering v Gordian Runoff............................... 14 THE PRINCIPLE OF OPEN JUSTICE................................................................................. 15 [1.170] Common law power to depart from the open justice principle...................... 16 [1.180] Hogan v Hinch................................................................................... 17 [1.200] Common law categories of cases that are exceptions to the open justice principle.............................................................................. 23 [1.210] Witness v Marsden.............................................................................. 24 [1.230] Seven Network (Operations) Ltd v Warburton (No 1).................................. 25 [1.240] Statutory power to close the court in civil proceedings.................................. 27 [1.250] Civil Procedure Act 2005 (NSW)............................................................. 28 [1.260] Re HIH Insurance................................................................................ 28 [1.270] Statutory power to make suppression and non-​publication orders................. 29 [1.280] Court Suppression and Non-​Publication Orders Act 2010............................ 29 [1.290] Rinehart v Welker............................................................................... 32 [1.295] “X” v Sydney Children’s Hospitals Specialty Network.................................. 42 [1.298] A v Bird; C v Bird................................................................................. 45 [1.300] The provision of reasons for decision............................................................. 46 [1.310] Wainohu v New South Wales................................................................. 47 PRINCIPLE OF A FAIR TRIAL........................................................................................... 48 [1.330] The Truth Can Cost Too Much............................................................... 48 [1.350] Stead v State Government Insurance Commission...................................... 51 [1.370] Mastronardi v New South Wales............................................................ 54 THE CROWN AS THE MODEL LITIGANT........................................................................ 55 [1.390] Model Litigant Policy for Civil Litigation................................................... 55 THE RIGHT TO A FAIR TRIAL RECOGNISED IN HUMAN RIGHTS LEGISLATION............... 57 [1.410] International Covenant on Civil and Political Rights.................................... 57 [1.420] Human Rights Act 2004 (ACT).............................................................. 58 [1.430] Charter of Human Rights and Responsibilities Act 2006 (Vic)........................ 58 [1.450] Civil Justice Review –​Human Rights Considerations.................................... 59 THE NSW COURT SYSTEM: AN OVERVIEW.................................................................... 61 [1.470] Supreme Court of New South Wales............................................................. 61 [1.490] Land and Environment Court of New South Wales........................................ 61 [1.500] District Court of New South Wales................................................................ 61 [1.120]

[1.150]

[1.320]

[1.380] [1.400]

[1.460]

 

1

Civil Procedure in New South Wales

[1.610]

[1.510] Local Court of New South Wales................................................................... 62 [1.515] Industrial Relations Commission.................................................................... 62 [1.520] Workers’ Compensation Commission............................................................ 62 [1.530] NSW Civil and Administrative Tribunal.......................................................... 62 [1.550] Independent Commission against Corruption............................................... 62 [1.560] Dust Diseases Tribunal................................................................................... 62 [1.570] Mental Health Review Tribunal...................................................................... 63 FEDERAL COURT STRUCTURE........................................................................................ 63 [1.610] High Court of Australia.................................................................................. 63 [1.620] Federal Court of Australia.............................................................................. 65 [1.630] Family Court of Australia............................................................................... 65 [1.640] Federal Circuit Court of Australia................................................................... 65

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; • 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.

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 New South Wales, 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 New South Wales. 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]:

2 [1.10]

Introduction to Civil Procedure  Chapter  1

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 (eg, 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.

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. 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

[1.25]  3

Civil Procedure in New South Wales

Judging Civil Justice cont. 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 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 [1.30] The sources of procedural law in the NSW 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 4 [1.30]

Introduction to Civil Procedure  Chapter  1

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; 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 The Queen (1989) 168 CLR 1 at 16–​17.

Grassby v The Queen [1.50]  Grassby v The Queen (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 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. [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 [1.50]  5

Civil Procedure in New South Wales

Grassby v The Queen cont. 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 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. 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 6 [1.60]

Introduction to Civil Procedure  Chapter  1

Pelechowski v Registrar, Court of Appeal cont. 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, 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: 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”. [1.70]  7

Civil Procedure in New South Wales

Pelechowski v Registrar, Court of Appeal cont. [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. [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

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: 8 [1.80]

Introduction to Civil Procedure  Chapter  1

1.

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

2. 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 3.

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.

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 (ie, 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 following: • 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. • There is no rigid separation between trial and pre-​trial phases. • 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 [1.90]  9

Civil Procedure in New South Wales

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 NSW 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. 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. • 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. 10 [1.100]

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Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System cont. • 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. • 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 [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 [1.100]  11

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Review of the Adversarial System of Litigation: Rethinking the Federal Civil Litigation System cont. 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 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 [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, 1

Jackson R, Review of Civil Litigation Costs: Preliminary Report (May 2009); Jackson R, Review of Civil Litigation Costs: Final Report (December 2009).

12 [1.110]

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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 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”. 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 [1.120]  13

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Civil Justice Review cont. 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 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 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 14 [1.130]

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Baulderstone Hornibrook Engineering v Gordian Runoff cont. 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” 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.

Spigelman CJ 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. [1.150]  15

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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 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 (ie, 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.

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. The power of the court to depart from the principle of open justice and make the orders described in [1.160] is on the 16 [1.160]

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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 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.]

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] [1.180]  17

Civil Procedure in New South Wales

Hogan v Hinch cont. 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 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 18 [1.180]

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Hogan v Hinch cont. 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 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]]: 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 [1.180]  19

Civil Procedure in New South Wales

Hogan v Hinch cont. [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. 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].] [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 … 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 20 [1.180]

Introduction to Civil Procedure  Chapter  1

Hogan v Hinch cont. 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 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)]. … [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 … [1.180]  21

Civil Procedure in New South Wales

Hogan v Hinch cont. 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 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: 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. 22 [1.180]

Introduction to Civil Procedure  Chapter  1

Hogan v Hinch cont. [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; [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. [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. [1.200]  23

Civil Procedure in New South Wales

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])). 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 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.] 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. 24 [1.210]

Introduction to Civil Procedure  Chapter  1

Witness v Marsden cont. [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 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.]



Seven Network (Operations) Ltd v Warburton (No 1) [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 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 [1.230]  25

Civil Procedure in New South Wales

Seven Network (Operations) Ltd v Warburton (No 1) cont. 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. 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. 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 26 [1.230]

Introduction to Civil Procedure  Chapter  1

Seven Network (Operations) Ltd v Warburton (No 1) cont. 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. [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. 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 Barrett J in Re HIH Insurance Ltd [2007] NSWSC [1.240]  27

Civil Procedure in New South Wales

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 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. [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 28 [1.250]

Introduction to Civil Procedure  Chapter  1

Re HIH Insurance cont. 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.

Court Suppression and Non-​Publication Orders Act 2010 [1.280]  Court Suppression and Non-​Publication Orders Act 2010 (NSW) ss 3–​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. “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). [1.280]  29

Civil Procedure in New South Wales

Court Suppression and Non-Publication Orders Act 2010 cont. 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 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)

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.

(2)

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

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)

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

(2)

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:

30 [1.280]

Introduction to Civil Procedure  Chapter  1

Court Suppression and Non-Publication Orders Act 2010 cont.

(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.

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.

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. [1.280]  31

Civil Procedure in New South Wales

Court Suppression and Non-​Publication Orders Act 2010 cont. (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. [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 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]). 32 [1.290]

Introduction to Civil Procedure  Chapter  1

Rinehart v Welker cont. 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. [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 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. [1.290]  33

Civil Procedure in New South Wales

Rinehart v Welker cont.

(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. [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 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 34 [1.290]

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Rinehart v Welker cont. 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”. [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 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 [1.290]  35

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Rinehart v Welker cont. 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. 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 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]). 36 [1.290]

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Rinehart v Welker cont. [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]). [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 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 [1.290]  37

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Rinehart v Welker cont. 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”. [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 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 38 [1.290]

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Rinehart v Welker cont. 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. 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 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. [1.290]  39

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Rinehart v Welker cont. [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. [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 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 40 [1.290]

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Rinehart v Welker cont. 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]). [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 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. [1.290]  41

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Rinehart v Welker cont. [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. [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. [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 42 [1.295]

Introduction to Civil Procedure  Chapter  1

“X” v Sydney Children’s Hospitals Specialty Network cont. 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 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: [1.295]  43

Civil Procedure in New South Wales

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

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



(a)

44 [1.295]

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;

Introduction to Civil Procedure  Chapter  1

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

(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.

(2)

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.

(3)

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 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 [1.298]  45

Civil Procedure in New South Wales

A v Bird; C v Bird cont. 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. [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, 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; 278 ALR 1; [2011] HCA 24 at [58] per French CJ and Kieffel J 46 [1.300]

Introduction to Civil Procedure  Chapter  1

Wainohu v New South Wales [1.310]  Wainohu v New South Wales (2011) 243 CLR 181; 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.] 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. … [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 [1.310]  47

Civil Procedure in New South Wales

Wainohu v New South Wales cont. 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”.] [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; 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: 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] 48 [1.320]

Introduction to Civil Procedure  Chapter  1

The Truth Can Cost Too Much cont. 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 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]: 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. [1.330]  49

Civil Procedure in New South Wales

The Truth Can Cost Too Much cont. 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: 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]. 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]]: 50 [1.330]

Introduction to Civil Procedure  Chapter  1

The Truth Can Cost Too Much cont. 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]. … 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 [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 [1.350]  51

Civil Procedure in New South Wales

Stead v State Government Insurance Commission cont. 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.] 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. [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 52 [1.350]

Introduction to Civil Procedure  Chapter  1

Stead v State Government Insurance Commission cont. 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 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.

 [1.360]  Stead v State Government Insurance Commission (1986) 161 CLR 141 was applied

in Mastronardi v NSW [2007] NSWCA 54 where the NSW 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. [1.360]  53

Civil Procedure in New South Wales

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)

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,



(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.) [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 54 [1.370]

Introduction to Civil Procedure  Chapter  1

Mastronardi v New South Wales cont. 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. [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 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 2

Clause 4.2 of the Legal Services Directions imposes the model litigant obligation, and that obligation is set out in Appendix B to the Directions. [1.390]  55

Civil Procedure in New South Wales

Model Litigant Policy for Civil Litigation cont. 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. [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



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

56 [1.390]

Introduction to Civil Procedure  Chapter  1

Model Litigant Policy for Civil Litigation cont. 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;

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 Spigelman J, 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.

International Covenant on Civil and Political Rights [1.410]  International Covenant on Civil and Political Rights, Art 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 [1.410]  57

Civil Procedure in New South Wales

International Covenant on Civil and Political Rights cont. 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)

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.

(2)

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.

(3)

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. 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.

(3)

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 58 [1.420]

Introduction to Civil Procedure  Chapter  1

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 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: (1) the nature of the right; (2) the importance of the purpose of the right; (3) the nature and extent of the limitation; (4) the relationship between the limitation and its purposes; and (5) 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)]. … 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 [1.450]  59

Civil Procedure in New South Wales

Civil Justice Review – Human Rights Considerations cont. 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 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 • 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)]. 60 [1.450]

Introduction to Civil Procedure  Chapter  1

Civil Justice Review – Human Rights Considerations cont. 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.



THE NSW 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 is also the Land and Environment 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.supremecourt.justice.nsw.gov.au/​). 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. The Equity Division hears cases involving commercial law, corporations law, equity, trusts, probate and matters pursuant to family provisions legislation. 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, or a lower court. 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. 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.lec.justice.nsw.gov.au/​). 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. District Court of New South Wales [1.500] The District Court is the “intermediate court” in New South Wales (http://​www.

districtcourt.justice.nsw.gov.au/​). 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. [1.500]  61

Civil Procedure in New South Wales

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 Local Court Act 2007 (NSW) s 29). 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.localcourt.justice.nsw.gov.au/​. Industrial Relations Commission [1.515] The Industrial Relations Commission of New South Wales was established under

the Industrial Relations Act 1996 (http://​www.irc.justice.nsw.gov.au/​). The Commission conciliates and arbitrates industrial disputes, sets conditions of employment and fixes wages and salaries by making industrial awards, approves enterprise agreements and decides claims of unfair dismissal in New South Wales. 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 [1.530]  NSW Civil and Administrative Tribunal (NCAT) was established by the Civil and

Administrative Tribunal Act 2013. It is a 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.

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 62 [1.510]

Introduction to Civil Procedure  Chapter  1

personal injury resulting from exposure to asbestos and other dusts resulting in dust diseases and other dust-​related conditions (http://​www.dustdiseasestribunal.justice.nsw.gov.au/​). 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 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;



(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: [1.610]  63

Civil Procedure in New South Wales



(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.

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 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. 64 [1.610]

Introduction to Civil Procedure  Chapter  1

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 [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, 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 (http://​www.federalcircuitcourt.gov.au/​). [1.650] There are other federal tribunals and commissions such as the Australian Industrial

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 NSW courts. [1.650]  65

CHAPTER 2

Case Management in New South Wales [2.10] INTRODUCTION........................................................................................................... 67 [2.20] JUSTICE DELAYED IS JUSTICE DENIED............................................................................ 68 [2.30] Jackamara v Krakouer.......................................................................... 69 [2.50] BACKLOG REDUCTION................................................................................................. 69 [2.50] Bi v Mourad...................................................................................... 69 [2.60] COSTS........................................................................................................................... 69 [2.80] The Complexities of Case Management................................................... 70 [2.100] CASELOAD MANAGEMENT AND MANAGERIAL JUDGING............................................. 75 [2.100] Case Management in New South Wales................................................... 75 [2.110] Managerial Judging............................................................................. 77 [2.130] THE CIVIL PROCEDURE ACT 2005 AND THE UNIFORM CIVIL PROCEDURE RULES......... 78 [2.140] Civil Procedure Act 2005 (NSW) ss 56–​60................................................ 79 [2.150] Amendment of s 56...................................................................................... 81 [2.160] HOW HAS PT 6 OF THE CPA AFFECTED CIVIL PROCEDURE?.......................................... 82 [2.160] Metropolitan Petar v Mitreski................................................................ 82 [2.170] Tripple Take v Clark Rubber Franchising................................................... 82 [2.180] DIRECTIONS.................................................................................................................. 83 [2.190] Civil Procedure Act 2005 (NSW) ss 61–​63................................................ 84 [2.200] Uniform Civil Procedure Rules 2005 (NSW) rr 2.1–​2.3................................ 86 [2.220] THE APPLICATION OF THE CPA AND UCPR................................................................... 87 [2.220] Hans Pet Constructions v Cassar............................................................ 87 [2.230] Halpin v Lumley General Insurance......................................................... 95 [2.240] McGuirk v University of New South Wales................................................ 99 [2.250] Aon Risk Services Australia v ANU........................................................... 99 [2.255] [2.260] [2.265]

[2.270] [2.280] [2.300] [2.320]

Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing................................................................................. 102 Tugrul v Tarrants Financial Consultants................................................. 104 Reconciling the Goals of Minimising Cost and Delay with the Principle of a Fair Trial in the Australian Civil Justice System.................................... 107

ETHICAL REQUIREMENTS............................................................................................ 111 PRACTICE NOTES........................................................................................................ 112 [2.290] Practice Note SC CL 7........................................................................ 113 ELECTRONIC CASE MANAGEMENT............................................................................. 114 ADMINISTRATION OF THE UNIFORM CIVIL PROCEDURE RULES.................................. 117 [2.330] Civil Procedure Act 2005 (NSW) ss 8, 9, 14–​16....................................... 117

INTRODUCTION [2.10] This chapter discusses case management in the civil jurisdiction of the NSW 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 NSW 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 [2.10]  67

Civil Procedure in New South Wales

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 NSW civil courts. Delay had become a cultural norm and that had to be changed. 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 NSW 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.

1

2 3

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. supremecourt.justice.nsw.gov.au/​Documents/​Publications/​Speeches/​Pre-​2015%20Speeches/​Spigelman/​ spigelman_​speeches_​2001.pdf. 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. See Dwyer D, “Introduction” in Dwyer D (ed), The Civil Procedure Rules Ten Years On (Oxford University Press, 2009) p 5.

68 [2.20]

Case Management in New South Wales  Chapter  2

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



BACKLOG REDUCTION 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

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. 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 [2.60]  69

Civil Procedure in New South Wales

(where the lawyer charges by the hour) which in turn may create an incentive to extend and complicate litigation. Costs can also be incurred due to disbursements such as court fees, expert reports, witness expenses and printing fees. Additionally, there may be less tangible (and largely unrecoverable costs) in the form of lost time and diverted resources. In its 2014 report on access to justice, the Productivity Commission estimated that the average cost of litigation in New South Wales was somewhere in the range of approximately $60,000 to $90,000.4 The Productivity Commission also reported that in the District and Supreme Courts of New South Wales, compared to cases that settled pre-​trial, legal costs nearly doubled for cases that settled on or during trial and more than doubled for cases that went to verdict.5 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.

The Complexities of Case Management Judicial Case Management and the Problem of Costs [2.80]  The Honourable James Allsop AO, Chief Justice of the Federal Court, Judicial Case Management and the Problem of Costs [Extract from the Lord Dyson Lecture on “The Jackson Reforms to Civil Justice in the UK,” 9 September 2014, (2015) 39 Australian Bar Review 228]6 Case management as a solution to the costs problem In the so-​called bad old days, litigation was left entirely to the parties, with the court taking no interest in its progress unless an issue was put before it by the litigants. It was the perceived (and real) inadequacies of this rigidly adversarial system, with its aloof judges, that led to the Woolf reforms of procedure in England and Wales. Lord Woolf put the interrelated problems of cost, delay and complexity squarely at the feet of judges and the role they played in the litigation process: These three [problems] are interrelated and stem from the uncontrolled nature of the litigation process. In particular, there is no clear judicial responsibility for managing individual cases or for the overall administration of the civil courts.[10] This is no mere truism or platitude. One may conceive of many reasons for the cost, delay and complexity of civil litigation. The intricacy of substantive laws, the conduct of the legal profession and the conduct of the courts are three distinct possible reasons. Yet Lord Woolf nominated the lack of judicial case management as the overriding concern. Without effective judicial control, he wrote, the adversarial process is likely to encourage an adversarial culture and to degenerate into an environment in which the litigation process is too often seen as a battlefield where no rules apply. In this environment, questions of expense, delay, compromise and fairness may have only low priority. The consequence is that expense is often excessive, disproportionate and unpredictable; and delay is frequently unreasonable.[11] … The result of such diagnoses is case management. What do we mean by this? It emerged under the label of caseflow management in the United States in the early 1970s. An early proponent was Maureen Solomon. … She described caseflow management as follows: [A]‌s now generally accepted in the courts community, caseflow management connotes supervision or management of the time and events involved in the movement of a case

4 5 6

Productivity Commission, Access to Justice Arrangements (Inquiry Report, 5 September 2014) 119. Productivity Commission, Access to Justice Arrangements (Inquiry Report, 5 September 2014) 120. Most footnotes omitted.

70 [2.80]

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The Complexities of Case Management cont. through the court system from the point of initiation to disposition, regardless of the type of disposition.[17] Where the principles of caseflow management hold sway, law ceases to be impassive and distant. Sword and scales are put to one side and practitioners are engaged by the court. … More generally, there are two broad ways in which case management is thought to put downward pressure on litigation costs. First, by ensuring that cases continue to progress in a timely fashion, the efficiency of their preparation should increase. Less time should be spent by lawyers and advocates refreshing their memory of any given matter after an unnecessary delay, while the necessity to adhere to a timetable should focus practitioners mind on the essential issues. Second, the length of litigation is supposed to be decreased by the encouragement of earlier and more frequent settlements, which in turn bring down litigants expenses. … Perils of case management The picture that emerges from these studies [to which Justice Allsop had referred in the full speech] is, at best, blurry. It seems tolerably clear, however, that judicial case management, if it is done badly, will either have no impact on litigation costs or, worse, increase them. In light of this, I propose to make some remarks about the perils of case management that must be borne in mind whenever it is proposed to deploy it as a means to reduce costs. Front-​loading and unnecessary running-​up of costs As observed in the American and English studies to which I have alluded, case management has the potential to cause parties to bear costs that might not otherwise have been incurred. It may happen in at least two ways. First, costs may be front-​loaded, with the result that parties who would in any event have settled their disputes are nonetheless forced to pay significant amounts for work done by lawyers in complying with case management requirements. This was a point made by the Hon James Spigelman, then Chief Justice of NSW, in an address in 2004: I recognise that some of the case management practices that the courts have adopted, in order to reduce delays, may have resulted in increased costs. In particular, they have resulted in the front loading of costs by bringing forward expenditure that may not occur if a case settles, as most do. Some aspects of court practice may show insufficient regard for the costs that are imposed on others.[59] The authors of the 2002 report on the Federal Courts docket system put a related point as follows: [I]‌t may be advantageous to let some cases stay dormant if that would assist the parties in reaching a resolution out of court, in which case it would be inappropriate for the court to attempt to hurry the matter through the court.[60] One must be careful not to overstate the point, however. Effective judicial case management, by clarifying and stripping the issues early, may greatly hasten any settlement that would in any event have occurred. Settlement negotiations may thereby be truncated. That, in turn, would exert downward pressure on expenses. Furthermore, parties who are destined to settle are nevertheless, as we all know, perfectly capable of running up litigation costs, whether or not judges become involved in case management. The second way in which judicial case management has the potential to drive up expenses is simply by being excessive. This is a danger irrespective of the propensity of most litigants to settle out of court. A case that ultimately goes to trial may be made even more expensive by judicial over-​ management. A requirement that practitioners attend multiple directions hearings may be counterproductive if any cost savings ultimately resulting from the matter being better prepared for trial have already been wiped out by the need to pour funds into the directions hearings themselves. [2.80]  71

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The Complexities of Case Management cont. … There is a particularly bitter irony where case management undertaken specifically to curb costs in fact adds to them. It has been suggested that the requirement to file costs budgets and attend cost management conferences under the Jackson reforms in the UK actually increases the length and cost of litigation. One is presented with the macabre spectacle of lawyers running up costs negotiating, preparing and filing costs budgets, and then running up more costs arguing about those budgets before a judge. On the other hand, one ought to acknowledge the salutary educational potential of the interaction between judge and profession that occurs in the process of case management. If it is done properly, judicial management of a case may inculcate habits and practices that are carried over into the practitioners next matter. A few careful words uttered in one directions hearing may forestall the need for such a hearing in a later case. I will forever recall Justice Andrew Rogers saying in his court in his gently modulated English: Not in my Court you won’t. It is possible, therefore, that judicial case management in one case will have an impact on costs not only in that proceeding but also in others down the track. Of course, it is also true that one should be slow to force unnecessary expense upon litigants in one matter for the sake of educating the profession and thereby ensuring that those expenses are not later incurred by litigants in other cases. Using people as means to ends always raises difficult moral questions. … The attitude of judges Judges also bear some responsibility for avoiding the pitfalls of an excessively inflexible approach to case management. The risk is that judges given a large amount of leeway to control cases before them will simply develop their own cookie-​cutter procedures. In this connection, history is important (as it always is). The common law developed as a liberal institution that accords parties the freedom to run their cases as they see fit. Inquisitorial justice is a civilian concept upon which Englishmen and their progeny in the common law world have traditionally looked askance. To a degree party autonomy is a virtue. It is one of the attractions of arbitration. Managerial judging, therefore, is at odds with the habits of mind in which common law judges have traditionally been steeped. One Australian Federal Court judge expressed this view as follows: I think its a most naÏve notion of all to suggest to the Court that judges should be managerialist judges, taking cases by the throat, and forcing them to a quick judgment, despite what the parties say, despite what the lawyers say.[71] In the rise of judicial case management, we are witnessing no less than a shift in common law philosophy. In some judges, resistance to it may take the form of a rule-​based, inflexible approach to the task of case management, infecting the new system with the ethos of the old. As one judge has observed, I suppose the success of the system so much depends on the approach and enthusiasm of the judges who are administering it. If you just treat it as a formal standardised process, oh well we’ve got to go through it, I don’t think you are going to find any change between this system and the old. But if you try and implement the underlying philosophy of it, I think there is a chance of change.[73] In other words, if a judges attitude to case management is that it is an onerous administrative burden that he or she should not be required to undertake, then the results may be counterproductive. It will be tempting for such a judge to apply standardised case management to any given matter, without being attentive to its particular characteristics. In such instances, it is likely that case management will inflate costs with no offsetting benefits. It will become process, separate from the resolution of the dispute: a necessary hurdle to be jumped before the real task begins. … 72 [2.80]

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The Complexities of Case Management cont. The responsibility of practitioners Now that we have reached the subject of focusing practitioners minds, allow me to step back for a moment. As I have observed, the argument for greater judicial intervention in the litigation process typically begins with a jeremiad on the perils of an adversarial culture that gives free rein to the practitioners. Somehow, though, one arrives at the conclusion that those who need to change their behaviour are not practitioners so much as judges. Alfred Hitchcock is rumoured to have said film actors were like cattle, and should be treated accordingly. A not dissimilar opinion of legal practitioners appears to be the unarticulated premise in any argument that since lawyers run up unnecessary costs for their clients, judges need to do their job differently. Implicit in the zealous call for judicial case management, in other words, is the notion that solicitors and barristers lack control over their own behaviour or are otherwise irredeemably refractory. Yet unlike, perhaps, screen actors, legal practitioners are not Brown’s cows, responsive only to the sting of the prod. They are professionals. And they are paid accordingly. Surely, as a profession, they must bear some responsibility for the way in which matters are litigated. The duty of lawyers to promote the just, timely and cost-​effective resolution of court proceedings has been given legislative imprimatur in several jurisdictions, including the Federal Court.[78] The penalty for dereliction of this duty may be a personal costs order. … Let me turn to the profession. Let me posit two methods or styles of practice. Perhaps there are more; perhaps neither exists; but humour me by allowing me to posit the dichotomy. I will let you judge for yourselves whether they exist. A little plain speaking is required. The distinction between them lies in divergent responses to the stimulus of a client’s instructions in relation to a dispute. In type A practice, the client’s problem is examined and a way is sought to arrive at the best possible result for the client at the lowest possible cost. In some cases, this may entail the sacrifice of fees that might have been earned (if that verb may sensibly be deployed in this context), had a less efficient approach been adopted. If a fight is necessary, it is had; but only on the real issues worthy of the trouble and cost of the fight. In type B practice, when faced with the client’s instructions, the response is to think of the fees that might foreseeably be derived by dealing with the dispute, without an eye to any parsimony of issues or costs. Disputes are treated as an instrument of fee generation. Like the litigants described by Gibbon, clients of the second species may well come out at the other end of litigation with patience and fortune almost exhausted. When next they have a problem, they do not return to the lawyer who has denied them true value for money. I accept that this may be a crude and inadequate paradigm. But, is it truly to be said that type B is not a problem? Is not the risk of it present when the practice of law is viewed as a fee earning business, the profits of which are maximised by fee delivery? One danger of excessive judicial case management is that it provides comfort to the second species of practice by fostering passivity in the profession as a whole. It risks encouraging over-​reliance upon the court to dictate to parties how their litigation will run. That makes it all too easy for lawyers to abdicate their statutorily mandated responsibility to resolve disputes in a cost-​effective manner for their clients. Initiative and responsibility are shifted to judges. Also, it may provide detailed and unnecessary process around which much work must be done. Litigation practitioners are reduced to fee-​collection machines. Such a development would have a profoundly deleterious impact upon the administration of justice. If costs cannot be controlled, the client comes to the view that law itself is useless and irrelevant: a deeply dangerous outcome. Judges and practitioners must strive to prevent this happening. How can it be avoided? One way of avoiding it, perhaps, is by thinking about court rules, procedures, trial processes and all aspects of litigation by reference to the dichotomy that I have posited. Will the procedure permit exploitation, whether conscious or unconscious, driven by process-​based activity? If so, how can a substitute procedure be put in place that will achieve the valid end in question, without feeding process-​driven costs. [2.80]  73

Civil Procedure in New South Wales

The Complexities of Case Management cont. If process-​driven costs can be reduced to a bare minimum, fees for true skill and acumen will not seem so painful. The role of but say may re-​emerge. Clients truly despise a system of 6 minute units (at say $50-​$75) for 60 second tasks; not only because the task took 60 seconds, but also because it was brain-​less in its character. If you think clients do not sometimes feel like this, I think you need to get out more. Clients should not have to pay like this for process, and they should not do so. What they should be prepared to pay for, and what they do not begrudge, is paying for real skill and experience. … A number of fundamental propositions need to be grasped and applied on a daily basis: 1.

The profession is primarily responsible for the skilful conduct of cases.

2.

The lawyer is a fiduciary to be held to the highest punctilio of an honour. If there is a choice to undertake a cheaper more efficient way to operate, the fiduciary duty is engaged.

3.

Courts should organise their structures to facilitate efficient and skilled lawyers, and to impede or prevent process-​based costs that are unnecessary.

4.

Disputes in society are inevitable. It is a social and constitutional imperative to make reasonably available the process of court adjudication.

5.

The basal considerations are trust, skill and service in, and of, the profession, and the judiciary.

It is unlikely that any one structure or one step, alone, will achieve and maintain a workable legal system of which we are all proud. But the recognition of what we do, and who we are, will go some way towards that: We are not in a business or an industry; we are a profession, that is founded on duty (fiduciary duty) that, as Cardozo CJ said in 1928, is not governed by the morals of the market place (by which he meant honesty and reasonable good faith) but by the punctilio of an honour the most sensitive. The courts are entitled to expect and demand no less from the profession and should organise their structures accordingly. The failure to recognise the strictness of the fiduciary duty may well have been at the base of many of the troubles of the financial sector in the last 20 years. It should never be allowed to undermine the practice of the law. The court’s task is to understand how litigation should run, and how it can be encouraged to run cost-​efficiently. I suggest a new dialogue based on these fundamentals. How case management works or not, as the case may be, should be part of that dialogue. [10] Lord Woolf MR, Access to Justice: Interim Report, ch 3 at [1]‌(available at ). [11] Lord Woolf MR, Access to Justice: Interim Report, ch 3 at [4]‌(available at ). [17] M Solomon and D Somerlot, Caseflow Management in the Trial Court: Now and for the Future (American Bar Association, 1987) 3. [59] James Spigelman, Opening of Law Term Dinner, 2004 (Address at the Law Society of NSW, Sydney, 2 February 2004) (available at ). [60] C Sage, T Wright and C Morris, Case Management Reform: A Study of the Federal Courts Individual Docket System (Law and Justice Foundation of New South Wales, June 2002) 80. [71] C Sage, T Wright and C Morris, Case Management Reform: A Study of the Federal Courts Individual Docket System (Law and Justice Foundation of New South Wales, June 2002) 79. [73] C Sage, T Wright and C Morris, Case Management Reform: A Study of the Federal Courts Individual Docket System (Law and Justice Foundation of New South Wales, June 2002) 45. [78] Federal Court of Australia Act 1976 (Cth), ss 37M, 37N, 43(3)(f); Family Law Rules 2004 (Cth), rr 1.07, 1.08, 19.10; Civil Procedure Act 2005 (NSW), s 56; Civil Procedure Act 2010 (Vic), ss 7, 28.

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Case Management in New South Wales  Chapter  2

CASELOAD MANAGEMENT AND MANAGERIAL JUDGING Case Management in New South Wales [2.100]  The Honourable JJ SpigelmanAC, 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 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 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

[2.100]  75

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Case Management in New South Wales cont. 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, 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: • 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.]

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Case Management in New South Wales  Chapter  2

Case Management in New South Wales cont. 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.] 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. 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.



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. In NSW, the role of managerial judge may be performed by registrars or list judges depending on the particular list.

[2.110]  77

Civil Procedure in New South Wales

Managerial Judging cont. More generally, Justice French, as he then was, has observed:7 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 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.



THE CIVIL PROCEDURE ACT 2005 AND THE UNIFORM CIVIL PROCEDURE RULES [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 NSW 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 NSW judicial system.

7

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

78 [2.130]

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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 NSW 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 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 ss 57 and 58(1) and (2)(a) are mandatory, whereas s 58(2)(b) is discretionary. The NSW Attorney-​General in the Civil Procedure Act 2005 Second Reading Speech8 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 Kumar M and Legg M (eds), 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 (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.

8

The Hon Bob Debus, Attorney General, and Minister for the Environment, NSW, Legislative Assembly, Hansard and Papers (Wednesday 6 April 2005). See https://​ www.parliament.nsw.gov.au/​ bill/​ files/​ 445/​ A2805.pdf. [2.140]  79

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. (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. 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



(b)

may have regard to the following matters to the extent to which it considers them relevant:



80 [2.140]

(i)

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

Case Management in New South Wales  Chapter  2

Civil Procedure Act 2005 (NSW) cont.

(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.

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 s 56 [2.150]  Schedule  6.2 of the Courts and Crimes Legislation Further Amendment Act 2010

(NSW) amended s 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 Pt 2A of the CPA9 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 Pt 2A.

9

The provisions of Pt 2A and the background to its introduction and subsequent repeal are set out in Boniface D, Kumar M and Legg M, Principles of Civil Procedure in NSW (2nd ed, Thomson Reuters, 2012)  [2.360]–​[2.420]. [2.150]  81

Civil Procedure in New South Wales

HOW HAS PT 6 OF THE CPA AFFECTED CIVIL PROCEDURE? Metropolitan Petar v Mitreski [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 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.



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

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Tripple Take v Clark Rubber Franchising cont. 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 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 200610 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. • 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

10

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]  83

Civil Procedure in New South Wales

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.

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)

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.

(2)

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.

(3)

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.

84 [2.190]

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

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,



(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,



(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.

(4)

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



(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.

(5)

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.

(6)

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

[2.190]  85

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont.

(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)

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.

(2)

Such a failure:



(a)

is to be treated as an irregularity, and



(b)

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

(3)

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,



(b)

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

(4)

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 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,

86 [2.200]

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

(o)

the filing of written submissions.



THE APPLICATION OF THE CPA AND UCPR Hans Pet Constructions v Cassar [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 mitigate and the defence also put the quantum of damage in issue. As one would expect, [2.220]  87

Civil Procedure in New South Wales

Hans Pet Constructions v Cassar cont. 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. [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 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

88 [2.220]

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Hans Pet Constructions v Cassar cont. 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. … [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]  89

Civil Procedure in New South Wales

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 90 [2.220]

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Hans Pet Constructions v Cassar cont. 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 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. [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]  91

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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: 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 92 [2.220]

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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) …. [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)

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).

[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) 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 [2.220]  93

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Hans Pet Constructions v Cassar cont. 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. [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;

(d)

appellant to pay the respondent’s costs.



94 [2.220]

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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. [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 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 [2.230]  95

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Halpin v Lumley General Insurance cont. 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. [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 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. 96 [2.230]

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Halpin v Lumley General Insurance cont. 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. 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)

saving expense;

(c)

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 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 [2.230]  97

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Halpin v Lumley General Insurance cont. 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). [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 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 98 [2.230]

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Halpin v Lumley General Insurance cont. 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 [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 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 Australian Capital Territory 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 four-​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: (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 [2.250]  99

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Aon Risk Services Australia v ANU cont.

(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: [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. [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

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Aon Risk Services Australia v ANU cont. 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. [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, 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 [2.250]  101

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Aon Risk Services Australia v ANU cont. 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. [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.] 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.”11 11

The version of s 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”.

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Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. 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.] [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 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):

[2.255]  103

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Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. 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. … 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.

 [2.258] The High Court has continued to require adherence to the principles of case

management established in Aon Risk and Expense Reduction Analysts in subsequent judgments in UBS AG v Tyne [2018] HCA 45 and Rozenbilt v Vainer (2018) 262 CLR 478; [2018] HCA 23.

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 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. 104 [2.258]

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Tugrul v Tarrants Financial Consultants cont. [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: 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. [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. [2.260]  105

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



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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 [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. … 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. 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. [2.265]  107

Civil Procedure in New South Wales

Reconciling the Goals of Minimising Cost and Delay with the Principle of a Fair Trial cont. 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? [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. … 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 108 [2.265]

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Reconciling the Goals of Minimising Cost and Delay with the Principle of a Fair Trial cont. 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. 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 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.

[2.265]  109

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Reconciling the Goals of Minimising Cost and Delay with the Principle of a Fair Trial cont. 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: 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 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, 110 [2.265]

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Reconciling the Goals of Minimising Cost and Delay with the Principle of a Fair Trial cont. 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 [2.270]  The requirements of the overriding purpose are reinforced by the duty to the court

and the requirement to exercise independent judgment, 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 provides:

3

Paramount duty to the court and the administration of justice

4

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. 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.



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.

[2.270]  111

Civil Procedure in New South Wales

Rule 23 of the Legal Profession Uniform Conduct (Barristers) Rules 2015 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 rr 17.1 and 17.2. 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



(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 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 7.

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Practice Note SC CL 7 [2.290]  Practice Note SC CL 7 Supreme Court Common Law Division –​Professional Negligence List This practice note applies to proceedings in the Common Law Division that include a claim for medical or legal professional negligence, or such other suitable proceedings as mentioned in paragraph 5 of the practice note. 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. Before the first directions hearing, parties are expected to have discussed the case and: • agreed on suitable interlocutory 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. The practice not also informs the parties that indemnity costs may be awarded in respect of work necessitated by an unreasonable failure to provide access to or copies of medical or hospital records before or after commencement of proceedings. At the directions hearing the registrar or judge manages how the case will proceed eg the provision of further information, the making of admissions, the administration and answering of interrogatories, an early separate trial on liability and the consent transfer of proceedings to the District Court. The registrar or judge may also consider at any directions hearing whether the proceedings are suitable for mediation and may direct the parties to confer on that suitability. The practice note states that if it appears to the court that the matter is suitable for mediation, it will endeavour to secure the consent of the parties to a referral to mediation and may give directions to enable the parties to prepare for mediation. 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. The practice note also specifies that expert evidence in matters on the list is likely to be limited. For example, if the court considers that a party is seeking to call an unnecessary expert, the court may reject the tender of the expert’s report; refuse to allow the expert to be called; and disallow any costs associated with that expert’s evidence preparation. Where the parties cannot agree on a single expert to give evidence about an issue and multiple experts are necessary, the court will make directions at an appropriate Directions Hearing, one of which is likely that the experts will give their evidence concurrently. Where the issue is the quantification of damages for death or personal injury, the default expectation is that the parties will be allowed one medical expert in any specialty, unless there is an issue as to an ongoing disability, in which case two experts in a relevant specialty concerning that disability are allowed. For any other damages issues, only two experts of any other kind are allowed. The default rule is that a single expert direction will be taken to have been made at the first Directions Hearing unless otherwise ordered. At the first Directions Hearing, the parties are to produce a schedule of the issues in respect of which expert evidence may be adduced and identify whether those issues can be addressed by a single expert or whether an expert witness retained by each party to give evidence concurrently will be necessary. In addition, if concurrent experts are to give evidence, then within 14 days of the expert evidence being served the parties are to agree on the questions to be asked of the witnesses, or be required to re-​list the proceedings for further directions with respect to the witness questions if the parties cannot agree.



[2.290]  113

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ELECTRONIC CASE MANAGEMENT [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 either become available or be expanded in the future. Currently, the Online Registry has more than 80 forms that can be filed online, such as statements of claim, defences and notices of appearance. Expanded e-​services will mean, for example, that any registry in New South Wales 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.12 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–​14R) into the ET Act on 20 December 2002, which was subsequently moved to Sch 1 in 2010. Schedule 1 cl 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,



(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, (h) 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 cl 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 Sch 1 cl 3 of the ET Act) for the purposes in column 2. 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.

12

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

114 [2.300]

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Column 1

Column 2

Court

Purpose 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.

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 Sch 1 cl 3 of the ET Act) in civil proceedings, but only so as (1) to enable documents to be created, filed, issued, used and served in electronic form, (2) to enable parties to the proceedings to communicate in electronic form with other parties to the proceedings and with the Court and (3) 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 cl 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,



(d) 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



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



(e) 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 contains 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. Part 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 [2.310]  115

Civil Procedure in New South Wales

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 r 3.9 of the UCPR (now r 3.8). At the discretion of a judicial officer, an order may be made that any or 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. Information about the online court, including practicalities such as getting registered and logging on, can be found at the NSW Online Registry Website.13 The interaction between the lawyers and court is achieved through posting a message similar to sending an email as the Online Registry 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.14 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).15 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.16

His Honour also ordered: [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.17 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

13 14 15 16 17

https://​onlineregistry.lawlink.nsw.gov.au/​content/​. See “Internet Court Gets First Case”, The Sydney Morning Herald, 29 October 2006. Koompahtoo Local Aboriginal Land Council v KLALC Property & Investments Pty Ltd (No 2) [2006] NSWSC 169. Koompahtoo Local Aboriginal Land Council v KLALC Property & Investments Pty Ltd (No 2) [2006] NSWSC 169 at  [8]‌. See, for example, the reference to the ECM court in Sheahan v Slattery (No 2) [2006] NSWSC 711 at [7]‌.

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set down for hearing before his Honour are required to register for eServices and to advise his Associate when this is done. 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 Ltd18 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 r 3.3 of the UCPR. 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 2006.19 [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.20

Three years later in Sedrak v Starr, Gzell J posted the following message in the ECM court:21 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 is 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

18 19 20 21

Hill v W & F Lechner Pty Ltd [2006] NSWSC 440. Hill v W & F Lechner Pty Ltd [2006] NSWSC 440 at [10]–​[12]. Hill v W & F Lechner Pty Ltd [2006] NSWSC 440 at [10]–​[12]. Sedrak v Starr [2009] NSWSC 996 at [5]‌. [2.330]  117

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. 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



(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 clause 2 of Schedule 1 to 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 clause 3 of Schedule 1to 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. 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)

A practice note must be published in the Gazette.

(3)

Sections 40 and 41 of the Interpretation Act 1987 apply to a practice note in the same way as they apply to a statutory rule.

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.

 118 [2.330]

CHAPTER 3

Costs of Litigation [3.10] INTRODUCTION......................................................................................................... 119 [3.20] PROPORTIONALITY OF COSTS.................................................................................... 120 [3.30] Civil Procedure Act 2005 (NSW) s 60.................................................... 120 [3.50] Access to Justice and Access to Lawyers.................................................. 121 [3.57] Bleyer v Google Inc............................................................................ 123 [3.70] Zanella v Madden............................................................................. 124 [3.100] THE PURPOSE OF COSTS............................................................................................. 125 [3.110] Northern Territory v Sangare............................................................... 126 [3.120] DUTIES OF LITIGANTS AND COSTS............................................................................. 128 [3.130] Civil Procedure Act 2005 (NSW) s 56.................................................... 128 [3.140] Priest v New South Wales................................................................... 129 [3.160] Civil Procedure Act 2005 (NSW) s 98.................................................... 130 [3.170] PARTIES AND COSTS................................................................................................... 131 [3.180] Uniform law costs....................................................................................... 131 [3.190] Ordered costs.............................................................................................. 132 [3.200] Costs follow the event –​the usual costs order............................................. 133 [3.210] Baulderstone Hornibrook Engineering v Gordian Runoff............................. 133 [3.220] LAWYERS AND COSTS................................................................................................. 136 [3.230] Legal Profession Uniform Law Application Act 2014 (NSW) Sch 2................ 137 [3.260] Civil Procedure Act 2005 (NSW) s 99.................................................... 140 [3.270] Treadwell v Hickey............................................................................ 141 [3.280] SPECIFIC COSTS ORDERS............................................................................................ 147 [3.280] No order as to costs.................................................................................... 147 [3.290] Costs of the day.......................................................................................... 147 [3.300] Costs in any event....................................................................................... 147 [3.310] Costs in the cause....................................................................................... 148 [3.320] JOINING PARTIES AND COSTS.................................................................................... 148 [3.330] Nationwide News v Naidu; ISS Security v Naidu (No 2)............................. 149 [3.350] COSTS AND SELF-​REPRESENTED LITIGANTS................................................................ 151 [3.360] Cachia v Hanes................................................................................ 151 [3.380] Bell Lawyers v Pentelow...................................................................... 152 [3.390] COSTS AGAINST NON-​PARTIES................................................................................... 155 [3.400] Heath v Greenacre Business Park.......................................................... 155 [3.410] SECURITY FOR COSTS................................................................................................. 159 [3.420] Wollongong City Council v Legal Business Centre..................................... 159 [3.440] Idoport v National Australia Bank......................................................... 163 [3.460] Uniform Civil Procedure Rules 2005 (NSW) rr 2.1, 42.21........................... 168 [3.470] Civil Procedure Act 2005 (NSW) s 67.................................................... 169 [3.490] Welzel v Francis................................................................................ 170 [3.500] PROPOSALS FOR CONTAINING COSTS....................................................................... 174 [3.510] Containment of Costs: Litigation and Arbitration..................................... 174 [3.530] Reforming the Structure of Costs Awards................................................ 180

INTRODUCTION [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. [3.10]  119

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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 literature1 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.

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.



1

2

3

See, for example, Hamilton JP, Lindsay G, Morahan M and Webster C (eds), NSW Civil Handbook (Lawbook Co, 2019) (UCPR Part 42, Commentary); Dal Pont DE, Law of Costs (4th ed, LexisNexis, 2018); Grace J and Ashe A, Legal Costs New South Wales Online (LexisNexis); The Law Society of NSW, Costs Guidebook (7th ed); Quick R and Harris E, Quick on Costs (Thomson Reuters); Cairns BC, Australian Civil Procedure (11th ed, Thomson Reuters, 2016), Ch 17. 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” (February 2006) 44(1) Law Society Journal (NSW) 68.

120 [3.20]

Costs of Litigation  Chapter  3

[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” (2007) 29 Australian Bar Review 136 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. 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. 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 [3.50]  121

Civil Procedure in New South Wales

Access to Justice and Access to Lawyers cont. 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, 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.

 [3.55] Costs that are out of proportion to the importance and complexity of the subject

matter in despite have been found to be tantamount to an abuse of process, warranting a permanent stay of proceedings. 122 [3.55]

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Bleyer v Google Inc [3.57]  Bleyer v Google Inc [2014] NSWSC 897 MCCALLUM J [1]‌ HER HONOUR: These proceedings raise an interesting question as to the Court’s authority to decline to determine a civil claim on the grounds of disproportionality between the cost of doing so and the interest at stake. [2]‌The claim is an action in defamation brought by Mr Roland Bleyer against Google Inc, the American company that provides the search engine known as Google. Mr Bleyer alleges that Google Inc published seven items defamatory of him to three people in the form of Google search results (in each case presumably in response to a Google search undertaken by each of those three people). [3]‌By notice of motion filed 4 September 2013, Google Inc seeks an order that the proceedings be permanently stayed or alternatively summarily dismissed as an abuse of process. This judgment determines that application. … [49] The obvious starting point in determining that issue is to consider the relevant provisions of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005. The defendant’s notice of motion seeks an order that the proceedings be permanently stayed pursuant to s 67 of the Civil Procedure Act, which confers a general power, subject to rules of court, to stay any proceedings before the court. … [51] Can it seriously be doubted that the power conferred by s 67 can properly be exercised to stay proceedings in which the resources required of the court and the parties to determine the claim are vastly disproportionate to the interest at stake? That appears to be the position taken on behalf of Mr Bleyer. It was noted on his behalf that the principle of proportionality is expressly part of the overriding objective of the English Civil Procedure Rules, stated in clause 1.1 as follows: [English Civil Procedure Rules extracted] [52] Mr. Smark [SC, counsel for plaintiff] noted that no principle in equivalent terms is expressly stated to be an aspect of the overriding purpose of the New South Wales Civil Procedure Act. Section 56 of the Act provides: [Section 56 extracted] [53] The only express reference to proportionality is in s 60 of the Act, which provides: 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. [54] Google Inc cited a number of decisions in which it has been said that, notwithstanding differences in language between the provisions in the two jurisdictions, the provisions of sections 56 to 58 of the Civil Procedure Act and r 1.1 of the English Civil Procedure Rules are substantially the same: Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 262; Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231; Owners Corporation –​Strata Plan 61732 v TR Druce Pty Ltd [2009] NSWSC 1024; Ritchie’s Uniform Civil Procedure NSW at [60.15]. [55] However, Mr Smark noted that none of those authorities states that the express principle of proportionality in the English Rules is also contained (by implication) within s 56 of the New South Wales Civil Procedure Act. [56] It is not, of course, a question of concluding that, noting the provisions of the English rules, the New South Wales Parliament decided expressly to exclude such a principle. As submitted by Mr McClintock [SC, counsel for defendant], as instructive as it is to consider the law of England, it is [3.57]  123

Civil Procedure in New South Wales

Bleyer v Google Inc cont. not necessary to resort to that body of law in order to determine what is an abuse of the process of this Court. Sections 56 and 60 of the Civil Procedure Act are not to be read disjunctively. Further, there is ample authority in this jurisdiction for the proposition (for which no authority is needed in any event) that the just allocation of the finite resources of the court is a relevant consideration in the exercise of the court’s authority, at least in civil matters. [57] Once it is recognised that proportionality between the resources required to determine a claim and the interest at stake is relevant to the exercise of the court’s procedural powers, it is a small and logical step to conclude that there will be cases in which the disproportion is so vast as to warrant the stay or dismissal of the proceedings. The converse proposition, that the court must always determine every claim on the merits, is expressly rejected by [the summary dismissal provisions in] r 13.4 of the UCPR. … [61] I accept, as suggested by Mr Smark, that the court should be slow to shut its doors on a plaintiff who has regularly invoked its jurisdiction, but in a sense that begs the question. Google’s contention is that the principle of proportionality is a norm of justice which informs the question whether the court’s jurisdiction has been regularly invoked. [62] I am satisfied that the court has power, in an appropriate case, to stay or dismiss an action on the grounds that the resources of the court and the parties that will have to be expended to determine the claim are out of all proportion to the interest at stake. In my view, such disproportionality can properly be regarded as a species of abuse of process. [63] It should go without saying that the cases in which a stay would be granted on the basis of disproportionality will be rare. The primary function of the court is to determine causes properly brought before it according to law and the merits of the case. Further, the value of the interest at stake will, at least in some instances, have to be assessed having regard to broader considerations than the sum of money involved. That is an important consideration in the context of defamation, where vindication of reputation is not wholly measured or achieved in financial terms, even though the remedy must be given in the form of monetary compensation. Undoubtedly, like considerations will arise in other kinds of cases.

 [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.

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. 124 [3.60]

Costs of Litigation  Chapter  3

Zanella v Madden cont. [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. [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.



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. [3.100]  125

Civil Procedure in New South Wales

The High Court, in Northern Territory v Sangare, has articulated the essential purposes for costs orders in Australia. The judgment extracted is in the context of costs orders made by courts in the Northern Territory, but the principles are equally applicable in New South Wales.

Northern Territory v Sangare [3.110]  Northern Territory v Sangare [2019] HCA 25 [The respondent, Sangare, was a citizen of Guinea who had arrived in Australia in 2011. He applied for a protection visa under the Migration Act 1958 (Cth), but that application was refused. In 2014, the respondent was employed by the Northern Territory Department of Infrastructure (the “Department”), which offered to sponsor him as a skilled migrant, requiring him to apply for and obtain an appropriate visa. The respondent received advice from the Commonwealth Government that his application for the visa was invalid because the respondent had previously applied for and been refused the protection visa. The respondent subsequently sought expressions of support from the Minister of the Department, who in turn requested that officers of the Department brief him about the respondent. The Chief Executive of the Department provided the brief, which the respondent alleged contained defamatory material, including material that had been fabricated to suggest the respondent had provided false and misleading information about his immigration status. The respondent brought proceedings against the Northern Territory. The Supreme Court of the Northern Territory dismissed the claims, based on application of protections in the Defamation Act 2006 (NT) and the defence of qualified immunity, and a subsequent appeal was unsuccessful. The Northern Territory applied for a costs order covering the costs of the trial and appeal. That order was refused, primarily on the basis that the respondent would not have the money to satisfy the costs order, so any order made would be futile.] KIEFEL CJ, BELL, GAGELER, KEANA AND NETTLE JJ The discretion as to costs [24] It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation[18]. While the width of the discretion “cannot be narrowed by a legal rule devised by the court to control its exercise”[19], the formulation of principles according to which the discretion should be exercised does not “constitute a fetter upon the discretion not intended by the legislature”[20]. Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power[21]. [25] A guiding principle by reference to which the discretion is to be exercised –​indeed, “one of the most, if not the most, important” principle –​is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party[22]. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action[23]. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour[24]. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the “just resolution of the real issues in civil proceedings with minimum delay and expense”[25], that might have been taken into account to justify refusing the appellant an order for its costs. Impecuniosity … [30] The [court appointed] amicus submitted that orders for costs are intended to be compensatory, not punitive. As a general proposition, so much must be accepted[32]. The amicus went on to submit 126 [3.110]

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Northern Territory v Sangare cont. that the respondent’s impecuniosity was a consequence of his being unemployed and that this followed the publication of the defamatory matter in respect of which the respondent brought these proceedings. It was then argued that the effect of a costs order in these circumstances would not be compensatory, but punitive. [31] This submission cannot be accepted. The very point decided by the Court of Appeal was that the respondent’s action was not justified in law. In these circumstances, there can be nothing punitive in an order that the appellant be compensated for having been unsuccessfully sued. No conduct on the part of the appellant in the course of the litigation caused or contributed in any way to the respondent’s impecuniosity. [32] Whether a party is rich or poor has, generally speaking, no relevant connection with the litigation[33]. It may be said, by way of qualification to that general proposition, that a party’s financial position may be relevant to the extent that it may inform the structure of a costs order. For example, impecuniosity may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order. That said, any such qualification was not invoked in the present case. … [35] [A]‌s a matter of authority, the courts have consistently rejected the suggestion that a costs order should not be made against an impecunious party because it would be futile to do so[37]. The circumstance that a person may not presently, or even foreseeably, be able to meet an order for costs has not been regarded as a reason to regard the creation of the debt as an exercise in futility. The very existence of the debt created by the order is a benefit to a creditor. The successful party is better off with the benefit of the order than without it. It simply cannot be assumed that the respondent will never have the means to pay the debt in whole or in part or that it might not otherwise be turned to valuable account by the appellant[38]. Conclusion and orders [36] The respondent’s impecuniosity was the only reason identified by the Court of Appeal for depriving the appellant of its costs. That consideration was not relevant to the proper exercise of the Court’s discretion as to costs. The Court of Appeal’s decision cannot be supported as an exception to the general principle that a wholly successful party should be entitled to an order for costs. It follows that the appeal must be allowed. The appeal should be allowed. The respondent should pay the appellant’s costs of and incidental to the proceedings in the Supreme Court of the Northern Territory at first instance and in the Court of Appeal. The respondent should pay the appellant’s costs of the appeal to this Court. Donald Campbell & Co v Pollak [1927] AC 732 at 811-​812; Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 539-​540, 557, 561-​562, 569; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 96 [65], 120-​121 [134].

[18]

[19]

Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 537; [1986] HCA 17. See also at 533.

Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 541-​542, see also at 558-​559; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 96 [65], 121 [134]. [20]

Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 519; Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 541-​542, see also at 558; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 96 [65], 121 [134].

[21]

Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2] [1953] 1 WLR 1481 at 1484; [1953] 2 All ER 1588 at 1590. See also Harold v Smith [1860] EngR 516; (1860) 5 H & N 381 at 385 [157 ER 1229 at 1231]; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 96-​97 [66]-​[67], see also at 86 [35], 120-​121 [134].

[22]

See, eg, Bostock v Ramsey Urban District Council [1900] 2 QB 616 at 622, 625, 627; Ritter v Godfrey [1920] 2 KB 47 at 53, 60, 66; Scottish Gympie Gold Mines Ltd v Carroll [1902] St R Qd 311 at 315-​316; Stewart v Moore [1921] St R Qd 182 at 190; Redden v Chapman [1949] NSWStRp 28; (1949) 50 SR (NSW) 24 at 25.

[23]

[3.110]  127

Civil Procedure in New South Wales

Northern Territory v Sangare cont. Anglo-​Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-​98 [69].

[24]

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 210 [90]; [2009] HCA 27. See Supreme Court Rules 1970 (NSW), r 1.10.

[25]

Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 543, 562-​563, 567; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 75 [1]‌, 89 [44], 97 [67], 102 [80], 103-​104 [82], 121 [134]. [32]

Hollier v Australian Maritime Safety Authority [No 2] [1998] FCA 975 at 3; Scott v Secretary, Department of Social Security [No 2] [2000] FCA 1450 at [4]‌; Board of Examiners v XY [2006] VSCA 190; (2006) 25 VAR 193 at 207-​208 [35], 209 [41]; Dal Pont, Law of Costs, 4th ed (2018) at [8.30]. [33]

[37] See Selliah v Minister for Immigration and Multicultural Affairs [1998] FCA 469 at 4; MZARS v Minister for Immigration and Border Protection [2017] FCA 177 at [36]-​[37]; Graham v Minister for Immigration and Border Protection [No 2] [2018] FCA 1116 at [16]-​ [17].

Tozier v Hawkins (1885) 15 QBD 680; The Commonwealth v Mewett (1997) 191 CLR 471 at 535; [1997] HCA 29.

[38]



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 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.

128 [3.120]

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Civil Procedure Act 2005 (NSW) cont. (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 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 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 [3.140]  129

Civil Procedure in New South Wales

Priest v New South Wales cont. 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. … 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 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 (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) (1)

Subject to rules of court and to this or any other Act:

130 [3.150]

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Civil Procedure Act 2005 (NSW) cont.

(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 J4 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 “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

4

Hamilton JP, The New Procedure Nuts and Bolts for Judicial Officers, Judicial Commission of NSW (16 August 2005). [3.180]  131

Civil Procedure in New South Wales

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) Sch 4 cl 18. Ordered costs [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 indemnify5 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 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), Pt  6 “Legal Costs –​ Costs Assessment”.

5

Latoudis v Casey (1990) 170 CLR 534; Cachia v Hanes (1994) 179 CLR 403.

132 [3.190]

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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 presumption6 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 party7 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. [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. 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

6 7 8

Ritter v Godfrey [1920] KB 47; 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]. Oshlack v Richmond River Council (1998) 193 CLR 72; 72 ALJR 578; 152 ALR 83; [1998] HCA 11 at [67].

[3.210]  133

Civil Procedure in New South Wales

Baulderstone Hornibrook Engineering v Gordian Runoff cont. 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: 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. [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; 134 [3.210]

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Baulderstone Hornibrook Engineering v Gordian Runoff cont. [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. [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: 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 [3.210]  135

Civil Procedure in New South Wales

Baulderstone Hornibrook Engineering v Gordian Runoff cont. 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].



LAWYERS AND COSTS [3.220] The CPA and Sch  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 among 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 Sch 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 Sch 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. First, lawyers should not be deterred from fearlessly pursuing the interests of their clients. Second, 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.

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,

9

Pinebelt Pty Ltd v Bagley [2000] NSWSC 655 at [28].

136 [3.220]

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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; • 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 • 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]  Legal Profession Uniform Law Application Act 2014 (NSW) Sch 2 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. [3.230]  137

Civil Procedure in New South Wales

Legal Profession Uniform Law Application Act 2014 (NSW) cont. (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. 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.

(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. 138 [3.230]

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Legal Profession Uniform Law Application Act 2014 (NSW) cont. 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,



(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. 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. 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.

(3)

(4)

6 Onus of showing facts provided reasonable prospects of success (1)

(2)

(3)

(4)

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. 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. 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. 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. [3.230]  139

Civil Procedure in New South Wales

Legal Profession Uniform Law Application Act 2014 (NSW) cont. [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.” Section 99 also specifically requires that the practitioner be given a reasonable opportunity to be heard. For example, in Berry Rural Co Operative Society Ltd v Sepak Industries Pty Ltd [2018] NSWSC 298, Stevenson J, after finding that the plaintiff’s negative position in the litigation was “due, entirely, to the egregious short comings in the manner in which its legal representatives have conducted [the] proceedings,” gave the plaintiff’s solicitor 4 days to show cause in writing why “she should not pay to the Co Operative the whole of the costs the Co Operative must pay Sepak; and why the costs thrown away by the Co Operative’s failure to comply with the directions made in these proceedings should not be disallowed as between [the solicitor] and the Co Operative.”



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) (1)

This section applies if it appears to the court that costs have been incurred:



(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.

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.

140 [3.240]

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Civil Procedure Act 2005 (NSW) cont. (2)

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



(ii)

in the case of a solicitor, as between the solicitor and the client,



(b)

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)

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,



(c)

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 [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. [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 [3.270]  141

Civil Procedure in New South Wales

Treadwell v Hickey cont. 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]).

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]. 142 [3.270]

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Treadwell v Hickey cont. [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. [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 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]. [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 [3.270]  143

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Treadwell v Hickey cont. 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 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, 144 [3.270]

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Treadwell v Hickey cont. 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. [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 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 [3.270]  145

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Treadwell v Hickey cont. 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. [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. [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. 146 [3.270]

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Treadwell v Hickey cont. [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. [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 capitulated or one party has acted unreasonably in initiating or defending the proceedings.11 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

11 12

See generally Hamilton J and Lindsay G, NSW Civil Practice & Procedure (Thomson Reuters, subscription service), UCPR Part 42, Commentary, r 42.1.50. See also Hamilton JP, Lindsay G, Morahan M and Webster C (eds), NSW Civil Procedure Handbook (Lawbook Co, 2018), UCPR Part 42, Commentary, r Pt 42.1.60. [3.300]  147

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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 [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 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.

3 1 14 15

See also Cairns BC, Australian Civil Procedure (11th ed, Thomson Reuters, 2016), Ch 17. This order takes its name from Bullock v London General Omnibus Co [1907] 1 KB 264. This order takes its name from Sanderson v Blyth Theatre Co [1903] 2 KB 533.

148 [3.310]

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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 [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 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

[3.330]  149

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Nationwide News v Naidu; ISS Security v Naidu (No 2) cont. 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.) [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 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.

 150 [3.330]

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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.

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. … [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 not entitled to receive

a costs order, as had been allowed under earlier precedent. [3.370]  151

Civil Procedure in New South Wales

Bell Lawyers v Pentelow [3.380]  Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29 KIEFEL CJ, BELL, KEANE AND GORDON JJ (GAGELER AND EDELMAN JJ AGREEING; NETTLE J AGREEING IN PART) [1]‌As a general rule, a self-​represented litigant may not obtain any recompense for the value of his or her time spent in litigation[1]. Under an exception to the general rule, a self-​represented litigant who happens to be a solicitor may recover his or her professional costs of acting in the litigation. This exception is commonly referred to as “the Chorley exception”, having been authoritatively established as a “rule of practice” by the Court of Appeal of England and Wales in London Scottish Benefit Society v Chorley[2]. [2]‌One issue raised by this appeal is whether the Chorley exception operates to the benefit of barristers who represent themselves. Another, more fundamental, issue is whether the Chorley exception should be recognised as part of the common law of Australia. [3]‌ The Chorley exception has rightly been described by this Court as “anomalous”[3]. Because it is anomalous, it should not be extended by judicial decision[4] to the benefit of barristers. This view has previously been taken by some courts in Australia[5]. Dealing with the matter more broadly, however, the Chorley exception is not only anomalous, it is an affront to the fundamental value of equality of all persons before the law. It cannot be justified by the considerations of policy said to support it. Accordingly, it should not be recognised as part of the common law of Australia. … The power to order costs [13] The power to make an order for costs is conferred on the courts of New South Wales by s 98(1) of the Civil Procedure Act 2005 (NSW), which provides: “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.”

[14] Section 3(1) of the Civil Procedure Act defines “costs” as follows: “costs, in relation to proceedings, means costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration.” [15] On one view, the reference to “costs payable” in this definition is an indication that an order for costs may be made only in respect of costs payable by the party in whose favour the order is made to another person for services rendered. On this view the Chorley exception is inconsistent with the statutory definition of costs and, costs being a creature of statute, the Chorley exception has been displaced by the Civil Procedure Act. [16] This view, which commended itself to Meagher JA below[19], was advanced by the appellant in argument in this Court. The respondent argued that the legislature did not intend to abrogate the Chorley exception by ss 3 and 98(1) of the Civil Procedure Act in the absence of clear words to that effect. It is preferable to address the proper effect of ss 3 and 98(1) of the Civil Procedure Act in the context of a discussion of the broader question whether the Chorley exception should be recognised as part of the common law of Australia. The examination of that question may conveniently proceed by reference to the principal authorities referred to by the parties in the course of argument in this Court. Chorley [17] One may begin with a consideration of the reasons said to support the Chorley exception. In that case, Brett MR stated the general rule, and the exception to it, in the following terms[20]: 152 [3.380]

Costs of Litigation  Chapter  3

Bell Lawyers v Pentelow cont. “When an ordinary party to a suit appears for himself, he is not indemnified for loss of time; but when he appears by solicitor, he is entitled to recover for the time expended by the solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket. He has to pay the fees of the court, that is money paid out of pocket; but for loss of time the law will not indemnify him. When, however, we come to the case of a solicitor, the question must be viewed from a different aspect. There are things which a solicitor can do for himself, but also he can employ another solicitor to do them for him; and it would be unadvisable to lay down that he shall not be entitled to ordinary costs if he appears in person, because in that case he would always employ another solicitor.” [18] It may be said immediately that the view that it is somehow a benefit to the other party that a solicitor acts for himself or herself, because the expense to be borne by the losing party can be expected to be less than if an independent solicitor were engaged, is not self-​evidently true. A self-​ representing solicitor, lacking impartial and independent advice that the court expects its officers to provide to the litigants they represent, may also lack objectivity due to self-​interest. That may, in turn, result in higher legal costs to be passed on to the other party in the event that the self-​representing solicitor obtains an order for his or her costs. [19] Importantly, the view that solicitors should be encouraged to act for themselves is contrary to the modern orthodoxy that it is undesirable, as a matter of professional ethics, for a solicitor to act for himself or herself in litigation. In McIlraith v Ilkin (Costs), Brereton J said[21]: “Where a solicitor represents a litigant, the court is entitled to expect the litigant to be impartially and independently advised by an officer of the court. Indeed, where the court concludes that a solicitor is not in a position to give impartial and independent advice to a party, because of the solicitor’s own interest in the outcome, the court has restrained the solicitor from continuing to act … Where a solicitor acts for himself or herself there cannot be independent and impartial advice, and this is in principle a strong reason for holding that a solicitor litigant should not be entitled to costs of acting for him or herself.” [20] The view expressed by Brereton J is reflected in rr 17.1 and 27.1 of the Australian Solicitors’ Conduct Rules, which have been adopted in New South Wales[22], Victoria, Queensland, South Australia and the Australian Capital Territory. Rules broadly equivalent to rr 17.1 and 27.1 of the Australian Solicitors’ Conduct Rules also appear in the conduct rules of Western Australia and the Northern Territory. [21] In Chorley, Bowen LJ explained the rationale for the exception as follows[29]: “Professional skill and labour are recognised and can be measured by the law; private expenditure of labour and trouble by a layman cannot be measured. It depends on the zeal, the assiduity, or the nervousness of the individual. Professional skill, when it is bestowed, is accordingly allowed for in taxing a bill of costs; and it would be absurd to permit a solicitor to charge for the same work when it is done by another solicitor, and not to permit him to charge for it when it is done by his own clerk.” [22] This reasoning is not persuasive. The notion that the “private expenditure of labour and trouble by a layman cannot be measured” is not the basis for the general rule. The general rule that a self-​ represented litigant may not obtain any recompense for his or her time spent on litigation is not based on a concern about the difficulty of valuing the appropriate amount of recompense, but, as was explained by the majority in Cachia v Hanes, because “costs are awarded by way of … partial indemnity … for professional legal costs actually incurred in the conduct of litigation”[30]. Accordingly, to say that the value of legal services rendered by a solicitor to himself or herself can be measured is not to justify an exception to the general rule. [3.380]  153

Civil Procedure in New South Wales

Bell Lawyers v Pentelow cont. [The High Court disavowed any reasoning in the judgments in Guss v Veenhuizen (No 2) (1976) CLR 47 and Cachia v Hanes (1994) 179 CLR 403 that accepted the Chorley exception as applying in Australia and rejected several arguments advanced by the respondent that the Chorley rule should be maintained, including because the abolition of the Chorley exception should be one for the legislature.] A matter for the legislature [54] The respondent also argued that this Court should refrain from holding that the Chorley exception is not part of the common law because that is a task more appropriately dealt with by the relevant legislature or rules committee of a superior court[66]. It was said that the legislature would be better placed than a court to decide whether the court’s rules of practice should be altered or abrogated. This argument may be disposed of briefly. The majority in Cachia saw great difficulty in resolving the inconsistency between the general rule and the Chorley exception by judicial abolition of the general rule. No such difficulty was said to confront the taking of the logical step of holding that the exception is not part of the common law. The Chorley exception is the result of judicial decision, and it is for this Court to determine whether it is to be recognised in Australia. … Conclusion and orders [57] There is no compelling reason for this Court to refrain from taking the “logical step” identified in Cachia. The Chorley exception is not part of the common law of Australia. [58] The appeal should be allowed. Orders 1 to 4 of the Court of Appeal of the Supreme Court of New South Wales should be set aside. In their place it should be ordered that the summons for judicial review be dismissed and the first respondent pay the appellant’s costs in the District Court and the Court of Appeal. The first respondent should pay the appellant’s costs of the appeal to this Court. Cachia v Hanes (1994) 179 CLR 403 at 410-​411; [1994] HCA 14. See also Guss v Veenhuizen [No 2] [1976] HCA 57; (1976) 136 CLR 47 at 51; [1976] HCA 57.

[1]‌

(1884) 13 QBD 872 at 877. The rule of practice was acknowledged prior to the decision in Chorley by Faucett J in the Supreme Court of New South Wales in Pennington v Russell [No 2] [1883] NSWLawRp 47; (1883) 4 LR (NSW) Eq 41.

[2]‌

[3]‌

Cachia v Hanes (1994) 179 CLR 403 at 411.

Midgley v Midgley [1893] 3 Ch 282 at 299, 303, 306-​307; Best v Samuel Fox & Co Ltd [1952] AC 716 at 728, 733; Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027 at 1086; CSR Ltd v Eddy [2005] HCA 64; (2005) 226 CLR 1 at 18 [35]; [2005] HCA 64.

[4]‌

See Hartford Holdings Pty Ltd v CP (Adelaide) Pty Ltd [2004] SASC 161 at [125]; Winn v Garland Hawthorn Brahe (Ruling No 1) [2007] VSC 360 at [10]-​ [11]; Murphy v Legal Services Commissioner [No 2] [2013] QSC 253 at [16]; Bechara v Bates [2018] FCA 460 at [6]. But see to the contrary Ada Evans Chambers Pty Ltd v Santisi [2014] NSWSC 538 at [29].

[5]‌

[19]

Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150 at [126]-​ [141] .

[20]

London Scottish Benefit Society v Chorley (1884) 13 QBD 872 at 875.

[21]

[2007] NSWSC 1052 at [25].

[22]

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW).

[29]

London Scottish Benefit Society v Chorley (1884) 13 QBD 872 at 877.

[30]

(1994) 179 CLR 403 at 410.

[66]

McGuire v Secretary for Justice [2018] NZSC 116 at [88].

 154 [3.380]

Costs of Litigation  Chapter  3

COSTS AGAINST NON-​PARTIES [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 privilege19 or to obtain a costs order.20

Heath v Greenacre Business Park [3.400]  Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 [Heath was a director of Deliver Australia Pty Ltd, the defendant and cross-​claimant in proceedings in the Equity Division of the Supreme Court of NSW. Heath verified the pleadings and made affidavits in that proceeding, including providing an affidavit that he had been authorized by resolution of the directors of Deliver that he was to carry on proceedings on behalf of Deliver. The court made an order for security for costs that was never satisfied by Deliver. Subsequently, Greenacre sought orders for Heath to pay Greenacre’s costs associated with the defence and cross-​claim in the proceeding.] GLEESON JA [26] At [17],21 his Honour referred to authorities for the proposition that the power under s 98 of the Civil Procedure Act  to make costs orders against non-​parties, is to be exercised only in exceptional circumstances, that is, outside the ordinary run of cases, and is a power to be exercised sparingly: FPM Constructions Pty Ltd v City of the Council of the Blue Mountains [2005] NSWCA 340 (FPM Constructions) at [210], [214]; May v Christodoulou [2011] NSWCA 75; 80 NSWLR 462 at [107] –​[116]; and Kebaro Pty Ltd v Saunders [2003] FCAFC 5 at [103]. [27] At [18], his Honour accepted that whilst the categories of cases which may attract the exercise of the power to make costs orders against non-​parties are not closed, they often satisfy some, if not a majority, of the criteria identified by Basten JA in FPM Constructions at [201], namely: (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.

[28] His Honour continued at [19]: But it is clear in my view that costs orders against a non-​party, whether director or solicitor, would be warranted where the unsuccessful party is a person or entity of straw and where the conduct of the litigation by the non-​party in question is improper. Maintaining a claim or a defence on a knowingly false basis is improper conduct that warrants the exercise of the power. The same conduct justifies the making of a costs order on the indemnity basis.

6 1 17 18 19 20 21

Note that UCPR r 42.3 was repealed on 7 May 2010. See Murphy v Young & Co Brewery [1997] 1 WLR 1591. Knight v FP Special Assets Ltd (1992) 174 CLR 178; 66 ALJR 560; Palmer v Walesby (1868) LR 3 Ch App 732. ACP Magazines Pty Ltd v Motion [2000] NSWSC 1169. Wentworth v Wentworth [2000] NSWCA 350. Greenacre Business Park Pty Ltd v Deliver Australia Pty Ltd (in Liq) [2014] NSWSC 1646. [3.400]  155

Civil Procedure in New South Wales

Heath v Greenacre Business Park cont. [29] His Honour concluded at [20]: I am satisfied that the defence and cross claim were propounded on a basis that Mr Heath knew to be false. It may be observed that he has not taken up the opportunity to appear to defend his conduct. Nor were any affidavits served in response to the affidavits served by the plaintiffs that “convincingly challenged the accuracy of the facts deposed to by Mr Heath and Mr Biggs”. In my view, an order should be made that Mr Heath personally be liable for the plaintiffs’ costs, and the costs for which he should be liable should be assessed on the indemnity basis. I also think that the plaintiffs should not be further delayed by having to have their costs assessed. Pursuant to s 98(4)(c) of the Civil Procedure Act, 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 specified gross sum instead of assessed costs. This is a proper case for the exercise of that power. … Relevant legislation [32] Section 98(1) of the Civil Procedure Act, provides as follows: 98 Courts powers as to costs (1)

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.

[33] It is well-​established that the terms of s 98 are sufficient to confer on the court a general power to make orders against non-​parties: Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178 (Knight). [The Court of Appeal allowed the appeal, finding that the lower court’s discretion had miscarried due to material errors of fact finding that the appellant knew about the falsity of Deliver’s allegations in the defence and cross-​claim, but re-​exercised the costs discretion.] Re-​exercise of the costs discretion [79] Where the exercise of a discretionary power has miscarried, it may be appropriate to remit the proceedings to the primary judge for re-​exercise of the power according to law. In the present case, neither party requested that the proceedings be remitted. The appellant did not seek to rely upon any evidence should this Court re-​exercise the costs discretion. Nor did the respondents contend that his Honour declined or failed to make any findings of fact sought by the respondents. In these circumstances, this Court should reconsider the respondents’ motion for a non-​party costs order against the appellant under s 98(1) of the Civil Procedure Act. [80] In May v Christodoulou at [111], Sackville AJA pointed out that the criteria identified by Basten JA in FPM Constructions (at [210]) (set out at [26] above), are not intended to be and cannot be exhaustive and that other factors may bear on the exercise of the discretionary power in a particular case. What needs to be emphasised is that the exceptional jurisdiction to make a non-​party costs order is only to be exercised where, in the circumstances of the case, the interests of justice require that such an order be made: see Yu v Cao [2015] NSWCA 276 at [137] and [139]: “Exceptional” in the context of the exercise of the non-​party costs jurisdiction 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. [81] There is a further consideration. Care must be taken not to apply the criteria identified by Basten JA in FPM Constructions mechanically. This is because as Basten JA observed (at [214]), it will often 156 [3.400]

Costs of Litigation  Chapter  3

Heath v Greenacre Business Park cont. be the case that a non-​party, be it a company officer or solicitor, will be active in the conduct of litigation and obtain some direct or indirect financial benefit from its success. His Honour continued (at [214]): Careful attention is required as 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. [82] In the present case, there is no issue as to the role played by the appellant in the proceedings. The appellant caused the Lessee to defend the proceedings and propound a cross-​claim seeking substantial damages against the respondents. When the Lessee’s solicitors ceased to act in mid-​ May 2014, the appellant took over the conduct of the appellant’s defence and cross-​claim which he continued to assert in the face of the respondents’ reply evidence and the absence of evidence from the Lessee to contradict it. [83] The appellant continued to actively manage the proceedings for the Lessee at least up until 29 September 2014, when the directors of the Lessee appointed a voluntary administrator. The appellant attended the directions hearings on 30 May 2014 and on 13 June 2014. On the later date, he sought an order for a mediation, which took place on 8 July 2014 with the appellant representing the Lessee. The mediation was unsuccessful. It was followed by the respondents’ application filed 13 August 2014 seeking security for costs and dismissal of the Lessee’s cross-​claim, which was listed for hearing on 30 September 2014. The appellant indicated by email on 29 September 2014, that he would not be appearing the next day: [2015] NSWSC 1353at [14]. Had the Lessee consented to judgment by 30 May 2014, the respondents would have avoided the further costs which they incurred up to and including the final hearing on 17 November 2014. [84] The appellant was a director and secretary of the Lessee and its largest unsecured creditor. It is common ground that the appellant had an indirect interest as a shareholder in the Lessee. The ASIC search reveals that Heathco Pty Limited held a 39 percent shareholding in the Lessee. The appellant also had an interest in the outcome or subject matter of the proceedings in the sense that if the cross-​ claim were successful, he stood to gain because it may result in a return to him in his capacity as the Lessee’s largest creditor. [85] It can also be inferred that from at least 30 May 2014 the Lessee, if not impecunious, was facing significant financial difficulties in meeting its own costs of the litigation, let alone those of the respondents’ costs, should the Lessee be unsuccessful. This inference arises from the following matters. First, the administrator’s report to creditors on 9 October 2014 noted that the Lessee had lost a significant part of its business during 2013, and that the assets of the Lessee had been sold to a related entity on 1 December 2013. Secondly, having told the Court on 30 May 2014 that the Lessee was waiting on funds to arrive within the next two to three weeks to decide whether or not to defend the case, the appellant did not subsequently suggest that any funding was ever forthcoming for the Lessee. As Robb J noted in his reasons when dealing with the application for security for costs on 1 October 2014, the appellant “has not provided any specific confirmation to the court, or to the plaintiff, as to whether it has funds to contest the hearing”: [2014] NSWSC 1353 at [46]. Thirdly, as Robb J also noted (at [49]) the appellant “did not deny that the [Lessee] was impecunious; but instead he asserted that the [respondents] were responsible for the [Lessee’s] financial difficulties.” As already noted the Lessee failed to provide security for costs as ordered on 1 October 2014. [86] The absence of evidence from the appellant before his Honour explaining his decision to maintain the Lessee’s defence and cross-​claim after receipt of the respondents’ reply affidavits is significant. This is because it is necessary to evaluate the evidence “according to the proof which is in the power of one side to have produced, and in the power of the other to have contradicted”: Blatch v Archer (1774) 1 Cowp 53 at 65; [1774] EngR 2; 98 ER 969 at 970 (Lord Mansfield). [87] In my view, the appellant as a director of the Lessee had no reasonable prospect of defending the proceedings or succeeding on the cross-​claim in the face of the respondents’ reply affidavits, [3.400]  157

Civil Procedure in New South Wales

Heath v Greenacre Business Park cont. which the Lessee had not sought to contradict. Further, the appellant acted irresponsibly as a director of the Lessee in not accepting the inevitable by consenting to judgment no later than 30 May 2014. Instead, he allowed the risk of a likely costs order against the Lessee to continue unabated, with the consequence that the quantum of the Lessee’s potential liability increased, as did the likelihood that costs would be awarded against it on an indemnity basis. The inevitable occurred when the liquidator of the Lessee consented to an order for costs against the Lessee on an indemnity basis on 17 November 2014. [88] Making allowance for the appellant being a non-​lawyer, and affording him a reasonable period in which to consider the respondents’ reply evidence, make further enquiries and seek legal advice, in my view, the appellant acting reasonably should have been in a position to assess and conclude that the defence and cross claim had no reasonable prospects by no later than the directions hearing on 30 May 2014. The appellant’s conduct in maintaining the proceedings after that date was so unreasonable that he should be required to pay the respondents costs from that date to the final hearing on 17 November 2014. [89] Acting unreasonably by prolonging litigation with no reasonable prospects also warrants an indemnity costs order: Colgate-​Palmolive Pty Ltd v Cussons [1993] FCA 536; (1993) 46 FCR 225 at 233-​ 234. No argument was advanced by the appellant to the contrary. [90] Nor was any argument advanced by the appellant that the appointment of the voluntary administrator on 29 September 2014, or the liquidator on 31 October 2014, in any way affected the appellant’s responsibility for the respondents’ costs incurred after 29 September 2014. In any event, if the appellant had acted reasonably and caused the Lessee to consent to judgment by no later than 30 May 2014, the respondents would not have incurred any further costs after that date. [91] The respondents submitted that their costs incurred prior to the date when it became unreasonable for the appellant to maintain the proceedings, should be included in any costs order against the appellant (excluding the costs of the preparation of the filing and service of the original statement of claim). They characterised the appellant’s conduct in maintaining the Lessee’s defence and cross claim after the Lessee’s solicitors ceased to act in mid-​May 2014, as an “adoption” of those allegations with the consequence that the costs order should travel back in time and include the earlier costs incurred by the respondents in responding to the Lessee’s allegations. However, contrary to the submission by counsel for the respondents, there is no analogy between the present case and the principles of ratification. [92] The focus in the present case is on the unreasonable conduct of the non-​party in maintaining the proceedings which had no prospect of success. If such a finding is made, that conduct cannot be said to be the cause of the successful party incurring costs at an earlier time before it was unreasonable for the non-​party to maintain the proceedings. [93] The adoption argument can be tested another way. If the Lessee, acting reasonably, should have consented to judgment by no later than 30 May 2011, and had done so, the circumstances would not have attracted a non-​party costs order against the appellant. Yet, the respondents’ adoption argument, if accepted, would have the unusual consequence that a non-​party costs order based on the appellant’s unreasonable conduct from 30 May 2011, would travel back in time and put the respondents in a better position as against the appellant, than if they had obtained an earlier judgment against the Lessee. There is no warrant for that outcome. The non-​party costs order should only relate to the period of time during which the non-​party is found to have acted, relevantly, unreasonably in maintaining the Lessee’s defence and cross-​claim. Here, in my view, that date commences on 30 May 2014.

 158 [3.400]

Costs of Litigation  Chapter  3

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 Supreme Court also has inherent jurisdiction to order security for costs22 which are necessary for the due administration of justice and to prevent abuse of the court’s processes.23 Recent New South Wales Court of Appeal decisions that addressed the criteria for the ordering of security for costs include Singh v De Castro [2017] NSWCA 130; 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: … (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.

22

Fiduciary v Morningstar Research [2004] NSWSC 664 at [34]; Morris v Hanley [2000] NSWSC 957; Bhagat v Murphy [2000] NSWSC 892; Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 at 447–​ 448 per Holland J.

23

Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 at 447–​448 per Holland J. [3.420]  159

Civil Procedure in New South Wales

Wollongong City Council v Legal Business Centre cont. (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 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. [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. 160 [3.420]

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Wollongong City Council v Legal Business Centre cont. [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 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. 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. [3.420]  161

Civil Procedure in New South Wales

Wollongong City Council v Legal Business Centre cont. [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 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. [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. 162 [3.420]

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Wollongong City Council v Legal Business Centre cont. 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 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)

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;

5.

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

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).24

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

24

Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148 at [6]‌. [3.440]  163

Civil Procedure in New South Wales

Idoport v National Australia Bank cont. 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 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) [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.

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)

164 [3.440]

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Idoport v National Australia Bank cont. 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 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: (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 [3.440]  165

Civil Procedure in New South Wales

Idoport v National Australia Bank cont. 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 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: 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 166 [3.440]

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Idoport v National Australia Bank cont. something that it will likely find difficult to do, ie to provide security for the costs which ex hypothesi it 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: 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,25 it will not be made automatically.26 It must not be made “arbitrarily, capriciously or so as to frustrate the legislative intent”.27 It must be exercised judicially.28

25 26 27 28

Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; 193 CLR 502 at [26]; Lucas v Yorke (1983) 50 ALR 228 at 228–​229. Barton v Minister for Foreign Affairs (1984) 2 FCR 463; 54 ALR 586. Oshlack v Richmond River Council (1998) 193 CLR 72; 72 ALJR 578; 152 SLR 83; [1998] HCA 11 at [22]. See generally Hamilton JP, Lindsay G, Morahan M and Webster C (eds), NSW Civil Procedure Handbook (Lawbook Co, 2018) (UCPR Part 42, Commentary). [3.450]  167

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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) (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) 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,

168 [3.460]

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Uniform Civil Procedure Rules 2005 (NSW) cont.

(e)

whether the plaintiff is effectively in the position of a defendant,



(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.



Civil Procedure Act 2005 (NSW) [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.29 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.

29

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]. [3.480]  169

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Welzel v Francis [3.490]  Welzel v Francis [2011] NSWSC 477 BALL J 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]: 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 170 [3.490]

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Welzel v Francis cont. 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 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. [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 [3.490]  171

Civil Procedure in New South Wales

Welzel v Francis cont. 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, 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? [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. 172 [3.490]

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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. … [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 motion.

 [3.490]  173

Civil Procedure in New South Wales

PROPOSALS FOR CONTAINING COSTS [3.500]  In 2007, Hamilton J30 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 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 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. … …

30

The Honourable Mr Justice Hamilton JP, Containment of Costs: Litigation and Arbitration (Supreme Court of New South Wales, 1 June 2007).

174 [3.500]

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Containment of Costs: Litigation and Arbitration cont. [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. 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 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. [3.510]  175

Civil Procedure in New South Wales

Containment of Costs: Litigation and Arbitration cont. 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]: 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 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. 176 [3.510]

Costs of Litigation  Chapter  3

Containment of Costs: Litigation and Arbitration cont. … 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

Fraction of stake (or minimum) payable by loser

Before 1 week after

Date for defence (P wins) 2% or $2,000 Service of defence (D wins)

Before 1 week after

Service of P’s evidence (P wins) 5% or $5,000 Service of D’s evidence (D wins)

1 month before date fixed for hearing

10% or $10,000

Thereafter

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 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. [3.510]  177

Civil Procedure in New South Wales

Containment of Costs: Litigation and Arbitration cont. 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)]



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;

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. …

178 [3.510]

Costs of Litigation  Chapter  3

Containment of Costs: Litigation and Arbitration cont. 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%.] … 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. 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 [3.510]  179

Civil Procedure in New South Wales

Containment of Costs: Litigation and Arbitration cont. 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. 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.

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 … 180 [3.520]

Costs of Litigation  Chapter  3

Reforming the Structure of Costs Awards cont. 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. 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: 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) [3.530]  181

Civil Procedure in New South Wales

Reforming the Structure of Costs Awards cont. 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) 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).

TABLE 13.3  An example of a percentage scale of costs For selected events in the South Australian Magistrates Court, for a claim worth $100 000, as at 26 April 2013 Event 1. Pre-​action notice 2. Filing an action or defence, including directions hearing

182 [3.530]

Action type

Rate

$100 000 claim

other than for personal injury

1%

$1 000

personal injury

2%

$2 000

liquidated sum

3%

$3 000

other than for a liquidated sum

5%

$5 000

Costs of Litigation  Chapter  3

Reforming the Structure of Costs Awards cont. 3. Activity after the first directions hearing until the trial date is set

liquidated sum other than for a liquidated sum

4. Activity from trial date set until trial 5. Preparing and filing a trial plan 6. Fees for counsel at trial

10%

$10 000

12%

$12 000

10%

$10 000

2.5%

$2 500

first day

3%

$3 000

subsequent days

2.5%

$2 500

2%

$2 000

7. Court ordered mediation 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 c­ hapter 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.

TABLE 13.4  Illustrative example of a fixed, event-​based proportional scale of costsa 1993 dollars, by stage & amount in dispute, for the County Court of Victoria Stage of process

Less than $20 000

$20 000 to $39 999

$40 000 to $99 999

$100 000 or more

Non-​monetary dispute

Event 1: Pre-​trial conferencing to trial

$1 065

$1 420

$1 775

$3 550

$1 950

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). [3.530]  183

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Reforming the Structure of Costs Awards cont. 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: 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 • 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: 184 [3.530]

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Reforming the Structure of Costs Awards cont. 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): [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).31 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: 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

31

Formerly order 62A of the Federal Court Rules (Cth). [3.530]  185

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Reforming the Structure of Costs Awards cont. 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). 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. 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).

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.



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CHAPTER 4

Alternatives to Litigation –​Negotiation and Mediation [4.10] INTRODUCTION......................................................................................................... 187 [4.20] ALTERNATIVE DISPUTE RESOLUTION........................................................................... 188 [4.30] GROWTH OF ADR....................................................................................................... 189 [4.40] Review of the Adversarial System in Litigation......................................... 190 [4.50] The New Lawyer: How Settlement Is Transforming the Practice of Law.......... 190 [4.70] Civil Justice Review............................................................................ 192 [4.80] Uncertainty in Litigation..................................................................... 193 [4.90] The New Lawyer: How Settlement Is Transforming the Practice of Law.......... 194 [4.100] Why We Still Litigate......................................................................... 195 [4.110] Against Settlement............................................................................ 195 [4.130] Whose Dispute Is It Anyway?............................................................... 196 [4.135] Courts as the Third Branch of Government............................................. 198 [4.140] Three Things to Be Against (Settlement Not Included)............................... 198 [4.155] Perspectives on ADR and Future Trends.................................................. 199 [4.160] TYPES OF ADR PROCESSES.......................................................................................... 200 [4.170] Dispute Resolution Processes............................................................... 200 [4.180] Dispute Resolution Terms.................................................................... 201 [4.190] NEGOTIATION............................................................................................................ 203 [4.200] Comparison of positional and interest-​based negotiation............................ 205 [4.210] What role does the law play in interest-​based negotiation?......................... 206 [4.220] MEDIATION................................................................................................................ 206 [4.230] Why choose mediation?.............................................................................. 208 [4.240] Role of the lawyer....................................................................................... 209 [4.244] Representing Clients from Courtroom to Mediation Settings....................... 210 [4.248] Position statements..................................................................................... 214 [4.250] Compulsory mediation................................................................................ 215 [4.260] Civil Justice Review............................................................................ 215 [4.280] Civil Procedure Act 2005 (NSW) ss 25–​34.............................................. 217 [4.290] Higgins v Higgins.............................................................................. 219 [4.300] Waterhouse v Perkins......................................................................... 221 [4.304] Good faith.................................................................................................. 223 [4.304]

The Right Balance between Trial and Mediation: Visions, Experiences and Proposals.................................................................................. 223

[4.306]

[4.340]

The ripeness of a dispute for mediation....................................................... 225 [4.310] Oasis Fund Management v ABN Amro................................................... 225 [4.320] Tony Hassan Noun v Margaret Pavey.................................................... 228 [4.330] The Objectives, Scope and Focus of Mediation Legislation in Australia.......... 229 ENFORCEABILITY OF AGREEMENTS TO USE ADR......................................................... 231 [4.350] United Group Rail Services v Rail Corporation NSW.................................. 231

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

[4.10]  187

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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 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 (NSW) r 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 (NSW) r  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, Lise Barry and Lola Akin Ojelabi, Dispute Resolution in Australia; Cases, Commentary and Materials (4th ed, Thomson, Sydney, 2019)  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.

1 2

Yarn DH and Jones GT, Alternative Dispute Resolution: Practice and Procedure in Georgia (3rd ed, Thomson West, 2006) at [1:7]. 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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ADR is defined by the National Alternative Dispute Resolution Advisory Council (NADRAC)3 as: 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 and Wales, employs the phrase ADR “to cover the full range of alternatives to litigation potentially available to resolve a civil dispute. It therefore includes 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 be addressed through litigation”.4

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 and 2017 Annual Reviews for the Supreme Court of NSW reported the following referrals to mediation for the period 2010 to 2017: Year

2010

2011

2012

2013

2014

2015

2016

2017

Cases Referred to Mediation

1,144

902

1,092

1,088

839

1,071

806

943

Mediation Referral Index

23.5%

19.4%

23.9%

23.7%

19.0%

23.1%

17.3%

20.8%

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 This reduction was also applicable to all later years.7 The above figures can be compared with 2005 when the mediation referral rate

3

4 5 6 7

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 (2nd ed, Oxford University Press, 2016) at [1.02]. Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008) p 213, quoting NADRAC, ADR Research: A Resource Paper (2004) at 32 [120]. Supreme Court of NSW, Annual Review 2014, pp 34 and 54. Supreme Court of NSW, Annual Review 2017, p 54. [4.30]  189

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was 9% of the filing rate for applicable cases.8 The 2014 Annual Review also reported that in relation to court-​annexed mediation (where the mediator is a court registrar) the settlement rate for 2010–​2014 was 50%–​55%. The 2017 Annual Review reported that in relation to court-​annexed mediation (where the mediator is a court registrar) the settlement rate for 2015–​2017 ranged from 51%–​46%. 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.

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) at [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 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.

8

Supreme Court of NSW, Annual Review 2009, p 28.

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The New Lawyer: How Settlement Is Transforming the Practice of Law cont. 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. 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. 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. [4.50]  191

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The New Lawyer: How Settlement Is Transforming the Practice of Law cont. 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 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.

Civil Justice Review [4.70]  Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008) p 214 The benefits and disadvantages of ADR were considered by the Victorian Law Reform Commission in its 2008 inquiry on civil justice. 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. 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).

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Civil Justice Review cont. 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. 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 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

[4.80]  193

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Uncertainty in Litigation cont. 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 … 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. 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. 194 [4.90]

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The New Lawyer: How Settlement Is Transforming the Practice of Law cont. 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 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 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 [4.110]  195

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Against Settlement cont. 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” (1995) 83 Georgetown Law Journal 2619 (arguing that 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” (1993) 9 Ohio State Journal on Dispute Resolution 1 (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 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 196 [4.120]

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Whose Dispute Is It Anyway? cont. 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.

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.

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.

 [4.130]  197

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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 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 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.

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[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 advantage”.9 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.

Perspectives on ADR and Future Trends [4.155] Chief Justice Bathurst, Perspectives on ADR and Future Trends –​Address to the 2018 ADR Masterclass on Making ADR Work in a #FakeNews World (11 August 2018) 8. Let me expand first on co-​optation. Courts and tribunals have increasingly adopted ADR into their processes, initially as a voluntary option, but now in many instances a mandated pre-​litigation step. [For example, in NSW, see: Aboriginal Land Rights Act 1983 (NSW) s 239A; Children and Young Persons (Care and Protection) Act 1998 (NSW) s 65; Dust Diseases Tribunal Regulation 2013 (NSW) cl 34; Land and Environment Court Act 1979 (NSW) s 34AA; Privacy and Personal Information Protection Act 1998 (NSW) s 49; Strata Schemes Management Act 2015 (NSW) s 218; Succession Act 2006 (NSW) s 98]. This removal of consent meant that in such cases, the process lost the elements of party control and autonomy, potentially to its detriment. In the United States, Professor Menkel-​Meadow expressed the view that ADR has become “just another stop in the ‘litigotiation’ game which provides an opportunity for the manipulation of rules, time, information and ultimately, money” and just “another battleground for adversarial fighting rather than multi-​dimensional problem solving”. … 9. Professor Sourdin has noted that the emphasis on settlement rather than resolution that results from institutionalisation may also have an impact on the way people participate in ADR –​that they simply “go through the motions”. … 10. I think in relation to co-​optation, we are at a point where it has been recognised that there needs to be a balance between enthusiastically embracing court-​annexed ADR, and the risk of undermining party autonomy and consent. The Supreme Court mediation practice note, for example, states that it is not the Court’s intention that every matter will be referred for compulsory mediation. … 14. The third challenge is the question of the public interest in disputants utilising public justice. I won’t repeat what Professor Fiss said in his seminal article [4.100], but this need for caution has also been echoed by former Chief Justice French [4.135], who noted that while the provision of court-​ annexed ADR services were an aid to early resolution and could help parties reduce the matters in issue, “it is in the public interest that the constitutional function of the judiciary is not compromised”, noting that the courts are “not just another provider of dispute resolution services in a market of different providers”. Courts have a role beyond simply resolving disputes between individual litigants in “articulating and enforcing social norms”. 15. One commentator has argued that there is currently an imbalance in Australia between the competing public interests in settlement and the courts performing this constitutional role,

9

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. [4.155]  199

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Perspectives on ADR and Future Trends cont. as it is given no consideration in a court’s decision to refer to ADR. While the issue does remain somewhat academic, it has emerged in public debate recently in relation to settlements between public regulators and private corporations. There has been public criticism of ASIC, for example, for negotiating settlements with corporate wrongdoers in recent years, with the suggestion that such settlements mean that the corporation is never publically held to account. 16. This criticism is rooted in the notion that there are certain matters that should be dealt with by a Court. Of course, it is probably indisputable that settlements are better value for money in terms of the impact on the public purse. However, I think the debate into the future is going to be centred on how and who should be making the choice to use ADR rather than the Courts in matters of public concern, and where the balance should be struck between the use of ADR and the courts performing their constitutional functions. It may also be the case that there simply needs to be greater transparency around the use of negotiation and settlements in matters involving a public enforcement body. [footnotes omitted]



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. 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).



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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. 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. 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. … 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 [4.180]  201

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Dispute Resolution Terms cont. 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. 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”. 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”. 202 [4.180]

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Dispute Resolution Terms cont. 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. 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.10 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; • 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. 10

Blake S, Browne J and Sime S, The Jackson ADR Handbook (2nd ed, Oxford University Press, 2016) at [2.17]–​[2.18]. [4.190]  203

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Negotiation may take many forms.11 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.12 The parties engage in distributive bargaining whereby “one for me is minus one for you”.13 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 do not 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, for example, extreme opening demands.14 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. First, 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.15 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 11 12 13 14 15

See, for example, 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. See [4.50] and Menkel-​Meadow C, “Toward Another View of Legal Negotiation: The Structure of Problem Solving” (1983–​1984) 31 University of California Los Angeles Law Review 754 at 756–​757. 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. Alexander N and Howieson J, Negotiation –​Strategy Style Skills (2nd ed, LexisNexis, 2010) p 40.

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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 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, that is, the pie must be split up as part of the resolution of the dispute.16 Even one of the authors of “Getting to YES” accepted that positional bargaining was an effective way to proceed in some categories of negotiations:17 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”.18 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] Positional Negotiation

Interest-​based Negotiation

Parties are opponents or adversaries

Parties are collaborative problem solvers

Goal is to win or give up as little as possible

Goal is to satisfy all parties’ interests

Assert correctness of position/​demand

Identify interests

Make minimal concessions in relation to position/​demand

Develop options –​expand the pie

Avoid disclosure of information –​communication is limited

Share and seek out information –​communication is enhanced

Assert rights that support position/​demand

Determine independent criteria for assessing options

Disagree with opponents position

Listen to parties explication of their interests

Make concessions slowly and incrementally to try and obtain agreement

Evaluate options to satisfy interests

16 17 8 1

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. [4.200]  205

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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 principles that may provide guidance as to how a court would resolve the dispute but law is but one criterion that may be relevant.19 However, too ready a resort to the result the legal system would produce may prevent innovative and idiosyncratic solutions.20

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:21 • 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. • 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. 9 1 20 21

Astor H and Chinkin C, Dispute Resolution in Australia (2nd ed, Butterworths, 2002) pp 118–​119. Menkel-​Meadow C, “Toward Another View of Legal Negotiation: The Structure of Problem Solving” (1983–​ 1984) 31 University of California Los Angeles Law Review 754 at 790–​791. Alexander N, “The Mediation Metamodel: Understanding Practice” (2008) 26(1) Conflict Resolution Quarterly 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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• 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 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; • 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.22 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.23 The mediation process is flexible but usually involves the following steps over one or more days:24 • Mediators, parties and any legal representatives introduce themselves and the mediator explains the process and “ground rules” for the mediation.

2 2 23 24

Blake S, Browne J and Sime S, The Jackson ADR Handbook (2nd ed, Oxford University Press, 2016) at [14.06]. Blake S, Browne J and Sime S, The Jackson ADR Handbook (2nd ed, Oxford University Press, 2016) at [14.09]. 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]  207

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• 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 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:25 • 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; • 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

25

Hardy S and Rundle O, Mediation for Lawyers (CCH, 2010) Ch 1.

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agreement among 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:26 • 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; • 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 counter-​ productive. Of course, lawyers are able to conduct themselves in a manner that avoids this. The role the lawyer plays has been explained by Dr Olivia Rundle who devised a spectrum of roles that lawyers may play in mediation, differentiated by their levels of involvement:27 Absent advisor 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, that is, 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

6 2 27

See, for example, Hardy S and Rundle O, Mediation for Lawyers (CCH, 2010) Ch 5. 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]  209

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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.

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. 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 210 [4.244]

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Representing Clients from Courtroom to Mediation Settings cont. 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. 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. 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. [4.244]  211

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Representing Clients from Courtroom to Mediation Settings cont. 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. 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. … 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, 212 [4.244]

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Representing Clients from Courtroom to Mediation Settings cont. 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 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 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 clients prior to the mediation.

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Civil Procedure in New South Wales

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: • 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 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 214 [4.248]

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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. …28 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.29 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 Civil Procedure Act 2005 (NSW) (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 [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 adopted a negotiating posture from the outset that they could not possibly

8 2 29

Blake S, Browne J and Sime S, The Jackson ADR Handbook (2nd ed, Oxford University Press, 2016) at [14.67]. Blake S, Browne J and Sime S, The Jackson ADR Handbook (2nd ed, Oxford University Press, 2016) at [14.71]. [4.260]  215

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Civil Justice Review cont. 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.

 [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, 9 March 2018 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 parties, or of any of the parties. 6. It is not the intention of the Court that mediation will be ordered in all proceedings. 216 [4.270]

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7. The parties themselves may, at any time, agree to mediation, nominate a mediator and request the Court to make the appropriate orders. 8. The Court may consider ordering mediation on the motion of a party, or on referral by a registrar, or on the Court’s own motion. Where mediation is ordered, the parties will usually agree on the person to be the mediator. If they do not: • the Court may select the mediator to be appointed or may appoint the mediator pursuant to the Joint Protocol set out in this Practice Note; or • the Court may decide against ordering mediation.

Civil Procedure Act 2005 (NSW) [4.280]  Civil Procedure Act 2005 (NSW) ss 25–​34 Part 4 –​Mediation of proceedings 25 Definitions (cf Act No 52 1970, ss 110I and 110J; Act No 9 1973, ss 163 and 164; Act No 11 1970, ss 21J and 21K) In this Part: mediation means 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. mediation session means a meeting arranged for the mediation of a matter. mediator means a person to whom the court has referred a matter for mediation. 26 Referral by court (cf Act No 52 1970, s 110K; Act No 9 1973, s 164A; Act No 11 1970, s 21L) (1)

If it considers the circumstances appropriate, the court may, by order, refer any proceedings before it, or part of any such proceedings, for mediation by a mediator, and may do so either with or without the consent of the parties to the proceedings concerned.

(2)

The mediation is to be undertaken by a mediator agreed to by the parties or appointed by the court, who may (but need not be) a listed mediator.

(3)

In this section, “listed mediator” means a mediator appointed in accordance with a practice note with respect to the nomination and appointment of persons to be mediators for the purposes of this Part.

27 Duty of parties to participate (cf Act No 52 1970, s 110L; Act No 9 1973, s 164B; Act No 11 1970, s 21M) It is the duty of each party to proceedings that have been referred for mediation to participate, in good faith, in the mediation. 28 Costs of mediation (cf Act No 52 1970, s 110M; Act No 9 1973, s 164C; Act No 11 1970, s 21N) The costs of mediation, including the costs payable to the mediator, are payable: (a)

if the court makes an order as to the payment of those costs, by one or more of the parties in such manner as the order may specify, or

(b)

in any other case, by the parties in such proportions as they may agree among themselves.

29 Agreements and arrangements arising from mediation sessions (cf Act No 52 1970, s 110N; Act No 9 1973, s 164D; Act No 11 1970, s 21O) (1)

The court may make orders to give effect to any agreement or arrangement arising out of a mediation session. [4.280]  217

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. (2)

On any application for an order under this section, any party may call evidence, including evidence from the mediator and any other person engaged in the mediation, as to the fact that an agreement or arrangement has been reached and as to the substance of the agreement or arrangement.

(3)

This Part does not affect the enforceability of any other agreement or arrangement that may be made, whether or not arising out of a mediation session, in relation to the matters the subject of a mediation session.

30 Privilege (cf Act No 52 1970, s 110P; Act No 9 1973, s 164F; Act No 11 1970, s 21Q) (1)

In this section, “mediation session” includes any steps taken in the course of making arrangements for the session or in the course of the follow-​up of a session.

(2)

The same privilege with respect to defamation as exists with respect to judicial proceedings and a document produced in judicial proceedings exists with respect to:



(a)

a mediation session, or



(b)

a document or other material sent to or produced to a mediator, or sent to or produced at the court or the registry of the court, for the purpose of enabling a mediation session to be arranged.

(3)

The privilege conferred by subsection (2) extends only to a publication made:



(a)

at a mediation session, or



(b)

in a document or other material sent to or produced to a mediator, or sent to or produced at the court or the registry of the court, for the purpose of enabling a mediation session to be arranged, or



(c)

in circumstances referred to in section 31.

(4)

Subject to section 29(2):



(a)

evidence of anything said or of any admission made in a mediation session is not admissible in any proceedings before any court or other body, and



(b)

a document prepared for the purposes of, or in the course of, or as a result of, a mediation session, or any copy of such a document, is not admissible in evidence in any proceedings before any court or other body.

(5)

Subsection (4) does not apply with respect to any evidence or document:



(a)

if the persons in attendance at, or identified during, the mediation session and, in the case of a document, all persons specified in the document, consent to the admission of the evidence or document, or



(b)

in proceedings commenced with respect to any act or omission in connection with which a disclosure has been made as referred to in section 31(c).

31 Confidentiality (cf Act No 52 1970, s 110Q; Act No 9 1973, s 164G; Act No 11 1970, s 21R) A mediator may disclose information obtained in connection with the administration or execution of this Part only in one or more of the following circumstances: (a)

with the consent of the person from whom the information was obtained,

(b)

in connection with the administration or execution of this Part, including section 29(2),

(c)

if there are reasonable grounds to believe that the disclosure is necessary to prevent or minimise the danger of injury to any person or damage to any property,

218 [4.280]

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

if the disclosure is reasonably required for the purpose of referring any party or parties to a mediation session to any person, agency, organisation or other body and the disclosure is made with the consent of the parties to the mediation session for the purpose of aiding in the resolution of a dispute between those parties or assisting the parties in any other manner,

(e)

in accordance with a requirement imposed by or under a law of the State (other than a requirement imposed by a subpoena or other compulsory process) or the Commonwealth.

32 Directions by mediator (cf SCR Part 72C, r 3) Subject to the uniform rules and any relevant practice notes, a mediator may, by order, give directions as to the preparation for, and conduct of, the mediation. 33 Protection from liability for mediator A mediator to whom the court refers proceedings has, in the exercise of his or her functions as a mediator in relation to those proceedings, the same protection and immunity as a judicial officer of the court has in the exercise of his or her functions as a judicial officer. 34 Mediation otherwise than under this Part (cf Act No 52 1970, s 110H (2); Act No 9 1973, s 162 (2)) This Part does not prevent: (a)

the parties to proceedings from agreeing to and arranging for mediation of any matter otherwise than as referred to in this Part, or

(b)

a matter arising in proceedings from being dealt with under the provisions of the Community Justice Centres Act 1983.



Higgins v Higgins [4.290]  Higgins v Higgins [2002] NSWSC 455 [The plaintiff applied to the Supreme Court for an order for compulsory mediation. This was opposed by the defendants.] AUSTIN J [1]‌These proceedings relate to a property at Camden in which the plaintiff has resided since about 1982. The plaintiff is the mother of the first defendant and mother-​in-​law of the second defendant. The property was acquired in the name of a company with which the defendants were associated, although the plaintiff claims that she contributed to the purchase money. The company which acquired the property went into liquidation about 1984 and then the defendants took a transfer of the property from the company in liquidation. Subsequently, the property was used to secure various advances, and the plaintiff says she became aware that the property had been transferred into the defendants’ name in 1998 when a valuer attended the property, and she then commenced the present proceedings. She is seeking declaratory and other relief to establish that the property is held in a substantial portion in trust for her and that the defendants acquired the property on notice of that trust. The defendants say the plaintiff by proxy approved the sale and transfer of the property to them and they rely on laches and delay. They deny that in the circumstances of the case the plaintiff has obtained any proprietary interest in the property.

[4.290]  219

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Higgins v Higgins cont. [2]‌The plaintiff is aged 76 and in failing health. She has a serious heart condition and is developing problems with her sight. The evidence before me today indicates that the plaintiff’s physical state has become much worse over the past 12 months as a result of the strain and stress caused on her by the proceedings. She only has two sons and she says the dispute has torn her family apart. She has not seen or talked to the son who is the first defendant, or his wife, her daughter-​in-​law, for over three and a half years. … [4]‌Section 110K [now s 26 of the Civil Procedure Act] was introduced by amendments to the Supreme Court Act which took effect in the year 2000. It gives the Court a discretion to refer proceedings for mediation or neutral evaluation with or without the consent of the parties concerned. An annotation to the section in Ritchie’s Supreme Court Procedure says that in the absence of an agreed mediation regime, there probably would be relatively few occasions for the compulsory referral of proceedings to mediation. However, referral may be appropriate where the Court is satisfied that the parties’ approach to the resolution of the proceedings is being unduly influenced by emotional or irrational considerations, the effect of which might be minimised by a skilled mediator. [5]‌It appears the approach to compulsory mediation has evolved since the powers were granted in the year 2000. In Morrow v chinadotcom Corp [2001] NSWSC 209 (28 March 2001) Barrett J refused to order a reluctant party to mediate on the basis that if mediation was not engaged upon willingly, the process would be pointless and would likely be a waste of money. However, in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 427 (23 May 2001) Einstein J made orders for mediation of massive litigation after the case had commenced, notwithstanding that the mediation process would be long and expensive and the prospects for success were not high. In Remuneration Planning Corporation Pty Ltd v Fitton [2001] NSWSC 1208 (14 December 2001) Hamilton J, in the course of deciding what orders should be made for mediation, notwithstanding the opposition of one of the parties to mediation in one of the matters before him, reviewed the other authorities and said: A short time ago there was general acceptance of the view adopted by Barrett J … that there was no point in a mediation engaged in by a reluctant party. Of course, there may be situations where the Court will, in the exercise of its discretion, take the view that mediation is pointless in a particular case because of the attitudes of the parties or other circumstances and decline to order a mediation. However, 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. [6]‌In my view, all of the cases point to the single conclusion that the Court’s discretion under s 110K is very wide and the Court should approach an application for an order without any predisposition, so that all relevant circumstances going to the exercise of the discretion may properly be taken into account. [7]‌In the present case, it is relevant that the plaintiff is an elderly woman whose health is deteriorating, partly because of the continuation of these proceedings. Her evidence is that she would like to try to resolve the dispute before it goes to hearing, presumably so that the family may be reconciled in her declining years. [8]‌The desirability of making every reasonable effort to achieve that outcome is, to my mind, obvious. The order would not be made, however, even given those circumstances, if I believed that there was no plausible prospect of success in the process of mediation. [9]‌ … I have no clear insight into how far the parties have gone in their own informal attempts to reach a compromise. I have competing assertions about that matter and all I know is that the parties have had discussions. One side says there is room for further discussion. 220 [4.290]

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Higgins v Higgins cont. [10] In the circumstances, and on balance, my conclusion is that there is a sufficient possibility that when faced with the prospect of mediation, both parties may approach the matter in the spirit of compromise, that I ought to make an order giving the parties one last chance of avoiding the more confrontational outcome that would result from a fully contested final hearing. I cannot conclude, in other words, that mediation would be hopeless, or anything like hopeless on the state of the evidence before me. I bear in mind the remarks of Hamilton J quoted above. [11] When the application was heard this morning, I indicated to the parties that I needed to have some further evidence with respect to the cost of mediation and the availability of an appropriate mediator, so I adjourned the matter until this afternoon. Now, I have affidavit evidence which indicates that the parties are available on 17 June and there is a mediator available on that day who is prepared to conduct the mediation pro bono. It appears likely that the mediation will be over within a day. The defendants have not submitted that the identified mediator would be an inappropriate person. Indeed, there is evidence of a substantial number of other mediators identified by Leadr, and in respect of none of them has it been contended that the person would be an inappropriate mediator. I am therefore satisfied that a mediator can be found and that a mediation can take place at a very moderate cost by no later than 17 June 2002. I shall frame my orders so that if the parties can arrange for a mediator at an earlier time suitable to all of them, the mediation can take place sooner rather than later. [12] In the event that mediation is successful, further costs will be minimised. On balance, therefore, it seems to me that the proper way to exercise my discretion in the special circumstances before me now is to make an order for mediation. [13] I should say that other submissions were put to me which, in the circumstances, I regard as rather less weighty. There was some argument about whether there were delays in bringing the case to trial, and whether the plaintiff was responsible for some or all of those delays. It seems to me even if she was, the order should still be made. [14] It was also contended that the plaintiff initiated the present proceedings without warning and that negotiations should have happened much earlier than the present time. That may be so, but in a sense, that it is beside the point. The real point is whether anything constructive is be done now to avoid a contested hearing of a kind that would irretrievably drive a wedge deeper into the relationships within this unhappy family. I accept that the Idoport and Remuneration cases are distinguishable on their facts. I have cited them for the general principles to which I have referred. The basis of my decision is the exercise of my discretion on the facts of this case. … Order that the proceedings be referred for mediation.



Waterhouse v Perkins [4.300]  Waterhouse v Perkins [2001] NSWSC 13 [The plaintiff commenced two defamation actions in respect of the publication of the book The Gambling Man. The first claim was filed in 1991 and the second claim was filed in 1996. The plaintiff refused the defendants’ request for mediation. The defendants sought an order for compulsory mediation.] LEVINE J [80] By letter dated 21 August 2000 Messrs Bush Burke & Co. wrote on behalf of all defendants in both matters expressing strongly the view that the matter should be mediated so as to “see if they can be resolved without the expenditure of large sums of money on legal fees and the tying up of large [4.300]  221

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Waterhouse v Perkins cont. amounts of valuable court time”. An estimate of the length of the hearing in this Court (and it would be an all issues jury trial –​save for public interest and privilege) is at least six weeks. [81] It was indicated by Messrs Bush Burke that the defendants had agreed to utilise the services of Sir Laurence Street and certain available dates were offered. It was the defendants’ expectation that the mediation would last one day. [82] Significantly the defendants have agreed to pay for all the mediator’s costs associated with the mediation: by that I understand from oral submissions that the mediator’s fees and the costs of the venue would be paid by the defendants pursuant to an arrangement among the defendants and that all the plaintiff would incur by way of costs is his own legal costs in respect of the mediation. [83] Essentially it was argued in support of the application that by reason of the complexities of the issues between the parties (and there are cross-​claims), the length of time taken since the initiation of proceedings (1991 –​the first action), what would be the length of time to be taken and the inestimable amount of costs to be incurred in a fully litigated jury trial are factors which at least point to the desirability of the exploration of the resolution of the issues between the parties otherwise than by the trial itself. … [87] However, the Court does have the power imposed by s 110K [now s 26 of the CPA] to order mediation without the consent of the parties to the proceedings. [88] An important component of this new part of the Supreme Court Act is s 110L [now s 27 of the CPA] which provides that it is the duty of each party to the proceedings the subject of a referral under s 110K to participate, in good faith, in a mediation or neutral evaluation. … [90] The plaintiff’s response to the defendants’ application has been entirely negative. The highest expression of this approach was in this statement made by Mr Campbell of counsel for the plaintiff: There is also the question of a choice of mediator. The plaintiff, for reasons which may or may not be justified, would rather die than accept a mediator selected and forced on him by the defendants and it wouldn’t matter if it was the Archangel Gabrielle. They are not offering his services. (T55.20) [91] More seriously, however, the plaintiff does point to a fundamental ingredient in a defamation action, that component of the ultimate remedy that constitutes vindication of the plaintiff in the eyes of the public. It is argued simply that mediation cannot achieve this. I do not know how that proposition seriously can be advanced. It is at least theoretically possible that the outcome of a mediation conducted in good faith by all parties could be a mechanism for the public vindication of the plaintiff. It might not necessarily be so, but to say that it is impossible is quite ingenuous. [92] Litigation of an action of this kind in this Court is one that leads to the determination of what might be described as “rights”. Mediation is not conducted to the exclusion of “rights”. The mediation might be directed to consideration of “interests and needs” independently of or against the backdrop of “rights” as exposed in the forensic environment. [93] Mediation might well have the advantage of taking the edge off the acrimony as evidenced, for example, by the statement made by Mr Campbell. [94] In any event, the plaintiff is an officer of this Court and if compulsorily ordered to participate he should do so as an officer of this Court fully conscious of the obligations of good faith. [95] Mr Campbell seemed to be preoccupied with what sanction would apply in the event of a party not acting in good faith under s 110L. That remains to be determined. Insofar as that obligation arises consequent upon the making of an order of the Court, it is feasible that one sanction might well be contempt. But I give that no further consideration, at present. 222 [4.300]

Alternatives to Litigation – Negotiation and Mediation  Chapter  4

Waterhouse v Perkins cont. [96] Thus it appears that the considerations relevant to the application in this litigation can be summarised as follows: a great deal of time has passed since the institution of each action (1991 and 1996). As at mid-​2000 the parties were still engaged in the usual interlocutory squabbles there being little chance, upon the resolution of them, and assuming no further interlocutory disputes (an unsafe assumption in the general course of this litigation), of the matter being heard before the end of 2001. On present estimates that hearing will take at least six weeks and be constituted by the two actions being heard together by one jury. The defendants are clearly concerned about costs and thus it may fairly be said “their financial interests”. The plaintiff is clearly concerned with vindication. As I have mentioned above I reject the statement, as too simplistic, that a mediator cannot give vindication. I note in this context that the defendant McPherson’s have thrice published an apology in metropolitan newspapers. The fact of one defendant having so apologised, as Mr Caspersonn remarked, may lead to “something” in the mediation process. [97] Further, the only costs in financial terms to the plaintiff will be his own legal costs. That expenditure by him, together with that of the defendants, cannot reasonably be considered a disproportionate diversion of resources (even if the mediation fails) when viewed against the quantification of resources in all their aspects in the further prosecution of this litigation to trial and verdict. [98] It is the law constituted by the will of the Parliament reflected in Pt 7B of the Supreme Court Act and the orders made by this Court itself that the parties are obliged to act in good faith. If they do so, and it is to be presumed that they will, the potential outcomes must be viewed positively when weighed against the dimensions and cost of a trial. I am not persuaded that there is any rational reason for not ordering mediation in the peculiar circumstances of this litigation at this time. The issues are clear as between the parties, if not as refined as parties in defamation actions seem to insist upon, by reason of outstanding interlocutory disputes. [99] With respect to the various matters dealt with in the body of this judgment I will defer making formal orders so that the resources of the parties both in terms of time and costs can the more easily be allocated to the mediation process. [100] As I consider the circumstances appropriate I order that the whole of the proceedings in matter number 13146 of 1991 and 21381 of 1996 be referred for mediation.

 Good faith

The Right Balance between Trial and Mediation: Visions, Experiences and Proposals [4.304]  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 [some footnotes omitted] A statutory duty to mediate in good faith 30 One attempt at formal regulation of the mediation process can be found in the statutory requirement to mediate in good faith. For instance the CPA provides that parties who have been referred to mediation by the Supreme Court are under a duty to participate in the mediation in good faith. A similar duty also exists under other statutes [Farm Debt Mediation Act 1995 (NSW), s 11(1)(c) (iii); Native Title Act 1993 (Cth), ss 31(1)(b) and 94E(5)]. [4.304]  223

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The Right Balance between Trial and Mediation: Visions, Experiences and Proposals cont. 31 Beyond some inherent difficulties in defining good faith and identifying when a party is not acting in good faith, the cloak of confidentiality might often protect a party who fails to mediate in good faith. This presents a complex problem for mediation regulation. In order to give substance to the duty to mediate in good faith, it is necessary to permit disclosure of information in certain circumstances. However this will be at the cost of the inherently confidential nature of mediation. Without confidentiality, the effectiveness of mediation, and its desirability as a method of dispute resolution, is greatly reduced. This dilemma arises whenever the authority of the court is called on to enforce or otherwise scrutinise the outcomes of a mediation. [See for example Hurworth Nominees Pty Ltd v ANZ Banking Group Ltd [2006] NSWSC 1278]. 32 In the analogous setting of negotiation, certain indicia have been identified to assist in determining whether a party has negotiated in good faith. [Western Australia v Taylor (1996) 134 FLR 211 at 224-​5]. Several of these indicia related to inaction or omissions, for instance, a failure to make proposals, contact parties, organise meetings or respond to information requests. Others involve more active steps, such as negotiators not having authority to make decisions. The final indicium, “failure to do what a reasonable person would do in the circumstances”, seems to impose a general standard on a negotiator’s conduct. The application of these indicia to mediation suggests that a party would not be acting in good faith if their conduct stymies, stalls or otherwise fails to progress the mediation process. 33 The “central or core content” of the obligation to mediate in “good faith” has been described as: (a)

A willingness to consider such options for the resolution of the dispute as may be propounded by the opposing party or by the mediator, as appropriate; and

(b)

A willingness to give consideration to putting forward options for the resolution of the dispute. [Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 996; 153 FLR 236 at 268].

34 The fact that a party might pretend to be disinterested in putting forward any constructive solutions to the problem at hand “is far from conclusive proof” that the party has breached the obligation. This is because: At the same time as putting up such pretence, [the party] might be awaiting a first offer from [the other party] or giving close consideration to itself making an offer at what it perceives to be an appropriate time. [Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 996; 153 FLR 236 at 269]. 35 These observations expose the inherent difficulties in identifying and enforcing a duty to act in good faith in the confidential setting of mediation. Law Council of Australia Guidelines [The Law Council of Australia has produced publications entitled: “Ethical Guidelines for Mediators”, “Guidelines for Lawyers in Mediations” and “Guidelines for Parties in Mediations”]. … 38 The Guidelines also provide that “all persons attending the mediation should participate in good faith with the intention of seeking settlement” and that a mediator may terminate the mediation if the mediator considers that a party is abusing the process. The mediator may be assisted in this regard by the parties’ legal representatives. The Guidelines advise that a lawyer who suspects that a party is acting in bad faith should raise the matter privately with the mediator. This form of mediator-​ led regulation likely reflects common practice. Mediators are responsible for the conduct of mediation and so, in effect, are under a duty to facilitate participation in good faith.

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The ripeness of a dispute for mediation [4.306] An important consideration in undertaking mediation or for a judge in ordering

mediation is determining when is the ripe or appropriate time to utilise mediation. The Law Council of Australia’s Guidelines for Lawyers in Mediation (August 2011) states: Timing is an important factor in establishing a framework conducive to settlement. There is no conclusive rule as to whether, or when, a case is suitable for mediation. Various factors should be considered, including the nature of the dispute and the mindsets of the parties. Comment (a) Most cases are suitable for mediation at some point in time. Costs of litigation are a persuasive factor in favour of mediation.

(b) Mediation may be undertaken at any time and should be considered:



(i) before proceedings are commenced;



(ii) after pleadings have closed, but before the costs of discovery are incurred;



(iii) before an action is set down for trial and trial costs are incurred; and



(iv) after a trial and before judgment.

Oasis Fund Management v ABN Amro [4.310]  Oasis Fund Management v ABN Amro [2009] NSWSC 967 MCDOUGALL J [1]‌The plaintiffs seek an order pursuant to s 26 of the Civil Procedure Act 2005 that these proceedings be referred to mediation. The first defendant opposes mediation at this time. The second defendant neither consents to nor opposes mediation at this time. Likewise, those of the cross-​defendants who are not otherwise parties neither consent to nor oppose mediation at this time. [2]‌The plaintiff seeks early mediation for a number of reasons. One is that, if there is no early or successful mediation, the costs of giving discovery and of putting on evidence will be high, and will of themselves be an obstacle to successful mediation at a later time. Another reason is that those who stand to benefit by success in the proceedings, and therefore by a fruitful mediation, are investors many of whom are old, many of whom relied on the investments in question to fund their retirement, and some of whom are suffering from financial distress because of the difficulties with the investment in question. [3]‌The first defendant opposes mediation at the present time for three reasons. One is that, absent discovery and evidence, it cannot make a realistic assessment of the strength and weaknesses of the case against it and its defence to that case. Another, perhaps somewhat inconsistent reason, is that even with no formal mediation, the parties could in any event engage in informal negotiations. The third, which in my view goes no further than the first, is that its “considered preference to continue the proceeding”, is of itself a factor to take into account. The quotation comes, and the submission is based upon, the judgment of Brereton J in Dimento v Dimento [2007] NSWSC 420 at [1]. [4]‌It is necessary to know a little about the case. The first plaintiff is the current trustee, and the second plaintiff was the trustee, of two trusts. Those trusts were in effect master trusts which offered a smorgasbord of superannuation products to members of the public. Two of the products that were offered were known by the engaging but entirely misleading title of “Safety PINS”. The plaintiff says that the information memorandum and other documentation prepared in relation to the two series of Safety PINS in question (issued in 2003 and 2004) were misleading or deceptive. They say that, had those documents disclosed accurately the weaknesses and other relevant aspects of the products, they would not have been listed among the products available to investors through the plaintiffs’ platform. [5]‌For reasons that I have to confess I do not entirely understand there are also two individual plaintiffs. One was an investor in the 2003 Safety PINS. The other was an investor in the 2004 Safety [4.310]  225

Civil Procedure in New South Wales

Oasis Fund Management v ABN Amro cont. PINS. They sue in their own capacities and claim also to sue as representatives of other investors who invested in the relevant Safety Pins through the plaintiffs’ platform. [6]‌Mr M J Darke of counsel, for the first defendant, has said that it is no part of his client’s case that if (contrary to his client’s case) there were misleading or deceptive conduct for which his client is liable or in which his client was involved, and if loss of damage were sustained by that misleading or deceptive conduct, the loss or damage was sustained in law by individual investors rather than by the relevant plaintiff as trustee. As I understand it, the first defendant accepts that if the hurdles to which I have referred are jumped, then the trustee is entitled to recover, on behalf of the trusts and for the recoupment of individual investors, such loss or damage as is proved. [7]‌As I have said, I am not entirely sure why there are individual plaintiffs, let alone why they seek to sue in a representative capacity. [8]‌The amounts of money at stake are large: of the order of $60 million for the 2003 Safety PINS, and over a million dollars for the 2004 Safety PINS (in each case inclusive of interest). In addition, the plaintiffs claim some amount of expenses (not yet particularised) which they say that they incurred in respect of the promoter of the Safety PINS, a company now in liquidation known by the acronym ACIL. [9]‌It is always difficult to pick, and in my view never possible to state a priori, the ideal time for mediation. In some cases, where the issues are clear and where the parties’ positions can be ascertained without a great deal of difficulty, early mediation is often a good idea because the parties have not spent vast amounts on costs and their positions have not become psychologically entrenched. In other cases, notwithstanding those possible obstacles, early mediation is not really useful because the parties simply do not know enough to make a considered choice as to where they are prepared to go in terms of mediated settlement. [10] Another factor of some significance is that although the second defendant (who is said to have been involved in the preparation of the information memoranda that are said to be misleading or deceptive) has the benefit of insurance, that insurance has a fixed limit of indemnity and that limit of indemnity applies to “loss” which, for the purposes of the policy, is defined to include defence costs. It follows, as between the plaintiffs and the second defendant, that the later mediation takes place, the less there will be available from the policy to apply towards an offer of settlement of the plaintiffs’ claim. [11] As I have said, I think that the principal issue is whether there is enough information at present for the parties to make a realistic assessment of their respective positions, so as to mediate not only in good faith but successfully. Of course, I accept that if an order is made –​even over the objections of the first defendant –​it will participate in good faith, mindful of its obligations under s 56 of the Civil Procedure Act. [12] I say that this is the principal issue because it seems to me that the “considered preference” to which respect must be given is a considered preference based entirely on that consideration. [13] The causation case that is alleged is that the trustee put the products on its platform and that, but for the misleading or deceptive conduct, it would not have done so. Alternatively, it is said, had it been told the real situation after the products had been put on their platform, it would have removed the products. Thus, it is said, the individual investors would not have been able to invest in the products –​at least, through the trustee. [14] The causation case for the individual plaintiffs is in effect that they relied on the information memorandum through their “agent”, some form of financial adviser who apparently steered them towards the products in question. Alternatively, they rely on some sort of indirect causation case: but for the misleading or deceptive conduct, they would not have invested because there would have been no opportunity; the trustee would not have offered the products. [15] The first way in which the individual investors put their case, and the way that the trustees put their case, seems to me to be relatively straightforward. However, the second way that the individual 226 [4.310]

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Oasis Fund Management v ABN Amro cont. plaintiffs put their case seems to me to involve both legal difficulties and some prospect that there will be significant evidence, from individual to individual, dealing with the question of causation. [16] Having said that, the first defendant’s position in relation to causation or loss, as I have outlined it above, suggests that this is more of a legal than a practical impediment to successful mediation. [17] Of more concern is the first defendant’s submission, based on the list response of the second defendant, that the trustee was involved in the development of the product –​that is to say, the 2003 and 2004 Safety PINS. The first defendant says that it is impossible to assess the case based on misleading or deceptive conduct until it knows the full extent of the trustee’s involvement. It is not however part of the first defendant’s case that the trustee was involved in the development of the relevant information memorandum or other documents said to be misleading or deceptive. [18] If that issue is to be understood before the matter goes to mediation, it means of necessity that mediation would not take place until after the evidence is complete and, I would think, until after discovery has been given. [19] In any event, Mr Darke submits, the position of the individual investors cuts both ways. He submits that their age and financial circumstances in fact dictate that the preparation of the proceedings should not be held up by a mediation that is unlikely to succeed. [20] As I have said, it is always a difficult exercise to fix the ideal time for mediation, and this case fully exemplifies the extent of that difficulty. It is necessary to take into account the circumstance that one of the parties is of the view that it needs to know more before it can consider whether to participate and if so how to formulate its negotiating position. I accept that what has been put as to the first defendant’s position is put in good faith (and I note that no submission was made to the contrary). Thus, I accept that the concern that the first defendant has expressed through Mr Darke is of itself a matter that bears on the desirability of mediation at this stage. [21] Nonetheless, I think, in the hands of a skilled mediator, it may be possible for that difficulty to be overcome. I think it possible that through appropriate position statements and other steps (which the mediator can direct) the first defendant may be given a sufficient understanding of the case that it has to meet to enable it to formulate a considered position on settlement. [22] This is a matter of conjecture. The real question is whether to risk the costs of mediation, and the delay that will necessarily be entailed, upon the basis of the conjecture. In this context, I think, the age and personal situations of the individual investors assumes very considerable importance. Whilst I accept the principle behind Mr Darke’s submission that this cuts both ways, I think that the reality is that a mediation in the near future –​and it seems that the preferred date is at the end of this month –​ is unlikely to cause such significant delay that, if the mediation is unsuccessful, any receipt of fruits through success in litigation will be unduly postponed. [23] I also think that the impediment of costs, and the obstacle of what I have called psychological entrenchment, are likely to become more significant as this case proceeds if there is no early mediation; and of course, in relation to the second defendant, costs are a particular obstacle. [24] Balancing all those considerations, and acknowledging that the decision is not one capable of detailed and rational explanation, I have come to the view that the prospects of success of early mediation sufficiently outweigh the acknowledged disadvantages of it to justify the making of an order notwithstanding the considered position of the first defendant. [25] Accordingly, I think it appropriate to make an order in terms of s 26 of the Civil Procedure Act. It appears that there is a mediator who is acceptable to the parties, and who can conduct the mediation within a time that is suitable to them all. One of the matters to be attended to before the mediation is that the plaintiffs should give adequate particulars of the expenses to which I have referred above. I have assumed that this can be accommodated before the mediation takes place. [26] In those circumstances, I think, having expressed the view that I will order mediation, the appropriate course is to stand the matter down so that the parties can prepare short minutes of order [4.310]  227

Civil Procedure in New South Wales

Oasis Fund Management v ABN Amro cont. to give effect to the steps that will need to be taken to enable the mediation to proceed before the Honourable Roger Gyles AO QC on 29 and if necessary 30 September 2009. [27] It will also be necessary to deal with the question of costs. Although there has been an application over opposition and the application has been successful, my strong, although tentative view, is that there should be no order as to costs at this stage. I say that because I think that to make an order for costs now is unlikely to improve the frame of mind for mediation.



Tony Hassan Noun v Margaret Pavey [4.320]  Tony Hassan Noun v Margaret Pavey [2014] NSWSC 429 DARKE J [The plaintiffs, Mr Noun and THN Pty Ltd, seek final injunctive relief against three defendants to restrain alleged breaches of confidence. The plaintiffs have served their evidence-​in-​chief and the defendants have served evidence in response. The plaintiffs have served their evidence in reply, except for evidence from the first plaintiff. Discovery had not occurred consistent with Practice Note SC Eq 11.] [32] The defendants also seek an order that the proceedings be referred to mediation once the totality of the plaintiffs’ evidence in reply has been served. This order is opposed by the plaintiffs. Mr Lawrance [of counsel] accepted that compelling mediation in such circumstances is unusual, although less so than it was once. He pointed out that the parties had late last year agreed to mediate once the evidence in reply was completed and served, and that the Court had noted such agreement. He stated further that the parties had agreed on a mediator, namely Mr Michael McHugh, AC QC, a former Justice of the High Court of Australia. [33] Mr Lawrance submitted that the mediation ought to take place prior to any discovery application which may be made by the plaintiffs which, he submitted, would likely be an exercise involving considerable expense. [34] He further stated that the proceedings do not involve any claim for monetary relief but are confined to applications for final injunctive relief, and in that context noted that the defendants, by paragraph 58 of their defence, have made open offers which include undertakings in relation to certain confidential information. It was submitted that this, in itself, provides some hope of an agreement being reached at a mediation. Mr Lawrance also noted, in relation to the plaintiffs’ claim for specific performance of what is described as Mr Noun’s resignation agreement, that the agreement concerned the affairs of MS Cognosis Pty Ltd, a company which was wound up on 15 July 2013. It was submitted that specific performance was thus no longer possible. Finally, Mr Lawrance stated that the only monetary relief being sought in the proceedings was by way of the cross-​claim filed by the second defendants, which was a claim for damages which did not exceed $50,000. [35] Mr Bevan, in his submissions on this question, put that the plaintiff wanted to know exactly what the defendants’ case against it was before attending any mediation. He submitted that whilst the plaintiffs were keen to resolve the matter, they should not be forced to mediate at this stage because of a likelihood that the defendants, in advance of any discovery being given, will assert that the plaintiffs simply have no case against the first and second defendants. Mr Bevan emphasised that a mediation should really be viewed (as he put it) as “one shot in the locker” and that the opportunity to mediate should not be taken at this point because the prospects of its success are much less than it would be if the plaintiffs had full information, including discovery and documents produced on subpoena, in relation to the defendants and their conduct. 228 [4.320]

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Tony Hassan Noun v Margaret Pavey cont. [36] The Court has a broad discretion concerning the making of orders for the parties to mediate. Plainly enough, the overriding purpose referred to in section 56 of the Civil Procedure Act 2005 (NSW) is a matter of significance in the exercise of that discretion. The parties have, no doubt, already expended vast sums of money on this litigation which, whilst clearly being of importance to the parties and whilst clearly raising significant issues, does not involve significant amounts of money. An exercise involving the obtaining orders for discovery, and then taking steps on the basis of the discovery (which has been foreshadowed would likely involve an examination of computers, quite apart from a great number of documents) is likely to be very expensive indeed. [37] I can understand the plaintiffs’ position in wanting to have full information available to it before embarking upon a mediation. However, I consider that once the affidavit evidence has been completed, that is, once all of the plaintiffs’ evidence in reply has been served, the parties will know the nature of the cases that each wishes to bring in the proceedings sufficiently to enable sensible discussion concerning the resolution of the litigation. [38] Moreover, if a mediation is held, the defendants will have obligations to mediate in good faith, just as the plaintiffs will. The scope, therefore, for the defendants to simply take a position that there is no evidence supporting a case against the first and second plaintiffs is one which is unlikely to be able to be maintained in circumstances where the plaintiffs can respond by asserting that orders for discovery in that respect are going to be sought if no settlement is reached. [39] Whilst the matter is somewhat finely balanced in my opinion, I have come to the conclusion, having regard to all of the above factors and the desirability of the parties attempting to resolve this matter before any further substantial legal costs are incurred, that it is appropriate for the parties to attend a mediation as soon as the evidence in reply has been served. The Court will make an order to that effect.



The Objectives, Scope and Focus of Mediation Legislation in Australia [4.330]  The Hon Justice PA Bergin, The Objectives, Scope and Focus of Mediation Legislation in Australia (Paper presented at the “Mediate First” Conference, Hong Kong International Arbitration Centre and The Hong Kong Mediation Council, Hong Kong Convention and Exhibition Centre, 11 May 2012) [footnotes omitted] 32 In 2007, I attempted to shed some light on the issue [of ripeness] by examining a limited sample of cases in the Equity Division of the Supreme Court of New South Wales. More specifically, I considered 98 cases from the Commercial List and the Technology & Construction List (the Lists) that had been referred to mediation in the period 1 January 2006 to 1 June 2007. 33 The cases in the sample were divided into three categories, depending on the stage in the litigious process at which they had been referred to mediation: • the preliminary stage –​in which the parties are finalising their pleadings; • the intermediate stage –​during which discovery and other interlocutory steps occur; and • the advanced stage –​when parties are preparing their evidence and the trial date has been set. 34 The data revealed that cases referred to mediation at a late stage in proceedings were more likely to settle. Of the 30 matters referred to mediation at an advanced stage, 18 (60%) settled. This compared to a settlement rate of 27% and 29% for matters referred to mediation at a preliminary stage and intermediate stage respectively. The overall settlement rate for the cases considered in the study was 38%.

[4.330]  229

Civil Procedure in New South Wales

The Objectives, Scope and Focus of Mediation Legislation in Australia cont. 35 New data has been collated from 99 cases referred to mediation from the Lists between 1 January 2008 and 31 December 2011. These cases were again categorised according to the three stages specified above. Significantly, the new data is consistent with the earlier finding that cases referred to mediation at an advanced stage are more likely to settle, although the difference between the settlement rates across the various stages was less marked in the new sample. 36 Occasionally, a matter was referred to mediation at multiple stages. There was a total of 104 referrals across the 99 cases. Where a matter was referred to mediation twice and a settlement was subsequently reached, the first referral was recorded as unsuccessful, while the later referral was recorded as successful. Where a matter was referred to mediation unsuccessfully on multiple occasions, all referrals were recorded as unsuccessful. 37 The overall settlement rate for the 99 cases was 46%, which was slightly higher compared to the earlier research (38%). Of the 46 matters that settled at mediation: • 16 (35%) were referred at a preliminary stage; • 14 (30%) were referred at an intermediate stage; and • 16 (35%) were referred at an advanced stage. 38 Of the 104 referrals to mediation: • 38 were referred at a preliminary stage and 16 (42%) settled; • 31 were referred at an intermediate stage and 14 (45%) settled; and • 35 were referred at an advanced stage and 16 (46%) settled. 39 In respect of those referrals to mediation that did not result in settlement (58): • 22 (38%) had been referred at a preliminary stage; • 17 (29%) had been referred at an intermediate stage; and • 19 (33%) had been referred an advanced stage. 40 Of the cases that did not settle at mediation, the majority (53%) went to trial or were proceeding to trial at the time the data was collected, while 15% settled within six months of mediation and 32% settled more than six months after mediation. 41 The recent study also provided some further detail that was not available in the 2007 evidence. In nine cases the parties attempted to mediate the dispute before commencing proceedings. Each of these cases were subsequently referred to mediation during the course of proceedings, and the settlement rate among this group was generally in line with the overall settlement rate (four settled while five failed to settle). 42 Where the parties expressed concerns about the appropriateness of mediation at the commencement of litigation, subsequent mediation outcomes were much less successful. There were eight cases in which the parties were completely unwilling to mediate and five cases in which willingness was conditional (either upon the completion of a certain stage in the interlocutory process or the determination of a threshold question of law). Only one case in each group subsequently settled at mediation, which represents a significantly lower settlement rate compared to all cases. 43 As I said in 2007, “the drawing of inferences and conclusions from raw statistics is never satisfactory and in an area such as this, where mediations are conducted in private with confidentiality regimes, the conclusions and inferences are bedevilled by even more uncertainty”. However, although less pronounced, the new data is consistent with the observations I made in 2007. 44 Even if the data were unable to support a clear inference that the ripe time to refer a matter to mediation is at an advanced stage, it nonetheless suggests that mediation is at least as effective at a later stage in proceedings as it is at the earlier stages. An equally available conclusion is that the ideal time to mediate varies from case to case; in other words, there is no universal ripe time to mediate civil disputes.

 230 [4.330]

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ENFORCEABILITY OF AGREEMENTS TO USE ADR [4.340]  There is no legislative basis for enforcing dispute resolution clauses otherwise than

those which provide for arbitration: Commercial Arbitration Act 2010 (NSW). However, it is clear that if parties have entered into an agreement to conciliate or mediate their dispute, the Court may, in principle, make orders achieving the enforcement of that agreement as a precondition to commencement of proceedings in relation to the dispute:  Hooper Bailie Associated Ltd v Natcan Group Pty Ltd (1992) 28 NSWLR 194 and Aiton v Transfield [1999] NSWSC 996. Construction of dispute resolution clauses is by reference to a liberal approach as expressed in Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163 and Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160. Nonetheless, the enforceability of dispute resolution clauses is ultimately a matter of contractual construction. This has often meant determining whether agreements to negotiate in good faith were enforceable or void for uncertainty.

United Group Rail Services v Rail Corporation NSW [4.350]  United Group Rail Services Ltd v Rail Corporation NSW [2009] NSWCA 177 ALLSOP P (WITH WHOM IPP JA AND MACFARLANE JA AGREED) [1]‌This appeal concerns the content and operation of a clause dealing with dispute resolution in the General Conditions of Contract of two contracts between Rail Corporation New South Wales, formerly the State Rail Authority of New South Wales (“Railcorp”) and United Rail Group Services Limited, formerly known as A. Goninan & Co Limited (“United”) under which United undertook to design and build new rolling stock for Railcorp. The relevant provisions are identical and reference need only be made to one group of provisions. [2]‌The dispute resolution clause, cl 35, is long and detailed, reflecting the parties’ careful attention to the subject. The clause commenced with a broadly expressed provision (cl 35.1) dealing with the scope of the clause, as follows: [35.1] Notice of Dispute If a dispute or difference arises between the Contractor and the Principal or between the Contractor and the Principal’s Representative in respect of any fact, matter or thing arising out of or in connection with the work under the Contract or the Contract, or either party’s conduct before the Contract, the dispute or difference must be determined in accordance with the procedure in this Clause 35. Where such a dispute or difference arises, either party may give a notice in writing to the Principal’s Representative and the other party specifying: (a) the dispute or difference; (b) particulars of the dispute or difference; and (c) the position which the party believes is correct. [3]‌That clause is to be read liberally as required by the common law of Australia: Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165-​166 (Gleeson CJ with whom Meagher JA and Sheller JA agreed) and Comandate Marine Corporation v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45 at 87-​93 [162] -​[187] (Allsop J with whom Finn J and Finkelstein J agreed). See also the law of international commerce: Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; [2008] 1 Lloyd’s Rep 254 (see [31] for the phrase “law of international commerce”) and Threlkeld & Co Inc v Metallgesellschaft Limited (London) [1991] USCA2 61; 923 F 2d 245 (2nd Cir. 1991). So reading the clause, it can be seen to require the totality of likely disputes between the parties to be dealt with by the clause. No evidence is needed to appreciate that an engineering contract for the designing and building of new rolling stock for Railcorp could lead to

[4.350]  231

Civil Procedure in New South Wales

United Group Rail Services v Rail Corporation NSW cont. complex disputes, which, if litigated, could be productive of very large legal and associated forensic costs. As I said in Comandate at 95 [192]: An ordered efficient dispute resolution mechanism leading to an enforceable award or judgment by the adjudicator, is an essential underpinning of commerce. Disputes arising from commercial bargains are unavoidable. They are part of the activity of commerce itself. Parties therefore often deal with the possibility of their occurrence in advance by the terms of their bargain. [4]‌In cl 35.2 to 35.9, the contract provided for expert determination of certain kinds of dispute. Clause 35.2 provided as follows: [35.2] Submission to Expert Determination If the dispute or difference is in relation to a Direction of the Principal’s Representative under one of the Clauses referred to in Attachment “A”, the dispute or difference must, if it is not resolved within 14 days after a notice is given under Clause 35.1, be submitted to expert determination to be concluded by:

(a) the independent industry expert specified in Attachment “A”; or

(b) where:

(i) no such person is specified; or



(ii) the independent industry expert specified in Attachment “A” or person appointed under this Clause 35.2:

(A) is unavailable;



(B) declines to act;



(C) does not respond within 14 days to a request by one or both parties for advice as to whether he or she is able to conduct the appraisal; or



(D) does not issue his or her decision within the time required by Clause 35.7,

a person agreed between the Principal and the Contractor and failing agreement within 21 days then a person appointed by the President for the time being of the Institution of Engineers, Australia. [5]‌For present purposes, it is unnecessary to dwell on the details of Attachment A, including the types of dispute to be dealt with by experts and the identity of the experts. [6]‌Clause 35.3 made clear that the expert was not an arbitrator and could reach a decision from his or her own knowledge and experience. [7]‌Clause 35.4 provided for the procedure of the expert determination by the adjudicator. [8]‌Clause 35.5 provided for disclosure of interests of the adjudicator. [9]‌Clause 35.6 provided for each party to bear its own costs of the expert determination. [10] Clause 35.7 provided for a determination by the adjudicator within 28 days of acceptance by him or her of the appointment, unless the parties otherwise agreed. [11] Clause 35.8 provided for the terms of an adjudication agreement between the parties and the adjudicator. [12] Clause 35.9 dealt with the determination in the following terms: [35.9] Determination The determination:

(a) must be given in writing by the Adjudicator;



(b) will be final and binding unless a party gives notice of appeal to the other party within 7 days of the determination; and

232 [4.350]

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United Group Rail Services v Rail Corporation NSW cont.

(c) is to be given effect to by the parties unless and until it is reversed, overturned or otherwise changed under the procedure in the following Clauses 35.10 to 35.12.

[13] Clause 35.10 provided that if a notice of appeal is given under subcl 35.9(b) or if the dispute is of a kind that is not required by cl 35.2 to be sent to expert determination: [T]‌ he dispute or difference must be determined by arbitration in accordance with the following Clauses. [14] It is to be noted that the parties expressed the process of what was thereafter to occur as the dispute or difference being “determined by arbitration”, though, of course, the following words were “in accordance with the following Clauses.” [15] Clauses 35.11 and 35.12 are the critical provisions in the appeal. They were as follows: [35.11] Negotiation If:

(a) a notice of appeal is given in accordance with Clause 35.9; or



(b) the dispute or difference for which the notice under Clause 35.1 has been given does not relate to a Direction of the Principal’s Representative under one of the Clauses referred to in Attachment “A”, the dispute or difference is to be referred to a senior representative of each of the Principal and Contractor who must:



(c) meet and undertake genuine and good faith negotiations with a view to resolving the dispute or difference; and



(d) if they cannot resolve the dispute or difference within 14 days after the giving of the notice under Clause 35.1 or 35.9 (whichever is later), the matter at issue will be referred to the Australian Dispute Centre for mediation. [35.12] Arbitration If the senior representatives referred to in Clause 35.11 cannot resolve the dispute or difference or, where the matter is referred to mediation under Clause 35.11(d), the matter is not settled within 42 days after the giving of the notice under Clause 35.1 or Clause 35.9 (whichever is the later), or within such longer period of time as these representatives may agree in writing, the dispute or difference will be referred to arbitration. The arbitration will be conducted before a person to be:



(a) agreed between the parties; or



(b) failing agreement within:



(i) 49 days after the giving of the notice under Clause 35.1 or Clause 35.9 (whichever is the later); or



(ii) where the senior representatives referred to in Clause 35.11 have agreed upon a longer period of time prior to reference to arbitration, 7 days after the expiration of that period, appointed by the President for the time being of The Institute of Arbitrators and Mediators Australia. The Rules for the Conduct of Commercial Arbitration of The Institute of Arbitrators and Mediators will apply to the arbitration. The arbitrator will have power to:



(c) open up and review any Direction of the Principal’s Representative and decision by the Adjudicator; and



(d) grant all legal, equitable and statutory remedies. [4.350]  233

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United Group Rail Services v Rail Corporation NSW cont. [16] Clause 35.13 provided that cl 35 would survive termination of the contract. [17] Clause 35.14 provided for the continuation of the work under the contract despite the existence of a dispute between the parties. [18] Clause 2.2 of the General Conditions of Contract was an interpretation provision, which provided that unless the context indicated a contrary intention headings were for convenience only and did not affect interpretation. [19] Clause 2.14 dealt with severability in the following terms: [2.14] Severability of Provisions If at any time any provision of this Contract is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair:

(a) the legality, validity or enforceability in that jurisdiction of any other provision of this Contract; or



(b) the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Contract.

The issues [20] The parties were agreed that subcl 35.11(d), the mediation clause, was uncertain and unenforceable. The agreement of the respondent (Railcorp) to this proposition was based on the fact that the “Australian Dispute Centre” did not exist. The parties’ agreement recorded by the primary judge at [5]‌in his reasons was that subcl 35.11(d) was “void for uncertainty.” [21] United also asserted (and Railcorp denied) that subcl 35.11(c) was also uncertain and therefore void and unenforceable. [22] Most importantly, United asserted (and Railcorp denied) that cl 35.12 (providing for the reference to arbitration) was not severable from cl 35.11, such that in circumstances where subcl 35.11(d) or subcl 35.11(c) and (d) was or were void and unenforceable, cl 35.12 was likewise void and unenforceable. The result of this argument, if it were accepted, would be that any dispute will be justiciable in Court, where the power to send any dispute to a referee would be available. The consequences and commercial relevance of success of United’s arguments were not explored. The primary judge’s decision [23] The primary judge (Rein J sitting in the Technology and Construction List of the Equity Division) rejected the arguments of United. His Honour found subcl 35.11(c) valid and enforceable. His Honour found cl 35.12 severable from the agreed voidness and unenforceability of subcl 35.11(d). The primary judge’s reasons and the arguments of the parties [24] As to the question of the certainty of subcl 35.11(c) the primary judge concluded by reference to various authorities, including in particular Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWSLR 1; Burger King Corporation v Hungry Jacks Pty Ltd [2001] NSWCA 187; 69 NSWLR 558; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; and Con Kallergis Pty Limited v Calshonie Pty Limited (1998) 14 BCL 201 that the obligation to undertake genuine and good faith negotiations had sufficient content not to be uncertain. [25] As to the question of severability, the primary judge concluded (at [37] of his reasons) that it was not the intention of the parties that disputes would be referred to arbitration only if the negotiation and mediation clauses were valid. His Honour’s reasoning was contained over the following eight pages and included reference to decisions at first instance of judges in the Commercial List. I intend no disrespect to the thoughtful and careful reasons of the primary judge by not analysing those reasons. I agree with his Honour’s conclusions, both as to the sufficient certainty and enforceability of 234 [4.350]

Alternatives to Litigation – Negotiation and Mediation  Chapter  4

United Group Rail Services v Rail Corporation NSW cont. subcl 35.11(c) and the severability of cl 35.12. In circumstances where there can be only one correct answer to a question (here legal questions as to the proper meaning and content of a provision of a contract and the severability of another provision based on the intention of the parties pursuant to the process of contractual construction and the application of legal reasoning) error or not in the primary judge’s approach will be demonstrated in an appeal by way of rehearing by the appeal court considering the question for itself and reaching a different or the same conclusion. [Allsop P discussed the authorities dealing with whether a clause seeking to create a legal obligation to negotiate in good faith is legally binding and sufficiently certain to be enforceable in relation to clause 35.11(c).] [78] This is a dispute resolution clause. To require in such a clause this degree of constraint [ie good faith meaning that a party is free to pursue its own interests in negotiation, but by reference to the honest and genuine appreciation of the rights and entitlements arising out of the relationship and touching the controversy] on the positions of the parties reflects developments in dispute resolution generally. The recognition of the important public policy in the interests of the efficient use of public and private resources and the promotion of the private interests of members of the public and the commercial community in the efficient conduct of dispute resolution in litigation, mediation and arbitration in a fair, speedy and cost efficient manner attends all aspects of dispute resolution: cf “just, quick and cheap resolution of the real issues”: Civil Procedure Act 2005 (NSW), s 56. Parties are expected to co-​operate with each other in the isolation of real issues for litigation and to deal with each other in litigation in court in a manner requiring co-​operation, clarity and disclosure: see for example Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Limited [2008] NSWCA 243 at [160]-​[165] and Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228 at [55]-​[56]. As part of its procedure, the Court can order mediation: Civil Procedure Act, s 26. Section 27 of that Act states that it is the duty of each party to the proceedings that have been referred to mediation to participate “in good faith” in the mediation. Costs sanctions can attend this duty cf Capolingua v Phylum Pty Ltd (1991) 5 WAR 137. [79] The contract here is, of course, not one governed by the Civil Procedure Act. It is, however, a modern contract with a sophisticated and detailed dispute resolution clause seeking to employ various tools to resolve disputes. The definition of “Law” in cl 2.2 makes clear that the law of New South Wales (and, implicitly, the common law of Australia) is the proper law of the contract. One of the available tools of dispute resolution is the obligation to engage in negotiations in a manner reflective of modern dispute resolution approaches and techniques –​to negotiate genuinely and in good faith, with a fidelity to the bargain and to the rights and obligations it has produced within the framework of the controversy. This is a reflection, or echo, of the duty, if the matter were to be litigated in court, to exercise a degree of co-​operation to isolate issues for trial that are genuinely in dispute and to resolve them as speedily and efficiently as possible. [80] The public policy in promoting efficient dispute resolution, especially commercial dispute resolution, requires that, where possible, real and enforceable content be given to clauses such as cll 35.11 and 35.12 to encourage approaches by, and attitudes of, parties conducive to the resolution of disputes without expensive litigation, arbitral or curial. [81] The business people here chose words to describe the kind of negotiations they wanted to undertake, “genuine and good faith negotiations”, meaning here honest and genuine with a fidelity to the bargain. That should be enforced. In my view, subcl 35.11(c) was not uncertain and had identifiable content.



[4.350]  235

CHAPTER 5

Alternatives to Litigation –​Arbitration, Referees and Expert Determination [5.10] INTRODUCTION......................................................................................................... 237 [5.20] ARBITRATION.............................................................................................................. 237 [5.30] Compulsory arbitration............................................................................... 238 [5.40] COMMERCIAL ARBITRATION ACT 2010 (NSW)........................................................... 239 [5.50] Judicial Support for Arbitration in Australia............................................. 239 [5.60] Commercial Arbitration Bill 2010......................................................... 240 [5.80] John Holland v Kellogg Brown & Root.................................................... 243 [5.85] Rinehart v Hancock Prospecting........................................................... 247 [5.100] Larkden v Lloyd Energy Systems........................................................... 248 [5.110] [5.120] [5.140] [5.150] [5.170] [5.180] [5.200]

[5.210]

[5.280]

Commercial Arbitration Act 2010 (NSW) ss 18, 19, 23–​25, 28, 29, 31, 32, 33B............................................................................... 251 Westport Insurance v Gordian Runoff.................................................... 255 Commercial Arbitration Act 2010 (NSW) ss 34, 34A................................. 258 Colin Joss v Cube Furniture.................................................................. 260 Commercial Arbitration Act 2010 (NSW) ss 35, 36.................................. 261 Uniform Civil Procedure Rules 2005 (NSW) rr 47.1–​47.4, 47.6–​47.8........... 262 Practice Note SC Eq 9........................................................................ 264

COMPULSORY REFERRAL TO A REFEREE...................................................................... 266 [5.220] Uniform Civil Procedure Rules 2005 (NSW) rr 20.13–​20.24....................... 266 [5.230] Cave v Allen Jack and Cottier............................................................... 269 [5.240] Practice Note SC Eq 3........................................................................ 271 [5.260] Chocolate Factory Apartments v Westpoint Finance.................................. 273 [5.270] Bellevarde Constructions v CPC Energy.................................................. 275 EXPERT DETERMINATION............................................................................................ 275 [5.300] Advantages and disadvantages of expert determination.............................. 279 [5.310] Challenging the expert’s decision.......................................................... 280 [5.320] Shoalhaven City Council v Firedam Civil Engineering................................. 280 [5.330] Strike Australia v Data Base Corporate................................................... 282 [5.340] Comparing arbitration and expert determination........................................ 283

INTRODUCTION [5.10] This chapter addresses three forms of alternative dispute resolution (ADR) that are

determinative or binding on disputants: arbitration, use of a referee and expert determination. It is the binding nature of these forms of ADR that distinguishes them from negotiation and mediation. Arbitration is usually employed to resolve an entire dispute. Referees and expert determination may be used to determine particular questions or an entire dispute requiring the application of expertise.

ARBITRATION [5.20] Arbitration is a quasi-​judicial process. The dispute is submitted to a third party (an

arbitrator) who renders a binding determination (an award). In Re Carus-​Wilson & Greene (1886) 18 QBD 7, Lord Esher MR described the determinative feature of an arbitration as [5.20]  237

Civil Procedure in New South Wales

being an “inquiry in the nature of a judicial inquiry”. Lord Wheatley in Arenson v Casson Beckman Rutley & Co [1977] AC 405 at 428 described the indicia of an arbitration as follows: (a) there is a dispute or a difference between the parties which has been formulated in some way or another; (b) the dispute or difference has been remitted by the parties to the person to resolve in such a manner that he is called upon to exercise a judicial function; (c) where appropriate, the parties must have been provided with an opportunity to present evidence and/​ or submissions in support of their respective claims in the dispute; and (d)  the parties have agreed to accept his decision.

Arbitrations can be pursuant to a court-​annexed scheme or under specific legislation or by private agreement. Parties may agree to arbitration at the outset of dealings, for example, an arbitration process will be the method of dispute resolution between contracting parties or arbitration can be chosen after a dispute has arisen. The arbitration hearing is an adversarial process where the arbitrator acts in a judicial manner. The arbitrator does not hear one party in the absence of the other. The arbitrator considers evidence and then makes an award. Arbitration pursuant to Pt  5 of the Civil Procedure Act 2005 (NSW) (CPA) is briefly discussed, with the main focus being on the Commercial Arbitration Act 2010 (NSW). Compulsory arbitration [5.30] Court-​ annexed arbitration was introduced into NSW on 1  July 1983 with the

commencement of the Arbitration (Civil Actions) Act 1983 (NSW). The provisions in this Act were moved into the CPA upon its enactment. The court may order that proceedings before it be referred for determination by an arbitrator: CPA s 38. Rule 20.8 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides that proceedings involving allegations of fraud and proceedings in the Small Claims Division of the Local Court cannot be referred for arbitration. The jurisdiction conferred on an arbitrator is part of the jurisdiction of the court:  CPA s 37. The arbitrator determines the procedure for the arbitration, but the rules of evidence apply: see CPA ss 49, 51. However, the arbitrator does not have power to compel witnesses, issue subpoenas or punish for contempt. If conduct giving rise to such issues occurs in the arbitration, this must be referred back to the court: see CPA ss 50, 52 and 53. The arbitrator determines a dispute on the evidence in a similar manner to a court. The arbitrator usually hears submissions from the parties. The arbitrator then makes an award. The award records the determination and reasons in writing and is signed: s 39. The award is sent to the referring court. If the award is not the subject of a rehearing then the award is final and conclusive, and is taken to be a judgment of the referring court: s 40. A dissatisfied party in an arbitration can apply for a rehearing: CPA ss 42–​47. An application for a rehearing under s 42 is to be made by notice of motion: UCPR r 20.12. The rehearing takes place before a judge. Once an application for a rehearing has been filed within time, the court is required to order a full or limited rehearing in all but the limited exceptional circumstances set out in s 43, namely: • An order for rehearing may not be made unless the amount claimed in the proceedings, or the value of the property to which the proceedings relate, exceeds the jurisdictional limit of the Local Court when sitting in its Small Claims Division. • An order for rehearing need not be made if it appears to the court that the applicant failed to attend a hearing before an arbitrator without good reason. 238 [5.30]

Alternatives to Litigation – Arbitration, Referees and Expert Determination   Chapter  5

As a result, while a court can compulsorily refer a case to arbitration, a dissatisfied party can obtain a rehearing with relative ease. Rehearings involve resolving the dispute afresh. Oral evidence given in the arbitration is not admissible and documentary evidence must be re-​tendered. The court may make a costs order in respect of both the referred arbitration and the rehearing:  CPA s  46. Costs may be ordered against a party who makes a tactical decision not to call available evidence at the arbitration that is then called at a rehearing. In such circumstances, the court may order costs against that party: MacDougall v Curleveski (1996) 40 NSWLR 430 and Quach v Mustafa (unreported, NSWCA, Kirby P, 15 June 1995), also see Morgan v Johnson (1998) 44 NSWLR 578; Howard v Telstra Corp Ltd [2003] NSWCA 188; and Sydney City Council v Geftlick [2006] NSWCA 280. Although the arbitral procedure under the CPA has some flexibility, there are specific requirements which must be adhered to so that in important respects it operates differently from other forms of arbitration, including the Commercial Arbitration Act 2010 (NSW). See WesTrac Pty Ltd v Eastcoast OTR Tyres Pty Ltd [2008] NSWSC 894 at [35]–​[39]. The Supreme Court’s 2017 Annual Review p 33 reports: Use of arbitration for Supreme Court cases is possible but now extremely rare. The most recent referral to arbitration occurred in 2006 (one referral only in that year). Arbitration of Supreme Court cases declined following re-​distribution of work among the State’s courts. The types of cases that typically had been referred to arbitration no longer come to the Supreme Court.

The District Court Annual Reviews for 2011 to 2017 show no cases being resolved by arbitration. Possible explanations for the court’s arbitration procedure not being utilised are the ease by which a rehearing may be obtained –​Barrett J in WesTrac Pty Ltd v Eastcoast OTR Tyres Pty Ltd [2008] NSWSC 894 at [38] stated that it “can be displaced virtually at the whim of a party and replaced by a judicial process and a judicial determination”. This can mean a duplication of costs and increased delay. Further, the relative formality that characterises arbitration pursuant to the CPA makes it similar to a court adjudication so that the advantages of reduced cost and delay may not exist.

COMMERCIAL ARBITRATION ACT 2010 (NSW) [5.40]  An alternative form of arbitration is that provided for under the Commercial Arbitration

Act 2010 (NSW) which applies to domestic commercial arbitration. International commercial arbitration is governed by the International Arbitration Act 1974 (Cth). An outline of the procedure for domestic commercial arbitration is given below through reference to the Second Reading Speech and key provisions in the Act. Each of the provisions of the Commercial Arbitration Act 2010 (NSW) is discussed in detail in Jones D, Commercial Arbitration in Australia (2nd ed, Thomson Reuters, 2013). However, first the advantages and disadvantages of arbitration are set out.

Judicial Support for Arbitration in Australia [5.50]  Chief Justice PA Keane, Federal Court of Australia, Judicial Support for Arbitration in Australia, Opening address, Financial Review International Dispute Resolution Conference, Sydney, 15 October 2010 [footnotes omitted]

[5.50]  239

Civil Procedure in New South Wales

Judicial Support for Arbitration in Australia cont. Arbitration as a method of dispute resolution is seen to offer the major benefits of enforceability, neutrality, speed and expertise over court based determinations; and, because arbitration is quicker and more expert, it is likely to be cheaper than the lengthier and more elaborate proceedings in court. It is a private proceeding which may be held in private. And international arbitration offers traders a mode of dispute resolution which is not skewed by local policies, peculiarities or prejudices. At the theoretical level, arbitration is distinguished from the dispute resolution mechanism provided by the state, ie the courts, by the circumstance that, with arbitration, the dispute is resolved by a person or persons whose authority to decide is derived from the voluntary agreement of the parties to the dispute. Ultimately, “the scope of judicial review of arbitration awards necessarily determines the utility of the arbitration process.” As stated by Justice Harper of the Victorian Supreme Court: Those who choose to resolve their disputes by invoking the provisions of the Commercial Arbitration Act must take the good with the bad. They trade litigation, with its strict adherence to justice in accordance with law and its relatively generous rights of appeal, for a species of alternative dispute resolution with its advantages of speed and, possibly, cost –​ but with more limited rights of recourse to the courts thereafter. In short, they thereby take a step which limits the power of this Court subsequently to intervene. On the other hand, as was said by Justice Rares of the Federal Court: Courts have an important role to play which is complimentary to arbitration. Courts systematise and explain the legal principles applicable in particular, as well as frequently occurring, situations faced by those involved in commerce. … Arbitrations cannot offer that perspective because they are conducted confidentially. And, no matter how eminent the arbitrator(s) may be, an award in one arbitration does not bind any other arbitrator or relationship between contracting parties. No one would suggest that the commercial entities who seek the benefits offered by arbitration as a method of dispute resolution are indifferent to the quality of the decision-​making process by which they have agreed to abide. No party to a commercial dispute would be content to be bound by a dishonest or blatantly incompetent decision. There is, therefore, a legitimate place for some intervention by the judicial organ of states in which arbitrations are conducted or sought to be enforced to ensure that the arbitration process is conducted fairly in conformity with the reasonable expectations of the parties to the dispute.



Commercial Arbitration Bill 2010 [5.60]  The Hon John Hatzistergos, Attorney-​General, Second Reading Speech, Commercial Arbitration Bill 2010, Legislative Council, Parliament of NSW, 12 May 2010 The Commercial Arbitration Bill 2010 will repeal the Commercial Arbitration Act 1984 and provide a new procedural framework for the conduct of domestic commercial arbitrations. The bill facilitates the use of arbitration agreements to manage domestic commercial disputes and will ensure that arbitration provides a cost effective and efficient alternative to litigation in Australia. The current Act is part of uniform domestic arbitration legislation across all States and Territories. … At the May 2010 meeting of the Standing Committee of Attorneys General, Ministers agreed to update the uniform legislation. This updated law would be based on the United Nations Commission on International Trade Law [UNCITRAL] Model Law on International Commercial Arbitration … 240 [5.60]

Alternatives to Litigation – Arbitration, Referees and Expert Determination   Chapter  5

Commercial Arbitration Bill 2010 cont. There are a number of good reasons for adopting the UNCITRAL model law as the basis for the domestic law. First, the UNCITRAL model law has legitimacy and familiarity worldwide. It has provided an effective framework for the conduct of international arbitrations in many jurisdictions, including Australia, for over 24 years. It provides a well-​understood procedural framework to deal with issues such as the appointment of arbitrators, jurisdiction of arbitrators, conduct of arbitral proceedings and the makings of awards, and therefore is easily adapted to the conduct of domestic arbitrations. Indeed, jurisdictions such as New Zealand and Singapore have based their domestic arbitration legislation on the UNCITRAL model law, and it has proven appropriate. Second, basing domestic commercial arbitration legislation on the UNCITRAL model law creates national consistency in the regulation and conduct of international and domestic commercial arbitration. The Commonwealth International Arbitration Act 1974 gives effect to the model law in relation to international arbitrations. Many businesses, including legal ones, operate domestically and internationally, and one set of procedures for managing commercial disputes makes sense. Thirdly, practitioners and courts will be able to draw on case law and practice in the Commonwealth and overseas to inform the interpretation and application of its provisions … I turn now to the details of the commercial arbitration framework established by the provisions of the bill. Part 1 of the bill applies the bill to domestic commercial arbitration and clarifies that it is not a domestic arbitration if it is an international arbitration for the purposes of the Commonwealth Act. Part 2 of the bill defines an arbitration agreement and requires a court before which an action is brought to refer that matter to arbitration if it is the subject of [an] arbitration agreement and a party so requests. Part 3 deals with the composition of arbitral tribunals and provides flexibility and autonomy to parties in selecting the arbitrator or arbitral tribunal to decide their dispute. It enables parties not only to agree on the number or [sic] arbitrators but the process by which they will be selected and how they may be challenged. It also provides a default position should the parties not be able to reach agreement. Clause 12 sets out the grounds on which the appointment of an arbitrator may be challenged and obliges proposed arbitrators to disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence. The jurisdiction of arbitral tribunals is dealt with in part 4, which makes it clear that an arbitral tribunal is competent to determine whether it has jurisdiction in a dispute but also enables a party to seek a ruling on the matter from the court where a tribunal determines that it has jurisdiction. Interim measures are dealt with in part 4A of the bill. It provides power to arbitral tribunals to grant interim measures for purposes such as maintenance of the status quo and the preservation of assets and evidence. The bill also contains power to grant enumerated interim and procedural orders in addition to those contained in the UNCITRAL model law. Arbitral tribunals are granted the flexibility, unless the parties otherwise agree, to conduct an arbitration on a “stop-​clock” basis in which the time allocated to each party in the hearing is recorded progressively and strictly enforced. This can enable arbitral tribunals to conduct arbitrations in a manner that is proportionate to the amount of money involved and the complexity of the issues in the matter. Similarly, clause 33B, contained in part 6 of the bill, enables an arbitral tribunal to limit the costs of arbitration, or any part of the arbitral proceedings, to a specified amount, unless otherwise agreed by the parties. This gives arbitral tribunals the flexibility to cap costs on the basis of proportionality –​another mechanism to ensure that arbitrations can be conducted in a proportionate manner to the money and complexity of the issues involved. Part 4A also provides for the recognition and enforcement of interim measures, issued under a law of New South Wales or of another State or Territory, in certain circumstances. The grounds for refusing recognition or enforcement of an interim measure are also contained in part 4A. The conduct of arbitral proceedings are dealt with in part 5 of the bill, which provides that parties must be given a fair hearing and that they are free to agree on the procedure to be followed by an arbitral tribunal, or, in the absence of agreement, for the arbitral tribunal to conduct the arbitration as it considers appropriate. This ensures that parties and arbitral tribunals are granted flexibility to adapt the conduct of the proceedings to the particular dispute before them. [5.60]  241

Civil Procedure in New South Wales

Commercial Arbitration Bill 2010 cont. Part 5 includes some provisions additional to those in the model law to ensure that arbitrations can be conducted efficiently and cost-​effectively. Clause 24B imposes a duty on parties to do all things necessary for the proper and expeditious conduct of arbitral proceedings. Clause 25 provides the powers of an arbitral tribunal in the event of the default of one of the parties. Additional powers to those contained in the UNCITRAL model are provided by clause 25 to ensure that arbitral tribunals have sufficient powers to deal with delay by parties or failure to comply with a direction of the tribunal. Clause 27A enables parties, with the consent of the arbitral tribunal, to make an application to the court to issue a subpoena requiring a person to attend arbitral proceedings or to produce documents. Clause 27D provides that an arbitrator can act as a mediator, conciliator or other non-​ arbitral intermediary, if the parties so agree, to provide further flexibility for parties to agree on how their disputes are to be determined. If, however, a mediation or conciliation is not successful an arbitrator is prevented from resuming as an arbitrator without the written consent of all parties. Part 5 also provides an optional confidentiality regime. Confidentiality is viewed as one of the key benefits of arbitration for parties dealing with sensitive commercial topics. These provisions are drafted consistently with those of the Commonwealth Act and provide a default position if an alternative confidentiality regime is not agreed upon by the parties. As parties often assume that arbitration is both private and confidential, the provisions apply on an opt-​out basis to cover situations in which an arbitration agreement does not cover confidentiality. Part 6 of the bill covers the making of awards and the termination of proceedings. The UNCITRAL model law has been supplemented by additional provisions to deal with the issue of costs and the awarding of interest. As stakeholders overwhelmingly suggested that harmonised treatment of costs and interests across international and domestic legislation was desirable, these are dealt with consistently with the Commonwealth Act. Recourse against award is dealt with in part 7 of the bill, which outlines the circumstances in which an application can be made for the setting aside of an award, or grounds upon which parties can appeal an award, if parties have agreed to allow appeals under the optional provision. Recognition and enforcement of arbitral awards is dealt with in part 8 of the bill, which allows for the recognition of awards irrespective of the State or Territory in which it was made, and which outlines the grounds on which enforcement can be refused.

 [5.70] To refer disputes to arbitration and for an arbitral tribunal to be constituted there

must be a valid and binding arbitration agreement. Section 7 of the Commercial Arbitration Act 2010 (NSW) defines an arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. The arbitration agreement must be in writing. These requirements must be met for the Act to apply. Section 8 reinforces the application of the Act by requiring a Court to stay litigation where parties have a valid arbitration agreement. Section 8 provides:

(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

The word “court” with a lower case “c” is not defined. The meaning of the word “court” in the context of the Victorian equivalent of s 8 was considered in Subway Systems Australia Pty Ltd 242 [5.70]

Alternatives to Litigation – Arbitration, Referees and Expert Determination   Chapter  5

v Ireland [2014] VSCA 142. The proceedings involved a dispute between parties to a franchise agreement which contained an arbitration clause but the franchisee commenced proceedings in the Victorian Civil and Administrative Tribunal. The Victorian Court of Appeal (Maxwell P, Beach JA with Kyrou AJA dissenting) held that the tribunal was a court for the purposes of s 8. A court was said to be a body or organ of the judicial system of a State and was not limited to those organs actually called a court.

John Holland v Kellogg Brown & Root [5.80]  John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 [John Holland Pty Ltd was engaged by Downer EDI Rail Pty Ltd (Downer) to design and build a rail facility known as the Auburn Maintenance Centre. John Holland engaged the first defendant (KBR) to furnish certain design and documentation services including the design of stormwater detention facilities for the AMC (KBR Contract). By written agreement entered into on 15 August 2008, John Holland engaged the second defendant (Atlantis) to design, manufacture, supply and certify the stormwater detention facilities to be used for the AMC (Atlantis Contract). Atlantis installed a modular tank system under the AMC car park for the purpose of providing storm water on site detention. Construction of the AMC was completed in 2010. Allegedly, about three and a half years after construction, subsidence of the pavement in the AMC car park was observed. Another builder, Laing O’Rourke, had been carrying out building and excavation works on an adjoining site. Both the KBR Contract and Atlantis Contract contained arbitration agreements as part of dispute resolution clauses that provided for a number of steps to resolve any dispute. The KBR Contract required the parties to meet and negotiate as a first step, which they did. At that conference discussions included whether litigation should be employed as John Holland was concerned about the expiry of a limitation period. On 28 August 2014 John Holland commenced proceedings against KBR and Atlantis in the Supreme Court for damages and indemnity. KBR and Atlantis moved the Court for the matter to be referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW) (“the Act”). John Holland argued: (1)

the action is not the subject of the arbitration agreement because a dispute or difference under cl 12.2 of the KBR Contract is limited to one between John Holland and KBR alone, whereas the dispute the subject of the action involves Atlantis and Downer and may also involve Laing O’Rourke. Construction of cl 12 of the KBR Contract should be informed by the commercial presumption that the parties did not intend the inconvenience of having possible disputes from their transaction being heard in multiple places;

(2)

the arbitration agreement is inoperative because during the conference, John Holland and KBR agreed, as contemplated by cl 12.2, on another “alternative dispute resolution process”, namely court proceedings; and

(3)

in the alternative to (2), if there is no agreement as contemplated by cl 12.2, KBR is estopped from denying the existence of such an agreement or from asserting its private rights arising under cl 12.3 because John Holland and KBR held the common assumption (known by KBR to be held by John Holland) that litigation was the proper course and John Holland acted to its detriment by taking the course of litigation, namely by incurring costs and exposing itself to a limitations defence which KBR would not otherwise have had.]

HAMMERSCHLAG J [15] Clause 12 of the KBR Contract is entitled Settlement of Disputes. Clauses 12.2 –​12.6 are in the following terms. 12.2 NEGOTIATION OF DISPUTE In the event of a dispute or difference (other than in relation to the MF Subcontractor’s assessment of whether milestones have been met) arising out of or relating to the [5.80]  243

Civil Procedure in New South Wales

John Holland v Kellogg Brown & Root cont. performance of the Agreement or the breach, rectification, termination, frustration or invalidity thereof, (hereinafter referred to as the “Dispute”), every endeavor shall be made to resolve the Dispute on its merits by negotiation. The parties shall attend at least one meeting to discuss the matter at issue, as a condition precedent to commencing any other proceeding in respect of the dispute. If the Dispute cannot be resolved by negotiation, the parties shall confer in order to ascertain whether they agree that the Dispute shall first be subject to the process of conciliation, mediation, appraisal, or such other alternative dispute resolution process as may be appropriate in the circumstances of the Dispute and, if they so agree, the Dispute shall be referred to such process. 12.3 GROUND FOR ARBITRATION In the event that the Dispute cannot be resolved in accordance with the foregoing procedure then a notice may be issued by one party to the other party requiring that the Dispute be referred to arbitration. 12.4 ARBITRATOR Arbitration shall be effected by a single Arbitrator in accordance with and subject to the Institute of Arbitrators and Mediators Australia Rules for the Conduct of Commercial Arbitration. Any Conciliator, Mediator or Appraiser who has been previously appointed shall not be appointed as Arbitrator, nor may that person be called by either party in the arbitration unless both parties agree in writing. The parties and the Arbitrator shall meet to discuss and develop procedures appropriate to expedite the conduct of the arbitration and the parties shall cooperate with the Arbitrator in expeditious conduct of the arbitration. 12.5 COST OF ARBITRATION The cost of Arbitration submission, reference and award, together with the apportionment thereof shall be at the discretion of the Arbitrator. 12.6 LEGAL ACTIONS Compliance by the parties with the procedures of clauses 12 is a condition precedent to either party being entitled to pursue any subsequent relief or remedy. [16] Clause 15 of the KBR contract is in the following terms: 15. NON-​WAIVER OF CONDITIONS Except as provided in the Agreement, none of the terms and conditions, requirements and obligations of the Agreement shall be varied, waived, discharged or released at law or in equity except with the prior consent in writing of the parties in each instance. In the event of any conflict or inconsistency between the provisions of clauses 1 to 15 hereof and the provisions of the Special Conditions, if any, then to the event only of such conflict or inconsistency, the provisions of the Special Conditions shall prevail. … [65] Section 8(1) applies where there is brought before a court an action in a matter which is the subject of an arbitration agreement. The section is enlivened where the matter, the subject of the action, that is, the rights or liabilities in controversy, fall within the ambit of controversies which the parties to the arbitration agreement have, on its proper construction, agreed to refer to arbitration. Section 8(1) requires the court to refer the parties to arbitration if a party so requests. The section does not expressly say so, but it seems clear that the compulsory reference pertains only to the extent that the subject of the action is also the subject of the arbitration agreement. [66] Determining the extent of any overlap requires examination of the relevant pleading or other process revealing the elements of the action, and examination of the terms of the arbitration agreement. 244 [5.80]

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John Holland v Kellogg Brown & Root cont. [67] Importantly, s 7(1) defines Arbitration Agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. [68] Clause 12 of the KBR Con[t]‌ract captures any dispute or difference (other than in relation to John Holland’s assessment of whether milestones have been met) arising out of or relating to the performance of the KBR Contract or its breach. [69] The courts have repeatedly held that words such as “arising out of”, “arising under”, “in connection with” or “connected with” have a wide ambit and that when commercial parties choose a forum for the resolution of disputes which may arise between them, such provisions should be liberally construed so as to further their ultimate intent, namely, that their disputes should be susceptible to the forum which they have chosen; see Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160; IBM Australia Ltd v National Distribution Services Pty Ltd (1999) 22 NSWLR 466. [70] In its Summons, John Holland sues KBR for, amongst other things, damages for breach of contract and indemnity against all loss or damage arising out of its breach of contract. In Section B of its Technology and Construction List Statement, John Holland articulates as issues likely to arise: whether the failures in the stormwater detention facilities were the result of defects in the design prepared by KBR, and if so, whether KBR breached the terms of the KBR Contract, whether it breached the warranties provided for under the KBR Contract, whether KBR is required to indemnify John Holland pursuant to the KBR Contract, and whether KBR was negligent in the performance of its services under the KBR Contract. It may be assumed, with some degree of confidence, that these claims will be controversial. [71] As between John Holland and KBR, the dispute between them patently arises out of or relates to performance of the KBR Contract or breach thereof and is susceptible to their arbitration agreement. It is not suggested that some elements of the dispute are susceptible whereas others are not. [72] The thrust of John Holland’s submission is that because it also has rights against Atlantis (which it has chosen to vindicate in the same action), because Downer may have claims against it for which it may seek indemnity against KBR and because it, KBR and others may have claims (or cross-​ claims) against Laing O’Rourke, the dispute between John Holland and KBR is not a dispute arising out of or relating to performance of the KBR contract or its breach. This needs only to be stated to be revealed as unsound. There may be rights and liabilities between each or both of them and other parties or strangers to the action. That has no bearing on whether the dispute that exists between John Holland and KBR is one which arises out of or relates to the performance of the contract between them or its breach. … [86] … The fact there may be an overlap of issues with claims between one or other of the parties to the arbitration agreement and third parties, with the consequent risk of inconsistent findings arising out of a multiplicity or [sic] proceedings, is no longer a relevant factor to be considered by a court in deciding whether or not to refer parties to arbitration (or grant a stay in that context) (see A Monichino, “International Arbitration in Australia –​2010/​2011 in review” (2011) 22 ADRJ 215). [87] Section 8(1) reflects the modern trend both domestically and internationally to facilitate and promote the use of arbitration and to minimise judicial intervention in the process. It gives full effect to the parties’ contractual freedom, which they have exercised by their arbitration agreement, to have disputes comprehended by that agreement arbitrated. [88] In principle, whether a dispute is arbitrable or not cannot depend on a plaintiff party to an arbitration agreement deciding to claim not only against the counterparty, but also a third party stranger. …

[5.80]  245

Civil Procedure in New South Wales

John Holland v Kellogg Brown & Root cont. [91] John Holland contends that at the conference a binding arrangement was concluded between it and KBR that their dispute would be resolved, not by arbitration, but by curial litigation. It contends that this arrangement amounted to agreement, in accordance with cl 12.2, to “[an]other alternative dispute resolution process”. The primary issue is whether John Holland and KBR made an agreement as alleged. The secondary issue is whether any agreement they made qualifies as an agreement to an alternative dispute resolution process under cl 12.2. The significance of the answer to the second question lies in the fact that an agreement under cl 12.2 to an alternative dispute resolution [process] need not be in writing to be effective –​see cl 15. [92] The agreement is said to arise from an exchange in which Deschamps explained John Holland’s potential Limitations Act problems, referred to the fact that there were different resolution procedures in various contracts and none with Laing O’Rourke, expressed the view that litigation was the most appropriate dispute resolution procedure in the circumstances, and Glatter responded to the effect that he agreed that litigation was the best course of action for resolution (recorded in Chedid’s file note as “This is right –​Litigation is proper course”). … [96] John Holland has the onus of establishing the agreement for which it contends. This entails proving to the reasonable satisfaction of the court that the words said to give rise to the agreement were actually said, and that the alleged consensus was capable of forming a binding agreement and was intended by the parties to be legally binding. [97] John Holland falls at each of these hurdles. … [115] In the ordinary grammatical meaning of the words, court proceedings are not an alternative dispute resolution process. They are a dispute resolution process to which all other resolution processes are alternative. [116] The words of cl 12 itself leave no room for the contention that the parties had court process in mind as an alternative dispute resolution process. Firstly, the phrase appears after the words “the process of conciliation, mediation, appraisal or such other …”. The processes described have the common genus of being alternatives to court process. The generic reference to other alternative dispute resolution process is to be construed accordingly. Clause 12.3 of the KBR Contract has in mind that the parties will go to arbitration if the dispute cannot be settled by some such procedure. The clear idea behind the provision is that if such a procedure fails the dispute will certainly be settled by arbitration. There is no dispute amenable to arbitration under cl 12.2 of the KBR Contract that cannot be settled by court process. Where cl 12.5 of the KBR Contract refers to any subsequent relief or remedy, this is clearly a reference to court process. [117] Thus, even had John Holland made out the agreement for which it contends, it would not be an agreement covered by cl 12.2. [118] The agreement for which it contends would amount to a variation of the KBR Contract, rendered ineffective by cl 15. … [120] John Holland’s contention that KBR is estopped from denying the existence of an agreement under cl 12.2 or from asserting its private rights under cl 12.3 fails. … [132] KBR, having made a request under s 8(1), and the arbitration agreement not being null and void, inoperative or capable [sic] of being performed, the Court must, and will, refer John Holland and KBR to arbitration.

 246 [5.80]

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Rinehart v Hancock Prospecting [5.85]  Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13 [Proceedings were commenced in the Federal Court of Australia by Bianca Rinehart and John Hancock (the Appellants) against a number of respondents, including their mother Mrs Gina Rinehart, that included claims that they were not bound by the terms of certain Deeds because their assent to them was procured by misconduct. They sought declarations that the Deeds were void as against them. These claims were referred to as “the validity claims”. Mrs Gina Rinehart sought an order pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW) (“the NSW Act”) that the matters the subject of the proceedings be referred to arbitration. Each of the Deeds contained an arbitral clause that provided “[i]‌n the event that there is any dispute under this deed” there is to be a confidential arbitration. In Rinehart v Welker (2012) 95 NSWLR 221 at 247-​249, Bathurst CJ said the phrase “under this deed” has consistently been given a narrow meaning than phrases such as “arising out of the deed” or “in connection with the deed”. A dispute is “under” a deed if its outcome is governed or controlled by the deed or invokes some right created by it. The primary judge applied that reasoning and found that the existence of a dispute “under” the Hope Downs Deed depends on the existence of the deed itself. The Hope Downs Deed cannot be said to govern or control the outcome of a dispute about its validity. The Full Court disagreed with the primary judge’s construction of the arbitral clause, holding that it should be given a liberal, not a narrow, interpretation. The proceedings were stayed and the validity claims were referred to arbitration.] KIEFEL CJ, GAGELER, NETTLE AND GORDON JJ. [17] When regard is had to the context of the Deeds, including the circumstances in which they were made as reflected in the text of the Deeds, it is apparent that the conclusion reached by the Full Court that the validity claims fell within the scope of the arbitral clauses is correct. [44] It is well established that a commercial contract should be construed by reference to the language used by the parties, the surrounding circumstances, and the purposes and objects to be secured by the contract [Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-​657 [35]]. It could not have been understood by the parties to these Deeds that any challenge to the efficacy of the Deeds was to be determined in the public spotlight. Especially is this so with respect to the Hope Downs Deed. [48] A person in the position of the parties to the Hope Downs Deed would have appreciated that disputes might once again arise, not only with respect to the claims made by Mr Hancock concerning the trusts but also concerning the validity of the deed. It is inconceivable that such a person would have thought that claims of the latter kind, raising allegations such as undue influence, were not to be the subject of confidential dispute resolution but rather were to be heard and determined publicly, in open court.

 [5.90] The Commercial Arbitration Act 2010 (NSW) also deals with important pre-​requisites

to the conduct of an arbitration such as: • the number of arbitrators (one or as agreed by the parties) –​ s 10; • the appointment of arbitrators (as agreed by the parties, or if three arbitrators and two parties then one arbitrator each with the arbitrators appointing the third or with court assistance) –​  s 11; • challenging a person’s appointment as an arbitrator –​ss 12, 13; • the arbitral tribunal’s ability to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement, and a party’s ability to request the Court to decide the matter –​ s 16; [5.90]  247

Civil Procedure in New South Wales

• place of arbitration (as agreed by the parties or as determined by the arbitral tribunal) –​  s 20; • language to be used (as agreed by the parties or as determined by the arbitral tribunal) –​ s 22; • the procedure for the conduct of the arbitration which is set out below.

Larkden v Lloyd Energy Systems [5.100]  Larkden Pty Ltd v Lloyd Energy Systems Pty Ltd [2011] NSWSC 268 HAMMERSCHLAG J [1]‌ Section 16(1) of the Commercial Arbitration Act 2010 (NSW) (“the Act”) provides that an arbitral tribunal may rule on its own jurisdiction. Section 16(9) provides that if the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days after having received notice of that ruling, the court to decide the matter. These proceedings come before the court by way of such a request by the plaintiff. BACKGROUND The Licensing Agreement [2]‌ The plaintiff (or “Larkden”) is the holder of US patent number 5994681, Australian patent numbers 694985 and 2005222444 (together “the Larkden patents”) and corresponding patents in other parts of the world which embody inventions in the renewable energy field, more particularly methods of collecting energy, converting it to heat, transferring the heat energy to a storage medium based on graphite and extracting and releasing the heat energy into useable form. [3]‌ The defendant (or “Lloyd”) is engaged in various forms of research and development at a development facility in Cooma, NSW. Lloyd is engaged in a project at Lake Cargelligo in Western NSW involving the construction of a solar thermal power station. [4]‌ On 16 November 2001 Larkden as Licensor and Lloyd as Licensee entered into a written Licensing Agreement (“the Licensing Agreement”) under cl 3.1(a) of which Larkden granted to Lloyd a Licence in the following terms: Subject to the terms and conditions of this Licence, the Licensor grants to the Licensee a licence, applicable Worldwide (including the right to sub-​license), to use, commercialise, exploit, adapt, modify and improve any and all aspects of the Technologies for the purpose of developing the Activities and exploiting the Project Objectives. [5]‌  Clause 1 of the Licensing Agreement defines “Patent” relevantly to mean: US Patent No 5994681 and any other patents agreed to from time to time by the Licensor and the Licensee to form part of this Licence … [6]‌  It defines “Licence Fee” or “Licence Fees” to mean the fees or royalties set out in Schedule C. [7]‌  It defines “the Technologies” to mean: The Patent and any corresponding patents or rights registered or recognised in other jurisdictions, including any patented enhancements, and all apparatus, applications, designs, drawings, know-​how, materials, processes, technical information, trade secrets and other intellectual property comprised in the Patent or those other patents for the: (a) collection of various forms of energy and the conversion of that energy to heat; (b) transfer of heat energy to, and storing energy in, a storage medium based on high purity graphite; and (c) extraction of the heat energy from the storage medium and its conversion to useable form. [8]‌  Clause 3.3 provides that in consideration for granting the Licence, the Licensee shall pay to the Licensor the Licence Fees. 248 [5.100]

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Larkden v Lloyd Energy Systems cont. [9]‌  Clause 5.4 of the Licensing Agreement is in the following terms: (a) If the Licensee develops any improvements or modifications to the Technologies, the Licensee will allow the Licensor to own such improvements and modifications. (b) The Licensor grants to the Licensee a perpetual and worldwide licence of the improvements and modifications referred to in cl 5.4(a), on the terms of this licence, including the right to sub-​licence and all rights of exclusivity granted under cl 3, but not including cll 10, 11 (other than cl 11.3) and 12. This licence includes a licence of the Technologies to the extent necessary for the Licensee to exploit such improvements and modifications. Following any termination or expiry of this Licensing Agreement, the Licensee’s rights to use such improvements and modifications, and the Licensor’s obligations under this Licensing Agreement in respect to such improvements and modifications, survive and continue without limitation. In particular, following any termination or expiry of this Licensing Agreement, cl 3.1(g) continues to apply to such improvements and modifications. (c) The Licensee shall promptly and periodically without charge disclose to Licensor information and technical data then available to the Licensee to enable the Licensor to fully exploit the Licensee’s improvements or modifications. [10]  Clause 7.1 of the Licensing Agreement is in the following terms: Licensee and Licensor shall inform the other immediately upon learning of any infringement of or any other matter adversely affecting the rights of the other whether in respect of the Technologies, their respective businesses, or otherwise. [11]  Clause 19 of the Licensing Agreement is in the following terms: (a) This licence shall be deemed to be a contract made under the laws of New South Wales and for all purposes shall be governed by and construed in accordance with the laws of those jurisdictions, as they shall from time to time be in effect. (b) All disputes arising in connection with this Licence, which are not adjusted by Licensing Agreement between the parties concerned, shall be finally settled by arbitration. The arbitration shall be held before a single arbitrator appointed by the parties or in the absence of agreement by the Chair of the Law Society of New South Wales, and conducted in accordance with and under the Commercial Arbitration Act 1984 of New South Wales. Judgment upon the award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award, or an order of enforcement as the case may be. [Two new patent applications, known as the Solfast and Ausra patents, were filed. Lloyd had an interest in the Solfast patent through a subsidiary and the Ausra patent through a contractual arrangement. A dispute arose as to what interest Larkden had in the Solfast and Ausra patents as Larkden contended that the patents were improvements or modifications to the Technologies. On 16 September 2010, Lloyd gave Larkden an Arbitration Notice of Dispute.] … [32] On 26 November 2010, the arbitrator ruled, as contemplated by s 16(9) of the Act, as a preliminary question, that he had jurisdiction. … [38] On 10 December 2010 Larkden sued out of this court a Summons and accompanying Commercial Arbitration List Statement, by which it requested the court to decide the matter of jurisdiction determined by the arbitrator in his preliminary ruling. … [57]  Larkden submits that Lloyd is impermissibly seeking to have determined by private arbitration eligibility to the grant of the patents for the inventions covered by the Solfast and Ausra patent [5.100]  249

Civil Procedure in New South Wales

Larkden v Lloyd Energy Systems cont. applications. It puts that this is something which only the Commissioner of Patents or the Federal Court may determine … [59] For its part, Lloyd submits that being arbitrated is a two party contractual dispute, which requires the arbitrator merely to determine whether the obligations in cl 5.4(a) of the Licensing Agreement are engaged in respect of certain intellectual property rights. It submits that it does not claim relief “in rem”, that is, relief directed to establishing, in a manner binding on persons other than Larkden, the presence or absence of any right in and to the Solfast and Ausra pat-​ent applications or the inventions they cover. … The applicable legal principles [61]  The applicable legal principles may be stated briefly. [62]  Generally, any dispute or claim which can be the subject of an enforceable award is capable of being settled by arbitration. [63] There are, however, some exceptions. Some disputes are not susceptible to resolution by private arbitration because they are in the exclusive domain of a national court or other tribunal. It has been said that a common element to the notion of arbitrability is the presence of a sufficient element of legitimate public interest in the subject matter of the dispute to make its private resolution outside the national court system inappropriate: see Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 98. The types of remedies which an arbitrator can award are limited by considerations of public policy (which may be reflected in legislative enactments which deal with the area of controversy) and by the fact that he is appointed by the parties and not by the state; see Metrocall Inc (Successor by Merger to Pronet Inc) v Electronic Tracking Systems Pty Ltd (2000) 52 NSWLR 1 at 21 and following, and more recently Siemens v Origin Energy Uranquinty Power [2011] NSWSC 195 at [36]-​[45]; Mustill and Boyd, Law and Practice of Commercial Arbitration in England, 2nd ed (1989) ch 10. [64] Non-​ arbitrable matters include criminal prosecutions, determination of status such as bankruptcy, divorce, and the winding up of corporations in insolvency, and certain types of dispute concerning intellectual property such as whether or not a patent or trade mark should be granted. These matters are plainly for the public authorities of the state. Patents and trade marks are monopoly rights that only the state can grant; Blackaby et al, Redfern and Hunter on International Arbitration, 5th ed (2009) at 2.118. [65]  The modern trend both domestically and internationally is to facilitate and promote the use of arbitration and to minimise judicial intervention in the process; see Gordian Runoff v Westport Insurance (2010) 267 ALR 74 at [105] and following. In Desputeaux v Editions Chouette (1987) inc 2003 SCC 17 at [38], the Supreme Court of Canada, in determining that a copyright dispute was arbitrable, referred to this trend particularly in modern Western legal systems. The trend was acknowledged by the Court of Appeal in Singapore in Tjong Very Sumito v Antig Investments [2009] 4 SLR(R) 732 at 745, [28] and following. See too Born, International Commercial Arbitration (2009) at p 806. Consideration [66]  The powers to grant a patent, to make a declaration of eligibility and to decide the case where the grant of a standard patent is opposed, are powers conferred by the provisions of the Patents Act on, and only on, the Commissioner of Patents or the Federal Court on appeal from the Commissioner. These statutory powers cannot, by private arrangement, be conferred by parties on an arbitrator. [67]  There is, however, no impediment to the parties investing in the arbitrator power to resolve a dispute as between themselves as to their rights in and entitlements to a patent application, or for that matter an invention. [68]  Does the Notice of Dispute call for the arbitrator to exercise, or to impinge upon the exercise of, powers reserved to the Commissioner of Patents and the Federal Court? 250 [5.100]

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Larkden v Lloyd Energy Systems cont. [69]  For the reasons which follow I do not consider that it does. [70]  Firstly, neither the Notice of Dispute nor the pleadings in the arbitration call for the arbitrator to make any declaration as to eligibility or to grant a patent. [71]  Secondly, the arbitrator is not (nor could he be) called upon, to resolve anything more than the dispute which has arisen between Larkden and Lloyd as to their respective rights and obligations under cl 5.4(a) of the Licensing Agreement in the events that have occurred. [72]  The nature and ambit of that dispute is revealed by the terms of the Notice of Dispute, the pleadings and the pre-​arbitration exchanges. [73]  In its 12 July 2010 letter, Lloyd asserted that there was a dispute over what rights Larkden had to the Solfast and Ausra patents. This was repeated in its letter dated 28 July 2010. The 13 August 2010 letter made detailed and well articulated assertions that if Lloyd developed any improvements or modifications to the Technologies (covered by both the Solfast and Ausra patents), Larkden owned them. It asserted that Lloyd was in breach of its obligations under cl 5.4(a) of the Licensing Agreement and threatened termination if the breach was not remedied. Larkden counterclaims for relief flowing from the alleged breach by Lloyd of cl 5.4(a) including a determination or declaration that it is entitled to terminate the Licensing Agreement, orders requiring Lloyd to take certain steps, and compensation. [74] That Solfast and Ausra have made patent applications or that Larkden has applied for declarations for eligibility in respect of what Lloyd denies (and Larkden asserts) are improvements or modifications to the Technologies developed by Lloyd, does not elevate the private contractual dispute between Lloyd and Larkden to one in which the public has an interest or the resolution of which involves the purported exercise by the arbitrator of any power given exclusively to the Commissioner of Patents or the Federal Court. [75]  Thirdly, arbitral determination of issues 2.1 and 2.2 in the Notice of Dispute that the Solfast and Ausra patent applications either embody or do not embody improvements or modifications to the Technologies which Lloyd must either allow or is not obliged to allow Larkden to own (as the case may be) will not, nor could it, bind the Commissioner of Patents or the Federal Court to declare who, as between Larkden, Solfast or Ausra (or anyone else), is or is not an eligible person under the Patents Act or who, as between them, should or should not be granted any patent. … [79] Fourthly, the arbitrator cannot make a declaration which binds third parties or the public at large. But there is no reason why the arbitrator does not have authority to give either party such relief as would be available to it in a court of law having jurisdiction with respect to the subject matter including, in this case, a determination declaratory of the position contended for by Lloyd, or for that matter Larkden; see Francis Travel Marketing Pty Ltd v Virgin Airlines Ltd (1996) 39 NSWLR 160 at 166-​ 167; IBM Australia Ltd v National Distribution Systems Ltd (1991) 22 NSWLR 466. Whether any relief should be granted and, if so, in what form is a matter for the arbitrator.



Commercial Arbitration Act 2010 (NSW) [5.110]  Commercial Arbitration Act 2010 (NSW) ss 18, 19, 23–​25, 28, 29, 31, 32, 33B Part 5 Conduct of arbitral proceedings 18 Equal treatment of parties The parties must be treated with equality and each party must be given a reasonable opportunity of presenting the party’s case.

[5.110]  251

Civil Procedure in New South Wales

Commercial Arbitration Act 2010 (NSW) cont. Note: This section differs from the Model Law to the extent that it requires a party to be given a “reasonable”, instead of “full”, opportunity of presenting the party’s case. 19 Determination of rules of procedure (1)

Subject to the provisions of this Act, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.

(2)

Failing such agreement, the arbitral tribunal may, subject to the provisions of this Act, conduct the arbitration in such manner as it considers appropriate.

(3)

The power conferred on the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

(4)

The power conferred on the tribunal also includes the power to make orders or give directions for the examination of a party or witness on oath or affirmation.

(5)

For the purposes of the exercise of the power referred to in subsection (4), the arbitral tribunal may administer any necessary oath or take any necessary affirmation.

(6)

An order made or direction given by an arbitral tribunal in the course of arbitral proceedings is, by leave of the Court, enforceable in the same manner as if it were an order of the Court and, where leave is so given, judgment may be entered in terms of the order or direction.

23 Statements of claim and defence (1)

Subject to any contrary agreement of the parties or a direction of the arbitral tribunal, within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant must state the facts supporting his or her claim, the points at issue and the relief or remedy sought, and the respondent must state the respondent’s defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of such statements.

(2)

The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.

(3)

Unless otherwise agreed by the parties, either party may amend or supplement the party’s claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it.

(4)

Subsection (1) does not require a statement by a claimant or respondent to be in a particular form.

24 Hearings and written proceedings (1)

Subject to any contrary agreement by the parties, the arbitral tribunal is to decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings are to be conducted on the basis of documents and other materials.

(2)

However, unless the parties have agreed that no hearings are to be held, the arbitral tribunal must hold such hearings at an appropriate stage of the proceedings, if so requested by a party.

(3)

The parties must be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents.

(4)

All statements, documents or other information supplied to the arbitral tribunal by one party must be communicated to the other party.

(5)

Also, any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision must be communicated to the parties.

24A Representation (1)

The parties may appear or act in person, or may be represented by another person of their choice, in any oral hearings under section 24.

252 [5.110]

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Commercial Arbitration Act 2010 (NSW) cont. (2)

A person who is not admitted to practise as a legal practitioner in New South Wales does not commit an offence under or breach the provisions of the Legal Profession Act 2004 or any other Act merely by representing a party in arbitral proceedings in this State.

24B General duties of parties (1)

The parties must do all things necessary for the proper and expeditious conduct of the arbitral proceedings.

(2)

Without limitation, the parties must:



(a)

comply without undue delay with any order or direction of the arbitral tribunal with respect to any procedural, evidentiary or other matter, and



(b)

take without undue delay any necessary steps to obtain a decision (if required) of the Court with respect to any function conferred on the Court under section 6.

(3)

A party must not wilfully do or cause to be done any act to delay or prevent an award being made.

25 Default of a party (1)

Unless otherwise agreed by the parties, if, without showing sufficient cause:



(a)

the claimant fails to communicate the claimant’s statement of claim in accordance with section 23(1) –​the arbitral tribunal may terminate the proceedings, or



(b)

the respondent fails to communicate the respondent’s statement of defence in accordance with section 23(1) –​the arbitral tribunal may continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations, or



(c)

any party fails to appear at a hearing or to produce documentary evidence –​the arbitral tribunal may continue the proceedings and make the award on the evidence before it.

(2)

Unless otherwise agreed by the parties, if a party fails to do any other thing necessary for the proper and expeditious conduct of the arbitration the arbitral tribunal:



(a)

if satisfied that there has been inordinate and inexcusable delay on the part of the claimant in pursuing the claim –​may make an award dismissing the claim or may give directions (with or without conditions) for the speedy determination of the claim, or



(b)

if without sufficient cause a party fails to comply with any order or direction of the arbitral tribunal –​may make an order requiring the party to comply with the terms of the earlier order or direction within the period specified by the arbitral tribunal (a peremptory order).

(3)

If a party fails to comply with a peremptory order, the arbitral tribunal may do any of the following:



(a)

direct that the party in default is not to be entitled to rely on any allegation or material which was the subject matter of the peremptory order,



(b)

draw such adverse inferences from the failure to comply as the circumstances justify,



(c)

proceed to an award on the basis of any materials that have been properly provided to the arbitral tribunal,



(d)

without limiting section 33B(4), in making an award give any direction or order that it thinks fit as to the payment of the costs of the arbitration incurred in consequence of the non-​compliance.

Part 6 –​Making of award and termination of proceedings 28 Rules applicable to substance of dispute (1)

The arbitral tribunal must decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. [5.110]  253

Civil Procedure in New South Wales

Commercial Arbitration Act 2010 (NSW) cont. (2)

Any designation of the law or legal system of a given State or Territory must be construed, unless otherwise expressed, as directly referring to the substantive law of that State or Territory and not to its conflict of laws rules.

(3)

Failing any designation by the parties, the arbitral tribunal must apply the law determined by the conflict of laws rules which it considers applicable.

(4)

The arbitral tribunal must decide the dispute, if the parties so agree, in accordance with such other considerations as are agreed to by the parties.

(5)

In all cases, the arbitral tribunal must decide in accordance with the terms of the contract and must take into account the usages of the trade applicable to the transaction.

29 Decision-​making by panel of arbitrators (1)

In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal must be made, unless otherwise agreed by the parties, by a majority of all its members.

(2)

However, questions of procedure may be decided by a presiding arbitrator, if so authorised by the parties or all members of the arbitral tribunal.

31 Form and contents of award (1)

The award must be made in writing and must be signed by the arbitrator or arbitrators.

(2)

In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal suffices, provided that the reason for any omitted signature is stated.

(3)

The award must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under section 30.

(4)

The award must state its date and the place of arbitration as determined in accordance with section 20.

(5)

The award is taken to have been made at the place stated in the award in accordance with subsection (4).

(6)

After the award is made, a copy signed by the arbitrators in accordance with subsection (1) must be delivered to each party.

32 Termination of proceedings (1)

The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal in accordance with subsection (2).

(2)

The arbitral tribunal is to issue an order for the termination of the arbitral proceedings when:



(a)

the claimant withdraws his or her claim, unless the respondent objects and the arbitral tribunal recognises a legitimate interest on the respondent’s part in obtaining a final settlement of the dispute, or



(b)

the parties agree on the termination of the proceedings, or



(c)

the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible, or



(d)

the arbitral tribunal makes an award under section 25(2)(a) dismissing the claim.

(3)

The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to sections 33 and 34(4).

33B Costs (1)

Unless otherwise agreed by the parties, the costs of an arbitration (including the fees and expenses of the arbitrator or arbitrators) are to be in the discretion of the arbitral tribunal.

254 [5.110]

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Commercial Arbitration Act 2010 (NSW) cont. (2)

Unless otherwise agreed by the parties, the arbitral tribunal may direct that the costs of an arbitration, or of any part of the arbitral proceedings, are to be limited to a specified amount.

(3)

A direction under subsection (2) may be varied at any stage, but this must be done sufficiently in advance of the incurring of costs to which it relates, or the taking of any steps in the proceedings which may be affected by it, for the limit to be taken into account.

(4)

The arbitral tribunal may, in making an award:



(a)

direct to whom, by whom, and in what manner, the whole or any part of the costs that it awards are to be paid, and



(b)

tax or settle the amount of costs to be paid or any part of those costs, and



(c)

award costs to be taxed or settled as between party and party or as between legal practitioner and client.

(5)

Any costs of an arbitration (other than the fees or expenses of an arbitrator) that are directed to be paid by an award are, to the extent that they have not been taxed or settled by the arbitral tribunal, to be assessed in the Court having jurisdiction under section 34 to hear applications setting aside the award.

(6)

If no provision is made by an award with respect to the costs of the arbitration, a party may, within 14 days after receiving the award, apply to the arbitral tribunal for directions as to the payment of those costs.

(7)

The arbitral tribunal must, after hearing any party who wishes to be heard, amend the award by adding to it such directions as the arbitral tribunal thinks proper with respect to the payment of the costs of the arbitration.



Westport Insurance v Gordian Runoff [5.120]  Westport Insurance Corp v Gordian Runoff Ltd (2011) 244 CLR 239; [2011] HCA 37 [Gordian Runoff Ltd (Gordian) and a Lloyd’s syndicate, R E Brown, underwrote for FAI Insurance Limited (FAI) a 7-​year directors and officers liability runoff policy. On 10 October 2008, arbitrators delivered their written award in favour of Gordian in an arbitration conducted under the Commercial Arbitration Act 1984 (NSW). Central to the outcome of the arbitration was the construction of s 18B of the Insurance Act 1902 (NSW). The written award comprised three paragraphs, and was accompanied by “Reasons for Award” comprising 96 paragraphs (the reasons). One of the grounds of appeal was that the arbitrators’ reasons were inadequate contrary to the requirement in s 29(1)(c), now s 31(3) of the Commercial Arbitration Act 2010 (NSW).] FRENCH CJ, GUMMOW, CRENNAN and BELL JJ [5]‌  The arbitration proceeded before a panel of three arbitrators upon a set of detailed pleadings which extended to more than 60 pages. The hearing commenced on 14 July 2008 and continued until 22 July, with representation by senior counsel, witnesses being sworn and cross-​examined on their written statements, many documents being in evidence and a full transcript provided. In many respects, therefore, the arbitration proceeded along the lines of the conduct of a commercial cause in a superior court. This complexity of the arbitration will be relevant when considering the content of the requirement in s 29(1)(c) of the Arbitration Act that the arbitrators provide a statement of the reasons for the making of the award. …

[5.120]  255

Civil Procedure in New South Wales

Westport Insurance v Gordian Runoff cont. [18] An award, subject to the Arbitration Act and to any contrary criterion in the arbitration agreement, is final and binding on the parties to the agreement (s 28). The award may order specific performance of a contract if the Supreme Court would have power to decree specific performance (s 24). By leave of the Supreme Court, judgment may be entered in terms of an award and an award may be enforced in the same manner as a curial judgment or order to the same effect (s 33). The Supreme Court is empowered by s 44 to remove an arbitrator who has misconducted the proceedings or who is incompetent or unsuitable to deal with the particular dispute. [The equivalent 2010 Act –​provision for ss 28 and 33 is s 35, s 24 has been replaced by s 33A and s 44 has been replaced by s 13.] [19]  These statutory provisions indicate that the making of an award in arbitration proceedings is more than the performance of private contractual arrangements between the parties which yields an outcome which rests purely in contract. They also suggest the importance which the provision of reasons by arbitrators has for the operation of the statutory regime. That statutory regime involves the exercise of public authority, whether by force of the statute itself or by enlistment of the jurisdiction of the Supreme Court. It also, as explained later in these reasons, displays a legislative concern that the jurisdiction of the courts to develop commercial law not be restricted by the complete insulation of private commercial arbitration. [20] No doubt it is true to say that the provision of an award under the Arbitration Act lacks distinctive hallmarks of the exercise of judicial power, namely the maintenance of public confidence in the manner of its exercise and in the cogency or rationality of its outcomes, and the operation of the appellate structure and of the case law system. However, it is going too far to conclude that performance of the arbitral function is purely a private matter of contract, in which the parties have given up their rights to engage judicial power, and is wholly divorced from the exercise of public authority. … Inadequate reasons? [49]  The Court of Appeal rejected the submission by the reinsurers that there had been an error of law in the failure of the arbitrators to give adequate reasons for their conclusion respecting the application of the proviso in the concluding words of s 18B(1) of the Insurance Act. The reinsurers had submitted that the findings by the arbitrators had compelled the contrary conclusion, namely, that it was not reasonable for them to be bound to indemnify Gordian. The reinsurers had supported their submission as to the inadequacy of reasons by reference to what they saw as having been decided by the Court of Appeal of Victoria in Oil Basins [Ltd v BHP Billiton Ltd (2007) 18 VR 346]. [50]  The relevant proposition from Oil Basins upon which the reinsurers relied before the Court of Appeal was that the requirement for reasons specified in para (c) of s 29(1) of the Arbitration Act was a statutory importation of the same standard as applies in Australia to the giving of reasons by judges. [51]  Allsop P [(2010) 267 ALR 74 at [220]] considered that the applicable standard was that stated by Donaldson LJ when giving the judgment of the English Court of Appeal in Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2) [[1981] 2 Lloyd’s Rep 130 at 132–​133]. As his Lordship had said: All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is. This is all that is meant by a “reasoned award” [in s 1(6) of the 1979 UK Act]. It may be noted that immediately following this passage Donaldson LJ had gone on to distinguish a reasoned award from reasons for judgment. [52]  This court granted special leave to appeal on the ground that the Court of Appeal had erred in not concluding that the arbitrators had failed to give reasons as required by para (c) of s 29(1) of the Arbitration Act for their conclusion that it was reasonable for the reinsurers to be required to 256 [5.120]

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Westport Insurance v Gordian Runoff cont. indemnify Gordian within the meaning of the proviso to s 18B(1) of the Insurance Act, and for their conclusion that considerations of general justice and fairness did not compel the conclusion that the reinsurers should not be required to indemnify Gordian within the meaning and on the proper construction of s 22(2) of the Arbitration Act. In the circumstances of this matter the considerations of general justice and fairness spoken of in s 22(2) are encompassed within the alleged failure to give reasons for the applicability of s 18B(1) of the Insurance Act, as required by s 29(1)(c) of the Arbitration Act. This ground of appeal is subsumed within the first ground. [53] The reference in Oil Basins to the giving by the arbitrators in that dispute of reasons to a “judicial standard” and cognate expressions placed an unfortunate gloss upon the terms of s 29(1) (c). More to the point were observations in Oil Basins to the effect that what is required to satisfy that provision will depend upon the nature of the dispute and the particular circumstances of the case. Their Honours illustrated the point by saying: If a dispute turns on a single short issue of fact, and it is apparent that the arbitrator has been chosen for his or her expertise in the trade or calling with which the dispute is concerned, a court might well not expect anything more than rudimentary identification of the issues, evidence and reasoning from the evidence to the facts and from the facts to the conclusion. But in Oil Basins itself, the central issue in dispute in the hard-​fought and lengthy arbitration: was whether the expression “overriding royalty” in the royalty agreement was used as a term of art, as the respondents contended (with the result that any right to royalty ceased upon surrender of the tenement to which it related (a “title based” royalty)), or whether the expression meant simply an additional royalty, as the appellant argued (with the result that royalty was payable in respect of production derived by the respondents from within the area regardless of surrenders (an “area based” royalty)). The primary judge in Oil Basins had, as the Court of Appeal put it, properly: held that, in order to provide reasons of the standard required by s 29(1)(c), it was necessary for the arbitrators to decide and give reasons for deciding whether “overriding royalty” was a technical term with a meaning usually understood by persons in the oil and gas industry and, if so, whether the context of the royalty agreement or the surrounding circumstances implied that the parties intended a different meaning from the technical meaning. This the arbitrators in Oil Basins had failed to do. [54]  In the present case, the reinsurers correctly submit that no wholly satisfactory formula can be found to flesh out the requirement in s 29(1)(c). Both Gordian and the reinsurers are content in this court to rest, like Allsop P, upon what was set out above from the reasons of Donaldson LJ in Bremer. But the parties differ respecting the outcome of applying Bremer to the Reasons. The submissions of the reinsurers on this point should be accepted. [55]  Treating s 18B of the Insurance Act as a critical element in reaching their award, the arbitrators were obliged to explain succinctly why the various integers in that complex statutory provision were satisfied. Those integers included the proviso. HEYDON J The merits of arbitration [111] The arbitration proceedings began on 15 October 2004 when Gordian served points of claim. This appeal comes to a close seven years later. The attractions of arbitration are said to lie in speed, cheapness, expertise and secrecy. It is not intended to make any criticisms in these respects of the arbitrators, of Einstein J, or of the Court of Appeal, for on the material in the appeal books none are fairly open. But it must be said that speed and cheapness are not manifest in the process to which the parties agreed. A commercial trial judge would have ensured more speed and less expense. On the construction point it is unlikely that the arbitrators had any greater relevant expertise than [5.120]  257

Civil Procedure in New South Wales

Westport Insurance v Gordian Runoff cont. a commercial trial judge. Secrecy was lost once the reinsurers exercised their right to seek leave to appeal. The proceedings reveal no other point of superiority over conventional litigation. One point of inferiority they reveal is that there have been four tiers of adjudication, not three. Comment on these melancholy facts would be superfluous.

 [5.130]  An important aspect of arbitration is that an award may be subject to judicial review.

The Commercial Arbitration Act 2010 (NSW) s  34(2) sets out the grounds that if proved allow for an award to be challenged and s 34A deals with appeals on questions of law. Jones D, Commercial Arbitration in Australia at p 471 summarises the grounds under s 34(2) as follows: The grounds for challenging an award under s 34 may be broadly divided between substantive and procedural. The substantive grounds include the jurisdiction of the tribunal to hear the dispute, the validity of the arbitration agreement, the capacity of the parties to the arbitration agreement to enter into it, and public policy considerations. The procedural grounds relate to the composition of the arbitral tribunal, compliance with the mandatory provisions of the [Commercial Arbitration Act 2010 (NSW)] and/​or the agreement of the parties and the requirement that each party be given notice of the proceedings and a reasonable opportunity to present its case.

One aspect of public policy that allows for an award to be challenged is a breach of natural justice. The requirement of natural justice or procedural fairness usually involves two main aspects, the so-​called “bias rule” and the “hearing rule”: that a person may not be a judge in his or her own cause; and that a person should be given a fair hearing. However, the underlying premise is not one or more black-​letter rules, rather, the notion of fairness will vary depending on context. Fairness is not an abstract concept, but essentially practical. The concern of the law is to avoid practical injustice. See TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83 at [84]–​[87]. Section 34A allows for an appeal on a question of law in the limited circumstances set out in s 34(3) and only if the parties agree that an appeal under s 34A is available.

Commercial Arbitration Act 2010 (NSW) [5.140]  Commercial Arbitration Act 2010 (NSW) ss 34, 34A Part 7 –​Recourse against award 34 Application for setting aside as exclusive recourse against arbitral award (1)

Recourse to the Court against an arbitral award may be made only by an application for setting aside in accordance with subsections (2) and (3) or by an appeal under section 34A.

(2)

An arbitral award may be set aside by the Court only if:



(a)



258 [5.130]

the party making the application furnishes proof that: (i)

a party to the arbitration agreement referred to in section 7 was under some incapacity, or the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication in it, under the law of this State, or

Alternatives to Litigation – Arbitration, Referees and Expert Determination   Chapter  5

Commercial Arbitration Act 2010 (NSW) cont.

(ii)

the party making the application was not given proper notice of the appointment of an arbitral tribunal or of the arbitral proceedings or was otherwise unable to present the party’s case, or



(iii)

the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside, or



(iv)

the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act, or



(b)

the Court finds that:



(i)

the subject-​matter of the dispute is not capable of settlement by arbitration under the law of this State, or



(ii)

the award is in conflict with the public policy of this State.

(3)

An application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application had received the award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal.

(4)

The Court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside of proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.

34A Appeals against awards (1)

An appeal lies to the Court on a question of law arising out of an award if:



(a)

the parties agree, before the end of the appeal period referred to in subsection (6), that an appeal may be made under this section, and



(b)

the Court grants leave.

(2)

An appeal under this section may be brought by any of the parties to an arbitration agreement.

(3)

The Court must not grant leave unless it is satisfied:



(a)

that the determination of the question will substantially affect the rights of one or more of the parties, and



(b)

that the question is one which the arbitral tribunal was asked to determine, and



(c)

that, on the basis of the findings of fact in the award:



(i)

the decision of the tribunal on the question is obviously wrong, or



(ii)

the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and



(d)

that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question.

(4)

An application for leave to appeal must identify the question of law to be determined and state the grounds on which it is alleged that leave to appeal should be granted.

(5)

The Court is to determine an application for leave to appeal without a hearing unless it appears to the Court that a hearing is required.

[5.140]  259

Civil Procedure in New South Wales

Commercial Arbitration Act 2010 (NSW) cont. (6)

An appeal may not be made under this section after 3 months have elapsed from the date on which the party making the appeal received the award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal (in this section referred to as the appeal period).

(7)

On the determination of an appeal under this section the Court may by order:



(a)

confirm the award, or



(b)

vary the award, or



(c)

remit the award, together with the Court’s opinion on the question of law which was the subject of the appeal, to the arbitrator for reconsideration or, where a new arbitrator has been appointed, to that arbitrator for consideration, or



(d)

set aside the award in whole or in part.

(8)

The Court must not exercise its power to set aside an award, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration.

(9)

Where the award is remitted under subsection (7)(c) the arbitrator must, unless the order otherwise directs, make the award within 3 months after the date of the order.

(10)

The Court may make any leave which it grants under subsection (3)(c) subject to the applicant complying with any conditions it considers appropriate.

(11)

Where the award of an arbitrator is varied on an appeal under this section, the award as varied has effect (except for the purposes of this section) as if it were the award of the arbitrator.



Colin Joss v Cube Furniture [5.150]  Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735 HAMMERSCHLAG J [43] Joss contends that the Award should be set aside because it is in conflict with the public policy of this State within the meaning of s 34(2)(b)(ii) of the Act. [44] The rules of natural justice apply in this State. An Award which is infected with a sufficiently material breach of them will be in conflict with the public policy of this State. Under s 34(2)(b)(ii), the Court has a discretion to set such an award aside. [45] For the Court to exercise that discretion in its favour, Joss must demonstrate real unfairness or real practical injustice in how the arbitration was conducted or resolved by reference to established principles of natural justice or procedural fairness. The rules of natural justice include the hearing rule, that is, that a person should be given a fair hearing. The making of a factual finding by a Tribunal without probative evidence may be a breach of the rules of natural justice if the fact was critical, was never the subject of attention by the parties to the dispute, and where the making of the finding occurred without the parties having an opportunity to deal with it. It does not follow that any wrong factual conclusion that may be seen to lack probative evidence (and so amount to legal error) should necessarily be, and without more, characterized as a breach of the rules of natural justice. A disguised attack on factual findings dressed up as a complaint about natural justice will not suffice; see TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 311 ALR 387 at [54]-​[55] and [83]. [46] The public policy exception in ss 34(2)(b)(ii) and 36(1)(b)(ii) is not concerned with mere procedural imperfections but with a negation of rights which our legal system recognizes as being fundamental and therefore matters of public policy. 260 [5.150]

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Colin Joss v Cube Furniture cont. [47] It is also to be remembered that arbitrators are frequently, as is the case here, non-​lawyers. Their procedural behaviour and awards should not be scrutinised with an overcritical or pedantic eye and should be viewed with commonsense and without undue legality: JH Rayner (Mincing Lane) Ltd v Shaher Trading Co [1982] 1 Lloyd’s Rep 632 at 636; Industriebeteiligungs & Handelsgesellschaft v Malaysian International Shipping Corporation Berhad (The “Bunga Melawis”) [1991] 2 Lloyd’s Rep 271 at 277; D Rhidian Thomas, The Law and Practice Relating to Appeals from Arbitration Awards (1994, Lloyd’s of London Press Ltd); Barry Smith Grains Pty Ltd (in liq) v Riordan Group Pty Ltd [2010] NSWSC 1291 at [40]. Additionally, by reason of Rule 17, the Arbitrator was not bound to apply strict rules of evidence.

 [5.160]  Section 35 of the Commercial Arbitration Act 2010 (NSW) allows a successful party

to seek an order from the Court that an arbitral award be enforced. Section 36 sets out the grounds on which a Court may refuse to recognise and enforce an award. See Larkden Pty Ltd v Lloyd Energy Systems Pty Ltd [2011] NSWSC 1331; Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735.

Commercial Arbitration Act 2010 (NSW) [5.170]  Commercial Arbitration Act 2010 (NSW) ss 35, 36 Part 8 –​Recognition and enforcement of awards 35  Recognition and enforcement (1)

An arbitral award, irrespective of the State or Territory in which it was made, is to be recognised in this State as binding and, on application in writing to the Court, is to be enforced subject to the provisions of this section and section 36.

(2)

The party relying on an award or applying for its enforcement must supply the original award or a copy of the original award.

(3)

If the award is not made in English, the Court may request the party to supply a translation of it into English.

36  Grounds for refusing recognition or enforcement (1)

Recognition or enforcement of an arbitral award, irrespective of the State or Territory in which it was made, may be refused only:



(a)

at the request of the party against whom it is invoked, if that party furnishes to the Court proof that:



(i)

a party to the arbitration agreement was under some incapacity, or the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication in it, under the law of the State or Territory where the award was made, or



(ii)

the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present the party’s case, or



(iii)

the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced, or [5.170]  261

Civil Procedure in New South Wales

Commercial Arbitration Act 2010 (NSW) cont.

(iv)

the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the State or Territory where the arbitration took place, or



(v)

the award has not yet become binding on the parties or has been set aside or suspended by a court of the State or Territory in which, or under the law of which, that award was made, or



(b)

if the Court finds that:



(i)

the subject-​matter of the dispute is not capable of settlement by arbitration under the law of this State, or



(ii)

the recognition or enforcement of the award would be contrary to the public policy of this State.

(2)

If an application for setting aside or suspension of an award has been made to a court referred to in subsection (1)(a)(v), the Court may, if it considers it proper, adjourn its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the party to provide appropriate security.



Uniform Civil Procedure Rules 2005 (NSW) [5.180]  Uniform Civil Procedure Rules 2005 (NSW) rr 47.1–​47.4, 47.6–​47.8 47.1 Definitions (cf SCR Part 72A, rule 1) In this Part: “arbitral tribunal” has the same meaning as it has in the Commercial Arbitration Act 2010. “arbitration” has the same meaning as it has in the Commercial Arbitration Act 2010. “the court” means the Supreme Court or a court exercising functions under section 6(2) of the Commercial Arbitration Act 2010. 47.2 Preliminary point of law (cf SCR Part 72A, rule 3) An application to the court for a determination under section 27J of the Commercial Arbitration Act 2010 must be made within 14 days after the date on which the consent of the arbitral tribunal or the consents of all other parties have been obtained. 47.3 Time for applications and appeals (cf SCR Part 72A, rule 5) (1)

An application made to the Court pursuant to section 34 of the Commercial Arbitration Act 2010 must include:



(a)

a statement by the applicant as to the date that the party received the award, or



(b)

if a request has been made under section 33 of that Act, the date on which that request was disposed of by the arbitral tribunal.

(2)

If a party appeals on a question of law arising out of an award and the parties have agreed before the end of the appeal period specified in section 34A(6) of the Commercial Arbitration

262 [5.180]

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Uniform Civil Procedure Rules 2005 (NSW) cont. Act 2010 that an appeal may be made under section 34A(1), the originating process for the appeal is to contain a statement:

(a)

providing the date (or dates if there are more than two parties) that such agreement was reached, and



(b)

identifying the question of law, and



(c)

describing the nature of the dispute with sufficient particularity for an understanding as to the context in which the question of law arises under section 34A (3) and (4), and



(d)

specifying the respects in which it is asserted that the arbitral tribunal fell into error.

(3)

If a party seeks leave to appeal on a question of law arising out of an award, the originating process for the application for leave is to contain a statement of the party’s case:



(a)

providing the dates relevant to the calculation of the appeal period specified in section 34A(6) of the Commercial Arbitration Act 2010, and



(b)

describing the nature of the case with sufficient particularity for an understanding of the matters referred to in the statement, and



(c)

identifying the question of law, and



(d)

specifying how the determination of the question will substantially affect the rights of one or more of the parties, and



(e)

specifying that the question is one which the arbitral tribunal was asked to determine, and



(f)

specifying the reasons for which it is asserted that, on the basis of the findings of fact in the award:



(i)

the decision of the tribunal on the question is obviously wrong, or



(ii)

the question is one of general public importance and the decision is at least open to serious doubt, and



(g)

specifying the reasons for which, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.

47.4 Subpoena (cf SCR Part 72A, rule 7) (1)

Part 33 applies to the issue of a subpoena under section 27A of the Commercial Arbitration Act 2010 in the same way as it applies to the issue of a subpoena in proceedings in the court.

(2)

A subpoena for production before an arbitral tribunal may, with the leave of the court or the arbitral tribunal, require production on any day.

(3)

Unless the court otherwise orders, a subpoena requiring production of any document or thing before an arbitral tribunal must permit the person named, instead of attending and producing it before the arbitral tribunal, to produce the document or thing:



(a)

to a person, and at a place, nominated in writing by the arbitral tribunal and stated in the subpoena, and



(b)

by hand or by post,



so that the person nominated receives it not later than 2 days before the first date on which production before the arbitral tribunal is required.

(4)

If a document or thing is produced in accordance with subrule (3) the person nominated:



(a)

if required to do so, must give a receipt to the person producing the document or thing, and



(b)

must produce the document or thing as the nature of the case requires or as the arbitral tribunal may direct. [5.180]  263

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (5)

Subrule (3) does not apply to so much of a subpoena as requires a person to attend to give evidence.

47.6 Application to enforce award (cf SCR Part 72A, rule 9) (1)

An application to the court under section 35 of the Commercial Arbitration Act 2010 must join the party who seeks enforcement of the award as plaintiff and the party against whom the enforcement is sought as defendant.

(2)

Section 9 of the International Arbitration Act 1974 of the Commonwealth applies to proceedings in which a person seeks leave under section 35 of the Commercial Arbitration Act 2010 to enforce an award in the same way as it applies to proceedings in which a person seeks the enforcement of a foreign award by virtue of the Commonwealth Act.

47.7 Leave to appeal (cf SCR Part 72A, rule 10) An appeal does not lie from a direction or decision in proceedings in the court under the Commercial Arbitration Act 2010 except by leave of the court to which the appeal is to be made. 47.8 Method of entry into the Commercial Arbitration List An application made to the court pursuant to the Commercial Arbitration Act 2010 (including an application for an interim measure pursuant to section 17J of that Act) and the rules is to be made by summons and entered in the Commercial Arbitration List in the manner specified in the Commercial Arbitration List Practice Note as amended from time to time.

 [5.190]  UCPR r 47.5 deals with court assistance in taking evidence pursuant to the evidence

on commission procedure in Part 24 of the UCPR. UCPR rr 47.10–​47.20 deal with offers of compromise.

Practice Note SC Eq 9 [5.200]  Practice Note SC Eq 9 Supreme Court Equity Division –​Commercial Arbitration List 3. Under the provisions of the International Arbitration Act 1974 (Cth) (“IA Act”) this Court is taken to have been specified in article 6 of the UNCITRAL Model Law on International Commercial Arbitration to perform the functions referred to in that article if the place of arbitration is or is to be in New South Wales. 4. Under s 2 of the Commercial Arbitration Act 2010 (NSW) (“CA Act”) “the Court” in that Act means, subject to s 6(2) of that Act, this Court. That Act confers jurisdiction on this Court in relation to proceedings under it. Definitions 5. In this Practice Note “List” means the Commercial Arbitration List. “List Judge” means a judge of the Court assigned by the (Chief Justice, Chief Judge in Equity) to administer the List. “Arbitration Proceedings” mean and include

(a)

264 [5.190]

proceedings arising under or relating to the construction or effect or operation of the IA Act, CA Act or the Commercial Arbitration Act 1984 (NSW) or any equivalent legislation of any State, Territory or foreign country;

Alternatives to Litigation – Arbitration, Referees and Expert Determination   Chapter  5

Practice Note SC Eq 9 cont.

(b)

proceedings arising under or relating to or concerning the construction or effect or operation of the UNCITRAL Model Law on International Commercial Arbitration or any international instrument concerning arbitration or alternative dispute resolution;



(c)

proceedings concerning the construction of an arbitration agreement;



(d)

application for stay of proceedings arising out of an arbitration agreement or proceedings relating to the dispute in question;



(e)

proceedings relating to the conduct of an arbitration including applications for any interim measures whether under the IA Act or otherwise;



(f)

proceedings relating to any challenge to or setting aside of an arbitral award; and



(g)

proceedings relating to the enforcement of an arbitral award or interim measures or an award under the Convention on the Settlement of Investment Disputes between States and Nationals of other States.

Introduction 6. This Practice Note is designed to facilitate the prompt resolution of disputes arising in the context of arbitral proceedings in which the Court has jurisdiction whether by virtue of the CA Act, the provision of an arbitration agreement or otherwise. 7. The objective of this Practice Note’s provisions are to provide parties with a quick and effective mechanism for resolving disputes in relation to arbitration agreements or which may arise in the context or out of arbitral proceedings. 8. The nature of the issues involved, generally speaking, should make substantive interlocutory steps unnecessary. In particular, the List will not be appropriate for matters which, for example, involve significant pre-​trial discovery or other interlocutory steps. In particular, such steps will only be ordered if the Court considers it is necessary for the just and quick disposal of the proceedings, the onus being on the party seeking such steps to justify their necessity. If such steps are found to be necessary then consideration will be given by the Court as to whether it is appropriate the matter remain in the List. 9. The judge administering the List will be Hammerschlag J. It is anticipated that the List will be called over at 9.30 am on the second Tuesday of every month or such earlier time as the nature of the case requires. Entry into the List 10. A matter in the List shall be commenced in the general form of summons prescribed under the Uniform Civil Procedure Rules 2005 but shall be endorsed with a note, “The proceedings have been entered into the Commercial Arbitration List established pursuant to Practice Note SC Eq 9. The provisions of the Practice Note shall apply to the proceedings.” 11. There is to be filed with the summons (a)

a statement of the nature of the dispute;

(b)

a succinct statement of the issues of fact the plaintiff contends will arise;

(c)

a succinct statement of the issues of law the plaintiff contends will arise;

(d)

a statement setting out the interlocutory steps the plaintiff considers necessary to prepare the matter for hearing.

12. Within 14 days of service of the summons a defendant shall file and serve an Commercial Arbitration List Response setting out to the extent, if any, it does not agree with the plaintiff’s formulation: (a)

the nature of the dispute.

(b)

a succinct statement of the additional issues of fact the defendant contends will arise.

(c)

a succinct statement of any additional issues of law the defendant contends will arise.

(d)

a statement setting out any additional or different interlocutory steps the defendant considers necessary to prepare the matter for hearing, and [5.200]  265

Civil Procedure in New South Wales

Practice Note SC Eq 9 cont. (e)

a statement whether the defendant contends that it will be more appropriate that the proceedings be dealt with in:



(i)

the Commercial List;



(ii)

the Technology and Construction List; or



(iii)

any other list.

13. On the return date of the summons the following matters to the extent practicable shall be dealt with: (a)

whether having regard to the extent of the factual matters involved in the proceedings it is more appropriate that the proceedings be dealt with in:-​



(i)

the Commercial List;



(ii)

the Technology and Construction List;



(iii)

any other list.

(b)

in the event it is determined that the matters remain in the Arbitration List the following matters will be dealt with:-​



(i)

directions as to the steps necessary to bring the matter to a hearing;



(ii)

fixing the hearing date.

14. Any urgent interim or interlocutory application is to be brought before the Commercial Arbitration List Judge by contacting his or her Associate or, in lieu thereof, the Registrar in Equity in the same manner as any urgent matter before the Duty Judge.



COMPULSORY REFERRAL TO A REFEREE [5.210]  A court can order that the whole or part of proceedings be referred to a referee for

determination. The UCPR regulates this process.

Uniform Civil Procedure Rules 2005 (NSW) [5.220]  Uniform Civil Procedure Rules 2005 (NSW) rr 20.13–​20.24 Division 3 –​References to referees 20.13 Definitions (cf SCR Pt 72, r 1) In this Division: “order of referral” means an order in force under rule 20.14. “question” includes any question or issue arising in any proceedings, whether of fact or law, or both, and whether raised by pleadings, agreement of parties or otherwise. 20.14 Orders of referral (cf SCR Part 72, rule 2) (1)

At any stage of the proceedings, the court may make orders for reference to a referee appointed by the court for inquiry and report by the referee on the whole of the proceedings or on any question arising in the proceedings.

266 [5.210]

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Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

The court must not make an order under subrule (1) in respect of a question to be tried with a jury.

20.15 Appointment of referees (cf SCR Pt 72, r 3) (1)

Subject to this rule, the court may appoint any person as a referee.

(2)

A judicial officer or other officer of the court may not act as a referee otherwise than with the concurrence of the senior judicial officer.

20.16 Two or more referees (cf SCR Pt 72, r 4) (1)

If the court appoints 2 referees and a decision to be made in the course of proceedings under the reference is not agreed, the decision that is binding is:



(a)

if a judicial officer is a referee, the decision of the judicial officer, or



(b)

in any other case, the decision of the referee appointed by the court to be senior referee.

(2)

If the court appoints 3 or more referees, any decision to be made in the course of proceedings under the reference may be made by a majority of the referees and, failing a majority, the decision that is binding is:



(a)

if a judicial officer is a referee, the decision of the judicial officer, or



(b)

in any other case, the decision of the referee appointed by the court to be senior referee.

20.17 Inquiry and report (cf SCR Pt 72, r 5) (1)

The court may, at any time and from time to time:



(a)

authorise the referee to inquire into and report on any facts relevant to the inquiry and report on the matter referred, and



(b)

direct the referee to make a further or supplemental report or inquiry and report, and



(c)

give such instructions as the court thinks fit relating to the inquiry or report.

(2)

Instructions under subrule (1)(c) may include provision concerning any experiment or test for the purposes of any inquiry or report of a referee.

20.18 Remuneration of referee (cf SCR Pt 72, r 6) (1)

The  court:



(a)

may determine the amount of the fees to be paid to a referee, and



(b)

may direct how, when and by whom the whole or any part of any such fees are to be payable, and



(c)

may determine the consequences of failure to comply with a direction under paragraph (b).

(2)

Subrule (1) does not affect the powers of the court as to costs.

20.19 Court rooms (cf SCR Pt 72, r 7) The court may give directions for the provision: (a)

of services of officers of the court, and [5.220]  267

Civil Procedure in New South Wales

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

of court rooms and other facilities,

for the purpose of any reference under this Division. 20.20 Conduct of proceedings under the reference (cf SCR Pt 72, r 8) (1)

The court may give directions with respect to the conduct of proceedings under the reference.

(2)

Subject to any direction under subrule (1):



(a)

the referee may conduct the proceedings under the reference in such manner as the referee thinks fit, and



(b)

in conducting proceedings under the reference, the referee is not bound by the rules of evidence but may inform himself or herself in relation to any matter in such manner as the referee thinks fit.

(3)

Evidence before the referee:



(a)

may be given orally or in writing, and



(b)

if the referee so requires, must, be given on oath or by affidavit.

(4)

A referee may take the examination of any person.

(5)

Each party must, within a time fixed by the referee but in any event before the conclusion of evidence on the inquiry, give to the referee and each other party a brief statement of the findings of fact and law for which the party contends.

(6)

The parties must at all times do all things which the referee requires to enable a just opinion to be reached and no party may wilfully do or cause to be done any act to delay or prevent an opinion being reached.

20.21 Interlocutory directions (cf SCR Pt 72, r 9) The court may, at any time and from time to time, on application of the referee or of a party, give directions with respect to any matter arising in proceedings under the reference. 20.22 Setting aside or variation of reference (cf SCR Pt 72, r 10) (1)

The court may, of its own motion or on application by a referee or a party, set aside or vary any order of referral.

(2)

Nothing in this rule affects any other power of the court to set aside or vary an order of referral.

20.23 Report (cf SCR Pt 72, rr 11 and 12) (1)

Unless the court orders otherwise, the referee must make a written report to the court on the matter referred to the referee, annexing the statements given under rule 20.20(5) and stating:



(a)

the referee’s opinion on the matter, and



(b)

the referee’s reasons for that opinion.

(2)

On receipt of the report, the court must send it to the parties.

20.24 Proceedings on the report (cf SCR Pt 72, r 13) (1)

If a report is made under rule 20.23, the court may on a matter of fact or law, or both, do any of the following:



(a)

268 [5.220]

it may adopt, vary or reject the report in whole or in part,

Alternatives to Litigation – Arbitration, Referees and Expert Determination   Chapter  5

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

it may require an explanation by way of report from the referee,



(c)

it may, on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report,



(d)

it may decide any matter on the evidence taken before the referee, with or without additional evidence,



and must, in any event, give such judgment or make such order as the court thinks fit.

(2)

Evidence additional to the evidence taken before the referee may not be adduced before the court except by leave of the court.



Cave v Allen Jack and Cottier [5.230]  Cave v Allen Jack and Cottier Pty Ltd [2014] NSWSC 1365 CAMPBELL J Ex tempore [1]‌The plaintiff applies for the reference out of the whole of these proceedings under r 20.14 … [2]‌The application of the rule has given rise to significant case law but I think as the argument has been presented to me, counsel all accept the accuracy of the commentary in Ritchie’s Uniform Civil Procedure New South Wales, that the rule confers a general discretion to refer matters to a referee whenever the Court is satisfied that doing so will best achieve the overriding purpose of the rules. That is to say the just, quick and cheap resolution of the real issues in the proceedings. [3]‌Although the matter is in the general list of the Common Law Division, involving as it does actions for breach of contract and in negligence, it is essentially a building and technology matter. The plaintiff is a homeowner who sues the architect who designed her home, the structural engineer who certified as to critical structural aspects as required and the builder who constructed it. [4]‌Each of the three defendants opposes the referral out of the whole of the proceedings. However, each of them concedes the advantages in referring the questions of the scope of the works required and the cost of the performance of those works to a referee. [5]‌I am told the premises are on the Central Coast and that the architect, who is the first defendant, was first retained in relation to the construction of the dwelling as long ago as 1996. The work was done around the turn of the century. Mr Lloyd of counsel, for the first defendant, identified the issues as being encompassed by the following broad categories: (1)

a limitation issue having regard to when the contracts were made and when the work was done.

(2)

a serious question about the identity of the parties to the contract retaining the second defendant, who is the structural engineer; and the terms of that contract as to limitation, and exclusion, of liability. These are described as legally complex questions.

(3)

inevitably, the question of the apportionment of liability among any liable defendants, if more than one, involving questions of fact and law.

(4)

quantum issues relating to the scope of the necessary rectifying works, the utility of actually performing them and the cost of them.

[6]‌I did not understand Mr Rogers of counsel for the plaintiff to demur from Mr Lloyd’s pithy summary of the issues, likewise Mr McManus of counsel for the second defendant and Mr Stevens of counsel for the third. [5.230]  269

Civil Procedure in New South Wales

Cave v Allen Jack and Cottier cont. [7]‌I am also informed that the ambit of the claim is between about $1.3 million on the plaintiff’s estimate in round terms –​when I say “estimate” I mean on the basis of the plaintiff’s evidence –​and around $600,000 on the basis of the estimates provided by experts on behalf of the defendants. In that regard Mr McManus made clear the defendants do not accept the plaintiff’s definition of the necessary scope of works and potentially the cost of rectification therefore could be less than $600,000 on the defendants’ case. [8]‌I am informed by Mr Rogers that the estimate of the necessary hearing time to have the matter determined in this division is six weeks. Again, from the arguments addressed to me, all counsel seem to accept that. Because of the flexibility and relative informality of the procedures likely to be available to a referee, it is thought that the hearing ought to be concluded in four weeks. That is Mr Rogers’ estimate but again I did not understand other counsel to be in violent disagreement with the accuracy of it. [9]‌I record that all counsel accept that the necessary preparations for hearing are complete with the exception of the necessity for experts to conferring and producing joint reports where necessary. The matter is not being currently judicially case managed. I am informed that when the matter is next before the registrar for directions the plaintiff intends seeking a hearing date but it is not expected the Court can allocate six weeks of hearing time until the second half of next year. That effectively means that the commencement of the hearing could be as long as 12 months away in a matter which has its origins in contracts made nearly 20 years ago. [10] It is to be expected that if the whole of the proceedings were referred to a referee that the hearing could commence much sooner subject to the availability of counsel and expert witnesses. [11] Mr Rogers is against fragmenting the case by referring part of it out and he points out that no-​one has made formal application in that regard and would prefer, if his application for referral of the whole of the proceedings fails, that the matter takes its turn in this list. [12] As I have said, the defendants are in favour of a partial referral but resist the referral of the whole proceedings. Part of the argument in that regard is that the efficiencies that might be available with referral out would, generally speaking, be because the referee might be a building professional with experience in dispute resolution techniques. However, such a person may lack the necessary legal skills and experience to resolve the type of legal issues that have been identified. When I say “legal issues” I mean the legal-​fact matrix as outlined above. [13] Mr Rogers argues that an experienced retired judicial officer with significant background in construction and technology cases could deal with the factual and legal issues and would be sufficiently familiar with the type of expert issues which arise in litigation of this type to efficiently decide those questions. [14] The attitude of the parties to reference out, of course, is not determinative of the question although naturally in an adversarial system the Court will give weight to the position of each of the parties. [15] There is a potential draw-​back that reference out does not always bring finality and the generation of arguments about adoption of reports can take on a litigious life of their own. One of the significant factors in this case is bringing the matter to a head sooner rather than later even after all this time. That, it seems to me, is the best way of facilitating, to the overriding purpose in this case. [16] It would be counter-​productive if reference out only generated the type of actions I have referred to by way of arguments in relation to adoption and the like. It seems to me that on the whole, although there is much to be said for the position adopted on either side of the record, that the overriding purpose will be better advanced in this case by reference out of the whole proceedings. And despite the persuasive arguments put against this proposition, I have in the end been persuaded by Mr Rogers that an experienced retired judge like, for example, the former Mr Justice Hunter, would be in a position to deal with all of the complexities of the case, legal, factual and technical and indeed

270 [5.230]

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Cave v Allen Jack and Cottier cont. deal with them sooner than a judge of this division, given the likely time span before obtaining a hearing date. [17] Essentially the factors I have had regard to are as follows: First, the relative speed with which a referee could hear the case; second, the relative flexibility and informality of procedure would better define the issues; and third, that second factor will lead to a hearing that is materially shorter, saving all parties significant legal costs, even accepting that there yet might be scope for argument about adoption. [18] It seems to me that an order in the form of the usual order for reference out appearing in Annex 2 to Equity Practice Note 3 is the appropriate order to make in the whole of the circumstances and that the order should provide for the referral of the whole of the proceedings. It may well be that the parties ought to confer about the identity of the relevant retired judicial officer who should be appointed and I suppose inquiries ought to be made in relation to that person’s availability before orders are pronounced. [19] I propose simply then to direct counsel to bring in short minutes of order largely conforming with the form of order in Annex 2 to Equity Practice Note 3. If counsel are unable to agree, on the identity of the referee, then I will hear some short argument about the competing contentions. Order I direct counsel to bring in short minutes of order largely conforming with the form of order in annexure 2 to Equity Practice Note 3.



Practice Note SC Eq 3 [5.240]  Practice Note SC Eq 3 Supreme Court Equity Division –​Commercial List and Technology and Construction List Orders for reference 40. Consideration should be given throughout the course of proceedings as to whether any questions are appropriate for referral to a referee for inquiry and report. 41. Where questions are appropriate to be referred to a referee for inquiry and report, the parties should: 41.1 formulate the questions with precision and 41.2 inform the Court of: 41.2.1 the identity of an agreed referee or, if no agreement can be reached, the referee each suggests 41.2.2 the date on which the referee can commence the reference 41.2.3 the expected duration of the reference and 41.2.4 the anticipated date for delivery of the report. 42. An order made for reference to a referee for inquiry and report will normally be in the form of the Usual Order for Reference set out in Annexure 2. 43. Consent Orders for amendment to the matters referred to the Referee in the Schedule to the Usual Order for Reference may be filed with the List Judge’s Associate in writing for the making of such order in Chambers. Any contested amendments are to be heard in the Motions List on Fridays. …

[5.240]  271

Civil Procedure in New South Wales

Practice Note SC Eq 3 cont. ANNEXURE 2 –​USUAL ORDER FOR REFERENCE 1

Pursuant to Part 20 rule 14 of the Uniform Civil Procedure Rules (the “UCPR”), refer to [state name of referee] for enquiry and report the matter in the Schedule hereto.

2

Direct that (without affecting the powers of the Court as to costs) the parties, namely [state relevant parties], be jointly and severally liable to the referee for the fees payable to him.

3

Direct that the parties deliver to the referee forthwith a copy of this order together with a copy of Division 3 of Part 20 of the UCPR.

4

Direct  that: 4.1

subject to paras 4.2 and 4.3 hereof, the provisions of Pt 20 r 20 shall apply to the conduct of proceedings under the reference

4.2

the reference will commence on [date] unless otherwise ordered by the referee

4.3

the referee consider and implement such manner of conducting proceedings under the reference as will, without undue formality or delay, enable a just determination to be made including, if the referee thinks fit:



4.3.1 the making of inquiries by telephone



4.3.2 site inspection



4.3.3 inspection of plant and equipment and



4.3.4 communication with experts retained on behalf of the party 4.4

any evidence in chief before the referee shall, unless the referee otherwise permits, be by way of written statements signed by the maker of the statement

4.5

the referee submit the report to the Court in accordance with Pt 20 r 23 addressed to the Equity Division Registrar on or before [date].

5

Amendments to the Schedule, whether by agreement or on a contested basis, are to be the subject of an order made by the Court.

6

If for any reason the referee is unable to comply with the Order for delivery of the report to the Court by the date in this Usual Order for Reference, the referee is to provide to the List Judge an Interim Report setting out the reasons for such inability and an application to extend the time within which to deliver the report to the Court to a date when the referee will be able to provide the Report.

7

Grant liberty to the referee or any party to seek directions with respect to any matter arising in proceedings under the reference upon application made on 24 hours’ notice or such less notice ordered by the Court.

8

Reserve costs of the proceedings.

9

Stand the proceedings over for further directions on [date].

SCHEDULE The whole of the proceedings; or The following questions arising in the proceedings, namely [state the questions]. [5.250]   The rules confer a wide scope for procedural flexibility in the conduct of the reference,

but this is subject to the requirements of natural justice. The requirements of natural justice will vary according to the circumstances of each case. Referees must consider what is required to achieve fairness between the parties in the particular circumstances of their reference: see Xuereb v Viola (1989) 18 NSWLR 453. A referee is not required to conduct the reference as if it were a trial. However, in some circumstances it may be appropriate for the referee to 272 [5.250]

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Practice Note SC Eq 3 cont.

adopt procedures substantially the same as those that would apply to a judicial proceeding. In Beveridge v Dontan (1991) 23 NSWLR 13 at 23, Rogers CJ in Comm Div explained that: The clear purpose of the [UCPR rules on referees] is to enable the Court to have the facility to obtain a report from a referee, which report may be obtained in the most efficient, expeditious and least expensive method available. This is particularly so where technical or accounting issues are involved and where it may be considered inappropriate or unnecessary for the processes normally adopted in the conduct of a trial to be availed of to obtain a just opinion upon the question referred. [5.255] In Jabulani Pty Ltd v Walkabout II Pty Ltd [2016] NSWCA 267 at [40], the New South Wales Court of Appeal (Bathurst CJ, Leeming JA and Payne JA) noted that the parties agreed that the principles to be applied concerning the discretion to adopt, vary or reject in whole or in part a report of a referee were those conveniently summarised by McDougall J in Chocolate Factory Apartments v Westport Finance [2005] NSWSC 784 at [6]‌–​[8] and in Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184, which at [24] referred to Chocolate Factory Apartments v Westport Finance as “highly influential, as a succinct distillation of earlier decisions”.



Chocolate Factory Apartments v Westpoint Finance [5.260]  Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 MCDOUGALL J [6]‌The principles to be applied, in exercising the discretion conferred upon the Court by [UCPR 20.24] to adopt, vary or reject in whole or in part a report of a referee, are well established. There are a number of cases to which, customarily, reference is made. They include Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; the unreported proceedings in that case before Giles J (19 May 1992: the relevant considerations referred to by his Honour are sufficiently extracted in the decision of the Court of Appeal); Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60; White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193; and Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615. As to the nature and content of the referee’s obligation to give reasons, the relevant authorities include Xuereb v Viola (1989) 18 NSWLR 453 and Hughes Bros Pty Ltd v Minister for Public Works (Rolfe J, 17 August 1994, unreported; BC 9402885). [7]‌The relevant principles, distilled from those decisions, can be stated as follows: (1)

An application under [UCPR 20.24] is not an appeal either by way of hearing de novo or by way of rehearing.

(2)

The discretion to adopt, vary or reject the report is to be exercised in a manner consistent with both the object and purpose of the rules and the wider setting in which they take their place. Subject to this, and to what is said in the next two sub paragraphs, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised.

(3)

The purpose of Pt [20 Div 3] is to provide, where the interests of justice so require, a form of partial resolution of disputes alternative to orthodox litigation, that purpose would be frustrated if the reference were to be treated as some kind of warm up for the real contest.

(4)

In so far as the subject matter of dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh. [5.260]  273

Civil Procedure in New South Wales

Chocolate Factory Apartments v Westpoint Finance cont. (5)

Where a report shows a thorough, analytical and scientific approach to the assessment of the subject matter of the reference, the Court would have a disposition towards acceptance of the report, for to do otherwise would be to negate both the purpose and the facility of referring complex technical issues to independent experts for enquiry and report.

(6)

If the referee’s report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, patent misapprehension of the evidence refers to a lack of understanding of the evidence as distinct from the according to particular aspects of it different weight; and perversity or manifest unreasonableness mean a conclusion that no reasonable tribunal of fact could have reached. The test denoted by these phrases is more stringent than “unsafe and unsatisfactory”.

(7)

Generally, the referee’s findings of fact should not be re-​agitated in the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise. Thus, the Court will not ordinarily interfere with findings of fact by a referee where the referee has based his or her findings upon a choice between conflicting evidence.

(8)

The purpose of Pt [20 Div 3] would be frustrated if the Court were required to reconsider disputed questions of fact in circumstances where it is conceded that there was material on which the conclusions could be based.

(9)

The Court is entitled to consider the futility and cost of re-​litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee such evidence and submissions as they desire.

(10)

Even if it were shown that the Court might have reached a different conclusion in some respect from that of the referee, it would not be (in the absence of any of the matters referred to in sub para (6) above) a proper exercise of the discretion conferred by [UCPR 20.24] to allow matters agitated before the referee to be re-​explored so as to lead to qualification or rejection of the report.

(11)

Referees should give reasons for their opinion so as to enable the parties, the Court and the disinterested observer to know that the conclusion is not arbitrary, or influenced by improper considerations; but that it is the result of a process of logic and the application of a considered mind to the factual circumstances proved. The reasoning process must be sufficiently disclosed so that the Court can be satisfied that the conclusions are based upon such an intellectual exercise.

(12)

The right to be heard does not involve the right to be heard twice.

(13) A question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come is not raised “by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it”. The real question is far more limited: “to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence”. (14)

Where, although the referee’s reasons on their face appear adequate, the party challenging the report contends that they are not adequate because there was very significant evidence against the referee’s findings with which the referee did not at all deal, examination of the evidence may be undertaken to show that the reasons were in fact inadequate because they omitted any reference to significant evidence.

(15)

Where the court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the court has a choice. It may decline to

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Chocolate Factory Apartments v Westpoint Finance cont. adopt the report. Or it may itself look at the detail of the evidence to decide whether or not the expense of further proceedings before the referee (which would be the consequence of non adoption) is justified. [8]‌The twelfth point restates the aphorism of Mahoney JA in Super at 567. The thirteenth, fourteenth and fifteenth points are drawn (and include direct quotations) from the judgment of Hodgson CJ in Eq (with whom Priestley JA agreed and with whom, as to the relevant principles, Fitzgerald AJ also agreed) in Franks & Anor v Berem Constructions Pty Ltd (NSWCA 2 December 1998, unreported; BC 9806367). If I may say so with respect, I regard what his Honour said as giving content, on the facts of the particular case, to the operation of relevant principles rather than as stating any new principle.



Bellevarde Constructions v CPC Energy [5.270]  Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228 SPIGELMAN CJ AND ALLSOP P [55]

It is important in this context to state how parties should approach the conduct of references. It is for the parties to make clear what their cases are. In appropriate cases, references are a tool for the convenient and expeditious conduct and despatch of controversies. Sometimes in technical matters the referee will not be legally trained. Here, the referees were a highly experienced former commercial judge of this Court and an architect. To effectuate the administration of justice in accordance with the overriding purpose in s 56 of the Civil Procedure Act 2005, and to make efficient use of referees, parties are obliged to express with clarity the issues that they wish to ventilate and upon which the referee will report.

[56]

The nature of the review by the Court on adoption makes it imperative that referees deal with all matters referred to them. This makes it imperative, in turn, that parties express their cases clearly and without equivocation, ambiguity or opacity. If a party complains about how a referee has dealt with the issues on the reference, it may be difficult to persuade a judge that a referee has not dealt with an issue, or not dealt with it adequately, if that issue had not been placed before the referee with the requisite clarity.



EXPERT DETERMINATION [5.280] The National Dispute Resolution Advisory Council (NADRAC) defines “expert

determination” as: a process in which the participants 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.

Expert determination may be compared with expert appraisal. The former is binding on the parties, while the latter provides advice on the facts, possible outcomes and procedures to achieve the outcomes but it is not binding on the parties. In Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646, Einstein J explained: [16] Expert Determination is a process where an independent Expert decides an issue or issues between the parties. The disputants agree beforehand whether or not they will be bound by [5.280]  275

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the decisions of the Expert. Expert Determination provides an informal, speedy and effective way of resolving disputes, particularly disputes which are of a specific technical character or specialised kind. [17] Unlike arbitration, Expert Determination is not governed by legislation, the adoption of Expert Determination is a consensual process by which the parties agree to take defined steps in resolving disputes. I accept that Expert Determination clauses have become commonplace, particularly in the construction industry, and frequently incorporate terms by reference to standards such as the rules laid down by the Institute of Arbitrators and Mediators of Australia, the Institute of Engineers Australia … [5.290]  The Resolution Institute, Expert Determination Rules (2016) provide an example of rules that may be agreed by parties to govern their use of expert determination. However, as the relationship between the disputing parties and the expert(s) is one of private contract, the parties are free to choose the terms and conditions or process they desire, rather than adopt rules of expert determination produced by relevant professional bodies.1 The Resolution Institute rules specify the role of the expert and the process to be adopted as follows: Rule 5: Role of the Expert

1.

The Expert shall determine the Dispute as an expert in accordance with these Rules and according to law.

2.

The parties agree that:



1.

the Expert is not an arbitrator of the matters in dispute and is deemed not to be acting in an arbitral capacity;



2.

the Process is not an arbitration within the meaning of any statute.

3.

The Expert shall adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay and expense, so as to provide an expeditious, cost-​effective and fair means of determining the Dispute.

4.

The Expert shall be independent of, and act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting its case and dealing with that of any opposing party, and a reasonable opportunity to make submissions on the conduct of the Process.

5.

Any dispute arising between the parties in respect of any matter concerning these Rules or the Process, (including the Expert’s jurisdiction) shall be submitted to and determined by the Expert.

Rule 6: General Duty of Parties 1.

The parties shall do all things reasonably necessary for the proper, expeditious and cost-​ effective conduct of the Process.

2.

Without limiting the generality of the foregoing, the parties shall:



1.

be represented at any Preliminary Conference or meeting convened by the Expert by a person or persons with authority to agree on procedural matters;



2.

comply without delay with any direction or ruling by the Expert as to procedural or evidentiary matters; and

1

de Fina AA, “Expert Determination: Misconception and Misapplication” (2014) 30 Building and Construction Law Journal 368 at 368.

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3.

where appropriate, take without delay any necessary steps to obtain a decision of a Court on a preliminary question of jurisdiction or law[.]‌ Rule 7: Confidentiality 1.

The Expert the parties and all advisers and representatives of the parties shall:



1.

except as provided in paragraph  2 of this Rule, keep all information disclosed during the Process confidential;



2.

sign Confidentiality Agreements in the terms of this Rule.

2.

The obligation of confidentiality under sub-​paragraph a of paragraph  1 above shall apply except:



1.



2.

1.

Unless otherwise agreed by the parties, the Expert shall convene a Preliminary Conference with the parties, in person or by teleconference, to be held as soon as practicable after reference of the Dispute to the Process.

2.

The purpose of the Preliminary Conference is to:



1.

discuss and agree on the issues in dispute, or formulate a procedure by which those issues can be clarified and agreed;



2.

plan and agree on how the Process should proceed, including a timetable for provision of submissions, documents and any other evidentiary material;



3.

make arrangements for Confidentiality Agreements to be signed by all persons taking part in the Process, in accordance with Rule 7;



4.

1.

Subject to any rule of law or equity or written agreement of the parties to the contrary, and the requirements of Rule  5, the Expert shall make such directions or rulings in relation to the Process as he or she sees fit.

2.

Subject to any written agreement of the parties to the contrary, and without limiting the generality of paragraph 1 of this Rule, the directions and rulings made by the Expert may include directions or rulings in relation to:



1.

identifying or clarifying the issues in dispute, by preparation of a joint statement of issues or otherwise;



2.

provision of submissions, documents and any other evidentiary material relied upon by the parties;



3.

provision of any further submissions and evidentiary material which the Expert considers appropriate;



4.

meetings between the parties, their representatives and/​or experts engaged by the parties, whether or not such meetings are attended by the Expert, including the times by which any such steps shall be taken.

if disclosure is compelled by law;

to the extent necessary to give effect to the Agreement or to enforce any determination of the Expert. Rule 8: Preliminary Conference

make such other planning and administrative arrangements as may be required in relation to the Process, including in respect of the terms of appointment of the Expert. Rule 9: Conduct of the Process

[5.290]  277

Civil Procedure in New South Wales

3.

If the parties agree in writing (in the Agreement or otherwise), the procedure in Schedule B shall apply.

Rule 10: The Expert’s Determination 1. As soon as reasonably practicable after receiving the submissions and evidentiary material from the parties pursuant to Rule 9, the Expert shall determine the Dispute between the parties and notify such determination in writing to the parties. 2.

Subject to any rule of law or equity or written agreement of the parties to the contrary, the Expert’s determination shall contain a statement of reasons in such form as the Expert considers reasonably appropriate, having regard to the amount and complexity of the Dispute.

3.

Subject to any rule of law or equity or written agreement of the parties to the contrary, the Expert’s determination may include for the payment of interest on any monetary sum determined, in such amount as the Expert considers reasonable.

4.

Where the Expert’s determination contains:



1.

a clerical mistake;



2.

an error arising from an accidental slip or omission;



3.

a material miscalculation of figures or a material mistake in the description of any person, thing or matter; or



4.

a defect of form,

the Expert may correct the determination. …

Schedule B The Process shall be conducted in the following manner: 1.

The claimant shall, within twenty-​one (21) days of the date on which the Expert accepts appointment, provide the following to each other party and to the Expert:



1.

a statement in writing detailing the nature of the dispute, the legal and factual issues involved, its contentions in relation to those issues, and the quantum of its claim;



2.

all documents and other evidentiary material on which it relies;



3.

its written submissions on the legal and factual issues involved in its claim.

2.

Thereafter, each party other than the claimant shall, within a further period of twenty-​ one (21) days, provide the following to each other party and to the Expert:



1.

a statement in writing indicating whether or not it agrees with the claimant’s written statement pursuant to paragraph 1a and, if not, its statement of the nature of the dispute (including any cross claim), the legal and factual issues involved in the claimant’s claim and any such cross claim, its contentions in relation to those issues, and the quantum of any such cross claim;



2.

all documents and other evidentiary material on which it relies;



3.

its written submissions on the legal and factual issues involved in the claimant’s claim and any cross claim brought by it.

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3.

Thereafter, any party may reply to written material served pursuant to paragraph 2, within a further period of twenty-​one (21) days, by providing the following to each other party and to the Expert:



1.

a statement in writing in reply indicating whether or not it agrees with the written statement pursuant to paragraph 2a and, if not, its reply as to the nature of the dispute, the issues likely to arise and its contentions in relation to same;



2.

all documents and other evidentiary material in reply to material served pursuant to paragraph 2b;



3.

its written submissions in reply on the legal and factual issues involved.

4.

If a cross claim is made in accordance with paragraph 2, then the cross claimant may reply, in the same manner as set out in paragraph 3, to written material served in respect of such cross claim pursuant to paragraph 3.

5.

If the Expert considers it appropriate, he or she may direct that expert reports not be served in accordance with paragraphs  1b, 2b, 3b and 4 above and that, instead, the experts retained by the parties are to be each provided with the material otherwise served pursuant to paragraphs 1b, 2b, 3b and 4, and then jointly confer (by a time fixed by the Expert) and produce a joint report or reports (by a time fixed by the Expert) recording the matters on which they agree, the matters on which they disagree, and identifying the reasons for any such disagreement and their respective contentions in relation to same.

6.

If the Expert considers it appropriate, he or she may direct that the experts retained by the parties attend one or more Experts’ Conclaves chaired by the Expert, so as to narrow issues in dispute, which Conclaves are to be held at a time and are to be conducted and recorded in a manner directed by the Expert.

7.

The Expert may make such other directions or rulings as he or she considers reasonably appropriate, including directions or rulings for further material or meetings pursuant to sub-​paragraphs 2c and 2d of Rule 9.

8.

Any times fixed pursuant to this Schedule B may be varied by agreement of the parties. In the absence of such agreement, on proper cause being shown by a party, the Expert may vary the times fixed on such terms as he or she considers reasonable in the circumstances.

Advantages and disadvantages of expert determination [5.300]  Expert determination is able to be a very flexible form of dispute resolution because

it can be designed and agreed to by the parties. This enables the use of a relatively informal procedure which can reduce costs and delay. For example, there are no pleadings, discovery or hearing. Equally the parties can choose an expert with specialist knowledge that should allow the expert to understand the detail and complexity involved in a specialist area much more quickly and with greater alacrity than a judge or arbitrator. There may also be scope for the employment of procedures that can assist the expert in coming to a conclusion, such as inspecting a building site or conducting tests. Expert determination may be less successful or lead to dissatisfaction by the parties where there are contested factual issues, as the expert may not have access to the procedures or the training to resolve these. Processes such as cross-​examination and discovery may be needed to assist in resolving a factual contest. For example, questions of credit, which require [5.300]  279

Civil Procedure in New South Wales

judgment as to the credibility of evidence given by witnesses, are normally best tested through cross-​examination.2 Enforcement of an expert determination can be problematic. If one party refuses to comply with the expert’s decision, the other party must issue court proceedings for a declaration or order for specific performance of the parties’ agreement to be bound by the determination. This can be met with various challenges to the determination, as explained below, which can give rise to costs and delay. By way of comparison, an arbitral award must be enforced as if it is a court order pursuant to Commercial Arbitration Act 2010 (NSW) s 35.

Challenging the expert’s decision [5.310] There are no rights to appeal the expert’s decision; the grounds for challenge are

limited to where:3 • the expert acts in excess of his or her jurisdiction to determine the matter; • the expert fails to act in accordance with the requirements of the contract (including procedural directions); and • the agreement expressly provides for recourse. Two important considerations are whether the contract requires reasons and/​or procedural fairness, and if it does, to what standard. In its traditional form, the role of the expert is inquisitorial, so that the process does not require a hearing or the taking of evidence and the expert may act solely on his or her own opinion. However, the parties may include an express contractual provision requiring procedural fairness and/​or reasons.

Shoalhaven City Council v Firedam Civil Engineering [5.320]  Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 305 [By the Contract dated 18 October 2005, Firedam Civil Engineering Pty Ltd (Firedam) agreed with Shoalhaven City Council (Shoalhaven) to design and construct a waste water collection and transport system for the Conjola Regional Sewerage Scheme. The contract included a dispute resolution clause whereby the parties agreed to the expert determination of claims for damages for any breach of the contract. Firedam claimed an entitlement to variations and payment for additional works, extensions of time in relation to those works and contractual compensation in respect of the extended time. Shoalhaven asserted, by way of cross-​claim, an entitlement under the contract to “direct costs incurred due to delayed completion”. An expert was appointed to provide an expert determination of issues in dispute between Shoalhaven and Firedam. The expert was contractually obliged to give reasons in making the expert determination. He did so. Firedam sought a declaration in the Supreme Court of New South Wales that the expert determination was not binding on it because the reasons for the expert determination were burdened with an unexplained inconsistency, such that the expert determination did not accord with the requirements of the contract.] FRENCH CJ, CRENNAN AND KIEFEL JJ [8]‌A dispute resolution procedure was set out in cll 73-​6 of the general conditions. A party to the contract could give notice to the other party of an issue about any matter arising under the contract.

2

3

Bradken Resources Pty Ltd v The ANI Corp Ltd [2002] NSWSC 463; Wood D, “Clause for Concern: The Referral of Unsuitable Disputes to Expert Determination in Australian Construction Contracts” (2011) 27 Building and Construction Law Journal 377. WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489 at [35] (Ipp J).

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Shoalhaven City Council v Firedam Civil Engineering cont. Senior executives were required to attempt to resolve issues so notified. An issue not able to be resolved by senior executives of the parties could be referred to an expert for “Expert Determination”. The contract also provided that, in answer to any issue referred to the expert by a party, the other party could raise any defence, set-​off or cross-​claim. … [10] The contract required the parties to treat the expert determination as final and binding if the aggregate liability of one party to the other did not exceed $500,000. If the aggregate amount determined exceeded $500,000, then either party was free to commence proceedings in respect of the determined amount within 56 days after receiving the determination. … [13] … In cl 4 it defined the role of the expert: Role of Expert 1 The Expert: 1  acts as an Expert and not as an arbitrator; 2 must make its determination on the basis of the submissions of the parties, including documents and witness statements, and the Expert’s own expertise; and 3 must issue a certificate in a form the Expert considers appropriate, stating the Expert’s determination and giving reasons, within 16 weeks, or as otherwise agreed by the parties, after the date of the letter of engagement of the Expert referred to in clause 75.2 of the General Conditions of Contract. … The validity of the Determination [25] Hudson’s Building and Engineering Contracts refers to the increasing diversity of dispute avoidance and resolution mechanisms in modern contracts. It points to the need to give careful consideration “to the true nature of the specific role described in the contract, because the consequences of the different nature of the roles can be radical”. The range of issues able to be entrusted to expert determination under the contract was wide. That width, and the associated procedures, might be thought to indicate proximity to an arbitral function. In this case, however, the contract expressly provided that the expert was to act “as an expert and not as an arbitrator”. “Expert Determination” was defined in the contract by reference to the procedures set out in the contract. Nevertheless, the history of the term suggests the way in which the function to which it refers will be discharged. As Chesterman J said in Zeke [Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563]: The evident advantage of an expert determination of a contractual dispute is that it is expeditious and economical. The second attribute is a consequence of the first: expert determinations are, at least in theory, expeditious because they are informal and because the expert applies his own store of knowledge, his expertise, to his observations of facts, which are of a kind with which he is familiar. [26] In this case, the expert determined, as required by the contract, the issues identified by the parties. He answered “meticulously”, as Campbell JA put it, each of the questions identified in the expert determination procedure set out in Sch 6 to the general conditions. The contested question, whether the determination accorded with the contract, reduced to an inquiry about whether the expert had given “reasons” within the meaning of cl 4 of Sch 6. The content of the requirement to give reasons must reflect the nature of the expert determination process, which is neither arbitral nor judicial. It must also be informed by the nature of the issues to be determined. Judicial observations in other cases about contractual requirements to give reasons in expert determinations or in arbitrations must be read according to their context. It may be accepted, as a general proposition, that a mistake in the reasons given for an expert determination does not necessarily deprive them of the character of [5.320]  281

Civil Procedure in New South Wales

Shoalhaven City Council v Firedam Civil Engineering cont. reasons as required by the relevant contract nor deprive the determination of its binding force. There are mistakes which may have that effect and others that will not. [27] A deficiency or error in the reasons given by an expert may affect the validity of the determination in two ways: (1)

The deficiency or error may disclose that the expert has not made a determination in accordance with the contract and that the purported determination is therefore not binding.

(2)

The deficiency or error may be such that the purported reasons are not reasons within the meaning of the contract and, if it be the case that the provision of reasons is a necessary condition of the binding operation of the determination, the deficiency or error will have the result that the determination is not binding.

It appears to have been an unstated premise in the proceedings leading to this appeal that the contractually binding effect of the determination between the parties was conditional upon the giving of reasons as required in cl 4 of Sch 6 to the general conditions. In this case it was held by the Court of Appeal that the reasons for the determination disclosed an inconsistency and did not account for it. The question whether there was an unexplained inconsistency is a threshold question. If answered in the negative, the further question whether the reasons were, on that account, insufficient to support a binding determination will not arise. [The High Court found no inconsistency in the expert’s reasoning.]



Strike Australia v Data Base Corporate [5.330]  Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205 WARD JA Legal principles [106] As noted above, there was no dispute as to the relevant legal principles. In Australian Vintage Ltd v Belvino Investments No 2 Pty Ltd, [(2015) 90 NSWLR 367] Bathurst CJ (with whom Beazley P and McColl JA agreed) stated (at [74]-​[75]): The parties accepted that the question depended upon whether the determination was made in accordance with the contract: Legal & General Life [of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314] at 336. As Nettle JA pointed out in AGL Victoria [Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173] at [44], in one sense, this test is conclusionary. The question of whether the determination is open to review rather depends on whether or not the expert has carried out the task which he or she was contractually required to undertake: AGL Victoria at [51]; Holt v Cox (1997) 23 ACSR 590 at 596-​597; Shoalhaven City Council v Firedam Civil Engineering Pty Ltd [2011] HCA 38; 244 CLR 305 at [26]-​[27]. If the expert in fact carried out that task, the fact that he made errors or took irrelevant matters into account would not render the determination challenge-​able. On the other hand, if the expert had not performed the task contractually conferred on him or her, but rather performed some different task, or carried out his or her task in a way not within the contractual contemplation of the parties, objectively ascertained, then the determination will be liable to be set aside. [107] The position was summarised in Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 576 by Hammerschlag J (at [39]) thus: As the authorities on the subject make clear, the parties will be bound if the Expert did what the Contract, on its proper construction, required him to do, irrespective of the result. Conversely, the Determination will not be binding if the Expert went outside the ambit of 282 [5.330]

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Strike Australia v Data Base Corporate cont. what the Contract required him to do: see, for example: Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314; Holt v Cox (1997) 23 ACSR 590; AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173; Australian Vintage Ltd v Belvino Investments No 2 Pty Ltd (2015) 90 NSWLR 367. [108] In AGL Victoria Pty Ltd v SPI Networks, Nettle JA (as his Honour then was) drew (at [53]-​[54]) a distinction between errors in the exercise of a judgment, opinion or discretion, and errors involving a mere mechanical or arithmetic exercise, as follows: Therein lies the distinction drawn in some of the authorities, and observed by the judge in this case, between an error in the exercise of a judgment, opinion or discretion entrusted to an expert, and an error which involves objective facts or a mere mechanical or arithmetical exercise. Subject to the contract in question, it is easier to suppose that parties to a contract contemplate that an error of the former kind be beyond the realm of review than it is to think that they intend to be fixed with errors of objective fact or in processes of mechanical calculation. … The question in each case is what the parties should be presumed to have intended, and that is to be determined objectively from the terms of the contract, bearing in mind the context in which it was created. [footnotes omitted]

 Comparing arbitration and expert determination [5.340]  A comparison of arbitration pursuant to the Commercial Arbitration Act 2010 (NSW)

and expert determination is difficult in the abstract due to the parties having significant scope to shape the procedures employed. However, in general, the following differences exist: (a) arbitration is subject to a detailed legislative regime, while expert determination is a creature of contract; (b) disputes for resolution by way of arbitration are usually presented to the arbitrator in a more formal manner (ie, by statements of claim and defence and with oral hearings) than is the case in expert determinations; (c) whereas an arbitrator acts in a manner similar, but not identical, to that of a judge, an expert manifests far fewer judicial attributes in the exercise of his or her functions; (d) whereas arbitrators in their decision-​making are subject to some court supervision by way of limited grounds of appeal, experts are subject to a lesser degree of court supervision; (e) whereas an arbitrator is required to afford the parties procedural fairness and an arbitration award can be set aside on the grounds of failure to provide procedural fairness, experts’ determinations are usually not required to provide procedural fairness unless the parties agree that it is required; (f) whereas arbitration awards can be enforced directly by the courts, experts’ determinations can only be enforced by way of a suit upon the contract; and (g) whereas arbitrators enjoy statutory immunity from suit in negligence, experts do not unless agreed to by the parties.

In Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205, Bell P explains the difference between an arbitrator and an expert as follows: [5.340]  283

Civil Procedure in New South Wales

[18] McHugh JA, when a judge of this Court, had explained in Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 at 336 the meaning of the phrase “acting as an expert and not as an arbitrator”. It will be recalled that, in the present case, the valuer appointed under cl 4 is to act “as an expert and not as an arbitrator”: cl 4.5(e). McHugh JA (as he then was) said as follows: … those words which have been commonly used in agreements since the Common Law Procedure Act 1854 serve the purpose of excluding the provisions of the Arbitration Act 1902. They avoid the necessity for the valuer to hear evidence and the parties and to determine judicially between them. They enable him to rely on his own investigations, skill and judgment:  Re Dawdy (1885) 15 QBD 426 at 429, 430. Indeed they reinforce the view that the parties, as between themselves, rely on the honest and impartial skill and judgment of the valuer. (Emphasis added)

[19] In Re Dawdy (1885) 15 QBD 426, to which McHugh JA referred, Lord Esher MR observed at 430 that: … if a man is, on account of his skill in such matters, appointed to make a valuation, in such a manner that in making it he may, in accordance with the appointment, decide solely by the use of his eyes, his knowledge, and his skill, he is not acting judicially; he is using the skill of a valuer, not of a judge. In the same way, if two persons are appointed for a similar purpose, they are not arbitrators, but only valuers. They have to determine the matter by using solely their own eyes, and knowledge, and skill.

[20] Similarly, in Palacath Ltd v Flanagan [1985] 2 All ER 161, Mars-​Jones J said at 166: In the instant case the defendant was specifically enjoined in cl 8 of the second schedule to act as an expert, and was not to be limited or fettered in any way by the statement of reasons or valuations submitted by the parties, but was entitled to rely on his own judgment and opinion. In the light of those express provisions it is impossible for me to hold that the parties intended that the defendant should act as an arbitrator or quasi-​arbitrator in determining the revised rent. I am satisfied that the provisions of cl 8 were not intended to set up a judicial or quasi-​judicial machinery for the resolution of this dispute or difference about the amount of the revised rent. Its object was to enable the defendant to inform himself of the matters which the parties considered were relevant to the issue. He was not obliged to make any finding or findings accepting or rejecting the opposing contentions. Nor, indeed, as I  see it was he obliged to accept as valid and binding on him matters on which the parties were agreed. He was not appointed to adjudicate on the cases put forward on behalf of the landlord and the tenant. He was appointed to give his own independent judgment as an expert, after reading the representations and valuations of the parties (if any) and giving them such weight as he thought proper (if any). (Emphasis added)

[21] See also Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2008] QCA 160 at [78] ff per Muir JA. In that case, Atkinson J (although dissenting in the result) summarised at [118] the characteristics of expert determination, as distinct from arbitration, as follows: • Whilst there may be a dispute in existence rather than just a determination to avoid a dispute, there but will ordinarily be a dispute of a kind which can be determined in an informal way by reference to the specific technical knowledge or learning of the expert: Capricorn Inks v Lawter International at 15, 28; Zeke Services v Traffic Technologies at [24]. … • The appointee is directed to make an appraisal in money terms of property value or loss or damage or the like by the use of some special knowledge or skill possessed by him or her: In

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Re an Arbitration Between Dawdy and Hartcup (1885) 15 QBD 426 at 430; Capricorn Inks v Lawter International at 28. … • It has the advantage of being expeditious and economical. This is so because an expert determination is informal and experts apply their own store of knowledge and expertise to their observation of the facts, which are of a kind with which they are familiar: Zeke Services v Traffic Technologies at [27]; Straits Exploration v Murchison United (2005) 31 WAR 187 at 192. … • Experts, unlike arbitrators, can undertake their own investigations, without disclosing them to the parties and generally can determine the question before them according to their own experience without being constrained by the contentions of competing parties: AGE Ltd v Kwik Save Stores Ltd at 148,151. • Experts are entitled to act solely on their own expert opinion:  Palacath Ltd v Flanagan at 166.

[5.340]  285

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Before a Civil Action Commences [6.10] INTRODUCTION......................................................................................................... 287 [6.20] JURISDICTION............................................................................................................. 288 [6.30] CROSS-​VESTING LEGISLATION.................................................................................... 288 [6.40] BHP Billiton v Schultz......................................................................... 289 [6.60] LIMITATION PERIODS.................................................................................................. 295 [6.60] Definition and rationale............................................................................... 295 [6.70] Brisbane South Regional Health Authority v Taylor................................... 296 [6.80] Specific limitation periods........................................................................... 297 [6.85] Limitation periods are substantive law......................................................... 298 [6.90] John Pfeiffer v Rogerson...................................................................... 298 [6.93] Contract and tort limitation periods in New South Wales............................ 299 [6.96] Limitation Act 1969 (NSW) ss 14, 14B, 16............................................. 300 [6.100] Personal injury limitation periods in New South Wales................................. 300 [6.110] Limitation Act 1969 (NSW) ss 50C–​50F, 62A, 62B, 62D........................... 301 [6.120] Baker-​Morrison v New South Wales...................................................... 305 [6.130] Frizelle v Bauer................................................................................. 310 [6.135] New South Wales v Gillett.................................................................. 313 [6.138] Baggs v University of Sydney Union...................................................... 319 [6.140] Postponement of the limitation period........................................................ 323 [6.145] Limitation Act 1969 (NSW) ss 52–​56.................................................... 323 [6.150] INTERIM PRESERVATION ORDERS................................................................................ 327 [6.160] Uniform Civil Procedure Rules 2005 (NSW) rr 25.1–​25.9........................... 327 [6.163] Interim injunctions...................................................................................... 329 [6.166] Australian Broadcasting Corporation v O’Neill......................................... 330 [6.170] Freezing orders........................................................................................... 331 [6.180] Jackson v Sterling Industries................................................................ 332 [6.186] Marango Investments v Kingdom Towers............................................... 334 [6.190] Cardile v LED Builders........................................................................ 335 [6.200] Uniform Civil Procedure Rules 2005 (NSW) rr 25.10–​25.17....................... 341 [6.210] Practice Note SC Gen 14.................................................................... 343 [6.220] Search orders.............................................................................................. 346 [6.230] Uniform Civil Procedure Rules 2005 (NSW) rr 25.18–​25.24....................... 346 [6.240] Practice Note SC Gen 13.................................................................... 348 [6.250] Findex Group Ltd v McKay.................................................................. 351 [6.260] Privilege against self-​incrimination and Pt 25............................................... 354 [6.265] Evidence Act 1995 (NSW) s 128A........................................................ 355

INTRODUCTION [6.10]  Before launching a civil action, it is important for the prospective plaintiff to consider

a number of issues: • The cause of action/​s and remedies should be identified. Parties will need to evaluate the facts to determine whether the facts give rise to a cause/​s of action and the evidence that is required to prove the claim. • The disadvantages of litigation need to be carefully considered before commencing court proceedings. Litigation is uncertain, time-​consuming and costly. It also impacts on business

[6.10]  287

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relationships and can strain personal ones. Litigation has inherent risks, eg witnesses may not come up to proof at the trial. Finally, there can only be one winner at the end of the litigation. • Whether the party has the funds to litigate the matter and the consequences that may eventuate should the party not succeed in the litigation are also important factors to consider. Even though the majority of personal injury litigation is conducted for plaintiffs on a speculative basis, the prospective plaintiff may still need to fund the costs of disbursements and if the prospective plaintiff loses the litigation then any assets they have may be needed to cover the defendant’s legal costs. • The prospective plaintiff will need to investigate whether the potential defendant has assets to satisfy any judgment. There is no point litigating unless the defendant can satisfy any judgment debt. • The prospective plaintiff should investigate whether the dispute can be resolved without litigation. It is customary for the aggrieved plaintiff to send a letter of demand before commencing proceedings. However, early dispute resolution, such as mediation, may also be of great benefit. This chapter looks at the issues which may arise before proceedings are commenced, that is, prior to the filing of the originating process. The issues examined are: • jurisdictional issues; • limitation periods; and • interim preservation orders (such as a freezing order or a search order).

JURISDICTION [6.20] Before court proceedings can be commenced, a prospective plaintiff will need to

consider whether the court in which it is proposed to commence proceedings has jurisdiction to hear the case (see Chapter 1 discussion of the hierarchy of courts in New South Wales). A party will need to consider the appropriate forum for bringing a claim. This will depend on the subject matter and value of the claim. The jurisdictional monetary limits are discussed in Chapter 1. If the plaintiff seeks equitable relief then it can only be granted by the Supreme Court, however, the District Court has some equitable jurisdiction (see District Court Act 1973 (NSW) s 134). If a party seeks a legislative remedy then it must sue in the court or tribunal specified by the legislation, for example a building claim pursuant to the Home Building Act 1989 (NSW) is brought in the NSW Civil and Administrative Tribunal (NCAT).

CROSS-​VESTING LEGISLATION [6.30] The Commonwealth and each of the States and Territories passed cross-​ vesting

legislation. The Commonwealth passed the Jurisdiction of Courts (Cross-​vesting) Act 1987 (Cth). The legislation was in response to problems that developed where litigants were unable to have all disputed issues determined in the one court, for example, an incident could give rise to claims for breaches of federal legislation and under state legislation and/​or common law. The prospective plaintiff, before cross-​vesting legislation, would be required to litigate claims in the Federal Court and a State court. 288 [6.20]

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The original cross-​vesting legislation took effect from 1 July 1988 and invested each court in the scheme with the civil jurisdiction of each of the other courts. The courts in the scheme are the Federal Court, the Family Court, the Supreme Courts of each of the States and Territories and the Family Court of Western Australia. The legislation also permitted the transfer of cases in another court within the scheme, if that court was the most appropriate court. In Re Wakim Ex parte McNally (1999) 198 CLR 511, the constitutional validity of the cross-​vesting legislation was challenged and a part of the scheme was held to be invalid. The High Court held the scheme was invalid to the extent that it gave State jurisdiction to federal courts. Put another way, State Acts cannot confer jurisdiction in State matters on the Federal Court and Family Court. However, the provisions in the Jurisdiction of Courts (Cross-​vesting) Act 1987 (Cth) relating to conferral of federal jurisdiction on State courts (which is authorised by Ch III of the Constitution), and the conferral by the States of jurisdiction in State matters on the courts of other States and Territories and the provisions for transfer of proceedings between such courts, survive. The cross-​vesting scheme was amended after Wakim and now only provides: • conferral of federal jurisdiction on State courts (s 4 of the Jurisdiction of Courts (Cross-​ vesting) Act 1987 (Cth)); • cross-​vesting of State jurisdiction among State courts (eg, s 4 of the Jurisdiction of Courts (Cross-​vesting) Act 1987 (NSW)); and • transfer of proceedings between courts participating in the scheme (s 5 of the Jurisdiction of Courts (Cross-​vesting) Act 1987 (NSW)). This transfer is to the most appropriate court. Transfer is possible if both the transferring court and the court to which it is sought to transfer the proceedings have jurisdiction.

BHP Billiton v Schultz [6.40]  BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400 [Trevor Schultz suffered from asbestosis and asbestos-​related pleural disease and sued BHP for negligence, breach of contract and breach of statutory duty in the Dust Diseases Tribunal of New South Wales (the Tribunal). Mr Schultz also brought proceedings against four other corporations (the second to fifth respondents in the High Court appeal) who were allegedly negligent in the manufacture and supply of the asbestos materials. BHP applied pursuant to s 5 of the Jurisdiction of Courts (Cross-​vesting) Act 1987 (NSW) (the Cross-​vesting Act) to remove the proceedings from the NSW Dust Diseases Tribunal to the Supreme Court of New South Wales, and transfer them to the Supreme Court of South Australia. Justice Sully in the Supreme Court refused the application. BHP appealed to the High Court.] GLEESON CJ, MCHUGH and HEYDON JJ [3]‌At the time of the commencement of the proceedings, the first respondent [Trevor Schultz] was a resident of South Australia. The appellant [BHP] is incorporated in Victoria, and carries on business both in South Australia and in New South Wales. The second respondent is incorporated in the United Kingdom, and is registered as a foreign corporation in New South Wales. The third and fourth respondents are incorporated in the Australian Capital Territory. The fifth respondent is incorporated in New South Wales. According to the first respondent, products containing the asbestos were manufactured, sold and supplied to the appellant and the second respondent in New South Wales by the fifth respondent. According to the appellant, the products were supplied to the appellant in South Australia. There are cross-​claims between the appellant and the respondents other than the first respondent. [6.40]  289

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BHP Billiton v Schultz cont. [4]‌ … In this Court, the first respondent did not challenge the view that the law of South Australia would be the substantive law that would govern his claim against the appellant, but asserted that the law of New South Wales could govern some of the claims against the other respondents and the cross-​claims. [5]‌Subject to proof of exposure and diagnosis, liability will not be in issue between the first respondent on the one hand and the appellant and the other respondents on the other hand. Subject to the qualification mentioned, the only issues affecting the first respondent will relate to damages and a claim that a limitation period has expired. The lay witnesses, and most (but not all) of the medical witnesses, reside in South Australia. [6]‌Sully J pointed out that s 11A of the Dust Diseases Tribunal Act 1989 (NSW) (“the Tribunal Act”), a provision unique to the Tribunal, empowered the Tribunal to make an award of damages in stages. That section provides: (2) The Tribunal may … (a) award damages assessed on the assumption that the injured person will not develop another dust-​related condition, and (b) award further damages at a future date if the injured person does develop another dust-​related condition. The first respondent sought from the Tribunal an order preserving his right to make a future and additional claim for damages should he develop any of the conditions of asbestos-​induced lung cancer, asbestos-​induced carcinoma of any other organ, pleural mesothelioma, or peritoneal mesothelioma. The Cross-​vesting Act [7]‌The purpose of the proposed removal of the proceedings from the Tribunal to the Supreme Court of New South Wales under s 8 of the Cross-​vesting Act was so that it could then be transferred to the Supreme Court of South Australia under s 5 of the same Act. The criterion for transfer established by s 5 is that it is in the interests of justice that the proceedings be determined in the Supreme Court of South Australia. [8]‌From the outset, it has been recognised by courts applying the Cross-​vesting Act that, although an application for transfer under s 5 will often involve evidence and debate about matters of the same kind as arise when a court is asked to grant a stay of proceedings on the ground of forum non conveniens, there are differences between the two kinds of application. Because of one controversial aspect of the reasoning of Sully J, it is useful to refer to some matters of history in order to explain those differences. [9]‌The current English common law on the subject of forum non conveniens was established by the decision of the House of Lords in Spiliada Maritime Corp v Cansulex Ltd [ [1987] AC 460]. The current Australian common law is to be found in the decision of this Court in Voth v Manildra Flour Mills Pty Ltd [ [1990] HCA 55; (1990) 171 CLR 538]. To the extent to which they differ, the difference can be traced to a view about the nature of the power to stay proceedings. [10] The earlier English view, overturned later by the House of Lords, was expressed by Scott LJ in St Pierre v South American Stores (Gath & Chaves) Ltd [ [1936] 1 KB 382 at 398]: “A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English Court if it is otherwise properly brought. The right of access to the King’s Court must not be lightly refused.” That approach, which stressed the duty of a court to exercise a jurisdiction that had been regularly invoked, was abandoned in England. In Spiliada [[1987] AC 460 at 476], Lord Goff of Chieveley said that a stay would be granted on the ground of forum non conveniens “where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably for the interests of all the parties and the ends of justice.”

290 [6.40]

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BHP Billiton v Schultz cont. [11] When Spiliada was first considered by this Court, in Oceanic Sun Line Special Shipping Company Inc v Fay [ [1988] HCA 32; (1988) 165 CLR 197], some members of the Court expressed concern about the “duty of an Australian court to exercise its jurisdiction” [ [1988] HCA 32; (1988) 165 CLR 197 at 238 per Brennan J]. Deane J said: “It is a basic tenet of our jurisprudence that, where jurisdiction exists, access to the courts is a right. It is not a privilege which can be withdrawn otherwise than in clearly defined circumstances” [[1988] HCA 32; (1988) 165 CLR 197 at 252]. Later, in Voth [[1990] HCA 55; (1990) 171 CLR 538], this Court settled upon the “clearly inappropriate forum” test as the basis of granting a stay of proceedings. The reason for adopting a test somewhat stricter than the English test emerges from the joint judgment of Mason CJ, Deane, Dawson and Gaudron JJ in Voth, which referred back to what Deane J had said in Oceanic, and stated that “[t]‌he selected forum’s conclusion that it is a clearly inappropriate forum is a persuasive justification for the court refraining from exercising its jurisdiction” [[1990] HCA 55; (1990) 171 CLR 538 at 559]. This emphasis upon the need for justification of a judicial refusal to exercise a jurisdiction that has been regularly invoked underlay the selection of the “clearly inappropriate forum” test, in contrast to the modern English test. It has overtones of what Scott LJ said in St Pierre about the right of access to a court being something that is not lightly refused. [12] The national scheme of legislation, of which the Cross-​vesting Act is a part, was intended to operate, and to be applied, in a different juridical context. This was clearly stated in the first case to come before the Court of Appeal of New South Wales under the Cross-​vesting Act, Bankinvest AG v Seabrook [ (1988) 14 NSWLR 711]. It has been recognised by the Court of Appeal in later cases in which jurisdiction of one kind or the other has been invoked. [13] In Bankinvest, Street CJ said: The cross-​vesting legislation passed by the Commonwealth, the States and the Territories both conferred on each of the ten courts Australia-​wide jurisdiction and set up the mechanism regulating the transferring of proceedings from one of these ten courts to another. In relation to transfer, the common policy reflected in each of the individual enactments is that there must be a judicial determination by the court in which proceedings are commenced either to transfer or not to transfer the proceedings to one of the other nine based, broadly speaking, upon consideration of the interests of justice … It calls for what I might describe as a “nuts and bolts” management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute. [14] In the context of the Cross-​vesting Act, one is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice. An application for transfer under s 5 of the Cross-​ vesting Act is brought upon the hypothesis that the jurisdiction of the court to which the application is made has been regularly invoked. If it appears to that court that it is in the interests of justice that the proceedings be determined by another designated court, then the first court “shall transfer” the proceedings to that other court. There is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it should be exercised. It is not necessary that it should appear that the first court is a “clearly inappropriate” forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate. [15] The reason why a plaintiff has commenced proceedings in a particular court might, or might not, concern a matter related to the interests of justice. It might simply be that the plaintiff’s lawyers have their offices in a particular locality. It is almost invariably the case that a decision as to the court in which an action is commenced is made by the plaintiff’s lawyers, and their reasons for making that choice may be various. To take an example at the other extreme, it might be because a plaintiff is near death, and has a much stronger prospect of an early hearing in one court than in another. The interests of justice are not the same as the interests of one party, and there may be interests wider than those of either party to be considered. Even so, the interests of the respective [6.40]  291

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BHP Billiton v Schultz cont. parties, which might in some respects be common (as, for example, cost and efficiency), and in other respects conflicting, will arise for consideration. The justice referred to in s 5 is not disembodied, or divorced from practical reality. If a plaintiff in the Tribunal were near to death, and, in an application such as the present, it appeared that the Supreme Court to which transfer was sought could not deal with the case expeditiously, that would be a consideration relevant to the interests of justice. Justice would ordinarily dictate that the interest of the plaintiff in having a hearing would prevail over the interest of the defendant in such benefit as it might obtain from the plaintiff’s early death. The capacity of the Tribunal to deal expeditiously with cases has always, and rightly, been regarded as relevant to the interests of justice, bearing in mind the condition of many sufferers from dust diseases. [16] On the other hand, there may be conflicting interests of such a kind that justice would not attribute greater weight to one rather than the other. The advantage which a plaintiff might obtain from proceeding in one court might be matched by a corresponding and commensurate disadvantage to a defendant. The reason why a plaintiff commenced proceedings in one court might be the same as the reason why the defendant seeks to have them transferred to another court. In such a case, justice may not dictate a preference for the interests of either party. [17] As was pointed out in John Pfeiffer Pty Ltd v Rogerson [ [2000] HCA 36; (2000) 203 CLR 503 at 517], the ordinary basis of jurisdiction of common law courts in personal actions is the presence of the defendant within the court’s territory, and the defendant’s resulting amenability to the court’s process. In most cases, the jurisdiction of an Australian court, in the sense of authority to decide, depends upon the location of the defendant, rather than that of the plaintiff. Suing a large corporation in the place where it has its headquarters would not ordinarily be regarded as “forum-​shopping”, although the location of the headquarters would not necessarily be decisive as to which was the most appropriate forum. John Pfeiffer Pty Ltd v Rogerson involved an action brought in the Supreme Court of the Australian Capital Territory, against a company which had its principal place of business in the Territory, for damages for personal injury arising out of a work-​related accident in New South Wales. No one suggested that the Australian Capital Territory was an inappropriate forum. The decision of this Court established that the law governing the quantum of damages, which was treated as a matter of substance, was the lex loci delicti, the law of New South Wales. [18] There is nothing unusual, either in the State or the federal judicature, about actions between residents of different Australian law areas. Federal diversity jurisdiction is an obvious example. Actions in New South Wales courts are commonly brought by residents of other States, especially when the residence or principal place of business of the defendant is New South Wales. Reference is sometimes made to one forum or another being the “natural forum”. Such a description is usually based upon a consideration of “connecting factors”, described by Lord Goff in Spiliada [ [1987] AC 460 at 478] as including matters of convenience and expense, such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction. Lord Templeman described such factors as “legion”, and said that it was difficult to find clear guidance as to how they are to be weighed in a particular case [at 465]. Thus, New South Wales might well be the “natural forum” for an action for damages brought by a passenger in a motor vehicle against the driver if they were both residents of New South Wales, even though the injury resulted from a collision that occurred on the other side of the Queensland or Victorian border. [19] In many cases, there will be such a preponderance of connecting factors with one forum that it can readily be identified as the most appropriate, or natural, forum. In other cases, there might be significant connecting factors with each of two different forums. Some of the factors might cancel each other out. If the action is between two individuals, and the plaintiff resides in one law area and the defendant in another, there may be no reason to treat the residence of either party as determinative, although, as already noted, it will ordinarily be the residence of the defendant that is important to establish jurisdiction. Weighing considerations of cost, expense, and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-​vesting applications. 292 [6.40]

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BHP Billiton v Schultz cont. [20] The case of Spiliada, decided as it was in a different context, provides an example of the difficulty that might attend an identification of a “natural” forum for litigation. It involved an action by shipowners against shippers for damages resulting from the condition of cargo when loaded, which caused corrosion to the vessel. The cargo was loaded in Canada, for transportation to India. The shipowners were Liberian. Their management was in Greece, although some part of the management took place in England. The shippers carried on business in Canada. Process was served in Canada. The contract of carriage was governed by English law, a factor which the House of Lords said might be of great importance in some cases and of little importance in others [at 481]. The contention that Canada was a more appropriate forum than England was rejected. A decisive consideration was said to be the experience of the English trial judge, the trial lawyers, and the experts, gained in dealing with earlier complex litigation arising out of the same events. That experience was regarded as crucial even though “the convenience of the parties and the witnesses probably tilted the scales towards British Columbia” [484–​485]. Lord Templeman regarded it as significant that the insurers of both the parties to the litigation were English [at 465]. That may be a practical reason why a high proportion of commercial litigation in London involves foreign parties. The conclusion of the House of Lords, that England was no less appropriate a forum than Canada, illustrates the wide range of factors that might govern appropriateness. [21] There will often be overlapping, but there is no necessary coincidence, between factors which connect litigation to a forum, and factors which motivate one party to prefer, and another party to resist, litigating in that forum. In the context of the Cross-​vesting Act, the treatment by the Court of Appeal of New South Wales, in James Hardie & Coy Pty Ltd v Barry [ (2000) 50 NSWLR 357], of the special procedural powers of the Tribunal is illuminating. The Court of Appeal pointed out that these were not merely forensic advantages to one party that represented a corresponding disadvantage to the other party, but were factors relevant to a decision under s 5 because they have the capacity to assist both plaintiffs and defendants in the efficient and economical resolution of disputes, and therefore serve the public interest. The reasoning of the primary judge [22] The reasoning of Sully J in the present case must be read together with his reasons in an earlier case of BHP Co Ltd v Zunic, which he imported by reference. Sully J acknowledged the difference between an application for a stay of proceedings on forum non conveniens grounds and a transfer application under s 5 of the Cross-​vesting Act. In Zunic, he referred to Bankinvest AG v Seabrook and James Hardie & Coy Pty Ltd v Barry as the principal authorities for him to follow. He was correct to do so. In Zunic, he described the ultimate question as being: which is the more appropriate forum, upon a fair balancing of all the factors defining the relevant “interests of justice”. No one suggests that was erroneous. In both Zunic and the present case, he listed a series of factors relevant to the interests of justice, and explained how he took them into account. Most of those factors are uncontroversial. [23] There were differences between Zunic and the present case. In particular, the plaintiff in Zunic was an elderly man with a short life expectancy. The position of the first respondent is somewhat different. In the present case, Sully J placed particular stress on the Tribunal’s powers under s 11A of the Tribunal Act. He referred to a medical prognosis of a possible future deterioration in the first respondent’s condition. The prognosis was uncertain. He said that the first respondent’s case was “very different” from that of Mr Zunic in that it did not require an expedited hearing. He said, however, that it was “important … to keep open to Mr Schultz the very unusual advantages that are conferred by s 11A of the Tribunal Act”. This observation was made against the background of a statement of principle, expressed in Zunic, and incorporated by reference in the present case, that a plaintiff’s own choice of forum “ought not lightly to be overridden”. [24] This, on the appellant’s submission, is where the primary judge fell into error. Notwithstanding his general reference to a fair balancing of all the factors defining the relevant interests of justice, the exercise was weighted in favour of the plaintiff in two ways that worked in combination: first, the [6.40]  293

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BHP Billiton v Schultz cont. plaintiff’s choice of forum was “not lightly to be overridden” secondly, the “unusual advantages” conferred on a plaintiff by s 11A were to be kept open. [25] As to the first of those considerations, it is, as the appellant submits, redolent of the Australian forum non conveniens approach, which begins from the premise that a court whose jurisdiction has been regularly invoked needs to justify a refusal to exercise that jurisdiction. For the reasons explained earlier, and developed at some length in Bankinvest, that is not the starting point for a consideration of a transfer application under the Cross-​vesting Act, where a court is simply applying a statute without any kind of presumption as to where the balance of the interests of justice might come down. The idea that a plaintiff’s choice is not lightly to be overridden echoes the statement of Scott LJ in St Pierre that a right of access to a court must not be lightly refused. That idea is still influential in the Australian approach to forum non conveniens, but it is out of place in a decision about s 5 of the Cross-​vesting  Act. [26] The second, and closely related, consideration gives rise to a number of difficulties. Sully J accepted that the substantive law governing the action, whether it was dealt with in the Tribunal or in the Supreme Court of South Australia, would be the law of South Australia, not the law of New South Wales. The law of South Australia concerning the assessment of damages in actions for personal injury is partly common law and partly statute. The statute law includes s 30B of the Supreme Court Act 1935 (SA), which is set out in the reasons of Callinan J. That section empowers the Supreme Court to make interim awards of damages. Sully J was not referred to it. There was debate in this Court as to whether the two statutory provisions, s 11A of the Tribunal Act, and s 30B of the South Australian Supreme Court Act, are substantive or procedural. They are significantly different, although both modify the common law, and could have an important effect on the rights of a plaintiff or a defendant. The assumption by Sully J that, if the action proceeded in the Tribunal, the assessment of damages would be governed by s 11A was challenged. It is unnecessary to resolve that question because, even if the assumption were correct, there is no warrant for concluding that the interests of justice dictate that the first respondent should be given, as against the appellant, the benefit of s 11A, or that s 11A of the Tribunal Act should be regarded as a more just dispensation than s 30B of the South Australian Supreme Court Act. They are different approaches to a similar problem by two legislatures within the Australian federation. No doubt the existence of s 11A enables the first respondent to rebut any charge that he is “forum-​shopping”. Let it be accepted that the first respondent has, or at least believes he has, a valid reason for preferring to commence proceedings in the Tribunal. His good faith is not in question. The question is where the interests of justice lie. If, in a particular respect, the first respondent’s assumed advantage and the appellant’s assumed disadvantage are commensurate, the one simply being the converse of the other, then that does not advance the matter. The scales are inappropriately weighted in favour of a plaintiff if a possibility of what might ultimately turn out to be a higher total award of damages is treated as a consideration of justice which argues against transfer and if, in addition, the plaintiff’s choice of venue is treated as a matter not lightly to be overridden. Although Sully J was not given the opportunity to consider how s 30B might operate in this case, the problem would be compounded if a judge were to become involved in comparing the respective merits of New South Wales and South Australian legislation. From whose point of view would those merits be judged? How could a judge form a preference between the public policy reflected in an Act of the Parliament of New South Wales and the public policy reflected in an Act of the Parliament of South Australia? If it came to that point, the appropriate course would be for the judge to draw back, and to consider the interests of justice by reference to more neutral factors. [27] As we have already indicated, we do not suggest that the interests of justice properly to be taken into account will be unrelated to the interests of one party or another. We do not doubt that, in the case of Zunic, it was entirely appropriate for Sully J to take into account the plaintiff’s short life expectancy, and the prospect of expedition in the Tribunal. There are cases in which justice may dictate that an interest of one party be given weight. Although in a different context, Lord Goff’s discussion in Spiliada of the “legitimate personal or juridical advantage” shows the kinds of consideration that might sometimes be relevant to a judgment as to the appropriateness of a forum. Yet, in the present case, 294 [6.40]

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BHP Billiton v Schultz cont. the combination of the importance that was attached to the first respondent’s choice of forum, and the treatment of s 11A as a factor relevant to the interests of justice, involved error in the application of s 5 of the Cross-​vesting Act. [28] There are two further matters that should be mentioned. For the reasons given by the Court of Appeal in James Hardie & Coy Pty Ltd v Barry, Sully J was right to attach importance to the procedural and evidentiary advantages offered to all parties in the Tribunal. In assessing the weight to be given to those advantages, however, his Honour may have overlooked the fact that all defendants undertook to give Mr Schultz the benefit of those provisions if the proceedings were transferred. Those undertakings are recorded in the evidence, but they were not mentioned in his Honour’s reasons. Additionally, his Honour was entitled to have regard to the Tribunal’s specialisation and expertise. If there were any doubt about the relevance of that to the appropriateness of the Tribunal as a forum, then it is only necessary to pay attention to the facts of Spiliada, the actual decision in that case, and the consideration that was regarded there as determinative [some footnotes omitted]. [Their Honours found that Justice Sully’s decision not to transfer the proceedings was affected by material error and that the matter should be remitted to the Supreme Court of New South Wales for further consideration in accordance with the reasons of this court. Kirby, Hayne, Callinan and Heydon JJ delivered separate judgments. They concluded that the interests of justice dictated that the Supreme Court of South Australia was the appropriate forum and that the proceedings should be removed from the Supreme Court of New South Wales and transferred to the Supreme Court of South Australia. The court ordered that the matter be removed from the Supreme Court of New South Wales and transferred to the Supreme Court of South Australia.]

 [6.50]  BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400 shows that the

plaintiff’s choice of tribunal and the reasons for it are not to be taken into account in determining whether the proceedings should be transferred to another court. Factors which could be relevant to the choice of forum include: • the place or places where the parties and/​or witnesses reside or carry on business; • the location of the subject matter of the dispute; • the importance of local knowledge to the resolution of the issues; • the law governing the relevant transaction; • the procedures available in the different courts; • the likely hearing dates in the different courts; and • whether it is sought to transfer the proceedings to a specialised court, for example, the Family Court: see Lambert v Dean (1989) 97 FLR 352.

LIMITATION PERIODS Definition and rationale [6.60]  The time period within which to bring a claim is referred to as the “limitation period”.

There are various statutes which dictate the time within which a plaintiff must commence an action. The limitation period of a cause of action will need to be considered before commencing a claim. Sometimes different limitation periods will apply to the plaintiff’s statement of claim [6.60]  295

Civil Procedure in New South Wales

if several causes of action are pleaded.1 The rationale for imposing limitation periods is discussed by McHugh J in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541.

Brisbane South Regional Health Authority v Taylor [6.70]  Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 MCHUGH J For nearly 400 years, the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that “[w]‌here there is delay the whole quality of justice deteriorates” [R v Lawrence [1982] AC 510 at 517 per Lord Hailsham of St Marylebone LC]. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wing [ (1972) 407 US 514 at 532], “what has been forgotten can rarely be shown”. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now “knowing” that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose. Even before the passing of the Limitation Act 1623 (Imp), many civil actions were the subject of time limitations [Bacon, New Abridgment of the Law, 5th ed (1798), vol 4 at 461 et seq]. Moreover, the right of the citizen to a speedy hearing of an action that had been commenced was acknowledged by Magna Carta itself [cap 40, Magna Carta]. Thus for many centuries the law has recognised the need to commence actions promptly and to prosecute them promptly once commenced. As a result, courts exercising supervisory jurisdiction over other courts and tribunals in their jurisdictions have power to stay proceedings as abuses of process if they are satisfied that, by reason of delay or other matter, the commencement or continuation of the proceedings would involve injustice or unfairness to one of the parties [Walton v Gardiner [1992] HCA 12; (1993) 177 CLR 378]. The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost [Jones v Bellgrove Properties Ltd [1949] 2 KB 700 at 704]. Second, it is oppressive, even “cruel”, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed [RB Policies at Lloyd’s v Butler [1950] 1 KB 76 at 81–​82]. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period. As the New South Wales Law Reform Commission has pointed out [New South Wales Law Reform Commission, Limitation of Actions for Personal Injury Claims (1986) LRC 50 at 3]:

1

In New South Wales, where an action is subject to two or more legislative provisions in the Limitation Act 1969 (NSW) which each specify a different limitation period, then the earliest date applies: Limitation Act 1969 (NSW) s 13.

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Brisbane South Regional Health Authority v Taylor cont. The potential defendant is thus able to make the most productive use of his or her resources and the disruptive effect of unsettled claims on commercial intercourse is thereby avoided. To that extent the public interest is also served. Even where the cause of action relates to personal injuries, it will be often just as unfair to make the shareholders, ratepayers or taxpayers of today ultimately liable for a wrong of the distant past, as it is to refuse a plaintiff the right to reinstate a spent action arising from that wrong. The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible. In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature’s judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated. … Legislatures enact limitation periods because they make a judgment, inter alia, that the chance of an unfair trial occurring after the limitation period has expired is sufficiently great to require the termination of the plaintiff’s right of action at the end of that period. When a defendant is able to prove that he or she will not now be able to fairly defend him or herself or that there is a significant chance that this is so, the case is no longer one of presumptive prejudice. The defendant has then proved what the legislature merely presumed would be the case. Even on the hypothesis of presumptive prejudice, the legislature perceives that society is best served by barring the plaintiff’s action. When actual prejudice of a significant kind is shown, it is hard to conclude that the legislature intended that the extension provision should trump the limitation period. The general rule that actions must be commenced within the limitation period should therefore prevail once the defendant has proved the fact or the real possibility of significant prejudice. In such a situation, actual injustice to one party must occur. It seems more in accord with the legislative policy underlying limitation periods that the plaintiff’s lost right should not be revived than that the defendant should have a spent liability reimposed upon it. This is so irrespective of whether the limitation period extinguishes or merely bars the cause of action.

 Specific limitation periods [6.80]  The following table summarises the various limitation periods that exist for various

civil causes of action. Generally, the limitation period begins to run upon accrual of a cause of action and is stopped by the commencement of proceedings. In contract, time runs from the date of breach. In tort, damage must be suffered before the limitation period commences. If proceedings are not commenced within the limitation period, then the time for bringing the action has expired which means that the cause of action is unenforceable. However, for some actions, a plaintiff may apply for an extension of time within which to bring their claim.2 The limitation period may be postponed in certain circumstances (see [6.140]). 2

See, for example, extension provision for defamation (Limitation Act 1969 (NSW) s 56A). Note that in New South Wales, the limitation period on a cause of action for personal injuries may be extended, where the cause of action accrued before 1 September 1990 and there was a belated discovery of material facts (Limitation Act 1969 (NSW) ss 57, 57A). Extension provisions apply to actions for damages for negligence, nuisance and breach of duty, where the damages consist of, or include, damages for personal injury (Limitation Act 1969 (NSW) s 58). For causes of action in negligence, nuisance, or breach of duty for damages for personal injury which accrue on or after 1 September 1990 but before 6 December 2002, the [6.80]  297

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Cause of action

Period

Contract

six years from the date on which the cause of action accrues to the plaintiff (Limitation Act 1969 (NSW) s 14(1)(a))

Tort general

six years from the date on which the cause of action accrues to the plaintiff (Limitation Act 1969 (NSW) s 14(1)(b))

Breach of trust or recovery of trust properties

six years from the date on which the cause of action accrues to the plaintiff (Limitation Act 1969 (NSW) s 48)

Cause of action founded on a deed

12 years from the date on which the cause of action accrues to the plaintiff (Limitation Act 1969 (NSW) s 16)

Recovery of land

12 years from the date on which the cause of action accrues to the plaintiff (Limitation Act 1969 (NSW) s 27(2))

Defamation

one year from the date of publication (Limitation Act 1969 (NSW) s 14B)

Personal injury (after 5 December 2002)

three years from the date on which the cause of action is discoverable by the plaintiff or 12 years running from the time of the act or omission alleged to have resulted in the injury or death, whichever period is the first to expire (Limitation Act 1969 (NSW) s 50C(1)(a) or 50C(1)(b))

Work injury

three years after the date on which the injury was received (Workers Compensation Act 1987 (NSW) s 151D)

Motor accident

three years after the date of the motor accident (Motor Accidents Compensation Act 1999 (NSW) s 109)

Limitation periods are substantive law [6.85] Limitation periods are a matter of substantive law (not procedural law) and are

governed by the law that governs the cause of action: John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503.

John Pfeiffer v Rogerson [6.90]  John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 GLEESON CJ, GAUDRON, MCHUGH, GUMMOW and HAYNE JJ [98] Some statutes of limitation have traditionally been held to be procedural on the basis that they bar the remedy not the right [Huber v Steiner (1835) 2 Bing (NC) 202 [132 ER 80]; Harris v Quine (1869) LR 4 QB 653; Alliance Bank of Simla v Carey (1880) 5 CPD 429; Noske v McGinnis [1932] HCA 32; (1932) 47 CLR 563; Pedersen v Young [1964] HCA 28; (1964) 110 CLR 162; John Robertson & Co Ltd v Ferguson Transformers Pty Ltd [1973] HCA 21; (1973) 129 CLR 65; Bargen v State Government Insurance Office (Q) [1982] HCA 22; (1982) 154 CLR 318; The Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 at 473–​474 per Toohey J; McKain v R W Miller & Co (SA) Pty Ltd [1991] HCA 56; (1991) 174 CLR 1]; other limitation provisions have been held to be substantive [Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261; Commonwealth of Australia v Dixon (1988) 13 NSWLR 601 at 611 per Hope JA, 612 per Samuels JA; Byrnes v Groote Eylandt Mining Co Pty Ltd (1990) 19 NSWLR 13 at 25 per Kirby P, 39 per Hope AJA]. But all limitation provisions can affect whether a plaintiff recovers. Questions of what heads of damage are allowable have been held to be substantive but questions of

limitation period of three years can be extended by a court (if it decides that it is “just and reasonable” to do so) for up to a maximum period of five years (Limitation Act 1969 (NSW) ss 60C, 60E). For causes of action for personal injuries accruing on or after 6 December 2002, a person may only apply to the court for an extension of the long-​stop limitation period (Limitation Act 1969 (NSW) ss 50C, 62A, 62B). There are no legislative extension provisions for causes of action in contract, for property damage or for economic loss. 298 [6.85]

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John Pfeiffer v Rogerson cont. quantification of damages have been held to be procedural [Stevens v Head [1993] HCA 19; (1993) 176 CLR 433 at 457 per Brennan, Dawson, Toohey and McHugh JJ cf at 447–​451 per Mason CJ. See also Livesley v Horst Co [1925] 1 DLR 159; J D’Almeida Araujo Lda v Sir Frederick Becker & Co Ld [1953] 2 QB 329; Chaplin v Boys [1971] AC 356; Breavington v Godleman [1988] HCA 40; (1988) 169 CLR 41]. But all questions about damages can affect how much a plaintiff recovers and, thus, statutes such as the NSW Compensation Act, which is in issue in this case, alter the rights of plaintiffs and, also, the obligations of defendants. [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]. [100] These principles may require further elucidation in subsequent decisions but it should be noted that giving effect to them has significant consequences for the kinds of case in which the distinction between substance and procedure has previously been applied. First, the application of any limitation period, whether barring the remedy or extinguishing the right, would be taken to be a question of substance not procedure (which is the result arrived at by the statutes previously referred to). The application of any limitation period would, therefore, continue to be governed (as that legislation requires) by the lex loci delicti. Secondly, all questions about the kinds of damage, or amount of damages that may be recovered, would likewise be treated as substantive issues governed by the lex loci delicti.

 Contract and tort limitation periods in New South Wales [6.93] The limitation period for an action in contract is six years from the date that the

cause of action accrues:  s  14(1)(a) of the Limitation Act 1969 (NSW). When the claim is based on contract under seal or deed the limitation period is 12 years: s 16 of the Limitation Act 1969 (NSW). The general limitation period for actions in tort is six years: s 14(1)(b) of the Limitation Act 1969 (NSW).3 In contract, running of time commences from the date of breach, while for torts which are actionable upon proof of damage, time starts running from the date of damage. Time starts running for torts that are actionable without proof of damage at the time of the wrongful act or when commission occurred. For example, a cause of action in trespass is actionable without proof of damage and accrues at the time of the commission of the act of trespass. In the case of a cause of action for breach of contract, the cause of action accrues at the date of breach, for example, at the date defective work is performed or the date that defective materials are provided. 3

For the limitation periods for causes of action for personal injury, see [6.100]. [6.93]  299

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Limitation Act 1969 (NSW) [6.96]  Limitation Act 1969 (NSW) ss 14, 14B, 16 Division 2 –​General 14 General (1)

An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:



(a)

a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed,



(b)

a cause of action founded on tort, including a cause of action for damages for breach of statutory duty,



(c)

a cause of action to enforce a recognizance,



(d)

a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture.

(2)

This section does not apply to:



(a)

a cause of action to which section 19 applies, or



(b)

a cause of action for contribution to which section 26 applies.

(3)

For the purposes of paragraph (d) of subsection (1), “enactment” includes not only an enactment of New South Wales but also an enactment of the Imperial Parliament, an enactment of another State of the Commonwealth, an enactment of the Commonwealth, an enactment of a Territory of the Commonwealth and an enactment of any other country.

14B Defamation An action on a cause of action for defamation is not maintainable if brought after the end of a limitation period of 1 year running from the date of the publication of the matter complained of. 16 Deed An action on a cause of action founded on a deed is not maintainable if brought after the expiration of a limitation period of twelve years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

 Personal injury limitation periods in New South Wales [6.100]  In New South Wales, the limitation period for causes of action for personal injury

which accrued on or after 6 December 2002 is three years from the date of discoverability (“the post-​discoverability limitation period”) or 12 years from the date of the act or omission which allegedly resulted in the injury or death (“the long-​stop limitation period”), whichever period is shorter.4 The amendments to the Limitation Act 1969 (NSW), as it relates to personal injury claims, by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW)

4

Limitation Act 1969 (NSW) ss 50C, 50D. The Limitation Act 1969 still contains provisions for personal injury actions that accrued before 1 September 1990 (see Limitation Act 1969 (NSW) s 14(1)(b)) and for actions that accrued in the period from 1 September 1990 up to and including 5 December 2002 (see Limitation Act 1969 (NSW) ss 18A(1)(b), 18A(2)).

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removed the ability for a plaintiff to proceed out of time by way of seeking an extension of time of the three-​year limitation period from the court.5 Prior to the 2002 amendments to the Limitation Act 1969 (NSW) a plaintiff could seek permission from the court to commence proceedings outside the limitation period.

Limitation Act 1969 (NSW) [6.110]  Limitation Act 1969 (NSW) ss 50C–​50F, 62A, 62B, 62D Division 6 –​Personal injury actions 50C Limitation period for personal injury actions (1)

An action on a cause of action to which this Division applies is not maintainable if brought after the expiration of a limitation period of whichever of the following periods is the first to expire:



(a)

the “3 year post discoverability limitation period”, which is the period of 3 years running from and including the date on which the cause of action is discoverable by the plaintiff,



(b)

the “12 year long-​stop limitation period”, which is the period of 12 years running from the time of the act or omission alleged to have resulted in the injury or death with which the claim is concerned.

Note: The 12 year long-​stop limitation period can be extended by a court under Division 4 of Part 3. (2)

For the purposes of the application of the 3 year post discoverability limitation period to a survivor action, the cause of action is taken to be discoverable by the plaintiff at whichever is the earliest of the following times:



(a)

the date on which the cause of action is discoverable by the deceased if the cause of action is discoverable by the deceased more than 3 years before the death of the deceased,



(b)

the appointment of the plaintiff as the deceased’s personal representative if the cause of action is discoverable by the plaintiff at or before the time of that appointment,



(c)

the date on which the cause of action is discoverable by the plaintiff if the cause of action is discoverable by the plaintiff after the appointment of the plaintiff as the deceased’s personal representative.

(3)

For the purposes of a compensation to relatives action, the 12 year long-​stop limitation period runs from the death of the deceased.

50D Date cause of action is discoverable (1)

For the purposes of this Division, a cause of action is “discoverable” by a person on the first date that the person knows or ought to know of each of the following facts:



(a)

the fact that the injury or death concerned has occurred,



(b)

the fact that the injury or death was caused by the fault of the defendant,



(c)

in the case of injury, the fact that the injury was sufficiently serious to justify the bringing of an action on the cause of action.

5

The limitation period on a cause of action for personal injuries may be extended, where the cause of action accrued before 1 September 1990 and there was a belated discovery of material facts (Limitation Act 1969 (NSW) ss 57, 57A, 58). For causes of action for personal injury which accrue on or after 1 September 1990 but before 6 December 2002, the limitation period of three years can be extended by a court (if it decides that it is “just and reasonable” to do so) for up to a maximum period of five years (Limitation Act 1969 (NSW) ss 60C, 60E). For causes of action for personal injuries accruing on or after 6 December 2002, a person may only apply to the court for an extension of the long-​stop limitation period (Limitation Act 1969 (NSW) ss 50C, 62A, 62B). [6.110]  301

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Limitation Act 1969 (NSW) cont. (2)

A person “ought to know” of a fact at a particular time if the fact would have been ascertained by the person had the person taken all reasonable steps before that time to ascertain the fact.

(3)

In determining what a person knows or ought to have known, a court may have regard to the conduct and statements, oral or in writing, of the person.

(4)

To remove doubt, a compensation to relatives action is not discoverable before the date of death of the deceased.

50E Special limitation period for minors injured by close relatives (1)

If a cause of action is founded on the death of or injury to a person (“the victim”) who was a minor at the time of the act or omission alleged to have resulted in that death or injury and the cause of action is against a person who at that time was a parent or guardian of the victim or a close associate of a parent or guardian of the victim:



(a)

the cause of action is for the purposes of this Division discoverable by the victim when the victim turns 25 years of age or when the cause of action is actually discoverable by the victim, whichever is the later, and



(b)

the 12 year long-​stop limitation period for the cause of action is a period of 12 years running from when the victim turns 25 years of age.

(2)

A person is a “close associate” of a parent or guardian of the victim if the person is a person whose relationship with the parent or guardian is such that:



(a)

the parent or guardian might be influenced by the person not to bring a claim on behalf of the victim against the person, or



(b)

the victim might be unwilling to disclose to the parent or guardian the conduct or events in respect of which the cause of action is founded.

(3)

If the victim dies before turning 25 years of age, the limitation period applicable to a survivor action that survives on the death of the victim is to be determined as if references in this section to when the victim turns 25 years of age were references to the death of the victim.

50F Effect of disability on limitation period (1)

If a person has a cause of action for which a limitation period has commenced to run and the person is under a disability, the running of the limitation period is suspended for the duration of the disability.

(2)

A person is “under a disability” while the person:



(a)

is a minor, but not while the minor has a capable parent or guardian, or



(b)

is an incapacitated person for a continuous period of 28 days or more, but not while the person is a protected person.

(3)

In determining when a cause of action is discoverable by a person who is a minor, or an incapacitated person, who is not under a disability, facts that are known or ought to be known by a capable parent or guardian of the minor or the guardian of the incapacitated person are taken to be facts that are known or ought to be known by the minor or incapacitated person.

(4)

In this section:

“capable parent or guardian” of a minor means a person who is a parent or guardian of the minor and who is not under a disability (as referred to in subsection (2)). “guardian” of a minor includes a person who under a written law of the State is exercising the parental responsibilities of the Minister under the Children and Young Persons (Care and Protection) Act 1998 for the minor.

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Limitation Act 1969 (NSW) cont. “incapacitated person” means a person who is incapable of, or substantially impeded in, the management of his or her affairs in relation to the cause of action in respect of the limitation period for which the question arises, by reason of:

(a)

any disease or any impairment of his or her physical or mental condition, or



(b)

restraint of his or her person, lawful or unlawful, including detention or custody under the Mental Health Act 1990, or



(c)

war or warlike operations or circumstances arising out of war or warlike operations.

“protected person” means:

(a)

a person in respect of whose person another person is guardian, whether under the Guardianship Act 1987 or any other Act or law, or



(b)

a person in respect of whom an order is in force under the NSW Trustee and Guardian Act 2009 or the Guardianship Act 1987 that the estate (or any part of the estate) of the person be subject to management under the NSW Trustee and Guardian Act 2009.

(5)

Sections 52 (Disability) and 53 (Notice to proceed) do not apply to a cause of action to which this Division applies.

62A Extension of 12 year long-​stop limitation period (1)

A person claiming to have a cause of action to which Division 6 of Part 2 applies may apply to a court for the extension of the 12 year long-​stop limitation period applicable to the cause of action under that Division.

(2)

The court is to hear such of the persons likely to be affected by the application as it sees fit and may, if it decides that it is just and reasonable to do so, order the extension of the 12 year long-​ stop limitation period applicable to the cause of action for such period as the court determines, but not so as to extend that period beyond the period of 3 years after the date on which the cause of action is discoverable (within the meaning of Division 6 of Part 2) by the plaintiff.

(3)

If a court orders the extension of the 12 year long-​stop limitation period for a cause of action under this section, that limitation period is accordingly extended for the purposes of:



(a)

an action brought by the applicant in that court on the cause of action that the applicant claims to have, and



(b)

section 26(1)(b) in relation to any associated action for contribution under section 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 brought by the person against whom that cause of action lies.

(4)

The court may, in an order under this section in relation to a cause of action arising under the Compensation to Relatives Act 1897, exclude any beneficiary or class of beneficiaries from the operation of the order, if it decides that it is just and reasonable to do so.

(5)

If a court excludes a beneficiary or class of beneficiaries from the operation of an order under this section, the beneficiary or beneficiaries are to be treated as not being entitled to damages in any action on a cause of action arising under the Compensation to Relatives Act 1897 brought as a consequence of the making of the order.

62B Matters to be considered in determining application for extension of 12 year long-​stop limitation period (1)

In exercising the powers conferred on it by section 62A, a court is to have regard to all the circumstances of the case, and (without affecting the generality of the foregoing), the court is, to the extent that they are relevant to the circumstances of the case, to have regard to the following:



(a)

the length of and reasons for the delay, [6.110]  303

Civil Procedure in New South Wales

Limitation Act 1969 (NSW) cont.

(b)

the extent to which, having regard to the delay, there is or may be prejudice to the defendant by reason that evidence that would have been available if the proceedings had been commenced within the limitation period is no longer available,



(c)

the nature and extent of the plaintiff’s injury or loss,



(d)

any conduct of the defendant that induced the plaintiff to delay bringing the action,



(e)

the steps (if any) taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice the plaintiff may have received,



(f)

the time when the cause of action was discoverable (within the meaning of Division 6 of Part 2) by the plaintiff.

(2)

In the application of this section in respect of a cause of action that has survived on the death of a person for the benefit of the person’s estate under section 2 of the Law Reform (Miscellaneous Provisions) Act 1944, references in subsection (1) to the plaintiff include references to the deceased and the applicant, or any of them, as appropriate in the circumstances.

(3)

In the application of this section in respect of a cause of action arising under the Compensation to Relatives Act 1897, references in subsection (1) to the plaintiff include references to the deceased, the personal representative of the deceased, and the beneficiaries, or any of them, as appropriate in the circumstances.

62D Extension of limitation period where irrational failure to bring action for minor (1)

A person claiming to have a cause of action to which Division 6 of Part 2 applies who was a minor at the time of the act or omission alleged to have resulted in the injury or death with which the cause of action is concerned may apply to a court for the extension of a limitation period applicable to the cause of action on the basis that the failure to bring an action founded on the cause of action within that limitation period is attributable to an irrational decision by a parent or guardian of the person made after the cause of action is discoverable (within the meaning of Division 6 of Part 2) by the parent or guardian.

(2)

If it appears to the court that:



(a)

the limitation period applicable to the cause of action expired before or within 1 year after the applicant reached 18 years of age, and



(b)

the failure to bring an action on the cause of action within that limitation period is attributable to an irrational decision by a parent or guardian of the applicant made while the applicant was a minor, and



(c)

there is evidence to establish the cause of action, apart from any defence founded on the expiration of a limitation period,

the court may order that the limitation period for the cause of action be extended so that it expires at the end of one year after the making of the court’s order. (3)

If a court orders the extension of a limitation period for a cause of action under this section, that limitation period is accordingly extended for the purposes of:



(a)

an action brought by the applicant in that court on the cause of action that the applicant claims to have, and



(b)

section 26(1)(b) in relation to any associated action for contribution under section 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 brought by the person against whom that cause of action lies.



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Baker-​Morrison v New South Wales [6.120]  Baker-​Morrison v New South Wales [2009] NSWCA 35; (2009) 74 NSWLR 454 [On 26 May 2004, the plaintiff, then two years old, was injured at Gosford Police Station when the fingers of her right hand were caught in the automatic sliding doors at the Station. The plaintiff was taken to hospital and required an amputation of part of her right ring and little fingers, together with some reconstruction of the tendons on her ring and middle fingers. The plaintiff’s mother consulted a solicitor on 1 June 2004. The solicitor, on the same day, wrote to the Gosford Police, suggesting that a copy of the letter be forwarded to their public liability insurer “so the correspondence may be commenced concerning a claim for damages”. He also asked that permission be sought from the insurer “to allow a view of the door and surrounds for the purpose of this matter”. Permission was given and the solicitor inspected and photographed the offending door on 4 June 2004. On 21 June 2007, being three years and 26 days after the date on which the plaintiff was injured, a statement of claim was sealed and issued. On 29 June 2007, the statement of claim was served. By notice of motion filed 2 November 2007, the State sought to strike out the claim on the basis that it was statute-​barred, pursuant to s 50C of the Limitation Act 1969 (NSW). Johnstone DCJ ordered that the applicant’s claim be struck out because it had been filed out of time and in circumstances where no power to extend was available. The applicant sought leave to appeal from the judgment and orders of Johnstone DCJ. Leave to appeal was granted. The issue for determination on appeal was whether the cause of action was “discoverable” by the plaintiff’s mother within the 26-​day period after the accident (see s 50F): specifically, whether the plaintiff’s mother was aware, in the relevant period, that the injury to her daughter was “caused by the fault of the defendant” and that the injury was “sufficiently serious to justify the bringing of an action on the cause of action”.] BASTEN JA (IPP and MACFARLAN JJA agreeing) Onus of proof [14] Although the State had not pleaded to the statement of claim, the plaintiff accepted that by filing a notice of motion seeking to strike out that pleading, it was, in effect, giving notice that it sought to rely upon a limitation defence and that the defence warranted summary dismissal of the proceedings. As the moving party on the motion, the State bore the burden of proving the relevant facts: see Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27 at 72–​74 (Brooking, Tadgell and Hayne JJ); Hawkins v Clayton (1986) 5 NSWLR 109 at 142B (McHugh JA); Cassis v Kalfus [2001] NSWCA 460 at [65] (Hodgson JA, Powell and Heydon JJA agreeing); Segal t/​as Segal Litton & Chilton v Fleming [2002] NSWCA 262 at [27] (Hodgson JA, Handley JA and Young CJ in Eq agreeing). To that end, it filed an affidavit of a solicitor which annexed a copy of the letter from the plaintiff’s solicitor to the Police Force dated 1 June 2004 and referred to above. The affidavit referred to no other conduct which had occurred prior to 21 June 2004. Factual background and submissions [15] There was no dispute in the present case that the plaintiff’s mother knew of the injury, as required in par (a) of s 50D(1). That could be inferred from the fact that the injury occurred in her presence and that she took the plaintiff to hospital. The position with respect to the facts identified in pars (b) and (c) was more equivocal, for a number of reasons. [16] The dispute focussed on whether the plaintiff’s mother was aware, in the relevant period, that the injury to her daughter was “caused by the fault of the defendant” (par (b)) and that the injury was “sufficiently serious to justify the bringing of an action on the cause of action” (par (c)). The State argued that it might properly be inferred that the letter of 1 June was sent either on the mother’s instructions or with her knowledge and identified the Police Service as the party responsible for causing her daughter’s injury. (There was no suggestion that anything turned on the fact that the State was the proper defendant in that event.) The State also argued that the plaintiff’s mother was well aware that the injury was serious, because it had involved hospitalisation of the plaintiff, together with an operation on her fingers and multiple post-​operative visits to the hospital.

[6.120]  305

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Baker-Morrison v New South Wales cont. [17] Whether this material could have been sufficient to demonstrate that the plaintiff’s mother had the relevant knowledge in the critical period depended both on the state of satisfaction required by the section and the elements which must constitute the relevant facts required to be known. [18] The plaintiff contended that reference to “fault” in par (b) involved a degree of appreciation of the potential legal liability of the putative defendant. The State, on the other hand, argued that it was sufficient that the plaintiff appreciate that there was a connection between some act or omission of the defendant and the injury and that the relevant act or omission was blameworthy, though not necessarily in a legal sense. [19] With respect to par (c), the plaintiff argued that the seriousness of the injury was not a matter of objective fact, but was an element in an evaluative judgment requiring the seriousness of the injury to be sufficient to justify bringing an action against the defendant. Given the variety of statutory schemes applicable to personal injury claims, and the various limits placed upon the recovery of damages, it was said to be unlikely that par (c) would be capable of assessment by a plaintiff unadvised, except perhaps in quite severe cases. The problems must be exacerbated in respect of injury to a young child. [20] The material before the Court included an assessment (albeit made in 2005) of the degree of “whole person impairment” of the plaintiff, although not a criterion relevant under the Civil Liability Act 2002 (NSW). The plaintiff’s medical expert considered that there was a whole person impairment of 16%, but the State’s expert considered the relevant figure was 1%. This was clearly not a case in which the seriousness of the injury self-​evidently justified the bringing of proceedings. Further, the question is whether such a judgment should have been made by the plaintiff’s mother within 26 days of the injury occurring. [21] The plaintiff’s mother did not give evidence, but her solicitor did. He stated in an affidavit (par 4): I was informed by [the mother] and believed she would wait for my advice before making any decision about a claim for [her daughter]. I was further informed by [the mother] and believed that she had no experience or knowledge in making personal injury claims and would rely on my advice. [22] The solicitor noted that he had attended at the Gosford Police Station on 4 June 2004 and taken photographs of the door and its surroundings. He noticed “an angle iron had been installed at the base” of the door. He agreed, in cross-​examination, that he inferred that such a device was intended to diminish or eliminate the risk of a further injury of the kind suffered by the plaintiff: Tcpt, 17/​06/​08, 29(30)-​(35). However, he also affirmed that he did not on that day form a belief that the plaintiff had reasonable prospects of success in a claim against anyone or that the occupier was at fault in causing the injuries. Further, he expressly stated that he did not convey to the mother that the plaintiff had reasonable prospects of success in making a claim and that the mother did not convey to him at any time before 14 March 2005 that she believed the plaintiff had such prospects: affidavit, par 7. [23] On 9 June 2004 the solicitor wrote to the mother informing her of the inspection and the photographs, and the fact that he had sent a letter of demand, and suggested that “a period of inactivity” should be allowed whilst the plaintiff’s treatment took place and the insurer carried out an investigation. [24] As the State conceded, it was not possible on the basis of this evidence to infer that the mother knew whether the injury was caused by the fault of the State or whether the injury was sufficiently serious to justify bringing an action, if such knowledge required the application of any degree of professional expertise or assessment. Construction of s 50D –​relevant “facts” [25] A cause of action is “discoverable” for the purposes of s 50C if the relevant person has either actual knowledge or what is sometimes described as “constructive” knowledge, being what he or she “ought to know” of certain facts: s 50D(1), set out at [7]‌above. Both limbs require giving content to: (i)

the concept of knowledge, and

(ii)

each of the identified “facts”.

306 [6.120]

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Baker-Morrison v New South Wales cont. [26] These aspects are interrelated, in the sense that if the facts are properly within the understanding and evaluation of a non-​professional, the nature of the person’s knowledge will be different from that which incorporates information or opinion supplied by a professional, on the basis of the exercise of professional expertise. It is therefore convenient to consider first the content of the prescribed facts. In the present case, no issue arose with respect to par (a). The plaintiff’s injury involved a physical wound which was readily apparent to her mother. Although that disposes of par (a) for the purposes of the present case, it should be noted that, in the case of a psychological injury, additional questions will arise. For example, does “injury” refer to compensable injury? If so, must the person have sufficient medical and legal knowledge required to distinguish a “recognised psychiatric illness” from emotional distress as required by the Civil Liability Act, s 33? [27] Some support for a construction which does not import any element of legal knowledge may be found in the repeated use of the word “fact” to describe that which the person knows or ought to know. However, the meaning of that term must be ascertained by reference to the whole of the provision and the possibility that (at least in some circumstances) the relevant fact identified in par (a) (namely, injury or death) is of a different quality to those identified in pars (b) and (c). Furthermore, at least in pars (b) and (c), the singular “fact” is used to describe a composite of inferences or the result of an evaluation. This is a drafting technique which used to be deplored (see Smith v Central Asbestos Co Ltd [1973] AC 518 at 531–​532 (Lord Reid)), but now passes with little protest. However, it deprives reliance on use of the word “fact” of much significance in this statutory context. [28] In par (b), the word “fault” is no doubt capable of having a broad generic meaning, not necessarily confined to that which engages legal liability. The context, on the other hand, gives it a different connotation. That which is identified as “discoverable” for the purposes of s 50C is “the cause of action”. The “fact” contemplated by par (b) is a relationship between two things, namely the injury or death on the one hand and the fault of the defendant on the other. The relevant connection is one of causation. … [36] The Court was provided with no direct assistance in respect of the adoption of the term “fault” in the New South Wales Act. In the Review of the Law of Negligence –​Final Report (2002) (“the Negligence Report”), which triggered the amendments, the particular element was identified by reference to the date on which the plaintiff knew or ought to have known that the injury “was attributable to negligent conduct of the defendant”: at par 6.19. This gives credence to the view that the term “fault” was used generically to cover a possible range of causes of action, an approach consistent with the intention of the Negligence Report that the precise nature of the cause of action should not be determinative: at par 6.14. [37] Although the statutory test is expressed in terms of what the person “knows or ought to know” of the identified facts, the objective element was clearly and expressly identified in the Negligence Report as the primary aspect of discoverability: at par 6.28. As will be noted below, s 50D(2) identifies when a person ought to know a fact on an assumption that the person had “taken all reasonable steps before that time to ascertain the fact”. Taking all reasonable steps must, in appropriate circumstances, include obtaining medical and legal advice and information. That assumption, and the significance given to it in the Negligence Report, remove any curiosity which might otherwise inhere in the conclusion that the concept of “fault” was to be ascertained by reference to legal concepts. … [40] The exercise undertaken by the State in the present case fell far short of demonstrating that the plaintiff’s mother knew, at the relevant time, of any steps which could and should reasonably have been taken by the occupier of the premises to render the sliding door safe. The primary particular of negligence on the statement of claim was a failure to provide “a protective guard or covering along the area of operation of the … sliding glass doors”. Until the plaintiff’s mother was aware (or ought to have been aware) of the availability and reasonable practicability of installation of such a device, she could not be said to be aware that her daughter’s injury was caused by a failure on the part of [6.120]  307

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Baker-Morrison v New South Wales cont. the State to take reasonable care for her safety. These are the terms in which the relevant test under s 50D(1)(b) should be formulated. [41] Although a legal evaluative judgment appears to be required by par (b), that element is even more explicit in par (c). Thus the injury must not only be understood to be serious, but “sufficiently serious to justify” a course of action. Further, that course is “the bringing of an action on the cause of action”, an objective which would appear to require the exercise of both legal and medical expertise. Similar language is found in the identification of material facts as being “of a decisive character” for the purposes of s 57B(1)(c), set out at [12] above. In that provision, the test is stated objectively, by reference to the opinion of a reasonable person, but also by asking whether one “knowing those facts and having taken the appropriate advice on those facts” would hold the identified opinion. [42] The construction of par (c) which would involve the person obtaining medical and legal advice gains support from the fact that a number of statutory regimes contain floors or caps on recovery of damages, or both: see, eg, Civil Liability Act, s 16. No proper view could be formed about the justification for bringing an action, absent information of that kind. [43] It is also appropriate that s 50D be read in a broader context. Thus, a claim for damages for personal injury, brought by a solicitor, must be accompanied by certification in accordance with the Legal Profession Act 2004 (NSW), s 347. The statement of claim in the present case bore such a certification which read: I 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 for damages in these proceedings has reasonable prospects of success. [44] A further element of the broader legal context is that, for a person such as the plaintiff under legal incapacity, proceedings may not be commenced except by a tutor nor may the tutor commence proceedings except by a solicitor: UCPR, r 7.14. To the extent that par (c) requires an assessment of the seriousness of injury sufficient to justify the bringing of proceedings, coherence with the broader statutory framework requires that the person have available to him or her relevant legal and medical information to allow an informed professional judgment to be made. Section 50D –​ “know” [45] This last line of reasoning has relevance also to the nature of the knowledge which the person is required to have, for the limitation period to commence to run. In common with extension provisions, s 50D refers, somewhat simplistically, to whether the person “knows” (or ought to “know”) the identified facts. It is rare that facts will be known in any absolute sense: rather, as a practical matter, the person will have a belief that certain matters can be established, usually on the balance of probabilities, which is sufficient for the purposes of legal proceedings. Such a belief may be held on firm grounds or on shaky grounds. The belief is likely to involve an assessment of various matters, none of which can be readily quantified. Questions involving causation, fault and assessment of damages are all susceptible to these kinds of uncertainty. Nevertheless, the chapeau of the sub-​section refers to knowledge of identified facts, and not to an assessment of prospects of success in the prospective proceedings. Further, despite the inability to bring proceedings without a solicitor in a position to certify in accordance with the requirements of the Legal Profession Act, it is the knowledge of the plaintiff’s mother which is the focus of the statutory test. [46] It follows from this analysis, in accordance with the concession made by the State, that the plaintiff’s mother did not at any stage within the relevant period have actual knowledge sufficient to satisfy par (c) or, in all probability, par (b). The approach adopted above with respect to par (c) is largely consistent with that adopted by Goldring DCJ in Rawle v Southstate Industrial Supplies Pty Ltd [2008] NSWDC 70; 7 DCLR (NSW) 134 referred to by the trial judge at [17]. Judge Goldring referred to s 50D in the following terms: [25] … The question of whether or not the bringing of action is justified is not simply a matter of looking at the seriousness of the injury, but also of looking at that injury in the light of the 308 [6.120]

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Baker-Morrison v New South Wales cont. statutory requirements for claiming compensation, and that requires some understanding of the law. [26] In order to know whether the injury is sufficiently serious to justify the bringing of action, a person must know not only that the injury is serious, but also, in approximate terms, whether that injury is sufficient to bring the person over any of the statutory thresholds that now exist. Approach of trial judge [47] In the case under appeal, his Honour concluded with respect to par (c) at [25]: Similarly, in my view, in respect of the seriousness of an injury it is not necessary that the prospective plaintiff know that it is sufficient to satisfy the threshold tests discussed by Judge McGrowdie and Judge Goldring in their judgments, nor that there be a determination of the cost benefit of bringing the proceedings, before time begins to run. All that is required is an injury of sufficient seriousness to raise the prospect of a cause of action. The prospective plaintiff still has three years to investigate the injury and determine whether it is sufficient to justify the commencement of proceedings. [48] His Honour concluded that the plaintiff’s mother had the relevant knowledge when she consulted her solicitor on 1 June 2004. She knew of the injuries to her daughter, she knew that the Police Department occupied the premises where the injuries occurred and that it was responsible for those premises and she knew that the injury was “so serious in fact that the child required to go to hospital”: at [27]. These facts were sufficient, his Honour held, “to put her on notice of the prospect of an action”. His Honour considered this was “self-​evident” because she consulted a solicitor within a matter of days. … The objective test –​“ought to know” [57] The next question was whether the plaintiff’s mother ought to have known each of the facts identified in sub-​s 50D(1). The answer to that question must depend upon the effect of sub-​s (2). It purports to provide a definition of what is covered by the phrase “ought to know”. That description is premised on an assumption that the person had not taken all reasonable steps to ascertain the facts, or a particular fact, requiring an assessment to be made of what would have been ascertained had such steps been taken. [58] In most circumstances, the step of instructing a solicitor will be sufficient for a prospective plaintiff (or the parent of a plaintiff) to satisfy the element of taking “all reasonable steps”. (In some circumstances there may no doubt be a question as to whether the plaintiff’s instructions were adequate or whether other limitations prevented the solicitor from taking proper steps in a timely fashion: no such question arose in the present case.) [59] The phrase “ought to have known” can mean either that the person should have inquired as to a fact (the active sense) or that he or she should have been told of the fact (the passive sense). In this context, “should” connotes a culpable omission, either by the person who should have known, or by the other person who should have supplied advice or information. If the limitation period had been intended to commence, not because of a failure on the part of the putative plaintiff to take reasonable steps, but because of the failure of another person, that could and should have been made clear. Rather, the expression “ought to know” was identified by reference only to what the putative plaintiff “would” have found out, if he or she had taken all reasonable steps. That language is apt to engage the active sense of the expression only. Further, the word “would” (rather than “should”) is inconsistent with any expectation of an inquiry into the conduct of the potential source of information or advice. [60] It was not suggested that, in the 26 day period after the accident, the plaintiff’s mother should reasonably have taken any step which she did not take. Accordingly, unless the plaintiff’s mother in fact had the relevant knowledge, the defence must fail. [6.120]  309

Civil Procedure in New South Wales

Baker-Morrison v New South Wales cont. [61] It may be added that, even if an inquiry into whether the solicitor acted reasonably were called for, the State neither called evidence to show that he had failed, nor cross-​examined him to suggest that he had failed, to take particular steps which he should reasonably have taken in order to supply the mother with appropriate advice or information. Conclusions [62] The District Court was in error in acceding to the application by the State. [After the Court of Appeal’s decision, the matter proceeded in the District Court and the defendant pleaded that the plaintiff’s claim was statute-​barred. The District Court struck out that defence on the ground that issue estoppel or res judicata prevented the defendant from re-​litigating the question of whether proceedings had been commenced within time: Baker-​Morrison v State of New South Wales [2010] NSWDC 45 (Truss DCJ).]

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Frizelle v Bauer [6.130]  Frizelle v Bauer [2009] NSWCA 239 [On 2 July 2003, the applicant suffered a fall in rented premises in Erskineville. The fall occurred at night, while she was going down stairs. There was no handrail on either side of the staircase. As a result of the fall, she was knocked unconscious and fractured her left kneecap. Her knee was reconstructed. She sought legal advice from a solicitor (McLellands) on 17 July 2003 but did not commence proceedings for damages with respect to her personal injury until 5 April 2007. The District Court judge noted that the applicant “accepted that she suffered a serious injury very shortly after the accident and that she would have a good cause of action”. His Honour found that the applicant’s proceedings were commenced out of time and his Honour’s judgment stated: True it is that that action is an action in negligence and one subject to the provisions of the Civil Liability Act with its limitations. There may have been some question as to whether or not any action commenced by the plaintiff would have been such as to entitle the plaintiff to recover damages for non-​economic loss given the threshold. However, the plaintiff by October of 2003, had been forced by reason of her injury to give up employment, which would appear to have been work which she enjoyed and which was well paying. She was out of work for four months or thereabouts before obtaining other employment in early 2004, and then, when she did obtain further employment it was only casual employment and at a time when she was under considerable financial stress. It seems to me that it would have been fairly apparent to the plaintiff, at least by early 2004, that she had an impairment of her earning capacity, certainly at that time, as a result of the injury. In early 2004 the plaintiff had developed crunching in the left knee (transcript p 25) that had not been present before. I think it is clear from the file note at McLellands in October 2003 that the plaintiff was aware that the likelihood was that she would require further surgery on the knee. She had been told, she says, that she had a good case. The conclusion I have reached is that it is more than three years before the filing of the statement of claim that the plaintiff knew all three matters in s 50D(1). To my mind the nature of the injury and the likelihood of some further surgery, albeit relatively minor surgery, the possibility of the development of arthritis, the development of the crunching and the substantial impact on her employment were such as would to the mind of a reasonable person have led to the conclusion that the injury was sufficiently serious to justify the bringing of an action on a cause of action prior to a date three years preceding the actual date upon which this statement of claim was filed. 310 [6.130]

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Frizelle v Bauer cont. The applicant claimed that her injury was not sufficiently serious to justify commencing proceedings prior to 5 April 2007 and argued that the District Court judge had misapplied s 50D(1)(c).] BASTEN JA (MCCOLL JA argeeing) [19] Senior counsel for the applicant argued that the trial judge either misunderstood the test which was to be applied, or misapprehended the nature of the evidence. In the latter respect, he drew attention to a paragraph in an affidavit sworn by the applicant on 16 October 2006 concerning a telephone conversation with her then solicitor, Mr Michael Doherty, which occurred in October 2003. She had noted her concerns that one of the prospective defendants might be about to leave the jurisdiction: at par 45. She continued: I queried whether a statement of claim could be filed in court as soon as possible to commence proceedings. I also advised Mr Doherty that I had left my employment with Country Road Australia and was under financial stress, photographs had been taken of the accident site where I fell and Dr Waddell had recommended that I undergo further surgery to remove the hardware from my left knee. [20] She then continued, in the paragraph to which senior counsel drew attention, par 46, as follows: I recall that Mr Doherty advised me in the course of the telephone conversation with him in October 2003 that it was too early to commence proceedings against Mr Bauer as my left knee condition would not yet have stabilised. I was advised by Mr Doherty that it would be necessary to obtain a medical opinion prior to commencing proceedings [and] that it would be necessary to wait six months following any further surgery before such an opinion could be obtained. I was also asked to send in photographs of the accident site as well as any documentation relating to my loss of income so that a claim could be prepared. [21] The next contact with her solicitor was not until 8 April 2004, in the course of which she spoke to Mr Doherty’s secretary and advised that she would send in the photographs as well as documents relating to her loss of income. She did not in fact take that step until August 2006. [22] There was no express reliance on paragraph 46 of her affidavit or the allegations there set out, in either the particulars of the grounds of appeal or the supplementary summary of argument prepared five days before the hearing in this Court and on which the applicant was permitted to rely. [23] As counsel for the respondents noted, that paragraph was the subject of cross-​examination in the course of the District Court proceedings. The key passages in the transcript of 9 November 2007 read as follows (p 50–​51): Q. In October 2003 you called Mr Doherty, your solicitor and said, you queried whether this statement of claim could be filed in court as soon as possible to commence proceedings, and you say in paragraph 46 that the advice you were given was that it was too early to commence proceedings as your knee condition would not yet have stabilised. Now, there was no suggestion, was there, by your solicitor that you would not commence proceedings because your injuries weren’t so serious? A. No, I was under the understanding that I had to wait until my injury could be evaluated and if I needed to have another operation. So I was under instruction that I had to go through that process first before. Q. But the seriousness of your injuries, and that seriousness giving rise to a cause of action was never once doubted in the advice offered to you by your solicitors? A. No. [24] In the final exchange in the course of cross-​examination, the following appeared (p 56): Q. When you left the solicitor’s office in the afternoon of 17 July 2003, Ms Frizelle, I suggest to you that you knew that your injuries were so serious that they would warrant commencing proceedings against the first and second defendant.? [6.130]  311

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Frizelle v Bauer cont. A. Yes. Q. You were in no doubt at all that they were sufficiently serious to warrant commencing proceedings? A. Potentially yes. [25] In re-​examination, she was immediately taken back to that evidence and asked: Q. Just on that last question, Ms Frizelle, you were asked whether you knew they were serious enough to justify commencement of proceedings and you said potentially, what do you mean by potentially? A. Well I knew my, my injuries were serious but I didn’t know whether at that stage whether I was actually going to go anywhere with it, you know proceed in any way … Q. What might have determined whether you did? … For example in July 2003 if you thought well they’re potentially serious enough what kind of factors were you thinking might, if anything, alter that? A. The need for another operation, the pain. [26] So far as the legal test was concerned, senior counsel for the applicant argued that his Honour did not apply the construction of the section required by this Court in Baker-​Morrison v State of New South Wales [2009] NSWCA 35, which was, of course, delivered after his Honour’s judgment. [27] There are circumstances in which s 50D may only be satisfied where the applicant has taken all reasonable steps to ascertain a fact which may involve medical or legal evaluation. It was not in doubt in Baker-​Morrison (and indeed was conceded) that the mother whose child had been injured did not know either that the injury was caused by the “fault” of the State or that it was sufficiently serious to justify bringing an action, if such knowledge required the application of any degree of professional expertise or assessment: at [24]. Nor was it established that there were any steps that she ought to have taken, but did not, within the period of 26 days following the accident, which was the period in issue in that case. [28] The present case falls into a different category. The period during which the necessary assessment had to be made was a period of some nine months after the date of the accident. The fact that further evidential material might need to be gathered was beside the point, so long as the seriousness of the injury could reasonably have been assessed within that period. Further, the issue was not the threshold in the Civil Liability Act with respect to non-​economic loss, but the quantum of the applicant’s economic loss. No doubt her prognosis remained somewhat uncertain in April 2004, but the primary judge was satisfied that the impairment of her earning capacity, and the likelihood that it would continue, was known to her at least by early 2004. On the evidence, that finding has not been shown to be open to significant doubt. [29] At the heart of the applicant’s claim was the suggestion in the affidavit, not fully supported when taken into account with the cross-​examination, that she did not believe that she had a cause of action in relation to an injury which was sufficiently serious to justify the bringing of the action because of advice received from her solicitors. His Honour found that the injury “obviously was a serious one and the plaintiff conceded that in her evidence”: Judgment, p 8. He then noted that there was a further question as to whether it was sufficiently serious to justify the bringing of an action, and continued (pp 8–​14) to consider whether that was so. In the passages set out above, he concluded that it was sufficiently serious and that the applicant appreciated that fact. [30] There may be a case in which the applicant has taken all reasonable steps to ascertain facts depending upon the advice of professional persons, but, having been given wrong advice, does not have the necessary state of mind. According to Baker-​Morrison, the terms of s 50D(1) may not be engaged: see, Baker-​Morrison at [59]. That, however, is not the present case and the correctness of that view does not arise.

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Frizelle v Bauer cont. [31] In substance, his Honour’s analysis of the evidence suggests that the delay in commencing proceedings was in part due to the dilatoriness of the applicant in maintaining contact with and providing information to her solicitors, and partly the dilatoriness of the solicitors. It is neither necessary nor appropriate to assess those elements further. [The application for leave to appeal was dismissed.]



New South Wales v Gillett [6.135]  New South Wales v Gillett [2012] NSWCA 83 [Gillett was a senior member of the NSW Police Service (“Police Service”). On 24 October 2008, he commenced proceedings against the State of NSW claiming damages for psychiatric injury that he alleged was caused by the negligence of his employer. The State was sued on the basis of it being vicariously liable for the failure of the Police Service to disclose to the Director of Public Prosecutions (“DPP”) all relevant information and documents obtained during an investigation of Gillett’s conduct which preceded him being charged with criminal offences. Gillett claimed that the Police Service failed to discharge its obligations under s 15A of the Director of Public Prosecutions Act 1986 (NSW) to disclose to the DPP all relevant information and documents obtained in the investigation that might assist the case of the prosecution or the defence. Gillett’s claim was that the Police Service failed to disclose documents that assisted his case. In October 2003, Gillett was charged with offences of common assault, perverting the course of justice and corruption. In June 2004, his trial commenced in the District Court where the Crown Prosecutor conceded that there was no evidence capable of establishing a prima facie case. The Crown Prosecutor informed the judge that the DPP did not have in his possession material shown to a police officer (Constable Farrelly) in cross-​examination. The material was Constable Farrelly’s report to Inspector Wood (MFI 1). The Crown Prosecutor invited the judge to direct the jury to acquit Gillett –​ which the judge did and Gillett was acquitted. In April 2005, Gillett sought legal advice and was advised in July 2005 by a barrister that there were no prospects of success of a claim for assault and no reasonable prospects of success in respect of claim of malicious prosecution. In April 2008, Gillett saw a second solicitor and was advised by a second barrister in September and October 2008 that there was a reasonably arguable case in negligence and breach of statutory duty (negligence in failing to disclose the documents to the DPP). Gillett filed a statement of claim on 24 October 2008. The State pleaded that the claim was not maintainable because it was commenced after the expiration of the three-​year discoverability period. The State filed a notice of motion seeking an order that the proceedings be permanently stayed on the basis that the claim was not maintainable by virtue of the Limitation Act 1969 (NSW) or that the question of whether Gillett’s claim was statute-​barred be determined as a separate question. Gillett also filed a notice of motion seeking that the limitation defence be struck out. The notices of motion were heard by Barr AJ who determined the limitation question as a separate question and struck out the State’s limitation defence. The State appealed and challenged the correctness of the decision of Baker-​Morrison v New South Wales [2009] NSWCA 35; (2009) 74 NSWLR 454. For that reason, a court of five judges was empanelled to hear the matter because in order for the Court to overturn a previous decision of its own, it must be satisfied that the earlier judgment is clearly wrong: see Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86; Gett v Tabet [2009] NSWCA 76; (2009) 254 ALR 504.] BEAZLEY JA (MCCOLL, CAMPBELL, YOUNG and WHEALY JJA agreeing) [25] The primary judge, at [30], stated that the question for his determination was whether the respondent’s cause of action was discoverable before the day, three years before he commenced his [6.135]  313

Civil Procedure in New South Wales

New South Wales v Gillett cont. action, that is, before 24 October 2005. His Honour noted that by its plea in bar and its notice of motion, the State assumed the burden of proving that the cause of action was discoverable before that day. [26] Both parties agreed that his Honour correctly identified the date of 24 October 2005 as being the relevant date for the purpose of the limitation provisions and that his Honour also correctly found the State bore the onus of establishing that the cause of action was discoverable before that date: see Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] VicRp 4; [1993] 1 VR 27 at 72-​74 per Brooking, Tadgell and Hayne JJ; Hawkins v Clayton t/​as Clayton Utz & Co (1986) 5 NSWLR 109 at 142 per McHugh JA; Cassis v Kalfus [2001] NSWCA 460 at [65] per Hodgson JA (Powell JA and Heydon JA (as his Honour then was) agreeing); Segal t/​as Segal Litton & Chilton v Fleming [2002] NSWCA 262 at [27] per Hodgson JA (Handley JA and Young CJ in Eq agreeing). … [39] The State submitted that Baker-​Morrison is plainly wrong and should not be followed: see Gett v Tabet. The essential argument advanced was that for the purposes of s 50D, the necessary knowledge, whether actual or constructive, is of facts sufficient to establish that a person has a cause of action against the defendant. Section 50D does not require that a person also know that s/​he has a cause of action, that is, it is not necessary that the plaintiff know that the defendant is legally liable. The State submitted that the construction of equivalent legislation and, in particular, the meaning of the word “fault”, as construed in Spandideas v Vellar [2008] VSC 198, was to be preferred with a qualification that the word “fault” in s 50D(1)(b) need not be limited to the concept of “moral blameworthiness” as was held in Spandideas. … Meaning of fault [79] The State submitted that the word “fault” in s 50D(1)(b) should be given its ordinary meaning, in accordance with the principle of statutory construction that general words be given their plain and ordinary meaning, subject to any contrary intention in the legislation. In this regard, the State relied on the definition of the word referred to by Kaye J in Spandideas, at [32]: 1.

A defect or imperfection; a flaw; a failing.

2.

An error or mistake.

3.

A misdeed or transgression.

4.

Delinquency; culpability; cause for blame.

[80] The State submitted this Court should apply the same meaning to the word “fault”. On that approach, all that the State was required to establish was that the respondent knew the State’s act or omission was causative of loss. It was not necessary for the plaintiff to know that the conduct was legally actionable. The State did not contend that “fault” “be limited to its extended meaning of moral blameworthiness”. [81] The State further submitted that the different terminology, viz: “act or omission” in other provisions of the Limitation Act did not detract from this construction. Reference was made to ss 50C(1)(b), 50E, 60D, 60E, and 60I(1)(iii). Those sections use the phrase “act or omission” or in the case of s 60D “wrongful act, neglect or default”. [82] The meaning of the words “act or omission” in these provisions had been considered by the High Court in Dedousis v Water Board [1994] HCA 57 181 CLR 171, which in turn was considered by this Court in Drayton Coal Pty Limited v Drain (NSWCA, 22 August 1995, unreported). The provision relevantly under consideration in those cases was s 60I(iii) which provided that a court could not make an order extending the limitation period unless it was satisfied that the plaintiff was unaware of the connection between the personal injury and the defendant’s act or omission at the expiration of the limitation period. 314 [6.135]

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New South Wales v Gillett cont. [83] In Dedousis, the High Court stated that this provision was concerned with ignorance of the existence of acts and omissions rather than legal conclusions. The Court (Deane, Dawson, Toohey, Gaudron and McHugh JJ) continued, at [27] 181-​182: However, if a plaintiff alleges that his or her employer has failed to provide him or her with a safe system of work and is able to establish that he or she was not aware that there was a safer alternative system, then the proper conclusion is that the plaintiff was “unaware of the connection between the personal injury and the defendant’s act or omission” within the meaning of [the section]. On that hypothesis, the relevant act or omission is the employer’s failure to provide the safer alternative system or to take suitable precautions. [84] In Drayton Coal, Gleeson CJ (Priestley and Meagher JJA agreeing) considered that questions of degree may be involved in determining whether a plaintiff was unaware of the connection between the personal injury and the defendant acts or omissions. His Honour stated, at 7: [A]‌court may well be confronted with a situation where, before and at the relevant time, the plaintiff was aware of some acts or omissions on the part of the defendant, and the connection between those acts or omissions and the plaintiff’s injury, but not of other acts or omissions upon which reliance will be placed at a trial. The mere fact that a plaintiff’s lawyers can think up some act or omission, upon which they will wish to place some reliance at trial, which was not known to the plaintiff at the relevant time, does not automatically mean that the requirements of s 60I(1)(a)(iii) are satisfied. On the other hand, the decision in Dedousis establishes that unawareness of a material act or omission: which constitutes a substantial ground upon which reliance will be placed is sufficient to satisfy s 60I(1)(a)(iii). [85] The State contended that the requirement that an injury was caused by the “fault” of another, within the meaning of s 50D(1)(b), meant that the injury was caused by a potential spectrum of possible errors or mistakes, misdeeds, transgressions or failures, which did not require that the plaintiff make a legal evaluation at that stage. Rather, what was necessary was that the plaintiff know of the necessary fact, that is the fault of the defendant that subsequently established legal liability. The State submitted that what needed to be identified were the key factors necessary to establish legal liability in the form of a cause of action, not the cause of action itself: see Drayton at 7. [86] The respondent maintained that “fault” for the purposes of s 50D(1)(b) engaged the notion of legal actionability. On this construction more was required than the plaintiff know or ought to know that the defendant was morally blameworthy, as had been held in Spandideas. However, it was not necessary that the plaintiff know what the cause of action was. This submission, in effect, adopted the reasoning in Baker-​Morrison at [39] 464. [87] The respondent submitted that if the construction for which the State contended was correct, s 50D(1)(b) would have to be read in a way consistent with earlier decisions such as Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17 154 CLR 234, which involved different legislative language. In Do Carmo, the statutory phrase “the fact of the occurrence of negligence nuisance or breach of duty” on which the cause of action was founded was construed to mean the occurrence of a wrongful act or omission and did not include the legal consequences of those acts: see especially Wilson J at 247, Brennan J at 249 and Dawson J at 254. [88] The language of s 50D(1)(b) was materially different from the provisions considered in these judgments. Accordingly, on the respondent’s submission, “fault” within s 50D(1)(b) should not be construed simply to mean knowledge of the causative acts or omissions. [89] The respondent also submitted that a plaintiff did not need to be certain of the prospects of success for the purposes of s 50D(1)(b). This submission embraced a case where a plaintiff received legal advice that there was a particular cause of action but with poor prospects of success. However, the plaintiff was given later advice that there was a different cause of action available with good prospects of success. The respondent accepted, in that circumstance, the plaintiff might still stumble [6.135]  315

Civil Procedure in New South Wales

New South Wales v Gillett cont. on the limitation defence because it was arguable the plaintiff knew of the defendant’s “fault” in the relevant sense. Notwithstanding that a plaintiff might not succeed in that circumstance, the respondent contended that this did not undermine his basic submission that “fault” involved the notion of legal actionability. [90] It was integral to the respondent’s argument that the “fault” for the purposes of s 50D(1) (b) was that of the defendant. It was contended that this could be profoundly important in a given case. The respondent posed two different scenarios relating to a motor vehicle accident to illustrate his point. In the first, a defendant drives through a red light and collides with a vehicle crossing the intersection with the green light in its favour. The respondent accepted that in this scenario, the ordinary layperson would be expected to know that the conduct of the driver was legally actionable. By contrast, if the identity of the driver of the vehicle that drove through the red light was never known, a court might conclude that a person injured as a result of the collision may know that the matter was legally actionable, but not know that it was legally actionable against the Nominal Defendant. In that case, the plaintiff would require legal advice for the action to be discoverable against the Nominal Defendant. [91] It followed on the respondent’s submission that what the section required was that the plaintiff know there was a cause of action worth pursuing, which nearly always required a legally evaluative judgment. Whether or not a plaintiff required the assistance of legal advice in order to make that evaluation would depend upon the facts of the particular case and the circumstances of the particular plaintiff. He submitted that this case was one where legal advice was required. A person could not be expected to know that a failure by a police officer to provide all material documents to the DPP was likely to be legally actionable against the State. [92] The respondent submitted that if a plaintiff was given incorrect advice so that they did not know that there had been an actionable wrong, time did not commence to run for the purposes of the limitation statute until the plaintiff had received correct advice. [93] It is important at this point to return to the words of the section. Section 50D provides that a cause of action is discoverable on the first date the person knows, or ought to know, relevantly, the fact that the injury was caused by the fault of the defendant. [94] In my opinion, Basten JA was correct when he stated, at [39] 464, that a cause of action was discoverable when a plaintiff knew or ought to have known the key factors necessary to give rise to liability. As his Honour pointed out, s 50D(1)(b) involves a relationship of causation between “fault” and injury. Section 60I involves a connection between an act or omission and injury. The respondent’s submission, noting the requirement in s 50D(1)(b) that the fault be that of the defendant, who may not be the actual wrongdoer, supports this construction. [95] There will be many cases where the discoverability of a cause of action will have little to do with moral blameworthiness in the ordinary meaning of that word. A case where a defendant is liable pursuant to a non-​delegable duty of care is one example where this could be said to be the case. A defendant only liable pursuant to statute, such as the Nominal Defendant, is another. The State, liable under the Crown Proceedings Act 1988, as is the case here, is another example. Yet another is a case of malicious prosecution, where the identity of the prosecutor is pivotal to the determination of the elements of malice and reasonable and probable cause: see A v The State of New South Wales [2007] HCA 10; 230 CLR 500. The factual circumstances in Bostik provide a further example where a plaintiff may not know who the employer is and therefore whether injury was the fault of a particular defendant. This is not so unusual. Many cases come before the courts where a plaintiff is unaware of the identity of the actual employer. [96] It is useful at this point to return to the statement of Basten JA in Baker-​Morrison, at [40] 464, where his Honour referred to the failure of the State to demonstrate: that the plaintiff’s mother knew, at the relevant time, of any steps which could and should reasonably have been taken by the occupier of the premises to render the sliding door safe. 316 [6.135]

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New South Wales v Gillett cont. [97] A question arose during the course of the argument whether, in making this observation, his Honour’s construction of “fault” referred to the facts that demonstrate that there has been a breach of the relevant legal standard. In this regard, the “relevant legal standard” may vary, depending upon whether the claim was brought in negligence, breach of contract or breach of statutory duty. The respondent submitted that this formulation reflected the construction he was propounding, namely that, for the purposes of “fault” in s 50D(1)(b), a defendant had to establish that the plaintiff knew the matter was legally actionable. What that involved in a particular case would depend upon the relevant facts and circumstances. I agree with senior counsel’s response. [98] In my opinion, the State has failed to demonstrate that the construction given to “fault” in Baker-​Morrison is “plainly wrong”. Indeed, I consider the construction to be correct. Its application in a particular case may not always be straightforward, as the respondent’s submission readily acknowledged. So far as the State’s submission is concerned, this Court should not follow the construction given to the similar provision in Spandideas. Meaning of constructive knowledge for the purposes of s 50D(2) [99] The State contended that Basten JA had erroneously construed s 50D(2) in Baker-​Morrison at [37] 463 and [59] 467-​468, although it submitted that the reasoning at [57] ff (emphasised portion of [57]: see above at [73]) was relevant to an understanding of his Honour’s error. For ease of reference, that reasoning was, relevantly: That description is premised on an assumption that the person had not taken all reasonable steps to ascertain the facts, or a particular fact, requiring an assessment to be made of what would have been ascertained had such steps been taken. [100] The State submitted that s 50D(2) was not based on the premise that the plaintiff had not taken all reasonable steps. Rather, the subsection required a finding as to whether the plaintiff had taken all reasonable steps to ascertain the matters identified in s 50D(1)(b). To approach it in the manner indicated by his Honour was, the State submitted, to invert the enquiry. The State contended that this erroneous approach to s 50D(2) informed his Honour’s approach in the succeeding paragraphs of his judgment, and in particular his Honour’s finding that imputed knowledge was not part of the inquiry for the purposes of s 50D(2). The State submitted that his Honour had adverted to the possibility of error in this regard in Frizelle v Bauer at [30] (see at [76] above). [101] The notion of imputed knowledge in a limitation statute was considered in Sola Optical Australia Pty Ltd v Judith Ann Mills [1987] HCA 57; 163 CLR 628. There, the limitation provision specified that a court was not empowered to extend the limitation period unless it was satisfied that material facts “were not ascertained by [the plaintiff] until some point of time occurring within twelve months before the expiration of the period of limitation”. The High Court (Wilson, Deane, Dawson, Toohey and Gaudron JJ) at [15] 637, rejected the argument that the ascertainment of material facts by the plaintiff’s solicitor satisfied the terms of the section. Other references to “the plaintiff” reinforced that construction. As the Court stated, at [15] 637: The paragraph is concerned with the materiality to the plaintiff’s case of the facts which were not ascertained by him before the expiration of the prescribed term. The concluding phrase of the paragraph is emphatic in declaring that the outside limit is twelve months after the ascertainment of the material facts by the plaintiff. [102] In Sola Optical there was no provision relating to constructive knowledge, as is the case here: viz s 50D(2). Having said that, the High Court’s construction, which focused on the particular words of the section, was similar to the approach taken by Basten JA. [103] The State submitted that the construction given to s 50D(2) was incorrect. It submitted that the subsection posed a hypothetical situation. A person is deemed to have knowledge of the facts if they would have been ascertained by a person taking all reasonable steps before that time to ascertain the facts.

[6.135]  317

Civil Procedure in New South Wales

New South Wales v Gillett cont. [104] In my opinion, there was no error of construction in the challenged portions of Baker-​Morrison on this issue. As I understand his Honour’s reasons, Basten JA was doing no more than postulating an objective test. For the purposes of s 50D(2), the court had to determine whether a fact within the meaning of s 50D(1) would have been ascertained if a person had taken all reasonable steps to ascertain it before the relevant date. This would involve an inquiry of the steps actually taken by the plaintiff, if any, and whether those steps satisfied the court’s determination of what were reasonable steps to take in the particular circumstances of a given case. Did the trial judge err in striking out the limitation defence in this case? [105] The respondent submitted that the trial judge’s factual findings were the only facts found by him on the State’s application for a permanent stay based on the limitation argument. The respondent acknowledged that there was evidence before his Honour that the Crown Prosecutor had stated in open court that, until the cross-​examination of Constable Farrelly, he had not been aware of Constable Farrelly’s report to Inspector Wood (MFI 1). The respondent submitted that did not establish that the respondent knew, or ought to have known at that time, that Senior Sergeant Gaskins had failed to provide documents to the DPP, which was the key factual ingredient in the cause of action. The respondent contended that for the State to discharge its onus on the application, the State needed to prove that fact, but had failed to do so. [106] The respondent submitted that the State had not established that the respondent knew that he had a legal remedy prior to the time he obtained the legal advice upon which he brought his claim. The fact that he may have had a suspicion that he had a legal remedy or wanted to know whether he had a legal remedy was different from establishing that the respondent knew that the State was legally liable, in the sense of there being an actionable claim against it, at any prior point of time. [107] In further support of his submission that the State had not discharged its onus in this case, the respondent reiterated that there was no evidence before the trial judge as to why the Crown Prosecutor did not have MFI 1 in his brief. In particular, there was no evidence as to whether that was due to an omission by the Police Service or was due to administrative or clerical deficiencies within the office of the DPP. The respondent also submitted that it was not open for the State to assert in the Court of Appeal that the respondent believed Senior Sergeant Gaskins had failed to hand documents on to the DPP and that constituted knowledge of a breach of a duty of care. The respondent contended that was not the way the matter was run before the primary judge but, in any event, a finding to that effect was not open on the evidence. The respondent submitted that he needed to know he had an actionable claim against the State based upon the fact that Senior Sergeant Gaskins did not give certain documents to the DPP. It followed on the respondent’s argument that the State had not discharged its onus of proof on the application to have the statement of claim permanently stayed on the basis that it was statute barred. [108] The respondent’s submission pointed out the difficulty of the course chosen by the State in having the limitation issue determined as a separate question. The courts have frequently warned of the undesirability of this process: see Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 at 533. Had the matter been left to trial, the evidence would have been before the court as to what the respondent knew, what he believed, and when he found certain things out. [109] The respondent submitted that there was no error in his Honour’s determination in this case, albeit that the circumstances were somewhat unusual. He summarised the position as follows. The respondent acknowledged that he knew he had suffered a psychiatric injury at an early stage after the conclusion of the criminal proceedings. He sought advice as to whether there was anything legally he could do about that. He received legal advice that he could not. The respondent submitted that in those circumstances, the cause of action was not discoverable unless and until he received legal advice that the State was legally liable for his injury. [110] In my opinion, these submissions should be accepted. No error has been shown in the primary judge’s reasons. Earlier in my judgment I gave my reasons as to why leave to appeal should be granted. My conclusion that no error has been shown in the primary judge’s reasons leads to 318 [6.135]

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New South Wales v Gillett cont. the result that the appeal should be dismissed. This means that the orders of the primary judge, including that the limitation defence be struck out, will stand. The primary judge’s determination on the limitation issue was made on limited evidence. Had the State not brought its notice of motion for the determination of the limitation issue as a separate question, it is possible that there may have been a different outcome. That is a matter upon which I express no opinion. Nor is it a matter about which the Court can be concerned, once it is decided that leave to appeal should be granted. The State has taken deliberate decisions as to the conduct of the proceedings. It must therefore bear the consequences of the Court’s determination on the issues raised. [Appeal dismissed.]



Baggs v University of Sydney Union [6.138]  Baggs v University of Sydney Union [2013] NSWCA 451 MEAGHER JA (MACFARLAN and HOEBEN JJA agreeing) [3]‌On 21 May 2003 Ms Baggs was injured when she slipped and fell down a flight of stairs in the Wentworth Building at the University of Sydney during a fire drill. At the time Ms Baggs was employed by the University as a clinical psychologist. Immediately before the fire alarm which triggered that drill Ms Baggs, as a patient, was attending a medical appointment in the Medical Centre on the first floor of the building. [4]‌On 26 May 2003 she lodged a workers compensation claim against the University. In January 2010 she commenced proceedings against the University as owner and alleged occupier of the building. It will be necessary later to return to what happened in the earlier part of the period between 2003 and 2010. The University filed a defence admitting that in May 2003 it was the owner of the building, but denying that it was at that time the occupier of the building or the fire stairs. On 31 March 2010 the solicitor for the University advised that the Union was the occupier of the building in May 2003. [5]‌On 28 April 2011 Ms Baggs commenced proceedings against the Union. By a notice of motion filed on 31 August 2012 the Union sought an order that the proceedings be dismissed or stayed permanently because the claim had not been brought within the “3 year post discoverability limitation period” under s 50C(1)(a). … Did Ms Baggs know? [16] The factors necessary to establish the liability of the Union to Ms Baggs include that it is a legal entity able to be sued; that on 21 May 2003 it was the owner or occupier of the building and as such had the care, control and management of it, including the fire exit stairs; and that it had failed to take a precaution which a reasonable person in its position would have taken to avoid a foreseeable risk of injury to persons using the fire stairs: Australian Safeway Stores Pty Ltd v Zaluzna [1987] HCA 7; 162 CLR 479 at [11]. [17] The primary judge concluded that Ms Baggs was aware of the fact in s 50C(1)(a) in relation to her claim against the Union. That conclusion was based primarily on a statement in the workers compensation claim form completed by Ms Baggs on 26 May 2003. That form included the following typewritten question and handwritten answer: In your opinion, who was responsible for the accident? And Why? The fire exit was not adequately maintained. The false alarm in combination with lack of lighting + debris on stairs meant I could not see to exit safely. I believe the University Union was negligent –​did not maintain a safe environment. … [6.138]  319

Civil Procedure in New South Wales

Baggs v University of Sydney Union cont. [18] After referring to Baker-​Morrison and Gillett, the primary judge continued at [52]: I find it difficult to interpret the plaintiff’s belief that the University Union was negligent as anything other than an attribution of fault on the basis that she believed (and on reasonable grounds) that the Union was the occupier of the Wentworth Building and that the failure to maintain the fire stairs and to ensure they were free of debris and well lit was their responsibility, breach of which rendered them liable for her injuries. I am satisfied that those interrelated facts were within her understanding and evaluation in May 2003 without the need for professional advice and accordingly, that she knew the identity of the defendant as the entity at fault for the purposes of s 50D(1)(b). As Basten JA observed in the extract from Baker-​Morrison above: It is rare that facts will be known in any absolute sense; rather, as a practical matter, the person will have a belief that certain matters can be established … (Emphasis added) [19] Ms Baggs submits that this conclusion is based on findings of fact which were either inconsistent with or not supported by the evidence and accordingly involved error. The findings which are submitted to be wrong are those as to Ms Baggs believing that the Union was a legal entity separate from the University; that the Union was the occupier of the Wentworth Building; and that the Union as occupier had failed to discharge its duty to maintain the fire stairs and ensure that they were free of debris and well lit. The first of these findings is to be implied from her Honour’s conclusion. The others are express. [20] The evidence before the primary judge established that in May 2003 the fact was, and Ms Baggs knew, that the Wentworth Building contained several clearly visible signs which read “University of Sydney Union, Wentworth Building” or “Wentworth Building, University of Sydney Union” or “The University of Sydney Union, Wentworth”. [21] In her affidavit evidence Ms Baggs said: At the time of the accident, I was not aware as to who was responsible as to the state of the subject fire stairs. What I did know was that the subject building was part of the land owned by my employer SU. [22] She was cross-​examined as to her understanding concerning the Union and the occupation of the Wentworth Building. In relation to the first subject she gave the following evidence (Tcpt 19/​02/​ 13 p 9; White 369): Q: The union itself you understood was a separate body from the university? A: Um, I didn’t understand that it was a separate body, no. Q: What did you understand the University of Sydney Union did? A: We used to go to the union bar for drinks and cafes and, um, I just assumed that, that being a member of the union was like you got discounts on coffee. The answer that she did not understand the Union to be a “separate body” from the University was not challenged or further explored in cross-​examination. [23] Ms Baggs agreed that the Wentworth Building was commonly referred to as the “union building”. She was then cross-​examined upon the answer in the claim form extracted above (Tcpt 19/​02/​13 p 17; White 377): Q: So, that you knew as of 26 May 2003 that the university union was negligent, in your view, is that correct? A: That the person who owned the building was negligent. Q: Well, the university union is the one that you thought was responsible as at 26 May 2003. A: Well, that’s, yeah, the union owned the building. That’s because it was written everywhere. HER HONOUR: Q: You believed that the owner of the Wentworth Building was the union? A: Yes. 320 [6.138]

Before a Civil Action Commences  Chapter  6

Baggs v University of Sydney Union cont. [24] These answers were to be understood in the light of Ms Baggs’ earlier evidence and not with the benefit of the knowledge which Ms Baggs had acquired at a much later stage that the Union was a separate entity and that, as such, it occupied the Wentworth Building. The cross-​examination did not return to the subject of the relationship between the Union and the University. [25] Finally, during the course of Ms Baggs’ re-​examination, the primary judge asked the following question (Tcpt 19/​02/​13 White 385): HER HONOUR: Q: So even though you had a belief that the union was responsible, and you said as much in that very early claim form, that belief was overtaken by advice from Mr Pangelis that on a title search he understood that the owner and person responsible for the stairs was not the union but the university, and you accepted that advice? A: Correct. [26] That answer was to be understood in the same way. The reference to Mr Pangelis is to a Mr Panaretos of the firm Steve Masselos & Co, who Ms Baggs consulted in September 2003. That firm wrote to Ms Baggs by letter dated 23 September 2003 (White 260), advising as follows: We enclose herewith Title Search received in relation to the Wentworth building located at Sydney University. You will notice from the First Schedule on page 1 of the search that the registered owner of the property is “the University of Sydney”. We understand that your fall occurred in the fire escape of the building. As this forms part of the common property of the building the care and control of that area remains with the University of Sydney. In this case however the University is also your employer. In circumstances where the employer’s primary liability arises as an occupier of premises, rather than through any feature relating to the employment itself, it will still be the provisions of the Workers Compensation Act that will prevail. In short this means that in order to continue a claim against your employer for damages, you need to be assessed as being 15% or greater whole person impaired. There are other significant limitations to this course of action, the most notable of which is that damages can no longer be obtained for pain and suffering. [27] Contrary to the challenged findings of the primary judge, which are referred to in [19] above, this evidence established the following. First, Ms Baggs did not believe that the University and the Union were separate legal entities. Accordingly, her statement in the claim form that the “University Union was negligent” could not be understood as indicating that she believed that the Union, as distinct from the University, had been negligent. Secondly, Ms Baggs believed that the Union, and accordingly the University, owned the building. That was contrary to the fact, which was that the Union was the occupier of the building and that the University was the owner. [28] Those being the findings the primary judge should have made as to Ms Baggs’ belief, the primary judge erred in concluding that Ms Baggs knew that her injury was caused by the fault of the Union. Ms Baggs’ understanding was that the Union, as part of the University, owned the building and was at fault. In the language of Baker-​Morrison, she did not know that the Union was a separate legal entity from the University or that the Union as distinct from the University occupied the building and was responsible for the care and control of the fire stairs. Each was a matter which Ms Baggs was required to know as a factor necessary to establish legal liability on the part of the Union. [29] The Union argued that this was a case in which the plaintiff did know the identity of the “defendant” for the purposes of s 50D(1)(b). Ms Baggs’ answer in the claim form showed that she believed the Union had been negligent and that the Union was the correct defendant. That argument ignores Ms Baggs’ unchallenged evidence that she believed that the Union was part of the University. When the claim form is read as explained by that evidence it reveals a belief that the University was at fault, which is not the relevant fact for the purposes of s 50C(1)(a). [30] That conclusion makes it necessary to consider the respondent’s notice of contention.

[6.138]  321

Civil Procedure in New South Wales

Baggs v University of Sydney Union cont. Ought Ms Baggs have known? [31] The Union submits that the fact that Ms Baggs’ injuries were caused by its fault would have been ascertained had she taken “all reasonable steps before June 2005 to ascertain that fact”. In order to understand the significance of June 2005 it is necessary to record briefly the events following the accident to the extent that they have not already been referred to. They are not controversial. [32] In September 2003 Ms Baggs contacted two law firms to inquire about her rights. The first was Steve Masselos & Co, which advised by its letter dated 23 September 2003. That advice was that the University was the owner of the building and the entity responsible for its care and control and that she could not pursue a common law claim against the University, which was also her employer, unless she was assessed as having 15 per cent or greater whole person impairment. That letter specifically advised: Although premature, it is most unlikely that we would recommend that you pursue a claim for damages against your employer. You will however be entitled to lump sum compensation on the provisions of the Workers Compensation Act once your injuries have stabilised. In any event, before a decision is made as to which course of action should be taken we would obtain appropriate medical reports from your specialist to assess the level of your whole person impairment. We note you are contemplating surgery sometime in the near future and we would recommend that any legal action be delayed for a period of approximately six months following surgery. There is a three year limitation period dating from the date of accident, in which proceedings must be filed against your employer should you elect to proceed at Common Law. [33] In cross-​examination Ms Baggs said that she accepted that advice and did not instruct that solicitor to pursue a claim for work injury damages against the University. [34] In November 2003 Ms Baggs also sought legal advice from Maurice Blackburn Cashman. She had no independent recollection of conferring with a Mr Purvis of that firm, although she received a letter, giving him as the reference, which appointed a conference on 1 December 2003. She gave conflicting evidence in cross-​examination as to whether she “would have been” talking to that firm only about her workers compensation claim. There was some subsequent correspondence from Maurice Blackburn Cashman dated 14 July 2004, 1 December 2004 and 17 June 2005. The first letter advised of an appointment for a medical examination on 15 September 2004. It is headed “Your Workers Compensation Claim”. The second, bearing the same heading and dated 1 December 2004, requests Ms Baggs to contact the writer. The third, bearing the same heading, notes that there had been no contact following the letter of 1 December 2004 and concluded by saying that if the firm did not hear from Ms Baggs within 28 days of 17 June 2005 it would “close your file and throw your papers away”. [35] These being the relevant circumstances, it is argued that Ms Baggs did not take all reasonable steps before June 2005 to ascertain the identity of the party against whom she had a cause of action for negligence. It is said that the enquiry made by the initial solicitors was totally inadequate and that had Ms Baggs sought further advice from Maurice Blackburn Cashman in respect of the same subject that firm “would have taken full instructions and carried out appropriate enquiries”. [36] There are at least two difficulties with this argument. First, it is not suggested that the applicant appreciated or had any basis for believing that the advice which she had received from the first firm of solicitors was not given carefully or that it was not correct. That being the position, from her perspective there is no reason suggested as to why, acting reasonably, she was required to seek a further opinion. Secondly, there were, on the basis of the advice that she had received, significant limitations on her right to recover from the University in a claim for work injury damages. That advice also was that she should delay considering whether to commence any proceedings until her condition had stabilised following surgery. As a result there was no urgency in her pursuing any claim she had at common law. In these circumstances it is not shown that the taking of all reasonable steps required Ms Baggs before June 2005 to seek advice from a second firm of solicitors in relation to a matter on which she had already received a written opinion. The notice of contention should be dismissed. [Appeal allowed.]

 322 [6.138]

Before a Civil Action Commences  Chapter  6

Postponement of the limitation period [6.140] The limitation period can be suspended or postponed where there has been fraud

or mistake (ss 55 and 56 of the Limitation Act 1969 (NSW)). If an action is based on fraud then the concealed cause of action accrues from the date of discoverability (s 55). If there is a cause of action from the consequences of a mistake, time stops running until the plaintiff first discovers the mistake (s 56). The limitation period can also be suspended or postponed where the plaintiff is under a disability. The plaintiff will be under a disability if she or he is under 18 years of age or is of unsound mind (s 11(3)). If the plaintiff is under a disability then the limitation period is suspended for the period during which the disability exists (s  52). However, there are exceptions to this principle in personal injury cases: see s 50F which is extracted at [6.110].

Limitation Act 1969 (NSW) [6.145]  Limitation Act 1969 (NSW) ss 52–​56 Division 2 –​Disability, confirmation, fraud and mistake 52 Disability (1)

Subject to subsections (2) and (3) and subject to section 53, where:



(a)

a person has a cause of action,



(b)

the limitation period fixed by this Act for the cause of action has commenced to run, and



(c)

the person is under a disability,

in that case:

(d)

the running of the limitation period is suspended for the duration of the disability, and



(e)

if, but for this paragraph, the limitation period would expire before the lapse of three years after:



(i)

the date on which the person last (before the expiration of the limitation period) ceases to be under a disability, or

(ii)

the date of the person’s death,

(whichever date is the earlier), the limitation period is extended so as to expire three years after the earlier of those dates. (2)

This section applies whenever a person is under a disability, whether or not the person is under the same or another disability at any time during the limitation period.

(3)

This section does not apply to a cause of action to recover a penalty or forfeiture or sum by way of penalty or forfeiture, except where the person having the cause of action is an aggrieved party.

53 Notice to proceed (1)

In this section, “curator” means:



(a)





in respect of a person: (i) who is a patient within the meaning of the Mental Health Act 1958, including a person detained in a mental hospital under Part 7 of that Act, (ii) who is a voluntary patient within the meaning of that Act whose property has been taken in charge under section 22 of that Act by the master assigned to the Protective Division of the Supreme Court, or (iii) to whose property section 101 of that Act applies: the master assigned to the Protective Division of the Supreme Court, [6.145]  323

Civil Procedure in New South Wales

Limitation Act 1969 (NSW) cont.

(b)

in respect of a protected person within the meaning of that Act, where a committee of the person’s estate is appointed under section 38 of that Act –​the committee,



(c)

in respect of an incapable person within the meaning of that Act, where a manager of the person’s property is appointed under section 39 of that Act –​the manager, and



(d)

in respect of a person of whose estate a committee is appointed under section 48 of the Act –​the committee.

(1A)

In this section “the master assigned to the Protective Division of the Supreme Court” means, where two or more masters are so assigned, the senior master so assigned.

(2)

Where a person having a cause of action is under a disability but has a curator, a person against whom the cause of action lies may give to the curator a notice to proceed in accordance with this section.

(3)

Where, after a notice to proceed is given under this section, an action is brought:



(a)

by the person under a disability or by the person’s curator or by a person claiming under the person under a disability,



(b)

on a cause of action to which the notice to proceed relates, and



(c)

against the person giving the notice to proceed or against the person’s successor under a devolution happening after the notice to proceed is given,

subsection (1) of section 52 has effect as if:

(d)

the person under a disability ceases, on the date of the giving of the notice, to be under any disability under which the person is immediately before the giving of the notice, and



(e)

the person does not, after the giving of the notice, come under that disability.

(4)

A notice to proceed under subsection (2) must:



(a)

be in writing,



(b)

be addressed to the curator,



(c)

show the name of the person under a disability,



(d)

state the circumstances out of which the cause of action may arise or may be claimed to arise with such particularity as is necessary to enable the curator to investigate the question whether the person under a disability has the cause of action,



(e)

give warning that a cause of action arising out of the circumstances stated in the notice is liable to be barred by this Act, and



(f)

be signed by the person giving the notice.

(5)

Minor deviations from the requirements of subsection (4), not affecting the substance nor likely to mislead, do not invalidate a notice to proceed.

(6)

A notice to proceed to be given to the master assigned to the Protective Division of the Supreme Court shall be given by leaving it at the office of the master.

(7)

A notice to proceed to be given to a curator, other than the master assigned to the Protective Division of the Supreme Court, may be given by:



(a)

delivering the notice to proceed to the curator,



(b)

leaving the notice to proceed at the usual or last-​known place of business or of abode of the curator, or



(c)

posting the notice to proceed by the certified mail service to the curator at his or her usual or last-​known place of business or of abode.

(8)

A notice to proceed given in accordance with subsection (6) or subsection (7) is, for the purposes of this section, given on the date of leaving delivering or posting as the case may be.

324 [6.145]

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Limitation Act 1969 (NSW) cont. (9)

Subsections (7) and (8) do not prevent the giving of a notice to proceed to a curator, other than the master assigned to the Protective Division of the Supreme Court, by any other means.

(10)

A notice to proceed under this section is not a confirmation for the purposes of section 54 and is not an admission for any purpose by the person giving the notice.

54 Confirmation (1)

Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom (either solely or with other persons) the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation.

(2)

For the purposes of this section:



(a)

a person confirms a cause of action if, but only if, the person:



(i) acknowledges, to a person having (either solely or with other persons) the cause of action, the right or title of the person to whom the acknowledgment is made, or



(ii)  m  akes, to a person having (either solely or with other persons) the cause of action, a payment in respect of the right or title of the person to whom the payment is made,



(b)

a confirmation of a cause of action to recover interest on principal money operates also as a confirmation of a cause of action to recover the principal money, and



(c)

a confirmation of a cause of action to recover income falling due at any time operates also as a confirmation of a cause of action to recover income falling due at a later time on the same account.

(3)

Where a person has (either solely or with other persons) a cause of action to foreclose the equity of redemption of mortgaged property or to recover possession of mortgaged property, a payment to the person of principal or interest secured by the mortgage or a payment to the person otherwise in respect of the person’s right or title to the mortgage is a confirmation by the payer of the cause of action.

(4)

An acknowledgment for the purposes of this section must be in writing and signed by the maker.

(5)

For the purposes of this section a person has the benefit of a confirmation if, but only if, the confirmation is made to the person or to a person through whom the person claims.

(6)

For the purposes of this section a person is bound by a confirmation if, but only if:



(a)

the person is a maker of the confirmation,



(b)

the person is, in relation to the cause of action, a successor of a maker under a devolution from the maker occurring after the making of the confirmation,



(c)

where the maker is, at the time when the person makes the confirmation, (either solely or with other persons) a trustee of the will or of the estate of a deceased person –​ the firstmentioned person is at the date of the confirmation or afterwards becomes a trustee of the will or of the estate,



(d)

where the maker is, at the time when the person makes the confirmation (either solely or with other persons) a trustee (other than a trustee of the will or of the estate of a deceased person) –​the firstmentioned person is at the date of the confirmation or afterwards becomes a trustee of the trust of which the maker is a trustee, or



(e)

the person is bound under subsection (7).

[6.145]  325

Civil Procedure in New South Wales

Limitation Act 1969 (NSW) cont. (7)

(a)

Paragraph (b) applies to a confirmation of a cause of action:



(i)

to recover property, being goods,



(ii)

to recover property, being land,



(iii)

to enforce in respect of property an equitable estate or interest in land,



(iv)

to foreclose the equity of redemption of mortgaged property,



(v)

to redeem mortgaged property,



(vi)

to recover principal money or interest secured by mortgage of property, by way of the appointment of a receiver of mortgaged property or of the income or profits of mortgaged property or by way of sale, lease or other disposition of mortgaged property or by way of other remedy affecting mortgaged property, or

(vii)

to recover trust property or property into which trust property can be traced.



(b)

Where a maker of a confirmation to which this paragraph applies is, on the date of the confirmation, in possession of the property, the confirmation binds a person in possession during the ensuing period of limitation, not being, or claiming through, a person other than the maker who is, on the date of the confirmation, in possession of the property.

55 Fraud and deceit (1)

Subject to subsection (3) where:



(a)

there is a cause of action based on fraud or deceit, or



(b)

a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed,

the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person against a person answerable for the fraud deceit or concealment. (2)

Subsection (1) has effect whether the limitation period for the cause of action would, but for this section, expire before or after the date mentioned in that subsection.

(3)

For the purposes of subsection (1), a person is answerable for fraud deceit or concealment if, but only if:



(a)

the person is a party to the fraud deceit or concealment, or



(b)

the person is, in relation to the cause of action, a successor of a party to the fraud deceit or concealment under a devolution from the party occurring after the date on which the fraud deceit or concealment first occurs.

(4)

Where property is, after the first occurrence of fraud deceit or concealment, purchased for valuable consideration by a person who is not a party to the fraud deceit or concealment and does not, at the time of the purchase, know or have reason to believe that the fraud deceit or concealment has occurred, subsection (1) does not, in relation to that fraud deceit or concealment, apply to a limitation period for a cause of action against the purchaser or a person claiming through the purchaser.

56 Mistake (1)

Subject to subsection (3), where there is a cause of action for relief from the consequences of a mistake, the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely

326 [6.145]

Before a Civil Action Commences  Chapter  6

Limitation Act 1969 (NSW) cont. or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the mistake does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person. (2)

Subsection (1) has effect whether the limitation period for the cause of action would, but for this section, expire before or after the date mentioned in that subsection.

(3)

Where property is, after a transaction in which a mistake is made, purchased for valuable consideration by a person who does not, at the time of the purchase, know or have reason to believe that the mistake has been made, subsection (1) does not apply to a limitation period for a cause of action for relief from the consequences of the mistake against the purchaser or a person claiming through the purchaser.



INTERIM PRESERVATION ORDERS [6.150]  There are a number of procedures in the Uniform Civil Procedure Rules 2005 (NSW)

(UCPR) to preserve rights and property which may be utilised before or after an action is commenced. They are: • injunctive relief: UCPR r 25.2(1)(c); • orders for the preservation of property: UCPR r 25.3; • orders for disposal of perishable or similar property: UCPR r 25.4; • orders for interim distribution of property or income surplus to the subject matter of the proceedings: UCPR rr 25.5–​25.6; • orders for payment of shares in a fund before the ascertainment of all persons interested: UCPR r 25.7; • freezing orders: UCPR rr 25.11, 25.14; and • search orders: UCPR r 25.19.

Uniform Civil Procedure Rules 2005 (NSW) [6.160]  Uniform Civil Procedure Rules 2005 (NSW) rr 25.1–​25.9 Part 25 –​Interim preservation Division 1 –​General 25.1 Application (1)

This Part applies to proceedings in the Supreme Court, Land and Environment Court or the District Court.

(2)

Divisions 2 and 3, but not this Division, also apply to proceedings in the Dust Diseases Tribunal.

25.2 Order in urgent case before commencement of proceedings (cf SCR Pt 28, r 1) (1)

In an urgent case, the court, on the application of a person who intends to commence proceedings, may do any of the following:



(a)

it may make any order which the court might make in proceedings on an application for a writ of habeas corpus ad subjiciendum, [6.160]  327

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

it may make any order for the custody of a minor,



(c)

it may grant any injunctive relief, including relief in the nature of a freezing order under Division 2 (Mareva relief) or a search order under Division 3 (an Anton Piller order),



(d)

it may make an order extending the operation of a caveat under:



(i) the Real Property Act 1900, or



(ii) the Offshore Minerals Act 1999, or



(iii) the Offshore Minerals Act 1994 of the Commonwealth,



(e)

it may appoint a receiver,



(f)

it may make an order for the detention, custody or preservation of property under rule 25.3,

to the same extent as if the applicant had commenced the proceedings and the application were made in the proceedings. (2)

In relation to proceedings in the Supreme Court, an application under subrule (1) may be made in any division of the Court but must, so far as practicable, be made in the division to which the proceedings that are intended to be commenced would be assigned.

(3)

A person making an application under subrule (1) must give an undertaking to the court to the effect that the applicant will file originating process commencing the proceedings within such time as the court may order or, if the court makes no such order, within 48 hours after the application is granted.

25.3 Preservation of property (cf SCR Pt 28, r 2) (1)

In proceedings concerning property, or in which any question may arise as to property, the court may make orders for the detention, custody or preservation of the property.

(2)

An order under subrule (1) may authorise any person to enter any land or to do any other thing for the purpose of giving effect to the order.

(3)

In proceedings concerning the right of any party to a fund, the court may order that the fund be paid into court or otherwise secured.

25.4 Disposal of personal property (cf SCR Pt 28, r 3) If, in proceedings concerning property (other than land) or in which any question may arise as to any property (other than land), it appears to the court that: (a)

the property is of a perishable nature or is likely to deteriorate, or

(b)

for any other reason it is desirable that the property should be sold or otherwise disposed of,

the court may make an order for the sale or other disposal of the whole or any part of the property by such person, and in such manner, as the court may direct. 25.5 Interim distribution (cf SCR Pt 28, r 4) If, in proceedings concerning property, it appears to the court that the property is more than sufficient to answer the claims on the property for which provision ought to be made in the proceedings, the court may allow any part of the property to be conveyed, transferred or delivered to any person having an interest in the property.

328 [6.160]

Before a Civil Action Commences  Chapter  6

Uniform Civil Procedure Rules 2005 (NSW) cont. 25.6 Interim income (cf SCR Pt 28, r 5) If, in proceedings concerning property, it appears to the court that the whole or any part of the income of the property is not required to answer the claims on the property or its income for which provision ought to be made in the proceedings, the court may allow that income or part to be paid, during such period as the court may determine, to all or any of the persons having an interest in the income. 25.7 Payment before ascertainment of all persons interested (cf SCR Pt 28, r 6) If two or more persons are entitled to share in a fund, the court may order or allow immediate payment to any of those persons of his or her share without reserving any part of that share to meet the subsequent costs of ascertaining any other of those persons. 25.8 Meaning of “usual undertaking as to damages” (cf SCR Pt 28, r 7(2)) The “usual undertaking as to damages”, if given to the court in connection with any interlocutory order or undertaking, is an undertaking to the court to submit to such order (if any) as the court may consider to be just for the payment of compensation (to be assessed by the court or as it may direct) to any person (whether or not a party) affected by the operation of the interlocutory order or undertaking or of any interlocutory continuation (with or without variation) of the interlocutory order or undertaking. 25.9 Orders may be made at any stage of proceedings (cf SCR Pt 28, r 7(1)) Orders may be made under this Part at any stage of proceedings.

 Interim injunctions [6.163]  The Supreme Court has power to grant an interim or interlocutory injunction at any

stage of the proceedings in any case in which it appears to the Court to be just or convenient to do so by virtue of its inherent jurisdiction and s  66(4) of the Supreme Court Act 1970 (NSW). The District Court has a limited power to grant temporary injunctions for a period not exceeding 14 days or exceeding that period if necessary to enable Supreme Court proceedings to be commenced or heard: District Court Act 1973 (NSW) s 141, also see s 140. To obtain an interlocutory injunction an applicant must show that there is a “prima facie case” and that the “balance of convenience” favours the order being made. An interim injunction will usually continue for a short period of time (measured in days). An example of an interim injunction is the injunction obtained by Apple against Samsung to restrain Samsung from launching its tablet device in Australia: Apple Inc v Samsung Electronics Co Ltd [2011] FCA 1164 –​the injunction was later discharged on appeal Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156. (The Federal Court has power to make interlocutory injunctions as the Court “has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate”: Federal Court of Australia Act 1976 (Cth) s 23.) [6.163]  329

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Australian Broadcasting Corporation v O’Neill [6.166]  Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; 229 ALR 457; [2006] HCA 46 [An interlocutory injunction was ordered that restrained the ABC from broadcasting or otherwise publishing any part of a documentary known as “The Fisherman” that imputed or implied that O’Neill was responsible for or is suspected of being responsible for the disappearance or murder of children commonly referred to as the Beaumont children or that O’Neill is a multiple killer of children. O’Neill is serving in Tasmania a life sentence of imprisonment following his conviction in November 1975 for the murder of a child. He had been charged with the murder of a second child, aged nine, in April 1975. Following the November 1975 conviction, the Tasmanian prosecuting authorities decided not to proceed with a trial for the April occurrence. The three Beaumont children, aged four, seven and nine, disappeared in South Australia in 1966.] GLEESON CJ and CRENNAN J [34] The primary judge, and the majority in the Full Court, erred in principle in two respects in their approach to the exercise of the discretionary power to grant an interlocutory injunction in the special circumstances of a defamation case. They failed to take proper account of the significance of the value of free speech in considering the question of prior restraint of publication, and they failed to take proper account of the possibility that, if publication occurred and was found to involve actionable defamation, only nominal damages might be awarded. The appeal should be allowed. GUMMOW and HAYNE JJ Interlocutory injunctions [65] The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued: The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal: How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks. [66] For example, special considerations apply where injunctive relief is sought to interfere with the decision of the executive branch of government to prosecute offences. Again, in Castlemaine Tooheys Ltd v South Australia, Mason ACJ, in the original jurisdiction of this Court, said that “[i]‌n the absence of compelling grounds” it is the duty of the judicial branch to defer to the enactment of the legislature until that enactment is adjudged ultra vires, and dismissed applications for interlocutory injunctions to restrain enforcement of the law under challenge. [67] Various views have been expressed and assumptions made respecting the relationship between the judgment of this Court in Beecham and the speech of Lord Diplock in the subsequent decision, American Cyanamid Co v Ethicon Ltd. It should be noted that both were cases of patent infringement and the outcome on each appeal was the grant of an interlocutory injunction to restrain infringement. Each of the judgments appealed from had placed too high the bar for the obtaining of interlocutory injunctive relief. 330 [6.166]

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Australian Broadcasting Corporation v O’Neill cont. [68] Lord Diplock was at pains to dispel the notion, which apparently had persuaded the Court of Appeal to refuse interlocutory relief, that to establish a prima face case of infringement it was necessary for the plaintiff to demonstrate more than a 50 per cent chance of ultimate success. Thus Lord Diplock remarked: The purpose sought to be achieved by giving to the court discretion to grant such injunctions would be stultified if the discretion were clogged by a technical rule forbidding its exercise if upon that incomplete untested evidence the court evaluated the chances of the plaintiff’s ultimate success in the action at 50 per cent or less, but permitting its exercise if the court evaluated his chances at more than 50 per cent. [69] In Beecham, the primary judge, McTiernan J, had refused interlocutory relief on the footing that, while he could not dismiss the possibility that the defendant might not fail at trial, the plaintiff had not made out a strong enough case on the question of infringement. Hence the statement by Kitto J in the course of argument in the Full Court that it was not necessary for the plaintiff to show that it was more probable than not that the plaintiff would succeed at trial. [70] When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase “serious question” if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham, depends upon the considerations emphasised in Beecham. [71] However, a difference between this Court in Beecham and the House of Lords in American Cyanamid lies in the apparent statement by Lord Diplock that, provided the court is satisfied that the plaintiff’s claim is not frivolous or vexatious, then there will be a serious question to be tried and this will be sufficient. The critical statement by his Lordship is “[t]‌he court no doubt must be satisfied that the claim is not frivolous or vexatious in other words, that there is a serious question to be tried”. That was followed by a proposition which appears to reverse matters of onus: So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. (emphasis added) Those statements do not accord with the doctrine in this Court as established by Beecham and should not be followed. They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. [72] The second of these matters, the reference to practical consequences, is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application. The first consideration mentioned in Beecham, the nature of the rights asserted by the plaintiff, redirects attention to the present appeal. [Balance of convenience favoured the denial of interlocutory relief.] [footnotes omitted]

 Freezing orders [6.170]  Freezing orders are otherwise known as Mareva injunctions or Mareva orders. The

power of a court to grant a Mareva injunction was first considered by the High Court in [6.170]  331

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Jackson v Sterling Industries Ltd (1987) 162 CLR 612. Mareva orders are named after one of the earliest cases which allowed their use: Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd’s Rep 509. In another common law case, Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; 73 ALJR 657 the High Court allowed a Mareva injunction to be made against a non-​party to the litigation. A Mareva order prevents a party from disposing of assets to frustrate the enforcement of a judgment. The power to make such an order derives from the court’s equitable inherent jurisdiction. Mareva orders now have a statutory basis in the UCPR and are called “freezing orders”. The UCPR would be the main source of power for a freezing order, however, the UCPR expressly preserve the court’s inherent jurisdiction. That inherent jurisdiction has been held by the High Court to extend to the granting of freezing orders in relation to a prospective judgment of a foreign court that is enforceable in Australia: PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36. An application for a freezing order should comply with the substance of the requirements contained in Practice Note SC Gen 14 (see [6.210]). See also Chapter 12 of Miiko Kumar and Michael Legg (eds), Ten Years of the Civil Procedure Act 2005 (NSW): A Decade of Insights and Guide to Future Litigation (Thomson Reuters, 2015).

Jackson v Sterling Industries [6.180]  Jackson v Sterling Industries Ltd (1987) 162 CLR 612 [The plaintiff, who sued the defendant for breach of s 52 of the Trade Practices Act 1974 (Cth), applied to the Federal Court for an order that the respondent pay $3 million into court as security for the satisfaction of any judgment that might be entered against him in the application. The Federal Court judge found that the plaintiff had a good chance of success and ordered that the defendant “provide security in the sum of $3,000,000 in such manner and form as the parties may agree or, in default of agreement, the Court or its Registrar may approve”. The defendant appealed. In the High Court, Mason CJ, Wilson, Brennan, Deane and Dawson JJ (Toohey and Gaudron JJ dissenting) found that the order should not have been made. However, the court recognised the power of courts to grant Mareva injunctions. The power derived from the inherent power of the court to prevent an abuse of its own process or in the general grants of statutory powers to superior courts to make interlocutory orders wherever just or appropriate.] DEANE J [622] There may have been a time when it would have been strongly arguable that the making of an interlocutory order to preserve assets of a defendant pending the determination of proceedings against him could not properly have been seen as “appropriate” to be made by a court in relation to the exercise of the jurisdiction to entertain the substantive proceedings. If that be so, that time has passed. Orders preventing a defendant from disposing of his assets so as to create a situation in which any judgment obtained against him would not be satisfied may be of comparatively recent development. They have, however, become an accepted incident of the jurisdiction of superior courts throughout most of the common law world. In this country, the jurisdiction to make such orders, commonly referred to as “Mareva injunctions”, has been progressively asserted and exercised by the Supreme Courts of Victoria, New South Wales, Western Australia, Queensland, the Australian Capital Territory and South Australia. Initially, injunctive orders to preserve assets were made to prevent a non-​resident defendant from removing assets from the territorial limits of a court’s jurisdiction so as to frustrate the effectiveness of any judgment that might be obtained: see Nippon Yusen Kaisha v Karageorgis [ [1975] 1 WLR 1093; [1975] 3 All ER 282]; Mareva Compania Naviera SA v International Bulkcarriers SA [ [1975] 2 Lloyd’s Rep 509; [1980] 1 All ER 213]. In due course, it was perceived that a general interlocutory power to make orders preventing a defendant from disposing of his assets so as to defeat any judgment obtained in an action was an incident of the substantive jurisdiction to entertain the action and was not confined 332 [6.180]

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Jackson v Sterling Industries cont. to the case where the defendant was a non-​resident. That general power has been held to encompass an order requiring the disclosure by a defendant of his assets (see Bekhor Ltd v Bilton [ [1981] QB 923]; TDK Tape Distributor v Videochoice Ltd [ [1986] 1 WLR 141; [1985] 3 All ER 345]); an order for the delivery up (to a named solicitor) of [623] designated assets which were not specifically in issue in the proceedings (see CBS United Kingdom Ltd v Lambert [ [1983] Ch 37]); and, an order restraining a local company from disposing of or dealing with assets which were outside the jurisdiction at least where they had been within the jurisdiction when the action commenced: see Hospital Products Ltd v Ballabil Holdings Ltd [ [1984] 2 NSWLR 662]; on appeal [(1985) 1 NSWLR 155]. Arguably, it extends to the making of an ancillary order after judgment to protect the efficacy of execution: see Stewart Chartering Ltd v C & O Managements SA [ [1980] 1 WLR 460; [1980] 1 All ER 718]. As a general proposition, it should now be accepted in this country that “a Mareva injunction can be granted … if the circumstances are such that there is a danger of [the defendant’s] absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied”: per Lord Denning MR, Rahman (Prince Abdul) v Abu-​Taha [ [1980] 1 WLR 1268; [1980] 3 All ER 409, at 1273 (WLR), 412 (All ER)] quoted with approval by Street CJ in Ballabil Holdings [ (1985) 1 NSWLR, at 160]. To some extent, the general power of the English High Court of Justice to grant a Mareva injunction was initially seen as based on the provisions of s 45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 (UK): see also the Supreme Court Act 1981 (UK), s 37(3). That general power should, however, now be accepted as an established part of the armoury of a court of law and equity to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. That being so, the power to grant such relief in relation to a matter in which the Federal Court has jurisdiction is comprehended by the express grant to that Court by s 23 of the Federal Court of Australia Act of power, in relation to such matters, “to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate”. Indeed, even in the absence of the provisions of s 23, the Federal Court would have possessed power to make such orders in relation to matters properly before it, as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters. In that regard, I agree with the following comments of Bowen CJ in his judgment in the present matter [(1986) 69 ALR 92, at 97]: In relation to a statutory court such as the Federal Court it is wise to avoid the use of the words “inherent jurisdiction”. [624] Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. The implied power for example to prevent abuse of its process, is similar to, if not identical with, inherent power.

 [6.183]  The majority judgment subsequently made explicitly clear that a freezing order is not

to be used to provide security to a plaintiff. As explained by Deane J at 625: [I]‌t appears to me that, when an order for the preservation of assets goes beyond simply restraining the defendant from disposing of specific assets until after judgment, it must be framed so as to come within the limits set by the purpose which it can properly be intended to serve. That purpose is not to create security for the plaintiff or to require a defendant to provide security as a condition of being allowed to defend the action against him. Nor is it to introduce, in effect, a new vulnerability to imprisonment for debt, or rather for alleged indebtedness, by requiring a defendant, under the duress of the threat of imprisonment for contempt of court, to find money, which he may or may not have (whether or not at some point of time it may have been available to him), to guarantee to a plaintiff that any judgment obtained will be [6.183]  333

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satisfied. It is to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action.

As additionally explained by Wilson and Dawson JJ at 617 (agreeing with Deane J): One important result of viewing the Mareva injunction in this way is to emphasize the limits of the remedy. Its use must be necessary to prevent the abuse of the process of the court. As Ackner LJ pointed out in A J Bekhor & Co Ltd v Bilton [[1981] QB 923, pp 941–​942], the Mareva injunction represents a limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it. He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors. The remedy is not to be used to circumvent the insolvency laws.

Marango Investments v Kingdom Towers [6.186]  Marango Investments Pty Ltd v Kingdom Towers 4 Pty Ltd [2019] NSWSC 801 [The plaintiff brought proceedings against the first defendant (Kingdom Towers) for breach of contract following a failure to make full payment on a contract for a sale of property. The proceeding was brought against the second defendant (Andrew Brodner) as guarantor of the first defendant’s obligations. A freezing order restraining both defendants from “alienating, encumbering or further encumbering” certain specified properties to maintain assets valued at no less than the plaintiff’s claim had been agreed to as a consent order by all parties. At the hearing date set to enter the order, the plaintiff sought to enter an amended consent order that included shares in companies held by each of the defendants in addition to the specified properties. Before taking up the matter of these proposed amendments, the Supreme Court discussed the general basis for granting a freezing order.] ROBB J [15] This is a case where the plaintiff has an apparently strong case against both defendants for an award of damages, or an order for payment under the second defendant’s guarantee, of an amount in the order of that claimed by the plaintiff, being $2,070,625. Accordingly, the plaintiff has satisfied the requirement for the making of a freezing order that requires that it establish that it has a good arguable case that it is entitled to the final relief claimed: see Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 25.14(1)(b). [16] The plaintiff accepted that, before the Court will make a freezing order in its favour, the plaintiff must establish that there is a danger that a prospective judgment in its favour will be wholly or partly unsatisfied because assets of the defendants are disposed of, dealt with or diminished in value: UCPR r 25.14(4)(b)(ii). The object of freezing orders is to protect “[t]‌he integrity of [the Court’s] processes [by] … preserving the efficacy of the execution which would lie against the actual or prospective judgment debtor”: see Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [25]. The risk of dissipation must be established by evidence and not mere assertion: see Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102 at [57]. As was said by the Court of Appeal in Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 at 276: … The basis of jurisdiction is founded on the risk that the defendant will so deal with his assets that he will stultify and render ineffective any judgment given by the Court in the plaintiff’s action, and thus impair the jurisdiction of the Court and render it impotent properly and effectively to administer justice in New South Wales. As has appeared, the jurisdiction to grant the injunction is not to be exercised simply to preclude a debtor from dealing with his assets, and in particular to prevent him from using them to pay his debts in the ordinary course of business. It is directed to dispositions which do not fall within this category and which are intended to frustrate, or have the necessary effect of frustrating, the plaintiff in 334 [6.186]

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Marango Investments v Kingdom Towers cont. his attempt to seek through the court a remedy for the obligation to which he claims the defendant is subject. Assuming that the jurisdiction is exercised with due caution, it seems to us that it is necessary for the administration of justice in this State that the court should have power to prevent a defendant who would otherwise have assets to satisfy a judgment from setting the court and its procedures at naught by making sure that its judgment will be a mere brutum fulmen. The whole sense and purpose of the inherent powers […] are to ensure the effective administration of justice … [17] The plaintiff relied upon the following circumstances to establish that there is a sufficient risk that the assets of the defendants will be dissipated in a manner that will have the necessary effect of frustrating any judgment obtained by the plaintiff against the defendants to justify the making of a freezing order against them. [Circumstances described.] [22] In essence, the plaintiff’s submission was, at the hearing, that the evidence that it was able to present established a real reason for concern that the second defendant may be in the course of liquidating his assets. Given what the plaintiff reasonably submitted was its relatively strong case for an order against the second defendant, on the guarantee given by him, for payment of a sum in the order of $2,000,000, the plaintiffs submitted that the evidence that it had put before the Court called for an explanation from the second defendant, as to why his conduct is not likely to frustrate any judgment made by the Court. No explanation has been given by the second defendant. … [27] I am persuaded by the submissions made for counsel for the plaintiff that the defendants had elected not to put on evidence in response to the plaintiff’s evidence, and had not applied for an adjournment until after the plaintiff’s submissions had been made. There was no explanation by the defendants concerning how matters would change if they were given a belated adjournment of the hearing. [28] The evidence upon which the plaintiff relies is not conclusive, and it is consistent with the defendants having some proper explanation of the reasons for the recent steps taken by the second defendant that suggest he is in the course of realising his assets. For instance, it is possible that the second defendant has taken these steps to try to fund the purchase of the plaintiff’s property by the first defendant, or to fund these proceedings. However, given the apparent strength of the plaintiff’s case, I am satisfied that the Court should, on balance, make a freezing order against the defendants. [29] I would not make an order in the alternative form sought by the plaintiff at the hearing, as the plaintiff had not given due notice to the defendants of the change in the relief that it would seek, and, as there is no evidence of the value of the assets that would have been the subject of that order, the Court cannot assess the practical consequences of that order being made. [30] As the parties agreed to the terms of the freezing order made on 17 June 2019 by consent, it will be appropriate to continue the order on those terms ….



Cardile v LED Builders [6.190]  Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [LED commenced proceedings against Eagle Homes Pty Ltd for infringing LED’s copyright in building plans. Mr and Mrs Cardile were the only shareholders in Eagle Homes Pty Ltd. While LED was litigating its claim against Eagle Homes, Eagle Homes paid large dividends to the Cardiles, who then [6.190]  335

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Cardile v LED Builders cont. set up another company (Ultra Modern Pty Ltd). The Cardiles owned shares in and controlled Ultra Modern Pty Ltd. LED was successful in obtaining a judgment against Eagle Homes for infringement however damages were not yet quantified. LED sought Mareva orders against Eagle Homes, the Cardiles and Ultra Modern Pty Ltd. The Full Bench of the Federal Court held that LED was entitled to such orders. A Mareva injunction was made. This order was made upon LED giving the usual undertaking as to damages that Ultra Modern “by itself, its directors, officers, employees, agents or otherwise”, and Mr and Mrs Cardile be restrained from disposing of or dealing with any of their money, property or other assets. The Cardiles and Ultra Modern appealed to the High Court.] GAUDRON, MCHUGH, GUMMOW and CALLINAN JJ [1]‌This appeal raises a question whether an order identified as a Mareva injunction or order may be granted against a third party to proceedings in circumstances in which that party has not been shown to have an interest in the assets or funds (with one possible exception) of the potential judgment debtor. … [392; 20] Ultra Modern is entitled to dispose of assets that it owns or has lawfully acquired. To dispose of its own assets, without more and when no substantive proceedings have been taken against it, cannot be said to be an abuse or frustration of the court’s process in respect of litigation between other parties. [21] The only assets that have been shown to be in contention here are the dividends declared and paid by Eagle Homes which served temporarily to reduce, but not entirely eliminate, a debt owed by Eagle Homes to Mr and Mrs Cardile, the business name “Eagle Homes” and possibly goodwill attached to the business name “Eagle Homes”. [22] We will deal with the dividends first. There was no evidence that Mr and Mrs Cardile were mere conduits for the transmission to Ultra Modern of the funds, received by them by way of dividends, and accordingly no order on account of them should have been made in respect of Ultra Modern. … [24] Ultra Modern has not been shown to own or hold, or have the power of disposition over, any property of Eagle Homes nor in any way at all [393] to owe any obligations or debts to that company (save perhaps for the business name “Eagle Homes” which we set aside for separate consideration later). The evidence does not in our opinion go so far as to establish, even on a prima facie basis, that Ultra Modern is in possession of, or using, Eagle Homes’ goodwill. It is not suggested that Eagle Homes, or a liquidator of it, or anyone else, would have any entitlement to set aside any transaction between Eagle Homes and Ultra Modern or to follow or trace any assets passing from the former to the latter. There have been no transactions between the companies and no assets have passed between them. [25] None of the authorities cited to this Court went so far as to support an order of the width of that made in the Full Court. As the argument proceeded upon the grounds of appeal to which we have referred, several matters became apparent. One was that the English authorities appear to have developed to a stage where what is identified as the Mareva injunction or order lacks any firm doctrinal foundation and is best regarded as some special exception to the general law. Another was that, whilst it is undesirable that asset preservation orders of the Mareva variety be left as a sui generis remedy with no doctrinal roots, the term “injunction” is an inappropriate identification of that area of legal discourse within which the Mareva order is to be placed. The third was the point encapsulated in the joint judgment of this Court in CSR Ltd v Cigna Insurance Australia Ltd [ (1997) 189 CLR 345 at 391]: The counterpart of a court’s power to prevent its processes being abused is its power to protect the integrity of those processes once set in motion. The integrity of those processes extends to preserving the efficacy of the execution which would lie against the actual or prospective judgment debtor [Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623, 638]. The protection of the administration of justice which this involves may, in a proper case, extend to asset preservation orders against third parties to the principal litigation. This appeal concerns the identification of such proper cases. 336 [6.190]

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Cardile v LED Builders cont. [26] In Jackson v Sterling Industries Ltd [at 623], Deane J referred to the armoury of a court of law and equity to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. By this means, the risk of the stultification of the administration of justice is diminished. Once the source of power is recognised, then, whatever may be the limitations with respect to inferior courts [see the remarks of Dawson J in Grassby v The Queen (1989) 168 CLR 1 at 16–​17 as to the powers of inferior courts enjoyed by implication], in the case of the Federal Court the power will be seen to be comprehended by the express grant in s 23 of the Federal [394] Court Act. In National Australia Bank Ltd v Bond Brewing Holdings Ltd [ (1990) 169 CLR 271 at 277], Mason CJ, Brennan and Deane JJ described as mistaken any proposition that Mareva relief could only be obtained against the defendant to an action if there were a positive intention to frustrate any judgment. However, the presence in s 23 of the expression “as the Court thinks appropriate” points to the requirement to develop principles governing the exercise of the power in such a fashion as to avoid abuse. This need, as indicated above, is at the heart of the present appeal. Meeting that need is not facilitated, and may be impeded, by continued attempts to force what has become known as the Mareva order into the mould of interlocutory injunctive relief as administered under that description by courts of equity [395]. [31] However, in England, it is now settled by several decisions of the House of Lords [Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation [1981] AC 909 at 979–​980, 992; South Carolina Insurance Co v Assurantie Maatschappij “De Zeven Provincien” NV [1987] AC 24 at 40; Pickering v Liverpool Daily Post and Echo Newspapers Plc [1991] 2 AC 370 at 420–​421. See also Mercedes Benz AG v Leiduck [1996] AC 284 at 298, 300–​301] that the power stated in Judicature legislation –​ that the court may grant an injunction in all cases in which it appears to the court to be just and convenient to do so –​does not confer an unlimited power to grant injunctive relief. Regard must still be had to [396] the existence of a legal or equitable right which the injunction protects against invasion or threatened invasion, or other unconscientious conduct or exercise of legal or equitable rights. The situation thus confirmed by these authorities reflects the point made by Ashburner that “the power of the court to grant an injunction is limited by the nature of the act which it is sought to restrain” [Principles of Equity, 2nd ed (1933), p 335]. [32] Further, the injunction remains a discretionary remedy in a particular sense of that term. In Bristol City Council v Lovell [ [1998] 1 WLR 446 at 453; [1998] 1 All ER 775 at 782], Lord Hoffmann observed: The reason why an injunction is a discretionary remedy is because it formed part of the remedial jurisdiction of the Court of Chancery. If the Chancellor considered that the remedies available at law, such as damages, were inadequate, he could grant an injunction to give the plaintiff more effective relief. If he did not think that it was just or expedient to do so, he could leave the plaintiff to his rights at common law. The discretion is therefore as to the remedy which the court will provide for the invasion of the plaintiff’s rights. [35] In the Mareva case itself, Lord Denning MR had classified relief as injunctive on the footing that it went in aid of a legal right, namely the right of the plaintiff to be paid the debt owing, even before the establishment of that right by the getting of judgment for it [Mareva [1975] 2 Lloyd’s Rep 509 at 510]. … However, as Bray CJ observed in Pivovaroff v Chernabaeff [73], such a position was foreclosed by the long-​standing decision of Lord Hatherley LC in Mills v Northern Railway of Buenos Ayres Co [74]. That decision had been taken as settled authority for the proposition, expressed by Joyce [The Law and Practice of Injunctions in Equity and at Common Law (1872), vol 2, p 923]: A simple contract creditor of a company (having no mortgage or other security, and not having taken out execution) cannot sustain a bill to restrain the company from dealing with their assets as they please, on the ground that they are diminishing the fund for payment of his debt. The remedies sought in Mills had included an injunction to restrain the [398] payment of any dividend to shareholders until provision had been made for paying the creditor’s debt. There had [6.190]  337

Civil Procedure in New South Wales

Cardile v LED Builders cont. been prima facie evidence that the plaintiff was a creditor and had been unpaid for years [Mills (1870) LR 5 Ch App 621 at 625n]. Thus, the plaintiff had made out, at least at the interlocutory level, the existence of his legal right. However, there being no security for the debt, the right was not, as then was considered important, proprietary in nature. Moreover, the contractual right itself would, on recovery of judgment, merge in the judgment. The substance of the relief sought by the plaintiff was anticipatory relief in aid of those rights that would at that later stage attach to the judgment debt. … [The court referred to non-​injunctive equitable remedies that had been developed by the courts to protect litigants.] [399; 40] In these various ways, the courts developed doctrines and remedies, outside the injunction as understood in courts of equity, to protect the integrity of its processes once set in motion. The Mareva order for the preservation of assets should be seen as a further development. There is no harm in the use of the term Mareva to identify that development, provided the source of the remedy is kept in view when considering the form of the remedy in each particular case. An anterior question will be whether there is another interlocutory remedy among those considered above which will be suitable to meet the case in hand but be less extensive in scope. … [401; 45] In this litigation, as has been mentioned, final judgment on LED’s claim against Eagle Homes for a money sum is still pending. The appellants correctly submit that the statement of principle in Patrick Stevedores provides no basis for the making of an order against a non-​party such as Ultra Modern which is not answerable or liable in some way to a party (plaintiff or defendant) in a proceeding where judgment has not been obtained or execution recovered, or not holding, controlling or capable of disposing of the property of a party in that [402] proceeding. This proposition, negative in character, should be accepted. … [48] LED’s stance in this appeal is that it is not essential that the court’s processes in support of which the Mareva relief is sought be confined to those set in motion upon a cause of action. That followed, it is submitted, from a passage in the speech of Lord Mustill in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [104], to which Hoffmann LJ referred in Mercantile Group (Europe) AG v Aiyela [105] in holding that the wife of the judgment debtor should be restrained from disposing of assets although no action had been brought against her. Lord Mustill said that the right to an interlocutory injunction which is incidental to, and dependent on, the enforcement of a substantive right usually, although not invariably, takes the shape of a cause of action. However, we do not think that his Lordship was [403] suggesting that an order might be made against a non-​party not amenable in some way ultimately to some coercive process requiring it to disgorge, or in some other way to participate in the satisfaction of, a judgment against a party. [49] LED argues that its substantive rights are the final injunctive orders already made by Davies J against Eagle Homes following the determination of the issue of liability upon LED’s actions for copyright infringement. Even if this be accepted for present purposes, LED still has the problem, which in our opinion the evidence does not resolve in its favour, of showing that recourse may be had to the appellants to satisfy LED’s prospective money judgment against Eagle Homes. [50] As LED submits, the development of this ancillary jurisdiction to grant Mareva orders has been an evolving process and the courts have approached the different factual situations as they have arisen “flexibly”. There is a temptation to use the term “flexible” to cloak a lack of analytical rigour and to escape the need to find a doctrinal and principled basis for orders that are made. There are significant differences between an order protective of the court’s process set in train against a party to an action, including the efficacy of execution available to a judgment creditor, and an order extending to the property of persons who are not parties and who cannot be shown to have frustrated, actually or prospectively, the administration of justice. It has been truly said that a Mareva order does not deprive the party subject to its restraint either of title to or possession of the assets to which the order extends. Nor does the order improve the position of claimants in an insolvency of the judgment debtor. It operates in personam and not as an attachment. Nevertheless, those statements should not obscure the reality that the granting of a Mareva order is bound to have a significant impact on the property of 338 [6.190]

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Cardile v LED Builders cont. the person against whom it is made: in a practical sense it operates as a very tight “negative pledge” species of security over property, to which the contempt sanction is attached. It requires a high degree of caution on the part of a court invited to make an order of that kind. An order lightly or wrongly granted may have a capacity to impair or restrict commerce just as much as one appropriately granted may facilitate and ensure its due conduct. [51] We agree with the tenor of what was said with particular respect to Mareva relief before judgment by the Court of Appeal of New South Wales (Mason P, Sheller JA, Sheppard A-​JA) in Frigo v Culhaci [404]: [A Mareva order] is a drastic remedy which should not be granted lightly. … A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant’s right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to “provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant’s insolvency” … Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]. The leading decision in this State is Patterson v BTR Engineering (Aust) Ltd. [52] Another reason, unfortunately rarely adverted to in the cases, for care in exercising the power to grant a Mareva order is that there may be difficulties associated with the quantification and recovery of damages pursuant to the undertaking if it should turn out that the order should not have been granted. These matters were the subject of discussion by Aickin J in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd. A further question to which a Mareva order gives rise is the identification of the events to trigger its dissolution or an entitlement to damages. So far as this is possible, some attention to that question should be given at the time that the order is framed in the first instance. [53] Discretionary considerations generally also should carefully be weighed before an order is made. Has the applicant proceeded diligently and expeditiously? Has a money judgment been recovered in the proceedings? Are proceedings (for example, civil conspiracy proceedings) available against the third party? Why, if some proceedings are available, have they not been taken? Why, if proceedings are available against the third party and have not been taken and the court is still minded to make a Mareva order, should not the grant of the relief be conditioned upon an undertaking by the applicant to commence, and ensure so far as is possible the expedition of, such proceedings? It is difficult to conceive of cases where such an undertaking would not be required. Questions of this kind may be just as relevant to the decision to grant Mareva relief as they are to a decision to dissolve it. These are matters to which courts should be alive. As will appear, they are matters which should have been considered by the Full Court in this case. [54] We have indicated our acceptance of a negative proposition put by [405] the appellants. However, we consider that the general proposition for which the appellants contend –​that the grant of Mareva relief against the third party should be limited to cases in which the third party holds or is about to hold or dissipate or further dissipate property beneficially owned by the defendant in the substantive proceedings –​is too narrowly expressed. Nevertheless, it will be a rare case in which Mareva relief will be granted if such a situation does not exist. [55] We do not accept an example suggested by LED as an answer to the appellants’ general proposition. LED contends that, if the appellants’ proposition be correct, a third party to whom a defendant makes a fraudulent gift to render useless the judgment against him would be immune from Mareva relief, whereas a third party trustee would not, because the third party taking the fraudulent gift would have no right in law or in equity to retain it. The former would be amenable to a claim pursuant to s 37A of the Conveyancing Act, or process by a trustee in bankruptcy, or a liquidator, and [6.190]  339

Civil Procedure in New South Wales

Cardile v LED Builders cont. susceptibility to that process may in our opinion be sufficient to support the grant of Mareva relief. The fact that such relief takes effect in personam, and may be distinguished from an equitable or other proprietary remedy such as tracing, does not mean that the availability of such remedies is irrelevant to a consideration whether that relief should be granted. Indeed the contrary is the case. The availability of a proprietary remedy may, in our opinion, in some cases be sufficient to constitute a substantive right in aid of which Mareva relief in personam might go. [56] The matters referred to above show that the general power of superior courts which is comprehended by the express grant in s 23 of the Federal Court Act is a broad one. But, as the statements of Deane J in Jackson v Sterling Industries Ltd make clear, orders made pursuant to that section (and under the general power) must be capable of properly being seen as appropriate to the case in hand. [57] What then is the principle to guide the courts in determining whether to grant Mareva relief in a case such as the present where the activities of third parties are the object sought to be restrained? In our opinion such an order may, and we emphasise the word “may”, be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which: (i)

the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including “claims and expectancies” [114], of the judgment debtor or potential judgment debtor or

(ii)

some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor. [58] It is that principle which we would apply to this case. Its application is a matter of law, although discretionary elements are involved. … [The court concluded that it would be appropriate to issue a Mareva injunction against the Cardiles to refrain from dealing with their assets in an amount equal to the amount that they had received as dividends ($1,058,977.120).] [75] The draft form of order, propounded for this contingency by LED, is, with some significant adaptations, the form of order that should be made on application by LED to a judge of the Federal Court. The order should be made by the Federal Court, upon remitter by this Court and provision of the necessary undertakings. Any variation or enforcement of the order will then be a matter for the Federal Court. The order is as follows: 1.

Upon the applicant [LED Builders Pty Ltd] by its counsel giving to the Court the usual undertakings as to damages order that:



(a)

Ultra Modern Developments Pty Ltd [Ultra Modern] by itself, its directors, officers, employees, agents or otherwise be restrained until further order from disposing of, encumbering or otherwise dealing with in any way the business name “Eagle Homes”



(b)

Paul Cardile and Lucy Cardile each be restrained until further order from disposing of or dealing with in any way any of their money, property or other assets whether in their own names or not and whether solely or jointly owned up to the value of $1,058,977.12, other than for the following purposes:



(i)

to enable them to pay and to continue to pay the reasonable legal expenses of defending these proceedings and any appeal there from;



(ii)

to protect the copyright of Eagle Homes Pty Ltd [Eagle Homes] or Ultra Modern in their housing plans (other than plans relating to these proceedings) by the

340 [6.190]

Before a Civil Action Commences  Chapter  6

Cardile v LED Builders cont. commencement and prosecution of proceedings against infringement of the same;

(iii)

to commence and prosecute any other bona fide proceedings which Eagle Homes or Ultra Modern may be advised to bring;



(iv)

to defend any other proceedings that may be brought against Eagle Homes or Ultra Modern;



(v)

to meet their taxation liabilities and those of Eagle Homes or Ultra Modern;



(vi)

to comply with the statutory requirements to which they, Eagle Homes or Ultra Modern are subject;



(vii)

to meet their normal accountancy fees and those of Eagle Homes or Ultra Modern;



(viii)

to pay ordinary and proper business expenses bona fide incurred by them or by Ultra Modern or Eagle Homes; and



(ix)

to pay their ordinary living expenses.



Uniform Civil Procedure Rules 2005 (NSW) [6.200]  Uniform Civil Procedure Rules 2005 (NSW) rr 25.10–​25.17 Division 2 –​Freezing orders The provisions of this Division comprise uniform rules developed under the auspices of the Australian Council of Chief Justices. 25.10 Interpretation (cf Federal Court Rules O 25A, r 1) In this Division: “ancillary order” has the meaning given by rule 25.12. “another court” includes a court outside New South Wales, whether inside or outside Australia. “applicant” means a person who applies for a freezing order or an ancillary order. “freezing order” has the meaning given by rule 25.11. “respondent” means a person against whom a freezing order or an ancillary order is sought or made. Note 1: The definition of “judgment” in the Federal Court Rules is not included above. The word is defined in section 3 of the Civil Procedure Act 2005 for the purposes of that Act and these rules. Note 2: In any notice of motion for a freezing order, a party should be referred to by the appropriate expression prescribed by rule 18.3. 25.11 Freezing order (cf Federal Court Rules O 25A, r 2) (1)

The court may make an order (a “freezing order”), upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.

(2)

A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets. [6.200]  341

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. 25.12 Ancillary order (cf Federal Court Rules O 25A, r 3) (1)

The court may make an order (an “ancillary order”) ancillary to a freezing order or prospective freezing order as the court considers appropriate.

(2)

Without limiting the generality of subrule (1), an ancillary order may be made for either or both of the following purposes:



(a)

eliciting information relating to assets relevant to the freezing order or prospective freezing order,



(b)

determining whether the freezing order should be made.

25.13 Respondent need not be party to proceeding (cf Federal Court Rules O 25A, r 4) The court may make a freezing order or an ancillary order against a respondent even if the respondent is not a party to a proceeding in which substantive relief is sought against the respondent. 25.14 Order against judgment debtor or prospective judgment debtor or third party (cf Federal Court Rules O 25A, r 5) (1)

This rule applies if:



(a)

judgment has been given in favour of an applicant by:



(i)

the court, or



(ii)

in the case of a judgment to which subrule (2) applies –​another court, or



(b)



an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in: (i)

the court, or

(ii)

in the case of a cause of action to which subrule (3) applies –​another court.

(2)

This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the court.

(3)

This subrule applies to a cause of action if:



(a)

there is a sufficient prospect that the other court will give judgment in favour of the applicant, and



(b)

there is a sufficient prospect that the judgment will be registered in or enforced by the court.

(4)

The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur:



(a)

the judgment debtor, prospective judgment debtor or another person absconds,



(b)

the assets of the judgment debtor, prospective judgment debtor or another person are:



(i)

removed from Australia or from a place inside or outside Australia, or

(ii)

disposed of, dealt with or diminished in value.

(5)

The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a “third party”) if the court is satisfied, having regard to all the circumstances, that:



(a)

342 [6.200]

there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because:

Before a Civil Action Commences  Chapter  6

Uniform Civil Procedure Rules 2005 (NSW) cont.

(i)

the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or



(ii)

the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or



(b)

a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.

(6)

Nothing in this rule affects the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so.

25.15 Jurisdiction (cf Federal Court Rules O 25A, r 6) Nothing in this Division diminishes the inherent, implied or statutory jurisdiction of the court to make a freezing order or ancillary order. 25.16 Service outside Australia of application for freezing order or ancillary order (cf Federal Court Rules O 25A, r 7) An application for a freezing order or an ancillary order may be served on a person who is outside Australia (whether or not the person is domiciled or resident in Australia) if any of the assets to which the order relates are within the jurisdiction of the court. 25.17 Costs (cf Federal Court Rules O 25A, r 8) (1)

The court may make any order as to costs as it considers appropriate in relation to an order made under this Division.

(2)

Without limiting the generality of subrule (1), an order as to costs includes an order as to the costs of any person affected by a freezing order or ancillary order.



Practice Note SC Gen 14 [6.210]  Practice Note SC Gen 14 Supreme Court –​Freezing Orders (also known as “Mareva orders” or “asset preservation orders”) Application This Practice Note applies to the Court of Appeal and to the Common Law and the Equity Divisions of the Supreme Court. Commencement This Practice Note was issued on 16 June 2010 and commences on 1 July 2010. Freezing Orders. 1.

This Practice Note supplements Division 2 of Part 25 of the Uniform Civil Procedure Rules 2005 (UCPR) relating to freezing orders (also known as “Mareva orders” after Mareva Compania Naviera SA v International Bulkcarriers SA (The Mareva) [1975] 2 Lloyd’s Rep 509, or “asset preservation orders”). [6.210]  343

Civil Procedure in New South Wales

Practice Note SC Gen 14 cont. 2.

This Practice Note addresses (among other things) the Court’s usual practice relating to the making of a freezing order and the usual terms of such an order. While a standard practice has benefits, this Practice Note and the example form of order annexed to it do not, and cannot, limit the judicial discretion to make such order as is appropriate in the circumstances of the particular case.

3.

Words and expressions in this Practice Note that are defined in UCPR rule 25.10 have the meanings given to them in that rule.

4.

An example form of ex parte freezing order is annexed to this Practice Note. The example form may be adapted to meet the circumstances of the particular case. It may be adapted for an inter partes freezing order as indicated in the footnotes to the example form (the footnotes and references to footnotes should not form part of the order as made). The example form contains provisions aimed at achieving the permissible objectives of the order consistently with the proper protection of the respondent and third parties.

5.

The purpose of a freezing order is to prevent frustration or abuse of the process of the Court, not to provide security in respect of a judgment or order.

6.

A freezing order should be viewed as an extraordinary interim remedy because it can restrict the right to deal with assets even before judgment, and is commonly granted ex parte.

7.

The respondent is often the person said to be liable on a substantive cause of action of the applicant. However, the respondent may also be a third party, in the sense of a person who has possession, custody or control, or even ownership, of assets which he or she may be obliged ultimately to disgorge to help satisfy a judgment against another person. Subrule 5(5) addresses the minimum requirements that must ordinarily be satisfied on an application for a freezing order against such a third party before the discretion is enlivened. The third party will not necessarily be a party to the substantive proceeding, (see Cardile v LED Builders Pty Ltd (1999) 198 CLR 380) but will be a respondent to the application for the freezing or ancillary order. Where a freezing order against a third party seeks only to freeze the assets of another person in the third party’s possession, custody or control (but not ownership), the example form will require adaptation. In particular, the references to “your assets” and “in your name” should be changed to refer to the other person’s assets or name (eg “John Smith’s assets”, “in John Smith’s name”).

8.

A freezing or ancillary order may be limited to assets in Australia or in a defined part of Australia, or may extend to assets anywhere in the world, and may cover all assets without limitation, assets of a particular class, or specific assets (such as the amounts standing to the credit of identified bank accounts).

9.

The duration of an ex parte freezing order should be limited to a period terminating on the return day of the motion, which should be as early as practicable (usually not more than a day or two) after the order is made, when the respondent will have the opportunity to be heard. The applicant will then bear the onus of satisfying the Court that the order should be continued or renewed.

10. A freezing order should reserve liberty for the respondent to apply on short notice. An application by the respondent to discharge or vary a freezing order will normally be treated by the Court as urgent. 11. The value of the assets covered by a freezing order should not exceed the likely maximum amount of the applicant’s claim, including interest and costs. Sometimes it may not be possible to satisfy this principle (for example, an employer may discover that an employee has been making fraudulent misappropriations, but does not know how much has been misappropriated at the time of the discovery and at the time of the approach to the Court). 12. The order should, where appropriate, exclude dealings by the respondent with its assets for legitimate purposes, in particular:

(a)

344 [6.210]

payment of ordinary living expenses;

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Practice Note SC Gen 14 cont.

(b)

payment of reasonable legal expenses;



(c)

dealings and dispositions in the ordinary and proper course of the respondent’s business, including paying business expenses bona fide and properly incurred; and



(d)

dealings and dispositions in the discharge of obligations bona fide and properly incurred under a contract entered into before the order was made.

13. Where a freezing order extends to assets outside Australia, the order should provide for the protection of persons outside Australia and third parties. Such provisions are included in the example form of freezing order. 14. The Court may make ancillary orders. The most common example of an ancillary order is an order for disclosure of assets. The annexed example form provides for such an order in paragraph 8 and for the privilege against self-​incrimination in paragraph 9. Section 128A of the Evidence Act 1995 (Cth) and Evidence Act 1995 (NSW) govern objection to compliance on the self-​incrimination ground in relation to a freezing order. In particular subsections, (3)ff of s 128A govern the procedure to be followed after objection is taken in accordance with paragraph 9 of the example form of freezing order annexed to this Practice Note. 15. The rules of court confirm that certain restrictions expressed in The Siskina [1979] AC 210 do not apply in this jurisdiction. First, the Court may make a freezing order before a cause of action has accrued (a “prospective” cause of action). Secondly, the Court may make a free-​standing freezing order in aid of foreign proceedings in prescribed circumstances. Thirdly, where there are assets in Australia, service out of Australia is permitted under a new “long arm” service rule. 16. As a condition of the making of a freezing order, the Court will normally require appropriate undertakings by the applicant to the Court, including the usual undertaking as to damages. 17. If it is demonstrated that the applicant has or may have insufficient assets within the jurisdiction of the Court to provide substance for the usual undertaking as to damages, the applicant may be required to support the undertaking by providing security. There is provision for such security in the example form of freezing order. 18. The order to be served should be endorsed with a notice which meets the requirements of UCPR rule 40.7. 19. An applicant for an ex parte freezing order is under a duty to make full and frank disclosure of all material facts to the Court. This includes disclosure of possible defences known to the applicant and of any information which may cast doubt on the applicant’s ability to meet the usual undertaking as to damages from assets within Australia. 20. The affidavits relied on in support of an application for a freezing or ancillary order should, if possible, address the following:

(a)



information about the judgment that has been obtained, or, if no judgment has been obtained, the following information about the cause of action: (i)

the basis of the claim for substantive relief;



(ii)

the amount of the claim; and



(iii)

if the application is made without notice to the respondent, the applicant’s knowledge of any possible defence;



(b)

the nature and value of the respondent’s assets, so far as they are known to the applicant, within and outside Australia;



(c)

the matters referred to in UCPR rule 25.14; and

the identity of any person, other than the respondent, who, the applicant believes, may be affected by the order, and how that person may be affected by it.

 [6.210]  345

Civil Procedure in New South Wales

Search orders [6.220] Search orders are otherwise known as Anton Piller orders:  Anton Piller KG v

Manufacturing Processes Ltd [1976] 1 Ch 55. Anton Piller orders have a statutory basis in the UCPR, however, the UCPR preserve the court’s inherent, implied or statutory jurisdiction. Search orders authorise the seizure of documents and other evidence. Search orders are obtained on an ex parte basis. This means that the respondent does not have any notice of the order and it is obtained by the applicant in the respondent’s absence. The purpose of a search order is to preserve evidence which is required to prove the applicant’s claim and which is in danger of being destroyed. The order permits the applicant’s legal representatives and an independent supervising solicitor to enter the respondent’s premises to search, copy documents and remove property from the respondent’s premises. The requirements for the granting of a search order are: (a) that an applicant seeking the order has a strong prima facie case on an accrued cause of action; and (b) the potential or actual loss or damage to the applicant will be serious if the search order is not made; and (c) there is sufficient evidence in relation to a respondent that:



(i)

the respondent possesses important evidentiary material; and



(ii)

there is a real possibility that the respondent might destroy such material or cause it to be unavailable for use in evidence in a proceeding or anticipated proceeding before the court.

An application for a search order should comply with the substance of the requirements contained in Practice Note SC Gen 13 (see [6.240]).

Uniform Civil Procedure Rules 2005 (NSW) [6.230]  Uniform Civil Procedure Rules 2005 (NSW) rr 25.18–​25.24 Division 3 –​Search orders The provisions of this Division comprise uniform rules developed under the auspices of the Australian Council of Chief Justices. 25.18 Interpretation (cf Federal Court Rules O 25B, r 1) In this Division: “applicant” means an applicant for a search order. “described” includes described generally whether by reference to a class or otherwise. “premises” includes a vehicle or vessel of any kind. “respondent” means a person against whom a search order is sought or made. “search order” has the meaning given by rule 25.19. Note: In any notice of motion for a search order, a party should be referred to by the appropriate expression prescribed by rule 18.3. 25.19 Search order (cf Federal Court Rules O 25B, r 2) The court may make an order (a “search order”), in any proceeding or in anticipation of any proceeding in the court, with or without notice to the respondent, for the purpose of securing or 346 [6.220]

Before a Civil Action Commences  Chapter  6

Uniform Civil Procedure Rules 2005 (NSW) cont. preserving evidence and requiring a respondent to permit persons to enter premises for the purpose of securing the preservation of evidence which is or may be relevant to an issue in the proceeding or anticipated proceeding. 25.20 Requirements for grant of search order (cf Federal Court Rules O 25B, r 3) The court may make a search order if the court is satisfied that: (a)

an applicant seeking the order has a strong prima facie case on an accrued cause of action, and

(b)

the potential or actual loss or damage to the applicant will be serious if the search order is not made, and

(c)

there is sufficient evidence in relation to a respondent that:



(i)

the respondent possesses important evidentiary material, and



(ii)

there is a real possibility that the respondent might destroy such material or cause it to be unavailable for use in evidence in a proceeding or anticipated proceeding before the court.

25.21 Jurisdiction (cf Federal Court Rules O 25B, r 4) Nothing in this Division diminishes the inherent, implied or statutory jurisdiction of the court to make a search order. 25.22 Terms of search order (cf Federal Court Rules O 25B, r 5) (1)

A search order may direct each person who is named or described in the order:



(a)

to permit, or arrange to permit, such other persons as are named or described in the order:



(i)

to enter premises specified in the order, and



(ii)

to take any steps that are in accordance with the terms of the order, and



(b)

to provide, or arrange to provide, such other persons named or described in the order with any information, thing or service described in the order, and



(c)

to allow such other persons named or described in the order to take and retain in their custody any thing described in the order, and



(d)

not to disclose any information about the order, for up to 3 days after the date on which the order was served, except for the purposes of obtaining legal advice or legal representation, and



(e)

to do or refrain from doing any act as the court considers appropriate.

(2)

Without limiting the generality of subrule (1)(a)(ii), the steps that may be taken in relation to a thing specified in a search order include:



(a)

searching for, inspecting or removing the thing, and



(b)

making or obtaining a record of the thing or any information it may contain.

(3)

A search order may contain such other provisions as the court considers appropriate.

(4)

In subrule (2): “record” includes a copy, photograph, film or sample.

25.23 Independent solicitors (cf Federal Court Rules O 25B, r 6) (1)

If the court makes a search order, the court must appoint one or more solicitors, each of whom is independent of the applicant’s solicitors (the “independent solicitors”), to supervise the execution of the order, and to do such other things in relation to the order as the court considers appropriate. [6.230]  347

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

The court may appoint an independent solicitor to supervise execution of the order at any one or more premises, and a different independent solicitor or solicitors to supervise execution of the order at other premises, with each independent solicitor having power to do such other things in relation to the order as the court considers appropriate.

25.24 Costs (cf Federal Court Rules O 25B, r 7) (1)

The court may make any order as to costs that it considers appropriate in relation to an order made under this Division.

(2)

Without limiting the generality of subrule (1), an order as to costs includes an order as to the costs of any person affected by a search order.



Practice Note SC Gen 13 [6.240] Practice Note SC Gen 13 Supreme Court –​Search Orders (also known as “Anton Piller Orders”) Application This Practice Note applies to the Court of Appeal and to the Common Law and the Equity Divisions of the Supreme Court. Commencement This Practice Note was issued on 16 June 2010 and commences from 1 July 2010. Search Orders 1.

This Practice Note supplements Division 3 of Part 25 of the Uniform Civil Procedure Rules 2005 (UCPR) relating to search orders (also known as Anton Piller orders, after Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55).

2.

This Practice Note addresses (among other things) the Court’s usual practice relating to the making of a search order and the usual terms of such an order. While a standard practice has benefits, this Practice Note and the example form of order annexed to it do not, and cannot, limit the judicial discretion to make such order as is appropriate in the circumstances of the particular case.

3.

Words and expressions in this Practice Note that are defined in UCPR rule 25.18 have the meanings given to them in that rule.

4.

Ordinarily, a search order is made ex parte and compels the respondent to permit persons specified in the order (“search party”) to enter premises and to search for, inspect, copy and remove the things described in the order. The order is designed to preserve important evidence pending the hearing and determination of the applicant’s claim in a proceeding brought or to be brought by the applicant against the respondent or against another person. The order is an extraordinary remedy in that it is intrusive, potentially disruptive, and made ex parte and prior to judgment.

5.

An example form of ex parte search order is annexed to this Practice Note (the footnotes and references to footnotes in the example form should not form part of the order as made). The example form may be adapted to meet the circumstances of the particular case. It contains provisions which are aimed at achieving the permissible objectives of a search order, while minimising the potential for disruption or damage to the respondent and for abuse of the Court’s process.

348 [6.240]

Before a Civil Action Commences  Chapter  6

Practice Note SC Gen 13 cont. 6.

The search party must include an independent solicitor who will supervise the search and a solicitor or solicitors representing the applicant. It may be necessary that it include other persons, such as an independent computer expert, and a person able to identify things being searched for if difficulties of identification may arise. Ordinarily, the search party should not include the applicant or the applicant’s directors, officers, employees or partners or any other person associated with the applicant (other than the applicant’s solicitor).

7.

The order should be clear about the maximum number of persons permitted to be in the search party. The number of people in the search party should be as small as is reasonably practicable. The example form contemplates that they will be named in the order. This is desirable but if it is not possible the order should at least give a description of the class of person who will be there (eg “one solicitor employed by A, B and Co”).

8.

The affidavits in support of an application for a search order should include the following information:



(a)

a description of the things or the categories of things, in relation to which the order is sought;



(b)

the address or location of any premises in relation to which the order is sought and whether they are private or business premises;



(c)

why the order is sought, including why there is a real possibility that the things to be searched for will be destroyed or otherwise made unavailable for use in evidence before the Court unless the order is made;



(d)

the prejudice, loss or damage likely to be suffered by the applicant if the order is not made;



(e)

the name, address, firm, and commercial litigation experience of an independent solicitor, who consents to being appointed to serve the order, supervise its execution, and do such other things as the Court considers appropriate; and



(f)

if the premises to be searched are or include residential premises, whether or not the applicant believes that the only occupant of the premises is likely to be:



(i)

a female; or



(ii)

a child under the age of 18; or



(iii)

any other person (“vulnerable person”) that a reasonable person would consider to be in a position of vulnerability because of that person’s age, mental capacity, infirmity or English language ability; or



(iv)

any combination of (i), (ii) and (iii), and any one or more of such persons.

9.

If it is envisaged that specialised computer expertise may be required to search the respondent’s computers for documents, or if the respondent’s computers are to be imaged (ie hard drives are to be copied wholesale, thereby reproducing documents referred to in the order and other documents indiscriminately), special provision will need to be made, and an independent computer specialist will need to be appointed who should be required to give undertakings to the Court.

10. The applicant’s solicitor must undertake to the Court to pay the reasonable costs and disbursements of the independent solicitor and of any independent computer expert. 11. The independent solicitor is an important safeguard against abuse of the order. The independent solicitor must not be a member or employee of the applicant’s firm of solicitors. The independent solicitor should be a solicitor experienced in commercial litigation, preferably in the execution of search orders. The NSW Law Society has been requested to maintain a list of solicitors who have indicated willingness to be appointed as an independent solicitor for the purpose of executing search orders, but it is not only persons on such a list who may be appointed. The responsibilities of the independent solicitor are important and ordinarily include the following: [6.240]  349

Civil Procedure in New South Wales

Practice Note SC Gen 13 cont.

(a)

serve the order, the notice of motion applying for the order (if applicable), the affidavits relied on in support of the application, and the originating process;



(b)

offer to explain, and, if the offer is accepted, explain the terms of the search order to the respondent;



(c)

explain to the respondent that he or she has the right to obtain legal advice;



(d)

supervise the carrying out of the order;



(e)

before removing things from the premises, make a list of them, allow the respondent a reasonable opportunity to check the correctness of the list, sign the list, and provide the parties with a copy of the list;



(f)

take custody of all things removed from the premises until further order of the Court;



(g)

if the independent solicitor considers it necessary to remove a computer from the premises for safekeeping or for the purpose of copying its contents electronically or printing out information in documentary form, remove the computer from the premises for that purpose, and return the computer to the premises within any time prescribed by the order together with a list of any documents that have been copied or printed out;



(h)

submit a written report to the Court within the time prescribed by the order as to the execution of the order; and



(i)

attend the hearing on the return day of the application, and have available to be brought to the Court all things that were removed from the premises. On the return day the independent solicitor may be required to release material in his or her custody which has been removed from the respondent’s premises or to provide information to the Court, and may raise any issue before the Court as to execution of the order.

12. Ordinarily, the applicant is not permitted, without the leave of the Court, to inspect things removed from the premises or copies of them, or to be given any information about them by members of the search party. 13. Ordinarily, a search order should be served between 9:00am and 2:00pm on a business day in order to permit the respondent more readily to obtain legal advice. However, there may be circumstances in which such a restriction is not appropriate. 14. A search order must not be executed at the same time as the execution of a search warrant by the police or by a regulatory authority. 15. If the premises are or include residential premises and the applicant is aware that when service of the order is effected the only occupant of the residential premises is likely to be any one or more of a female, a child under the age of 18, or a vulnerable person, the Court will give consideration to whether:

(a)

if the occupants are likely to include a female or child, the independent solicitor should be a woman or the search party should otherwise include a woman; and



(b)

if the occupants are likely to include a vulnerable person, the search party should include a person capable of addressing the relevant vulnerability.

16. Any period during which the respondent is to be restrained from informing any other person (other than for the purposes of obtaining legal advice) of the existence of the search order should be as short as possible and not extend beyond 4:30pm on the return day. 17. At the inter partes hearing of the application on the return day, the Court will consider the following issues:-​

(a)

what is to happen to any things removed from the premises or to any copies which have been made;



(b)

how any commercial confidentiality of the respondent is to be maintained;

350 [6.240]

Before a Civil Action Commences  Chapter  6

Practice Note SC Gen 13 cont.

(c)

any claim of privilege by the respondent;



(d)

any application by a party; and



(e)

any issue raised by the independent solicitor.

18. Appropriate undertakings to the Court will be required of the applicant, the applicant’s solicitor and the independent solicitor, as conditions of the making of the search order. The undertakings required of the applicant will normally include the Court’s usual undertaking as to damages. The applicant’s solicitor’s undertaking includes an undertaking not to disclose to the applicant any information that the solicitor has acquired during or as a result of execution of the search order, without the leave of the Court. Release from this undertaking in whole or in part may be sought on the return day. 19. If it is demonstrated that the applicant has or may have insufficient assets within the jurisdiction of the Court to provide substance for the usual undertaking as to damages, the applicant may be required to provide security for the due performance of that undertaking. The security may, for example, take the form of a bank’s irrevocable undertaking to pay or a payment into Court. The example form of search order contains provision for an irrevocable undertaking. 20. An applicant ex parte for a search order is under a duty to the Court to make full and frank disclosure of all material facts to the Court. This includes disclosure of possible defences known to the applicant and of any financial information which may cast doubt on the applicant’s ability to meet the usual undertaking as to damages from assets within Australia. 21. The order to be served should be endorsed with a notice which meets the requirements of UCPR rule 40.7. 22. The example form of search order refers to privilege in paragraphs 21 and 24. Section 128A of the Evidence Act 1995 (Cth) and Evidence Act 1995 (NSW) govern objection to compliance on the self-​incrimination ground in relation to a search order. In particular, subsections (3) ff of s 128A govern the procedure to be followed after objection is taken in accordance with paragraphs 21 and 24 of the example form of search order annexed to this Practice Note.



Findex Group v McKay [6.250]  Findex Group Ltd v McKay [2019] NSWCA 93 [1]

BASTEN JA: In September 2016 the applicants sought orders by way of preliminary discovery for the purpose of identifying the publisher of certain statements allegedly defamatory of them. The orders allowed them to identify the first respondent, David McKay, as the publisher of the impugned material.

[2]

On 16 September 2016 the applicants obtained, ex parte, a search order against Mr McKay for the purpose of securing or preserving evidence. The search order was executed on 20 September 2016. Over the following two years, further interlocutory steps were taken with respect to documents seized in the course of the search.

[3]

An affidavit in support of the application for the search order identified, in accordance with UCPR r 25.20, “a strong prima facie case on an accrued cause of action”, namely (i) misleading or deceptive conduct, contrary to the Australian Consumer Law, s 18, and (ii) a claim in defamation on behalf of the non-​corporate applicants.

[4]

By mid-​2018 the documents could be classified in the following manner: (i) documents subject to claims for privilege or public interest immunity; (ii) documents to which a specified officer of the corporate applicant, Mr Michael Doucas, and the applicants’ solicitors, had access; (iii) documents which had been disclosed unconditionally to the applicants and (iv) documents which were not relevant to the anticipated causes of action. [6.250]  351

Civil Procedure in New South Wales

Findex Group v McKay cont. [5]

By an amended notice of motion filed in the Equity Division on 4 July 2018, the applicants sought unrestricted access to the documents in category (ii) (inspected only by Mr Doucas and the solicitors) and, leave to use documents to which the applicants had had unrestricted access for the purpose of “anticipated proceedings”, and for the purpose of “responding to or correcting any allegations made to any third party”.

[6]

On 19 October 2018 orders were made by Ward CJ in Eq in substance refusing the applicants unrestricted access to the seized documents; directing that the applicants notify Mr McKay whether they wished to pursue the orders sought for use of the documents in other (or anticipated) proceedings, and otherwise requiring that some documents be returned to Mr McKay. Further interlocutory proceedings were envisaged.

[7]

The applicants seek leave to appeal from two of the interlocutory orders made by Ward CJ in Eq (together with an order reserving the question of costs). Leave is required because the orders were interlocutory: Supreme Court Act 1970 (NSW), s 101(2)(e). Although the matter was listed for the concurrent hearing of the leave application and the proposed appeal, for reasons explained below, a grant of leave would be unwarranted in the circumstances and leave should therefore be refused. …

[13]

The search conducted in September 2016 had been supervised by an independent solicitor appointed for that purpose. The vast bulk of the material seized comprised electronic documents held on Mr McKay’s computer. Annexure A to his 31 October 2016 affidavit was a printout of documents said to be “confidential and privileged” which extended to 121 pages containing between 30 and 40 documents on each page.

[14]

Mr McKay’s affidavit classified the documents as (i) documents falling within the search order “to which no privilege or other right to withhold disclosure applies”; (ii) documents in respect of which a claim for privilege or other right to withhold disclosure applies; (iii) documents which were not sent to any person and therefore did not fall within the terms of the search order; and (iv) documents which did not refer to any of the applicants or related entities and therefore were not within the terms of the search order.

[15]

It is also convenient to refer at this stage to the affidavit of Mr Doucas of 7 September 2016, in support of the application for the search order. Mr Doucas stated that he was employed as “Head of Risk Management of Crowe Horwath (Aust) Pty Ltd, which is a wholly owned subsidiary of [Findex Group Ltd].” He explained his knowledge of various emails, damaging to the business of Findex, including the completion of the acquisition by Findex of another business, which was then on foot. Mr Doucas stated: 34. As of the date of this affidavit, each of the plaintiffs intend to commence proceedings against the publisher of the above communications on receipt of the documents from the defendants, in order to remedy the harm and damage suffered by the plaintiffs. Whilst we hold a suspicion as to the identity of the person involved, we do not know with sufficient certainty to commence proceedings.

Mr Doucas also stated an apprehension, in support of ex parte orders, that if the publisher became aware of the application, steps might be taken to delete or destroy important information necessary for the anticipated proceedings (par 38). … Bases on which leave to appeal sought [23]

The applicants sought to base their case for leave on two propositions. First, it was said that the purpose of a search order was to preserve documents from destruction so that they might be available to be adduced in evidence in existing or anticipated proceedings. Secondly, a relevant cause of action, which the party seizing the documents is otherwise unable to maintain, may become apparent upon inspection of the documents. Inspection for such a purpose is a legitimate exercise in giving effect to the purpose of the search order.

352 [6.250]

Before a Civil Action Commences  Chapter  6

Findex Group v McKay cont. Findings of trial judge [24]

After noting the history of the proceedings, the restrictions imposed upon the disclosure of the documents seized, and the fact that the applicants’ lawyers had inspected all documents seized, other than those over which privilege or public interest immunity was claimed, the primary judge continued: [109] It is relevant to note that, following the plaintiffs’ solicitors’ inspection of the seized documents, no proceedings have been commenced in this Court in relation to the causes of action in respect of which the documents were originally preserved by reason of the search order and no such proceedings are now contemplated. [110] That is, while the search order was granted in circumstances where Rein J was satisfied that there was a good arguable case of defamation or misleading or deceptive conduct, no such causes of action against Mr McKay have subsequently been brought in this Court. (The claim for misleading or deceptive conduct that is on foot in the Federal Court relates to other conduct and any new claim for misleading or deceptive conduct does not relate to the claim that was identified before Rein J). [111] In these circumstances, the fourth defendant submits that the plaintiffs, in now making any application themselves to be permitted to inspect the seized documents, is seeking improperly to use the search order as an investigatory tool. The plaintiffs, on the other hand, say that they are still pursuing ‘proceedings and claims of the same nature’ as were anticipated or contemplated at the time when the search order was sought and obtained. … The plaintiffs emphasised that when the search order was obtained, it was expressly put to Rein J that what was then known (in terms of defamatory statements and/​or misleading or deceptive conduct) was ‘just the tip of the iceberg and that there might be more’. … However, the fact that this possibility was put to Rein J does not alter the nature and purpose of a search order as provided for by statute, which turns on the securing and preservation of evidence (not on preliminary discovery or investigation of potential causes of action).

[25]

On its face, this reasoning discloses no error of fact or law. …

[26]

There was an additional problem with this aspect of the application: as the primary judge correctly accepted, the purpose of a search order pursuant to r 25.19 is to secure or preserve evidence, not to provide discovery, whether at a preliminary stage or in the course of proceedings. Counsel for the applicants was at pains to avoid reference for this purpose to the terms of r 25.19. It provided, he submitted, no guidance as to what was to be done with the documents once seized in terms of access and inspection. That is only true to the extent that one finds no assistance from the express identification of the purpose of a search order. Having regard to that purpose provides an implied constraint on the use which is to be made of the seized documents. The present application appeared to be an opportunistic form of fishing expedition, seen to be available because the documents to be reviewed were available. The primary judge stated: [123] The plaintiffs maintain … that the purpose of the search order was that of “obtaining documents for use in anticipated proceedings including, but not limited to, the proceedings of the kind that were identified at the time” and that this purpose will not be fulfilled “until the plaintiffs have looked at the documents”. That, to my mind, conflates the purpose of preserving evidence (for use in anticipated proceedings) and the function of inspection of that material (as to which it is clear there is no absolute right). It is not a purpose or object of search order provisions to facilitate discovery processes otherwise authorised by rules or to facilitate the provision of further particulars. In Metso Minerals at [34], Flick J warned that construing search order provisions as extending to such a purpose would erode the importance attached by the common law to protecting the privacy of individuals and the constraints otherwise imposed by the rules governing discovery process. [6.250]  353

Civil Procedure in New South Wales

Findex Group v McKay cont. [124] Put another way, it is not a purpose or object of search order provisions to permit a plaintiff who believes that there has been an vindictive campaign made against it, him or her, the luxury of trawling through a mass of documentation that would not otherwise have been available to it, him or her at this stage, whether that be to see what else was said about it, him or her that might be defamatory or might otherwise support some other potential cause of action. [125] The plaintiffs in the present case argue that, while the purpose of a search order is a relevant consideration as to whether the Court should exercise its discretion to permit further inspection, it is not determinative. Similar to the arguments (unsuccessfully) put forward by the applicant in Metso Minerals, they submit that it is in the interests of the administration of justice that leave should be granted to permit further inspection of the documents, even if the purpose of that further inspection (that being, to determine whether or not to pursue any causes of action) is different to the purpose for which the search order was originally granted. … [131] In light of the above principles, it is clear that if I were to accede to the plaintiffs’ application for access to the seized documents for the purpose of facilitating discovery or of ascertaining what other potential causes of action they or any of them may have against the fourth defendant (relevantly, a purpose which is different to the purpose which the search order was originally granted to assist and different from the accepted purpose of search orders) it would be endorsing an approach that courts have consistently rejected. That is, it would be allowing the “extraordinary” nature of relief granted pursuant to UCPR r 25.19 to be subverted to an investigatory tool. [132] In those circumstances I consider that the plaintiffs’ application for the relief sought at prayer 2A of their amended notice of motion should be dismissed. The search order made by Rein J has now been spent, save only to the extent that there is any need to ensure that any of the documents seized under that order (other than the admittedly irrelevant documents or documents falling outside the terms of the search order and therefore not authorised by the search order) should be preserved pending an application to use those documents in other proceedings. As to that qualification, the difficulty is that the way in which the parties agreed that the hearing on 6 September 2018 was to proceed has had the result that the application for leave to use the Identified Documents (prayers 2B and 2C of the plaintiffs’ amended notice of motion) has not yet been heard and it cannot be said, in my opinion, that there may not be a need for the seized documents to be preserved for that purpose. The plaintiffs should now elect whether to proceed with their motion for orders in terms of prayers 2B and 2C, failing which the appropriate order in my opinion would be for the return of all the documents seized pursuant to the search order made by Rein J in September 2016. [Leave to appeal refused.] [footnotes omitted]

 Privilege against self-​incrimination and Pt 25 [6.260] The Evidence Act 1995 (NSW) provides that a party can raise the privilege against

self-​incrimination to prevent the disclosure of information under a freezing, search or other order under Pt 25 of the Uniform Civil Procedure Rules 2005 (NSW) that may tend to prove that a person has committed a criminal offence or is liable to a civil penalty.

354 [6.260]

Before a Civil Action Commences  Chapter  6

Evidence Act 1995 (NSW) [6.265]  Evidence Act 1995 (NSW) s 128A 128A Privilege in respect of self-​incrimination –​exception for certain orders etc (1)

In this section:



“disclosure order” means an order made by a NSW court in a civil proceeding requiring a person to disclose information as part of, or in connection with, a freezing, search or other order under Part 25 of the Uniform Civil Procedure Rules 2005 but does not include an order made by a court under the Proceeds of Crime Act 2002 of the Commonwealth or the Confiscation of Proceeds of Crime Act 1989 or Criminal Assets Recovery Act 1990 of New South Wales.



“relevant person” means a person to whom a disclosure order is directed.

(2)

If a relevant person objects to complying with a disclosure order on the grounds that some or all of the information required to be disclosed may tend to prove that the person:



(a)

has committed an offence against or arising under an Australian law or a law of a foreign country, or



(b)

is liable to a civil penalty,

the person must:

(c)

disclose so much of the information required to be disclosed to which no objection is taken, and



(d)

prepare an affidavit containing so much of the information required to be disclosed to which objection is taken (the “privilege affidavit”) and deliver it to the court in a sealed envelope, and



(e)

file and serve on each other party a separate affidavit setting out the basis of the objection.

(3)

The sealed envelope containing the privilege affidavit must not be opened except as directed by the court.

(4)

The court must determine whether or not there are reasonable grounds for the objection.

(5)

Subject to subsection (6), if the court finds that there are reasonable grounds for the objection, the court must not require the information contained in the privilege affidavit to be disclosed and must return it to the relevant person.

(6)

If the court is satisfied that:



(a)

any information disclosed in the privilege affidavit may tend to prove that the relevant person has committed an offence against or arising under, or is liable to a civil penalty under, an Australian law, and



(b)

the information does not tend to prove that the relevant person has committed an offence against or arising under, or is liable to a civil penalty under, a law of a foreign country, and



(c)

the interests of justice require the information to be disclosed,



the court may make an order requiring the whole or any part of the privilege affidavit containing information of the kind referred to in paragraph (a) to be filed and served on the parties.

(7)

If the whole or any part of the privilege affidavit is disclosed (including by order under subsection (6)), the court must cause the relevant person to be given a certificate in respect of the information referred to in subsection (6)(a).

(8)

In any proceeding in a NSW court or before any person or body authorised by a law of this State, or by consent of parties, to hear, receive and examine evidence:

[6.265]  355

Civil Procedure in New South Wales

Evidence Act 1995 (NSW) cont.

(a)

evidence of information disclosed by a relevant person in respect of which a certificate has been given under this section, and



(b)

evidence of any information, document or thing obtained as a direct result or indirect consequence of the relevant person having disclosed that information,



cannot be used against the person. However, this does not apply to a criminal proceeding in respect of the falsity of the evidence concerned.

(9)

Subsection (8) does not prevent the use against the relevant person of any information disclosed by a document:



(a)

that is an annexure or exhibit to a privilege affidavit prepared by the person in response to a disclosure order, and



(b)

that was in existence before the order was made.

(10)

Subsection (8) has effect despite any challenge, review, quashing or calling into question on any ground of the decision to give, or the validity of, the certificate concerned.

(11)

If a person has been given a certificate under a prescribed State or Territory provision in respect of information of a kind referred to in subsection (6)(a), the certificate has the same effect, in a proceeding to which this subsection applies, as if it had been given under this section.

(12)

For the purposes of subsection (11), a prescribed State or Territory provision is a provision of a law of a State or Territory declared by the regulations to be a prescribed State or Territory provision for the purposes of that subsection.

(13) Subsection (11) applies to a proceeding in relation to which this Act applies because of section 4, other than a proceeding for an offence against a law of the Commonwealth or for the recovery of a civil penalty under a law of the Commonwealth. Note: Section 87 of the Civil Procedure Act 2005 makes provision with respect to protection against self-​incrimination in relation to certain matters to which this section does not apply.



356 [6.265]

CHAPTER 7

Causes of Action and Parties [7.10] INTRODUCTION......................................................................................................... 357 [7.20] STANDING.................................................................................................................. 358 [7.40] Truth About Motorways v Macquarie.................................................... 358 [7.60] JOINING PARTIES AND CAUSES OF ACTION................................................................ 360 [7.80] Res Judicata: General Principles and Recent Developments......................... 361 [7.95] Tomlinson v Ramsey Food Processing.................................................... 367 [7.100] Gibbs v Kinna.................................................................................. 373 [7.120] Rippon v Chilcotin............................................................................. 375 [7.140] Redowood v Link Market Services......................................................... 377 [7.150] Champerslife v Manojlovski................................................................. 379 [7.165] Timbercorp Finance v Collins............................................................... 380 [7.170] Joining plaintiffs.......................................................................................... 388 [7.190] Joining defendants...................................................................................... 388 [7.200] Uniform Civil Procedure Rules 2005 (NSW) r 6.19.................................... 389 [7.210] What is a transaction?....................................................................... 389 [7.230] Uniform Civil Procedure Rules 2005 (NSW) r 6.22.................................... 391 [7.250] Payne v Young................................................................................. 391 [7.260] Joinder by leave........................................................................................... 393 [7.270] Dean-​Willcocks v Air Transit International............................................... 394 [7.280] SET-​OFFS AND CROSS-​CLAIMS................................................................................... 397 [7.290] Civil Procedure Act 2005 (NSW) ss 21, 22.............................................. 398 [7.320] CHANGING PARTIES.................................................................................................... 399 [7.330] Uniform Civil Procedure Rules 2005 (NSW) rr 6.24, 6.28, 6.29................... 399 [7.350] New Idafe Inc v Barnard..................................................................... 400 [7.370] News v Australian Rugby Football League............................................... 401 [7.380] Weber v Ankin.................................................................................. 403 [7.400] JOINDER OF CAUSES OF ACTION................................................................................ 406 [7.410] Uniform Civil Procedure Rules 2005 (NSW) r 6.18.................................... 406 [7.415] JOINDER, EFFICIENCY AND COSTS............................................................................. 407 [7.420] AMENDMENT POWERS............................................................................................... 408 [7.430] CONSOLIDATION....................................................................................................... 408 [7.440] Uniform Civil Procedure Rules 2005 (NSW) r 28.5.................................... 409 [7.450] A Goninan v Atlas Steels..................................................................... 409 [7.470] Uniform Civil Procedure Rules 2005 (NSW) r 28.2.................................... 413

INTRODUCTION [7.10]  Before commencing proceedings, the plaintiff must ascertain who is the appropriate

party to be sued. Mostly, the identity of the proper defendant will be clear. Where it is not clear, however, there are civil procedure mechanisms that can assist in identifying prospective defendants or cross-​defendants. Chapter 12 discusses types of preliminary discovery procedures available to an applicant. Ascertaining the identity of a prospective defendant and obtaining information from them and others can help to determine who to sue and the possible causes of action. If different people and different causes of action are revealed, the plaintiff should consider which person or persons should be sued and assess which causes of action should be litigated in the same

[7.10]  357

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proceedings. The plaintiff should also ensure that they have standing to initiate the particular proceedings under consideration.

STANDING [7.20] Standing in civil proceedings refers to the right of a plaintiff to be considered an

appropriate party to initiate a particular proceeding. Issues of standing do not arise in every legal proceeding. For example, standing is generally not contentious in proceedings which are purely private in nature, such as actions for breach of contract or actions for damages. There is no doubt that a “natural” person who is injured in a traffic accident is the appropriate person to sue the driver who caused his or her injuries, either in person or through their solicitor: UCPR r 7.1. Cases in which standing may be an issue are almost always confined to legal proceedings that have a public element, such as proceedings to enforce public rights or duties arising under legislation, proceedings that test the constitutional validity of legislation or proceedings for the review of decisions of inferior courts and administrators. [7.30] In litigation concerning public duties and rights, the Attorney-​General can initiate

proceedings with respect to a public wrong or grant a fiat to allow a private person to sue. The person who is granted the Attorney-​General’s fiat is referred to as a relator and is liable for the costs of the action.1 A relator action is dependent upon the Attorney-​General’s consent to the proceedings being initiated and this discretion is unfettered and not reviewable by the courts.2 Without the grant of a fiat, private citizens can have difficulties with standing that would preclude them from initiating an action. There are, however, avenues that can provide standing and these are discussed in the next case extract.

Truth About Motorways v Macquarie [7.40]  Truth About Motorways v Macquarie (2000) 200 CLR 591; 169 ALR 616; 74 ALJR 604; [2000] HCA 11 [footnotes inserted in the text in square brackets –​some legislation has been repealed or amended] KIRBY J Varied standing rights under Australian federal legislation [131] For some years the Australian Law Reform Commission has been considering reform of the law of standing in federal jurisdiction [Australian Law Reform Commission, Standing in Public Interest Litigation, Report No 27, (1985); Australian Law Reform Commission, Beyond the Door-​keeper: Standing to Sue for Public Remedies, Report No 78, (1996)]. In the course of its examination of the subject, the Commission has reviewed the standing provisions contained in Australia’s federal legislation [Australian Law Reform Commission, Beyond the Doorkeeper: Standing to Sue for Public Remedies, Report No 78, (1996) at 87-​97 (Appendix C)]. Its analysis demonstrates that much federal legislation reflects the general rule of the common law (to which, however, there are a number of exceptions). This rule states that a party, invoking the jurisdiction of a court in respect to an alleged interference with a public right, must show either that some private right of that party has been interfered with at the same time, or that such party has suffered “special damage peculiar to himself” [Boyce v Paddington Borough Council [1903] 1 Ch 109 at 114 per Buckley J; affirmed Gouriet v Union of Post Office Workers [1977] UKHL 5; [1978] AC 435; applied Australian Conservation Foundation v The Commonwealth [1979] 1 2

Attorney-​General v Scott I [1905] 2 KB 160. Re Suncorp Insurance and Finance [1991] 2 Qd R 704 at 711–​712.

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Truth About Motorways v Macquarie cont. HCA 1; (1980) 146 CLR 493; Bateman’s Bay [1998] HCA 49; (1998) 194 CLR 247 at 281]. Thus, it is common in federal legislation to require that the party invoking the jurisdiction of a court must show that it is “aggrieved” by the conduct complained of [Explained in Australian Conservation Foundation v The Commonwealth [1979] HCA 1; (1980) 146 CLR 493 at 526, 548. See eg Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5(1), 6(1), 7(1); Bankruptcy Act 1966 (Cth) s 303; Child Support (Assessment) Act 1989 (Cth), s 106; Companies (Acquisition of Shares) Act 1980 (Cth), s 60A; Copyright Act 1968 (Cth), s 202; Designs Act 1906 (Cth), s 32C(1); Patents Act 1990 (Cth), s 128; Securities Industry Act 1980 (Cth), ss 35, 42, 134; Trade Marks Act 1995 (Cth), s 129; cf Australian Conservation Foundation v The Commonwealth [1979] HCA 1; (1980) 146 CLR 493 at 555, 557]. [132] Sometimes the legislation adopts another formulation, affording standing to a person who, by name or description necessarily has a special or personal interest [eg a “creditor” or “bankrupt” under Bankruptcy Act 1966 (Cth), ss 104, 178; a “candidate” under Commonwealth Electoral Act 1918 (Cth), s 383(1) and (2); a company or company member or person from whom shares are acquired under Companies (Acquisition of Shares) Act 1980 (Cth), s 45; the “owner of the copyright” under Copyright Act 1968 (Cth), s 115; the “owner” under Designs Act 1906 (Cth), s 40B; the “holder of a licence” under Olympic Insignia Protection Act 1987 (Cth), s 8; the “party to a franchise agreement” under Petroleum Retail Marketing Franchise Act 1980 (Cth), s 21(1)]. Many federal statutes reflect the special standing which was accorded by English law to the Attorney-​General to initiate or authorise court proceedings, in effect for the Crown, so that right might be done according to law [See eg Crimes Act 1914 (Cth), s 30AA(8); Diplomatic and Consular Missions Act 1978 (Cth), s 4; Environment Protection (Sea Dumping) Act 1981 (Cth), s 33(1); Foreign Evidence Act 1994 (Cth), s 45; Foreign Proceedings (Excess of Jurisdiction) Act 1984 (Cth), s 8(2); World Heritage Properties Conservation Act 1983 (Cth), s 14]. Particularly in recent times, numerous statutory provisions have been enacted by which standing is accorded to other Ministers, statutory agencies or office-​holders [Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) s 26(1); Air Navigation Act 1920 (Cth) s 11B(1); Banking Act 1959 (Cth), s 69; Building Industry Act 1985 (Cth) s 5(12); Hazardous Waste (Regulation of Exports and Imports) Act 1989 (Cth), s 41; Industrial Chemicals (Notification and Assessment) Act 1989 (Cth), s 83(1); Weapons of Mass Destruction (Prevention of Proliferation) Act 1995 (Cth), s 16(1)]. Sometimes standing is conferred on a Minister as an alternate to a person or body with a specified interest [eg Banking Act 1959 (Cth), s 69 (“Treasurer or a bank …”)]. Increasingly in recent years, federal legislation has purported to expand standing rights so as to permit proceedings to be brought by any “interested person” [Endangered Species Protection Act 1992 (Cth), s 131; Environment Protection (Sea Dumping) Act 1981 (Cth), s 33(1); Olympic Insignia Protection Act 1987 (Cth), s 8; Securities Industry Act 1980 (Cth), s 149; Workplace Relations Act 1996 (Cth), ss 257, 258, 259 (“any other person having an interest”); World Heritage Properties Conservation Act 1983 (Cth), s 14] or “person affected” [The Corporations Law s 1324; Futures Industry Act 1986 (Cth), s 157; Great Barrier Reef Marine Park Act 1975 (Cth), s 38N; Liquid Fuel Emergency Act 1984 (Cth), s 37; Superannuation Industry (Supervision) Act 1993 (Cth) s 315]. In many federal statutes provision has been made for a self-​defining class of persons, usually described as a “claimant” or “complainant”, to bring proceedings for some benefit under federal law and to have standing by virtue of such claim [eg Disability Discrimination Act 1992 (Cth), ss 105, 105D; Lands Acquisition Act 1989 (Cth), ss 72(1), 100; Privacy Act 1988 (Cth), s 55; Racial Discrimination Act 1975 (Cth), ss 25ZC, 25ZCC; Sex Discrimination Act 1984 (Cth), ss 83A, 83D]. [133] Finally, there is legislation of the kind attacked in this case. Statutes, in some instances, confer rights on “a person” or “any person” to seek judicial remedies without the expression of a statutory requirement for a specific grievance, interest or effect [eg Aboriginal and Torres Strait Islander Commission Act 1989 (Cth), ss 31(3)(c), 102(2)(c), 142V(2)(c); Agricultural and Veterinary Chemicals Code Act 1994 (Cth), s 130(1); Trade Practices Act 1974 (Cth), ss 44ZZE, 80(1), 163A].



[7.40]  359

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[7.50]  To the extent that standing might be regarded as a filtering mechanism to determine

who can be a party to an action, there are other mechanisms that might also be regarded as performing this role. For instance, a company may commence and carry on proceedings by its solicitor or a director of the company: UCPR r 7.2. The commencement of representative proceedings in the Supreme Court is governed by the Civil Procedure Act 2005 (NSW) (CPA) and the Federal Court of Australia Act 1976 (Cth) and is dealt with in Chapter  8 “Class Actions in NSW”. Where proceedings concern the administration of a deceased person’s estate, property subject to a trust, or the construction of an Act, instrument or other document, the court may appoint a person who has an interest in the proceedings to represent others who may be affected: r 7.6(1). Where a deceased person’s estate is not represented in proceedings, a court may appoint a representative with their consent: r 7.10(1), 7.10(2).3 Where parties operate under a registered business name, they are to sue and be sued in their own name unless the proceedings relate to conduct carried on under an unregistered name, in which event their unregistered business name will be considered a sufficient description for the commencement of proceedings:  UCPR rr 7.19, 7.20. Some people might be subject to a legal incapacity4 and can only sue or defend actions through a litigation guardian known as a “tutor”.5 Such people include children under the age of 18 years and persons who have a physical or mental disability such that they are unable to receive communications or freely express their will in regard to their property or affairs.6 The litigation guardian is liable for the costs of the solicitor retained and is also potentially liable for the costs of the other party.

JOINING PARTIES AND CAUSES OF ACTION [7.60] The rules in Div  5 of Pt  6 of the UCPR for the joinder of causes of action (see

rr 6.18, 6.22) and the joining of parties (rr 6.19–​6.28) are interrelated though different. The requirements of the rules concerning joining of parties can be more demanding than those for joinder of causes of action. On this basis, logic would dictate that the decisions concerning the causes of action that are to be joined in the one proceeding are subject to the decisions concerning the joining of parties. There are powerful incentives to join all causes of action and parties in the same proceedings. In Dow Jones & Co v Gutnick,7 Gleeson CJ, McHugh, Gummow and Hayne JJ said: Clearly, the common law favours the resolution of particular disputes between parties by the bringing of a single action rather than successive proceedings. The principles of res judicata, issue estoppel, and what has come to be known as Anshun estoppel, all find their roots in that policy.

Because it is in the public interest that litigation should be minimised, the principles referred to in Dow Jones evolved so as to stop parties from raising old issues anew. Parties are bound by causes of action and issues that are resolved by courts. Res judicata (meaning “a matter already judged”, and sometimes referred to as “cause of action estoppel”) precludes a resolved cause

3 4 5 6 7

See RL v NSW Trustee and Guardian (No 2) [2012] NSWCA 78. See UCPR r 7.13: In this Division, “person under legal incapacity” includes a person who is incapable of managing his or her affairs. See UCPR r 7.14. See CPA s 3 for the definition of a “person under legal incapacity”. Dow Jones & Co v Gutnick (2002) 210 CLR 575 at [36]. See also Goninan & Co Ltd v Atlas Steels (Australia) Pty Ltd [2003] NSWSC 956.

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of action as a whole from being re-​litigated. On the other hand, issue estoppel may preclude a particular issue or matter in previous proceedings from being raised in any subsequent proceedings. Finally, Anshun estoppel applies to a claim that could have been, but was not, made in the earlier proceedings. The failure to join a claim to a proceeding may prevent it being pursued in the future. Dixon J in Blair v Curran8 discussed the distinction between res judicata and issue estoppel: The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order. [7.70]  Res judicata applies when a court has delivered judgment. It prevents the re-​litigation of claims made in the earlier proceedings between the same parties in respect of the same subject matter (that resulted in the judgment). In Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28, the High Court of Australia addressed the issue of whether there was sufficient “privity of interest” between parties in earlier proceedings for an issue estoppel to be raised in subsequent proceedings. The doctrine of res judicata gives rise to different types of estoppel, as described in an article by the Honourable Justice Handley extracted below (for further reading, see Maiden S, “Recent Steps in the Evolution of Res Judicata, Cause of Action Estoppel and the Anshun Doctrine in Australia” (2004) 25 Australian Bar Review 139). The doctrine of res judicata may be relevant to the question of joining parties and claims.

Res Judicata: General Principles and Recent Developments [7.80]  Honourable Justice K R Handley, “Res Judicata: General Principles and Recent Developments” (1999) 18 Australian Bar Review 214 [Footnotes inserted in the text in square brackets] The law of res judicata is based on two broad principles: (1)

The interest of the community in the termination of disputes and in the finality and conclusiveness of judicial decisions;

(2)

The interest of litigants in being protected from the vexatious repetition of civil actions or criminal proceedings.

There is a related principle that emphasises the need for decisions of the court, unless set aside or quashed, to be accepted as incontrovertibly correct. These principles were referred to by Deane and Gaudron JJ in Rogers v R [Rogers v R (1994) 181 CLR 251 at 273-​4]. They have given rise to different types of res judicata: (1)

Cause of action estoppel,

(2)

Issue estoppel,

(3)

Merger in judgment, and

(4)

The extended form of res judicata known as Anshun estoppel which prevents the relitigation of an issue where this would be an abuse of process.

Cause of action estoppel applies where a civil or criminal cause of action has been litigated to judgment. In the criminal law this form of estoppel gives rise to the pleas of autrefois acquit and

8

Blair v Curran (1939) 62 CLR 464 at 532. [7.80]  361

Civil Procedure in New South Wales

Res Judicata: General Principles and Recent Developments cont. autrefois convict. The cause of action having been litigated to judgment cannot be raised again in another action or prosecution. Where the cause of action is litigated to judgment and upheld, it merges in the judgment and loses its separate existence. For that reason, as well as cause of action estoppel, it cannot be made the basis of another action or prosecution. The leading Australian decision is Chamberlain v Deputy Commissioner of Taxation [(1988) 164 CLR 502]. In that case the Deputy Commissioner had issued a writ in the Supreme Court of the ACT to recover $25,557.92 for assessed and unpaid tax. The writ should have been issued for $255,579.20 but in the typing the decimal point was misplaced and the mistake was not discovered in time. The defendant who could not believe his luck consented to judgment and paid the judgment debt with unseemly haste. When the mistake was discovered the commissioner issued a second writ for the balance, but the High Court held that his cause of action had merged in the judgment, there was no independent cause of action as long as the judgment stood, and there was no discretion to deny the application of the doctrine of res judicata. This principle is the basis for the common law rule that damages must be assessed once and for all in personal injury cases, and indeed in all cases. Accordingly an injured plaintiff whose condition worsens after judgment cannot bring a second action to recover the additional damages. In the criminal law this doctrine is reflected in the plea of autrefois convict. Another form of res judicata is issue estoppel. A judicial decision on one cause of action may require the court to decide issues of fact or law which may become issues in later litigation between the same parties involving a different cause of action. If the first court determines, by evidence or admission, that some ingredient of a cause of action does or does not exist, and that determination was fundamental to the decision, it will issue estop the parties in later litigation. The leading Australian decision is Blair v Curran [(1939) 62 CLR 464] particularly the judgment of Dixon J. Issue estoppel, as its name implies, only applies to issues. There is no estoppel as to evidentiary facts or legal questions which are no more than steps in reasoning to the determination of an issue. In Rogers v R [(1994) 181 CLR 251] the High Court held that there are no issue estoppels in the criminal law, although the abuse of process doctrine may be available to the defence where an issue estoppel would have arisen in civil litigation. Res judicata estoppels arise from decisions of courts, domestic and foreign, statutory tribunals, and arbitrators, domestic or foreign. However, verdicts or judgments which are set aside on appeal or otherwise, and decisions made by judges when issuing or refusing to issue search and similar warrants pursuant to statute, do not give rise to such estoppels. A recent illustration is to be found in Grollo v Palmer [(1995) 184 CLR 348]. However judgments by default or by consent are decisions for this purpose. The prior decision judicial, arbitral, or administrative, must have been made within jurisdiction before it can give rise to res judicata estoppels. This applies to both domestic and foreign decisions. If the present High Court should decide, contrary to the statutory decision in Gould v Brown [(1998) 193 CLR 346], that so much of the cross-​vesting legislation as confers State jurisdiction on Federal Courts is invalid, there will be a lot of judicial decisions in this country which were made without jurisdiction. A judicial decision can only give rise to res judicata estoppels if it is final, but we have to be careful here. The law classifies judgments and orders as final and interlocutory on one basis for purposes of appeal but on a different basis for purposes of res judicata. An interlocutory judgment for damages to be assessed is final for res judicata purposes and binding on the parties during the subsequent assessment. Equity orders, which have to be worked out by accounts or enquiries, are also final for this purpose and there are many decisions which determine which issues must be raised and decided at the trial, and which can be left to the later stages of the proceedings. Orders deciding separate questions are also final for this purpose, although interlocutory for purposes of appeal. In Bass v Permanent Trustee Co Ltd [(1999) 73 ALJR 522 at 535] the High Court applied a decision of Diplock LJ to this effect. However interlocutory orders on matters of practice and procedure do not create res judicata estoppels. Thus, subject to the restraints imposed by the abuse of process doctrine, a second 362 [7.80]

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Res Judicata: General Principles and Recent Developments cont. application may be brought to set aside a default judgment, or to obtain an extension of a limitation period. The prior decision must be one on the merits, not on some question of procedure. Thus dismissals for want of prosecution or jurisdiction, or a foreign decision which upholds a procedural limitation defence, are not decisions on the merits but default judgments and judgments by consent are. The doctrine of issue estoppel extends to issues that were assumed or conceded in the prior litigation. Although the bars created by cause of action estoppel and merger in judgment are absolute, the bar created by an issue estoppel is not absolute, or at least it has been held in Britain not to be absolute. See Arnold v National Westminster Bank plc [[1991] 2 AC 93]. In that case the House of Lords held that an issue estoppel was not binding in later proceedings where special circumstances made it unjust to give effect to it. A decision of a High Court Judge on the construction of a rent escalation clause was held not to be binding in a later rent review under the same lease. The earlier decision, on appeal from an arbitrator, could not be appealed to the Court of Appeal and had been shown to be fundamentally wrong by later decisions between different parties. It is not yet clear that this decision will be accepted in Australia. In O’Toole v Charles David Pty Ltd [(1991) 171 CLR 232 at 258], Brennan J said that Arnold’s case “rests on an uncertain foundation”. See also Linsley v Petrie [[1998] 1 VR 427 at 441, 449]. In Arnold’s case the House of Lords also held that an issue estoppel is not binding in later litigation if fresh evidence, within the common law rules relating to fresh evidence, has since come to the knowledge of the party affected by the estoppel which demonstrates that the prior decision was  wrong. An issue estoppel cannot be enlarged by evidence. This was decided in O’Donel v Commissioner for Road Transport [(1938) 59 CLR 744 at 763]. The decision at first sight is surprising. An award of workers’ compensation for a period of incapacity due to blindness was held not to estop the employer from alleging that incapacity due to blindness during a subsequent period arose from a different cause. Evatt J said: when a distinct and separate issue arises subsequently [the unsuccessful party] is not bound to submit to the second issue being established by the combination of a former issue with additional evidence, no matter how strong that evidence may be. A decision on an issue against the party who succeeded does not give rise to an issue estoppel because it was not fundamental to the decision in his favour. Where several grounds for succeeding on a cause of action are upheld, there is no estoppel on the separate findings because none are fundamental. Examples include a number of particulars of negligence, or different breaches of the same contract occurring at the same time. There will be cause of action estoppels but no issue estoppel as to any particular of negligence or particular breach. Judicial decisions in personam bind not only the parties but also their privies, in blood, interest or title. In Anglo-​Australian law, res judicata estoppels must be mutual, and are not available for or against strangers. The United States doctrine of collateral estoppel by which a party can be bound by an adverse decision in earlier proceedings, where the question was fully litigated, in favour of a stranger who was not a party or privy to those earlier proceedings was rejected in Ramsay v Pigram [(1967) 118 CLR 271 at 276, 282]. The principles which undergird the operation of res judicata estoppels against privies were explained by a learned author in a passage quoted by Starke J in Partridge v McIntosh & Sons Ltd [(1933) 49 CLR 453 at 463]: although the estoppel is only a personal matter between the particular parties yet to really give the parties the benefit of it, and subject them to the burden of it, it is essential that not they only, but those of whom it can be predicted that they are their representatives in interest should likewise have the benefit of and be subject to the burden … Upon anyone therefore upon whom all the rights and obligations of any legal entity devolve such as an executor, administrator, or trustee in bankruptcy, there will devolve, as one of such rights [7.80]  363

Civil Procedure in New South Wales

Res Judicata: General Principles and Recent Developments cont. and obligations, the right to exact or the obligation to be subject to the [estoppel]; and so too upon anyone upon whom the right and obligations arising out of the particular transaction that gave rise to the estoppel devolve as, for example, a purchaser or assignee, that will also devolve this right and this obligation. There may be estoppels between defendants inter se. Persons who could have intervened but did not may also be bound. Members of a class in a properly constituted class action, and persons represented in a representative action, will also be bound. A party who litigates in different rights is in law different persons, eg a person in his own right is a different person for present purposes from the same person as an executor or trustee. A person in his private capacity is a different person from the same person in an official capacity, eg as the holder of a public office. Decisions in rem, such as those relating to probate and administration, personal status, and the status of property such as a ship, are decisions which bind strangers to the litigation, and have been said, with an advocate’s flourish, to bind the world. The whole purpose of a court decision admitting a will to probate is to authenticate the executor’s title to all and sundry so that it does not have to be proved again and again. However, in the absence of appropriate legislation, the probate of a will is only directly recognised within the jurisdiction of the court which granted it. See Nagel v Hough [(1927) 27 SR (NSW) 418 at 424]. Decisions as to the status of other property can also be decisions in rem, such as decisions about the status of roads and public rights-​of-​way. In P E Bakers Pty Ltd v Yehuda [(1988) 15 NSWLR 437] the Court of Appeal held that a decision on the validity of the conditions of a planning consent was a decision in rem. Decisions on the validity of statutory instruments or administrative decisions are not in rem unless the instrument or decision is quashed by certiorari or set aside under a statutory power. Thus in Hoffmann-​La Roche v Trade Secretary [[1975] AC 295 at 365] Lord Diplock held that a decision that a statutory instrument was ultra vires only bound the parties although the doctrine of precedent will give it general effect, especially if the decision is that of an appellate court. This passage was quoted with approval by the Court of Appeal in Burwood Council v P D Mayoh Pty Ltd [(1997) 96 LGERA 268] where the court held that its previous decision that a Regional Environment Plan was invalid should have been followed as a matter of precedent in the later case. Res judicata estoppels may be answered by proof that the earlier judgment was affected by fraud or collusion, or a cross-​estoppel by representation. The estoppel may also be contrary to public policy or statute, or there may be special circumstances why it should not be enforced as in Arnold v National Westminster Bank [[1991] 2 AC 93]. It is thought that there is no res judicata in constitutional cases, because this would be contrary to public policy, and that has been the practice of the High Court and the Supreme Court of Canada. The point will arise on the second cross-​vesting case, because the unsuccessful appellants in Gould v Brown [(1998) 193 CLR 346] have applied for a prohibition against the orders of the Full Federal Court which were affirmed in that case on the ground that if the new challenge succeeds they should not be the only persons in Australia bound by the earlier decision. Fraud or collusion can only be relied on to displace a res judicata in substantive proceedings to set aside the prior judgment. The other form of res judicata, strictly so called, is the doctrine of merger in judgment, which has already been referred to. If, in an earlier action, the cause of action was sustained it will have merged in that judgment and ceased to exist. The merger also affects causes of action other than the precise one sued on. The same principle applies in the criminal law under the plea of autrefois convict. Thus in Trawl Industries v Effem Foods [(1992) 36 FCR 406 at 422] Gummow J held that judgment in an action for breach of s 52 of the Trade Practices Act [“misleading or deceptive conduct”, now in s 18 of the Australian Consumer Law] barred an action for negligent misrepresentation arising from substantially the same facts. ............................ It seems, despite Anshun, that a party is free to bring forward in later litigation a cause of action not previously adjudicated upon provided it is not substantially the same as one that has been, unless success in the new proceedings would result in inconsistent judgments. There are dicta to this effect 364 [7.80]

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Res Judicata: General Principles and Recent Developments cont. by Brennan and Dawson JJ in O’Brien v Tanning Research Laboratories [(1990) 169 CLR 322 at 346], but no appellate decision as yet. The remaining category of res judicata is an Anshun estoppel, named after Port of Melbourne Authority v Anshun Pty Ltd [(1981) 147 CLR 589]. A dock worker injured by the operation of a crane sued the authority as its owner, and Anshun as its hirer, and recovered. Responsibility was apportioned 90% to the authority and 10% to Anshun. The authority then sued to enforce an indemnity under a clause in the hiring contract and failed. The High Court held [Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602] that a judgment enforcing the indemnity would be inconsistent with the earlier judgment for 10% contribution and said that there will be no estoppel of this type unless “the matter relied upon … in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it”. The extended res judicata doctrine applied in Anshun is based on the court’s inherent jurisdiction to prevent abuse of its process by proceedings which are vexatious, that is unreasonable. It is not necessary for this purpose to establish identity of parties or privity. A good example is Hunter v Chief Constable [[1982] AC 529] where civil proceedings for assault brought by members of the Birmingham Six against police officers were dismissed as an abuse of process because they sought to relitigate issues decided against them in the criminal trial. Needless to say the police officers were not parties to the criminal proceedings. On the other hand, in J v Oyston [[1999] 1 WLR 694] Smedley J held that it was not vexatious for a defendant sued for sexual abuse in civil proceedings to relitigate the merits of his conviction for the same conduct. A plaintiff cannot do this in civil proceedings but a defendant is allowed to defend himself. ............................ Res judicata in all its forms must be specially pleaded where this is possible. If the estoppel cannot be pleaded in a defence or reply, or if the estoppel goes only to damages and could not be pleaded at all, it must be raised at the trial. This must be done at the earliest possible moment, by taking an objection to evidence, at the risk of the point otherwise being lost by waiver.

 [7.90] In Port of Melbourne Authority v Anshun Pty Ltd,9 the issue was whether it was

permissible to initiate a second proceedings on a different cause of action against a party who had been a defendant in the first proceedings. The cause of action in the second proceedings had not been litigated in the first proceedings so there was no apparent res judicata principle to prevent the second proceedings. Anshun Pty Ltd (“Anshun”) hired a crane from the Port of Melbourne Authority (“the Authority”). While the crane was in use by Anshun for the purpose of handling materials, a load of steel girders handled by the crane struck a worker, Soterales, and severely injured him. Soterales sued both the Authority and Anshun for damages for personal injury for negligence. He alleged that he was injured as a result of Anshun exposing him to unnecessary risk and/​or as a result of the negligence of the servants or agents of Anshun. Further and in the alternative, Soterales alleged that he was injured as a direct result of the negligence or breach of statutory duty of the Authority, its servants or agents. Judgment was entered in favour of Soterales against both defendants for damages and costs. The two defendants claimed contribution from each other and the trial judge ordered that the Authority was liable to pay 90% of Soterales’ damages and costs and Anshun was liable for the remaining 10%.

9

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. [7.90]  365

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The hire agreement for the crane contained a clause under which Anshun agreed to indemnify the Authority against all claims and actions brought against the Authority arising out of the use of the crane. The Authority did not plead the indemnity clause contained in the hire agreement in answer to Anshun’s claim for contribution from the Authority. In fact, the indemnity in the agreement was not raised in the first proceedings by either defendant. After the conclusion of the first set of proceedings, the Authority initiated second proceedings by commencing an action against Anshun claiming $53,632.89 by way of indemnity for the amount paid by it to Soterales and for legal costs and disbursements. The claim was based on the indemnity in the hiring agreement. Anshun’s defence to the Authority’s claim was one of estoppel, the substance of the defence being that the Authority could have raised its claim against Anshun in the earlier action by Soterales. The High Court held that the Authority was estopped from making its claim. Essentially, the High Court held that the Authority could and should have raised the indemnity as a defence to Anshun’s claim for contribution from the Authority in the first proceedings. The Authority had not offered an explanation as to why it had not raised the contractual indemnity in the first set of proceedings. An important fact in the Court’s view was that a second proceeding might cause a conflicting judgment. Gibbs CJ, Mason and Akin JJ said: 40. The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By “conflicting” judgments we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction. 41. It is for this reason that we regard the judgment that the Authority seeks to obtain as one which would conflict with the existing judgment, though the new judgment would be based on a different cause of action, a contractual indemnity. 42. Taking into consideration the relevant factors we conclude that the Full Court was right in holding that there was an estoppel. The matter now sought to be raised by the Authority was a defence to Anshun’s claim in the first action. It was so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun. The third party procedures were introduced to enable this to be done. If successful, the indemnity case would have obviated an inquiry into contribution. If reserved for assertion in a later action, it would increase costs and give rise to a conflicting judgment. [Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at [40] -​ [42]].

[Footnotes inserted in the text in square brackets] It is to be remembered that in Anshun, parties to the second proceedings were parties in the first proceedings. This was also the case in Gibbs v Kinna (extracted at [7.100]), in which an employee (Kinna) received compensation after bringing an action in the Industrial Relations Commission against his employer for wrongful termination. In a second proceeding in the Magistrates’ Court, the plaintiff sued his former employer (the defendant in the first proceeding) for damages based on an action for breach of contract and violations of the Trade Practices Act 1974 (Cth) and Fair Trading Act 1985 (Vic). The magistrate dismissed the second proceedings on the basis that the claim should have been raised in the first proceedings. A judge of the Victorian Supreme Court allowed the employee’s appeal against the magistrate’s 366 [7.90]

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order and the employer appealed to the Victorian Court of Appeal. The Court of Appeal overturned the magistrate’s decision.

Tomlinson v Ramsey Food Processing [7.95]  Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 [Tomlinson was employed to work in an abattoir by Ramsey Food Processing Pty Ltd (Ramsey). In October 2006, his employment was formally terminated and, on the following day, he continued his duties in the employ of a labour hire company, Tempus Holdings Pty Ltd (Tempus). He was finally terminated in November 2008 together with a group of other workers. In June 2011, Tomlinson sued Ramsey in the District Court for negligence following a workplace injury he sustained in June 2008. He alleged that he was employed by Tempus at the time of the injury. However, it was part of Ramsey’s defence that Tomlinson was employed at the relevant time by Tempus so as to invalidate his claim for non-​compliance with certain requirements of workers’ compensation legislation. In separate Federal Court proceedings, the Fair Work Ombudsman had taken legal action against Ramsey on behalf of a group of workers, including Tomlinson, for the recovery of unpaid severance entitlements. In those proceedings, the Federal Court found that Tomlinson had been employed by Ramsey from at least October 2006 because Tempus had not been an employer in its own right at the relevant time. Ramsey argued in the District Court proceedings that the court was bound by the Federal Court finding through issue estoppel. The trial judge ruled against the issue estoppel argument because the subject matter of the two claims was different and there was no privity of interest between Tomlinson and the Fair Work Ombudsman. He awarded damages to Tomlinson for his injuries. Ramsey successfully appealed to the New South Wales Court of Appeal. However, the High Court allowed Tomlinson’s appeal, holding that for issue estoppel to apply the privy must make its claim “under or through” the person of whom it is said to be a privy.] FRENCH CJ, BELL, GAGELER AND KEANE JJ The question in perspective [17] It is common ground between Mr Tomlinson and Ramsey that the question of whether Mr Tomlinson was privy in interest with the Fair Work Ombudsman for the purpose of issue estoppel is to be determined by reference to the principle governing privity of interest stated and applied in this Court in Ramsay v Pigram. That principle, in the language of Barwick CJ, is that the “basic requirement of a privy in interest is that the privy must claim under or through the person of whom he is said to be a privy”. It is not argued that some wider principle, along the lines of that which has since come to be adopted in the United Kingdom or New Zealand or Canada, should now be adopted in Australia. [18] Nor does resolution of the question of whether Mr Tomlinson was privy in interest with the Fair Work Ombudsman call for consideration of the related but distinct principle of mutuality, referred to in Ramsay v Pigram, by which an issue estoppel has traditionally been understood to be capable of assertion in a subsequent proceeding only by a party who was also a party, or the privy of a party, to the first proceeding. The benefit of an estoppel in the District Court proceeding is claimed here only by Ramsey, which was both defendant in the District Court and respondent in the Federal Court. [19] To put the principle governing who is privy in interest stated and applied in Ramsay v Pigram in perspective, however, it is appropriate to say something more generally as to the place of issue estoppel in Australian law. [20] An exercise of judicial power, it has been held, involves “as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons”. The rendering of a final judgment in that way “quells” the controversy between those persons. The rights and [7.95]  367

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Tomlinson v Ramsey Food Processing cont. obligations in controversy, as between those persons, cease to have an independent existence: they “merge” in that final judgment. That merger has long been treated in Australia as equating to “res judicata” in the strict sense. [21] Estoppel in relation to judicial determinations is of a different nature. It is a common law doctrine informed, in its relevant application, by similar considerations of finality and fairness. Yet its operation is not confined to an exercise of judicial power; it also operates in the context of a final judgment having been rendered in other adversarial proceedings. It operates in such a context as estoppel operates in other contexts: as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law. [22] Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as “cause of action estoppel”. Estoppel in that form operates to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment. It is largely redundant where the final judgment was rendered in the exercise of judicial power, and where res judicata in the strict sense therefore applies to result in the merger of the right or obligation in the judgment. The second form of estoppel is almost always now referred to as “issue estoppel”. Estoppel in that form operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The classic expression of the primary consequence of its operation is that a “judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies”. The third form of estoppel is now most often referred to as “Anshun estoppel”, although it is still sometimes referred to as the “extended principle” in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a “true estoppel” and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument. [23] The present significance of the recognition of those three forms of estoppel is that each has the potential to preclude assertion of a right or obligation, or the raising of an issue of fact or law, between parties to a proceeding or their privies. Absent a principled basis for distinction –​and none has been suggested –​one principle must govern the identification of privies for the purpose of all forms of estoppel which result from the rendering of a final judgment in an adversarial proceeding. [24] To explain contemporary adherence to the comparatively narrow principle in Ramsay v Pigram, it is appropriate also to explain the relationship between the doctrine of estoppel and the doctrine of abuse of process as it has since come to be recognised and applied in Australia. The doctrine of abuse of process is informed in part by similar considerations of finality and fairness. Applied to the assertion of rights or obligations, or to the raising of issues in successive proceedings, it overlaps with the doctrine of estoppel. Thus, the assertion of a right or obligation, or the raising of an issue of fact or law, in a subsequent proceeding can be simultaneously: (1) the subject of an estoppel which has resulted from a final judgment in an earlier proceeding; and (2) conduct which constitutes an abuse of process in the subsequent proceeding. [25] Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel. 368 [7.95]

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Tomlinson v Ramsey Food Processing cont. [26] Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel. [27] The final element of the legal context relevant to explaining continuing adherence to the comparatively narrow principle in Ramsay v Pigram is the continuing existence of the distinct rule, equitable in origin, which prevents a person from actually recovering more than once for a given loss that results from breach of a given obligation. The rule applies irrespective of the part, if any, which the person might have played in a proceeding which would otherwise facilitate the double recovery against which it guards. Its distinct operation was noted more than two centuries ago in the seminal explanation of issue estoppel. There it was explained that “a finding upon title in trespass not only operates as a bar to the future recovery of damages for a trespass founded on the same injury, but also operates by way of estoppel to any action for an injury to the same supposed right of possession” and that “it is not the recovery, but the matter alleged by the party, and upon which the recovery proceeds, which creates the estoppel”. The explanation continued: The recovery of itself in an action of trespass is only a bar to the future recovery of damages for the same injury: but the estoppel precludes parties and privies from contending to the contrary of that point, or matter of fact, which having been once distinctly put in issue by them, or by those to whom they are privy in estate or law, has been, on such issue joined, solemnly found against them. The privity principle explained 28 The principle adopted and applied in Ramsay v Pigram, as that governing the identification of a person who is privy in interest with a party to proceedings for the purpose of an estoppel resulting from the rendering of a final judgment, was the principle propounded in argument in that case by Mr Deane QC. By reference to a passage in an early text on the law of estoppel, Mr Deane advanced the following proposition: As regards estoppel, the same doctrine applies to each category, namely that one who claims through another is, to the extent of his claim, subject to and able to take advantage of all estoppels affecting the person through whom he claims. [29] The higher-​level principle which informed the formulation of that proposition was identified in a preceding passage in the same text. It was identified in terms of the maxim qui sentit commodum sentire debet et onus: who takes the benefit ought also to bear the burden. That higher-​level principle has long been recognised as informing the determination of the extent of the preclusive effect of other forms of estoppel. It has particular resonance in relation to an estoppel which results from the rendering of a final judgment. Another early legal text explained its significance this way: The maxim “qui sentit commodum sentire debet [e]‌t onus” is … particularly explanatory of this branch of the law of estoppel, in accordance with which the record of a verdict followed by a judgment inter partes will estop not only the original parties, but those also who claim under them. A man will be bound by that which bound those under whom he claims quoad the subject-​matter of the claim, for he who derives the benefit from a thing ought to sustain the burden, or feel the disadvantages attending it. And no man, except in certain cases, which are regulated by the statute law and law merchant, can transfer to another, a better right than he himself possesses. The grantee shall not be in a better condition than he who made the grant, and, therefore, privies in blood, law and estate shall be bound by and take [7.95]  369

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Tomlinson v Ramsey Food Processing cont. advantage of estoppels. In order to give full effect to the rule by which parties are held estopped by a judgment, all persons who are represented by the parties or claim under them or in privity with them are as equally and as effectually estopped by the same proceedings. [30] That is the essential rationale for the pithy, already quoted statement of principle by Barwick CJ in Ramsay v Pigram. [31] Barwick CJ’s explanation of the application of that statement of principle in Ramsay v Pigram is useful in illustrating its content. The result was to deny that the Government of New South Wales, then sued by the respondent for damages in negligence arising out of a collision with a police car, was privy in interest with the police officer driving that car, who had earlier sued the respondent for damages in negligence arising out of the same collision. His Honour explained: In every respect the action between the respondent and the police officer was personal to each of them, neither being in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police officer or of any right of his, or that it derives any relevant interest through him. [32] It is important to recognise that Barwick CJ’s explanation of the application of his statement of principle had two limbs. The conclusion that the Government was not privy in interest with the police officer was based on the absence of either representation of interest or derivation of interest. [33] Consistently with the rationale for the principle, the explanation demonstrates that a party to a later proceeding (“A”) can be privy in interest with a party to an earlier proceeding (“B”) on either of two bases. One basis is that A might have had some legal interest in the outcome of the earlier proceeding which was represented by B, or that B has some legal interest in the outcome of the later proceeding which is represented by A. The extent to which the representation by A or B will be sufficient to bind the other is the critical issue which will be explored later in these reasons. The other basis is that, after that earlier proceeding was concluded by judgment, A might have acquired from B some legal interest in respect of which B would be affected by an estoppel which A then relies on in the later proceeding. [34] Other bases on which a person might potentially be privy in interest with a party need not be explored. For present purposes, it is sufficient to focus on one operation of the first basis illustrated by the application of the principle in Ramsay v Pigram: where A has a legal interest in the outcome of the earlier proceeding which was represented by B. [35] Subsequent applications of the principle in Ramsay v Pigram have for the most part correctly emphasised that the interest of the privy must in each case be a legal interest: an economic or other interest on the part of A in the outcome of the earlier proceeding is insufficient. Those applications have also correctly emphasised that, absent a legal interest, such influence as A might have had over the conduct of the earlier proceeding is irrelevant even if that influence amounted to control. Thus, directors of a company, who also held shares in its parent company, were held not to be estopped from pursuing a later action to recover damages to compensate for a loss on their own account in circumstances where they had stood to gain financially from an earlier action by the company claiming damages for loss on the company’s account. That was despite the directors having been found to have exercised effective control over the company’s conduct of that earlier action. The constraint on the conduct of A in such circumstances lies not in an estoppel but, in an appropriate case, in abuse of process. [36] One subsequent application of the principle is especially instructive for the present case. It is Young v Public Service Board. There, government employees claiming a declaration that their employer, the Public Service Board, had not determined their ordinary hours of work were held not to be estopped by a contrary finding of fact made in the course of resolving an earlier dispute between the Board and an industrial association of which they were members. The reasoning of Lee J in support of 370 [7.95]

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Tomlinson v Ramsey Food Processing cont. that conclusion acknowledged that the industrial association had in that earlier dispute made a claim which it was in the interests of its members collectively to assert. The reasoning acknowledged also that the claim was one which would, if accepted, have resulted in an award which was made binding by statute on the employees as well as the Board. But it emphasised that the claim was made by the association in an industrial context in which members individually had no capacity to appear in or control the proceedings which resulted in the resolution of the dispute. The reasoning emphasised, in addition, that the employees were claiming the declaration sought in the later proceedings simply as employees of the Board, without regard to the industrial association or their membership of it. [37] The first strand of the reasoning in Young illustrates that a person does not become bound by an estoppel by reason of a party having represented legal interests of that person in an earlier proceeding merely as a consequence of that party having lawfully asserted a claim which, if accepted, would have resulted in a determination enhancing or enforcing a legal entitlement of the person. In the absence of the person having authorised the assertion of the claim, the representation must at least have been of such nature as to have protected the person from being unjustifiably subjected to an unwanted estoppel. [38] Why that should be so is not difficult to explain. It is a principle at the core of our legal system that a party claiming or denying the existence of a legal right or obligation should have an opportunity to present evidence and arguments to establish the facts and law on which the claim or denial is founded. There are countervailing considerations, some of which operate to create exceptions to that principle. Finality and fairness, including maintaining the certainty of past adjudicated outcomes and ensuring the predictability of future adjudicated outcomes, are amongst those countervailing considerations, and the estoppels informed by those considerations are amongst the exceptions to the principle. The operation of an estoppel, it must be remembered, is to preclude the assertion in a subsequent proceeding of what is claimed to be the truth. [39] The justice of binding to an estoppel a person who was a party to an earlier proceeding is readily apparent: the person has already had an opportunity to present evidence and arguments. The justice of binding to an estoppel a person whose legal interests stood to benefit from the making or defending of a claim by someone else in an earlier proceeding will often also be apparent. With the benefit of the claim or defence also comes the detriment of the estoppel. That, at least, is the underlying theory. But it is a theory which has limitations. It would be quite unjust for such a person to be precluded from asserting what the person claims to be the truth if the person did not have an opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceeding and if the potential detriment to the person from creating such an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding. [40] Traditional forms of representation which bind those represented to estoppels include representation by an agent, representation by a trustee, representation by a tutor or a guardian, and representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding. To those traditional forms of representation can be added representation by a representative party in a modern class action. Each of those forms of representation is typically the subject of fiduciary duties imposed on the representing party or of procedures overseen by the court (of which opt-​in or opt-​out procedures and approval of settlements in representative or class actions are examples), or of both, which guard against collateral risks of representation, including the risk to a represented person of the detriment of an estoppel operating in a subsequent proceeding outweighing the benefit to that person of participating in the current proceeding. [41] That is not necessarily the nature of the representation which occurs in a proceeding commenced by a statutory entity (whether a regulatory or other authority) or a statutory office-​holder in the exercise of a power or capacity to make a claim to enforce a legal entitlement of another person. The entity or office-​holder necessarily acts for statutorily mandated or permitted reasons within a statutorily defined area of responsibility in making such a claim. Other than where the entity or [7.95]  371

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Tomlinson v Ramsey Food Processing cont. office-​holder is specifically required or authorised by statute to make such a claim as a representative of another person, the entity or office-​holder would not ordinarily be required by statute to consider interests of the person beyond those interests which fall within its own statutorily defined area of responsibility. The entity or office-​holder might not even be permitted to consider broader interests of the other person, because to do so might conflict with the proper discharge of that statutory responsibility. [42] Were a person whose legal entitlement the statutory entity or office-​holder claimed to enforce thereby to be privy in interest with the entity or office-​holder for the purpose of the common law doctrine of estoppel, pursuit of the claim by the statutory entity might foreclose not only the pursuit of the same and other claims by that person, but also the raising by that person of issues of fact or of law in defence of claims brought against that person. The entity or office-​holder, in acting within its statutorily defined area of responsibility, might in that way unwittingly preclude the future enforcement of other rights or obligations of far more value to that person. [43] For the conduct of the statutory entity or statutory office-​holder to constrain the future conduct of the person would therefore have the real potential not only to occasion injustice to that person but to impose a practical impediment to the performance of the entity or statutory office-​ holder’s statutory responsibilities. If such a result is not imposed by the statute under which the entity or office-​holder acts, then such a result should not be superimposed by the common law of estoppel. The privity principle applied [44] The Court of Appeal erred in concluding that the Fair Work Ombudsman was Mr Tomlinson’s privy on the basis that, in the Federal Court proceeding, the Fair Work Ombudsman was enforcing Mr Tomlinson’s entitlements “under or through”, or “on behalf of”, Mr Tomlinson. In truth, the Fair Work Ombudsman was acting pursuant to his statutory power to commence proceedings in a court “to enforce” the Workplace Relations Act and an award made under that Act. That power was not derived from Mr Tomlinson or his entitlements. The Fair Work Ombudsman was not acting pursuant to his distinct power “to represent” employees who are, or may become, a party to proceedings in a court. The orders for the payment of Mr Tomlinson’s entitlements were made, not in satisfaction of a claim asserted on behalf of Mr Tomlinson by the Fair Work Ombudsman as his representative, but pursuant to the power of the court to make such an order, which power arose when the court found that employees had not been paid their entitlements. [45] The statutory function conferred by the Fair Work Act on the Fair Work Ombudsman of commencing proceedings in a court to enforce terms of the Australian Fair Pay and Conditions Standard and of awards made under the Workplace Relations Act, as distinct from the statutory function of representing employees who are or may become parties to proceedings in a court, cannot be interpreted as requiring the Fair Work Ombudsman to consider legal interests of employees beyond the legal interests specifically protected by the enforcement action the Fair Work Ombudsman is authorised to undertake. Nor are those wider legal interests protected by the procedures which govern the exercise of power on the part of an eligible court. [46] Performing that function and invoking those procedures, the Fair Work Ombudsman did not represent the legal interests of Mr Tomlinson, in the sense which gives rise to an estoppel, by seeking in the Federal Court orders that Ramsey pay Mr Tomlinson and others amounts which Ramsey had failed to pay in breach of applicable terms. The fact that Mr Tomlinson had complained to the Fair Work Ombudsman and the fact that he provided evidence in the proceeding make no difference to that conclusion. Counsel for Ramsey disavowed any suggestion that Mr Tomlinson in fact gave to the Fair Work Ombudsman some additional non-​statutory authority to act as his agent. The Fair Work Ombudsman acted in the discharge of its own statutory responsibility. [47] It follows that the declarations and orders made by the Federal Court in the proceeding commenced by the Fair Work Ombudsman created no estoppel binding on Mr Tomlinson in the subsequent District Court proceeding or in any other subsequent proceeding between Mr Tomlinson and Ramsey. If Mr Tomlinson was paid the amount that the Federal Court determined Ramsey to 372 [7.95]

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Tomlinson v Ramsey Food Processing cont. have underpaid and that it ordered Ramsey to pay to him, Mr Tomlinson would be prevented from personally pursuing Ramsey for the same amount. That would not be because of the operation of an estoppel arising from the order made by the Federal Court. It would be the result of the operation of the distinct rule against double recovery. [48] It has never been suggested that Mr Tomlinson’s conduct in bringing the District Court proceeding constituted an abuse of process. Disposition of the appeal [49] There remains the question, raised but not determined in Ramsey’s appeal to the Court of Appeal and raised again by Ramsey in its notice of contention in this appeal, as to whether or not the evidence before the District Court established that Mr Tomlinson’s employer had in fact been Ramsey. Neither party suggests that the determination of that question involves any novel or important question of principle. What the determination of that question does involve is an analysis of the evidence before the District Court as distinct from that which had been before the Federal Court. It is inappropriate that such an evidentiary analysis be undertaken for the first time in this Court. [50] The appropriate disposition of this appeal, in those circumstances, is by the making of the following orders: (1)

Appeal allowed  …

(3)

Remit the matter to the Court of Appeal to determine the issue raised by the respondent’s notice of contention in this Court.

 [7.98]  It should be noted that Nettle J held at [132] that “the District Court judge was right to

hold that Buchanan J’s finding that Ramsey Food was the employer for the purpose of the Fair Work proceeding did not estop the appellant from contending that Tempus was his employer for the purpose of the District Court proceeding”. Nettle J concluded that the appeal should be allowed with costs and that the appeal to the Court of Appeal be dismissed with costs.

Gibbs v Kinna [7.100]  Gibbs & McAllion Lloyd Pty Ltd v Kinna [1999] 2 VR 19; [1998] VSCA 52 KENNY JA [20] Accepting as I do that, save for the Trade Practices Act claims, the claims which Kinna seeks to advance in the Magistrates’ Court could have been advanced in the Industrial Relations Court, is it now open to Kinna to advance those claims in the Magistrates’ Court as he wishes to do? The appellants submit that he is not, because they are, so they say, entitled to the benefit of what has been called the “extended principle” of res judicata deriving from Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 as explained in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. [21] The rule of res judicata is that, generally speaking, no proceeding can be maintained on a cause of action upon which judgment has been entered. The cause of action is said to merge in the judgment, in the sense that it no longer has an existence independent of the judgment: see Blair v Curran (1939) 62 CLR 464, at 532 per Dixon, J; Jackson v Goldsmith (1950) 81 CLR 446 at 466 per Fullagar, J dissenting on other issues; Anshun’s Case 147 CLR at 597; and Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 507-​8. In Henderson v Henderson at 3 Hare 115; 67 ER 319, Sir James Wigram VC said that the rule: applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point [7.100]  373

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Gibbs v Kinna cont. which properly belonged to the subject of the litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. This statement of principle was accepted by the High Court in Anshun’s Case. The majority (Gibbs, CJ, Mason, J and Aickin, J) would have it that the principle as stated in Henderson v Henderson applies against a party asserting a cause of action in a subsequent proceeding if it appears that it was unreasonable for that party to have refrained from raising the cause of action in an earlier proceeding. The majority in Anshun’s Case rested their conclusion that the Port of Melbourne Authority was estopped from pursuing its claim in a second action upon the basis that “it was unreasonable for the Authority to refrain from raising its case of indemnity for disposition in the first action”: 147 CLR at 604. Whilst the other members of the Court, Murphy and Brennan, JJ, agreed with the majority in the result, they did not adopt the criterion of unreasonableness. Murphy, J based his decision on the potential for inconsistency which would arise were the second proceeding to continue. Brennan, J concluded that the relevant cause of action had merged in the orders made in the previous proceeding, the appellant’s claim to an indemnity being barred by the contribution orders in the earlier proceeding which were inconsistent with that claim. … [23] Whether or not it is unreasonable for a party asserting a cause of action in a later proceeding not to have done so in an earlier proceeding depends almost entirely on the particular circumstances. It seems, however, that there are two matters which must first be established before it can be said that the failure to raise a cause of action earlier might be said to have been unreasonable. The first is that the cause of action must be one that could have been raised in the previous proceeding. For the reasons already stated, leaving aside the Trade Practices Act claims, this much is established in the present case. Secondly, it must appear that the same or substantially the same facts will arise for consideration in the second as in the first proceeding. For the purposes of this case, I assume, as counsel for the appellants submitted, that, if the Magistrates’ Court proceeding continues, there will be a good deal of overlap between the evidence and the facts which fell for consideration in the Industrial Relations Court and that which falls for consideration in the Magistrates’ Court. But, in my view, adopting the analysis favoured by the majority in Anshun’s Case, these are necessary but not sufficient conditions for the application of the principle in Henderson v Henderson. … [25] There is at least one factor, however, which is indicative of “unreasonableness” in not asserting a cause of action in an earlier proceeding: if any judgment or order which might be made on the cause of action in the subsequent proceeding would conflict with a judgment or order in the earlier proceeding, then it will ordinarily be unreasonable to refrain from raising the cause of action in the first proceeding … [26] This factor was the most important in Anshun’s Case … … [29] Assuming in the appellant’s favour that it is appropriate to consider all relevant aspects of the proceedings, there are a number of considerations in this case which lead me to the conclusion that it was not unreasonable for the respondent to decide to pursue his statutory claim for relief under the IRA without seeking to join in the Industrial Court proceeding the claims which he now brings in the Magistrates’ Court. First, on initiating his application in the Industrial Relations Commission, it was not open to him to raise any claim other than the statutory one. He could only have raised the other claims by applying to make amendment after the matter had been referred to the Industrial Relations Court pursuant to s 170ED. Whilst it seems that at some point in the hearing in the Industrial Relations Court the respondent was invited by the Judicial Registrar to amend his application, the precise scope of the amendment which was invited is unclear. Counsel for the respondent said that the invited amendment would not have covered all the claims which the respondent seeks to bring

374 [7.100]

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Gibbs v Kinna cont. in the Magistrates’ Court. This was not contradicted by counsel for the appellants. In any event, according to counsel for the respondent, had the respondent proceeded with an application to amend his claim, the Judicial Registrar would have been bound to consider an application for an adjournment by the other parties. Again, this was not contradicted by counsel for the appellants. The point was fairly made that to add further issues would have complicated and, in all likelihood, delayed the relatively straightforward and speedy adjudication of Kinna’s primary claim, being a claim which, according to the relevant Rules of Court, is to be considered and determined by the Court “(a) without undue formality; and (b) with regard to the need to avoid unnecessary cost to the parties to the application”: see Industrial Relations Court Rules, Order 75, Rule 2. It is presumably on this account that the matter came before the Judicial Registrar without pleadings. It is, I think, relevant to bear in mind in this regard, too, that the respondent had the benefit of s 170EDA(1), a reverse onus provision, in relation to his primary claim. … [39] I am not persuaded that the judge below erred in result. It should, I think, be borne in mind that whilst the principle discussed in Anshun’s Case is designed to foster public and private interests by encouraging parties to advance all their related claims or defences at the one time, thereby diminishing unnecessary duplication of curial and other effort, it seeks to meet these objectives by terminating a litigant’s right to have a court adjudicate upon the merits of a claim. It is, I think, on this account that the principle is to be applied only in the clearest of cases.

 [7.110]  The principle in Anshun may apply also where the parties in subsequent proceedings

are not the same as in the relevant earlier proceedings. A subsequent defendant may be able to raise the principle even though he or she was not involved in the earlier case, as in Rippon v Chilcotin (2001) 53 NSWLR 198; [2001] NSWCA 142, a decision of the New South Wales Court of Appeal extracted below.

Rippon v Chilcotin [7.120]  Rippon v Chilcotin (2001) 53 NSWLR 198; [2001] NSWCA 142 [The purchasers of a business took legal action against the vendors for breach of contract and misrepresentation. They succeeded on the first cause of action and obtained limited damages, but failed in relation to the misrepresentation claim. They had alleged that relevant financial statements prepared by the vendors’ accountants had been misleading. The court held that the purchasers had not in fact relied on the financial statements. The purchasers then commenced proceedings against the accountants, who successfully raised the Anshun defence.] HANDLEY JA (MASON P AND HEYDON JA AGREEING) [19] … in the terms of the joint judgment of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Limited [1981] HCA 45; (1981) 147 CLR 589, 602 (Anshun) those claims were “so relevant to the subject matter of the first action that it would have been unreasonable not to rely on [them]” and they would therefore be barred by the wider form of estoppel applied in that case. [20] The purchasers could have been expected to bring forward any claims against the vendor based on the earlier figures so that all relevant issues could be determined in the one proceeding. Moreover a judgment in favour of the purchasers based on the earlier figures would conflict with the judgment in favour of the vendor based on the 1991 figures because the judgments would declare inconsistent rights in respect of the same transaction (Anshun 603-​4).

[7.120]  375

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Rippon v Chilcotin cont. [21] The judgment in favour of the vendor on the cause of action for misleading and deceptive conduct created a cause of action estoppel against any claim against the vendor for negligent misrepresentation. … [22] The purchasers could have included their claim against the accountants for negligent misrepresentation, based on the 1991 figures, in their Supreme Court proceedings. They knew that the figures came from the accountants and there would have been common issues of reliance, falsity and damage. If the claims based on the earlier figures were not worth pursuing against the vendor they were not worth pursuing against the accountants either. [23] In those circumstances it could fairly have been said, in the language of the joint judgment in Anshun (602), that the claims against the accountants were so relevant to the subject matter of the first action that it was unreasonable for the purchasers not to rely upon them in that action. Compare Morris v Wentworth-​Stanley [1999] QB 1004 (CA), 1011, 1017. … [30] The substance of the matter therefore is clear. The purchasers, disappointed with their bargain, sued their vendor in contract and in misrepresentation. They lost their case in misrepresentation and were disappointed with their modest recovery in contract. A few weeks before the expiration of the limitation period they sued the accountants for what is in substance the same misrepresentations. In the first proceedings they had to prove that they relied upon those misrepresentations. This turned on the evidence of Mr Hoefl, the contemporary documents, and the surrounding circumstances. The purchasers lost that issue and seek to re-​litigate it against the accountants on substantially the same evidence in the hope that this time Mr Hoefl will be believed. … [32] In State Bank of NSW Ltd v Stenhouse Ltd (1997) Aust Tort Rep 81-​423, another case involving abuse of process in seeking to re-​litigate an issue, Giles CJCommD said at 64,089: The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are –​

(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or ultimate issue;



(b) the opportunity available and taken to fully litigate the issue;



(c) the terms and finality of the finding as to the issue;



(d) the identity between the relevant issues in the two proceedings;



(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; …



(f) the extent of the oppression and unfairness to the other party if the issue was relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and



(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.

… [34] The first four matters have already been considered. The purchasers made an attempt to rely on fresh evidence … [35] There are difficulties with this evidence apart from the fact that it is not fresh evidence in the technical sense … 376 [7.120]

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Rippon v Chilcotin cont. [36] There is no question here of oppression and unfairness because the accountants were not parties to the earlier action, but these proceedings do threaten the integrity of the administration of justice and raise the prospect of conflicting judgments. [37] In my opinion therefore these proceedings are an abuse of process and this appeal should be allowed.

 [7.130] The notion that Anshun may be characterised as rooted in the doctrine of abuse

of process was acknowledged also in Redowood Pty Ltd v Link Market Services Pty Ltd (extracted at [7.140]). However, as Redowood shows, it does not necessarily follow that the Anshun argument will be decisive, where earlier proceedings fail to raise the issue. This is more likely to be the case where the proceedings involve the same parties. But where the parties are different, failing to take appropriate action in the earlier proceedings has to be so unreasonable as to amount to an abuse of process for the estoppel to apply. In Meriton Apartments Pty Limited v Industrial Court of New South Wales, Handley  AJA (with whom Allsop  P and Tobias JA agreed) said that “[t]‌he Anshun test is based on the reasonableness or otherwise of the conduct of a litigant in earlier proceedings”.10 In Champerslife Pty Ltd v Manojlovski (extracted at [7.150]), the Court of Appeal emphasised that it was a “fundamental error” in the operation of the principle of Anshun estoppel to hold that because a “matter could have been raised in the first proceeding to draw a conclusion, it should have been” so as to bar later proceedings based on that matter. “Rather, it has to be so relevant as to make it unreasonable not to raise it.”11

Redowood v Link Market Services [7.140]  Redowood Pty Ltd v Link Market Services Pty Ltd (formerly known as ASX Perpetual Registrars Ltd) [2007] NSWCA 286 [Redowood Pty Ltd (Redowood) originally brought proceedings against Mongoose Pty Ltd (Mongoose) for breach of contract in the alleged sale to Mongoose of certain securities. Redowood argued that a partially completed Rights Acceptance Form sent to it by ASX Perpetual Registrars Ltd (ASX) (later known as Link Market Services Ltd) on behalf of Mongoose constituted the contract. Mongoose denied contractual liability. It filed a defence, as well as a cross-​claim against ASX alleging negligence in the event that a valid contract had been formed. The cross-​claim was stayed pending resolution of the Redowood claim. Einstein J in the Supreme Court held no contract had been formed between Redowood and Mongoose. Redowood then commenced separate proceedings against Link for negligence, which were dismissed on the Anshun basis. Redowood appealed.] HODGSON JA (MASON P AND BRYSON AJA AGREEING) Decision [43] In Anshun at 602, the leading judgment of Gibbs CJ, Mason J and Aiken J asserted that in cases concerning the extended estoppel based on Henderson v Henderson (1843) 3 Hare 100, 67 ER 313,

10 11

Meriton Apartments Pty Limited v Industrial Court of New South Wales (2009) 263 ALR 556; [2009] NSWCA 434 at [60]. Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245; [2010] NSWCA 33 at [4]‌per Allsop P. [7.140]  377

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Redowood v Link Market Services cont. “the abuse of process test is not one of great utility”. They preferred to say “there will be no estoppel unless it appears that the matter relied on as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it”. They also (at 603-​4) adopted the proposition that “a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment”, in the sense that the two judgments “appear to declare rights that are inconsistent in respect of the same transaction”. [44] This leading judgment did not treat this extended estoppel as being based on jurisdiction to prevent abuse of process; but in my opinion, this extended estoppel, operating beyond the area of res judicata, issue estoppel and merger is (as Justice KR Handley said in his article “Res Judicata: General Principles and Recent Developments”, (1999) 18 Australian Bar Review 214 at 219) “based on the court’s inherent jurisdiction to prevent abuse of its process by proceedings which are vexatious, that is unreasonable”. In Rippon v Chilcotin Pty. Limited [2001] NSWCA 142, 53 NSWLR 198, Handley JA, which whom Mason P and Heydon JA agreed, found Anshun estoppel made out and on that basis found the proceedings (albeit not oppressive) to be an abuse of process, and ordered that they be dismissed. [45] In cases where the earlier proceedings and the later proceedings are between the same parties, as in Anshun itself, a finding of unreasonableness in not raising a matter in the earlier proceedings would almost inevitably mean that the later proceedings were oppressive and an abuse of process. Where the parties are different, the test of unreasonableness is still relevant; but in my opinion it must either be considered not conclusive, or else must be understood as involving unreasonableness of such a nature that the later proceedings against different parties are an abuse of process. [46] In the present case, if the earlier proceedings had proceeded as a tripartite contest, with the cross-​claim against ASX-​Perpetual being heard together with Redowood’s claim against Mongoose, then I think it would have been strongly arguable, even though there was no issue joined directly between Redowood and ASX-​Perpetual, that these later proceedings involve the same parties as the previous proceedings, that it was unreasonable for Redowood not to agitate a claim against ASX-​ Perpetual in the earlier proceedings, and that the present proceedings are oppressive and an abuse of process. However, six weeks after the cross-​claim was brought, it was stayed and ASX-​Perpetual took no further part in the proceedings, and in particular it did not participate in the hearing. In those circumstances, as in Rippon, I do not think these proceedings against ASX-​Perpetual can be considered oppressive. I do not think that the circumstance that ASX-​Perpetual employees gave evidence and were cross-​examined in the earlier proceedings, without legal advisers, makes the present proceedings oppressive or unfair. [47] The possibility of inconsistent findings may be a reason for finding proceedings to be an abuse of process. In Rippon, the plaintiff had in previous proceedings failed to prove reliance on certain accounts. The Court said that it would be an abuse of process to bring proceedings against a different defendant for the same loss based on reliance on the same accounts; and it also said that the plaintiff’s attempt to avoid this by alleging reliance on earlier accounts was mere camouflage and in any event had no prospect of success. [48] There was nothing like that in the present case. Looking at the first of the three matters referred to by the primary judge, Redowood is not seeking any different finding of fact, and the possibility that a different finding adverse to Redowood might be made by a different judge in a hearing between different parties gives little support to Anshun estoppel. As regards the second matter, Redowood is not alleging that there was a representation or assumption such that compliance would have absolved Redowood from complying with the requirements of Mongoose’s offer, but is rather alleging that the negligence of ASX-​Perpetual caused it to act in such a way that it did not obtain a contract and was not otherwise able to retrieve the situation. As regards the third matter, the respondent is not alleging any duty based on the Rights Offer Document, but rather a duty based on Redowood’s own dealings with ASX-​Perpetual. Accordingly, in my opinion the primary judge was in error in his findings on the question of inconsistent judgments. 378 [7.140]

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Redowood v Link Market Services cont. [49] The possibility of a finding that there was a binding contract between Redowood and Mongoose, suggested in argument by Mr McGrath, is extremely remote, having regard to the reasoning of Einstein J and the Court of Appeal in the Mongoose proceedings. It is true that there is no estoppel binding ASX-​Perpetual, and such a finding could possibly be sought by ASX-​Perpetual, because it would defeat Redowood’s claim. But plainly, this is not an inconsistent finding sought by Redowood; and in my opinion, particularly having regard to the remoteness of this possibility, it does not significantly support the existence of an Anshun estoppel. [50] In my opinion also, the approach of the primary judge to the somewhat analogous case of a breach of warranty of authority was too sweeping. In cases such as that, and more generally where a plaintiff may have alternative remedies against different parties, to suggest that a plaintiff should generally sue all of them, barring exceptional circumstances, would be to encourage complex and lengthy litigation, and promote the incurring of costs where there is no certainty that a Bullock or Sanderson order would be obtained. In my opinion, plaintiffs should be permitted reasonable latitude in deciding whether to sue just one defendant, or to join a number of defendants in alternative claims. [51] The circumstance that the primary judge did not accept the reason put forward by Redowood for not joining ASX-​Perpetual in the Mongoose proceedings was relevant to the question whether the present proceedings were an abuse of process, but did not of itself discharge the onus lying on ASX-​ Perpetual to show that it was objectively unreasonable for Redowood not to join ASX-​Perpetual in the previous proceedings, and that these proceedings were an abuse of process. [52] In my opinion, for the reasons I have given, it was not shown that Redowood not joining ASX-​Perpetual in the previous proceedings was objectively unreasonable in a sense that would render the present proceedings an abuse of process, and the primary judge was in error in finding Anshun estoppel was made out.



Champerslife v Manojlovski [7.150]  Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245; [2010] NSWCA 33 ALLSOP P [1]‌The reasons of Gibbs CJ, Mason J and Aickin J in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; 147 CLR 589 at 602-​603 referred to the “inutility” of founding the test for the application of the principle in Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100; 67 ER 313 on abuse of process. It is to be recalled that Lord Wilberforce, speaking for the Privy Council in a Queensland appeal only three years earlier, approved the statement of Somervell LJ in Greenhalgh v Mallard [1947] 2 All ER 255 at 257 to the following effect: res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but … it covers issues or facts which are so clearly part of the subject-​matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them. [2]‌Lacking utility might be thought to be different from being wrong in principle. Nevertheless, their Honours went on to express the relevant test for Australia at 602 as follows: we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. [3]‌The question of unreasonableness is derived significantly from the matter being so relevant to the subject matter of the first proceeding. There are at least two related assessments that have to be [7.150]  379

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Champerslife v Manojlovski cont. made: was the matter so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding? Whilst it is necessary to eschew language of abuse of process, the character of the assessments is such as to make relevant to a point what Lord Bingham of Cornhill said in Johnson v Gore Wood & Co [2002] 2 AC 1 at 31: It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-​based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. (emphasis added) Leaving to one side his Lordship’s reference to “abusive” and “misusing or abusing the process of the court”, what is of assistance from what he said is the recognition that the assessment is not to be made mechanistically, but rather there is a value judgment to be made referable to the proper conduct of modern litigation. [4]‌One fundamental error in the approach of the respondent was to build on the proposition that because the matter could have been raised in the first proceeding to draw a conclusion, it should have been. That mechanistic approach was what Lord Bingham was rejecting in the above passage from Johnson v Gore Wood. It is also what Gibbs CJ, Mason J and Aickin J found objectionable in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581. In that case at 590, Lord Kilbrandon spoke of the principle as “an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings” (emphasis added). This way of putting it overstated the principle. The mere fact that the matter could have been raised does not mean it should have been raised (for the operation of the principle). Rather, it has to be so relevant as to make it unreasonable not to raise it.

 [7.160]  At the heart of the Anshun estoppel is whether it was unreasonable that the action

in the second proceedings was not litigated in the first proceedings. The risk of inconsistent verdicts with the first proceedings has significant influence in determining whether the second proceedings will be stayed.

Timbercorp Finance v Collins [7.165]  Timbercorp Finance Pty Ltd (In Liquidation) v Collins & Anor; Timbercorp Finance Pty Ltd (In Liquidation) v Tomes [2016] HCA 44 [The appellants (Timbercorp) provided loans to investors in managed investment schemes operated by a related company. After all companies in the corporate group were placed in liquidation, a group proceeding was commenced by persons who held interests in the managed investment schemes. The lead plaintiff argued there had been misrepresentations and failure to comply with statutory obligations. The respondents (Collins and Tomes) had applied for loans from Timbercorp, and they chose not to opt out of the group proceedings, which ultimately failed. Timbercorp then sued the respondents to recover principal and interest on their defaulted loan agreements. The respondents’ defences included that no loans were advanced to them for the purpose of acquiring interests in the relevant project, that they had not acquired such interests, or that certain misrepresentations had been made by Timbercorp or its agent. Timbercorp argued that the respondents’ defences were precluded by Anshun estoppel and abuse of process, since they should have been raised in the group proceedings from which the respondents failed to opt out. 380 [7.160]

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Timbercorp Finance v Collins cont. The High Court unanimously dismissed Timbercorp’s appeals. It ruled it was not unreasonable for the respondents not to have raised their loan agreement issues in the group proceeding because the issues in the group proceeding concerned undisclosed risks and the making of misrepresentations; there was no issue in the group proceeding as to the validity of the loan agreements; and the respondents had limited control over the group proceeding. It also held that raising the defences in the current proceedings did not amount to an abuse of process because there was no adverse effect on case management decisions open to the court.] FRENCH CJ, KIEFEL, KEANE AND NETTLE JJ Estoppel [27] It was mentioned at the outset of these reasons that the appellant does not contend that an issue estoppel arises with respect to the claims that the respondents now seek to pursue. That is to say, it is not argued that they involve an issue of fact or law which was necessarily involved as a step in reaching the determination of the group proceeding. Rather, it is contended that these claims ought to have been raised and determined in that proceeding. An estoppel of this kind, an “Anshun estoppel”, will preclude the assertion of a claim or of an issue of law or fact if the claim or issue was so connected to the subject matter of the first proceeding as to make it unreasonable, in the context of the first proceeding, for the claim or issue not to have been made or raised in it. The appellant’s arguments [28] The appellant submits that an obvious connection between the respondents’ defences and the group proceeding is that they seek to achieve the same result, namely avoiding repayment of the loan obligations. The respondents’ loan agreements were the subject of the group proceeding in the sense that they were sought to be rendered void or unenforceable by reason of the claims there made. [29] The appellant further submits that the fact that the group members held interests in the schemes was a fundamental assumption upon which the group proceeding was based. It went to the root of the matter in the way discussed in Hoysted v Federal Commissioner of Taxation. Likewise it was assumed for the purposes of the group proceeding that loan agreements between the appellant and the respondents were actually entered into. Now the respondents seek to argue to the contrary –​that there were no concluded agreements for loans and thus no loans. This has the potential that the two proceedings could produce declarations of inconsistent rights. [30] As to the representations upon which Mr Tomes seeks to rely, the appellant says that they closely match those in the group proceeding. In particular, the lead plaintiff in the group proceeding pleaded a misrepresentation that his funds would effectively be quarantined and not pooled with other funds. This led to a finding by Judd J that the lead plaintiff’s assertion in this regard was not consistent with what had been stated in the Product Disclosure Statements. [31] The appellant submits that it was unreasonable of the respondents not to use the statutory safeguards provided for by opting out of the group proceeding or by raising the matters of defence as claims in that proceeding. An aim of the statutory provisions for group proceedings is the efficient use of judicial resources and this requires that lawyers and individuals be encouraged to bring similar or related claims in the one set of proceedings. [32] The relevant question, the appellant submits, is whether the defences in these proceedings are so similar to issues in the group proceeding that the respondents should be precluded from pursuing them. The enquiry begins and ends with similarity, regardless of whether it was practicable to have litigated the claims in the group proceeding. Were it otherwise, framing a claim as personal to the particular plaintiff would always provide an answer to an Anshun estoppel. [33] In any event, the appellant submits that there is no reason to think that the matters raised in the defences could not have been determined in the group proceeding. The ever-​expanding claims in the group proceeding could have accommodated them. Instead the appellant now faces hundreds [7.165]  381

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Timbercorp Finance v Collins cont. of separate proceedings which are to be determined on much of the same evidence which was led in the group proceeding. [34] The appellant submits that there is no injustice in precluding the respondents from raising their defences. They were not helpless or passive as group members. To say that they did not have control over their part in the proceeding does not fully describe the way Pt 4A works and does not take account of the powers which the Court may exercise. In that regard, the Court could have made directions for the determination of the respondents’ claims in the group proceeding had it been asked to do so. [35] The appellant’s arguments also focus on another aspect of a group proceeding, namely, the representative capacity of the lead plaintiff in that proceeding. It is submitted that group members are privies in interest with the lead plaintiff in a group proceeding, because that person represents their legal interest. In the appellant’s submission, recognition of that shared interest “narrows inevitably the relevant considerations on reasonableness” in connection with estoppel. It is convenient to deal with that aspect of the appellant’s arguments first. Group members as privies [36] A person (the “second party”) who seeks to make a claim in later proceedings may be bound by the actions of a party in earlier proceedings if the party in those proceedings represented the second party such that they could be described as the privy in interest of the second party. The same principle which is applied to determine when a party in earlier proceedings may be said to be a privy in interest of the second party applies with respect to all forms of estoppel. The interest in question is required to be a legal one. [37] If the appellant is correct in its submissions concerning the privy relationship between the lead plaintiff in the group proceeding and the respondents as group members, the enquiry becomes whether the lead plaintiff would have been estopped. The nature of the enquiry does not alter. It remains whether the respondents’ claims were so connected to the subject matter of the group proceeding as to make it unreasonable for their claims not to have been made. However, the question is directed at whether the lead plaintiff in the group proceeding should have done so, rather than the respondents in these proceedings. (The question whether the respondents, acting reasonably, should themselves have raised their claims will be addressed later in these reasons.) [38] The reason for the appellant’s focus on the position of the lead plaintiff in a group proceeding may be understood by reference to the level of involvement or control that the lead plaintiff has, compared with a group member. The argument must be that, since the lead plaintiff has the carriage of the proceedings and, subject to the Court’s case management powers, determines what claims are to be put forward, there is good reason for the lead plaintiff to include for determination in the group proceeding claims by group members which are connected to the group proceeding. [39] The question whether the lead plaintiff in the group proceeding should himself have sought to have the respondents’ claims included in the group proceeding is a question which is reached only if the appellant is correct in its submission that the lead plaintiff was the privy in interest of the respondents with respect to their individual claims. For the reasons which follow, he was not. [40] The appellant submits that the representation of group members’ interests by a lead plaintiff in a group proceeding is not limited to the legal interest in the common questions in that proceeding. It submits that group members, such as the respondents, are privies in interest of the lead plaintiff not only with respect to the claims pleaded in that proceeding, but also with respect to unpleaded claims of individual group members that should have been raised. It would follow that if the lead plaintiff in that proceeding did not bring forward those claims for determination, the group members will be unable to pursue them later. The appellant submits that if the lead plaintiff in a group proceeding is not viewed in this way, the principle in Anshun could never apply to individual claims in a group proceeding. But the appellant does not explain why the principle should apply in this way. 382 [7.165]

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Timbercorp Finance v Collins cont. [41] If the appellant’s argument was correct it would give estoppels a wide operation in the context of a group proceeding, on account of it being a proceeding of that nature. It is therefore necessary to consider the nature and subject matter of group proceedings under Pt 4A, the role of the lead plaintiff in them and the legal interests which the lead plaintiff represents. [42] Representative proceedings have, in some form, historically been permitted under the Rules of the Supreme Court of Victoria at least since 1916. They were modelled on the English rules and can be traced back to the practice of the Chancery Court. The old rule of the Chancery Court was that, in order to achieve finality, the presence before the Court of all the parties interested in the matter was required. However, the rule did not apply where the parties were too numerous. It was said that “[i]‌t was originally a rule of convenience: for the sake of convenience it was relaxed”. [43] The Victorian Rules were modified over the years. It is not necessary to detail that history. Part 4A took effect from 1 January 2000 and was based on federal legislation for representative proceedings. The report of the Australian Law Reform Commission (“the ALRC”), which preceded the enactment of the federal legislation, envisaged that grouping procedures in cases of multiple wrongdoing might reduce costs and inefficiencies and other barriers which impede access to legal remedies. Gleeson CJ was later to observe that, although there may be differences of opinion about the legislative policy underlying group proceedings, the primary object of Pt 4A is clear enough: It is to avoid multiplicity of actions, and to provide a means by which, where there are many people who have claims against a defendant, those claims may be dealt with, consistently with the requirements of fairness and individual justice, together. As his Honour pointed out, the State has an interest in preventing relitigation of common issues of fact and law so far as it can be done consistently with the requirement of justice to all parties. [44] For the purposes of Pt 4A, s 33A relevantly defines a “plaintiff” of a group proceeding as “a person who commences a group proceeding as a representative party” and a “group member” as “a member of a group of persons on whose behalf a group proceeding has been commenced”. It may be observed that group membership under Pt 4A does not require any choice to be exercised. There is no “opt in” procedure provided. A group member can “opt out”. More importantly for present purposes, there can be little doubt that the plaintiff in the group proceeding has a representative role. [45] In a passage in the joint reasons in Tomlinson v Ramsey Food Processing Pty Ltd, upon which the appellant relies, it was observed that traditional forms of representation which bind those represented to estoppels include representation by an agent, by a trustee, by a tutor or guardian and “representation by another person under rules of court which permit representation of numerous persons who have the same interest in a proceeding”. The joint reasons went on to say that “[t]‌o those traditional forms of representation can be added representation by a representative party in a modern class action”. These latter forms of representation, it was observed, are the subject of procedures such as opt in or opt out which guard against the collateral risks of representation, such as an estoppel. [46] The joint reasons in Tomlinson  referred to representative proceedings for the purpose of comparison with the proceedings there in question, which were commenced by a statutory office-​ holder in the exercise of a power conferred by statute. Proceedings of that kind may result in the enforcement of another person’s legal entitlement, but the office-​holder may not be concerned with the interests of that person in the discharge of the statutory function. By implication, plaintiffs in representative proceedings may be so concerned, not the least because they share the same interest as group members in the matter litigated. It was not necessary in Tomlinson to decide that a group member might be a privy in interest of the plaintiff in group proceedings, but it may be taken to acknowledge that such a relationship may arise. [47] That acknowledgement does not, however, answer the question as to the extent to which the plaintiff in group proceedings may be taken to represent the legal interest of the group members. The [7.165]  383

Civil Procedure in New South Wales

Timbercorp Finance v Collins cont. answer to that question lies in the nature of a group proceeding and the commonality of interest that may be pursued in it. Section 33C(1) provides: Subject to this Part, if –​

(a) seven or more persons have claims against the same person; and



(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and



(c) the claims of all those persons give rise to a substantial common question of law or fact; a proceeding may be commenced by one or more of those persons as representing some or all of them.

[48] Section 33H provides that the indorsement on the writ, by which the group proceeding must be commenced, must identify the group members to whom the proceeding relates; specify the nature of the claims made on behalf of the group members and the relief claimed; and “specify the questions of law or fact common to the claims of the group members”. [49] These provisions identify the subject matter of a group proceeding as a claim which gives rise to common questions of law or of fact. The plaintiff represents the group members with respect to their interests in that regard and the group members claim through the plaintiff to the extent of that interest. Their relationship is therefore that of privies in interest with respect to that claim. [50] However, other provisions of Pt 4A also make plain that group members may have other, individual, claims which do not form part of the subject matter of the group proceeding. Group members’ claims were also the subject of discussion by the ALRC in its report. The ALRC, whilst recognising that the grouping of many claims into one proceeding involving at least one common question of law or fact might have benefits, also recognised that there may be issues which must be decided separately in relation to each group member. And in Wong v Silkfield Pty Ltd, this Court held that it was not necessary for a representative proceeding to be likely to resolve wholly, or even to any significant degree, the claims of all group members. [51] Section 33Q provides that where it appears to the Court that the determination of the questions common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining questions and for that purpose may establish sub-​groups. Section 33R allows the Court to permit an individual group member to take part in the proceeding for the purpose of determining a question that relates only to the claim of that group member. In this circumstance, however, the group member is liable for the costs associated with the determination of that question, a liability which does not generally arise in the group proceeding itself. [52] Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment “binds all persons who are such group members at the time the judgment is given”. In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions. [53] The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents’ claims. This is so regardless of whether they should have been raised in the group proceeding. That leaves for consideration the question whether the respondents themselves are estopped from raising them in these proceedings. [54] A conclusion that the representative capacity of a plaintiff in a group proceeding is limited to the claims giving rise to common questions is consistent with principles which underlie the concept of 384 [7.165]

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Timbercorp Finance v Collins cont. a privy in legal interest. The basic requirement of a privy in interest is that the privy “must claim under or through the person of whom he is said to be a privy”. The principle underlying the concept of privies is that “one who claims through another is, to the extent of his claim, subject to … all estoppels affecting the person through whom he claims”. That principle is in turn informed by the theory that a person who takes a benefit ought also to bear a burden. With the benefit of the claim comes the detriment of the estoppel. But, as explained in Tomlinson, it is a theory which has its limitations. It would be quite unjust for a person whose legal interests stood to benefit by making a legal claim to be precluded if they did not have some measure of control of the proceedings in question. As has been observed earlier in these reasons, the control of group members such as the respondents is limited. Relevance and reasonableness [55] The appellant’s submission, that an Anshun estoppel is made out by reference to similarities between the matters raised in the two proceedings, regardless of whether the matters sought to be raised in the present proceedings could practicably have been raised in the group proceeding, is contrary to authority on two levels. [56] An Anshun estoppel is not based upon degrees of similarity, which may be a matter of impression. It was made clear in Anshun that there could be no estoppel “unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it” (emphasis added). It was further explained: Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. [57] In Anshun the owner of the crane which was involved in an accident was prevented from pursuing separate proceedings in which it sought an indemnity from the hirer of the crane, when it had only claimed contribution from the hirer in the first proceeding. It would have been expected that the owner would have sought an indemnity in the first proceeding and litigated the questions of law and fact relevant to it. [58] By way of contrast, in these proceedings, it could hardly be said to have been expected that the respondents would raise their individual issues about their loan agreements referred to above in the group proceeding, where the common issues were undisclosed risks and misrepresentations affecting the entry of investors into the schemes. The only connection between those matters and their loan agreements was the relief sought regarding the enforceability of the loan agreements. There was no issue in the group proceeding about the validity of the loan agreements which would have made the claims in the respondents’ defences relevant in the group proceeding. [59] Even if the respondents’ claims were relevant to those in the group proceeding, there remain, contrary to the appellant’s submissions, questions as to whether they could, and should, have been raised in that proceeding. In Anshun it was acknowledged that there may be a variety of circumstances which may justify a party refraining, reasonably, from litigating an issue in the earlier proceedings. [60] The appellant’s argument –​that the group proceeding was litigated on the basis of assumptions of fact –​does not rely upon any similarity between the proceedings but rather the potential for there being inconsistent findings. In Anshun it was regarded as generally accepted that a party will be estopped from bringing an action where, if it succeeds, it would result in a judgment which conflicts with an earlier judgment. In such a circumstance the litigation should be regarded as concluded by the earlier proceedings. [61] Anshun itself provides an example of how such an inconsistency might arise. A finding had been made that the hirer was liable to provide contribution to the owner with respect to the injuries; and a finding that the hirer was liable to provide a complete indemnity was later sought. But in [7.165]  385

Civil Procedure in New South Wales

Timbercorp Finance v Collins cont. these proceedings there is no question of inconsistency arising with respect to findings as to the respondents’ claims. No issue was raised, and no finding was made, in the group proceeding about these matters. There was no particular assumption about the loan agreements upon which the group proceeding was based, apart from their existence. [62] Contrary to the appellant’s submissions, this is not a case like Hoysted, where the Commissioner was estopped from raising an issue of mixed fact and law which had been the subject of admission by him in the earlier proceeding. It was there said that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and fresh litigation started with a view to obtaining a judgment based upon a different assumption of facts. If this were permitted, litigation would not have the finality deemed desirable. But the present case involves no such admission. [63] In Hoysted it was said that the same principle, that of setting to rest the rights of litigants, applies to a case where a point, fundamental to the decision, has not been traversed. But, in this case, it cannot be said that the lead plaintiff’s failure to raise in the group proceeding the issues now raised by the respondents in these proceedings was fundamental to Judd J’s decision in the group proceeding. The lead plaintiff’s claim in the group proceeding alleged the existence of the loan agreements and that was the assumption on which the claim proceeded. The lead plaintiff sought relief from obligations under the loan agreements on the basis of the contraventions of the Corporations Law, the Corporations Act 2001 (Cth), the Fair Trading Act 1999 (Vic), the Trade Practices Act 1974 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) which were alleged in the group proceeding. But, for all intents and purposes of the group proceeding, the efficacy of the loan agreements was not adverted to. Judd J made no determination as to whether they were efficacious. In effect, his Honour determined only that, assuming the existence of the loan agreements, the borrowers were not entitled to the relief from their obligations under the loan agreements on the basis of the misrepresentations alleged in the group proceeding. The bases for seeking to avoid the loan agreements were entirely different from the matters now sought to be agitated. [64] It is correct that one of the representations upon which Mr Tomes seeks to rely is similar to that made by the lead plaintiff in the group proceeding, to the effect that he was led to believe that his funds would be quarantined from other funds and applied only to his investments. Judd J found that such a representation was inconsistent with information provided in the Product Disclosure Statements. However, unlike the representation relied on by the lead plaintiff in the group proceeding, the representation relied upon by Mr Tomes does not stand alone; it is said to have been made in the context of other representations which were entirely personal to him. [65] Moreover, although, as has been observed, it appears that the solicitors did not bring the representations alleged by Mr Tomes to the attention of the Court during the group proceeding, it may be inferred from the fact that Judd J made an order postponing the determination of the counterclaim in the group proceeding that his Honour was not disposed to determine any claim other than those in the group proceeding. [66] Further, Mr Tomes would have been exposed to a liability for costs of the determination of his individual claim with the group proceeding. In Anshun the expense of litigating was given as an example of a circumstance which might justify a person not raising an issue in earlier proceedings. [67] The appellant’s submission that the respondents should have opted out of the group proceeding takes its case no further. It is necessarily based upon the notion that the lead plaintiff in the group proceeding represented the respondents with respect to their unpleaded claims as well as those common claims which were the subject of that proceeding. This contention has been dealt with above. There was no need for the respondents to opt out in order to preserve their position with respect to the claims now the subject of the defences. [68] More generally, the appellant’s submissions respecting the control that the respondents had in relation to the group proceeding appear to be based upon a misapprehension of the ability of a 386 [7.165]

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Timbercorp Finance v Collins cont. group member to have his or her individual claim decided and, more particularly, a misunderstanding of the case management powers given by Pt 4A to the Court to determine what is to be heard and when. Those powers are considerable. They include the power to decide whether the proceeding continues as a group proceeding; whether the lead plaintiff needs to be substituted to provide better representation; as to the determination of questions which remain after the resolution of the common questions; and, most relevantly, whether the claim of a group member can be determined in the group proceeding. These powers have further relevance with respect to the other limb of the appellant’s argument, that the defences are an abuse of process. Abuse of process? [69] The appellant submits that the respondents’ defences may constitute an abuse of process even if the group proceeding does not give rise to an estoppel. So much was recognised in Tomlinson, where it was pointed out that abuse of process is inherently broader and more flexible than estoppel and is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. [70] The damage to the administration of justice which the appellant identifies is said to lie in the Supreme Court being denied the opportunity, in the group proceeding, of determining how best to manage the issues raised in the defences in the context of all the common claims. The appellant points to what was said by the ALRC with respect to the then proposed federal legislation for representative proceedings, namely that it was intended to facilitate claims and strengthen case management powers, given the burdens that complex litigation can put on the judicial system and the parties. If all group members have an unfettered right to pursue their claims individually, the goal of judicial economy would not be fulfilled. [71] The latter reference is taken out of context. The ALRC was not suggesting that a group member should not be permitted to pursue an individual claim outside the group proceeding. Part 4A itself acknowledges that this will occur. Rather it was saying that where claims were such that they could be determined as a group, they should be. That will arise where there is a common question or issue. [72] Consistently with the issues of efficiency and better use of court resources, Pt 4A provides the Court with overall management of a group proceeding, with powers to determine how and when individual claims might be heard either in connection with, or separately from, the group proceeding. These powers are to be exercised consistently with the aims of Pt 4A, as no doubt they were when Judd J postponed the counterclaim to after the determination of the claims in the group proceeding. His Honour was no doubt aware of the possibility, if not the fact, that there were other claims, as is evident from the discussions reported from the early directions hearing. But there is nothing to suggest that their determination was considered by his Honour to be necessary to the management and determination of the group proceeding. To the contrary, it may reasonably be inferred that they were not. [73] At most it may be said that the respondents’ claims were not brought to the attention of the Court. It could not be said that the failure to do so affected the case management decisions open to the Court. There is no reason to suppose that knowledge of the respondents’ claims would have altered the course that the Court took. In these circumstances, raising the defences in these proceedings can in no way be said to amount to an abuse of process. To the contrary, the preclusion of the respondents’ defences to the appellant’s claims would be unwarranted in principle and therefore unjust. Orders [74] The appeals should be dismissed with costs. [footnotes omitted]

 [7.165]  387

Civil Procedure in New South Wales

Recent decisions of the New South Wales Court of Appeal in which Anshun estoppel, res judicata or issue estoppel were discussed are: Charafeddine v Morgan [2014] NSWCA 74; Dimitrovski v Australian Executor Trustees Limited [2014] NSWCA 68; Sneddon v State of New South Wales [2012] NSWCA 351; Beck v Weinstock; Beck v L W Furniture (Consolidated) Pty Ltd [2012] NSWCA 289. See also discussion of Anshun estoppel by the Full Court of the Federal Court of Australia in Truthful Endeavour Pty Ltd v Condon (Trustee) Re Rayhill (Bankrupt) [2015] FCAFC 70, and by the Victorian Court of Appeal in Shaw v Gadens Lawyers; Shaw v Rigby Cooke Lawyers [2014] VSCA 74. Joining plaintiffs [7.170]  Much of what will be said here applies equally to plaintiffs and defendants. However,

for the sake of clarity, plaintiffs and defendants will be treated separately. Plaintiffs can join in the same proceedings where each has a right to relief arising out of the same transaction (or series of transactions) and, if there were separate trials, there would be common questions of law or fact. Where these conditions are not fulfilled the court also has power to grant leave for plaintiffs to join in the same proceedings: see UCPR r 6.19. It should be noted that leave can be given before or after commencement of proceedings. The court has wide powers regarding the joining or removal of parties: see UCPR rr 6.22 and 6.29. Should the court take the view that joining a plaintiff in any proceedings may be embarrassing, inconvenient, or cause delay to the conduct of the proceedings the court can order that separate trials should take place or make any order that the court thinks fit: see UCPR r 6.22. Such decisions are determined by taking into account the overriding purpose principles in ss 56–​60 of the CPA. [7.180]  UCPR r 6.24 allows a person to be added during the course of the proceedings, but

a person is not to be joined as a plaintiff without giving consent: see UCPR r 6.25. Where different people are jointly entitled to the same relief, all of them should be joined as plaintiffs. If a person jointly entitled is not prepared to consent to be joined as a plaintiff, that person can be joined as a defendant: see UCPR r 6.20. Consent is not required to be joined as a defendant. Plaintiffs who each have separate causes of action against a defendant can be joined in the same proceedings but only if the conditions in UCPR r 6.19 are fulfilled. In Payne v Young,12 the plaintiffs were improperly joined because each plaintiff was held to have entered into a separate transaction and the transactions were not related and had nothing in common. They were separate causes of action against different defendants. Plaintiffs who join in the same proceedings are usually represented by the same legal representative.13 A person can also apply to the court to become a plaintiff pursuant to UCPR r 6.27, and r 6.24 contains the basis upon which the court will determine whether that person will be made a party. Joining defendants [7.190] Different defendants can be joined in the same proceedings if the claim of relief

against each defendant arises out of the same transaction (or series of transactions) and the 12 13

Payne v Young (1980) 145 CLR 609. Goold & Porter Pty Ltd v Housing Commission [1974] VR 102.

388 [7.170]

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causes of action give rise to a common question of law or fact. Where these conditions are not fulfilled the court has power to grant leave for different defendants to be joined:  see UCPR r 6.19. It should be noted that leave can be given before or after commencement of proceedings. This rule is the same rule as discussed above for the joining of plaintiffs. The causes of action against the different defendants can be joint, several or in the alternative. All jointly liable defendants must be sued in the same proceedings and the court may order, pursuant to UCPR r 6.21(2), that the proceedings be stayed until all joint defendants are joined as parties. This rule is the counterpart to r 6.20 which concerns parties jointly entitled to relief. Both rules ensure that all parties jointly entitled or liable are parties to single proceedings where the entitlement or liability is litigated. It must be borne in mind that the court has wide powers to make orders regarding joinder or removal of parties: see UCPR rr 6.22 and 6.29. Where a plaintiff is unsure as to which of two or more persons are liable to him or her, the defendants can be joined severally or in the alternative in the same proceedings. If the court takes the view that it was reasonable for the plaintiff to have joined the successful defendant and there was some conduct by the unsuccessful defendant that contributed to the plaintiff’s decision to join the successful defendant, Bullock and Sanderson costs orders may be appropriate. Costs are at the discretion of the court and if the court concludes that the successful defendant has been joined by the plaintiff unnecessarily it is likely that the plaintiff would be ordered to pay the successful defendant’s costs: see Chapter 3 on “Costs of Litigation”. A defendant may also be joined as a party by the court during the course of the proceedings: see UCPR r 6.24. This power is in addition to the power of the court to grant leave or make orders in regard to joinder of causes of action and the joining of parties contained in UCPR rr 6.18 and 6.21.

Uniform Civil Procedure Rules 2005 (NSW) [7.200]  Uniform Civil Procedure Rules 2005 (NSW) r 6.19 Part 6 Commencing proceedings and appearance Division 5 Joinder of causes of action and joinder of parties 6.19 Proceedings involving common questions of law or fact (cf SCR Pt 8, r 2; DCR Pt 7, r 2; LCR Pt 6, r 2) (1)

Two or more persons may be joined as plaintiffs or defendants in any originating process if:



(a)

separate proceedings by or against each of them would give rise to a common question of law or fact, and



(b)

all rights of relief claimed in the originating process are in respect of, or arise out of, the same transaction or series of transactions, or if the court gives leave for them to be joined.

(2)

Leave under subrule (1) may be granted before or after the originating process is filed.

 What is a transaction? [7.210] The meaning of “transaction” is not settled and the term is not defined in the

Dictionary of the UCPR. The notion of a transaction suggests a contract but it seems clear from [7.210]  389

Civil Procedure in New South Wales

the case law that the meaning of “transaction” in this context is not limited to a contractual transaction, which implies a consensual act between two parties. It may mean simply an act by one party which affects another, thereby binding the two parties in a “transaction” for the purposes of potential litigation. In Bendir v Anson,14 the plaintiffs were owners of adjoining buildings who were affected in different ways by the defendant’s construction of a new building across the road. Lord Wright MR in the Court of Appeal discussed the preferable meaning of “transaction” and held there was no common question of fact. Because of that, it was preferable to exercise the court’s discretion in favour of separate trials. Lord Wright said: The phrase “transaction or series of transactions” is not a term of art, and I  cannot find in the authorities any precise definition of the exact scope of the words. But it is quite clear that the tendency of the decisions has been to give literal interpretation to the rule and to apply it in any cases where you have a claim to relief by more than one person in respect of what has been treated as the effect of the words “transaction or series of transactions, whether the relief claimed is joint, several, or in the alternative”. The word “transaction”, I  think, necessarily means an act, the effect of which extends beyond the agent to other persons. For instance to take the particular case, the building of the premises by the defendant is an act which from one point of view is limited to the builder and to the area covered by the premises; but its effects on other premises extend also to those premises in respect of which a nuisance or an interference with an easement may be created by the building. In that sense the building of the premises may be regarded as a transaction, and I find on the authorities that that view seems to have been taken. As I have already said, I do not think that the word is very happily chosen. It seems to have been used in the first instance rather with reference to cases in which there was something in the nature of a contractual relation, or some relation of that nature between the parties, but it has quite clearly been extended from that more limited connotation. I very much doubt, however, whether in this case there was any common question of law or fact which could arise. The law as to what constitutes an interference with light or air is now well established, and I do not see how any question of law could be said to arise in this respect. As to the facts, it seems obvious enough that the position of each building may be quite different from that of the other building –​the position, I mean, from the point of view of whether or not its ancient lights were interfered with by the new construction. But I do not think it necessary to express any decided opinion on whether the case comes within the rule or not. It is enough, I think, for me to say here that exercising the discretion which is vested in the court in applications of this character, I think that the joinder of these two plaintiffs in the one action would produce a condition of things likely to embarrass the judge. I think that the judge would be much more capable of dealing with each building separately –​as indeed it involves quite separate questions –​in an action brought in respect of that building apart from the other action brought in respect of the other separate building.

His Lordship ordered separate trials based on the equivalent of UCPR r 6.22. [7.220]  The ordering of separate trials under r 6.22 where, for example, there is no common

question of law or fact is justified by the exercise of the court’s discretion to give effect to the overriding purpose contained in s 56 of the CPA. That purpose is to facilitate the just, quick and cheap resolution of the real issues in the proceedings having regard to the objects of case management contained in s 57, which include the just determination of the business of the court, the efficient disposal of its business, the efficient use of court resources, and the timely disposal of proceedings at an affordable cost to the parties.

14

Bendir v Anson [1936] 3 All ER 326.

390 [7.220]

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Uniform Civil Procedure Rules 2005 (NSW) [7.230]  Uniform Civil Procedure Rules 2005 (NSW) r 6.22 Part 6 Commencing proceedings and appearance Division 5 Joinder of causes of action and joinder of parties 6.22 Court may order separate trials if joinder of party or cause of action inconvenient (cf SCR Pt 8, r 6; DCR Pt 7, r 6; LCR Pt 6, r 6) If the court considers that the joinder of parties or causes of action in any proceedings may embarrass, inconvenience or delay the conduct of the proceedings, the court: (a)

may order separate trials, or

(b)

may make such other order as it thinks fit.

 [7.240] In Birtles v Commonwealth,15 the notion of “transaction” was given a broader

interpretation than in Bendir v Anson. In that case the plaintiff, while at work digging a hole, used a crowbar that contacted a high-​voltage underground cable. He suffered an electric shock and sued the occupier of the land (the Commonwealth), the State Electricity Commission (SEC) and his employer. All defendants claimed that the relevant limitation period had expired. The SEC also claimed that it had not received the required statutory notice of the plaintiff’s intention to sue. After the defences had been filed, the plaintiff changed his solicitor and sought to add his former solicitor as a new defendant in the proceedings in an action for negligence in the event that he failed against the existing defendants. Adams J said: The word “transaction” … is of vague import, but I see no reason why in the circumstances of this case it should not be treated as comprehending, in addition to the accident and the injury sustained by the plaintiff, the further matters of relevance in the action against the original defendants; … , and the fact of the commencement of the action more than two years after the accident.

Adam J held that the “transaction” included the accident and injury to the plaintiff as well as the matters relating to the litigation and the limitation issue. The court held that, had the action against the former solicitor been separated, the plaintiff could have fallen “between two stools”. Birtles gives an illustration of an aspirational high water mark for the scope of “transaction”. However, in Payne v Young (extracted below), the definition of “transaction or series of transactions” was given a more limited interpretation.

Payne v Young [7.250]  Payne v Young (1980) 145 CLR 609 [Payne and six other operators of different Western Australian abattoirs, joined as plaintiffs, initiated proceedings claiming a declaration that regulations under which fees were levied for inspection of carcasses by different state authorities were invalid. Joinder for the purpose of this claim was allowed even though Barwick CJ was of the view that “the claim for a declaration of invalidity of the regulation imposing the inspection fee does not arise out of any transaction”.16 The plaintiffs also had another

15 16

Birtles v Commonwealth [1960] VR 247. Payne v Young (1980) 145 CLR 609 at 614. [7.250]  391

Civil Procedure in New South Wales

Payne v Young cont. claim for which joinder was not permitted. Murphy J dissented on the basis that the rule should be interpreted liberally because it was merely remedial.] BARWICK CJ [7]‌ … Each plaintiff claims against a defendant a sum of money representing the amount of inspection fees which have been paid by that plaintiff to that defendant. No plaintiff has any interest in the money claim of any other plaintiff, nor is any defendant concerned with the amount claimed against any other defendant. A right to recovery of the money sums is individual to each plaintiff and particular to the appropriate defendant. The right in each case arises out of the payment by the particular plaintiff to the particular defendant of the inspection fee demanded pursuant to the Regulations. The fees have been paid in respect of inspections of different parcels of meat or of different animals over a period of time. Thus, it would be right to say of each plaintiff that its money claim arises out of a series of transactions, that is to say, his own transactions with a particular defendant. But the plaintiffs say that the right to relief, that is to say, the relief by way of payment of a money sum, arises out of the same series of transactions. There is clearly no transaction to which all the plaintiffs are party, nor indeed, if it matters, is there any claim by any plaintiff to which all the defendants are really parties. Of course, the basis of the individual’s claimed relief by payment of a money sum is common to all. All claim invalidity and because of invalidity in each case the right to be refunded by a particular defendant money improperly demanded would arise. But I am quite unable to see how the transactions of each plaintiff with a different defendant can be treated as a series of transactions within the meaning of the rule, however liberally one might construe and apply it. I agree entirely with my brother Aickin when, in giving judgment in the matter, he said: “The most that can be said here is that the claims arise out of similar transactions or several series of similar transactions.” I also agree entirely with my brother in thinking that the rule cannot be extended to cover these transactions. In my opinion, the several plaintiffs whose names were struck from the record by his Honour’s order were improperly joined as plaintiffs in the claim for recovery of money. It is, of course, otherwise in the case for a declaration of invalidity. MASON J [6]‌Argument centred on the meaning of the words “the same transaction or series of transactions” in par. (a) of O 16, r 1(1). For the appellants (the plaintiffs) Mr Horton argued that the words should be read as “the same transaction or a series of transactions”, not as “the same transaction or the same series of transactions”. For my part I doubt whether there is a distinct difference in meaning between the two alternatives which Mr Horton offers for consideration. For the appellants to succeed, the paragraph would need to be read as if it referred to any series of transactions, whether they constituted the same series or a different series. To my mind this would be an unnatural reading of the language in which the paragraph is expressed. As a matter of English wording the word “series” is governed by the words “the same”. The appellants’ construction proceeds on the footing that something has been omitted, whether it be the indefinite article, as Mr Horton would say, or, as I see it, words expressive of the notion of differing series. [7]‌The appellants suggest that the construction for which they contend is supported by authority and by the object of O 16, r 1, considered in the light of its history. I do not think that the authorities sustain this submission. True it is that Lord Macnaghten in Duke of Bedford v Ellis, (1901) AC 1, at p 12 in applying the rule to the facts there under consideration, used the expression “a series of transactions”, but I do not read his Lordship’s remarks as asserting that separate causes of action vested in several plaintiffs arising out of different series of transactions will suffice for the purposes of the rule. … [9]‌The object of the amendment was to allow several plaintiffs to join separate causes of action where under the old rule as interpreted by judicial decision they could not do so. Subject to the two limitations expressed in pars (a) and (b) of the rule, it permits the joinder of separate causes of action 392 [7.250]

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Payne v Young cont. which have accrued to different plaintiffs. The effect of the rule was, in my opinion, correctly stated by Vaughan Williams LJ in Stroud v Lawson when he said (1898) 2 QB, at pp 54-​55: I do not think that the rule means that the whole of a transaction must be involved in each of the causes of action joined. I think that, if there was a transaction or series of transactions in respect of which one plaintiff was interested up to a certain point, and other plaintiffs were interested, not only up to that point, but in respect of the entire transaction or series of transactions from beginning to end, under this rule they might join their separate causes of action in one action, because there would be one transaction or series of transactions in respect of which the various plaintiffs all claimed a right to relief. Their remedies or damages might be different, but they would be claiming relief in respect of the same transaction or series of transactions. To these observations I would add the comment that the rule may well authorize the joinder of separate causes of action accruing to various plaintiffs against different defendants, so long as the causes of action arise out of the same transaction or series of transactions. MURPHY J (DISSENTING) [6]‌A liberal view has been taken in America and Canada. For example, in Allan v McLennan (1916) 31 DLR 617 where a salesman induced numerous persons to buy parts of a block of shares on the same misrepresentation, the British Columbia Court of Appeal held that the various sales constituted a “series of transactions” entitling the purchasers to join as plaintiffs. In Broderick v Abrams (1935) 181 A 321, the rule stated was that “the plaintiff may join separate causes of action against several defendants if the causes of action have a common question of law or fact and arose out of the same transaction or series of transactions” Heher J. of the Supreme Court of New Jersey said of the plaintiff bank suit against 559 stockholders (1935) 181 A, at pp 322-​323: While the complaint counts upon several liabilities grounded upon separate contracts, they arose out of “transactions” that are of kin, and are therefore of a “series” within the intendment of the statute and the rules designed to effectuate its object. (See also Metropolitan Casualty Insurance Co v Lehigh Valley R Co (1920) 109 A 743; Beatty v Lincoln Bus Co (1933) 169 A286 at p 623.) [7]‌ In Barnes and Co. Ltd. v Sharpe [1910] HCA 26; (1910) 11 CLR 462, Griffith CJ was disposed to think that the case in which several persons joined in an action for defamation (without any pecuniary interest such as that of partners) fell within the terms of a similar order (Rules of Supreme Court (Q), O 3, 5.1). [8]‌The words which define the scope of the rule are wide words. Transaction should be given a generous meaning (Birtles v Commonwealth (1960) VLR 247, at p 249, Adam J). In this context, it means some business or affair (see Shorter Oxford English Dictionary). “Series” means “a set of similar things or events” (Collins Shorter Contemporary Dictionary). The various meanings in the Oxford English Dictionary shows that “series” is a very general and vague word, which contains a notion that series consist of those things or events which are connected in some way by time, place, or similarity. In this context, it is equivalent to “class”. The expression “series of transactions” is thus so wide that it is difficult to place limits on it. This means that r 1, if unqualified, could be used to join claims the trial of which would lead to embarrassment and delay. The means to avoid this is provided for in rr 1(2) and 8(2).

 Joinder by leave [7.260]  UCPR r 6.19 provides the court with power to grant leave to join a party even if

there is no common question of law or fact and rights to relief do not arise out of the same [7.260]  393

Civil Procedure in New South Wales

transaction or same series of transactions. Such exceptions would be appropriate where the court was of the view that justice as between the parties was to be served and costs and delay would be minimised.

Dean-​Willcocks v Air Transit International [7.270]  Dean-​Willcocks v Air Transit International (2002) 55 NSWLR 64; [2002] NSWSC 525 (Supreme Court of New South Wales Equity Division) [Three related companies went into liquidation together. The liquidator identified, as unfair preferences in the preceding six months, payments that had been made to 58 separate suppliers and creditors of the companies. The liquidator commenced one action as plaintiff, joined with the three companies, against all the other parties seeking recovery of the amounts. Although the claim against each defendant arose out of a separate “transaction” with the liquidated companies, Austin J held it was in the public interest to allow joinder because the liquidator should be permitted to efficiently pursue claims on behalf of all the unsecured creditors in a single action.] AUSTIN J [14] The liquidator in the present cases endeavoured to establish a new model. Rather than having separate proceedings, transaction by transaction, case managed together while moving to the hearing and determination of one or a few proceedings before the others, then relying on the statutory presumptions, the liquidator proposed that proceeding No 5862 of 2001 be a “mother proceeding” in which multiple transactions entered into by Clifford Corporation are challenged and each other party to each of those transactions is a defendant. Proceeding No 5662 of 2001 goes even further, for in that case there are multiple corporate plaintiffs as well as multiple defendants. In the liquidator’s submission, case management may involve separately hearing some of his claims in due course, when all defences have been filed and the matters in issue against each defendant are known, but in the meantime the liquidator wants the Court to case manage the two mother proceedings as two single proceedings, both with many defendants and one with three corporate plaintiffs. [15] The advantages to the liquidator are obvious. All claims are pursued in the same Court, regardless of the amounts involved. All parties to impugned transactions are bound by the decision of the Court with respect to such matters as insolvency, rather than being affected by presumptions which they may each rebut. There is a single filing fee (not an insubstantial consideration where a very large number of impugned transactions is involved). [16] The liquidator maintained that joining multiple defendants in a “mother proceeding” is permitted by the Supreme Court Rules. Likewise, he claimed that the Rules permit multiple corporate plaintiffs. He relied on Part 8 rule 2, [now UCPR r 6.19] … [17] The liquidator contended that the ingredients of subparagraph (a) are satisfied in each proceeding but that if they are not, the Court should grant leave under subparagraph (b). To fit within subparagraph (a), the liquidator must identify, in each proceeding, a question of law or of fact common to all of the transactions encompassed by the proceeding. He must also show that in each proceeding, all rights to relief are in respect of or arise out of “the same transaction or series of transactions”. I shall consider each of these elements. Common questions of law or fact [18] As to the first matter, the liquidator submitted that the common issues of fact and law that arise in each proceeding are the issue whether the relevant company or companies were insolvent at any time, and if so the time when the company or each of the companies became insolvent, and whether there will be a shortfall to unsecured creditors in the winding up of the company or companies. [19] Those submissions are clearly correct as regards proceeding No 5862 of 2001. The question is more difficult to answer in proceeding No 5662 of 2001, because there are three corporate plaintiffs. Some of the defendants submitted that there is no common question of law or fact in that proceeding 394 [7.270]

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Dean-Willcocks v Air Transit International cont. because the question of solvency of a particular corporate plaintiff would not arise where the claims were made on behalf of another corporate plaintiff. However, the liquidator’s case is that the three companies were part of a single group, and that only one of them operated bank accounts, used in respect of all three companies. While the proceeding will require the Court to make separate determinations as to the solvency of each of the three corporate plaintiffs, the fact that all payments were made by Austral on behalf of itself and the other two plaintiff companies means that the solvency of all three companies will be affected by the determination of common questions of fact with respect to payments out of the Austral bank accounts. [20] Some of the defendants also made a submission drawing attention to s 588FC, under which solvency must be established at the date of the relevant transaction. They submitted that as currently configured, proceeding 5662 of 2001 relates to 265 separate cheque or transfer of funds payments ranging from an amount of $1,358.32 to an amount of $81,950.17 (excluding payments to Air International Transit which reached $173,993), those payments ranging over the period from 5 May to 17 November 1998. Those defendants submitted that while there may be some coincidental conformity in transaction or payment dates, the claim in relation to each of the 265 transactions demands, in principle, a determination as to solvency at a separate date. The answer to that submission is provided by the way the liquidator intends to run his case on solvency, as disclosed in his affidavit. He intends to assert that the companies were all insolvent throughout the period between 26 May and 26 November 1998. That will raise, in respect of the various claims in proceeding 5662 of 2001, a common question of mixed fact and law. ............................ Same transaction or series of transactions [23] The liquidator’s submission is that the rights to relief claimed in each proceeding arise out of the same series of transactions: namely either the series of payments made to the defendants and now said to be preferences, or the series of transactions which have led to the companies being solvent and winding up orders being made. In my view, the fact that various transactions are linked together by the liquidator’s allegation that each of them is an unfair preference is not enough to make those transactions the same series of transactions for the purposes of the Rule, just as it was not enough in Payne v Young that the various exactions of fees were linked together by the plaintiffs’ allegation that the legislation authorising them was invalid. The same point was made by Hill J in Re The Thai Silk Company Ltd (Federal Court of Australia, unreported, 31 May 1989). His Honour referred (at paragraph 22) to a hypothetical case where a vendor sells a number of properties by auction one after the other, subject to a common misrepresentation by the vendor. As his Honour said, it would not be correct to describe each of the contracts negotiated at auction with different purchasers as being a series of transactions for the purposes of the Rule. [24] Nor can it be said that the rights to relief alleged to arise out of various preferential transactions are “in respect of or arise out of” the course of transactions which led to the companies becoming insolvent, even if that course of transactions could be described as a “series” –​just as the exactions of fees in Payne v Young could not be said to be in respect of or to arise out of the events leading to the enactment of allegedly unconstitutional legislation. [25] The observations of Tadgell J, dealing with the equivalent Victorian rule in Marina v Esanda Ltd [1986] VR 735, at 740, are apposite: I think that the Rule no more applies here than it would be to authorise the joinder as plaintiffs of 100 unrelated members of the public who all went to a supermarket on Saturday morning and bought, each of them, a pound of butter that happened to be contaminated. Each purchaser, if he consumed part of his purchase and became ill as a result, might have a right of action against the vendor by virtue of breach of an implied condition or warranty derived from the Goods Act, and perhaps also some other statutory rights to compensation. Those who sued would sue the common vendor and each would presumably have a cause [7.270]  395

Civil Procedure in New South Wales

Dean-Willcocks v Air Transit International cont. of action of a kind identical to that of each of the others. Moreover, the 100 purchase transactions could well be described as a series, but the relief obtainable by none of the purchasers could be said to arise out of the same transaction or series of transactions; in the case of each the relief would be in respect of or arise out of his individual transaction and nothing else. [26] Here, the liquidator’s right to relief against a defendant in respect of a particular preferential transaction arises out of that transaction and not out of the events giving rise to the insolvency. Those events are analogous to the negligent contamination of the butter, rather than the sale of the contaminated product to a particular customer. ............................ The discretion to grant leave [28] The liquidator submits that if I find subparagraph (a) of the Rule to be inapplicable, as I do, then I should exercise my discretion in his favour under subparagraph (b). Both sides referred to some observations by Wilcox J in Bishop v Bridgelands Securities Ltd (1990) 25 FCR 311, as to the principles to be applied when exercising the discretion. That case concerned the equivalent rule in the Federal Court of Australia, which is not materially different from Part 8 rule 2. His Honour said (at 314): As the discretion conferred by subrule (b) is, in terms, unconfined, it would be inappropriate to specify circumstances in which it might be applied. Everything must depend upon the facts of the particular case. But it is appropriate to consider what principles ought to guide the exercise of such a discretion. The basic principle, as it seems to me, is that the Court should take whatever course seems to be conducive to a just resolution of the disputes between the parties, but having regard to the desirability of limiting, so far as practicable, the costs and delay of the litigation. Considerations of costs and delay may often support the grant of leave under subrule (b); but in my opinion, leave ought not to be granted unless the Court is affirmatively satisfied that joinder is unlikely to result in unfairness to any party. Secondly, regard must be had to practical matters. For example, it would normally be inappropriate to grant leave for the joinder of applicants who were represented by different solicitors. There must be a single solicitor, or firm of solicitors, who is accountable for the conduct of the proceeding on the applicants’ side of the case. Similarly, although all applicants might propose to rely upon some common, or similar facts, there may be such differences between the evidence intended to be relied upon in support of the claims of particular applicants as to make it inexpedient to join the claims. The discrete material may overbear that which is common to all the claims. Again, there may be cases in which the sheer number of the claims, if joinder is permitted, will impose an undue burden on the respondent; although it seems to me unlikely that this will be so except in cases where separate evidence is proposed to be adduced in support of individual claims. [29] Wilcox J applied these principles to grant leave to 80 plaintiffs to sue as investors who invested, with the first respondent, money that was subsequently deposited with some Estate Mortgage trusts. He took into account that the case would be substantially dependent upon documents, the plaintiffs foregoing any reliance on oral representations, and only a little additional work would be involved in tracing individual claims through the financial records of the respondents. ............................ [32] Often the exercise of the discretion under subparagraph (b) arises in a case where an attempt is made to join many people as plaintiffs –​for example, because they have all suffered investment losses at the hands of the same adviser, who is made the defendant in the proceeding. In such a case the Court will be concerned that it may be unfair to the defendant to be forced to deal in a single proceeding with a multitude of transactions, even though the alleged wrongdoing (say, by circulation of a letter in standard form) may be identical or similar in the case of each plaintiff. The principles discussed by Wilcox J and Rogers CJ Comm D are applied to resolve the problem. 396 [7.270]

Causes of Action and Parties  Chapter  7

Dean-Willcocks v Air Transit International cont. [33] Where there is a single plaintiff but many defendants, the concern is rather different, and those principles are not fully applicable, although the general objectives of fairness and practicability remain. Each defendant will be required to answer a case individually pleaded against it by the plaintiff, but the pleaded case against each defendant will contain assertions made against all defendants. It is not unfair to a defendant that the plaintiff makes identical or similar allegations against others. The fact that the plaintiff does so by joining more than one defendant to a single proceeding does not itself create unfairness. Disadvantage to a defendant, and the possibility of unfairness, may arise if, for example: • the making out of the case against one defendant in some way hampers another defendant from adequately making out its defence; or • the joinder of multiple defendants leads to cost or delay to a defendant materially greater than would have occurred if the cases had been brought separately; or • a defendant is forced to defend its case in an inconveniently located court; or • a defendant is forced to defend its case in the Supreme Court, whereas if the case had been brought separately against a defendant it would have been brought in a lower court at less cost to the defendant. [34] It seems to me that the Court’s task is to identify disadvantages of these kinds, and to weigh them up against identified advantages to the plaintiff, to the defendants as a whole, and in terms of the efficient use of the Court’s resources, having regard to the commonality of the issues raised by each claim and the Court’s ability to case manage so as to minimise the disadvantages. In some cases the disadvantages to a defendant will be so great as to outweigh the advantages of a single proceeding, and the Court should therefore decline to exercise its discretion under subparagraph (b) as to the joinder of that defendant. In other cases, the sensible and practical solution will be to grant leave to the plaintiff to join all defendants to the proceeding, subject perhaps to case management and review at a later stage.



SET-​OFFS AND CROSS-​CLAIMS [7.280]  Cross-​claims should not be confused with set-​offs. The New South Wales Law Reform

Commission Report 94 (2000) entitled Set-​off provided the following by way of explanation of set-​off and its distinction from a cross-​claim. 1.4 Set-​off, at its most basic, is a mechanism whereby one party can apply a debt owed to him or her by another party to discharge all or part of a debt that he or she owes to that other party. The result is either that the debt is completely discharged, or a sum remains which represents the balance of the debt owed by one of the parties to the other. Although sometimes invoked as a self help remedy, it is usually applied as a countervailing claim in answer to a plaintiff’s claim in proceedings before a court. In the context of such proceedings set-​off is quite different from counterclaim. 1.5 … counterclaim is merely a procedural device (involving cross-​claim) whereby actions by one party against the other and vice versa are heard as part of the one proceeding. Such actions are treated essentially as distinct actions, including for the purposes of striking out, summary judgment and costs in the proceeding. Although the economic result of counterclaim will often be the same as the one which would be achieved by set-​off, the result of a hearing involving claim and counterclaim is separate judgments for each party against the other, whereas a single judgment only is issued when set-​off is pleaded. [7.280]  397

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) [7.290]  Civil Procedure Act 2005 (NSW) ss 21, 22 21 Defendant’s right to set-​off (1)

If there are mutual debts between a plaintiff and a defendant in any proceedings, the defendant may, by way of defence, set off against the plaintiff’s claim any debt that is owed by the plaintiff to the defendant and that was due and payable at the time the defence of set-​off was filed, whether or not the mutual debts are different in nature.

(2)

This section extends to civil proceedings in which one or more of the mutual debts is owed by or to a deceased person who is represented by a legal personal representative.

(3)

This section does not apply to the extent to which the plaintiff and defendant have agreed that debts (whether generally or as to specific debts) may not be set off against each other.

(4)

This section does not affect any other rights or obligations of a debtor or creditor in respect of mutual debts, whether arising in equity or otherwise.

(5)

This section is subject to section 120 of the Industrial Relations Act 1996.

(6)

In this section, debt means any liquidated claim.

Note: The application of this provision to existing debts is dealt with in clause 6 of Schedule 6 (Savings, transitional and other provisions). 22 Defendant’s right to cross-​claim (cf Act No 52 1970, s 78; Act No 11 1970, s 15; DCR Pt 20, r 1) (1)

Subject to subsection (2), the court may grant to the defendant in any proceedings (the first proceedings) such relief against any person (whether or not a plaintiff in the proceedings) as the court might grant against that person in separate proceedings commenced by the defendant for that purpose.

(2)

Relief may not be granted under this section against a person who is not a plaintiff in the first proceedings unless the relief relates to, or is connected with, the subject of the first proceedings.

(3)

A person against whom a defendant makes a claim for relief under this section:



(a)

has the same rights in respect of his or her defence against the claim as he or she would have in separate proceedings commenced against the person by the defendant, and



(b)

if not already a party to the first proceedings:



(i)

becomes a party to the first proceedings, and



(ii)

unless the court otherwise orders, is bound by any judgment (including a judgment by consent or by default) or decision (including a decision by consent) on any claim for relief in the proceedings (including a claim for relief in any cross-​claim in the proceedings).

 [7.300]  Section 21 of the CPA gives effect to the New South Wales Law Reform Commission’s

recommendation for the statutory reintroduction of set-​off (Report No 94 (2000)). Section 21 does not apply to unliquidated claims and is restricted to mutual debts. Note that s  21(4) makes it clear that this section does not affect any equitable rights of set-​off. [7.310]  Where a defendant brings a cross-​claim against the plaintiff it need not be related to

or connected with the plaintiff’s claim or arise out of the same transaction. The cross-​claim is merely required to relate to the same parties to the original claim and be a matter in which the court has jurisdiction. 398 [7.290]

Causes of Action and Parties  Chapter  7

A defendant can only bring a cross-​claim against a person who is not a party to the proceedings between the plaintiff and the defendant if it is related to or connected with the subject of those existing proceedings:  CPA s  22(2). If the defendant’s cross-​claim against a non-​party is allowed to be joined, the non-​party becomes a cross-​defendant and is bound by the judgment between the plaintiff and defendant. However, without a further order from the court, the cross-​defendant does not become a defendant against the plaintiff and is not allowed to intrude upon the conduct of the proceedings between the plaintiff and the defendant. Because the cross-​defendant is bound by the judgment in the proceedings, the Anshun principle would restrict (or stay) claims that may be made in subsequent proceedings if any later claims could have been, but were not, raised in the proceedings to which the cross-​ defendant has been joined. A cross-​claim is to be made within the time limit for a party to file a defence: see UCPR r 9.1. In proceedings commenced by statement of claim this period is 28 days after service of the statement of claim or such time as the court directs: see UCPR r 6.10(1)(a).

CHANGING PARTIES [7.320]  Note that UCPR r 6.19(2) provides for retrospective joinder. This means that leave

can be granted to join parties after proceedings have been commenced. UCPR r  6.24 also provides for joinder after commencement of proceedings. The reason for the different avenues of adding parties to proceedings is largely based on the fact that, historically, there was a rule for joinder at the time of commencement of proceedings and a different (narrower) rule for adding parties after commencement of proceedings. The existence of r 6.19(2) is one indication that the rules of joinder and addition of parties have tended to unite. Another indication is the fact that there is no longer any reference to “addition” of parties in r 6.24. UCPR r 6.28 concerns the date of commencement of proceedings for new parties who are joined after the plaintiff originally initiated the proceedings. The time at which a new party is joined to the proceedings can be important because of limitation periods.

Uniform Civil Procedure Rules 2005 (NSW) [7.330]  Uniform Civil Procedure Rules 2005 (NSW) rr 6.24, 6.28, 6.29 Division 5 Joinder of Causes of Actions and Parties 6.24 Court may join party if joinder proper or necessary (cf SCR Pt 8, r 8(1); DCR Pt 7, r 8(1); LCR Pt 6, r 8(1)) (1)

If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party.

(2)

Without limiting subrule (1), in proceedings for the possession of land, the court may order that a person (not being a party to the proceedings) who is in possession of the whole or any part of the land (whether in person or by a tenant) be added as a defendant.

6.28 Date of commencement of proceedings in relation to parties joined (cf SCR Pt 8, r 11(3) and (4); DCR Pt 7, r 11(3); LCR Pt 6, r 11(3)) If the court orders that a person be joined as a party, the date of commencement of the proceedings, in relation to that person, is taken to be the date on which the order is made or such later date as the court may specify in the order. [7.330]  399

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. Division 6 Removal of Parties 6.29 Removal of parties by order (cf SCR Pt 8, r 9; DCR Pt 7, r 9; LCR Pt 6, r 9) The court may order that a person: (a)

who has been improperly or unnecessarily joined, or

(b)

who has ceased to be a proper or necessary party, be removed as a party.

 [7.340]  UCPR r 6.29 is the reverse of r 6.24. It allows the court to remove parties who should

not have been joined. UCPR r 6.24 allows the court to join additional parties (either plaintiffs or defendants). UCPR r 6.27 allows an application to become a party, either as plaintiff or defendant, for a person who is not an existing party to the proceeding.

New Idafe Inc v Barnard [7.350]  New Idafe Inc v Barnard [2007] NSWSC 1107 (Equity Division Expedition List) BRERETON J [2]‌ … this is a dispute as to the control of New Idafe, a non-​profit organisation which provides disability services to persons with disabilities, in the Port Macquarie region on the New South Wales North Coast. [6]‌In this case, the Barnard faction contend that the proceedings have been commenced in the name of New Idafe without its proper authority. This follows, they say, from the circumstance that they, and not the Kasteel faction, constitute the duly elected board of management of New Idafe. [8]‌The real dispute is between those two competing factions as to who constitutes the Board of New Idafe. [9]‌These proceedings would more appropriately be constituted with the Kasteel faction as the plaintiffs, the Barnard faction as the active defendants, and New Idafe be removed as a plaintiff and joined as a defendant, in which capacity it would probably be a passive party. I note that Mr Washington, who appears on behalf of the Kasteel faction as cross-​defendants, has indicated their consent to being joined as plaintiffs. Accordingly, I order, pursuant to (NSW) Uniform Civil Procedure Rules 2005, r 6.24, that Henk Kasteel, Kevin Cantwell, Warren Nagle, Glen Matheson, and Michael Finucane be joined as plaintiffs. I order, pursuant to r 6.29, that New Idafe Incorporated be removed as plaintiff. I order, pursuant to r 6.24, that New Idafe be joined as sixth defendant. New Idafe will presumably be unrepresented and will take a passive role.

 [7.360]  UCPR r 6.24 allows parties to be added after proceedings have been commenced if

those additional parties should have been joined initially or if their presence is necessary for the court to effectively and completely adjudicate on all matters in dispute. The following case discusses Federal Court Rules O 6, r 8 (now Federal Court Rules 2011 (Cth) r  9.05) which is a rule similar to UCPR r  6.24. The case extract below concerns an application that orders made in regard to a cross-​claim should not have been made because all the parties to the cross-​claim had not been joined. 400 [7.340]

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News v Australian Rugby Football League [7.370]  News Ltd v Australian Rugby Football League Ltd (1996) 139 ALR 193 LOCKART, VON DOUSSA AND SACKVILLE JJ I. Introduction A. Background [199] This case arises out of an attempt by the appellants, one of which is News Limited (“News”), to establish a new professional rugby league competition in Australia, known as “Super League” or “Superleague”. (For consistency we use the designation “Super League”, except where another style is adopted in quotations.) According to the appellants, they intend Super League to operate in competition with the established national rugby league competition, which has been conducted for many years under the auspices of the New South Wales Rugby League Limited (the “League”) or the Australian Rugby Football League Limited (the “ARL”), or their predecessors. The appellants invoke the provisions of Part IV of the Trade Practices Act 1974 (Cth) (the “TP Act”) to attack certain contractual arrangements, referred to in argument as the Commitment and Loyalty Agreements. These agreements, to which the League, the ARL and the 20 clubs participating in the 1995 national competition were parties, were executed, respectively, in November 1994 and February 1995. According to the respondents, which include the League and ARL, the establishment of Super League constitutes an attempt to destroy the existing competition by unlawful means. The nub of their case is that some of the clubs participating in the national competition have breached fiduciary and contractual obligations owed to the League, the ARL and other clubs. The respondents contend that News and its associated Super League companies have induced or encouraged these breaches, including breaches of the Commitment and Loyalty Agreements. The trial Judge, although reserving some issues for further consideration, in substance found in favour of the respondents. His Honour’s judgment is reported as News Limited v Australian Rugby Football League Limited (1996) 58 FCR 447. His Honour’s orders (at 548-​556) have the effect, inter alia, of preventing the appellants organising or participating in a rugby league competition, other than one authorised by the League or ARL, until the year 2000. The respondents support his Honour’s orders, the terms of which are set out in Appendix I to this judgment. The history of the present proceedings is recounted in Part II, Section Q of this judgment. It suffices to note here that News instituted the proceedings on [200] 30 March 1995. The respondents were the League, the ARL and 17 of the 20 clubs, including five clubs aligned with Super League. (Following the terminology adopted by counsel, we refer to these five clubs, together with the other three clubs aligned with Super League, as the “rebel clubs”). The five rebel clubs named as respondents did not contest the claims made by News, but the other respondents did. On 11 April 1995, the League, the ARL and the twelve clubs aligned with them (to which we refer as the “loyal clubs”), filed cross-​claims. The cross-​respondents were News, 20 licensee clubs created by News for the purpose of Super League (to which we refer as the “Franchisees”), Super League Pty Ltd (“SLPL”) (a company associated with News), and the eight rebel clubs. … [272] Some time after the cross-​claim had been filed, the solicitors for the ARL wrote letters to coaches and players who had signed Super League contracts, advising them of the orders that, at that stage, were sought in the proceedings. The letters suggested that the players and coaches should seek their own legal advice on the implications of any orders sought in the proceedings. No steps were taken, either then or later, to join the players and coaches as cross-​respondents to the first cross-​claim. Nor did any of the players and coaches apply to be joined as parties, although, as will be seen, some of them were permitted to make representations as to the form of orders that were to be made in consequence of the judgment at first instance. A question on this appeal is whether the first cross-​ claim was properly constituted without the Super League players and coaches being joined. … [7.370]  401

Civil Procedure in New South Wales

News v Australian Rugby Football League cont. [297] G. The Question of Parties 1. The Test In this Section, we deal with the submission on behalf of the Super League players and coaches that all the orders made on the first cross-​claim should be set aside. They argued that, since the players and coaches were not joined, the first cross-​claim was improperly constituted. Mr Sackar, on their behalf, relied on what he said was the fundamental rule that all the parties necessary for determining the point in issue must be before the Court: see FCR O.6, r.8(1) and Grovenor v Permanent Trustee Company of NSW Limited (1966) 40 ALJR 329. … The League and ARL contended that the Super League players and coaches were not necessary parties who “ought to have been joined” within the meaning of O.6, r.8(1). It was not impossible to do justice between the existing parties to the litigation without the players and coaches being joined. … [298] In relation to a rule based on the precursor to FCR O.6, r.8, Lord Diplock, delivering the opinion of the Judicial Committee of the Privy Council in Pegang Mining Co. Ltd. v Choong Sam [1969] 2 MLJ 52, said this (at 55-​56): The cases illustrate the great variety of circumstances in which it may be sought to join an additional party to an existing action. In their Lordships’ view one of the principal objects of the rule is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. To achieve this object calls for a flexibility of approach which makes it undesirable in the present case, in which the facts are unique, to attempt to lay down any general proposition which could be applicable to all cases. It has been sometimes said as in Moser v Marsden [1892] 1 Ch. 487 and in In re I.G. Farbenindustrie A.G. [1944] Ch. 41 that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between “legal” and “commercial” interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action? … There are some classes of case where the ascertainment of the necessary parties who “ought to have been joined” is not difficult. Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest. Grovenor v Permanent Trustee Company of NSW Limited is an example of this class of case. Where the subject matter of the proceedings is not of this kind, the ascertainment of necessary parties who ought to have been joined may be more difficult. In our opinion, the question should be decided according to the test proposed by Lord Diplock. The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party’s rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser [299] extent. This is particularly so with 402 [7.370]

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News v Australian Rugby Football League cont. remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317, at 322, per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-​parties can be characterised as only indirect or consequential. Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties. Where the question arises after final orders have been made in the proceedings, the inquiry must be directed to the orders actually made, or which, on appeal it is contended should be made: cf Associated Grocers Co-​operative Limited v Hubbard Properties Pty Ltd (1986) 42 SASR 321 (S Ct SA/​FC), at 341. 2. Non-​Joinder of the Players and Coaches In the present case, insofar as the remedies sought at trial by the League and ARL against News, SLPL and the Franchisees were confined to damages based on unlawful inducement of breaches of the players’ and coaches’ contracts, the Super League players and coaches were not necessary parties who ought to have been joined. An award of damages against News and the Super League companies would not directly affect the rights or liabilities of the players or coaches. Their non-​joinder did not prevent the Court from considering, for the purpose of this part of the claim, whether breaches of players’ and coaches’ contracts with their clubs had occurred. The position is less clear insofar as the remedies sought injunctive relief and declarations in respect of the pleaded joint venture, which was said to include the benefits of player and coach contracts, and the expectation of player contract renewals. The absence of the players and coaches was a deliberate choice by the League and ARL. As the players and coaches were not joined, the relevance of their non-​joinder became a matter of importance when orders were formulated at the conclusion of the trial. They remain matters of importance in the formulation of the orders that are to operate between the parties in consequence of the judgment of this Court. In our opinion, the notice given to the players before trial does not, and could not, extend the jurisdiction of the Court to make orders which offend the test stated in Pegang Mining. Absent an application for joinder by a defendant, or by a third party who claims to be directly affected by the proposed orders, it is for the party prosecuting the proceedings to choose who are the necessary parties to enable the Court to make the orders sought. Generally speaking, to permit that party to transfer to others who might be affected by the outcome of the proceedings the responsibility of deciding whether or not they should apply to be joined could be productive of uncertainty and inconvenience. At times, it could lead to the need to halt expensive litigation part-​way through, because a third party insufficiently understood the proceedings, or, through impecuniosity or some other reason, was not adequately advised. The present case demonstrates the potential difficulty.



Weber v Ankin [7.380]  Weber v Ankin [2007] NSWSC 263 (Supreme Court of New South Wales Equity Division) WHITE J [1]‌These proceedings are part-​heard. An issue has arisen as to whether the Marrickville Council ought to be joined as a party to the proceedings pursuant to rule 6.24 of the Uniform Civil Procedure Rules 2005 (NSW). [7.380]  403

Civil Procedure in New South Wales

Weber v Ankin cont. [2]‌The proceedings concern title to a strip of land known as “Wallace Lane”, Marrickville. The plaintiffs claim title by adverse possession to a portion of the land within the boundary of the lane, but which is physically enclosed by a retaining wall so as to form part of their property at number 13 Wallace Street. [3]‌The plaintiffs also claim an order for the imposition of an easement pursuant to s 88K of the Conveyancing Act 1919 (NSW) along the lane to create a right of carriageway to an area at the rear of number 13 Wallace Street where the plaintiffs propose to construct a carport, if Council approval to that course is obtained. [4]‌The defendants are the owners of 11A Wallace Street. The only vehicular and pedestrian access to 11A Wallace Street is through the lane. They claim possessory title over the lane, save for that part which is enclosed as part of number 13 Wallace Street. Alternatively, they claim that easements ought to be imposed over the lane in their favour pursuant to s 88K. [5]‌The question of joinder of the Marrickville Council arises because of issues which I have raised during the course of the hearing as to whether the lane is a public road. [6]‌The proceedings have had a somewhat unfortunate history. This is the third occasion upon which they have been set down for hearing. [7]‌Unless the lane has been vested in the Council by statute, the owner of the lane appears to be either the heirs of a late Mr Bushby, or possibly the heirs of a late Mr Sharp, both of whom died in the nineteenth century or thereabouts. On the first occasion, the proceedings were adjourned to enable such persons to be served. [8]‌On a second occasion, the parties reached agreement as between themselves as to how the proceedings should be disposed of. However, their agreement provided for the making of declarations by consent as to the parties’ possessory title to the land. Windeyer J declined to make such declarations, as his Honour was of the view that the evidence did not support the plaintiffs’ claim to possessory title over parts of the lane which the declarations, if made, would have provided them to have. [9]‌The Marrickville Council was notified of these proceedings in 2004. In 2002, the Council took the position that the lane was not owned by the Council. It declined to undertake repair or maintenance work which the defendants were then pressing it to undertake. [10] By letter of 25 February 2002 to one of the defendants, the Council advised that: Council has conducted a thorough search to determine the ownership status of the lane. The results of the search indicate that this laneway is not owned by Council. Therefore, Council is not in a position, nor is it responsible, to undertake maintenance or repair works to the laneway in question. [11] On 27 February 2002, Mr Strickland, the Manager, Engineering, of the council, also wrote to Ms Ankin, one of the defendants. He said that: As discussed, the subject “laneway” has never been dedicated as public road and, accordingly, its title remains in the name of one John Campbell Sharp. [12] He went on to say the Council had not made any decision with regard to the future of the laneway or any other “similar laneways” in the Local Government area and it was not appropriate for Council to construct and seal the laneway as it was not Council land. [13] Mr Strickland enclosed a copy of a letter from a surveyor, Mr McNiff, whom he described as the Council’s consulting surveyor. Mr McNiff reported to the Council on 22 January 2002 that: The land was originally shown in Deposited Plan 1351 which was surveyed in November  1884. As this subdivision pre-​dates the implementation of the Local Government Act in 1920 and there is no record of the laneway being dedicated as public road since that date, the fee of

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Weber v Ankin cont. the laneway comprises the residue of the original certificate of title and remains in the name of John Campbell Sharp who was the original proprietor of the subject Certificate of Title or James Bushby who in Dealing No 87402 was conveyed the whole of 20-​25 in Section 1 in Deposited Plan 272 which included the site of the lane. If the Council accepts the care and maintenance of the laneway, it may be dedicated to the public as road by the preparation of a notification in the Government Gazette pursuant to Section 16 Roads Act 1993. [14] On 28 July 2004, the defendants’ solicitors gave notice to the Council of the plaintiffs’ summons in these proceedings and of their cross-​ claim. The defendants’ solicitors noted that in previous correspondence, the Council had indicated it had no interest in the laneway and recorded that this had recently been confirmed verbally by a Council officer. [15] On 6 August 2004, the council replied by saying that it had no legal interest in the land. It also said that it considered that, regardless of which party obtained title to the land, suitable rights of way and easements for drainage, sewerage and utilities should be granted to adjoining properties, where necessary. However, the Council confirmed it had “no specific interest in the outcome of this matter”. [16] Hence, Mr Bradford of counsel, who appears for the defendants, has submitted that it is unnecessary for the council to be joined as a party to the proceedings, and that such a joinder would be productive of further cost and delay. [17] Nonetheless, I have concluded that, for reasons I will give, it is appropriate for an order to be made for the joinder of the Council. I have concluded that it is seriously arguable that the lane is a public road and is vested in the Council. If that is so, it would be seriously arguable that that may affect the rights of parties on both sides of the record to the relief which they claim. I have concluded that the joinder of the Council is desirable and may be necessary to ensure that all issues in dispute are resolved in these proceedings, so that if I were to conclude that the lane is a public road, a declaration to that effect could be made which would bind the Council. … [62] If the lane is a public road then, prima facie, no question would arise of the imposition of easements for carriageway or footway. [63] In my view, these proceedings cannot be determined without the question of whether the lane is a public road also being determined. In my view, the council is a desirable party, and a necessary party, to the determination of that question. If the lane is a public road, that issue should be determined in a way which binds all affected parties and avoids the need for further litigation. It was not submitted that this Court lacks jurisdiction to determine that question in these proceedings. [64] It is for these reasons that I have concluded that an order ought be made for the joinder of the Council as a party. [65] The evidence of the plaintiffs and the defendants has been concluded. It is possible that the Council may wish to cross-​examine some of the witnesses who have given evidence, and that will be possible. It may be that the Council will itself wish to adduce evidence on the question. It may be that either of the parties may wish to re-​open to tender evidence, at least if there is evidence, one way or the other, as to whether the lane was, in 1920 or thereafter, classified as a public road. [66] Because of the unfortunate history of the proceedings, because the proceedings were fixed for hearing for three days, and because much of the evidence did not relate to this question, I took the view that the interests of justice did not require joinder of the Council as a party before embarking on the evidence. [67] For these reasons, pursuant to r 6.24(1), I order that the Marrickville Council be joined as a defendant and cross-​defendant to the proceedings.

 [7.380]  405

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[7.390]  Different considerations are applicable where it is the plaintiff’s application to add a

party compared with the application of an existing defendant to add a new defendant and the plaintiff objects. When a plaintiff makes the application, the words “all matters in dispute in any proceedings” in UCPR r 6.24 should not be interpreted as only those matters arising in the existing pleading. For example in Qantas Airways Ltd v A F Little Pty Ltd,17 the plaintiff commenced proceedings against an architect and an engineer claiming defective design of a building. The plaintiff sought to add the builder to allege alternative claims in contract and tort. The court held that, because the application to add a party was being made by the plaintiff, “all matters in dispute in the proceeding” should not be interpreted as only those that existed between the plaintiff, the architect and the engineer. If an application to add a new defendant, made by an existing defendant over the objection of the plaintiff, is granted, the plaintiff will be compelled to sue a defendant it does not wish to sue. Accordingly, the new defendant’s presence must be necessary for the complete adjudication of the issues between the existing parties. In this context, a new defendant will only be joined if there is a question relating to or arising out of the claim in the existing proceedings and it is just and convenient to determine that question between the plaintiff, the existing defendant and the new defendant.18

JOINDER OF CAUSES OF ACTION [7.400]  Multiple causes of action can be joined in the same proceedings. The considerations

controlling joinder of causes of action and the joining of parties are interrelated because when parties are joined different causes of action may exist between those parties that have been joined. Where the rules refer to joinder of causes of action,19 this means causes of action that have been properly constituted as to parties. Therefore, once a proceeding is properly constituted as to parties (by virtue of UCPR r 6.19) the cause or causes of action that can be joined are determined by UCPR r 6.18. The requirements of UCPR r 6.18 are relatively undemanding. Causes of actions can be joined in the same proceedings as long as the capacity of the plaintiff and defendant are within one of subr (1)(a)–​(c) or if the court grants leave under subr (1)(d). The discretion to grant leave should take into account the overriding purpose principle in CPA s 56, namely, the facilitation of a just, quick and cheap resolution of the issues in dispute. UCPR r 6.22 allows the court to order separate trials or make other orders where the joinder of separate causes of action or the joining of different parties may embarrass, inconvenience or delay the conduct of the proceedings.

Uniform Civil Procedure Rules 2005 (NSW) [7.410]  Uniform Civil Procedure Rules 2005 (NSW) r 6.18 6.18 Joinder of causes of action (cf SCR Pt 8, r 1; DCR Pt 7, r 1; LCR Pt 6, r 1) 17 18

19

Qantas Airways Ltd v A F Little Pty Ltd [1981] 2 NSWLR 34. See Walker v Commonwealth Trading Bank of Australia (1985) 3 NSWLR 496, where the court held that a new defendant should not be joined because issues between the existing parties could be determined without the addition of a new defendant. See UCPR r 6.18 for example.

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Uniform Civil Procedure Rules 2005 (NSW) cont. (1)

In any originating process, the plaintiff may claim relief against the defendant in respect of more than one cause of action in any of the following circumstances:



(a)

if the plaintiff sues in the same capacity, and claims the defendant to be liable in the same capacity, in respect of each cause of action,



(b)

if the plaintiff sues:



(i)

in his or her capacity as executor of the will of a deceased person, or administrator of the estate of a deceased person, in respect of one or more of the causes of action, and



(ii)

in his or her personal capacity, but with reference to the estate of the same deceased person, in respect of the remaining causes of action,



(c)

if the plaintiff claims the defendant to be liable:



(i)

in his or her capacity as executor of the will of a deceased person, or administrator of the estate of a deceased person, in respect of one or more of the causes of action, and



(ii)

in his or her personal capacity, and in relation to the estate of the same deceased person, in respect of the remaining causes of action,



(d)

if the court grants leave for all of the causes of action to be dealt with in the same proceedings.

(2)

Leave under subrule (1) may be granted before or after the originating process is filed.



JOINDER, EFFICIENCY AND COSTS [7.415]  Joinder of parties and causes of action can provide for more efficient use of resources

because litigation need only occur once. A single judge can master all of the facts relevant to a dispute and decide the issues once and for all. The alternative would be to litigate each cause of action against each party in separate proceedings. Justice Finkelstein in Bray v F Hoffmann-​ La Roche Ltd (2003) 130 FCR 317; [2003] FCAFC 153 at [247] explained these benefits through historical analysis: According to the common law, no two causes could be joined in one action, the exceptions being that the debt could be joined with detinue and an action on the case could be joined with trover. One of the great reforms brought about by the Common Law Procedure Act 1852 (UK) was to get rid of this highly undesirable state of affairs by allowing a plaintiff to bring one action with different causes provided they could conveniently be tried together: Common Law Procedure Act, s 41. The common law also denied to two or more plaintiffs the ability to bring an action against one defendant (Smurthwaite v Hannay [1893] 2 QB 412) or one plaintiff to bring an action against two or more defendants (Malone v Great Northern Railway Co (Ireland) [1931] IR 1; Cameron v McBain [1948] VLR 245). The court simply lacked jurisdiction to entertain such claims. The undesirability, indeed the injustice, of the common law position was obvious. By the end of the 1800s, both the Judicature Acts and rules of court had altered the common law. As a result, it is now permissible in every superior court for causes of action to be combined or actions to be consolidated so that: (1) if a plaintiff has a number of complaints against a defendant, he is no longer compelled to bring one action for

[7.415]  407

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each complaint; and (2) where there are causes of action between different parties which raise common issues of law or fact, it is no longer necessary for these causes to be tried separately by different judges or juries. That is to say, both sensible and practical considerations led to the view that, at least in certain circumstances, “a writ should be like an omnibus travelling on a certain route into which any number of persons may get as passengers for the journey”:  Smurthwaite v Hannay [1893] 2 QB at 412, where on the rules a different view was taken. If this view had not been accepted, and the rules of court not modernised, courts would be even more inundated with litigation than they already are, and the expense to parties wishing to try cases would be so burdensome as to deny to all but the very rich the ability to obtain redress for legal wrongs.

The efficiencies of joinder can be lost when the resulting litigation gives rise to claims that are too disparate or the multitude of parties and causes of action creates too great a level of complexity. This explains, in part, the limitations placed on joinder and the important role of the overriding purpose. The other explanation is fairness.

AMENDMENT POWERS [7.420] The court has power pursuant to s 64 of the CPA to amend pleadings or to grant

leave to amend any document in the proceedings even if the amendment would have the effect of adding or substituting a cause of action that has arisen after commencement of the proceedings. Generally, an amendment takes effect not from the date of amendment but from the date of the original document which is amended. However, where an amendment has the effect of introducing a new plaintiff or defendant, or a new cause of action, the date of such an amendment in relation to that cause of action (subject to s 65) is taken to be the date on which the amendment is made. UCPR rr  6.28 and 19.2 (amendments to add or remove parties) conform with s 64(3) of the CPA in this regard. The court also has power to make amendments that raise statute-​ barred matters such as: correcting a mistake in the name of a party; changing the capacity in which the plaintiff sues; and permitting the addition or substitution of a cause of action arising after the commencement of proceedings if the new cause of action arises out of the same or substantially the same facts as originally pleaded. Such amendment is authorised by s  65 of the CPA, despite anything to the contrary in the Limitation Act 1969 (NSW), if the proceedings were commenced before the limitation period expired. Unless the court otherwise orders, an amendment under s 65 of the CPA is taken to be effective from the date on which the proceedings were commenced. Chapter 10 discusses the amendment powers in s 64 and s 65 of the CPA in more detail.

CONSOLIDATION [7.430] Consolidation is a procedure that allows different proceedings to be brought

together where it would be appropriate because hearing the causes of action together or one after another would achieve efficiencies in costs and time:  see UCPR r  28.5. The overriding purpose in CPA s 56, having regard to the objects of case management in s 57, which include the effective disposal of the business of the court and efficient use of judicial resources, is considered a very important matter when making a decision under UCPR r 28.5.

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Uniform Civil Procedure Rules 2005 (NSW) [7.440]  Uniform Civil Procedure Rules 2005 (NSW) r 28.5 Part 28 Separate decision of questions and consolidation Division 3 Consolidation etc of proceedings 28.5 Consolidation etc of proceedings (cf SCR Pt 31, r 7; DCR Pt 12, r 7) If several proceedings are pending in the court and it appears to the court: (a)

that they involve a common question, or

(b)

that the rights to relief claimed in them are in respect of, or arise out of, the same transaction or series of transactions, or

(c)

that for some other reason it is desirable to make an order under this rule, the court may order those proceedings to be consolidated, or to be tried at the same time or one immediately after another, or may order any of them to be stayed until after the determination of any other of them.

Note: See also Division 5 of Part 6 with respect to joinder of causes of action and joinder of parties.



A Goninan v Atlas Steels [7.450]  A Goninan & Co v Atlas Steels (Aust) Pty Ltd [2003] NSWSC 956 (New South Wales Supreme Court Equity Division) [Pacific National (NSW) Pty Ltd (“Pacific National”) owned a large number of coal wagons, which it claimed were defective. The wagons were constructed and supplied by A Goninan & Co Ltd (“Goninan”), using steel supplied by Atlas Steels (Australia) Pty Ltd (“Atlas”). Atlas sourced that steel from BHP Steel Ltd (“BHP”) and three joint venture companies. BHP commenced proceedings against the three companies for supplying steel not fit for purpose. Goninan sued Atlas for supplying steel below standard, breach of duty of care and misleading or deceptive conduct. It also sued Pacific National for withholding payments on the coal wagons. Pacific National filed cross-​claims against Goninan and Atlas. In separate proceedings, Atlas sued BHP, the three companies and Goninan. All the proceedings arose out of essentially the same sale of goods dispute. Austin J consolidated five separate proceedings involving seven different parties, with all the proceedings raising the common issue of whether the steel was defective. The single proceeding had one plaintiff and two joined defendants, with a number of cross-​claims. The complexity of the pleadings, discovery, subpoenas and issues at trial was reduced significantly.] AUSTIN J [10] Some of the history of the development of the consolidation rule in England was outlined by Herring CJ in Cameron v McBain [1948] VLR 245. Prior to the enactment of the Judicature Acts of 1873-​1875 in the United Kingdom, the English Courts of Common Law confined orders for consolidation, in the proper sense, to cases where the same plaintiff brought two or more actions against the same defendant, or where the same plaintiff brought actions against two or more defendants. The order would be made only on the application of the defendant or defendants. According to Herring CJ (at 246), where there were different plaintiffs the Court had no jurisdiction to bind one plaintiff in an action in tort by a decision in an action by a different plaintiff, even where the action was against the same defendant and arose out of the same transaction. The Court might, however, single out one of several actions and stay proceedings in the others until that one had been tried; sometimes on terms to the effect that the party applying for a stay would undertake to [7.450]  409

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A Goninan v Atlas Steels cont. abide by the result of the action that was allowed to proceed. An order of this kind was made in Amos v Chadwick (1887) 4 Ch D 869. ............................ [12] After the enactment of the Judicature Acts, the English rule of court which became Order XLIX rule 8 stated that “causes or matters pending in the same Division may be consolidated by order of the Court or a judge in the manner in use before the commencement of the principal Act in the superior courts of common law.” … The proper construction, [in the view of Lord Esher MR (with whom Chitty LJ agreed) in Martin v Martin & Co [1897] 1 QB 49], was that these words required that if an order were made, it was to be treated in the same manner as before. This left the making of order for consolidation to the discretion of the judge. Chitty LJ said (at 431) that “the object of this rule was to save expense, and I think it ought to have as large an application as the words of it will reasonably permit.” Lord Esher made an observation to similar effect. [13] But the discretion was not entirely at large. In Lee v Arthur (1909) 100 LT 61 the English Court of Appeal held that the rule did not authorise the consolidation of actions commenced by the same plaintiff against different defendants, without the consent of all parties, in a case where one of the proceedings raised an issue (whether the defendant had ceased to be in possession of premises) not raised in the other proceedings. The headnote to Lee v Arthur says that in those circumstances consolidation would not be ordered unless the issues to be tried were “precisely similar”, but those words do not appear in the reported judgments (although Cozens-​Hardy MR referred in the course of argument to consolidation being available where “precisely the same relief is claimed … but not otherwise”). In Horwood v Statesman Publishing Co Limited [1929] WN 38, 39, Sankey LJ expressed the opinion that the headnote in Lee v Arthur was inaccurate in this respect. [14] The English rule was amended in 1964 so as to articulate, no doubt in light of Lee v Arthur and other cases, the prerequisites to an order for consolidation. According to the editors of The Annual Practice 1964, p 41, the new rule did not change the existing practice. The new wording appears to have been used as the model for the New South Wales rule. In their present forms, Part 31 rule 7 in New South Wales and Order 4 rule 9 in England are not materially different, although the New South Wales rule expressly permits the Court to make the order on terms. [15] It appears that the judicial interpretation of the rule has become less restrictive over time. In Lee v Arthur Moulton LJ had observed, at 62, that “consolidation is much more rarely applicable that is generally supposed”, because of loose use of the word. That observation was referred to by Herring CJ in Cameron v McBain (at 247), who said that in later years the English Court of Appeal had taken a much more liberal view, adopting the principle that where several actions have been brought raising matters which might have been joined in one writ, the Court had power in its discretion to consolidate them under the English rule (citing Horwood v Statesman Publishing Co for that proposition). No doubt because of the expansion of scope of the consolidation rule, Herring CJ was led to the conclusion (at 247) that the cases provided him with no principle upon which the Court should exercise its discretion to order consolidation, and each case was to be decided in its own special circumstances. [16] Some observations in Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97 might, on first reading, be thought to revert to Moulton LJ’s restrictive approach to the availability of consolidation, but a closer reading reveals that this is not so. The plaintiff, who had paid virtually the full purchase price for construction of a yacht, but had paid it to another entity, sued the builder of the yacht for detinue and conversion, when the builder refused to deliver up the yacht. After the action had been commenced, the defendant sold the yacht. At the conclusion of the trial, the judge permitted the plaintiff to issue a fresh writ against the defendant, based on alleged conversion by sale, and consolidated the new proceeding with the first action, directing that the pleadings in the two actions be deemed to form the pleadings in the consolidated action and that the hearing of evidence in the first action be deemed the hearing of evidence in the consolidated action. He then gave directions for written submissions. The effect of his orders was to introduce a new cause of action for determination, based on different components of the proven facts, after the closing of evidence. 410 [7.450]

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A Goninan v Atlas Steels cont. [17] On appeal Brooking J said (at 104): The course taken in relation to the second action was highly unusual. It was a course that was not really resisted by the appellant, and no doubt what was done by the learned Judge was done by him with the entirely understandable desire of resolving all disputes between the parties as speedily and inexpensively as possible. The effect of a consolidation order is difficult to determine and in my opinion such an order should rarely be made. What was done in the present case went far beyond the making of a consolidation order and while I can, as I said, sympathise with the motives which prompted the making of the order … I feel bound to say, with the benefit of hindsight, that perhaps the order would have been better not made. [18] In my opinion these observations should not be seen as authority for the proposition that a consolidation order should rarely be made in any circumstances. They are directed towards the specific order under consideration by the Full Court. It was, as Brooking J said, highly unusual and went far beyond consolidation. The effect of a consolidation order, at the end of the hearing when only final submissions were left, would indeed be difficult to determine and in those circumstances such an order should rarely be made. Indeed, one wonders why the trial judge did not merely grant leave to the plaintiff to initiate the new proceeding returnable forthwith, and make orders for the hearing and evidence in the first action to be deemed the hearing and evidence in the second action, without any need for consolidation. Where, on the other hand, an order is made to consolidate two or more existing proceedings well before the final hearing, and in sufficiently precise terms that its consequences are clear, Brooking J’s observations seem inapplicable. [19] Young CJ (with whom Kaye J agreed) said (at 100): Like Brooking J I sympathise with the learned trial Judge’s attempt to assist the parties to a final resolution of their dispute by enabling the respondents to begin a second action and then making a consolidating order. In my opinion, however, a consolidating order should very rarely be made. The cases disclose no principle upon which the discretion of the Court to make a consolidating order should be exercised but, speaking generally, I think it is better to confine them to cases in which several actions have been brought which might have been joined in one writ [citing Cameron v McBain, Horwood v Statesman Publishing Co and Todd v Jones]. Ex hypothesi that was not the case here. Some of the same consequences might have been achieved however by directing that the two actions be heard together and by making various enabling orders. There are vital distinctions between consolidating actions and directing that they be tried together … [20] For present purposes, there are two components to these observations. First, there is the assertion that a consolidating order should very rarely be made. Secondly, there is the assertion, derived from Horwood v Statesman Publishing Co, that consolidation orders should be confined to cases where several actions have been brought which might have been joined in one writ. The two propositions are compatible only if it is very rare that several actions are commenced which might have been joined in one writ (probably not empirically true), or if the first assertion is read not as a statement of some general principle or approach to consolidation but as an observation directed to the kind of consolidation order made in the instant case. The fact that his Honour cited, evidently with approval, both Horwood v Statesman Publishing Co and Todd v Jones, cases in which consolidation orders were made in circumstances that were not especially rare, tends to reinforce the conclusion that Young CJ, like Brooking J, had in mind that consolidation should rarely be ordered in the way that the trial judge ordered it in the instant case. [21] The assertion may be made that consolidation orders are relatively rare, and that it is far more usual to order that proceedings be heard together, with evidence in each to be treated as evidence in the other (see, for example, LED Pty Ltd v Masterson Homes (NSW) Pty Ltd (1984) IPR 393, 400 per Master Gressier). But that is quite different from saying that consolidation orders should be rare, that is, that the Court should presume against them. [7.450]  411

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A Goninan v Atlas Steels cont. [22] There are some additional restrictions arising out of the wording of the rule (to which I shall turn shortly). Beyond these restrictions, there is no longer any requirement to approach the exercise of the consolidation power with a prima facie reluctance to use it. We are left with the observation of Herring CJ in Cameron v McBain that each case is to be decided, in the exercise of the Court’s discretion, by reference to its own circumstances. [23] That leaves Bolwell Fibreglass as authority only for the very broad principle that orders for consolidation should be confined to cases where several actions have been brought that might have been joined in one writ. [24] But that position is now subject to Part 1 rule 3, which requires the Court to interpret the rules, and exercise powers under them, in order to give effect to the overriding purpose of the rules, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Part 1 rule 3 [s 56 CPA] does not replace the earlier reluctance to make a consolidation order with a prima facie willingness to do so, but it focuses the Court’s attention, in the exercise of its discretion under Part 31 rule 7, on the factors that will contribute to just, quick and cheap resolution of the issues, and that focusing may lead to greater willingness than in the past to use the consolidation power where to do so is likely to enhance the achievement of the overall purpose. [25] It seems to me plain that in the present case, it would have been appropriate for the claims by all five parties to have been joined in a single proceeding. Indeed, for the reasons I have given, my view is that the most rational way of presenting the issues for curial determination would have been for Pacific National to commence a proceeding founded upon its allegation that the coal wagons were defective, and for the other parties to file defences and cross-​claims inter se in that proceeding. It therefore seems to me that the principle articulated in Bolwell Fibreglass, following Horwood v Statesman Publishing Co, is satisfied in the present case. [26] The wording of the rule imposes three other limitations on the Court’s power to consolidate. First, there must be several proceedings pending in the same Division. Here, each of the five proceedings is now in the Equity Division and they are all pending. The rule does not limit the number of proceedings that may be pending. Five is not too many. [27] Secondly, it must appear to the Court that one of the three subparagraphs of the rule is satisfied. Subparagraph (a), that some common question of law or fact arises in all of the proceedings, appears to me to be satisfied. Counsel for Atlas did not contend otherwise. As counsel for the Columbus Joint Venturers put it, there is in constitutional terms a single “matter” raised by the five proceedings. All the proceedings arise out of a single set of facts, relating to the ordering, construction and supply of the coal wagons, and the supply of the steel used to produce them, and the circumstances relied upon by Pacific National to make good its allegation that the wagons are defective for reasons having to do with the steel used in their manufacture. There will be, to the extent that a party appears in more than one proceeding, a substantial overlapping of issues of law concerning the liability of the various parties to Pacific National or inter se, if it is found that the wagons are defective. [28] The third limitation arising of the wording of the rule is that the order authorised by the rule is (relevantly) an order that the proceedings be “consolidated”. An order for the consolidation of proceedings is, by the terms of the rule, different from an order that proceedings be tried at the same time or immediately after one another, or that one be stayed until determination of another. Sometimes, in the past, the word “consolidation” has been used in a looser sense to encompass these other kinds of orders: Lee v Arthur, at 62 per Moulton LJ. But in its “proper sense”, an order for consolidation is an order “combining actions so that they thereafter proceed as one”: Cameron v McBain, at 246 per Herring CJ; see also Thomas & Morgan (United Kingdom) Ltd v Erica Vale Australia Pty Ltd (1995) 31 IPR 335.



412 [7.450]

Causes of Action and Parties  Chapter  7

[7.460]  Consolidation in its “proper sense” is rarely ordered. More common are proceedings

where common questions in different proceedings are heard together: see UCPR r 28.2. The separate and preliminary determination of common questions of fact or law may enable the identical issue in a number of proceedings to be tried once in a manner binding on the parties to all proceedings. Then the balance of each of the proceedings could be heard separately.20

Uniform Civil Procedure Rules 2005 (NSW) [7.470]  Uniform Civil Procedure Rules 2005 (NSW) r 28.2 Division 2 Separation of questions 28.2 Order for decision (cf SCR Pt 31, r 2) The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings.



20

For example, Kosciusko Thredbo Pty Ltd v State of New South Wales [2002] NSWSC 96. [7.470]  413

CHAPTER 8

Class Actions in New South Wales [8.10] INTRODUCTION......................................................................................................... 416 [8.70] Class Action Economics...................................................................... 418 [8.80] HISTORY OF CLASS ACTION PROCEDURES IN NEW SOUTH WALES............................ 419 [8.220] COMMENCING A CLASS ACTION............................................................................... 423 [8.220] Civil Procedure Act 2005 (NSW) s 157.................................................. 423 [8.240] Civil Procedure Act 2005 (NSW) s 158.................................................. 424 [8.270] Civil Procedure Act 2005 (NSW) s 161.................................................. 424 [8.280] Practice Note SC Gen 17.................................................................... 425 [8.285] The representative party.............................................................................. 425 [8.285] Johnston v Endeavour Energy.............................................................. 425 [8.290] Seven or more persons................................................................................ 426 [8.300] Claims against the same person.................................................................. 427 [8.330] Cash Converters International v Gray.................................................... 427 [8.350] Same, similar or related circumstances.................................................. 429 [8.350] Zhang v Minister for Immigration......................................................... 429 [8.370] Substantial common issue of law or fact................................................ 429 [8.370] Wong v Silkfield................................................................................ 429 [8.380] Class action pleadings....................................................................... 432 [8.380] Petrusevski v Bulldogs Rugby League Club.............................................. 432 [8.392] Rodriguez & Sons v Queensland Bulk Water Supply Authority..................... 434 [8.394] CASE MANAGEMENT AND CLASS ACTIONS............................................................... 436 [8.396] Practice Note SC Gen 17.................................................................... 436 [8.400] DISCONTINUANCE AND SUBGROUPS........................................................................ 439 [8.400] Discontinuing a class action........................................................................ 439 [8.410] Civil Procedure Act 2005 (NSW) ss 164–​167.......................................... 439 [8.420] Bright v Femcare............................................................................... 440 [8.430] Giles v Commonwealth of Australia....................................................... 446 [8.440] Multiplex Funds Management v P Dawson Nominees............................... 449 [8.470] Adequacy of representation......................................................................... 451 [8.475] Hassid v Queensland Bulk Water Supply Authority.................................... 452 [8.530] Sub-​groups and individual issues................................................................. 453 [8.530] Civil Procedure Act 2005 (NSW) s 168.................................................. 453 [8.550] Civil Procedure Act 2005 (NSW) s 169.................................................. 454 [8.570] Class Actions in Australia: (Still) a Work in Progress.................................. 454 [8.580] GROUP DEFINITION AND THE RIGHT TO OPT-​OUT.................................................... 455 [8.590] Right to opt-​out.......................................................................................... 455 [8.600] Civil Procedure Act 2005 (NSW) s 162.................................................. 455 [8.620]

Reconciling Litigation Funding and the Opt Out Group Definition in Federal Court of Australia Class Actions.............................................. 456

[8.630]

The closed class........................................................................................... 456 Multiplex Funds Management v P Dawson Nominees............................... 457 Jameson v Professional Investment Services............................................ 459 [8.710] Notice......................................................................................................... 460 [8.715] MEDIATION AND CLASS ACTIONS.............................................................................. 461 [8.720] SETTLEMENT............................................................................................................... 461 [8.750] Requirements for court approval................................................................. 462 [8.760] Civil Procedure Act 2005 (NSW) ss 173, 174.......................................... 462 [8.780] Johnston v Endeavour Energy.............................................................. 463 [8.640] [8.690]

[8.782]

Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited (No 4)............................................ 465  

415

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[8.784] Distribution of settlement funds.................................................................. 466 [8.790] NOTICES..................................................................................................................... 467 [8.800] Civil Procedure Act 2005 (NSW) ss 175, 176.......................................... 467 [8.810] Uniform Civil Procedure Rules 2005 (NSW) r 58.2.................................... 468 [8.814] Practice Note SC Gen 17.................................................................... 468 [8.830] Courtney v Medtel............................................................................ 469 [8.840] JUDGMENT................................................................................................................. 470 [8.840] Civil Procedure Act 2005 (NSW) s 177.................................................. 470 [8.860] Graham Barclay Oysters v Ryan........................................................... 471 [8.870] Civil Procedure Act 2005 (NSW) s 179.................................................. 471 [8.873] Timbercorp Finance Pty Ltd (in liq) v Collins............................................ 471 [8.880] SUSPENSION OF LIMITATION PERIODS....................................................................... 472 [8.880] Civil Procedure Act 2005 (NSW) s 182.................................................. 472 [8.900] GENERAL POWER TO ENSURE JUSTICE IS DONE......................................................... 473 [8.900] Civil Procedure Act 2005 (NSW) s 183.................................................. 473 [8.930] COSTS IN CLASS ACTIONS......................................................................................... 476 [8.930] Civil Procedure Act 2005 (NSW) s 181.................................................. 476 [8.1010] LITIGATION FUNDING................................................................................................ 479 [8.1040] Campbells Cash & Carry v Fostif.......................................................... 480

INTRODUCTION [8.10]  In 1940, two American lawyers observed in the University of Chicago Law Review

that: Modern society seems increasingly to expose men to such group injuries for which individually they are in a poor position to seek legal redress, either because they do not know enough or because such redress is disproportionately expensive … The problem of fashioning an effective and inclusive group remedy is thus a major one.1

A 1982 report on class actions prepared by the Ontario Law Reform Commission contained the following description of the role of class actions:2 [I]‌t is the development of a highly complex, interdependent society that has impeded the capacity of each person to vindicate his legal rights. No longer are we faced with only a single individual or small business against whom we have some grievance. Trite as the observation necessarily is, it bears emphasising that we live in a corporate society, characterised by mass manufacturing, mass promotion, and mass consumption. The production and dissemination of goods and services is now largely the concern of major corporations, international conglomerates, and big government, whose many and diverse activities necessarily affect large numbers of persons in virtually all aspects of their lives. Inevitably, dramatic changes in production, promotion, and consumption have given rise to what may be called “mass wrongs” –​that is, injury or damage to many persons caused by the same or very similar sets of circumstances. The mass production and sale of an inherently defective product has the potential to touch all consumers of that product. Misleading advertising by a large corporation can have province-​ wide or even national implications. Large scale pollution of rivers or the atmosphere can affect countless persons over a long period of time. Sophisticated securities frauds, discrimination in hiring, illegal strikes, and many other types of unlawful conduct have direct and indirect ramifications for all of society. And in the wake of such misconduct, the individual is often very unable or unwilling to stand alone in meaningful opposition.

1 2

Kalven H and Rosenfield M, “The Contemporary Function of the Class Suit” (1940) 8 University of Chicago Law Review 684 at 686. Ontario Law Reform Commission, Report on Class Actions, Toronto, Ontario: Ministry of the Attorney General (1982) Vol 1, p 3.

416 [8.10]

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The law’s procedural response to mass wrongs or group injuries was the class action. [8.30]  Class actions (also known as group proceedings, collective actions or representative

actions) can take many forms, however they may be generally defined as:3 a legal procedure which enables the claims (or part of the claims) of a number of persons against the same defendant to be determined in the one suit. In a class action, one or more persons (“representative plaintiff”) may sue on his or her own behalf and on behalf of a number of other persons (“the class”) who have a claim to a remedy for the same or a similar alleged wrong to that alleged by the representative plaintiff, and who have claims that share questions of law or fact in common with those of the representative plaintiff (“common issues”). Only the representative plaintiff is a party to the action. The class members are not usually identified as individual parties but are merely described. The class members are bound by the outcome of the litigation on the common issues, whether favourable or adverse to the class, although they do not, for the most part, take any active part in that litigation. [8.40] The objective of class action litigation when introduced at the Federal level was to provide access to justice, to resolve disputes more efficiently, avoid respondents facing multiple suits and the risk of inconsistent findings and to reduce costs for the parties and the Courts.4 Access to justice, efficiency and effectiveness were key reasons put forward by the NSW Attorney-​General for adoption of class action legislation in New South Wales.5 In Giles v Commonwealth of Australia [2014] NSWSC 83, Garling J (at [81]–​[82]) set out the advantages and disadvantages of class actions. The advantages include:

• They are a cost-​effective means for enabling the pursuit of a legal remedy (or remedies) relating to wrongful acts or omissions by one or more defendants where there is commonality of conduct. • They are a means of providing access to justice where there are a number of claimants for whom access to justice on an individual basis is not possible for a variety of reasons including impecuniosity and the small amount of damages being claimed. • They provide an effective means for a court to resolve claims involving common questions of fact and law, where damages may be sufficient to justify the bringing of individual claims but the impact on court resources of the hearing of a multitude of claims would be more satisfactorily managed through a representative proceeding. • The avoidance of injustice which may be occasioned to parties, which may arise from inconsistent judgments in individual cases relating to the same, or substantially similar subject matter where these are heard separately and at different times. • They achieve a balance between the ordinary rights of claimants and defendants to pursue and defend cases individually, and the interests of a group of parties to litigate the action as a whole in an effective manner. • They provide a means whereby defendants can limit their liability in a timely and cost-​ effective way, by enabling finalisation of claims from all group members including those who are not specifically identified other than as within the description of the group. By use 3 4

5

Mulheron R, The Class Action in Common Law Legal Systems: A Comparative Perspective (Hart Publishing, 2004) p 3. Second Reading Speech by the Attorney-​General, Australia, House of Representatives, Parliamentary Debates (Hansard), 14 November 1991 at p 3176; Femcare Ltd v Bright (2000) 100 FCR 331 at [10]; Bright v Femcare Ltd (2002) 195 ALR 574 at [152]. Second Reading Speech by the Attorney-​General, New South Wales, Legislative Council (24 November  2010). [8.40]  417

Civil Procedure in New South Wales

of an opt-​out procedure, the liability of a defendant can be determined on a final basis for all group members, although the members of the group are not specifically identified. • They promote efficiency in the administration of justice, and in particular, provide for the sensible and careful use of judicial resources. • By combining individual claimants together, problems arising from inequality in bargaining power and any significant discrepancy between the resources of the parties, can be effectively minimised. However, representative actions also have disadvantages. These include: • the number of, and the identities of, group members and the amount of damages of their claims may not be known, or else may be difficult to ascertain –​at least during the early stage of the proceedings, including at the time of hearing of common questions of fact and law; • there can be a difficulty for defendants in settling proceedings or else rationally estimating their value, at an early stage because of these unknowns; • apart from the named plaintiffs, members of the group lose any real degree of control over the manner and conduct of the proceedings, and have a role in the proceedings which is much diminished in its influence and relevance; and • particularly in claims involving personal injury, a representative action is rarely, if ever, capable of resolving the calculation of individual damages. Class action procedural rules are generally trans-​substantive and can be used to bring a range of proceedings relying on different types of causes of action. The types of class actions being run in Australia has changed over time. Originally the class action was used for personal injuries arising out of faulty drugs, devices and treatments. Consumer protection claims have been a prominent source of class actions. More recently, class actions have been brought by shareholders and investors. There have also been class actions brought by the customers of entities engaged in cartels. In New South Wales, class actions have been commenced in relation to a range of subjects, including allegations involving children that were physically and sexually abused at the Fairbridge Farm School in the 1950s and 1960s, children illegally detained by police for breach of bail conditions, the malfunction of an engine on a flight from Singapore to Sydney, airbags in motor vehicles, customers of the operator of luxury river cruises in Europe, and property damage resulting from the operation of the Wivenhoe Dam in Queensland. [8.60] The effectiveness of the class action procedure is derived from the economics of

grouping and co-​ ordinating multiple claims. The economics of the class action may be illustrated by reference to shareholder claims.

Class Action Economics [8.70]  M Legg, “Shareholder Class Actions in Australia –​The Perfect Storm?” (2008) 31(3) UNSW Law Journal 669 The class action is designed to facilitate access to justice and, accordingly, results in litigation where previously there may have been none. However, it is also meant to make that litigation more efficient in terms of party and judicial resources that need to be expended to resolve the grouped claims. The pooling of claims means that a claim that may be uneconomic to pursue alone can, when combined with other claims, become worthwhile pursuing. The class action also allows for the cost of bringing 418 [8.60]

Class Actions in New South Wales  Chapter  8

Class Action Economics cont. the action to be spread across many claimants giving rise to economies of scale. For example, the cost of investigating the merits of a claim is about the same whether there is one claimant or many. However, when the stakes are increased the case is likely to be harder fought which may create additional costs. In the area of shareholder claims, the class action is an attractive procedural vehicle –​many of the claims are small and the class action allows for them to be aggregated, creating a single substantial claim. The group also tends to be large, dispersed and disorganised, and therefore suffers from a collective action dilemma. The benefits to the group, namely recovery of damages, exceed the aggregate costs to the individual members of the group, making action desirable. However, because benefits are dispersed among the group, an individual may be unwilling to incur the cost of action alone, as individual costs would exceed their individual benefits. The class action allows the benefit to be pursued by sharing the costs. There is also an ability to include large shareholders, such as institutional investors, in class actions. Large shareholders can also benefit from the cost savings. They will weigh the potential recovery with the costs involved, which may include greater opportunity costs than for small shareholders. For example, if they commence litigation they will have the cost of lost management time from instructing lawyers, the costs of complying with discovery and the impact on business relationships. As a group member in a class action, those costs are reduced as they have an almost anonymous role, albeit with little control over the litigation. The aggregation and economies of scale advantages that flow from class actions have led to suggestions of a “small claimant” and “large claimant” dichotomy in describing class actions. Both small and large claimants may be present in any shareholder class action, and are able to benefit from the class action mechanism. The ability to aggregate claims and obtain economies of scale is also important because it attracts class action promoters who see the ability to make profitable returns from investing in the litigation. Indeed, the ability to profit provides the incentive for a class action promoter to investigate if a cause of action exists, to consider prospects of success and to organise the group. The economics of the class action are such that they transform non-​viable claims, either because of the small loss involved or the opportunity costs associated with litigation, into high stakes litigation. As such, claims that otherwise would not take place are now able to be pursued.



HISTORY OF CLASS ACTION PROCEDURES IN NEW SOUTH WALES [8.80]  In New South Wales when the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)

commenced on 15 August 2005 they provided for representative proceedings in r 7.4 which provided:

(1) This rule applies to any matter in which numerous persons have the same interest or same liability in any proceedings.



(2) Unless the court orders otherwise, the proceedings may be commenced and carried on by or against any one or more persons as representing any one or more of them.

Rule 7.4 of the UCPR effectively mirrored Pt 8 r 13 of the Supreme Court Rules 1970 (NSW) which had its origins in the former practices of the Court of Chancery in the United Kingdom. The history of the rule was explained by Biscoe AJ in Oasis Fund Management Ltd v Royal Bank of Scotland Nv [2010] NSWSC 584 at [14]: Representative proceedings are the creature of equity. The Chancery Court permitted representative proceedings because of the inconvenience, expense and injustice in dealing many times over with identical issues in claims by numerous persons with a common interest [8.80]  419

Civil Procedure in New South Wales

against the same defendant. Representative proceedings preserved the principle that all persons concurrently interested should be before the court and bound by the judgment, but were an easier and cheaper mode of determining common issues than a multitude of proceedings which harassed the defendant. In the nineteenth century the great increase in the number of unincorporated joint stock companies and trading associations had the effect of extending the Chancery Court practice: Daniell’s Practice of the High Court of Chancery (5th ed, 1871) 213; Cameron v National Mutual Life Assn of Australasia Ltd (No 2) [1992] 1 Qd R 133 at 135. With the merger of law and equity, the Chancery Court practice was incorporated in the new rules of procedure scheduled to the Supreme Court of Judicature Act 1873 (UK):  Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 415.

The procedure was little used in the United Kingdom and in New South Wales with the UK precedents seemingly adopting broad then narrow then broad interpretations of the expression “the same interest” so that uncertainty was created.6 [8.110]  In Australia at the Federal level class actions or “representative proceedings” were

introduced in 1992 through the addition of Pt IVA to the Federal Court of Australia Act 1976 (Cth) (FCAA).7 This addition followed the publication in 1988 of the Australian Law Reform Commission’s Report No 46, titled Grouped Proceedings in the Federal Court. Most class actions in Australia have been brought under the Federal legislation. [8.120] Victoria followed shortly after with a procedure for “group proceedings” that is

provided for in Pt  4A of the Supreme Court Act 1986 (Vic). The Victorian provisions are almost identical to the FCAA, including adopting the same numbering of sections. [8.130] At around the same time in New South Wales Mr and Mrs  Carnie commenced

proceedings against Esanda Finance in relation to loan agreements relying on Pt  8 r  13 of the Supreme Court Rules 1970 (NSW) on behalf of themselves and a class of borrowers. The proceedings raised the issue of the meaning of “the same interest” that had plagued the UK jurisprudence. In Esanda v Carnie (1992) 29 NSWLR 382, the NSW Court of Appeal viewed the provisions for representative proceedings as inadequate to accommodate class action proceedings as provided for in the Federal Court.8 Gleeson CJ adopted the words of Estey J in Naken v General Motors of Canada Ltd (1983) 144 DLR (3d) 385, that “the rule, consisting as it does of one sentence of some thirty words, is totally inadequate for employment as the base from which to launch an action of the complexity and uncertainty of this one”.9 However, the High Court in Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398 disagreed and found that despite the claims arising under separate contracts the same interest requirement was satisfied.10 Further, Toohey and Gaudron JJ found that “[t]‌he simplicity of the rule is also one of its strengths, allowing it to be treated as a flexible rule of convenience in the administration of justice and applied ‘to the exigencies of modern life as occasion requires’.”11 The proceedings continued before the Supreme Court of New South

6

7 8 9 0 1 11

See, eg, Duke of Bedford v Ellis [1901] AC 1; Taff Vale Railway Co v Amalgamated Society of Railway Servants [1901] AC 426; Markt & Co Ltd v Knight Steamship Co Ltd [1910] 2 KB 1021; Prudential Assurance Co Ltd v Newman Industries Ltd [1981] Ch 229; Irish Shipping Ltd v Commercial Union Assurance Co Plc [1991] 2 QB 206. See Federal Court of Australia Amendment Act 1991 (Cth) which commenced on 4 March 1992. Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at 390, 404. Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382 at 390. Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398 at 403, 408, 420–​422, 427. See also Wong v Silkfield Pty Ltd (1999) 199 CLR 255 at [27]. Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398 at 422.

420 [8.110]

Class Actions in New South Wales  Chapter  8

Wales where the likelihood of a cross claim by Esanda saw an opt in approach adopted with the result that the plaintiffs were not prepared to pay the cost of the necessary notices and proceedings ceased to continue under Pt 8 r 13.12 The requirements of Pt 8 r 13 of the Supreme Court Rules 1970 (NSW) were again revisited in Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386. The High Court once again observed that despite an absence of elaborate provisions the rule should not be narrowly construed. Nonetheless the majority found that the plaintiff in Fostif had not correctly engaged the rule which required “numerous persons [having] the same interest” in the proceedings. This was because at the time the proceedings were commenced there were no persons, other than Fostif, who had an interest in the proceedings.13 [8.150]  In April 2007, the decision in O’Sullivan v Challenger Managed Investments Limited

[2007] NSWSC 383 appears to be the proverbial straw that broke the camel’s back. The decision in interpreting the requirements of r  7.4 of the UCPR held that, inter alia, the relief claimed must be “beneficial to all”14 and that representative proceedings will not be appropriate for damages claims where loss must be demonstrated by each individual.15 This decision had the potential to significantly restrict the scope of representative proceedings, as it would prevent representative proceedings being brought in New South Wales for damages claims where quantum, reliance and/​or causation must be individually proved.16 On 9 November 2007, r 7.4 of the UCPR was amended to adopt the same requirements for commencing a representative proceeding as s 33C of the FCAA.17 Rule 7.4 was further amended, with effect from 11 December 2009, to adopt other aspects of the FCAA such as the power to discontinue a representative proceeding pursuant to ss 33M and 33N.18 [8.170] Finally, the Courts and Crimes Legislation Further Amendment Act 2010 (NSW) inserted Pt 10 into the CPA so as to make representative proceedings available in NSW courts. Part 10 commenced on 4 March 2011. The NSW procedures are similar to the FCAA but some changes were introduced. Accompanying Rules (Pt 58) have also been inserted into the UCPR.19 To coincide with the commencement of Pt  10, Practice Note SC Gen 17  –​Supreme Court  –​ Representative Proceedings was issued on 22 February 2011 and commenced on 4 March 2011. The practice note has been subsequently amended and is available on the Supreme Court’s website. [8.180]  The Second Reading Speech by the NSW Attorney-​General addressed the introduction

of class actions as follows: In relation to the Civil Procedure Act 2005, schedule 6.1 to the bill amends the Civil Procedure Act 2005 to insert a new part 10 to provide for a comprehensive representative proceedings

12 13 14

15 16 17 18 19

Carnie v Esanda Finance Corp Ltd (1996) 38 NSWLR 465 at 475. Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at [51], [57]–​[58], [222]–​[224]. O’Sullivan v Challenger Managed Investments Limited [2007] NSWSC 383 at [41]. Accordingly, mere common questions of law and fact were deemed insufficient to commence a representative proceeding where the relief sought by group members required individual determination, but a claim for declaratory relief would be a legitimate basis to commence representative proceedings: [58]–​[60]. O’Sullivan v Challenger Managed Investments Limited [2007] NSWSC 383 at [53], [63]. Legg M, McBride V and Clark S, “The Challenge of Class Actions in the Supreme Court of NSW” (2007) 45(8) Law Society Journal 56. Uniform Civil Procedure Rules (Amendment No 19) 2007 (NSW). Uniform Civil Procedure Rules (Amendment No 30) 2009 (NSW). See also Legg M and Dowler J, “The Class Actions Juggling Act” (2010) 48(6) Law Society Journal 59. Uniform Civil Procedure Rules (Amendment No 41) 2011 (NSW). [8.180]  421

Civil Procedure in New South Wales

regime in the New South Wales Supreme Court. The new regime is substantially modelled on Part IVA of the Commonwealth’s Federal Court of Australia Act 1976, plus the inclusion of two new procedural rules to clarify the existing Federal regime. Representative proceedings, which are also known as class actions, are proceedings brought by one person on behalf of a group of people with the aim of resolving common issues and factual disputes among that group. In New South Wales, rules 7.4 and 7.5 of the Uniform Civil Procedure Rules 2005 make some provision for representative proceedings. However, these rules lack procedural clarity. The regime that is proposed by these amendments will provide a greater level of certainty for both litigants and the court, and will enhance the community’s access to justice. Two additional procedural rules also have been included. The first additional rule clarifies that representative proceedings may be taken against several defendants, even if not all group members have a claim against all defendants. The provision overcomes the contrary view of the Commonwealth expressed in relation to the operation of part IVA of the Federal Court of Australia Act 1976 in Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487. The second rule clarifies that it is not inappropriate for representative proceedings to be brought on behalf of a limited group of identified individuals. This is consistent with the view taken by the Full Court of the Federal Court in relation to the operation of the Federal Part IVA in Multiplex Funds Management Limited v Dawson Nominees Pty Limited (2007) 244 ALR 600. The Government has taken the opportunity to prescribe this view in legislation to avoid unnecessary interlocutory battles and appeals on this point. Both of these new procedural rules arose out of the 2009 Commonwealth Attorney-​General’s Department’s Report on Access to Justice and the Victorian Law Reform Commission’s report, “Civil Justice Review”, in 2008. The new regime established by these amendments will give the New South Wales Supreme Court an efficient and effective procedure to deal with representative proceedings. The broad consistency between this bill and the existing Federal and Victorian regimes also will provide New South Wales litigants with a greater degree of certainty and clarity. [8.190] The representative action, which was the predecessor to the class action, while co-​existing in some jurisdictions such as the Federal Court and Victoria,20 in New South Wales Sch 6.4 of the Courts and Crimes Legislation Further Amendment Act 2010 (NSW) repealed rr 7.4 and 7.5 of the UCPR. In Burwood Council v Ralan Burwood Pty Ltd (No 2) [2014] NSWCA 179, Sackville AJA explained that, prior to the introduction of court rules providing for the making of representative orders, common law courts had no power to make representative orders. However, the “traditional equity jurisdiction” to make representative orders was not affected by the repeal of r  7.4. The representative action therefore remains available. In particular, it may be needed where it is desirable to make orders that a defendant be appointed to represent persons who have the same interest and are necessary parties to the litigation. [8.200]  This chapter will focus on class actions in the NSW context but the dearth of case

law on some issues will mean that reference will need to be made to cases decided under the Federal legislation. Beech-​Jones J of the Supreme Court of New South Wales has observed that: From a legal perspective the superior Courts of the States and the Federal Court should strive to interpret and apply what is, in effect, uniform legislation in a consistent manner. From a public policy perspective differences between class action regimes are best avoided or at least minimised to reduce the capacity for litigants to gain some advantage perceived to be available under one regime compared to another. In its idealised form the Australian legal system should ensure that, within jurisdictional limits, there should be the same outcome for the same matter irrespective of which forum determines it.

20

Federal Court Rules 2011 (Cth) r 9.21; Supreme Court (General Civil Procedure) Rules 2005 (Vic) Order 8 r 2.

422 [8.190]

Class Actions in New South Wales  Chapter  8

However, his Honour went on to observe that this was subject to legislative differences between the Civil Procedure Act 2005 (NSW) and the FCAA.21 His Honour also highlighted the differences in jurisdiction between the Supreme Court and the Federal Court which would impact the causes of action that could be brought in each court: The most obvious and important difference between the New South Wales and Federal schemes for representative actions is the limitations on the Federal Court’s jurisdiction exposed by the High Court’s decision in Re Wakim; Ex parte McNally & Anor [1999] HCA 27; 198 CLR 511 (“Wakim”). The Federal Court’s accrued jurisdiction enables it to hear and determine non-​ federal claims that bear the necessary relationship to claims arising under federal law [Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457]. However Wakim established that the Federal Court does not have jurisdiction over a matter that solely involves non-​federal claims even if State legislation such as the cross vesting legislation purports to confer it on the Federal Court. I would expect that this limitation may be of real concern to those who bring and finance representative actions. The time and resources devoted to these actions is presumably so significant that they cannot risk commencing proceedings only to have them later fail on a jurisdictional issue especially after a limitation period has expired. As an illustration of this, many of the class actions in the Common Law Division arise out of natural disasters such as bushfire or flood. It would take some truly ingenious thinking to construct a “non colourable” federal claim out of such events.22

COMMENCING A CLASS ACTION Civil Procedure Act 2005 (NSW) [8.220]  Civil Procedure Act 2005 (NSW) s 157 The requirements to commence a class action in NSW are set out in s 157 of the CPA. Section 157 (1)

Subject to this Part, where:



(a)

7 or more persons have claims against the same person, and



(b)

the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances, and



(c)

the claims of all those persons give rise to a substantial common question of law or fact,

proceedings may be commenced by one or more of those persons as representing some or all of them. (2)

Representative proceedings may be commenced:



(a)

whether or not the relief sought:



(i)

is, or includes, equitable relief, or



(ii)

consists of, or includes, damages, or



(iii)

includes claims for damages that would require individual assessment, or



(iv)

is the same for each person represented, and

21 22

The differences between New South Wales and the FCAA are discussed at [8.250], [8.340], [8.470] and [8.660]. Justice Beech-​Jones, “Representative Actions in NSW Courts”, Class Actions CLE Seminar –​Current issues after 25 years of Part IVA, University of New South Wales, 23 March 2017, 2–​3. [8.220]  423

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont.

(b)

whether or not the proceedings:



(i)

are concerned with separate contracts or transactions between the defendant in the proceedings and individual group members, or



(ii)

involve separate acts or omissions of the defendant done or omitted to be done in relation to individual group members.



Civil Procedure Act 2005 (NSW) [8.240]  Civil Procedure Act 2005 (NSW) s 158 The standing of the person who may commence a class action (referred to as the representative party or representative plaintiff or lead plaintiff) is addressed in s 158 of the CPA. Section 158 (1)

For the purposes of section 157(1)(a), a person has a sufficient interest to commence representative proceedings against another person on behalf of other persons if the person has standing to commence proceedings on the person’s own behalf against that other person.

(2)

The person may commence representative proceedings on behalf of other persons against more than one defendant irrespective of whether or not the person and each of those persons have a claim against every defendant in the proceedings.

(3)

If a person has commenced representative proceedings, that person retains standing:



(a)

to continue the proceedings, and



(b)

to bring an appeal from a judgment in the proceedings,

even though the person ceases to have a claim against any defendant.

 [8.250]  Section 157 of the CPA is based on s 33C of the FCAA and s 158 of the CPA is based

on s 33D of the FCAA. However, s 158(2) of the CPA does not have a reciprocal provision in the FCAA as it was specifically adopted to overcome the decision in Philip Morris (Aust) Ltd v Nixon (2000) 170 ALR 487 discussed at [8.300]. However, s 158(2) may be interpreted to go further as discussed at [8.340].

Civil Procedure Act 2005 (NSW) [8.270]  Civil Procedure Act 2005 (NSW) s 161 Section 161 of the CPA (based on s 33H of the FCAA) makes provision for the inclusion of specific matters in the originating process for a class action. Section 161 (1)

The originating process in representative proceedings, or a document filed in support of the originating process, must, in addition to any other matters required to be included:



(a)

424 [8.240]

describe or otherwise identify the group members to whom the proceedings relate, and

Class Actions in New South Wales  Chapter  8

Civil Procedure Act 2005 (NSW) cont.

(b)

specify the nature of the claims made on behalf of the group members and the relief claimed, and



(c)

specify the question of law or facts common to the claims of the group members.

(2)

In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members.



Practice Note SC Gen 17 [8.280]  Practice Note SC Gen 17, Supreme Court –​Representative Proceedings Commencement of proceedings 4.1

Representative proceedings are to be commenced in the Division of the Court appropriate to their subject matter in accordance with the Supreme Court Act 1970 (NSW) and the Uniform Civil Procedure Rules.

4.2

In addition to the requirements of Part 6, Division 4 of the Uniform Civil Procedure Rules, an originating process must:



(a)

describe or otherwise identify the group members either by name or characteristic;



(b)

specify the nature of the claims and the relief sought by the representative party on his or her own behalf and on behalf of the group members;



(c)

specify the common questions of law or fact which are said to arise in the proceedings;



(d)

indicate whether the proceedings are commenced in the Common Law Division or the Equity Division; and



(e)

contain a notation that the proceedings are listed for an initial case conference at 9:00am on the Wednesday after the expiration of 42 days following the filing of the originating process.

 The representative party

Johnston v Endeavour Energy [8.285]  Johnston v Endeavour Energy [2015] NSWSC 1117 GARLING J [62] Part 10 of the Civil Procedure Act 2005 provides a range of powers with respect to representative proceedings. [63] It is important to note that a plaintiff in representative proceedings occupies a position which, in many respects, differs from that of a plaintiff in an individual claim. [64] The first feature of the Pt 10 procedure is that a plaintiff can nominate themselves, by commencing proceedings under Pt 10, as a representative of people who have claims which arise out of or in respect of the same, similar or related circumstances, and which otherwise comply with the provisions of s 157. The plaintiff can nominate themselves without the knowledge of, or the [8.285]  425

Civil Procedure in New South Wales

Johnston v Endeavour Energy cont. consent of, individuals to their inclusion in the proceedings. The issue of consent to participation in the proceedings is dealt with by the opt out procedure set out in s 162 of the Civil Procedure Act 2005 and the following sections. [65] At the time of the commencement of the proceedings, there needs to be at least seven people who have claims against the same person, but there are no other provisions relating to the size of the group. In many cases the likely, and the maximum, size of the defined group is unknown, although estimates which may or may not be well informed, are often made. [66] The second feature is that a plaintiff in representative proceedings retains standing to commence the proceedings against more than one defendant, even though the plaintiff does not have a claim against all of the defendants: s 158(2) Civil Procedure Act 2005. [67] The third feature is that a plaintiff, having commenced representative proceedings, retains standing to continue proceedings, including bringing an appeal from a judgment in proceedings, even though the plaintiff personally has ceased to have any claim against any defendant: s 158(3) Civil Procedure Act 2005. [68] Put differently, a plaintiff in a representative proceeding retains standing to participate, and to continue to conduct proceedings, in which he has no personal interest or available claim against any defendant. The rationale for this is that the named plaintiff is a person authorised, and permitted, by statute to represent the interests of all individuals who fall within the group membership description. [69] Even though the plaintiff may have standing overall to conduct the proceedings, where a question requires determination that relates only to the claims of a particular member, that group member may be entitled to appear with respect to that question: s 169 Civil Procedure Act 2005. Whether the court permits that to occur is a matter for the court’s discretion in the circumstances. It is not mandatory. [70] Even if such a person is permitted to appear, the plaintiff remains a party to the proceedings although not personally directly affected by the determination of that individual’s claim. [71] A court may give directions, including establishing a sub-​group, and may appoint a person to be the representative of that sub-​group where it is appropriate to deal with questions common to that sub-​group: s 168 Civil Procedure Act 2005. The plaintiff remains a party with respect to the proceedings in which the sub-​group claims are being determined. [72] A particularly important feature is that the court retains control over the proceedings generally and, in particular, over the plaintiff who is the representative party. Where it appears to the court on an application made by a group member, that a representative party is not able adequately to represent the interests of group members, the court may substitute another group member as a representative party: s 171 Civil Procedure Act 2005. [73] Ultimately, the court retains control over representative proceedings because approval of the court is required for settlement or discontinuance: s 173 Civil Procedure Act 2005. Even if an individual wishes to settle their claim, that settlement must be approved by the court: s 174 Civil Procedure Act 2005.

 Seven or more persons [8.290] The “seven or more” requirement was considered in Tropical Shine Holdings Pty

Limited v Lake Gesture Pty Limited (1993) 45 FCR 457 where Wilcox J sought to reconcile the requirement with s  33H(2) of the FCAA (s  161(2) of the CPA in New South Wales) which does not require the specific identification of group members. Wilcox  J interpreted 426 [8.290]

Class Actions in New South Wales  Chapter  8

the requirement as “restricting the use of Pt IVA to claims that, by their nature and assuming that they have substance, are shared by at least seven persons”. Cases cannot be brought as representative proceedings where it is obvious that fewer than seven people share the claim.23 Claims against the same person [8.300] The “claims against the same person” requirement has been contentious due to

competing interpretations of the Federal Court-​equivalent of s 157(1)(a), namely s 33C(1)(a) of the FCAA, by two Full Federal courts. In Philip Morris (Australia) Ltd v Nixon [2000] FCA 229, Sackville J observed that “as the parties accepted, s 33C(1)(a) requires every applicant and represented party to have a claim against the one respondent or, if there is more than one, against all respondents”. Further, “[i]‌t follows that s 33C(1)(a) is not satisfied if some applicants and group members have claims against one respondent (or group of respondents) while other applicants and group members have claims against another respondent (or group of respondents).” In Bray v F Hoffman-​La Roche Ltd [2003] FCAFC 153, Finkelstein J stated: It can immediately be acknowledged that a properly constituted representative proceeding must involve a group of seven or more persons each of whom has a claim or claims against one person. But that is all the section requires. It simply does not address the situation where some members of the group, say 10 out of a group of 15, also have claims (that is, causes of action) against some other person, being causes of action which satisfy both s 33C(1)(b) (each claim arises out of the same circumstances) and s 33C(1)(c) (each claim gives rise to common issues of law or fact).

The disagreement was considered by a Full Federal Court in Cash Converters International Limited v Gray [2014] FCAFC 111. The Full Court posed the question: “does s 33C(1) of the [FCAA] require that each group member have a claim against each respondent to the proceedings?” The Full Court’s answer was no. The decision proceeded on the basis that to satisfy the standing requirements a representative party must have a claim against each respondent. Further, there needs to be seven group members with a claim against one respondent for the proceedings to be commenced. However, the addition of other group members and other respondents is not prohibited.

Cash Converters International v Gray [8.330]  Cash Converters International Limited v Gray (2014) 233 FCR 139; [2014] FCAFC 111 JACOBSON, MIDDLETON and GORDON JJ [Ms Gray, the applicant, commenced two class actions related to the provision of consumer credit by Cash Converters franchises through “personal loan” and “cash advance” contracts. The respondents were alleged to have engaged in unconscionable conduct in contravention of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) and to have charged interest/​ fees in respect of the credit contracts and cash advance contracts in contravention of the Credit (Commonwealth Powers) Act 2010 (NSW) which caps the maximum annual interest rate on consumer credit contracts.

23

Tropical Shine Holdings Pty Limited v Lake Gesture Pty Limited (1993) 45 FCR 457 at 462. See also Philip Morris (Aust) Ltd v Nixon (2000) 170 ALR 487 at [88] and Symington v Hoechst Schering Agrevo Pty Ltd (1997) 78 FCR 164 at 166. [8.330]  427

Civil Procedure in New South Wales

Cash Converters International v Gray cont. In the personal loan proceedings, Ms Gray obtained personal loans from both Safrock Finance Corporation (Qld) Pty Ltd and Cash Converters Personal Finance Pty Ltd but the members of the group in that proceeding obtained finance from one or the other but never both. A claim of accessorial liability was also made against Cash Converters International Pty Ltd, the parent company of the other Cash Converters entities, by all group members. The same representative, this time in proceedings for the cash advance contracts, received credit from only one Cash Converters franchise, Ja-​Ke Holdings Pty Ltd, whereas the majority of group members received credit from different franchisees who were not parties to the proceedings. The representative and the group members also made claims for accessorial liability against the same respondents, Cash Converters Pty Ltd and Cash Converters International Pty Ltd. The respondents in both proceedings argued that neither proceeding complied with s 33C(1)(a) of the FCAA because the group members did not claim against each and every respondent. The group members in the personal loan proceedings had claims against either Safrock Finance or Cash Converters Personal Finance but not both. The claims of the group in the cash advance proceedings did not comply as they related to many different franchises, not the respondent franchise with which the representative dealt.] [18] These reasons for judgment will consider the proper construction of s 33C of the [FCAA] (and, in particular, s 33C(1)(a)) and then turn to consider the authorities. [19] The starting point is the statutory text. Context and purpose are also important … [21] … The question which arises is what does s 33C(1) require if the applicant’s circumstances (and those of the group members) give rise to a claim of multiple wrong doing against more than one respondent? Does s 33C(1)(a) require that the applicant and each group member have a claim against each respondent? Or, does it require no more than that there be seven or more persons with a claim against the same respondent (subject of course to satisfying the requirements of sub-​ paragraphs (b) and (c))? If the usual requirements for the joinder of parties are met, can an applicant (being one of the seven or more persons with claims against one respondent) join in the proceeding other respondents in respect of whom some group members have claims and some do not? The answer is yes. [22] Cash Converters’ argument falls at the first hurdle. If the condition in s 33C(1)(a) is met by observing that 7 or more persons have claims against the same respondent (and sub-​paragraphs (b) and (c) are satisfied), that is the end of the enquiry. Cash Converters’ submission would require the Court to treat the condition in s 33C(1) for starting a representative proceeding where seven or more persons have a claim against one respondent as imposing an additional requirement that they cannot have a claim against anyone else, or treat it as though the condition reads that “a representative proceeding can only be begun where seven or more persons have claims against all defendants”. That is not what s 33C, or any other provision in Pt IVA, says or provides.

 [8.340] According to the Explanatory Note to the Courts and Crimes Legislation Further

Amendment Bill 2010 (NSW) which introduced Pt 10 of the CPA, the purpose behind s 158(2) was explained as follows:24 Proposed section 158(2) makes it clear that representative proceedings may be taken against several defendants even if not all group members have a claim against all defendants. The provision overcomes the view to the contrary expressed in relation to the operation of Part IVA of the Federal Court of Australia Act 1976 of the Commonwealth in Philip Morris (Australia) Ltd v Nixon [2000] FCA 229. 24

Explanatory Note, Courts and Crimes Legislation Further Amendment Bill 2010 (NSW) 4.

428 [8.340]

Class Actions in New South Wales  Chapter  8

The Explanatory Note supports the view that the legislature intended that s 158(2) operate to overcome the interpretation in Philip Morris, and adopt the position in Cash Converters, ensuring that group members are not required to have a claim against each defendant. However, in Fernandez v State of New South Wales [2019] NSWSC 255, Garling J concluded that the preferable interpretation of s 158(2) was “that it is not necessary for a plaintiff to have a claim personally against each [defendant] joined to the proceeding. What is necessary, in accordance with s 158 of the CPA, is that either a plaintiff or a group member has a claim against at least one of the [defendants]” (at [62]). As a result of the decision in Fernandez, a representative party in New South Wales is only required to have a claim against one defendant to bring representative proceedings under the CPA. This further relaxes the position expressed in Cash Converters and means that New South Wales differs from the position in the Federal Court, as well as the Courts in Queensland and Victoria which do not have equivalent wording to s 158(2) of the CPA in their class actions legislation. For a critique of the reasoning in Fernandez, see Legg M and Uptin L, “Representative Party Standing and Sub-​Groups in New South Wales Class Actions” (2019) 8 (2) Journal of Civil Litigation and Practice 71.

Same, similar or related circumstances

Zhang v Minister for Immigration [8.350]  Zhang v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384 FRENCH J at 404–​405 [Section 33C(1)(b)] contemplates a relationship between the circumstances of each claimant and specifies three sufficient relationships of widening ambit. … The outer limits of eligibility for participation in representative proceedings are defined by reference to claims in respect of or arising out of related circumstances. The word “related” suggests a connection wider than identity or similarity. In each case there is a threshold judgment on whether the similarities or relationships between circumstances giving rise to each claim are sufficient to merit their grouping as a representative proceeding. At the margins, these will be practical judgments informed by the policy and purpose of the legislation. At some point along the spectrum of possible classes of claim, the relationship between the circumstances of each claim will be incapable of definition at a sufficient level of particularity, or too tenuous or remote to attract the application of the legislation.

 [8.360] The “same, similar or related circumstances” requirement may be conceptualised

as representing a series of concentric circles with “same” being in the centre. “Similar” and then “related” involve greater degrees of difference between the claims of the seven or more persons who form the group membership.

Substantial common issue of law or fact

Wong v Silkfield [8.370]  Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48 GLEESON CJ, MCHUGH, GUMMOW, KIRBY and CALLINAN JJ [2]‌ … the appellants seek relief including a declaration that the respondent (“Silkfield”) has engaged in misleading and deceptive conduct in respect of the sale or proposed sale of lots in a residential [8.370]  429

Civil Procedure in New South Wales

Wong v Silkfield cont. building known as “the Phoenician North Tower” situated at Broadbeach in the State of Queensland, and an award of damages pursuant to s 82 of the Trade Practices Act. The building comprises 166 strata title lots and contracts for 124 of the residential lots were entered into by Silkfield through the agency of Skye Court Pty Ltd (“Skye”). [3]‌The Application states that it is brought by the appellants as a “representative party” and the group members to whom the proceeding relates are identified in para 4 of the Statement of Claim. They are all said to be persons who entered into contracts to purchase lots in the building from Silkfield, by or through the agency of Skye, prior to the date of registration of the plan in respect of the building and who were provided by Silkfield with a statement purportedly made pursuant to s 49 of the Building Units and Group Titles Act 1980 (Qld) (“the Building Units Act”). … The decision of the Full Court [19] In the Full Court, O’Loughlin and Drummond JJ emphasised that, whilst Pt IVA was introduced in response to Report No 46 of the Australian Law Reform Commission, Grouped Proceedings in the Federal Court, it did not adopt all the recommendations made by the Commission. In particular, their Honours emphasised that the requirement that the common issue be “substantial” was a departure made by the Parliament. Their Honours said: The imposition of this requirement demonstrates a clear intention on the part of the [P]‌arliament to restrict the wider availability of the representative procedure recommended by the [Australian] Law Reform Commission, the better to achieve the objectives of the new procedure. By rejecting the Commission’s proposal in this respect, [P]‌ arliament showed that it intended that a common issue would be justification for the use of the new procedure only where it was an issue with some special significance for the resolution of the claims of all the group members. It is by reference to the objectives of Pt IVA of the Act that we consider the evaluative judgment whether a common issue is a substantial one must be made. In our opinion, those objectives cannot be achieved unless determination of the issue or issues common to the claims of all group members is likely to have a major impact on the conduct and outcome of the litigation. (Emphasis added) [20] In the second reading speech of the Bill for the Federal Court of Australia Amendment Act 1991 (Cth), which introduced Pt IVA, the purposes of the Bill were identified as follows: The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant, each person’s loss is small and not economically viable to recover in individual actions. It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action. The second purpose of the Bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions. [21] With respect to this statement of purpose, O’Loughlin and Drummond JJ used the phrases “some special significance for the resolution of the claims” and “likely to have a major impact on the conduct and outcome of the litigation”. Later in their joint judgment their Honours gave two further formulations. They said: Determination of the issue may not necessarily result in resolution of the whole of the group members’ claims or even of an element of those claims such as the liability of the respondent 430 [8.370]

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Wong v Silkfield cont. to all. But where such an issue can be seen, in the circumstances of the particular case, to be a matter the resolution of which will have a major impact on the litigation because it is an issue at the core of the dispute between the respondent and each group member, then it can properly be described as being a “substantial” common issue. (Emphasis added) Their Honours concluded: In the present case, there is only one question, viz, that concerning the accuracy of the representations made in the common form s 49 statement given to all that is both a live issue and common to the claims of all group members, identified as well as unidentified. However, there is no reason to think that litigation of this common issue would be likely to resolve wholly or to any significant degree the claims of all group members. (Emphasis added) [22] The formulation advanced in this Court by Silkfield identifies the presence of a substantial common issue of law or fact, the resolution of which is “by reason of its dominance or other kind of importance for the claims of all group members, likely to have a major impact on settling the disputes of all group members”. It is submitted that, of its nature, this requirement “involves an evaluation of the relative significance of the putative common issue of law or fact”. [23] In his dissenting judgment in the Full Court, Foster J said: In my view, the word “substantial” indicates no more than that the common issue should not be a merely trivial one but should be of weight and significance. It need not be a “major” issue. Once its existence is demonstrated then the representative party, having otherwise complied with s 33C, is entitled to commence the representative proceedings. The fact that they may later be terminated by order of the [C]‌ourt is not to the point. [24] His Honour’s reference in the last sentence is to s 33N. … [25] An example of the application of s 33N is provided by the decision of French J in Zhang v Minister for Immigration. His Honour gave judgment by way of declaratory relief upon the common issue and then, pursuant to s 33N(1), ordered that the proceeding not continue as a representative proceeding under Pt IVA. Reference also may be made to the “safeguards” provided elsewhere in Pt IVA. For example, the Court may substitute for a representative party another group member (s 33T). It may, for the purpose of determining an issue which relates only to the claims of one member, permit that member to appear (s 33R). [26] At a stage when a question arises under these provisions, particularly s 33N, it is more likely that issues will have been clarified and, if there be pleadings, have been joined. One difficulty with the various formulations by the majority of the Full Court of the construction of para(c) of s 33C(1) is that they postulate the evaluation of the issues at a stage in litigation well beyond the threshold at which s 33C operates. That provision is concerned with the commencement, not subsequent conduct, of litigation using the procedures provided in Pt IVA. In terms, s 33C(1) looks to the claims made by seven or more persons against the same person, being claims which are in respect of, or arise out of, the same, similar or related circumstances, and asks whether claims so understood give rise to a substantial common issue of law or fact. How in the present case, to apply terms used by the majority in the Full Court, could one sensibly ask whether the issue with respect to the s 49 statements “can be seen, in the circumstances of [this] case, to be a matter the resolution of which will have a major impact on the litigation because it is an issue at the core of the dispute between [Silkfield] and each group member” so that it may properly be described as being a “substantial” common issue? “Substantial” common issue [27] The term “substantial” may have various shades of meaning. Having regard to the context, it may mean “large or weighty” or “real or of substance as distinct from ephemeral or nominal”. Some assistance for the present case may be derived from authorities construing provisions in the form of that rule considered in Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398. This [8.370]  431

Civil Procedure in New South Wales

Wong v Silkfield cont. rule provided for the commencement of proceedings by numerous persons having “the same interest in any proceeding”. In Carnie, Mason CJ, Deane and Dawson JJ expressed the view that to equate the meaning of the phrase “same interest” with a common ingredient in the cause of action by each member of the class might not adequately reflect the content of the statutory expression. Their Honours said that the expression may extend “to a significant common interest in the resolution of any question of law or fact arising in the relevant proceedings”. Brennan J and McHugh J were of opinion that a plaintiff and the represented persons had “the same interest” when they had a community of interest “in the determination of any substantial question of law or fact that arises in the proceedings”. Toohey and Gaudron JJ treated as sufficient “a significant question common to all members of the class”, to be determined by the grant of declaratory relief. [28] Clearly, the purpose of the enactment of Pt IVA was not to narrow access to the new form of representative proceedings beyond that which applied under regimes considered in cases such as Carnie. This suggests that, when used to identify the threshold requirements of s 33C(1), “substantial” does not indicate that which is “large” or “of special significance” or would “have a major impact on the … litigation” but, rather, is directed to issues which are “real or of substance”. [29] The circumstance that proceedings which pass the threshold requirement of s 33C may later be terminated as representative proceedings, by order made under s 33N, confirms rather than denies such a construction of s 33C(1). Further, as Foster J pointed out, the broadening provisions in subs (2) of s 33C emphasise the width of the entitlement conferred by s 33C(1) to commence a representative proceeding. [30] Foster J noted that the only issue of fact which could be common to all members of the postulated group, identified and unidentified, would be that raised in the statement of claim respecting the representation as to the accuracy of the s 49 statements. His Honour, like Spender J at first instance, regarded the identified common issue as “substantial” in the necessary sense. This was because the allegations involved were serious and significant and detrimental misrepresentations were claimed. It was not to the point that, in the final resolution of the litigation, this might not prove to be the “major” or “core” issue. It was not necessary to show that litigation of this common issue would be likely to resolve wholly, or to any significant degree, the claims of all group members. [31] The Statement of Claim alleged various misrepresentations made by Skye for the purposes of promoting sales of lots in the building, and consequent contraventions of s 52 of the Trade Practices Act. The issue respecting the s 49 certificates was but one of these matters. However, on the face of the Application and the Statement of Claim, the issue was one of substance. [32] Spender J correctly refused the declaration sought on the motion by Silkfield, and the Full Court erred in upholding the appeal and granting relief to Silkfield.

 Class action pleadings

Petrusevski v Bulldogs Rugby League Club [8.380]  Petrusevski v Bulldogs Rugby League Club Ltd [2003] FCA 61 SACKVILLE J [19] In determining what s 33H(1)(a) of the Federal Court Act requires, it is important to consider why it is necessary to describe or identify the group members in a representative proceeding. One reason, as the High Court observed in Wong v Silkfield, is to enable the Court to determine whether the requirements of s 33C have been satisfied. Unless the group member is adequately described or

432 [8.380]

Class Actions in New South Wales  Chapter  8

Petrusevski v Bulldogs Rugby League Club cont. identified (although not necessarily named or counted: s 33H(2)), it may be difficult to ascertain, for example, whether the claims of all the group members give rise to a substantial common issue of law or fact. [20] Another reason for describing or identifying group members is to enable group members to decide whether or not to opt out of the representative proceeding pursuant to s 33J(2) of the Federal Court Act. If a person who is a group member does not opt out of the proceedings he or she will be bound by the judgment. (Section 33ZB requires the judgment in a representative proceeding to “describe or otherwise identify the group members who will be affected by it” and provides that the judgment binds any such persons other than any person who has opted out.) The failure by a group member to opt out of representative proceedings may therefore be attended by serious consequences, although of course the litigation might also produce advantages for that group member. [21] These factors suggest that it must be possible for persons who may be within the represented group to ascertain from the pleadings whether they are in fact group members. The point was made by Hedigan J in Cook v Pasminco Ltd [2000] VSC 534, at [59], in relation to similar State legislation: It is beyond doubt that in a group proceeding the description of a group membership must be such so that it is at least possible to determine who falls within the group as described. Persons contemplated as being within the group would themselves not understand whether they were within it, unless the definition of the group is intelligible, although not necessarily exact. Members of the group are entitled to know what constitutes the essentials of the group. A decision concerning opt-​out cannot be sensibly made unless it is known what it is that is being opted out from. It follows from his Honour’s observations that a person must be able to ascertain from the description of the represented group whether he or she is a member of that group. [22] In Bray v F Hoffmann-​La Roche Ltd [2002] FCA 1405, Merkel J criticised a pleading which defined the represented group to include, in effect, all persons who, over a seven year period, had purchased certain vitamins in Australia. His Honour expressed the view (at [29]) that the definition did not adequately describe or identify the group members. As he asked rhetorically, to whom was notice to be given under s 33X of the Federal Court Act (which requires group members to be given notice of certain matters)? Merkel J’s approach supports the view that what constitutes an adequate description or an identification of the represented group for the purposes of s 33H(1)(a) of the Federal Court Act must be determined by reference to the other provisions of Pt IVA, in particular those concerned with the rights and duties of group members. [23] Clearly enough, not every description or identification of the represented group will satisfy the requirements of s 33H(1)(a) of the Federal Court Act. A useful, although not necessarily exhaustive test, is whether the description is such as to enable a person, with the assistance of a legal adviser if necessary, to ascertain whether he or she is a group member. If the description incorporates a reference to conduct alleged in the pleadings, a person or his or her adviser ought to be able, by reading the description and the relevant portion of the pleadings, to determine whether he or she is a member of the represented group. If a person cannot reasonably be expected to do this, the definition is unlikely to satisfy the requirements of s 33H(1)(a).

 [8.390] A group definition will meet the requirements of s  33H(1)(a) of the FCAA if it

contains “objective criteria by reference to which membership or non-​membership can be established”: Wright Rubber Products Pty Ltd v Bayer AG [2010] FCAFC 85 at [34].

[8.390]  433

Civil Procedure in New South Wales

Rodriguez & Sons v Queensland Bulk Water Supply Authority [8.392]  Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority [2014] NSWSC 1565 GARLING J [In January 2011, the Brisbane River and Bremer River (and their tributaries) flooded, causing substantial inundation to areas of south-​ east Queensland located downstream of the Wivenhoe Dam. That inundation caused significant damage to property, both real and personal, and significant interruption to businesses which operated in or throughout that area. A class action was commenced against Queensland Bulk Water Supply Authority t/​ a Seqwater, Sunwater Ltd, and the State of Queensland alleging negligence by them or their employees in the operation of the dam for the period from 1 December 2010 to 11 January 2011. In summary, the dam did not release sufficient water in a controlled manner so that it had capacity to receive the water from increased rainfall, meaning that the water had to be released from the dam at substantial rates of discharge. The defendants sought to strike out the plaintiff’s Statement of Claim based on r 14.28 of the UCPR (see Chapter 9).] [Garling J discussed the principles to be applied in considering whether a pleading is a sufficient pleading, and one which is not embarrassing or an abuse of process within the meaning of those phrases in r 14.28 of the UCPR.] [39] However, as this is a representative proceeding, the question of the sufficiency of a pleading, in the sense of being a pleading which is not liable to be struck out pursuant to r 14.28, has to be considered in light of the nature of a representative action and its purpose. [40] In Philip Morris (Australia) Ltd v Nixon [2000] FCA 229; (2000) 170 ALR 487, Sackville J, with whom Spender and Hill JJ agreed on this issue, made remarks which are appropriate here with respect to pleading in a representative action. His Honour’s remarks were formulated in the specific context of the legislation and procedural rules which applied to the Federal Court of Australia. However, I see no reason why his Honour’s remarks are not applicable to proceedings in this court of a representative kind. His Honour said: [131] The fact that pt IVA of the Federal Court Act preserves the ordinary rules of pleading in representative proceedings does not, however, necessarily mean that the applicant in such proceedings is bound to plead material facts specific to each individual member of the represented class. The principal functions of pleadings are to furnish a statement of the case sufficient to allow the opposing party a fair opportunity to meet it:



to define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial; and





to enable the opposing party to understand and assess the pleaded case for the purposes of settling the litigation …

[133] In the context of representative proceedings, it may be sufficient for the applicant to plead the case of each member of the represented class at a reasonably high level of generality. … [134] Unless the rules of pleading permit this degree of flexibility, serious inroads would be made into the utility of the representative procedure established by Part IVA of the Federal Court Act. … [135] … one of the key objectives of the representative procedure is to provide a genuine remedy where many people suffer small losses, but the total amount at stake may be large. To achieve this objective it may well be necessary and appropriate for the represented group to consist of a very large number of people… If the individual claims of each member of the represented group had to be pleaded by reference to specific dates and events, the representative procedure might well be rendered ineffective for the very kind of group claim it is intended to facilitate. [136] Whether proceedings at a relatively high level of generality are permissible will depend on the circumstances of the particular case and the stage it has reached. The facts 434 [8.392]

Class Actions in New South Wales  Chapter  8

Rodriguez & Sons v Queensland Bulk Water Supply Authority cont. material to the claims of each member of the represented group might not be necessary to ensure that the respondent adequately understands the case made on behalf of the represented class and has a fair opportunity to meet that case. This may be the position, for example, where representative proceedings are brought in order to provide a mechanism to enable one or more common issues of law or fact to be resolved in a manner that binds the respondent and all class members, rather than to determine finally the claims of each class member. See Federal Court Act ss 33Q, 33R … [The Court then considered a number of alleged deficiencies, including the following:] [42] Sunwater submitted that the pleading of the group members was defective because in order to enable duty and then the breach of duty to be properly understood and articulated, there needed to be specificity as to geography and time with respect to the group members. It was submitted that the pleading ought contain, conveniently by reference to a schedule if necessary, the street addresses of the land which suffered the inundation, the location of the personal property and the location of the businesses which were said to be interrupted by the flood. … [47] When the proceedings were first before the court on 15 August 2014, counsel for the plaintiff informed the court that there were approximately 4,500 members of the group. There is no reason to think that this number has substantially changed. [48] I do not accept these submissions of the defendants. In my view there is no basis for a submission that unless the pleading discloses all of the street addresses of the group members, it ought be struck out. [49] There may well be group members who do not ultimately prove that they suffered any damage. That is of the nature of representative actions. But that issue falls to be determined at a much later stage of the proceedings. [50] A common question which it is suggested will arise, and will need to be determined, is whether a duty of the kind pleaded is owed to all of the members of the class. The fact that there may be some members of the class of whom it can be said that no duty is owed, is a question largely of fact, which will be determined at a hearing. I do not accept that the precise facts need to be pleaded at this stage. The duty will be, in any amended statement of claim, pleaded sufficiently according to the pleading rules. [51] It is sufficient to allege a duty owed to a broad range of people including the group members. I see no difficulty in the defendants pleading to such an alleged duty. The salient features upon which the plaintiff relies to create the duty are clearly pleaded. Whether or not those salient features are accepted by the defendants is a matter they can address in their defence, and even if they all were, a duty arises which is a matter can be addressed in the defence [sic]. If there are particular features upon which the defendants wish to rely to argue that a duty is not owed, then no doubt those matters can be pleaded as well … [71] Senior counsel for Seqwater drew attention to the fact given that there were individual engineers on duty at different times throughout the six week period, that it was not possible for Seqwater to know whether the breaches which were alleged were ones for which they were responsible, they employing only two of the four engineers, unless the Statement of Claim descended to further particularity, namely, that it nominated the breaches by reference to each shift and each engineer. [72] I am not satisfied that requiring such level of specificity at this stage is necessary. In fact, requiring such level of specificity at this stage would result in a much more complex, much lengthier and much more prolix pleading. Such a pleading would not [conform] with the overriding of purpose of s 56 of the Civil Procedure Act 2005. In any event, such specificity is not required, in my view, before the stage where evidence is produced. [73] Seqwater also drew attention to the need for there to be greater precision with respect to the phrase “Greater Flooding” in the Statement of Claim. Seqwater correctly submitted that, even if they [8.392]  435

Civil Procedure in New South Wales

Rodriguez & Sons v Queensland Bulk Water Supply Authority cont. had acted without negligence in the circumstances which occurred, there would have been some inundation downstream of the Wivenhoe Dam. Seqwater pointed to the fact that the Statement of Claim was deficient because it did not in any rational way define by reference to either maps or other geographical description, where in truth the floodwater which had been caused by negligence had occurred, and had affected properties. [74] I think this is a fair criticism, and in any future amended statement of claim it will be necessary for there to be addressed with some specificity where it is said that the greater flooding occurred.



CASE MANAGEMENT AND CLASS ACTIONS [8.394] As Chapter  2 explains, case management is an important component of modern

civil litigation. The significance of case management is arguably magnified in relation to class actions which create their own particular complexities and difficulties due to the representative and group nature of the class action. In New South Wales, the need for case management was recognised by the Chief Justice who issued a revised Practice Note SC Gen 17 Supreme Court –​Representative Proceedings which is designed to facilitate management of class actions by providing for maximum flexibility and utilising case management conferences to promote discussion as to the best way to progress the matter. The use of case management conferences and the assignment of the same judge to manage the preparation of proceedings is a significant change from the usual NSW practice of directions hearings and case preparation being by a registrar or judge overseeing a list (see [2.100]). The Practice Note is set out at [8.396] and specifies matters to be dealt with at the initial case conference (such as whether the requirements to be able to commence a class action have been met, group definition, identification of common questions and pleading issues) and subsequent case conferences (opt-​out notices, discovery, expert and lay witnesses, the date of the hearing). Case management is also important as it may be utilised by the court to facilitate the use of the class action procedure rather than discontinuing the proceedings as a class action. Lindgren J, as part of a Full Federal Court in Bright v Femcare Ltd [2002] FCAFC 243 (see [8.420]), saw case management as a way in which the utility of a class action could be maximised, that is decide as many common issues as possible and then resolve individual or sub-​sets of issues as provided for by ss 168–​170 of the CPA (see [8.530]–​[8.560]) or discontinue the proceedings pursuant to s 166 of the CPA (see [8.410]). Case management may also be necessary to avoid numerous interlocutory applications challenging aspects of the class action.

Practice Note SC Gen 17 [8.396]  Practice Note SC Gen 17 Supreme Court –​Representative Proceedings Introduction Representative proceedings under Part 10 of the Civil Procedure Act 2005 (NSW) commonly described as class actions present complexities which are unique compared to other forms of civil and commercial litigation.

436 [8.394]

Class Actions in New South Wales  Chapter  8

Practice Note SC Gen 17 cont. This Practice Note is designed to facilitate the management of representative proceedings. There are a number of features which are designed to assist in their prompt and efficient resolution. … The proceedings will be assigned on their commencement to one of the judges on the panel of judges who will hear representative actions. …. Judges who are assigned to manage the proceedings will determine any common questions that may arise and give directions for the determination of the remaining questions. Representative proceedings will be managed by way of case conferences, which will be a more informal procedure than a directions hearing. This is designed to promote discussion between the parties and the judge to whom the proceedings are assigned with a view to exploring the best method of bringing the case to a hearing. The case conferences can, if appropriate, take place by video link or by telephone. General 3.1 Words and expressions in this Practice Note have the meanings given to them in Part 10 of the Act. 3.2 Subject to Part 10 of the Act, the Uniform Civil Procedure Rules 2005 (NSW) apply to representative proceedings. 3.3 The aim of this Practice Note is to facilitate the just, quick and cheap conduct of representative proceedings by ensuring that the issues in contest are identified at an early date and that representative proceedings are not unnecessarily delayed by interlocutory disputes. 3.4 The provisions of SC Gen 9, SC Gen 10, SC Gen 11, SC CL 5, SC CL 7, SC Eq 5 and SC Eq 11 will not apply save to the extent the judge managing particular proceedings orders to the contrary. This is to provide maximum flexibility in bringing the proceedings to trial and their prompt disposal at trial. 3.5 Any practitioner who anticipates problems in complying with any aspect of this Practice Note is to raise the matter with the Court as soon as practicable to comply with obligations imposed by the Civil Procedure Act 2005, s 56. … Assignment of proceedings 5.1 When the proceedings are commenced they will be assigned to a judge on the panel of the Division in which the proceedings are filed (the presiding judge). 5.2 The proceedings will be made returnable for an initial case conference before the presiding judge at 9:00am on the Wednesday after the expiration of 42 days from the filing of the originating process. Case conferences 6.1 Representative proceedings will be managed by the presiding judge. 6.2 There will be an initial case conference and subsequent case conferences at times determined by the presiding judge in consultation with the parties. The initial case conference 7.1 The parties should be in a position to deal to the extent possible with the following matters at the initial case conference: (a)

whether there is any dispute that the proceedings are representative proceedings for the purpose of Pt 10 of the Civil Procedure Act 2005;

(b)

any issue concerning the description of group members;

(c)

any issue concerning the identification of the common questions of fact or law in the originating process;

[8.396]  437

Civil Procedure in New South Wales

Practice Note SC Gen 17 cont. (d)

any other issues concerning the adequacy of the originating process;

(e)

a timetable for the service of defences, cross-​claims and further pleadings;

(f)

whether any security for costs will be sought and if so the amount, manner and timing of the provision of such security; and

(g)

any protocol for communication with unrepresented group members.

Subsequent case conferences and further interlocutory steps 8.1 It may not be possible to deal with all the matters referred to in par [7]‌above at the initial case conference. To the extent that it is not possible to do so, those matters will be dealt with at a subsequent case conference or conferences at a time or times fixed by the presiding judge after consultation with the parties. The following additional matters will be dealt with at subsequent case conferences: (a)

The date before which a group member may opt out of the proceedings (Civil Procedure Act 2005, s 162).

(b)

The form and content of the notice to group members advising of the commencement of the proceedings and their right to opt out of the proceedings before a specified date (Civil Procedure Act 2005, s 175) (the opt out notice).

(c)

The manner of publication and dispatch of the opt out notice.

(d)

The extent of discovery/​disclosure.

(e)

The steps necessary for the determination of the representative party’s claim and the common questions including:



(i)

the provision of witness statements; and



(ii)

the provision of expert evidence and the manner that such evidence will be taken.

(f)

Such further directions as may be necessary.

(g)

The date of the hearing. …

Interlocutory disputes 9.1 In the event that agreement cannot be reached on the matters referred to in pars [7]‌and [8] above or any other interlocutory matter at the case conferences, the presiding judge: (a)

after hearing from the parties may make such directions as he or she thinks appropriate; or

(b)

direct that a motion and to the extent necessary a supporting affidavit be filed in respect of the matters in dispute and fix a date for an interlocutory hearing on those matters.

Mediation 10.1 As a matter of general practice the proceedings will be referred to mediation at an appropriate time. The timing of that mediation and the identity of the mediator will be a matter for decision by the parties. In the event the parties are unable to agree on a mediator, the mediator will be selected by the presiding judge from persons nominated by the parties. Unless otherwise agreed or ordered the costs of the mediation will be borne by each party equally. … Issues remaining for the determination of the common questions 12. In the event there are any matters remaining following determination of the common questions, the presiding judge shall give direction as to the disposal of the remaining issues.



438 [8.396]

Class Actions in New South Wales  Chapter  8

DISCONTINUANCE AND SUBGROUPS Discontinuing a class action [8.400]  Discontinuance of a class action is dealt with by ss 164, 165 and 166 of the CPA

(based on ss  33L, 33M and 33N of the FCAA respectively). The experience in the Federal Court if transferred to New South Wales would mean that s 166 will be frequently invoked and the other provisions rarely relied on.

Civil Procedure Act 2005 (NSW) [8.410]  Civil Procedure Act 2005 (NSW) ss 164–​167 Section 164 Situation where fewer than 7 group members If, at any stage of representative proceedings, it appears likely to the Court that there are fewer than 7 group members, the Court may, on such conditions (if any) as it thinks fit: (a)

order that the proceedings continue under this Part, or

(b)

order that the proceedings no longer continue under this Part.

Section 165 Distribution costs excessive If: (a)

the relief claimed in representative proceedings is or includes payment of money to group members (otherwise than in respect of costs), and

(b)

on application by the defendant, the Court concludes that it is likely that, if judgment were to be given in favour of the representative party, the cost to the defendant of identifying the group members and distributing to them the amounts ordered to be paid to them would be excessive having regard to the likely total of those amounts,

the Court may, by order: (c)

direct that the proceedings no longer continue under this Part, or

(d)

stay the proceedings so far as it relates to relief of the kind mentioned in paragraph (a).

Section 166 Court may order discontinuance of proceedings in certain circumstances (1)

The Court may, on application by the defendant or of its own motion, order that proceedings no longer continue under this Part if it is satisfied that it is in the interests of justice to do so because:



(a)

the costs that would be incurred if the proceedings were to continue as representative proceedings are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding, or



(b)

all the relief sought can be obtained by means of proceedings other than representative proceedings under this Part, or



(c)

the representative proceedings will not provide an efficient and effective means of dealing with the claims of group members, or



(d)

a representative party is not able to adequately represent the interests of the group members, or



(e)

it is otherwise inappropriate that the claims be pursued by means of representative proceedings.

(2)

It is not, for the purposes of subsection (1)(e), inappropriate for claims to be pursued by means of representative proceedings merely because the persons identified as group members in relation to the proceedings: [8.410]  439

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont.

(a)

do not include all persons on whose behalf those proceedings might have been brought, or



(b)

are aggregated together for a particular purpose such as a litigation funding arrangement.

(3)

If the Court dismisses an application under this section, the Court may order that no further application under this section be made by the defendant except with the leave of the Court.

(4)

Leave for the purposes of subsection (3) may be granted subject to such conditions as to costs as the Court considers just.

Section 167 Effect of discontinuance order under this Part (1)

If the Court makes an order under section 164, 165 or 166 that proceedings no longer continue under this Part:



(a)

the proceedings may be continued as proceedings by the representative party on the party’s own behalf against the defendant, and



(b)

on the application of a person who was a group member for the purposes of the proceedings, the Court may order that the person be joined as an applicant in the proceedings.

(2)

In this section: applicant, in relation to proceedings, includes a claimant or plaintiff (as the case may be) in the proceedings.



Bright v Femcare [8.420]  Bright v Femcare Ltd (2002) 195 ALR 574; [2002] FCAFC 243 KIEFEL J [82] The applicant commenced these proceedings in 1999 as a representative of two groups of women pursuant to Pt IVA of the Federal Court Act 1976 (Cth) (“the Act”). Her Honour the primary Judge ordered, pursuant to s 33N of the Act, that the proceedings should no longer continue as a representative proceeding. Her Honour held that whilst there were some issues of substance common to the group members, their resolution in the applicant’s proceedings would not facilitate the determination of the other members’ claims to any significant extent. Further, in her Honour’s view, the costs of continuing the proceeding as a representative one were likely to exceed the costs if each claim were dealt with individually. THE STATEMENT OF CLAIM [83] The statement of claim (the fourth amended statement of claim) refers to “Group A” as women who became pregnant after undergoing a sterilisation procedure which involved the use of a Filshie clip and a Filshie applicator. The required result, occlusion of the fallopian tubes, is achieved by clamping a Filshie clip on each fallopian tube by means of the Filshie applicator. These products have been manufactured by the first respondent since 1982 and were distributed in Australia by the second respondent since November 1993. In each case it is alleged that the applicator was out of calibration and that caused the procedure to be ineffective. In this context “out of calibration” means that an applicator is not adjusted so that it will sufficiently close the Filshie clip and occlude the fallopian tube. “Group B” is made up of women who underwent the procedure at particular hospitals but who subsequently had further procedures to check the effectiveness of the first, or took other procedures or precautions to ensure that they would not conceive. The need to do so was said to have been brought about because of publicity concerning the effectiveness of the Filshie procedure. The 440 [8.420]

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Bright v Femcare cont. publicity raised questions as to whether applicators could be confirmed as having been in calibration. In each case it could not, and the group member was left in a state of uncertainty as to whether her operation was effective. [84] The facts pleaded as personal to the plaintiff show that she falls within Group A. The applicant alleges that she became pregnant following an operation in January 1998 in which the Filshie equipment was employed. There may therefore be a question as to whether she can represent Group B members. It may fairly be observed that the motions determined by her Honour and this appeal have focused upon the proceedings so far as they relate to Group A members, although the second respondent had raised a question about Group B. [85] The applicant alleges that obligations, on the part of the respondents, arose because of the likelihood of an applicator going out of calibration for any number of reasons, and because of the effect that might have upon the success of the procedure for the woman. The obligations were said to include those to warn users, hospitals and surgeons, of the risk just mentioned and of the need to have the applicator checked and serviced on a regular basis. These are referred to respectively as the “Calibration Risk Warning”, the “Regular Check Warning” and the “No Servicing Warning”. No such warnings were provided, although manuals and promotional material were provided from time to time. There were some warnings given about the need for checking and servicing from about 1994, but it is to be inferred that it is the applicant’s case that they were not sufficient. The respondents are alleged to have known that applicators were not regularly serviced because they were not presented to them for servicing. [86] The applicant alleges that if the Calibration Risk Warning had been given, the Filshie products may not have been sold. If the Regular Check and No Servicing Warnings were given, they would not have been used. It is alleged that the only safe and effective way to check calibration was immediately prior to use in surgery. There was however no “on site” gauge made available by the first respondent until 1999. What was needed was such a gauge and the warning to check calibration. The first respondent could have produced the gauge since 1982 but did not do so, it is alleged. The case therefore appears to describe the products as unsafe to use, absent the ability to check their calibration and a warning to do so. In this event the other warnings may be otiose. This approach is reinforced by the allegations of misrepresentation. It is alleged that the Filshie procedure was misrepresented as a safe and effective one, or that such misrepresentation is to be inferred, because it was promoted and sold without qualification. The provision of materials absent a warning is relied upon as conduct likely to mislead or deceive: s 52 Trade Practices Act 1974 (Cth) (“the TPA”). [87] So far as concerns the Group B members, it is alleged that in 1997 a number of procedures at the John Hunter Hospital failed and two applicators were found to be out of calibration. A safety alert was given by the second respondent in October 1998 to the effect that if an applicator had not been calibrated in a given period it should not be used. This is the beginning of the publicity relevant to Group B. [88] The issues which are alleged to be common to all group members are described, rather unhelpfully, in the following way in the statement of claim: [159] The claim gives rise to substantial common issues of law and fact including the issues raised by the allegations contained in each of para 9, para 10, para 15 to para 39, para 40, para 42 to para 45, para 47 to para 50, para 52 to para 55, para 60 to para 63, para 64 to para 67, para 94 to para 145, para 146(a), para 147, para 148, para 149, para 151, para 152, para 154, para 155, para 157 and para 158. … [128] As her Honour the primary Judge observed, a proceeding might satisfy the requirements of s 33C(1) but an order for its discontinuance as a representative proceeding nevertheless be appropriate under s 33N(1). In general terms the matters listed for the Court’s consideration under para (a) to para (c) of the latter subsection require consideration as to what would be achieved by a [8.420]  441

Civil Procedure in New South Wales

Bright v Femcare cont. determination of the proceedings in their present form and the costs of doing so. If there is some real benefit to be gained, the requirement that the proceedings be seen as an inefficient means of dealing with the claims might not be met. A consideration as to whether the proceedings would, or would not, provide an efficient means of dealing with the claims of group members would almost certainly involve an assessment of the findings which might be made in an applicant’s case and of the extent to which they would be likely to resolve the other claims. It does not seem to me that the subsection requires an audit to be conducted of the findings which might be useful, and those which might not be in the other claims. The enquiry required by the subsection is not whether the continuance of the representative proceeding can be seen to be efficient, but whether the Court is satisfied that it is in the interests of justice to order its discontinuance as a proceeding under Pt IVA for the reasons listed in para (a) to para (c) of s 33N(1). A Court may also order a discontinuance if it thinks it otherwise inappropriate for the claims to be pursued in that way (para (d)). … [135] Her Honour’s conclusions, that there were some common questions of substance, and that s 33C(1)(c) were satisfied, was however plainly correct. It is necessary to mention only a few of those questions. A substantial question, or questions, could be seen to arise from the allegation that an applicator which was out of calibration might affect the risk of a procedure failing and be the cause of its failure, as is alleged to have occurred in each case. Whether warnings were given and whether they were sufficient, were questions which would arise in all the claims, as would the question whether the respondents’ conduct, as particularised in the statement of claim, could amount to misleading and deceptive conduct. [136] It may therefore be concluded that the threshold requirements, for the commencement of a representative proceeding, have been met. Attention can then be directed to the enquiries under s 33N(1). A consideration as to how many common questions could be seen to arise from the applicant’s pleading would not seem to me to be particularly influential in that consideration, as I have earlier observed. More telling is what their resolution in the representative proceeding might mean for the other claims and how much evidence might be thereby made unnecessary. [137] There were some aspects of the evidence identified by her Honour as likely to be necessary in each case, but proof of which could not be said to involve a great deal. The manuals and promotional material relevant to the period in question fall into this category. Whether warnings were given might be thereby established. Whether other information might have been given in face-​to-​face meetings would not seem to me to have been established as likely by the respondents. If it is in some cases, that may be an additional feature of the evidence on the issue of causation, which the applicant accepts will be likely to require assessment in each case. [138] The applicant submits that the fact that causation may need to be proved in each case does not necessarily mean that the representative proceeding is an inefficient means for determining the other claims. There are other matters which may nevertheless be determined and be useful in the resolution of the claims. An analogy was drawn with cases where reliance must be proved individually. Questions of utility and efficiency will depend upon the nature and circumstances of a representative proceeding. In a case of misrepresentation, it may be thought that the nature of the misrepresentation itself might have something to say on the question of reliance, or that a determination as to the quality of the conduct in question was nevertheless of real benefit to the other claims. In any event, even though proof of causation might involve a considerable part of the evidence and substantial argument in each case, the possibility of other findings being useful is not foreclosed. It will be necessary to assess what might be provided by them. [139] It is not necessary to outline what may be necessary to be proved in connexion with causation. The respondents will seek to establish other possible causes. The surgeon in question may be called to give evidence regarding what was observed during and at the conclusion of the operation, if they are not joined. It might be sought to be shown that the particular applicator was not likely to be out of calibration, because of servicing and checks undertaken on the use to 442 [8.420]

Class Actions in New South Wales  Chapter  8

Bright v Femcare cont. which it was put. Much might depend upon how the applicant approaches proof of causation. The respondents submit that there is nothing to suggest that the cases will involve reference to the applicator in question. They have not been identified, and neither the applicant nor the group members appear to be able to show whether the particular instrument was out of adjustment. The respondents’ argument however assumes a method of proof. Having regard to the applicant’s expert report, the applicant’s case might seek to draw an inference about the state of the applicator by reference to its failure to occlude a tube or to remain in position. It may be necessary for the applicant to negate other possibilities, but that is not to say that the question whether an applicator was out of calibration will not arise. [140] The importance of the point the first respondent sought to make about whether the applicator would be raised as an issue in the proceedings is not relevant only to the question of causation. If the first respondent were correct it could also be said that there was no likelihood of a finding that an applicator being out of calibration posed the risk alleged. The first respondent could be taken to say that the state of an applicator was a false issue. A contention such as this must however be established at a factual level. That would involve a determination as to how the applicant’s case was to be established and such a finding was not sought. As I have said, the first respondent appears to have assumed the method by which the applicant’s case is to be proved, and the applicant’s expert’s report appears to suggest that a different approach may be taken. [141] I have considered whether the applicant should be taken to have had a sufficient opportunity to put evidence forward, at least to clarify how it will approach proof on this issue. Whilst complaints were made by the respondents as to the lack of identification of the applicator in question, I do not think it could be suggested that the matter was approached on the basis that the Court might make a finding on this issue and, in effect, determine the applicant’s prospects. I do not consider a Court would be likely to entertain such a request except in the clearest of cases. This is not such a case. [142] The issue which assumes importance in an assessment under s 33N(1)(c) is the threshold issue as to whether the claimed risk was present. The risk was that an applicator which was out of calibration, and therefore capable of affecting the failure of the operation, might be used. That risk is said to have eventuated in each case: (Chappel v Hart (1998) 195 CLR 232). [143] The prospect, that an applicator might go out of calibration to some unspecified extent, might not be controversial. I take this to be the concession made by the first respondent. Evidence may not therefore be necessary on this point. If it were, it would not seem likely to involve many witnesses. That would not however complete the assessment of the risk. What will certainly remain in issue is the possible consequences for a patient if an applicator is in that state. Whether an applicator could be so far out of calibration so as to be ineffective has only been accepted as a theoretical possibility by the first respondent. Its approach might be to postulate a critical point in the adjustment of the opening. This would not appear to be accepted by the applicant’s expert. [144] To the prospect of a finding concerning the existence of some risk is to be added a finding concerning the nature and extent of that risk. Evidence is likely to be called in aid of the assessment of the danger presented: Mercer v Commissioner for Road Transport and Tramways (NSW) (1936) 56 CLR 580, 601. The extent of any duty and what obligations, on the part of the respondents, arose in connexion with it, would be thereby determined. The evidence relating to that risk should be the same in each case. A determination in the applicant’s case might remove the need to establish the threshold issues in the other claims, or bring the claims to an end. [145] The question whether the respondents’ conduct qualifies as having been misleading and deceptive might also be of general application in each case. Findings in connexion with the risk will go some way towards determination of this question. In my respectful view it will not however be necessary to have regard to the position of individuals affected by the conduct in question, at least so far as concerns whether it contravenes s 52 TPA. In that connexion reference may be necessary to a class of persons to whom the conduct can be seen to be addressed, and a determination made as to a representative member of that class: Campomar Sociedad, Limitada & Anor v Nike International [8.420]  443

Civil Procedure in New South Wales

Bright v Femcare cont. Ltd & Anor (2000) 202 CLR 45, 85 [103]. Evidence in each case would not be necessary. I add that a determination as to whether there was any accessorial liability, on the part of the first respondent, would not add much, dependent as it is on the resolution of the principal issue. [146] The applicant also submitted that the legal question, concerning the measure of any damages where the result is the birth of a healthy child, provides a further example of the utility of the representative proceedings. In my view that under-​estimates the effect of rulings in other cases which, if not operating as precedent, operate as influential. For similar reasons I consider the applicant’s contention that it is better to determine any issue once, rather than sixty-​one times, to deny the practical effect upon litigants of a ruling in one case, or a few cases. [147] In my respectful view, the proceedings cannot at this point be considered to provide an inefficient method of determining the other claims, or at least that has not been shown to be the case. There is, I accept, considerable uncertainty as to how the applicant will go about proving risk and causation, but such an opinion is not sufficient for an order to be made under s 33N(1). At least for the present the prospect that the determination of questions concerning the existence and degree of any risk cannot be denied. Other aspects of the case will largely be determined by findings in those areas. [148] I have considered the difficulty posed by hospitals or surgeons, against whom the respondents might wish to cross-​claim, not being bound by a determination on these issues. This involves an assessment of the likelihood that they would seek to re-​litigate these issues as between them and the respondents concerning the equipment. It could not be assumed and, in my view, a clearer picture might emerge at the conclusion of the applicant’s case. The risk that they may do so does not deny some utility to a determination as between the present parties. [149] In my view the motion brought by the first respondent was premature, in the sense that it required a view of the evidence which is likely only to be gained after a hearing, or at least a hearing on those issues. If the trial Judge considers that the findings to be made have application to the other claims, appropriate determinations and orders can be made. The question whether to make an order of discontinuance under s 33N(1)(c) could be revisited at that point. If the findings are not useful in that way, and the applicant fails to establish the relevant risk and cause, such an order could be made at an earlier point and before other orders in the proceedings. LINDGREN J [18] The applications under s 33N were made at a procedurally early stage. Defences have not yet been filed. In substance, the applicant commenced a representative proceeding which ex hypothesi, the legislature intended she be entitled to commence because of the presence of substantial common issues of law and fact, yet the Court was immediately asked to accept that the proceeding would not provide an efficient and effective means of dealing with the claim of the Group Members. I do not mean to suggest that an application under s 33N at such an early stage of a properly commenced representative proceeding would always be premature: if there were an incompatibility or conflict between the representative party’s case and the cases of the represented parties (cf Tropical Shine Holdings Pty Ltd (t/​a KC Country) v Lake Gesture Pty Ltd (1993) 45 FCR 457 at 464) or if the only substantial common issue were one of law on which a decision in the case of one group member would bind the others, it may be thought not efficient or effective for the representative proceeding to continue. But ordinarily one would expect that, in an attempt to give effect to the legislative intention, a means will be sought, by case management techniques, to enable a representative proceeding to continue to the stage of resolution of the substantial common issues on the basis that after that stage is completed, an order under s 33N or directions under s 33Q will be made (cf the order made by French J in Zhang v Minister for Immigration, Local Government & Ethnic Affairs (1993) 45 FCR 384 at 403, 404, and the course followed by Stone J in Vasram v AMP Life Ltd [2000] FCA 1676 at [18]). … 444 [8.420]

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Bright v Femcare cont. Should an order be made under subs 33N(1)? … [74] Subs 33N(1) of the Act empowers the Court to order a discontinuance only if it is satisfied that it is in the interests of justice to do so on one or more of the grounds specified in para (a) to para (d) of the subsection. Unless the Court is so satisfied, the representative proceeding is to continue. Those grounds raise practical questions which require that the Pt IVA proceeding be compared with other proceedings that are available to the applicant and group members as a means of resolving their claims. What are the comparator proceedings here? Other proceedings all in the one court might be more efficient and effective than other proceedings in several courts. If the applicant and group members were all to bring, through the same solicitors, proceedings in the same court, filing fees on all but one proceeding might be waived and the court might order, with necessary adjustments and to the extent appropriate, that interlocutory steps and orders in one proceeding be deemed to have been taken and made in each of the others, and that the proceedings be heard together, the evidence in one, to the extent relevant, being evidence in each of the others. But counsel for the respondents could hardly submit that the evidence shows that individual proceedings in the one court would probably be brought and are therefore the appropriate comparator. They have, in fact, referred to proceedings in State courts at various levels in Queensland, New South Wales and Victoria. [75] I am not “satisfied” (to use the word in subs 33N(1)) that the proceedings to be compared with the present representative one under Pt IVA are anything other than individual proceedings in several courts brought by all the Group Members (numbering at least sixty-​one) not necessarily represented by the same solicitors. [76] In relation to the grounds referred to in subs 33N(1), I would have expected the parties to adduce evidence directed to establish in some detail the likely course and cost of the two kinds of proceeding required to be compared. They did not do so. One is left to speculate whether Dr Filshie will come from England to testify in all of the individual cases, and if so, why the respondents do not prefer the present representative proceeding to ordinary individual proceedings. Perhaps the parties’ omission is attributable, at least in part, to the applicant’s failure to “specify” common “questions” of law or fact as she was required to do by s 33H(1)(c), and to the early stage in the proceeding at which the respondents have applied under s 33N. [77] Senior counsel for the first respondent said that the substantial controversy will relate to the non-​common issues. But let it be assumed that in respect of the resolution of each woman’s claim, two thirds of the time to be spent will have to be devoted to issues unique to that claim and one third to issues which are common to all claims. Is it still not preferable that the common issues be heard and determined once so as to be binding as between each claimant and the respondents rather than many times? [78] As noted earlier, the respondents submit that once one descends to the non-​common issues, one will appreciate that the claims will very probably fail. Senior counsel refer to the difficulty which the respondents have had over a long period in extracting particulars of the individual claims. They also refer to evidence of actions brought in various other courts against the respondents, all of which have come to an end without payment of any compensation by either respondent to a plaintiff. [79] But, as also noted earlier, it is possible for the present Pt IVA proceeding to be managed by the Docket Judge in ways which will permit the respondents’ present submission, in relation to at least some of the individual claims, to be tested at an early time. The mechanism by which the non-​common issues are to be accommodated within the present Pt IVA proceeding will be a matter for the Docket Judge. One possibility would be for the applicant and the respondents to nominate a small number of Group Members’ claims, resolution of the non-​common issues in which would provide guidance to the parties as to how the Judge would be likely to decide the non-​common issues in the remainder (cf NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270 at [20]–​[22] –​not a proceeding under Pt IVA of the Act). The hearing and determination of the selected claims would also

[8.420]  445

Civil Procedure in New South Wales

Bright v Femcare cont. afford the occasion for the resolution of the common issues in the claims of all Group Members. Care would have to be taken in the formulation of directions under s 33Q of the Act and otherwise. [80] I am not satisfied that it is in the interests of justice that the proceeding at first instance should not continue under Pt IVA of the Act because of any of the matters referred to in para (a), para (c) or para (d) of subs 33N(1) of the Act.



Giles v Commonwealth of Australia [8.430]  Giles v Commonwealth of Australia [2014] NSWSC 83 GARLING J [In 1937, a farm and a school were established at Molong in New South Wales by the Fairbridge Society. It continued to operate until 1974. The plaintiffs alleged that there was systemic physical and sexual abuse perpetrated on the children by a significant number of staff and others at the Fairbridge Farm. They claimed that the defendants (the Commonwealth government, State government and the Fairbridge Foundation) were negligent and were liable in damages for the harm, physical and psychological, which they suffered from such abuse.] [103] The third matter identified in s 166(1)(c), which is to be considered, is whether the representative proceedings will not provide an efficient and effective means of dealing with the claims of the group members. If the court is satisfied that they do not, then the section provides that it would not be in the interests of justice to allow the proceedings to continue as representative proceedings. [104] As has been earlier recorded, the plaintiffs submit that having regard to the pleaded issue, the representative proceedings are manifestly an effective and efficient means of dealing with the claims. It will be recalled that a feature of the Second Amended Statement of Claim is that there was, during the relevant period at the Fairbridge Farm, alleged to have been an abusive environment. It is pleaded that as a consequence of this environment, the plaintiffs and group members who were resident at the Fairbridge Farm, were exposed to the behaviour of persons in an environment which permitted systemic misconduct, and allowed such abuse to occur. [105] Of this broad allegation, the Commonwealth submits: The defect in the [plaintiffs’] process of reasoning in this respect is to assume that proof of individual instances of abuse over a 31 year period will prove that each of the first and second plaintiff and the represented persons were subject to an abusive environment common to all. Even if the Court was satisfied that the environment in which the first or second plaintiff was subjected to over the period of their residence at Fairbridge was abusive, that would not constitute proof that each of the group members were also subjected to the same abusive environment. The fallacy in this argument is the assumption that proof of the environment to which the first or second plaintiff was subjected, is proof of a common environment to which the group members were subjected. [106] A similar submission is made by NSW. It said: The controversy broadly speaking is firstly as to whether each group member (the group comprising potentially over 800 members) resident at Fairbridge for periods ranging, it seems, from one year … to 13 years, were somehow abused and thereby suffered injury during their respective residences by one or more of the 68 alleged abusers identified to date. The group members’ case does not plead the relationship of each alleged perpetrator to the third defendant, nor specifically how the second defendant is said to be liable for their conduct. …

446 [8.430]

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Giles v Commonwealth of Australia cont. As far as the State of NSW is concerned, the basis on which it is alleged to be responsible for the alleged abuse remains unclear at present. … The controversy so far as the State is concerned appears to be whether, in its 34 years of connection with Fairbridge by way of licensing its continued operation through the various directors of Child Welfare, it failed somehow to fulfil some particular duty so as to avoid foreseeable injury to the various children in different periods within those 34 years. Assuming the gist of the action is one alleging the second defendant exposed the group members to an abusive environment as alleged, it is unclear how and why that is alleged to have occurred. [107] All defendants pointed to the lengthy period of time, variously 31 or 34 years, over which the Fairbridge Farm operated, the obvious changes in personnel on the staff of the school and on the farm, the obvious variations in the identity of each resident and length of stay of each resident at the Fairbridge Farm over that period, the large number of individuals alleged to be responsible for the abuse, and the absence of commonality in many respects of the claims made by the group members, including the plaintiffs. [108] These submissions concentrate on issues of difference, and issues of non-​commonality, which are said to be so significant that the proceedings ought not continue in their current form. [109] It is inevitable, when dealing with claims by multiple plaintiffs for damages for personal injury based on causes of action in tort, that there will be elements of those claims which are not common. The legislation acknowledges and gives effect to this proposition. Besides the provisions of s 166 of the Civil Procedure Act 2005 to which attention has been given, the provisions of ss 168, 169 and 170 all provide a mechanism which recognises that not all questions in all claims by all individual group members will be resolved in a single hearing. In particular, s 168(1) specifically contemplates the need for the court to give directions with respect to remaining outstanding questions. [110] Accordingly, when one is considering under s 166 of the Civil Procedure Act 2005 whether the representative proceedings will, or will not provide an efficient and effective means of dealing with the claims of group members, it needs to be borne in mind that there is no necessary expectation that the representative proceedings will deal with all claims of all group members through to finality although the claims of the plaintiff (or plaintiffs) may be so dealt with. It is a part of the legislative scheme for representative proceedings, that the court is entitled when it decides that it is appropriate so to do, to order that proceedings be continued individually, or else the individual questions be determined separately. A relatively recent example of this approach is to be found in Merck Sharp & Dohm (Aust) Pty Ltd v Peterson [2009] FCAFC 26. [111] The plaintiffs submitted that upon the basis of the pleadings and defences, there were a significant number of common questions of law and fact such as would justify the continuation of the proceedings as representative proceedings, at least at this point in time. [112] In particular, with respect to the legal issues referring to the existence of a duty on the Commonwealth and the State, the plaintiffs submitted that having regard to the pleaded basis for the existence of the duty, including the nature and content of the duty, an identical duty must arise for each member of the group who was an immigrant from the United Kingdom. [113] As well, the plaintiffs submitted that the nominated common questions of mixed fact and law relating to the third defendant, the Fairbridge Foundation and its role and function with respect to the Fairbridge Farm, would all arise in the context of any claim made against the Fairbridge Foundation by any group member. [114] With respect to the common questions of fact set out in Annex B to the Second Amended Statement of Claim, the plaintiffs submitted that as those questions demonstrated, the allegations of breach of duty involve systemic failures by the three defendants. The plaintiffs submit that rather than these failures existing on a different basis for each plaintiff and group member, the evidence about and findings which they seek this court make, must be common.

[8.430]  447

Civil Procedure in New South Wales

Giles v Commonwealth of Australia cont. [115] Finally, the plaintiffs point to matters raised in the pleaded defences which they submit are matters of substance and which must necessarily be common to all claims. These matters include: (a)

whether the contemporaneous mores and culture of the time permitted corporal and other punishment of children of the kind, speaking generally, which was administered; and

(b)

whether the resources available to the defendants enabled them to conduct themselves differently from the ways which the plaintiffs claim they did, or else should have done.

[116] The defendants challenged these identified common issues, largely by submitting that whilst such issues may appear to have some degree of commonality, given that each individual claimant in a tortiously based claim needs to establish that the duty is owed to them individually and that any breach is a breach of that individual duty, then the real likelihood was that there would not in truth be such commonality of fact or law. The defendants drew attention to the length of time covered by the allegations in the plaintiff’s claim. [117] The defendants in particular challenged the notion of an “abusive environment” to which considerable attention is devoted in the Second Further Amended Statement of Claim. The defendants submitted that the proof that such an environment existed could not be a relevant fact in the causes of action alleged. I have earlier referred to their submissions to this effect. [118] It is not appropriate on this motion to reach a concluded view on whether the plaintiffs would be entitled to prove the existence of such an environment. However, it is appropriate that I note that I am not persuaded that the proof of such an environment as is pleaded would be wholly irrelevant to the determination of the issues joined between the parties. If permitted into evidence at any hearing, the “environment” would seem to be common to a number of the plaintiffs and group members. Whether this will ultimately be so, can only be determined by the trial Judge. [119] Against this review of the pleaded issues, and the submissions of the parties, it is necessary to identify the authorities and resolve the arguments, and to examine, also by reference to s 166(1) (e), whether it is otherwise inappropriate for the claims to be pursued by means of representative proceedings. [The Court considered Bright v Femcare Ltd [2002] FCAFC 243, as the reasoning in the decision in relation to similar provisions was found to be applicable to the NSW provisions.] … [129] The context, size and range of the representative proceedings need first to be considered as it provides the extent within which the discretion is to be exercised. [130] In addition to the two named plaintiffs, by a letter of particulars dated 26 August 2011, the solicitors for the plaintiffs provided the names of a further 65 individuals who would be group members. The earliest point in time at which one of these group members attended at the Fairbridge Farm was in 1938. The latest in point of time was 1971. The solicitors for the plaintiffs have also indicated that they act for a further three individuals who were not then named as being group members. [131] The overall period covered by the operation of the Fairbridge Farm is about 34 years. It is undoubted that over that time there will have been different staff members, although some will have remained for significant periods. But it is also clear that some staff members will be the subject of allegations made by more than one of the group members. The particulars provided that 68 individuals are pointed to as being perpetrators of the abuse. [132] From the pleadings, it is clear that there are some complex questions of law surrounding the existence of a duty of care by each of the defendants. This requires an analysis of legislation in respect of the first and second defendants, the inter-​governmental agreement in respect of the Commonwealth and a variety of documents, including licensing documents, so as to enable an identification of who, in truth, was in control of the affairs of the Fairbridge Farm.

448 [8.430]

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Giles v Commonwealth of Australia cont. [133] Given that each of the plaintiffs falls within an identified group, namely, children who attended at the school, and were resident on the Fairbridge Farm, the issue of the nature and content of any duty of care on the part of each defendant, and how it arises is most likely to be identical with respect to each member of that group. [134] The contention advanced, at least by the first and second defendants, with respect to why a duty is not owed, also equally applied to all members of the group as well as the plaintiffs themselves. This question of duty of care is a matter of substance which at this stage appears to be a common question which would require findings of fact and determination of questions of law. [135] In considering whether or not a duty exists, and if so, whether in respect of either plaintiff, any defendant has breached that duty, a central question will arise to which the parties have not specifically adverted, which is whether, having regard to the provisions of s 3B of the Civil Liability Act 2002, and in light of the nature of the claims made in the pleadings, the Civil Liability Act applies to the claims made. [136] If that Act applies, ss 5B and 5D involve considerations which are likely to involve factual findings applicable to the claims of the plaintiffs and all group members, such as: (a)

the actual or constructive knowledge of each defendant of the relevant risk of harm;

(b)

the social utility of the relevant activity, namely, the undertaking of the Fairbridge Farm;

(c)

what reasonable community standards were, at the relevant time, particularly with respect to the administration of corporal punishment.

[137] Similarly, the pleading by the Commonwealth raises a substantial common issue, namely that it was not negligent “… having regard to the social and cultural standards of the time …” including what standards of behaviour were “… socially and morally acceptable …”. [138] As earlier noted, in addition to the two plaintiffs, their solicitors are presently aware of a further 65 group members, and the potential size of the entire group may well be in the many hundreds. If the court was to hear each of these cases as individual cases, the call upon the court’s resources would be very significant. The call upon such witnesses as are available to the defendants would also be significant. They may have to give similar evidence many times over, because there is a very real likelihood that the same witnesses would be called upon to give similar evidence in each individual case. … [143] Ultimately, it is a question, in light of the foregoing and all of the submissions of the parties, of whether the court is satisfied that it is in the interests of justice to order that the proceedings no longer continue as representative proceedings under Pt 10 of the Civil Procedure Act 2005, having regard to the provisions of the various subsections in s 166 of the Civil Procedure Act 2005. [144] I am not so satisfied. On the contrary, as things presently appear, at this stage of the proceedings, I am satisfied that the most efficient and cost effective method of disposition of these claims is by a representative proceeding as it is presently constituted.



Multiplex Funds Management v P Dawson Nominees [8.440]  Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200 [P Dawson Nominees Pty Limited commenced a class action against Multiplex Limited and Multiplex Funds Management Limited (together Multiplex) on behalf of about 40 corporations who alleged that they suffered loss as a result of the Multiplex parties’ failure to disclose delays and increased costs in the construction of the Wembley Stadium in the United Kingdom. [8.440]  449

Civil Procedure in New South Wales

Multiplex Funds Management v P Dawson Nominees cont. The represented group was defined, inter alia, on the basis that they “had as at the commencement of the … proceeding entered a litigation funding agreement with International Litigation Funding Partners, Inc (ILF)”. The funding agreement contained provisions that the funded parties would not be liable for any fees, costs or disbursements as they were to be paid by ILF. However, if the proceedings were successful by way of judgment or settlement the funded parties agreed that the sum received would be used to (1) reimburse ILF for the costs and disbursements of the action, (2) pay ILF 30–​40% of the recovery, and (3) the remainder to be shared among the group. The funding agreement terminated if a funded party settled their claim or opts out of the proceedings but the funded party would still be liable to apply any payment received as if the agreement was still on foot. The Respondents sought to strike out the class action by relying on s 33N(1) of the FCAA. The Respondents also contended that the group definition amounted to an opt-​in approach contrary to the opt-​out nature of Pt IVA of the FCAA and that the litigation funding agreement imposed a fetter upon the ability to opt-​out contrary to s 33J.] JACOBSON J [125] In Bright v Femcare at [74], Lindgren J considered that a comparison was required between the Pt IVA proceedings and other proceedings that are available. Kiefel J did not specifically address that question, but it follows from what her Honour said at [128]–​[130] that, at least in relation to s 33N(1)(c) and (d), wider considerations may inform the exercise of the power. [126] Section 33N(1)(a) and (b) call in express terms for a comparison of the costs that would be incurred, and the relief that can be obtained, in other proceedings. However, no such comparison is expressly contemplated by the language of s 33N(1)(c) or (d). [127] Section 33N(1) confers power to make an order of discontinuance of the proceeding under Pt IVA. Implicit in this is that the Court will consider whether it is in the interests of justice that the proceeding be determined as a non-​representative action, or as a number of such actions. Indeed, s 33P provides for that consequence. [128] Thus, s 33N(1) envisages that the Court will engage in a comparison between how the factors specified in grounds (a) to (d) apply to the existing representative proceeding and how they would apply to a hypothetical non-​representative proceeding. This is explicit in grounds (a) and (b). It is implicit in grounds (c) and (d). [129] But it does not follow that the weighing exercise involved, in particular, in grounds (c) and (d), will always entail detailed evidence of the likely course or form, of the comparator proceeding. I do not consider that the remarks of Lindgren J at [76] in Bright v Femcare were intended to state an invariable rule of practice. [130] The considerations applicable to grounds (c) and (d) will vary greatly, depending upon the facts and the form of each representative proceeding. It is plain from what Kiefel J said in Bright v Femcare at [128]–​[130] that in considering the “inefficiency” or “inappropriateness” grounds, the Court will focus more closely on matters such as the commonality and non-​communality of issues raised in the representative proceeding, as well as the purpose of that proceeding. See also Wong at [33], citing the observations of Spender J at first instance. [131] In my view, nothing in the language or context of s 33N(1) requires the Court, as a necessary pre-​condition to the exercise of the power in s 33N(1)(c) or (d), to give detailed consideration to the likely course of the comparator proceeding. It may be that in some cases the inefficiency or inappropriateness of the claims as a representative proceeding will be so great that the only possible order is to “de-​class” the proceeding and permit it to proceed as a separate action or a series of separate actions. [132] Section 33N(1)(c) calls for a consideration of the efficiency and effectiveness of the representative proceeding as a means of dealing with the claims. So too, s 33N(1)(d) calls for 450 [8.440]

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Multiplex Funds Management v P Dawson Nominees cont. consideration of the appropriateness of “a representative proceeding”, as a vehicle by which the claims are to be pursued. [133] The focus therefore of both of those grounds is “the claims” of the group members. What is required to enliven those grounds is a consideration of the efficiency or appropriateness of the claims in the existing representative proceeding. The enquiry is a wide one as was explained by Kiefel J in Bright v Femcare at [128] and [130]. LINDGREN J [13] Paragraphs (a) and (b) of s 33N(1) expressly call for a comparison between the particular Pt IVA proceeding and a non-​Pt IVA proceeding. Paragraph (c) invites but does not compel a comparison between the particular Pt IVA proceeding and any other proceeding, including any under Pt IVA, by which the claims may be pursued. Paragraph (d) does not require, although it does not prohibit, a comparison between the particular Pt IVA proceeding and non-​Pt IVA proceedings by which the claims may be pursued. Paragraph (d) does not, however, permit a comparison between the particular Pt IVA proceeding and some other hypothetical proceeding under Pt IVA. This last proposition arises from the use of the indefinite article “a” rather than the definite article “the”. [14] In my view, since the Multiplex parties accept that it is appropriate that the claims be pursued by means of a Pt IVA proceeding, their attack on the definition of the group is to be assessed under para (c), not para (d), of s 33N(1). [15] Inappropriateness of the present Pt IVA proceeding within s 33N(1)(d) is not established merely by pointing to a hypothetical different Pt IVA proceeding that the Court may consider “more appropriate”. Paragraph (c) directs attention to the particular proceeding under Pt IVA that is on foot, whereas para (d) directs attention to the group members’ claims and poses the question whether it is appropriate that they be pursued by a proceeding under Pt IVA at all.

 [8.450]  Jacobson J in Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd [2007]

FCAFC 200 also rejected an approach to the statutory construction of s 33N of the FCAA that would determine the meaning of “inappropriate” by reference to “policy considerations that are not expressed or apparent from the language and scheme of Pt IVA”, or that would “graft onto the legislation a rule prohibiting a class defined by criteria otherwise within the language of the Act”.25 Section 33N(1)(d) is not a ground for discontinuance that is completely at large, rather it is circumscribed by the objectives and requirements of the legislation. Adequacy of representation [8.470]  Section  166(1)(d) of the CPA adds an additional ground for discontinuing a class

action compared to the Federal Court-​equivalent FCAA s  33N  –​namely, a representative party is not able to adequately represent the interests of the group members. The requirement for adequacy of representation has its origins in the representative action26 and in the US class action procedure.27 In Templeton v Leviathan Pty Ltd (1921) 30 CLR 34 at 76, Starke J said

25 26 27

Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 at [118], [120]. See also [1]‌per French J and [11] per Lindgren J. See Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398 at 408 (Brennan J); Oasis Fund Management Ltd v Royal Bank of Scotland Nv [2010] NSWSC 584 at [17]. Legg M, “Judge’s Role in Settlement of Representative Proceedings: Lessons from United States Class Actions” (2004) 78 Australian Law Journal 58. [8.470]  451

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that, “[i]‌t was no doubt the duty of the Court in such suits to see that the absent interests were fairly and honestly represented”. An inadequate representative has been held to be someone whose interests are not aligned with the group members’ interests due to conflicts of interest or they “prove to be an indolent or incompetent champion of the common cause in the courtroom”: Carnie v Esanda Finance Corp Ltd (1995) 182 CLR 398.

Hassid v Queensland Bulk Water Supply Authority [8.475]  Hassid v Queensland Bulk Water Supply Authority t/​as Seqwater (No 2) [2017] NSWSC 1064 Beech-​Jones  J [Hassid commenced representative proceedings seeking damages on behalf of an open class in respect of various forms of damage, other than personal injury, said to have been suffered during flooding of the greater Brisbane area in January 2011 as a result of the allegedly negligent operation of the Somerset and Wivenhoe dams. The proceedings were commenced on 9 January 2017. It was likely that the six-​year limitation period provided for by s 10(1) of the Limitation of Actions Act 1974 (Qld) expired the next day or shortly afterwards. At the time, these proceedings were commenced, the Rodriguez proceedings that were commenced in July 2014 had been on foot for a number of years, and were due to be heard in October 2017. The Hassid proceedings were commenced because the Rodriguez proceedings amended its group definition in February 2016 to delete claims for pure economic loss. The pleadings filed in the Hassid proceedings were almost identical to the Statement of Claim in the Rodriguez proceedings except that they pursued pure economic loss. However efforts to obtain a litigation funder were unsuccessful, the plaintiffs did not file their evidence by the date ordered, and the agreed security for costs was not provided. On 23 June 2017, the plaintiffs’ solicitor advised the Court that the order for security had not been complied with, but that attempts to obtain funding or some form of insurance policy to meet the obligation to provide security, were continuing. The failure to provide security meant the proceedings were stayed. The defendants filed motions to dismiss the proceedings. The principal relief sought by the defendants’ motions was that these proceedings, including all of the claims of group members, be dismissed or permanently stayed. Various bases were put forward but they all arise out of the failure of the representative party, namely, the Hassids, to properly prosecute the proceedings, specifically, their failure to provide their affidavit evidence in accordance with the directions, comply with other procedural directions and most importantly to provide the agreed security. The State of Queensland also contended that, in the alternative, the Court should order under s 166(1) of the Civil Procedure Act 2005 (NSW) that the proceedings no longer continue as a representative action because the relevant representative party was “not able to adequately represent the interests of group members” (Civil Procedure Act 2005 (NSW) s 166(1)(e)).] [22]

… the critical point to note is that it must or should have been apparent to all that once these proceedings were commenced, they had to be conducted with expedition given their relationship to the Rodriguez proceedings. As at January 2017, it was well-​known that the Rodriquez proceedings were well advanced and due to be heard sometime this year. There was, and is, no realistic prospect of this Court conducting two separate hearings into the same flood given the resources required of the Court and the parties and the risk of inconsistent judgments. This was effectively conceded by the plaintiffs at the first directions hearing when their Senior Counsel embraced the proposition that these proceedings should be heard with the Rodriguez proceedings.

[23]

Despite this, these proceedings were not conducted expeditiously. The statement of claim was not served quickly, opt out notices were not finalised, procedural directions were not complied with and, ultimately, the proceedings were stayed when an agreed amount of security could not be provided. In these circumstances I have no doubt that, at the very least, s 183 of the

452 [8.475]

Class Actions in New South Wales  Chapter  8

Hassid v Queensland Bulk Water Supply Authority cont. Civil Procedure Act empowers the Court to dismiss the proceedings, including the claims of group members (see Lam v Rolls Royce PLC (No 5) [2016] NSWSC 1332). [24]

However, I will not take that course. Given the width of the description of the represented group in these proceedings and the fact that opt out notices have not been sent, it is very likely that many if not most group members are not aware that these proceedings have been brought on their behalf. In those circumstances, it would be unjust for them to have any rights that they may have to bring a claim extinguished because the person that just happened to bring the proceedings proved unable to prosecute them properly.

[25]

On the other hand, the potential injustice that the defendants might have to face effectively the same action brought by a different representative party, is largely ameliorated by the fact that any fresh action is most likely to be statute barred. In those circumstances, I consider the preferable course is to make an order under ss 166(1) of the Civil Procedure Act …

[26]

There is no doubt that ss 166(1)(e) has been demonstrated by the various defaults which I have described.

[27]

I am aware that making this order is likely to lead to many group members’ claims becoming statute barred as any suspension of the running of the limitation period effected by s 182 of the Civil Procedure Act will be lifted. However, the alternative is to leave group members’ claims suspended in a stayed class action or dismiss their claims outright. To take either course would be unfair to any group member who for any reason whatsoever may be able to bring a claim outside the six year limitation period and any person who opted out of the Rodriguez proceedings to participate in these proceedings who wishes to apply to undo that step, assuming that is possible.

 [8.480]  New South Wales also deals with adequacy of representation through s 171 of the

CPA which is based on s 33T of the FCAA which provides that if, on application by a group member, it appears to the Court that a representative party is not able to adequately represent group members, the Court may substitute another group member as the representative party. Sub-​groups and individual issues

Civil Procedure Act 2005 (NSW) [8.530]  Civil Procedure Act 2005 (NSW) s 168 Section 168 of the CPA, based on s 33Q of the FCAA, deals with non-​common issues and the use of sub-​groups. Section 168 (1)

If it appears to the Court that determination of the issue or issues common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining issues.

(2)

In the case of issues common to the claims of some only of the group members, the directions given by the Court may include directions establishing a sub-​group consisting of those group members and appointing a person to be the sub-​group representative party on behalf of the sub-​group members.

 [8.530]  453

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) [8.550]  Civil Procedure Act 2005 (NSW) s 169 Section 169 of the CPA, based on s 33R of the FCAA, addresses the determination of individual issues. Section 169 (1)

In giving directions under section 168, the Court may permit an individual group member to appear in the proceeding for the purpose of determining an issue that relates only to the claims of that member.

(2)

In such a case, the individual group member, and not the representative party, is liable for costs associated with the determination of the issue.

 [8.560] Section  170 of the CPA, based on s  33S of the FCAA, allows the Court to give

directions relating to the commencement and conduct of a separate individual proceeding or a separate class action proceedings.

Class Actions in Australia: (Still) a Work in Progress [8.570] S S Clark and C Harris, “Class Actions in Australia: (Still) a Work in Progress” (2008) 31 Australian Bar Review 63 [footnotes omitted] The Australian rules, unlike those in the United States, expressly allow for the determination of “sub-​group” or even individual issues as part of a class action. This has meant that Australian courts have generally declined to discontinue a class action simply because it is more properly described as a mass of individual claims with some common connections. The classic example of this type of action is one involving a drug or medical device. In the United States, courts have been reluctant to allow such actions to proceed as class actions given the unique issues of causation usually raised by individual class members. However, some of the persons involved in the development of class actions in the Federal Court expressly intended an action of this nature to proceed as a class action. As a consequence, an Australian applicant can commence a class action claiming damages for injuries allegedly suffered as a result of their use or exposure to an allegedly defective drug or medical device notwithstanding the fact that there will be a myriad of individual facts and circumstances that must be taken into account before any individual group member can be found to be entitled to recover damages –​let alone determining the quantum of those damages. The courts are yet to resolve how this might be achieved in practice. To date there has only been one instance of a class action involving a drug or medical device that has been pursued to judgment [Courtney v Medtel Pty Ltd (2003) 126 FCR 219]. In that case, Justice Sackville of the Federal Court heard the case of the group applicant, Mr Courtney, and delivered judgment awarding Mr Courtney $9988 in compensation. At the conclusion of the appeal process, the parties faced the prospect of determining the claims –​ both in terms of liability and quantum –​of a further 1047 group members (this was reduced to 482 after opt outs and individual settlements), albeit with some common issues of fact and law having been determined. While the parties in Courtney ultimately reached a global settlement that resolved all outstanding claims, sooner or later, a court will be confronted with the prospect of having to determine a significant number of individual claims involving complex issues. It remains to be seen how that will be done.



454 [8.550]

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GROUP DEFINITION AND THE RIGHT TO OPT-​OUT [8.580]  There are three options for establishing the group in a class action. These are:28

• the opt-​out model which is commenced without the express consent of the absent class members. All those entities that fall within the group definition are automatically part of the class action but the members are subsequently afforded an opportunity to exclude themselves from the proceedings. In Australia, the opt-​out model is also referred to as an open class; • the opt-​in model which may be commenced by an applicant alone or on behalf of a group but involves notices being sent to potential group members asking them to participate in the class action by giving their consent to inclusion; and • the defined-​class model, determined by way of a limited group, or a closed class. This approach involves a class action being commenced on behalf of a group specifically created for, and prior to, the commencement of the class action. Right to opt-​out [8.590]  Traditionally, the debate over group definition has been between the “opt-​out” and

“opt-​in” approaches.29 In New South Wales, ss 159 and 162 of the CPA adopt an opt-​out procedure for group members to inform the court that they do not wish to be part of the proceedings. Section 159(1) states that the consent of a person to be a group member is not required. Section 159(2) creates an exception to that position for government entities and related persons such as Ministers. An example of such an exception is Richmond Valley Council v Jardine Lloyd Thompson Pty Ltd [2019] NSWSC 126 where local councils were required to consent to their inclusion in the class action.

Civil Procedure Act 2005 (NSW) [8.600]  Civil Procedure Act 2005 (NSW) s 162 Section 162 (1)

The Court must fix a date before which a group member may opt out of representative proceedings in the Court.

(2)

A group member may opt out of the representative proceedings by written notice given under the local rules before the date so fixed.

(3)

The Court may, on application by a group member, the representative party or the defendant in the proceedings, fix another date so as to extend the period during which a group member may opt out of the representative proceedings.

(4)

Except with the leave of the Court, the hearing of representative proceedings must not commence earlier than the date before which a group member may opt out of the proceedings.

 28

29

Legg M, “Funding a Class Action through Limiting the Group: What Does Pt IVA of the Federal Court of Australia Act 1976 (Cth) Permit?” (2010) 33 Australian Bar Review 17 at 18. See also Mulheron R, The Class Action in Common Law Legal Systems: A Comparative Perspective (Hart Publishing, 2004) pp 29–​38. See, eg, Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No 46 (1988) [98]–​[130]. [8.600]  455

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[8.610] The merits of the opt-​out class action have been extensively discussed around the

world,30 including in relation to the Federal Court class action.

Reconciling Litigation Funding and the Opt Out Group Definition in Federal Court of Australia Class Actions [8.620]  M Legg, “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 [footnotes omitted] The opt out class action was chosen because it promotes access to justice as group members who cannot be identified at the outset or who are unable to affirmatively participate due to social or economic barriers, are not excluded from the legal system and a potential remedy. The opt out class action also results in the efficient use of judicial resources as one proceeding instead of many are processed by the Court system and all group members are bound by the outcome unless they affirmatively opt out. In a successful class action all members of the group are entitled to any recovery and in an unsuccessful class action the respondent is freed from any future claims from the members of the class. The opt out class [action’s] advancement of access to justice and efficiency does have some limitations that should be noted. Group members who opt out are free to pursue their individual actions. This leads to multiple proceedings. However, the group members who opt out become known. In contrast, an opt in procedure raises the possibility of multiple class actions as well as multiple individual actions as the universe of possible applicants is not captured by the class action. Even under an opt out procedure, if a class action is successful, group members must come forward at some point to establish membership of the group and to collect their share of the proceeds, unless the remedy sought is solely declaratory or injunctive. Consequently a court managing an opt out class action may need to “close the class” at some point to be able to deal with any individual issues, administer the remedy obtained and resolve the litigation once and for all. Group members who do not come forward may be unable to participate in any remedy.

 The closed class [8.630]  The issue of group definition was enlivened with the advent of litigation funding (see

[8.1010]). Litigation funders, as repeat players in the class action arena, set about advocating changes to class action procedure that promoted their business model. Specifically, the use of the opt-​in model, which was unsuccessful,31 and then the use of a “closed class” method of group definition. The closed class approach was favoured by litigation funders because it allowed them to require each group member to accept the terms of their funding agreement thereby eliminating the so called “free-​riders”.32

30

31 32

Kaplan B, “Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I)” (1967) 81 Harvard Law Review 356; Mulheron R, “Justice Enhanced: Framing an Opt-​Out Class Action for England” (2007) 70(4) Modern Law Review 550. Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394. 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(1) Civil Justice Quarterly 52 at 53.

456 [8.610]

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An example of a closed class is provided by Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority [2014] NSWSC 1565 which describes the group definition as follows: [22] As I have earlier indicated, it relates to people who had an interest in land who suffered loss when their land was inundated or else whose use and enjoyment of that interest was interfered with by inundation of that or other land, people who owned personal property which was destroyed by the inundation and people who conducted businesses or enterprises which were affected adversely by the flood waters. [23] As well, the class is what is described as a “closed class” because, in order to be a member of the class, each person had to have entered into a litigation funding agreement as at the date of the commencement of the proceedings, or else have been indemnified by an insurer which had entered into a litigation funding agreement.

Multiplex Funds Management v P Dawson Nominees [8.640]  Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200 JACOBSON J [108] Part IVA was enacted in response to Report No 46 of the Australian Law Reform Commission, entitled Grouped proceedings in the Federal Court, 1988. However, Parliament did not adopt all the recommendations made by the ALRC. [109] One of the recommendations of the ALRC which was not adopted in Pt IVA was that grouped proceedings would be brought on behalf of all members of the group who were alleged to have suffered harm by the conduct of the respondent. Clause 14 of the ALRC’s draft Bill provided for the Court to be able to order a stay of proceedings where the group was incomplete. Indeed, the heading to the ALRC’s cl 14 was “Addition of further group members: incomplete groups”. [110] The rejection of this recommendation is to be found in the words of s 33C(1). That subsection permits a representative party to commence a proceeding by one or more of the persons who satisfies the threshold requirements of paras (a) to (c) “as representing some or all of them.” [111] These words expressly permit the representative party to commence a proceeding on behalf of less than all of the potential members of the group. This construction, though sufficiently clear from the wording of s 33C(1), is reinforced by the fact that in enacting s 33C, Parliament rejected the ALRC’s recommendation. [His Honour then considered whether the grounds for discontinuance in s 33N could be used to discontinue a limited group class action.] Issue 5 –​opting in [122] In considering whether the grounds stated in s 33N(1)(c) or (d) are enlivened, the Court may look to the inefficiency or inappropriateness of the proceeding in the terms stated in those paragraphs. [123] In my view, the definition of the group is one of the matters to which the Court can look in determining those questions. However, the mere fact that the group does not include the entirety of the class of persons with claims against the respondent cannot provide an answer to the question. This follows from what I have said about s 33C(1). … [134] As Stone J observed in Dorajay at [110], it is plain from the terms of ss 33E and 33J, and the relevant extrinsic material, that Parliament made a deliberate policy choice to adopt the “opt out” procedure for representative proceedings under Pt IVA.

[8.640]  457

Civil Procedure in New South Wales

Multiplex Funds Management v P Dawson Nominees cont. [135] The Multiplex parties submit that the definition of the group in the present case subverts the aims of Parliament in establishing the “opt out” model. They submit that the third element of the definition which requires group members to take the positive step of entering into a funding agreement with ILF is inconsistent with the “opt out” nature of a Pt IVA proceeding. They point to the statements of the Attorney-​General in the Second Reading Speech set out at [106] in Dorajay. [136] The primary judge was of the view that the third element of the definition did not amount to an “opting in” requirement, because at the time when the step was to be taken there was nothing to opt into. That is to say, the expressions “opting in” and “opting out” apply to an existing action: see his Honour’s reasons at [40] and [50]. [137] There is force in the submission of the Multiplex parties that the definition of the group in terms which exclude those who do not sign the funding agreement does not facilitate access to justice for all those claimants who have suffered loss. [138] However, whether or not the definition of the group is inconsistent with the requirements of Pt IVA cannot be determined by resort to broad arguments about the aims or policy of the legislation. The question is whether it is inconsistent with ss 33C, 33E or 33J. [139] For reasons already mentioned, the definition of the group is not inconsistent with s 33C(1). Nor does it contravene s 33E. As the primary judge said at [49], although the consent of group members to bring a proceeding is not required by Pt IVA, it is not forbidden. [140] Moreover, it is plain that the right of a group member to opt out under s 33J(2) is a right that relates to existing representative proceedings. [141] I can see nothing in the language of those provisions, construed in the context of the whole of the provisions of Pt IVA, which precludes a definition of the group in accordance with the third element of the definition in this case. [142] Part IVA does not use the expression “opt in”. But a group definition that allowed a person to take a positive step of “opting in” after the commencement of the proceeding would be inconsistent with one or more of ss 33C, 33H, 33J and 33K. Senior counsel for Dawson accepted that a post-​ commencement right to opt in was not permissible. However, no such question arises in the present case because the third element of the definition restricts the class to persons who have entered into the funding agreement at the commencement of the proceeding. … Issue 6 –​whether the funding agreement prevents opting out [145] Clause 15.3 of the funding agreement provides that the agreement terminates upon the claimant giving a notice of opting out before the date set by the Court for opting out of the proceedings. [146] Accordingly, the funding agreement does not prevent a group member from exercising the entitlement to opt out of the proceedings in accordance with s 33J(2). [147] However, the effect of cll 8.3, 10.1 and 15.5 is that if a group member opts out of the proceeding, he or she remains liable to pay the “Resolution Sum” to MBC; the costs and disbursements of the proceeding and ILF’s “not insignificant” percentage fee are payable out of that sum. [148] Thus, MBC and ILF continue to be entitled to a portion of any sum received by the former group member in respect of the claims, irrespective of whether MBC or ILF has played any role in the person obtaining the Resolution Sum. [149] The execution of the funding agreement, as a condition of inclusion in the represented group, therefore operates as a substantial practical disincentive to a group member to exercise the right to opt out of the proceeding. [150] The Multiplex parties submit that this subverts a fundamental principle of Pt IVA that a group member should be free to opt out of the proceeding whenever he or she chooses to do so, up to the 458 [8.640]

Class Actions in New South Wales  Chapter  8

Multiplex Funds Management v P Dawson Nominees cont. date fixed pursuant to s 33J(1). However, the plain fact, as I have stated, is that group members are entitled to opt out. I do not see that the language of the “otherwise inappropriate” ground extends to a consideration of practical disincentives to exercise the right granted by s 33J(2).

 [8.650] For an alternative interpretation, see M Legg, “Funding a Class Action through

Limiting the Group:  What Does Pt  IVA of the Federal Court of Australia Act 1976 (Cth) permit?” (2010) 33 Australian Bar Review 17 which argues that a closed class is not permissible. The interpretation of Pt 10 of the CPA also needs to be considered in light of the overriding purpose. This was not required for Pt IVA of the FCAA at the time Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd [2007] FCAFC 200 was decided. However, in New South Wales, “[e]‌ach of the provisions in Pt 10 of the CPA is to be read consistently with the enjoinder in s 56(1) of the CPA, namely, that civil proceedings should be conducted in a manner that ‘facilitates the just, quick and cheap resolution of the real issues in the proceedings’.”: Lam v Rolls Royce Plc [2013] NSWSC 805 at [18]. [8.660] In New South Wales, the availability of a closed class or limited group is further reinforced by s 166(2) of the CPA stating that: (2) It is not, for the purposes of subsection (1) (e), inappropriate for claims to be pursued by means of representative proceedings merely because the persons identified as group members in relation to the proceedings:

(a) do not include all persons on whose behalf those proceedings might have been brought, or



(b) are aggregated together for a particular purpose such as a litigation funding arrangement.

Note that s  166(2) only relates to s  166(1)(e) and the appropriateness grounds but not to the other factors supporting discontinuance, such as “the representative proceedings will not provide an efficient and effective means of dealing with the claims of group members”. [8.680]  The use of a limited group or opt-​in class action definition was employed in Jameson

v Professional Investment Services Pty Ltd [2009] NSWCA 28 where proceedings were commenced under the now repealed r  7.4 of the UCPR. At first instance, Young  CJ in Eq considered whether he should “otherwise order” based on the group definition employed. Spigelman CJ considered the issue for the Court of Appeal.33

Jameson v Professional Investment Services [8.690]  Jameson v Professional Investment Services Pty Ltd [2009] NSWCA 28 SPIGELMAN CJ [120] In my opinion, Young CJ in Eq erred in proceeding on the basis that there was a general preference for an “opt out” procedure under the rules of this Court. The text of the rule, specifically the power to “otherwise order” under r 7.4(2), confers a broadly expressed, relevantly unfettered and unguided discretion, which should not be confined by a broad presumption of that character. [121] Furthermore, it appears to me that his Honour erred in another respect in this regard. The party and the solicitors and litigation funder involved had undertaken the task of communicating 33

See Legg M and Di Mauro L, “Flexibility or Uncertainty for NSW Class Actions?” (2009) 47(8) Law Society Journal 66. [8.690]  459

Civil Procedure in New South Wales

Jameson v Professional Investment Services cont. with all persons who may have an interest in joining in the proceedings on the basis of the terms which the litigation funder required. There is nothing to suggest that an “opt out” procedure is a practical option in the present circumstances. The choice, as Young CJ in Eq expressly contemplated, is between the present proceedings and an array of individual proceedings by each of the persons affected, including all those who have in fact consented to the terms required by the litigation funder. [122] The nature of the proceedings as either an “opt out” or an “opt in” proceedings may be a relevant consideration in the exercise of the discretion under r 7.4(2) or, the exercise of the discretion to grant the amendment sought by the appellant. However, each approach has benefits and disadvantages. Many of the cases involved representative proceedings that had been instituted before the relevant parties, or at least the full range of those parties, has been contacted with a view to participating in any proceeding. That is not the case here. [123] As shown in the persons identified in Sch A in the original proceedings, as expanded in the proposed amended Sch A, a systematic effort had already been made to involve relevant persons in the proceedings. In such a context it is not, in my opinion, pertinent to the exercise of the discretion under r 7.4(2) to proceed on the basis of a general preference for an “opt out” scheme. [124] Where, as here, there is no basis for concluding that any person is prepared to institute representative proceedings on an “opt out” basis, the issue of whether or not one, rather than the other, form of procedure is preferable is not a consideration relevant to the exercise of the discretion.

 [8.700]  The use of a closed class or opt-​in procedure may exclude putative group members

from being able to access the courts contrary to the goal of access to justice. For example, an applicant may limit a shareholder class action to institutional investors and exclude retail investors because the latter’s claims are small and time-​consuming to administer. In Jameson v Professional Investment Services Pty Ltd [2009] NSWCA 28, Spigelman CJ appears to accept that such an approach may be improper and grounds for discontinuing the proceedings. Under the new regime in Pt 10 of the CPA, s 166(2) limits, but does not completely exclude, a Court’s ability to consider the desirability of the group definition. Notice [8.710]  The right to opt-​out is given effect by the requirement that group members receive notice of that right and of the commencement of the proceedings: see [8.790]. Rule 58.2 of the UCPR and Practice Note SC Gen 17 provide further guidance and requirements in relation to opt-​out notices: see [8.810] and [8.814]. In New South Wales, Form 115 is the opt-​out notice that a group member is required to return to the court to exercise their opt-​out right. [8.713] In TW McConnell Pty Ltd as trustee for the McConnell Superannuation Fund v

SurfStitch Group Ltd (subject to deed of company arrangement) (No 3) [2018] NSWSC 1749, Stevenson J considered whether the general power in s 183 (see [8.900]) can be used to dispense with the mandatory requirements in ss 162(1) and 175(1)(a) (see [8.600] and [8.800]) to fix an opt-​out date and give notice to group members of their right to opt-​out. His Honour held that to make an order under s 183 to dispense with the requirements in ss 162(1) and 175(1)(a) because the Court thought it “appropriate or necessary” would amount to judicial “rewriting” of the express requirements in the legislation. Moreover it would require that the Court disregard s 175(2) (see [8.800]) which provides that where the relief sought in the representative proceedings does not include a claim for damages, the Court “may” 460 [8.700]

Class Actions in New South Wales  Chapter  8

dispense with any or all of the requirements of s 175(1), including the requirement that group members be notified of the date fixed under s 162(1) by which they must opt-out. Stevenson J’s reasoning is consistent with the later High Court decision in BMW Australia Ltd v Brewster; Westpac Banking Corporation v Lenthall [2019] HCA 45 discussed at [8.920].

MEDIATION AND CLASS ACTIONS [8.715]  Mediation has been employed in class actions on a regular basis.34 Mediation may

minimise legal costs, expeditiously obtain compensation for group members and reduce potential adverse publicity and the distraction of management for a defendant. Mediation may be hampered in class actions because the opt-​out approach means that the number of group members may be unknown or, if known due to the use of a closed class, will only be within the knowledge of the plaintiff. Further, the merits and quantum of group members’ claims will also be unknown or only known in outline to the plaintiff. It should also be noted that traditional mechanisms for the provision of information, such as discovery, usually apply only to the representative party and not to group members.35 To overcome the lack of knowledge as to the size of the group and value of claims it may be necessary for either the voluntary exchange of information or to seek the assistance of the court for orders as to the provision of information. In Regent Holdings Pty Ltd v State of Victoria (2012) 36 VR 424, the Victorian Court of Appeal stated: [23] … Of course, mediation should be conducted without prejudice. But that does not mean that it should be conducted in ignorance. Court ordered mediation is not a game of bluff and bluster in which one party is free to mislead another to conclude that a claim is worth more than it is. It is designed to be an exercise in rational bargaining between relatively well-​ informed parties aimed at providing just compensation for worthy claims. The more accurate and complete the available information as to quantum, the more likely that rational settlements will be achieved. Where a party seeks the court’s assistance to obtain further information which ex facie will facilitate a court directed mediation process, cogent submissions are required to demonstrate that the provision of that assistance will undermine the process.

SETTLEMENT [8.720] A settlement has been defined by Jacobson  J in Tongue v Council of the City of

Tamworth [2004] FCA 1702 as follows: [32] … In ordinary parlance, for a claim to be settled, it must have been compromised. However, law dictionaries suggest that the element of compromise is not a necessary ingredient. As is said in Butterworth’s Australian Legal Dictionary at 1073, when a matter has been settled, the parties have reached some kind of agreement and no longer require the Court to deliberate between them. Another dictionary states that a “settlement” means “an agreement ending a dispute or law suit”; see Transport Accident Commission v Coyle (2001) 3 VR 589 at [27].

A broad reading of settlement in the class action context would be consistent with the objectives of the provision discussed at [8.750] and [8.780]. 34

35

See, eg, Darwalla Milling Co Pty Ltd v F Hoffman-​La Roche Ltd (No 2) [2006] FCA 1388 at [17]; Hobbs Anderson Investments Pty Ltd v Oz Minerals Ltd [2011] FCA 801 at [14]; Wepar Nominees Pty Ltd v Schofield (No 2) [2014] FCA 225 at [2]‌; Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 at [19], [339]. Legg M, “Discovery and Particulars of Group Members in Class Actions” (2012) 36 (2) Australian Bar Review 119. [8.720]  461

Civil Procedure in New South Wales

[8.730] Class action settlements are important because settlement rather than trial is the

norm in class action proceedings. In P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029, Finkelstein J commented that:36 It goes without saying that the court should encourage the settlement of class actions and other complex cases. Perhaps more than most cases, class actions lend themselves to compromise because of the uncertainty of their result, difficulties of proof, complexities in the assessment of damages, as well as the expense of a long trial.

Requirements for court approval [8.750] Court approval of class actions settlements is designed to protect absent group

members whose claims will be extinguished by the settlement in exchange for whatever the representative party has negotiated in return. The Federal Court has observed that it is “appropriate for the court to be satisfied that any settlement or discontinuance of representative proceedings has been undertaken in the interests of the group members as a whole, and not just in the interests of the applicant and the respondent”: Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 at 258. The need for protection may be further explained as follows:37 Settlements are usually viewed as a form of contract in which the parties can settle their dispute for whatever amount they agree upon. The fairness of the settlement amount is not examined provided the parties are competent and not under any disability. In class actions the settlement amount needs to be reviewed because the lawyer for the class is potentially an unreliable agent of the class and the class is unable to effectively monitor the lawyer. In terms of principal (class) and agent (lawyer), the principal has too little at stake to expend resources monitoring the agent and the agent has superior information.

Civil Procedure Act 2005 (NSW) [8.760]  Civil Procedure Act 2005 (NSW) ss 173, 174 Section 173 Approval of Court required for settlement and discontinuance (1)

Representative proceedings may not be settled or discontinued without the approval of the Court.

(2)

If the Court gives such approval, it may make such orders as are just with respect to the distribution of any money, including interest, paid under a settlement or paid into the Court.

Section 174 Settlement of individual claim of representative party (1)

A representative party may, with the leave of the Court, settle the party’s individual claim in whole or in part at any stage of the representative proceedings.

(2)

A representative party who is seeking leave to settle, or who has settled, the party’s individual claim may, with the leave of the Court, withdraw as representative party.

(3)

If a person has sought leave to withdraw as representative party under subsection (2), the Court may, on application by a group member, make an order for the substitution of another group member as representative party and may make such other orders as it thinks fit.

36 37

P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 at [2]‌. Legg M, “Judge’s Role in Settlement of Representative Proceedings: Lessons from United States Class Actions” (2004) 78 Australian Law Journal 58 at 68.

462 [8.730]

Class Actions in New South Wales  Chapter  8

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

Before granting a person leave to withdraw as a representative party:



(a)

the Court must be satisfied that notice of the application has been given to group members in accordance with section 175(1) and in sufficient time for them to apply to have another person substituted as the representative party, and



(b)

any application for the substitution of another group member as a representative party must have been determined.

 [8.770]  The notice provision, s 175(4) of the CPA, requires an application for approval of a

settlement to not be determined unless notice has been given to group members, or unless the Court is satisfied that it is just not to provide notice: see [8.800]. Despite the importance of settlement approval, s 173 makes no express reference to the criteria for approving settlement. Rather, the criteria have developed through the case law addressing settlement approval motions.

Johnston v Endeavour Energy [8.780]  Johnston v Endeavour Energy [2016] NSWSC 1132 HOEBEN CJ at CL Relevant principles [22] The principles that govern an application for approval of a settlement of a group proceeding are well established: (i)

The central question for the Court is whether the proposed settlement is fair and reasonable in the interests of the group members as a whole (Rowe v AusNet Electricity Services Pty Ltd and Ors [2015] VSC 232 at [49]–​[51]; Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74 (Matthews) at [34]; Wheelahan & Anor v City of Casey & Ors [2011] VSC 215 (Wheelahan) at [57] (Emerton J) citing ACCC v Chats House Investments Pty Ltd & Ors [1996] 71 FCR 250; FCA 1119 at 258 (Branson J) (Chats House)).

(ii)

There will rarely be one single or obvious way in which a settlement should be framed, either between group members and the defendants (inter partes aspects) or in relation to sharing the compensation among group members (inter se aspects) –​reasonableness is a range and the question is whether the proposed settlement is within that range (Darwalla Milling Co Pty Ltd v F Hoffman-​La Roche & Ors Ltd (No 2) [2006] FCA 1388; 236 ALR 322 at 336 [40] (Jessup J) (Darwalla)).

(iii)

It is not the task of the Court to “second-​guess” or go behind the tactical or other decisions made by the plaintiff’s legal representatives, but rather to satisfy itself that the decisions are within the range of reasonable decisions according to the known circumstances and the reasonably perceived risks of the litigation (Matthews, Darwalla, see also Pharm-​a-​Care Laboratories Pty Ltd v Commonwealth of Australia (No 6) [2011] FCA 277 at [22] (Flick J) (Pharma); Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [12] (Modtech) (Gordon J)).

(iv)

In assessing the fairness and reasonableness of a proposed settlement the court relies heavily upon the candid, frank and confidential opinions provided to it by the plaintiff’s legal representatives requiring them to disclose the factors which were material to the decision to accept the settlement (Thomas v Powercor Australia Limited [2011] VSC 614 at [18] (Beach J) (Powercor); Wheelahan at [75]; Rod Investments (Vic) Pty Ltd v Abeyratne & Ors [2010] VSC 457 at [11] and [18] (Almond J) (Abeyratne); Lopez v Star World Enterprises Pty [1999] ATPR 41-​678 at 42-​670; [1999] FCA 104 (Finkelstein J) (Lopez)). [8.780]  463

Civil Procedure in New South Wales

Johnston v Endeavour Energy cont. (v)

The factors adopted in Williams v FAI Home Security Pty Ltd (No 4) [2000] 180 ALR 459; [2000] FCA 1925 (Williams) indicate some of the considerations typically relevant to an assessment of an application for approval. As Goldberg J pointed out in Williams, this is a useful but not exhaustive guide. Those considerations are:

(vi)

(A) The complexity and duration of the litigation.

(vii)

(B) The reaction of the class to the settlement.

(viii)

(C) The stage of the proceedings.

(ix)

(D) The risks of establishing liability.

(x)

(E) The risks of establishing damages.

(xi)

(F) The risks of maintaining a class action.

(xii)

(G) The ability of the defendants to withstand a greater judgment.

(xiii)

(H) The range of reasonableness of the settlement in light of the best recovery; and

(xiv) (I) The range of reasonableness of the settlement in light of all of the attendant risks of litigation. (xv)

The factors in Williams are largely directed to the reasonableness of a compromise inter partes. … The procedure should likewise be fair and reasonable “inter se”.

(xvi) An important consideration is whether group members were given timely notice of the critical elements so that they had an opportunity to take steps to protect their own position if they wished. Once appropriate notice is given, the absence of objections or other response action from group members is a relevant consideration in support of the settlement and all its elements (Dorajay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19 (Stone J) (Aristocrat); Abeyratne at [22]; Horsham at [15], [25]). (xvii) Where a group member objects to the settlement, an important question is whether the objector is prepared to assume the role and risks of being lead plaintiff. It is easy for group members who face no adverse costs risk to want a plaintiff to fight to the very end. The weight to be given to objections will diminish where the objector is unwilling or unable to take on all of the economic and other burdens which the plaintiff otherwise bears (Wong v Silkfield [2000] FCA 1421 at [24]–​[30] (Spender J)). [23] The effect of those considerations is that the proposed settlement must be fair and reasonable and in the interests of all group members who will be bound by the settlement. In this context group members, who are not clients of Maddens, are not directly represented. It is their interests in particular which the Court, in an application of the present kind, is concerned to ensure are addressed fairly, vis-​a-​vis the plaintiff and other group members and having regard to the overall merits of the claims made on their behalf in the action. [24] Notwithstanding the reservations expressed by Jessup J in Darwalla regarding lists of criteria, the factors identified by Goldberg J in Williams as typically bearing on an assessment of a proposed settlement provide a useful framework. Those factors are: (a)

The amount offered to each group member.

(b)

The prospects of success in the proceeding.

(c)

The likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer.

(d)

The terms of advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding.

(e)

The likely duration and cost of the proceeding if continued to judgment.

(f)

The attitude of group members to the settlement.

 464 [8.780]

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Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited (No 4) [8.782]  Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited (No 4) [2018] NSWSC 1584 BALL J [20] Both proceedings settled shortly before the hearing, subject to approval from the Court. The settlements followed a formal mediation of both proceedings. Under the settlement of the Creighton Proceeding, it is proposed that AET settle the claim for $28,500,000 (inclusive of costs), that $12,800,000 of that amount be paid to Slater and Gordon in respect of its costs and the balance of $15,700,000 be distributed to Mr Creighton and group members in accordance with the scheme described below. It is apparent from these figures that group members will receive approximately 55 per cent of the settlement amount. [21] Under the proposed settlement of the Smith Proceeding, AET is to pay $15,750,000 (inclusive of interest and costs) which is to be distributed as follows: 1.

$4,252,500 to the funder in respect of its funder fee;

2.

$5,268,778.87 in respect of Mr and Mrs Smith’s legal costs and disbursements;

3.

$220,000 for administration costs; and

4.

$6,008,721.13 to Mr and Mrs Smith and the group members to be distributed in accordance with the scheme described below.

It is apparent from these figures that group members will receive approximately 38 per cent of the settlement amount. … [22] The central question for the Court is whether the proposed settlement is fair and reasonable in the interests of group members considered as a whole: King v Liverpool City Council (No 3) [2018] NSWSC 1047 at [25] per Garling J citing Johnston v Endeavour Energy [2016] NSWSC 1132 at [22](i) per Hoeben CJ at CL; Rowe v AusNet Electricity Services Pty Ltd [2015] VSC 232 at [49]-​[51] per Emerton J; Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74 at [35] per Dixon J; Wheelahan v City of Casey [2011] VSC 215 at [57] per Emerton J citing Australian Competition and Consumer Commission (ACCC) v Chats House Investments Pty Ltd (1996) 71 FCR 250 at 258. In making that assessment, the task of the Court is to consider whether the settlement falls within the range of reasonable settlements having regard to all the risks associated with the litigation: King v Liverpool City Council (No. 3) [2018] NSWSC 1047 at [25] per Garling J citing Johnston v Endeavour Energy [2016] NSWSC 1132 at [22](iii); Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74 at [35] per Dixon J; see also Pharm-​a-​care Laboratories Pty Ltd v Commonwealth of Australia (No 6) [2011] FCA 277 at [22] per Flick J; Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [12] per Gordon J; Wheelahan v City of Casey [2011] VSC 215 at [110]-​[111] per Emerton J. [23] In considering the question of reasonableness, it is also necessary for the Court to consider whether the settlement is reasonable as between group members and, to the extent that group members are treated differently, whether there is a rational and reasonable basis for doing so: Darwalla Milling Co Pty Ltd v F Hoffman-​La Roche Ltd (2006) 236 ALR 322; [2006] FCA 1388 at [34], [60]-​[64] per Jessup J; Thomas v Powercor Australia Ltd [2011] VSC 614 at [25] per Beach J; Mercieca v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Eagle Travel Tower Services Pty Ltd [2012] VSC 204 at [38]-​[39] per Emerton J. [24] It is also necessary for the Court to consider whether the costs were reasonable having regard to the terms of any agreement relating to costs and the reasonableness of the costs that are sought to be paid from the settlement amount particularly having regard to the proportion of the settlement funds to be paid in costs: Wheelahan v City of Casey [2011] VSC 215 at [103] per Emerton J; Courtney v Medtel Pty Ltd (No 5) (2004) 212 ALR 311; [2004] FCA 1406 at [61] per Sackville J; Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [24]-​[54] per Gordon J; Modtech Engineering [8.782]  465

Civil Procedure in New South Wales

Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited (No 4) cont. Pty Ltd v GPT Management Holdings Ltd (No 2) [2013] FCA 1163; Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) (No 9) [2013] FCA 1350 at [58] per Jacobson J; Downie v Spiral Foods Pty Ltd [2015] VSC 190 at [177] per J Forrest J; Rowe v AusNet Electricity Services Pty Ltd [2015] VSC 232 at [112]-​[113] per Emerton J. [25] In considering the reasonableness of any funding fee, it is necessary to take into account all relevant circumstances including relevantly: 1.

The information provided to group members concerning the funding commission;

2.

Whether the funding commission reflects market rates;

3.

The litigation risks of providing funding in the proceeding;

4.

The quantum of adverse costs exposure that the funder assumed;

5.

The legal costs expended and to be expended and the security for costs provided by the funder;

6.

The amount of any settlement; and

7.

Any substantial objections made by group members in relation to any litigation funding charges.

See Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148 at [80] per Murphy, Gleeson and Beach JJ. [Ball J concluded that, taking account of the various risks inherent in litigation, including the prospects of success, the settlements were reasonable. Further the legal costs claimed were found to be reasonable. Although two representative proceedings were brought rather than one, this did not require a reduction in the costs awarded because the two claims that were brought were sufficiently different and provided sufficiently different benefits to group members depending on their particular circumstances to justify them both being brought. The total funding fee claimed by the funder in the Smith class actions was $4,252,500, which is 27% of the total settlement amount. The amount claimed by the funder was reduced from the 40% plus management fee of $225,000 that the funder was entitled to recover under the funding agreements. Ball J found the funding fee to be reasonable.]

 Distribution of settlement funds [8.784]  Once a settlement is approved, the next step is to distribute the settlement funds to

group members. In the Corrugated Cardboard cartel class action the five main features of a distribution scheme were set out:38 The first is the appointment of [the applicant’s lawyers] as court appointed administrator. The second is the establishment of a procedure for the identification and verification of Group Members who are entitled to participate in the Settlement. The third is the assessment of claims by Participating Group Members and the identification of the formula by which claims are to be assessed and determined. The fourth is the establishment of a dispute resolution mechanism. The fifth is the provision for supervision of the Scheme by the court.

The court will maintain jurisdiction over settled proceedings to be able to monitor and approve steps involving the calculation and distribution of group member’s claims and payment to the solicitors (and possibly third parties such as accountants) undertaking the settlement administration.39 Group members will usually need to substantiate their claim, including

38 39

Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2011] FCA 671 at [23]. Pharm-​a-​Care Laboratories Pty Ltd v Commonwealth (No 9) [2011] FCA 1111.

466 [8.784]

Class Actions in New South Wales  Chapter  8

providing information to calculate their loss or damage. The distribution of the settlement is also very significant in terms of the fairness of a settlement as it determines whether participation in the settlement is allowed and the actual payment to be received. There is a trade-​off between precision and cost that must be managed so as to ensure settlement funds are distributed fairly. For a discussion of the different types of settlement distribution scheme models, see Gilsenan R and Legg M, “Australian Class Action Settlement Distribution Scheme Design –​Deciding Who Gets What” (2019) 38(1) University of Queensland Law Journal 16.

NOTICES [8.790]  An important protection for group members is the various requirements for notice

to inform the group members of key steps in the proceedings. The requirements for notices are set out in ss 175 and 176 of the CPA and based on ss 33X and 33Y of the FCAA. Further requirements are contained in Practice Note SC Gen 17.

Civil Procedure Act 2005 (NSW) [8.800]  Civil Procedure Act 2005 (NSW) ss 175, 176 Section 175 Notice to be given of certain matters (1)

Notice must be given to group members of the following matters in relation to representative proceedings:



(a)

the commencement of the proceedings and the right of the group members to opt out of the proceedings before a specified date, being the date fixed under section 162(1),



(b)

an application by the defendant in the proceedings for the dismissal of the proceedings on the ground of want of prosecution,



(c)

an application by a representative party seeking leave to withdraw under section 174 as representative party.

(2)

The Court may dispense with compliance with any or all of the requirements of subsection (1) if the relief sought in the proceedings does not include any claim for damages.

(3)

If the Court so orders, notice must be given to group members of the bringing into Court of money in answer to a cause of action on which a claim in the representative proceedings is founded.

(4)

Unless the Court is satisfied that it is just to do so, an application for approval of a settlement under section 173 must not be determined unless notice has been given to group members.

(5)

The Court may, at any stage, order that notice of any matter be given to a group member or group members.

(6)

Notice under this section must be given as soon as practicable after the happening of the event to which it relates.

Section 176 Notices under section 175 (1)

The form and content of a notice under section 175 must be approved by the Court.

(2)

The Court must, by order, specify:



(a)

who is to give the notice, and



(b)

the way in which the notice is to be given.

(3)

An order under subsection (2) may also include provision:



(a)

directing a party to provide information relevant to the giving of the notice, and



(b)

relating to the costs of giving notice. [8.800]  467

Civil Procedure in New South Wales

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

An order under subsection (2) may require that notice be given by means of press advertisement, radio or television broadcast, or by any other means.

(5)

The Court may not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so.

(6)

A notice that concerns a matter for which the Court’s leave or approval is required must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter.

(7)

A notice that includes or concerns conditions must specify the conditions and the period, if any, for compliance.

(8)

The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in any proceedings.



Uniform Civil Procedure Rules 2005 (NSW) [8.810]  Uniform Civil Procedure Rules 2005 (NSW) r 58.2 58.2 Opt out notice (1)

A group member who wishes to opt out of representative proceedings in accordance with Division 2 of Part 10 of the Act must do so by filing and serving on the representative party a notice in the approved form.

(2)

The representative party must, within 14 days after the opt out date, provide to each of the other parties to the proceedings a list of persons who have filed and served opt out notices in accordance with this Part.

(3)

In this clause: opt out date means the date fixed by the Court before which a group member may opt out of representative proceedings.



Practice Note SC Gen 17 [8.814]  Practice Note SC Gen 17 Supreme Court –​Representative Proceedings 8.2 The form, content and manner of service of the opt out notice is required to be approved by the Court (Civil Procedure Act, s 176). The representative party within seven days following the initial case conference or such further time as directed by the presiding judge should file and serve: (a)

a draft opt out notice;

(b)

draft orders with respect to the proposed manner and timing of giving the opt out notice;

(c)

information as to the anticipated costs of giving the opt out notice in the manner proposed;  and

(d)

a draft order as to the payment of costs of giving the opt out notice if not to be borne by the representative party.

… 11.1 Subject to directions of the Court, notice is to be given to group members of the following matters in a form approved by the presiding judge: 468 [8.810]

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Practice Note SC Gen 17 cont. (a)

amendment of the originating process varying the persons who may be group members (Civil Procedure Act, s 163(4));

(b)

a motion seeking dismissal for want of prosecution (Civil Procedure Act, s 175(1)(b));

(c)

proposed settlement or discontinuance of the proceedings (Civil Procedure Act, s 173);

(d)

proposed withdrawal of the representative party (Civil Procedure Act, ss 174 and 175(1)(c));

(e)

the bringing of money into court (Civil Procedure Act, ss 175(3) and 177(4)); and

(f)

the need for proof of individual claims in respect of a fund (Civil Procedure Act, s 178(5)).

 [8.820]  Notices must not mislead group members and must be expressed with clarity and

simplicity.

Courtney v Medtel [8.830]  Courtney v Medtel Pty Ltd [2001] FCA 1037 SACKVILLE J [8]‌Section 33Y(2) of the Federal Court Act requires the Court to consider whether it should approve the form and content of the opt out notice provided for in s 33X(1)(a). Neither party in the present case disputed that the Court is entitled to determine for itself whether a notice drafted by one or both parties is satisfactory having regard to the objects of the legislation and the circumstances of the case. [9]‌As the Full Court observed in King v GIO [[2001] FCA 270] (at [15]): [t]‌he principal purpose of the notice given under s 33X(1)(a) and s 33Y(2) is to ensure that group members can make an informed decision concerning their rights. In Femcare Ltd v Bright (2000) 100 FCR 331, at 349, the Full Court noted that the object underlying the direction to the Court in s 33Y(5) is to find the most economical means of ensuring that the group members are informed of the proceedings and their rights. The [Law Reform Commission, Grouped Proceedings (Report No 46, 1988), para 190] had considered that “the more at stake for each person, the more effective the notice should be”. [10] It is also important to bear in mind that, as was said by Wilcox J in McMullin v ICI Australia Operations Pty Ltd (1998) 156 ALR 257, at 260: Any notice that is to be issued to members of the public in connection with a representative proceeding must be readily comprehensible by non-​lawyers. It should be written in plain English. [11] I would add a further observation. Any opt-​out notice should be framed so as not to cause unnecessary alarm or distress to intended recipients. Practising lawyers, and for that matter judges, may tend to underestimate the impact that publication or service of a Court ordered notice may have on members of the represented group. The recipients of a notice under s 33X of the Federal Court Act may become anxious when they learn for the first time of legal proceedings which may affect their legal rights and in respect of which they must decide whether or not to participate. They may be concerned by technical language that is difficult to understand. The notice may also alert them, particularly in personal injury cases, to the possibility that they are at risk of future harm. People who are at risk of harm or who are otherwise vulnerable, such as elderly persons, may be particularly susceptible to anxiety or distress. Notices must be accurate but should be drafted with sensitivity to these considerations.

 [8.830]  469

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JUDGMENT Civil Procedure Act 2005 (NSW) [8.840]  Civil Procedure Act 2005 (NSW) s 177 Section 177 Judgment –​powers of the Court (1)

The Court may, in determining a matter in representative proceedings, do any one or more of the following:



(a)

determine a question of law,



(b)

determine a question of fact,



(c)

make a declaration of liability,



(d)

grant any equitable relief,



(e)

make an award of damages for group members, sub-​group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies,



(f)

award damages in an aggregate amount without specifying amounts awarded in respect of individual group members.

(2)

In making an order for an award of damages, the Court must make provision for the payment or distribution of the money to the group members entitled.

(3)

Subject to section 173, the Court is not to make an award of damages under subsection (1) (f) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment.

(4)

If the Court has made an award of damages, the Court may give such directions (if any) as it thinks just in relation to:



(a)

the manner in which a group member is to establish the member’s entitlement to share in the damages, and



(b)

the manner in which any dispute regarding the entitlement of a group member to share in the damages is to be determined.

 [8.850]  Section 177 of the CPA is based on s 33Z of the FCAA. It is expressed in broad terms

to take account of the nature of class action proceedings where one or more representative parties will have some or all of their claims resolved in a way that also determines some or all of the group members’ claims depending on how similar the claims are. In relation to a Victorian class action arising out of the Black Saturday bushfires on 7 February 2009, it was noted that “because this is a group proceeding under Pt  4A of the Supreme Court Act, it necessarily involves a determination not only of the plaintiff’s individual claim, but also the resolution of a number of questions or issues which will bind members of the group”.40 As a consequence, it may be necessary or expeditious for the Court to determine questions of law or fact, make declarations or grant equitable relief.

40

Matthews v SPI Electricity Pty Ltd (Ruling No 2) [2011] VSC 168 at [24].

470 [8.840]

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Graham Barclay Oysters v Ryan [8.860]  Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 KIRBY J [267] From [s 33Z], it is clear that the parliament intended to arm the Federal Court with a wide and flexible armoury of powers, capable of being adapted to the particular needs and novel circumstances of representative proceedings and any matter in such proceedings. Representative proceedings are not traditional litigation; nor should they be subjected to all of the requirements of such litigation. To confine the grant of such a statutory power is incompatible with the oft-​repeated statements in this court concerning the construction of grants of such powers to superior courts. In particular, it is inappropriate to impose upon such grants of power strictures derived from earlier times and traditional powers in litigation between individual parties.



Civil Procedure Act 2005 (NSW) [8.870]  Civil Procedure Act 2005 (NSW) s 179 Section 179 Effect of judgment A judgment given in representative proceedings: (a)

must describe or otherwise identify the group members who will be affected by it, and

(b)

binds all such persons other than any person who has opted out of the proceedings under section 162.



Timbercorp Finance Pty Ltd (in liq) v Collins [8.873]  Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; [2016] HCA 44 FRENCH CJ, KIEFEL, KEANE and NETTLE JJ [A class action proceeding was brought against members of the Timbercorp Group in the Supreme Court of Victoria under Pt 4A of the Supreme Court Act 1986 (Vic) (equivalent to Pt 10 of the Civil Procedure Act 2005 (NSW)) following the collapse of that group in 2009 and its subsequent liquidation. The class action was brought on behalf of about 18,500 investors who had invested in horticultural and forestry managed investment schemes (MISs) operated by the Timbercorp Group. The class action concerned alleged breaches of statutory disclosure obligations and sought relief including declarations that the representative party and the group members were not liable under the loan agreements that had been entered into between Timbercorp Finance and various group members for the purpose of funding the group members’ participation in the schemes. The common questions in the class action did not raise any issues about the validity or enforceability of the loans arising out of the lending process or the advancement of moneys under the loans. The class action was unsuccessful at first instance and on appeal. Timbercorp Finance brought separate proceedings for the balance of the outstanding loan amounts. Mr and Mrs Collins and Mr Tomes had been members of the class action proceeding (but neither were representative parties). In the proceedings brought by Timbercorp Finance, Mr and Mrs Collins and Mr Tomes each sought to raise claims and defences challenging the validity and enforceability of the loan agreements that had not been raised in the class action. The primary issue before the High Court was whether the individual group members were entitled to raise defences to the debt recovery proceedings brought against them, or instead, were barred from doing so by Anshun estoppel or abuse of process. The High Court held that the individual group members were entitled to raise their defences.] [8.873]  471

Civil Procedure in New South Wales

Timbercorp Finance Pty Ltd (in liq) v Collins cont. [The High Court set out in ss 33C and 33H.] [49] These provisions identify the subject matter of a group proceeding as a claim which gives rise to common questions of law or of fact. The plaintiff represents the group members with respect to their interests in that regard and the group members claim through the plaintiff to the extent of that interest. Their relationship is therefore that of privies in interest with respect to that claim. [The concept of privies was explained by the High Court in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 which is set out in Chapter 7 at [7.95].] [50] However, other provisions of Pt 4A also make plain that group members may have other, individual, claims which do not form part of the subject matter of the group proceeding. Group members’ claims were also the subject of discussion by the ALRC in its report. The ALRC, whilst recognising that the grouping of many claims into one proceeding involving at least one common question of law or fact might have benefits, also recognised that there may be issues which must be decided separately in relation to each group member. And in Wong v Silkfield Pty Ltd, this Court held that it was not necessary for a representative proceeding to be likely to resolve wholly, or even to any significant degree, the claims of all group members. [51] Section 33Q provides that where it appears to the Court that the determination of the questions common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining questions and for that purpose may establish sub-​groups. Section 33R allows the Court to permit an individual group member to take part in the proceeding for the purpose of determining a question that relates only to the claim of that group member. In this circumstance, however, the group member is liable for the costs associated with the determination of that question, a liability which does not generally arise in the group proceeding itself. [52] Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment “binds all persons who are such group members at the time the judgment is given”. In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions. [53] The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. …

 [8.878]  For an analysis of the Timbercorp case and how it applies in relation to class action

settlements, see Legg M and Hickey S, “Finality and Fairness in Australian Class Action Settlements” (2019) 41(2) Sydney Law Review 185.

SUSPENSION OF LIMITATION PERIODS Civil Procedure Act 2005 (NSW) [8.880]  Civil Procedure Act 2005 (NSW) s 182 Section 182 Suspension of limitation periods (1)

On the commencement of any representative proceedings, the running of the limitation period that applies to the claim of a group member to which the proceedings relate is suspended.

472 [8.878]

Class Actions in New South Wales  Chapter  8

Civil Procedure Act 2005 (NSW) cont. (2)

The limitation period does not begin to run again unless either the member opts out of the proceedings under section 162 or the proceedings, and any appeals arising from the proceedings, are determined without finally disposing of the group member’s claim.

(3)

However, nothing in this section affects the running of a limitation period in respect of a group member who, immediately before the commencement of the representative proceedings, was barred by the expiration of that period from commencing proceedings in the member’s own right in respect of a claim in the representative proceedings.

(4)

This section applies despite anything in the Limitation Act 1969 or any other law.

 [8.890] In Bray v F Hoffman-​ La Roche Ltd [2003] FCA 1505, Merkel  J dealt with an

amendment to narrow the group definition which had the result of excluding some group members from the class action going forward. In relation to the FCAA-​equivalent to s 182 of the CPA, his Honour observed: [37] … Insofar as any limitation period is concerned s 33ZE suspends the period that applies to the claims of group members upon the commencement of the proceeding and the period will not begin to run until there has been a discontinuance: see s 33ZE(2).

See also Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388 at [17].

GENERAL POWER TO ENSURE JUSTICE IS DONE Civil Procedure Act 2005 (NSW) [8.900]  Civil Procedure Act 2005 (NSW) s 183 Section 183 General power of Court to make orders In any proceedings (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order that the Court thinks appropriate or necessary to ensure that justice is done in the proceedings.

 [8.910] Section  33ZF, the FCAA equivalent of s  183 of the CPA, has been interpreted

broadly. [8.920]  BMW Australia Ltd v Brewster; Westpac Banking Corporation v Lenthall

[2019] HCA 45 KIEFEL CJ, BELL AND KEANE JJ (Nettle J and Gordon J concurring, Gageler J and Edelman J dissenting, in separate judgments) 1

The principal issue in these appeals is whether, in representative proceedings, s 33ZF of the Federal Court of Australia Act 1976 (Cth) (“the FCA”) and s 183 of the Civil Procedure Act 2005 (NSW) (“the CPA”) empower the Federal Court of Australia and the Supreme Court of New South Wales respectively to make what is known as a “common fund order” (“CFO”). Such an order is characteristically made at an early stage in representative proceedings and provides for the quantum of a litigation funder’s [8.920]  473

Civil Procedure in New South Wales

remuneration to be fixed as a proportion of any moneys ultimately recovered in the proceedings, for all group members to bear a proportionate share of that liability, and for that liability to be discharged as a first priority from any moneys so recovered. … 3

Properly construed, neither s 33ZF of the FCA nor s 183 of the CPA empowers a court to make a CFO. Section 33ZF of the FCA and s 183 of the CPA each provide relevantly that in a representative proceeding, the court may make any order the court thinks appropriate or necessary to ensure that justice is done in the proceeding. While the power conferred by these sections is wide, it does not extend to the making of a CFO. These sections empower the making of orders as to how an action should proceed in order to do justice. They are not concerned with the radically different question as to whether an action can proceed at all. It is not appropriate or necessary to ensure that justice is done in a representative proceeding for a court to promote the prosecution of the proceeding in order to enable it to be heard and determined by that court. The making of an order at the outset of a representative proceeding, in order to assure a potential funder of the litigation of a sufficient level of return upon its investment to secure its support for the proceeding, is beyond the purpose of the legislation. …

43 The determination of the true construction of s 33ZF of the FCA and s 183 of the CPA requires consideration of the text of these provisions in their context and having regard to the mischief that Pt IVA of the FCA and Pt 10 of the CPA were intended to remedy. The scope of each of ss 33ZF and 183 is “not confined by matters not required by [their] terms or context; however, the terms must be construed and the context considered”. And context must be regarded in its widest sense to include the state of the law prior to the enactment of these sections. 44 There can be little doubt that when Pt IVA of the FCA was enacted, the Parliament could not have been understood to contemplate that s 33ZF might be invoked to support a CFO. That must be so because, at that time, an agreement to maintain legal proceedings by another in return for a piece of the action was unlawful under the laws against champerty in States other than Victoria. But the question here is not about the intention with which these sections were originally enacted; rather, the question is whether, given the breadth and generality of their language, and the absence now of any objection on the ground of champerty, the making of a CFO falls, on a fair construction, within their terms. 45

In Johnstone v HIH Ltd [[2004] FCA 190 at [104]], Tamberlin J rightly said that the power conferred on the court by s 33ZF is not limited to the actual determination of the matter in question in the proceeding, “but extends to encompass all procedures necessary to bring the matter to a fair hearing on a just basis”. …

46 The power conferred by s 33ZF is broad, but it is essentially supplementary. And the words of limitation should not be ignored. In McMullin v ICI Australia Operations Pty Ltd [(1998) 84 FCR 1 at 4], Wilcox J said: “In enacting Pt IVA of the [FCA], Parliament was introducing into Australian law an entirely novel procedure. It was impossible to foresee all the issues that might arise in the operation of the Part. In order to avoid the necessity for frequent resort to Parliament for amendments to the legislation, it was obviously desirable to empower the Court to make the orders necessary to resolve unforeseen difficulties; the only limitation being that the Court must think the order appropriate or necessary to ensure ‘that justice is done in the proceeding’. 474 [8.920]

Class Actions in New South Wales  Chapter  8

… The criterion ‘justice is done’, involves consideration of the position of all parties. An order preventing unfairness to a particular party may be necessary to ensure justice is done in the proceeding.”

47 While it has rightly been acknowledged that the power conferred by each of s 33ZF and s 183 is broad, it is one thing for a court to make an order to ensure that the proceeding is brought fairly and effectively to a just outcome; it is another thing for a court to make an order in favour of a third party with a view to encouraging it to support the pursuit of the proceeding, especially where the merits of the claims in the proceeding are to be decided by that court. Whether an action can proceed at all is a radically different question from how it should proceed in order to achieve a just result. 48 In the resolution of this issue, textual and contextual considerations must be addressed together with considerations of purpose. These considerations all point to the conclusion that ss 33ZF and 183 do not empower the making of a CFO. … 51 The text of each of s 33ZF and s 183 assumes that an issue has arisen in a pending proceeding between the parties to it, and that the proceeding will be advanced towards a just and effective resolution by the order sought from the court. The construction of ss 33ZF and 183 for which the respondents contend departs from this assumption. The making of a CFO does not assist in determining any issue in dispute between the parties to the proceeding; it does not assist in preserving the subject matter of the dispute, or in ensuring the efficacy of any judgment which might ultimately be made as between the parties; it does not assist in the management of the proceeding in order to bring it to a resolution. Nor does it assist in doing justice between group members in relation to the costs of litigation. 52 Court approval of arrangements with a non party in order to enable a proceeding to be pursued at all could only be said to be appropriate or necessary to ensure that justice is done between the parties to the proceeding if one were to assume that maintaining litigation, whatever its ultimate merit or lack thereof, is itself doing justice to the parties. That would be to make an assumption about process for its own sake rather than the outcome of the process. Such an assumption cannot be attributed to the legislature having regard to the text of ss 33ZF and 183. 53 The making of a CFO is not apt to ensure that justice is done in the proceeding by regulating how the matter is to proceed; to the contrary, an application for a CFO is centrally concerned to determine whether the proceeding is viable at all as a vehicle for the doing of justice between the parties to the proceeding. That is a question outside the concerns of ss 33ZF and 183. As Wigney J explained in Blairgowrie [Trading Ltd v Allco Finance Group Ltd (2015) 325 ALR 539 at 560 [112] [114]] in a passage that warrants citation at length: “The requirement in s 33ZF that the order be ‘appropriate or necessary’ would ordinarily require, as a first step, the identification of a particular issue or problem in the proceeding that needs to be addressed. There would ordinarily have to be some specific reason or justification for making an order under s 33ZF. An order is unlikely to be either appropriate or necessary unless it is directed at resolving some issue or problem that has arisen or would, but for the order, arise. The particular issue or reason for making the order under s 33ZF must also be one that has arisen in, or relates to, ‘the proceeding’. The section is not concerned with theoretical issues, or difficulties that may exist beyond the metes and bounds of the [8.920]  475

Civil Procedure in New South Wales

particular proceeding. It is not directed, for example, at resolving theoretical or practical problems concerning litigation funding that might occur in representative proceedings generally. Nor is it concerned with issues or problems concerning the rights or interests of third parties, such as litigation funders. Justice ‘in the proceeding’ would not ordinarily involve any consideration of the commercial interests of a litigation funder unless they gave rise to some issue or problem that has, or is likely to have, some direct impact on the proceeding. The criterion ‘justice is done’ also suggests that the particular issue or problem must somehow relate to the just hearing and determination of the claims, or the enforcement of the rights or subject matter in issue in the proceeding. That may involve a question of procedure, or it might involve a question involving the substantive rights and interests of the parties. A requirement that justice is done also suggests that the proposed order must be fair and equitable. That will ordinarily involve a consideration of the position of all parties”.

54 It can be seen that the reasons of Wigney J did not seek to confine the scope of s 33ZF to the final determination of the ultimate issues between the parties. Of course, interlocutory orders apt to move the proceeding towards a just conclusion between the parties are within the scope of the sections. 70

… Section 183 (and s 33ZF) cannot be given a more expansive construction and a wider scope of operation than the other provisions of the scheme. To accept this submission would be to use s 183 (and s 33ZF) as a vehicle for rewriting the scheme of the legislation. NETTLE J.

124 … as the plurality reason, seen in the context of Pt IVA of the FCA Act as a whole –​as of course s 33ZF(1) must be construed –​the broad generality of s 33ZF(1), compared to the detail and specificity of other provisions such as ss 33J, 33M, 33N, 33U, 33V, 33X, 33Z and 33ZA, suggests that s 33ZF(1) is in the nature only of a supplementary power to do what is necessary or incidental to achieve the objectives at which those other more detailed, specific provisions are aimed.

COSTS IN CLASS ACTIONS Civil Procedure Act 2005 (NSW) [8.930]  Civil Procedure Act 2005 (NSW) s 181 Section 181 Costs Despite section 98, in any representative proceedings, the Court may not award costs against a person on whose behalf the proceedings have been commenced (other than a representative party) except as authorised by sections 168 and 169.

 [8.940]  Section 181 of the CPA seeks to mirror the approach taken under s 43(1A) of the

FCAA which retains the usual costs rule for litigation that a losing party is liable for the other side’s costs (see Chapter 3), however, the costs rule is limited to the representative party only and does not apply to other group members. This approach to costs provides protection to group members from an adverse costs order. However, it has been raised as a disincentive to the commencement of class action litigation 476 [8.930]

Class Actions in New South Wales  Chapter  8

as the representative party is liable for their own costs (which are arguably incurred for the benefit of the entire group) and, if they are unsuccessful, the costs of their opponent.41 [8.960]  Before turning to litigation funding, which is one solution to the above disincentive to commencing class actions, a number of other solutions will be briefly noted. These solutions may be divided into two main categories: first, those that address the representative party’s liability for their own costs and, second, those that address the risk of being liable to pay an opponent’s costs, that is an adverse costs order.42 In the first category are conditional or no win-​ no fee arrangements whereby the representative only becomes liable to pay their own legal costs if the litigation is successful. Another approach is the American contingency fee (or in class actions the common-​fund approach) where the lawyer does not charge the client for their labour but instead receives a share of any recovery.43 The no win-​no fee arrangement is allowed in New South Wales and in certain circumstances may be coupled with an uplift fee arrangement where the amount payable is increased by a percentage that cannot exceed 25% but contingency fees are illegal.44 Also in the first category is s 184 of the CPA, based on s 33ZJ of the FCAA, which provides that if a judgment was obtained and the representative party is unable to recover all of their reasonably incurred costs from the defendant, the Court may order that the representative party can recover its costs from the damages awarded. Section 184 of the CPA does not apply to a settlement. In the second category is the American approach to costs whereby all litigation is conducted on the basis that each party bears their own costs. A  less drastic change is the concept of public interest costs orders where the Court may decline to make a costs order against an unsuccessful representative party because the nature or subject matter of the litigation was in the public interest. The meaning of public interest is not clear but connotes a matter which impacts the public generally, such as environmental issues, rather than being a private interest or is a test case that seeks to resolve an unsettled area of the law. [8.1000]  At the Federal level, Bray v F Hoffman-​La Roche Ltd [2003] FCAFC 153 considered

the availability of security for costs in a class action brought under the FCAA. The Full Federal Court held that despite group members not being liable for costs pursuant to s  43(1A) of the FCAA, the operation of the law as to security for costs was preserved by s 33ZG(c)(v). Consequently an application for security for costs could be made. Carr J observed: [141] Depending upon the particular circumstances, I  do not think that an order providing reasonable security for costs necessarily operates indirectly to remove the effect of the immunity provided by s 43(1A). It is one thing for a group member to be saddled with an order for what might be joint and several liability for a very substantial costs order at the end of the hearing of a representative proceeding, but it is another thing to have the choice of contributing what might be a modest amount to a pool by which the applicant might provide security for costs.

41

42 43 44

Spender P, “Securities Class Actions: A View from the Land of the Great White Shareholder” (2002) 31 Common Law World Review 123 at 143, 160; Morabito V, “Contingency Fee Agreements with Represented Persons in Class Actions –​An Undesirable Australian Phenomenon” (2005) 31 Common Law World Review 201 at 206. For a more detailed and comparative discussion, see Mulheron R, The Class Action in Common Law Legal Systems: A Comparative Perspective (Hart Publishing, 2004) Ch 12. See Legg M, “Contingency Fees –​Antidote or Poison for Australian Civil Justice?” (2015) 39(3) Australian Bar Review 244. Legal Profession Uniform Law (NSW) ss 181–​183. [8.1000]  477

Civil Procedure in New South Wales

It is a question of balancing the policy reflected in s 43(1A) against the risk of injustice to a respondent, … which, on the admitted facts, has no chance of recovering very substantial costs from the applicant if it is successful in defending the proceedings. [142] Much would depend upon the number of group members involved, their financial circumstances and in particular whether an order for security for costs might stifle the proceedings. In that regard, in my opinion, it was for the applicant to adduce evidence about the likely effect of any order for security for costs. … [8.1003] The NSW provisions do not have an equivalent provision to s 33ZG(c)(v) of the

FCAA. However, it has been held that the absence of a similar provision, while prohibiting security to be ordered against group members, does not preclude the ordering of security against the representative party which may need to be satisfied by the group members. In other words, while the mechanism may differ, the practical effect may be the same. In De Jong v Carnival PLC [2016] NSWSC 347, where the plaintiff sought a refund of the cost of a cruise due to certain destinations being cancels, Beech-​Jones J reasoned as follows (at [6]‌and [26]): For the reasons that follow, I conclude that this Court has the power to order security for costs against the representative party in representative proceedings, but not against group members. I also find that it can stay the proceedings in the event that security is not provided, although the Court might order that the proceedings no longer continue as representative proceedings before ordering a stay. The power to order security for costs is to be exercised in the manner stated by Carr J in Bray v F Hoffman-​La Roche Ltd (2003) 130 FCR 317 (“Bray”) at [141] namely by balancing the policy reflected in s 181 of the CPA against the risk of injustice to a defendant. In circumstances where the representative party is impecunious, but is neither suing on behalf of a person with assets who seeks to avoid a costs liability nor supported by an external funder, then a determination of whether security will be ordered and, in particular, whether an order for security will stifle the proceedings requires that consideration be given to the financial circumstances of group members. If a reasonably strong case for security is made out then it may, and often will, be appropriate to ascertain the capacity and willingness of group members to contribute to a fund to meet any order for security that is made against the representative party. … Bray either is, or has come to be treated as, authority for at least the five following propositions. First, that an order for security against the representative party does not affect the immunity conferred by s 43(1A) (Bray at [141] per Carr J; Madgwick v Kelly at [81] and [87] per Allsop CJ and Middleton J and at [141] per Jessup J). Second, the fact that an impecunious plaintiff brings proceedings for the benefit of represented persons may be a significant factor in favour of an order for security (Madgwick v Kelly at [21] to [23] per Allsop CJ and Middleton J). Third, that to obtain an order for security it is not necessary to demonstrate that the representative party had been deliberately selected to shield group members with substantial means for whose benefit the proceedings were brought (Bray at [144] per Carr J; Madgwick v Kelly at [21] to [23] per Allsop CJ and Middleton J). Fourth, that the party resisting security on the basis that it will stultify the proceedings bears the onus of proof of that fact (Bray at [142], [144], [214] and [250]; Madgwick v Kelly at [80] and [87] per Allsop CJ and Middleton J and at [141] per Jessup J). Fifth, that the financial circumstances of group members are relevant to an application for security especially the contention that an order for security would stultify the proceedings (Bray at [142] per Carr J; Madgwick v Kelly at [80] to [88] per Allsop CJ and Middleton J and at [141] per Jessup J).

Beech-​Jones J held that the contention that an order for security will stifle the case proceedings had not been made out because little was known about the capacity and willingness of group members to contribute to a fund to meet any order for security. His Honour ordered that information be included in the opt-​out form to ascertain the capacity and willingness of group members to contribute an amount representing 15% of the cost of the cruise they paid for 478 [8.1003]

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to create a pool of funds to satisfy an order for security. In De Jong v Carnival PLC (No 3) [2016] NSWSC 1461, Beech-​Jones J considered the group members responses to the opt-​ out notice. His Honour ordered Ms De Jong to provide security for costs in the amount of $145,000.00, which was calculated as 15% of the claims of those group members who responded and indicated that they could pay ($9,866.18), and 15% of the fares of half of those group members who did not respond ($135,119.55). [8.1007] In Eades v Endeavour Energy [2018] NSWSC 801, a claim for personal injury and/​

or loss and damage to personal or real property from a bushfire, a motion seeking security for costs from an impecunious individual representative party using the same approach as in De Jong v Carnival PLC was denied. Garling J considered a number of factors relevant to whether security should be ordered, including that: [95] Here, there is no suggestion that the proceedings are not properly constituted, and no application has been made under s 166 of the Civil Procedure Act for the proceedings not to continue as group proceedings. In such circumstances, there is an absence of a principled approach for the determination of a security for costs application when such an order would not ordinarily be made in individual proceedings [because in claims for personal injury, traditionally security for costs are rarely, if ever, ordered]. [96] The mere fact that the proceedings are representative proceedings does not on its own seem to be an adequate reason. The nature of the claims is not changed by virtue of their being brought as part of a group. Perhaps the principal difference is the existence of s 181 of the Civil Procedure Act and the policy which underlies it, which precludes the Court from making a costs order against a group member. But it would be curious that such a provision would, as a matter of principle, have the consequence that an order for security for costs would be more readily made than in individual proceedings. This is more so when one considers that a costs order in favour of the defendant in the individual proceedings would be likely to be unpaid whilst ever the individual claimant remained impecunious. [97] It is even more curious in circumstances such as these, where significant benefits to the defendants arise as a result of the action being constituted as representative proceedings. Those benefits include, but are not limited to, having to defend the claims on liability issues on one occasion only rather than in each individual proceeding on multiple occasions, and concomitant savings of time, effort and expense.

LITIGATION FUNDING [8.1010]  In a typical litigation-​funding arrangement, the funder (usually a commercial entity) will enter into an agreement with one or more potential litigants. The funder pays the costs of the litigation (such as the lawyer’s fees, disbursements, project management and claim investigation costs) and usually accepts the risk of paying the other party’s costs in the event that the claim fails through providing the plaintiff with an indemnity. In return, if the claim is successful, the funder will receive a certain percentage of any funds recovered by the litigants either by way of settlement or judgment, and the litigants will assign the funder the benefit of any costs order they receive. The share of the proceeds is agreed with the litigants and is typically between one third and two thirds of the proceeds (usually after reimbursement of costs).45

45

Waye V, “Conflicts of Interests between Claimholders, Lawyers and Litigation Entrepreneurs” (2007) 19(1) Bond Law Review 225 at 297; 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 at 56. See Jeffery & Katauskas Pty Limited v SST Consulting Pty Ltd (2009) 239 CLR 75 for an example of a litigation-​funding arrangement that did not include an indemnity for adverse costs. [8.1010]  479

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[8.1020] For a litigation funder to determine whether to fund an action, they must calculate

the risk associated with the litigation, that is, the prospects of success. They must also quantify the amount of a successful recovery and their potential liability for the costs of the proceedings (the expenses they incur bringing the suit and the risk of having to pay the defendant’s costs if the action fails). In simple terms, litigation funders will fund litigation when the probability of a successful outcome multiplied by the amount they stand to recover is greater than the probability of an unsuccessful outcome multiplied by the costs they are liable for.46 Ideally, the percentage of the recovery going to the funder should reflect the risk inherent in the proceedings. The riskier the proceedings, the greater the share of the proceeds that will need to be payable to the funder to make the investment attractive. However, the litigation funder is able to spread the risk associated with a particular proceeding by adopting a portfolio approach to its inventory of cases.47 If the funder is going to fund a claim involving novel theories of liability and therefore take a greater risk, it can offset the risk by also funding a low risk case where liability is clear. In summary, litigation funding is a business which decides whether to fund cases based on risk and return. [8.1030] Litigation funding does not just make available the financing needed for identifying

and prosecuting potential lawsuits. For example, central to class action litigation is the entrepreneur who can identify the potential lawsuit, undertake the due diligence to determine the feasibility of litigation, organise a representative party and group members, provide financing to fund the costs that are incurred and co-​ordinate the resources needed to achieve a favourable settlement or judgment. The litigation funder frequently performs this role, although assisted, more or less, by the lawyers for the representative party.48

Campbells Cash & Carry v Fostif [8.1040]  Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41; (2006) 229 CLR 386 [The proceedings concerned claims for the recovery of amounts paid by tobacco retailers to tobacco wholesalers, allegedly for the purposes of the wholesalers paying a licence fee, later found to be unconstitutional. As a result, the amounts sought to be recovered in the proceedings were never paid by the wholesalers to the various State and Territory governments. In 2001, the High Court allowed a similar claim by seven NSW tobacco retailers against a tobacco wholesaler.49 The proceedings were instigated by a litigation funder who was prepared to underwrite the litigation (and meet any costs order against the plaintiffs) in exchange for one-​third of any amounts recovered, plus the benefit of any costs order. There were a number of different proceedings, but each took a similar form whereby a single plaintiff retailer made a claim against a defendant wholesaler. The High Court held 5 to 2 that litigation funding was not an abuse of process or contrary to public policy. The joint judgment of Gummow, Hayne and Crennan JJ indicated that existing doctrines of abuse of process and the courts’ ability to protect their processes would be sufficient to deal

6 4 47

48 49

Walker J, Khouri S and Attrill W, “Funding Criteria for Class Actions” (2009) 32(3) UNSW Law Journal 1036. A portfolio approach means that it is not enough to look at the expected risk and return of one particular investment. Investors can reduce their exposure to individual asset risk by holding a diversified portfolio of assets. Colloquially, this is described as not putting all your eggs in one basket. See Carew E, The Language of Money (3rd ed, Allen & Unwin, 1996) p 257. Legg M, “Shareholder Class Actions in Australia –​The Perfect Storm?” (2008) 31(3) UNSW Law Journal 669 at 707. Roxborough v Rothmans of Pall Mall (2001) 208 CLR 516.

480 [8.1020]

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Campbells Cash & Carry v Fostif cont. with a funder conducting themselves in a manner “inimical to the due administration of justice”.50 Gleeson CJ and Kirby J agreed with the reasoning of the joint judgment.51 Callinan and Heydon JJ dissented on this issue.52] GUMMOW, HAYNE and CRENNAN JJ Public policy and abuse of process in the courts below [63] The Court of Appeal concluded that neither the role occupied by Firmstones in connection with the litigation, nor the particular funding arrangements that were made and proposed to be made, justified the staying of the proceedings. The court concluded that whether proceedings funded by a litigation funder are an abuse of process depends on whether the role of that funder “has corrupted or is likely to corrupt the processes of the court to a degree that attracts the extraordinary jurisdiction to dismiss or stay permanently for abuse of process”. In the present matters, the Court of Appeal identified several facts as requiring the conclusion that there was no abuse of process. First, the proceedings were under judicial supervision; second, Firmstones’ control of the litigation was “not excessive”; third, Firmstones’ fees were not excessive; fourth, there was a solicitor on the record; and fifth, the individual claims were small (making separate recovery processes unlikely). [64] At first instance, Einstein J had characterised Firmstones’ activities as “trafficking in the retailers’ litigation”, and made a number of more specific criticisms of the relationships that existed between Firmstones, the retailers and the solicitor engaged by Firmstones to act in “the project”. Particular emphasis was given to statements made in correspondence between Firmstones and the solicitor to the effect that the solicitor was engaged by Firmstones as principal, not as agent for the retailers, and that Firmstones would “liaise with [its] clients. [The solicitor] will not directly liaise with [Firmstones’] clients”. [65] In the Court of Appeal, Mason P, who gave the principal reasons of the court, rejected the criticisms made of the relationship between the solicitor and the retailers, concluding that the solicitor had adopted the normal role as a solicitor on the record in the litigation. Questions of public policy were treated as having turned at first instance on whether the funding arrangements were champertous. Mason P said that the policy of the law had changed: “[t]‌he law now looks favourably on funding arrangements that offer access to justice so long as any tendency to abuse of process is controlled”. Mason P concluded that the present litigation should be regarded as falling within the principle that “[p]ublic policy now recognises that it is desirable, in order to facilitate access to justice, that third parties should provide assistance designed to ensure that those who are involved in litigation have the benefit of legal representation”. The Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) [66] Examination of questions of public policy must begin from consideration of the Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) (the Abolition Act). By the Abolition Act the offence of maintenance, including champerty that, but for s 3 of the Act, would be punishable by the common law, was abolished. Section 4 of the Abolition Act provided that “[a]‌n action in tort no longer lies on account of conduct known as maintenance (including champerty)”. Sections 3 and 4 indicated that the principles respecting maintenance and champerty were expressed both in the criminal law and the law of tort. But s 6 of the Abolition Act assumed that when the statute was enacted there may have been a more broadly based rule in the Australian common law. Section 6 provided:

50 51 52

Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at [93]. See also Jeffery & Katauskas Pty Limited v SST Consulting Pty Ltd (2009) 239 CLR 75 at [26], [29]–​[30]. Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at [1]‌, [146]. Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at [287]. [8.1040]  481

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Campbells Cash & Carry v Fostif cont. 6 Preservation of liability under certain contracts This Act does not affect any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal, whether the contract was made before, or is made after, the commencement of this Act. [67] It is evident from s 6 of the Abolition Act that questions of maintenance and champerty are not to be regarded as always legally irrelevant. Section 6 assumes that considerations of public policy and illegality can still arise in connection with contracts providing for or dealing with maintenance or champerty. The Abolition Act, however, does not state explicitly whether questions of maintenance or champerty are relevant to issues of abuse of process. Nor does it deal directly with what scope is to be given to public policy or doctrines of illegality when the conduct in question is no longer to be characterised as criminal or tortious. … Abuse of process? [83] In the present matters, the appellants did not contend that maintenance or champerty provided any defence to the claims made against them. But they did contend that the nature of the funding arrangements made and to be made by Firmstones with retailers warranted the conclusion reached by Einstein J that those arrangements constituted an abuse of process. [84] The appellants sought to encapsulate their submissions on this aspect of the appeals by describing Firmstones’ conduct as “trafficking” in the litigation. Expressed in that way, the appellants’ submission may be understood as conflating two separate propositions: first, that the funding arrangements constituted maintenance or champerty, and, second, that for the maintainer to institute and continue proceedings, in the name of or on behalf of plaintiffs who were thus maintained, was an abuse of process which could be avoided only by ordering a stay of the proceedings. The second of these propositions, about abuse of process, assumed that maintenance and champerty give rise to public policy questions beyond those that would be relevant when considering the enforceability of the agreement for maintenance of the proceedings as between the parties to the agreement. [85] In jurisdictions where legislation has been enacted to the same effect as the Abolition Act, the premise for the second proposition identified is not valid: there are several reasons to reject it. It is neither necessary nor appropriate to decide what would be the position in those jurisdictions where maintenance and champerty may remain as torts, perhaps even crimes. [86] First, and foremost, s 6 of the Abolition Act preserved any rule of law as to the cases in which a contract is to be treated as contrary to public policy or as otherwise illegal. It preserved no wider rule of law. The Abolition Act abolished the crimes, and the torts, of maintenance and champerty. By abolishing those crimes, and those torts, any wider rule of public policy (wider, that is, than the particular rule or rules of law preserved by s 6) lost whatever narrow and insecure footing remained for such a rule. As Fletcher Moulton LJ had rightly said nearly a century ago, the law of maintenance and champerty, even then, suffered: from the vice of being based upon definitions of ancient date which were framed to express the law at a time when it was radically different from what it is at the present day… Secondly, the asserted rule of public policy would readily yield no rule more certain than the patchwork of exceptions and qualifications that could be observed to exist in the law of maintenance and champerty at the start of the twentieth century. As Fletcher Moulton LJ had also said, it was then “far easier to say what is not maintenance than to say what is maintenance”. No certain rule would emerge because neither the content nor the basis of the asserted public policy is identified more closely than by the application of condemnatory expressions like “trafficking” or “intermeddling”, with or without the addition of epithets like “wanton and officious”. [87] In the present matters, the appellants pointed to a number of matters which together were said to be important. First, there was Firmstones’ seeking out of claimants, which the appellants described as “officious intermeddling”. Secondly, there was the degree of control which Firmstones 482 [8.1040]

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Campbells Cash & Carry v Fostif cont. would have over the proceedings, the litigants’ interests being said to be “subservient” to those of the “intermeddler”. Firmstones’ retainer of a solicitor to act for the plaintiffs and represented parties was said not to lessen Firmstones’ control of the proceedings but to give rise to possible conflicts of duty for the solicitor. Thirdly, it was said that Firmstones bought rights to litigate and did so with a view to profit. Firmstones was, so it was submitted, “a speculative investor in other persons’ litigation”. [88] Shorn of the terms of disapprobation, the appellants’ submissions can be seen to fasten upon Firmstones’ seeking out those who may have had claims, and offering terms which not only gave Firmstones control of the litigation but also would yield, so Firmstones hoped and expected, a significant profit to Firmstones. But none of these elements, alone or in combination, warrant condemnation as being contrary to public policy or leading to any abuse of process. [89] As Mason P rightly pointed out in the Court of Appeal, many people seek profit from assisting the processes of litigation. That a person who hazards funds in litigation wishes to control the litigation is hardly surprising. That someone seeks out those who may have a claim and excites litigation where otherwise there would be none could be condemned as contrary to public policy only if a general rule against the maintenance of actions were to be adopted. But that approach has long since been abandoned and the qualification of that rule (by reference to criteria of common interest) proved unsuccessful. And if the conduct is neither criminal nor tortious, what would be the ultimate foundation for a conclusion not only that maintaining an action (or maintaining an action in return for a share of the proceeds) should be considered as contrary to public policy, but also that the claim that is maintained should not be determined by the court whose jurisdiction otherwise is regularly invoked? [90] Two kinds of consideration are proffered as founding a rule of public policy –​fears about adverse effects on the processes of litigation and fears about the “fairness” of the bargain struck between funder and intended litigant. In Giles [v Thompson [1994] 1 AC 142], Lord Mustill said that the law of maintenance and champerty could best “be kept in forward motion” by looking to its origins; these his Lordship saw as reflecting “a principle of public policy designed to protect the purity of justice and the interests of vulnerable litigants”. [91] Neither of these considerations, whatever may be their specific application in a particular case, warrants formulation of an overarching rule of public policy that either would, in effect, bar the prosecution of an action where any agreement has been made to provide money to a party to institute or prosecute the litigation in return for a share of the proceeds of the litigation, or would bar the prosecution of some actions according to whether the funding agreement met some standards fixing the nature or degree of control or reward the funder may have under the agreement. To meet these fears by adopting a rule in either form would take too broad an axe to the problems that may be seen to lie behind the fears. [92] It is necessary to bear steadily in mind that questions of illegality and public policy may arise when considering whether a funding agreement is enforceable. So much follows from s 6 of the Abolition Act. Further, to ask whether the bargain struck between a funder and intended litigant is “fair” assumes that there is some ascertainable objective standard against which fairness is to be measured, and that the courts should exercise some (unidentified) power to relieve persons of full age and capacity from bargains otherwise untainted by infirmity. Neither assumption is well founded. [93] As for fears that “the funder’s intervention will be inimical to the due administration of justice”, whether because “[t]‌he greater the share of the spoils … the greater the temptation to stray from the path of rectitude” or for some other reason, it is necessary first to identify what exactly is feared. In particular, what exactly is the corruption of the processes of the court that is feared? It was said, in Re Trepca Mines Ltd (No 2), that “[t]he common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses”. Why is that fear not sufficiently addressed by existing doctrines of abuse of process and other procedural and substantive elements of the court’s processes? And if lawyers undertake obligations that may give rise to conflicting duties there is no reason proffered for concluding that [8.1040]  483

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Campbells Cash & Carry v Fostif cont. present rules regulating lawyers’ duties to the court and to clients are insufficient to meet the difficulties that are suggested might arise. [94] The appellants submitted that special considerations intrude in “class actions” because, so it was submitted, there is the risk that such proceedings may be used to achieve what, in the United States, are sometimes referred to as “blackmail settlements”. However, as remarked earlier in these reasons, the rules governing representative or group proceedings vary greatly between courts and it is not useful to speak of “class actions” as identifying a single, distinct kind of proceedings. Even when regulated by similar rules of procedure, each proceeding in which one or more named plaintiffs represent the interests of others will present different issues and different kinds of difficulty. [95] The difficulties thought to inhere in the prosecution of an action which, if successful, would produce a large award of damages but which, to defend, would take a very long time and very large resources, is a problem that the courts confront in many different circumstances, not just when the named plaintiffs represent others and not just when named plaintiffs receive financial support from third-​party funders. The solution to that problem (if there is one) does not lie in treating actions financially supported by third parties differently from other actions. And if there is a particular aspect of the problem that is to be observed principally in actions where a plaintiff represents others, that is a problem to be solved, in the first instance, through the procedures that are employed in that kind of action. It is not to be solved by identifying some general rule of public policy that a defendant may invoke to prevent determination of the claims that are made against that defendant. Conclusions and orders [96] It follows that the funding arrangements made and proposed to be made by Firmstones did not constitute a ground to stay the present proceedings. CALLINAN and HEYDON JJ [266] Further, it is not the law that proceedings funded by a litigation funder can only be stayed on the ground of abuse of process if there is an actual corruption, or a tendency to corruption, of the processes of the court. The approach stated by the Court of Appeal is much stricter than, and does not accord with, that which is suggested by the expression “abuse of process”. The expression is a wide one, capable of application in very diverse circumstances. But, in general, the aspect of “abuse of process” which is relevant for present purposes is that the process of the court is abused when it is employed for some purpose other than that which it is intended by the law to effect. The justifications for the court’s intervention against this kind of abuse of process as exemplified by some forms of litigation funding are diverse. Court process is expensive for the state to supply and for litigants to participate in. It is coercive and otherwise injurious both to litigants and to third parties and should not be employed beyond legitimate necessity. To the extent that people with urgent claims are held out from having them heard by actions in abuse of process, the latter actions should be stayed so that the former may be heard. Normal litigation is fought between parties represented by solicitors and counsel. Solicitors and counsel owe duties of care and to some extent fiduciary duties to their clients, and they owe ethical duties to the courts. They can readily be controlled, not only by professional associations but by the court. The court is in a position to deploy, speedily and decisively, condign and heavy sanctions against practitioners in breach of ethical rules. The appearance of solicitors is recorded on the court file. Institutions like Firmstone & Feil, which are not solicitors and employ no lawyers with a practising certificate, do not owe the same ethical duties. No solicitor could ethically have conducted the advertising campaign which Firmstone & Feil got Horwath to conduct. The basis on which Firmstone & Feil are proposing to charge [a form of contingency fee] is not lawfully available to solicitors. Further, organisations like Firmstone & Feil play more shadowy roles than lawyers. Their role is not revealed on the court file. Their appearance is not announced in open court. No doubt sanctions for contempt of court and abuse of process are available against them in the long run, but with much less speed and facility than is the case with legal practitioners. In short, the court is in a position to supervise litigation conducted by persons who are parties to it; it is less easy to supervise litigation, one side of which is conducted by a party, while on the other side there are only nominal 484 [8.1040]

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Campbells Cash & Carry v Fostif cont. parties, the true controller of that side of the case being beyond the court’s direct control. Finally, the function of court proceedings is to provide a means of quelling real and active controversies that have arisen between persons who are unfortunate enough to have fallen into disputes with each other and that exist independently of and anterior to the commencement of the proceedings. The purpose of court proceedings is not to provide a means for third parties to make money by creating, multiplying and stirring up disputes in which those third parties are not involved and which would not otherwise have flared into active controversy but for the efforts of the third parties, by instituting proceedings purportedly to resolve those disputes, by assuming near total control of their conduct, and by manipulating the procedures and orders of the court with the motive, not of resolving the disputes justly, but of making very large profits. Courts are designed to resolve a controversy between two parties who are before the court, dealing directly with each other and with the court: the resolution of a controversy between a party and a non-​party is alien to this role. Further, public confidence in, and public perceptions of, the integrity of the legal system are damaged by litigation in which causes of action are treated merely as items to be dealt with commercially.

 [8.1050]  The amendments to s 56 of the CPA as a result of the Courts and Crimes Legislation

Further Amendment Act 2010 (NSW) have meant that litigation funders are now subject to the requirements of the overriding purpose. Further, Practice Note SC Gen 17 requires disclosure of the existence of a litigation funder as follows: 7.2 At or prior to the initial case conference each party will be expected to disclose any agreement by which a litigation funder is to pay or contribute to the costs of the proceedings, any security for costs or any adverse costs order. Any funding agreement disclosed may be redacted to conceal information which might reasonably be expected to confer a tactical advantage on the other party.

[8.1050]  485

CHAPTER 9

Initiating Proceedings and Pleadings [9.10] INTRODUCTION......................................................................................................... 487 [9.20] THE ORIGINATING PROCESS....................................................................................... 488 [9.30] Legal Profession Uniform Law Application Act 2014 –​Schedule 2.......................... 489  [9.60] APPEARANCE............................................................................................................... 492 [9.70] PLEADINGS................................................................................................................. 493 [9.80] Films and Casting Temple v Malla........................................................ 493 [9.100] Banque Commerciale SA (in liq) v Akhil Holdings...................................... 498 [9.110] ASIC v Rich...................................................................................... 499 [9.115] Young v Hones................................................................................. 500 [9.120]

[9.140]

Uniform Civil Procedure Rules 2005 (NSW) rr 14.6–​14.11, 14.14, 14.17–​14.20, 14.22, 14.23............................................................... 502

Material facts.............................................................................................. 506 [9.150]

Charlie Carter v The Shop, Distributive and Allied Employees’ Association of Western Australia.......................................................................... 506

[9.160] Evidence..................................................................................................... 507 [9.170] No conclusions of law as materials facts...................................................... 507 [9.180] Kirby v Sanderson Motors................................................................... 508 [9.190] Markisic v Department of Community Services of New South Wales (No 2)...... 508 [9.200] Surprise....................................................................................................... 508 [9.210] Kasupene v Ajax Foundry.................................................................... 509 [9.230] Glover v Australian Ultra Concrete Floors................................................ 510 [9.240] Verification.................................................................................................. 511 [9.250] Pascoe v Divisional Security Group........................................................ 511 [9.260] PARTICULARS.............................................................................................................. 512 [9.270] [9.280] [9.300] [9.320]

Uniform Civil Procedure Rules 2005 (NSW) rr 15.1. 15.3, 15.5, 15.6, 15.9, 15.10.................................................................................... 512 Bailey v Federal Commissioner of Taxation.............................................. 513 Boral Bricks v Cosmidis....................................................................... 513 BWK Elders Australia v Westgate Wool Company...................................... 515

[9.330]

Particulars and evidence.............................................................................. 515 Allianz v Newcastle Formwork Constructions........................................... 515 Douglas v John Fairfax & Sons............................................................. 516 Dare v Pulham................................................................................. 516 [9.370] When are particulars required?.................................................................... 517 STRIKING OUT PLEADINGS......................................................................................... 517 [9.390] Uniform Civil Procedure Rules 2005 (NSW) r 14.28.................................. 518 [9.400] Markisic v Department of Community Services of New South Wales (No 2)...... 518 [9.410] Pleadings that cause prejudice, embarrassment or delay............................. 518 [9.410] Priest v New South Wales................................................................... 518 [9.420] Pleadings that do not disclose a reasonable cause of action......................... 519 [9.420] Silverside Superfunds v Silverstate Developments..................................... 519 [9.430] Shaw v New South Wales................................................................... 520 [9.440] New South Wales v Williams............................................................... 522 [9.330] [9.350] [9.360]

[9.380]

INTRODUCTION [9.10]  This chapter discusses the process by which proceedings are initiated in New South

Wales and the rules concerning pleadings. Section 3 of the Civil Procedure Act 2005 (NSW) (CPA) defines the “originating process” as the process by which proceedings are commenced, [9.10]  487

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and includes the process by which a cross-​claim1 is made. Section 3 also defines “plaintiff” as a person by whom proceedings are commenced and includes a person by whom a cross-​claim is made. “Defendant” is defined as a person against whom proceedings are commenced, and includes a person against whom a cross-​claim is made. The Dictionary to the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides that these words as defined in the CPA have the same meanings in the UCPR.

THE ORIGINATING PROCESS [9.20]  In New South Wales, proceedings are initiated by using either a statement of claim or

summons: UCPR r 6.2. These documents are referred to as the originating process. The date of filing of the originating process is conclusive for the purposes of any limitation defences. In general terms, statements of claim are usually required where the proceedings involve disputed contentions of fact and they will initiate the pre-​trial and trial processes for that purpose. A  summons, on the other hand, is used where a question of law, rather than a substantial dispute of fact, is at issue. A summons initiates a summary procedure, and a return date for determination of the matter is entered on the summons by the Court Registry when it is filed. In matters commenced by summons, evidence in chief is usually given by affidavit, rather than by oral testimony, enabling the court to give a speedy determination. In civil proceedings in New South Wales, the form of the originating process is prescribed by the UCPR. Proceedings in which a statement of claim must be used are prescribed by UCPR r 6.3. Such proceedings include proceedings on a claim for relief in relation to a debt or other liquidated claim;2 a claim for relief in relation to a tort; a claim based on an allegation of fraud; and a claim for damages for breach of duty where the damages claimed consist of or include damages in respect of the death of any person, or damages in respect of personal injuries to any person, or damages to any property. UCPR r 6.4 prescribes the proceedings for which a summons must be used. These include, for example, proceedings in which there is no defendant; an appeal or application for leave to appeal (other than proceedings assigned to the Court of Appeal); and proceedings for preliminary discovery. Proceedings in the Supreme Court in which the plaintiff intends to be entered in the Commercial List or the Technology and Construction List3 are also to be commenced by a summons. A summons may be used to commence proceedings (except where the application pertains to a proceeding already commenced) for other specific kinds of matters, for example, proceedings on an application for an injunction and for the appointment of a receiver. If the plaintiff incorrectly uses the wrong originating process, whether commenced by statement of claim or summons, there are rules that nevertheless take the proceedings to have been duly commenced and that provide the court with power to make appropriate orders: UCPR r 6.5, r 6.6.

1 2

3

See Chapter 6 for discussion of cross-​claims. A “debt or liquidated claim” is where a particular sum of money is due. The sum of money must be ascertainable by mere arithmetic. The UCPR Dictionary indicates that a “liquidated claim” includes a claim for interest up to judgment. There are specific rules concerning liquidated claims, see, for example, UCPR rr 6.17, 16.6, and 29.7(3). See also UCPR rr 45.6 and 45.7 as well as Practice Note SC Eq 3 Supreme Court Equity Division –​Commercial List and Technology and Construction List.

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The contents and appearance of the originating process have specific requirements.4 Information that must be contained in the originating process is prescribed, as are the paper and margin sizes, those parts of the document that must be in bold print, and the requirements for a proper address for service. The originating process should also specifically state the relief claimed:  UCPR r 6.12. Approved forms should be used for statements of claim and for summons.5 The originating process is also required to contain a notice to the defendant indicating the consequences of the defendant not filing a defence or notice of appearance.6 Sample originating processes are included in Chapter 16. As a general rule, the originating process describes the parties,7 and includes their address and address for service of documents. The fairness of the process is reinforced by the fundamental principle of open justice so that justice can be seen to be done. Reference has been made in Chapter 1 to CPA s 71 (Business in the absence of the public) and the Court Suppression and Non-​publication Orders Act 2010 (NSW). Section 7 of that Act provides power to the court to make a suppression order or non-​publication order of “information tending to reveal the identity of or otherwise concerning any party to … proceedings before the court”. The specific grounds for making such an order are specified in s 8. Schedule  2 of the Legal Profession Uniform Law Application Act 2014 (NSW) places obligations on legal practitioners in regard to initiating and defending legal proceedings.

Legal Profession Uniform Law Application Act 2014 –​Schedule 2 [9.30]  Schedule 2 –​Costs in civil claims where no reasonable prospects of success 1 Application of Schedule (1)

Schedule extends to appeals



vThis 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. 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.

4 5 6 7

See UCPR rr 4.2–​4.9. See Forms 3A and 3B for statements of claim and Forms 4A and 4B for summons at http://​www.ucprforms. justice.nsw.gov.au. See UCPR r 6.13 for statements of claim and r 6.14 for summons. See UCPR r 7.1 for who can commence proceedings. For example, a natural person may commence and carry on proceedings either by a solicitor acting on his or her own behalf or in person. A company within the meaning of the Corporations Act 2001 (Cth) may commence and carry on proceedings by a solicitor or by a director of a company (but if the proceedings are in the Supreme Court only if the director is also a plaintiff in the proceedings) or in a Local Court (unless the court otherwise orders) by a duly authorised officer or employee of the company. [9.30]  489

Civil Procedure in New South Wales

Legal Profession Uniform Law Application Act 2014 – Schedule 2 cont. (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.

(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,



(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.

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Legal Profession Uniform Law Application Act 2014 – Schedule 2 cont. (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.

(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.

 [9.50] An originating process initiating proceedings in the Supreme Court, Dust Diseases

Tribunal or Local Court is valid for service for six months. An originating process that initiates proceedings in the District Court is valid for service for one month after the date it was filed unless the defendant(s) is to be served outside New South Wales, in which case it is valid for six months: UCPR r 6.2(4). A failure to serve the originating process within the prescribed time does not prevent the plaintiff from commencing fresh proceedings by filing another originating process: UCPR r 6.2(5). [9.50]  491

Civil Procedure in New South Wales

[9.55]  The originating process must be served on each defendant: UCPR r 6.2(3). The copy

of the originating process that is served must include the seal of the court on the first page (the sealed copy or a photocopy of the seal copy is acceptable), the case number or unique identifier, and the listing date (if allocated by the court registry).8 After the plaintiff’s originating process has been served, the defendant has the opportunity to respond with an appearance or a defence by using the prescribed form.9

APPEARANCE [9.60] The defendant may file an appearance10 or a defence and serve it on the plaintiff’s

address for service as indicated on the plaintiff’s statement of claim or summons. A defendant who files a defence is taken to have entered an appearance in the proceedings: UCPR r 6.9(2). When a defendant responds in this way it prevents the plaintiff who served the statement of claim from entering a default judgment (see Chapter 15). If the plaintiff served a summons, the appearance prevents the plaintiff from seeking judgment for the relief claimed. Entering an appearance can be done by a solicitor or by the defendant in person. If the defendant is a corporation, an appearance can be entered by an authorised officer. However, if the matter is in the Supreme Court or District Court, an affidavit must be filed by the authorised officer of the corporation attesting to his or her authority to act:  UCPR r  7.2. Evidence of the instrument that provides the authority must be annexed. Entering an appearance formally notifies the court and the plaintiff that the defendant intends to take some part in the proceedings and may indicate a submission to the jurisdiction. It also acts as a waiver to object to any possibility that the originating process has failed to comply with the rules.11 There is express provision for a responding party to file an appearance submitting to the orders of the court “save as to costs”: UCPR r 6.11(1). One effect of this is that the party cannot, without leave, take any other step in the proceedings: see r 6.11(2). The appearance or defence must be filed within prescribed time periods. If the originating process is a statement of claim, an appearance12 or a defence13 must be entered within 28 days after service of the statement of claim. If the originating process is a summons, the appearance must be filed on or before the return date stated on the summons.14 If a defendant wishes to object to the jurisdiction, or the originating process, or service of the originating process, an appearance should not be entered. Instead, a notice of motion (or an application) pursuant to UCPR r 12.11 should be made for, inter alia, any of the following: an order to set aside the originating process or service of it; an order declaring that the court does not have jurisdiction over the defendant in respect of the subject matter of the proceedings; an order declining jurisdiction in the proceedings; or an order granting such other relief as the court thinks appropriate. An application for an order under UCPR r 12.11 must be made within the time period prescribed for entering an appearance, and an application for an order

8 9 0 1 11 12 13 14

See UCPR r 6.2(3A). Forms 6A or 6B for an Appearance or, for a Defence, Forms 7A or 7B. See http://​www.ucprforms.justice. nsw.gov.au. See UCPR r 6.9. UCPR r 12.5 provides for leave to withdraw an appearance by leave of the court. See UCPR r 6.10. See UCPR r 14.3. See UCPR r 6.10.

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under this rule is specifically excluded from the requirement contained in UCPR r 6.1 that a party may not take any step in the proceedings without entering an appearance. UCPR r  12.5 allows a defendant to seek leave to withdraw an appearance, and UCPR r 12.6 allows the defendant to seek leave to withdraw any matter that is contained in a defence or subsequent pleading.

PLEADINGS [9.70]  Pleadings are formal documents filed in court and exchanged between the parties that

set out the plaintiff’s claim and the defendant’s response to the claim. The UCPR Dictionary indicates that “pleading” includes a statement of claim, defence, reply and any subsequent pleading for which leave is given under Pt 14, but does not include a summons or notice of motion. Pleadings apply in proceedings that are appropriate for trial rather than for matters being dealt with by summary determination. Because pleadings are binding on the parties, the pleading process creates the incentive to respond. Once the statement of claim has been filed and served on the defendant, each factual allegation in the statement of claim is deemed to be admitted unless the defendant denies the allegation or makes a statement of non-​admission in regard to each allegation: UCPR r 14.26. After the defence has been delivered, the last unanswered pleading is deemed to be denied unless further pleadings15 are served: UCPR r 14.27. If the defendant does not file a defence within the time prescribed, the defendant is in default16 and the plaintiff can apply to the court for a judgment to be given17 (see Chapter 15). It should be noted that pleadings may be amended and, with leave of the court, even at the stage of trial. Further, a court may decide a case on the evidence presented notwithstanding that a cause of action may have been pleaded defectively. In Films and Casting Temple v Rajesh Malla [2013] NSWCA 377, the New South Wales Court of Appeal (Ward and Gleeson JJA; McDougall  J) held that pleadings that had mischaracterised the effect of a contractual provision, the terms of which had been adduced in evidence at trial and proved without objection, did not preclude the court from deciding the claim on the basis of the contractual term as proved, not as pleaded.

Films and Casting Temple v Malla [9.80]  Films and Casting Temple v Rajesh Malla [2013] NSWCA 377 MCDOUGALL J (WARD AND GLEESON JJA AGREEING) The issues on appeal [37] Temple’s notice of appeal raised the following issues: (1)

15

6 1 17

Whether Mr Malla breached PA1 “as pleaded in” the FASC (ground 1);

Pursuant to UCPR r 14.2, the court can order that the proceeding may be properly tried without further pleadings and, if such an order is made, may direct the parties to prepare a statement of the issues in the proceedings or if the parties do not agree may settle a statement itself. This rule allows the court to advance the overriding purpose in s 56 of the CPA. See UCPR r 16.2. See UCPR r 16.3. [9.80]  493

Civil Procedure in New South Wales

Films and Casting Temple v Malla cont. (2)

In the alternative, whether Temple was entitled to damages for breach of PA1 “notwithstanding the way in which PA1 was pleaded in” the FASC (ground 2);

(3)

Whether Mr Malla’s guarantee under the 23 May agreement operated “in the circumstances of this case” (ground 4);

(4)

Whether Mr Malla was liable under his guarantee “by reason of Anjana Productions’ failure to pay Temple the sum of $149,471.83” (ground 5);

(5)

Whether the 23 May agreement “comprised not only the letter of 23 May 2010, but also the email correspondence leading up to the signing of that letter” (ground 6); and

(6)

Whether the words “if Anjana is unable to pay” should be construed to mean “if Anjana fails to pay”; this ground sought to call in aid, in support of that construction, the email correspondence referred to in ground 6 (ground 7).

Grounds 1 and 2: the claim under cl 9.3 The parties’ submissions [38] Mr Horowitz of Counsel, for Temple (who did not appear for Temple before the primary judge), submitted that the primary judge had erred in her approach to the claim based on cl 9.3. He submitted that: (1)

the “mischaracterisation” of the effect of cl 9.3 was not fatal to Temple’s claim; it had pleaded and particularised the elements of a valid cause of action for breach of contract, and the superfluous although erroneous allegation as to the effect of cl 9.3 was not an insuperable obstacle to success.

(2)

Since the contract was in evidence, and the facts said to amount to breach of cl 9.3 were likewise in evidence, it had been incumbent on the primary judge to deal with the case on the basis of the evidence that had been admitted.

(3)

Perhaps as a variant of the preceding submission, the parties had conducted this aspect of the proceedings on the basis of cl 9.3 as it was drafted, not as it was pleaded, and the primary judge should have dealt with this aspect on the same basis.

[39] As to the guarantee claim, Mr Horowitz submitted that: (1)

as a matter of fact, Anjana was “unable” to pay Temple, because its directors would not permit or direct it to do so.

(2)

Alternatively, on their proper construction, the relevant provisions of the 23 May agreement required Mr Malla to pay the amount owed by Anjana to Temple if Temple failed to do so.

(3)

Alternatively, the word “unable” should be construed to mean “unwilling” in the context of the 23 May guarantee, understood “in light of the relevant extrinsic evidence” (including an exchange of emails between the parties and a conversation between Mr Sharma of Temple and Mr Malla).

(4)

Alternatively, since the 23 May agreement in terms was a summary of “our agreed settlement”, it was proper to go to the evidence showing what that “agreed settlement” was for the purpose of understanding the nature of the guarantee obligation undertaken by Mr Malla.

[40] Mr Cook of Counsel, for Mr Malla (who did not appear for Mr Malla before the primary judge), submitted, as to the claim under cl 9.3, that: (1)

the claim as pleaded had properly failed, and the claim now pressed had not been pleaded.

(2)

Had the claim now pressed been pleaded, Mr Malla might well have raised other defences, including that cl 9.3, as drafted and agreed, was an unenforceable restraint of trade.

(3)

The pleaded case was based on protection of confidential information and sought an account of profits for alleged breach of what was said to be an equitable obligation of confidence; there was no pleaded case seeking damages for breach of cl 9.3.

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Films and Casting Temple v Malla cont. (4)

The way the claim for damages was now put assumed that there was in effect a joint venture between Temple and Mr Malla; or that (to paraphrase the way that leading counsel for Temple opened the case to the primary judge), Mr Malla’s obligation was to “bring Temple in”; and that, by breach of this obligation, Temple would have earned income.

(5)

However, Temple had not proved that it would have been “brought in”; Mr Malla could equally have performed his obligations under cl 9.3 by declining to be involved with PN 12 or with the second stage of Orange.

(6)

Further, and as a variant of the preceding submission, since Temple’s claim for damages under cl 9.3 was in substance a claim for lost opportunity, it had to show that it had been deprived of a lost opportunity to make profit, and the strength of that opportunity.

(7)

Further, although the claim was characterised as one for loss of profit, the primary judge’s quantification of the claim appeared to reflect revenues rather than profit (Mr Cook acknowledged that this was a point that should have been raised by way of notice of contention).

Decision –​the claim under cl 9.3 [41] I start with the pleading point. [42] It is clear that FASC para 6 does not correctly characterise cl 9.3 of PA1. Clause 9.3 is in substance a restraint of trade (I express no view as to whether it is or is not enforceable). Its stated purpose is to protect what is asserted to be Temple’s “leading advantage and know how about the niche industry –​Indian film in Australia”. By its terms Mr Malla accepted that, through performance of PA1, he would have access to confidential information of Temple; and he agreed that he would not “deal with any Indian film project” unless Temple provided “production management”, for the agreed period of two years from signing. [43] Whatever cl 9.3 is, it is not an agreement by Mr Malla that he would engage, or procure the engagement of, Temple to provide production management services for any Indian film project with which Mr Malla might deal for the described period. [44] In essence, Mr Malla could have performed his obligations under cl 9.3 in one of two ways: (1)

by not dealing with any Indian film project for the period of the restraint; or

(2)

by not dealing with any Indian film project for the period of the restraint unless Temple were engaged to provide production management services.

[45] If, in relation to any particular Indian film project, Mr Malla took the first course, there would be no question of his using, for his own benefit, any confidential information of Temple. If Mr Malla took the second course, whatever use he might make of any confidential information would be for the joint benefit of himself and Temple. Perhaps as importantly from Temple’s perspective, that use would be within the knowledge, or in a broad sense under the oversight, of Temple. [46] The relief claimed, in respect of cl 9.3, was a restraint for the balance of the two year period and an account of profits. No relief was sought by way of damages. The damages claim did not surface until leading counsel for Temple opened the case before the primary judge. That way of presenting, or narrowing, Temple’s case may have come as some surprise to counsel then appearing for Mr Malla; but if it did, there does not seem to have been any protest. [47] Mr Horowitz submitted that the relevant procedural obligation imposed on his client was to plead the facts material to its cause of action. He submitted that, if the facts proved showed that Temple was entitled to relief, then the court should give it that relief. It was not necessary that the court should find proved the cause of action pleaded; it was sufficient that the court find that the facts proved demonstrated an entitlement to relief. [48] That may be accepted. It is made good by the judgment of Perry J in SP Hywood Pty Ltd v Standard Chartered Bank Ltd [1992] SASC 3764, in particular at [50] to [52]. In the last of those paragraphs, his Honour said: [9.80]  495

Civil Procedure in New South Wales

Films and Casting Temple v Malla cont. … all causes of action are at large at the end of the trial, in the sense that judgment may be given upon any cause of action open on the evidence as proved, irrespective of the manner in which the plaintiff’s case has been presented, or argued. [49] I would qualify that only by saying that before the court proceeds thus, it should ensure that the party affected by the proposed judgment has been given an adequate opportunity (either through the conduct of the trial or otherwise) to deal with the case that has in fact been made good. And I think that it is at least implicit in his Honour’s reasons that ordinarily, through the conduct of the trial, the parties will have become aware of the real issues and, expressly or by inference, agreed to those issues being fought out and decided. [50] So qualified, the observations of Perry J seem to me to be consonant with the views expressed by the High Court of Australia in Banque Commerciale SA, EN Liquidation v Akhil Holdings Limited (1990) 169 CLR 279. [51] Mason CJ and Gaudron J dealt at 286-​287 with the situation in which a case might be decided on a basis other than that pleaded. Their Honours noted that the function of pleadings was to state the case to be met, and thus “to ensure the basic requirement of procedural fairness” (at 286). It followed, they said, that a case should not be decided on a different basis unless “the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities” (at 287). [52] Then, their Honours said: Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference. … [53] Brennan J expressed similar views at 288. [54] Dawson J, who dissented in the result, expressed perhaps a stronger view, at 296 -​297. His Honour stated the function of pleadings as being to define the issues so as to tell parties the case to be met and to enable the trial to proceed in an orderly fashion. His Honour gave, as an example of the latter point, rulings on objections to evidence on the ground of relevance. However, his Honour said (at 296-​297): But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties. Special procedures apart, cases are determined on the evidence, not the pleadings. It is incumbent upon the trial judge to see that the pleadings or particulars are amended so that the record reflects the proceedings as they have been conducted, but his failure to do so will not result in the invalidity of those proceedings. [55] There was, his Honour said at 297, a limiting case. The relief granted should not exceed the relief claimed. That was of particular relevance to the case before the High Court, because the appellant bank did not participate in the trial. Thus, any application to amend the relief claimed would necessarily be one made in its absence. [56] In this case, the relief that Temple sought at the trial went beyond that claimed in its pleading. Temple sought damages for breach of cl 9.3. As I have pointed out, no such claim for relief was made in FASC. But Mr Malla was represented at the trial. It does not appear that counsel then appearing for him took any objection to the way in which the case for Temple was put to the primary judge. The obvious inference is that Mr Malla was content to meet the new case on its merits. [57] In those circumstances, in my view, it was not appropriate for the primary judge to deal with the claim under cl 9.3 in the way that she did: by rejecting it because the pleaded case was not made 496 [9.80]

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Films and Casting Temple v Malla cont. good. Her Honour was required to consider whether, having regard to the way in which the trial had been conducted, it was open to Temple to seek a verdict and judgment on the basis of the facts proved. Those proven facts would include, of course, PA1 itself, and the evidence that Mr Malla had been involved in two other Indian film projects during the period of the restraint, in circumstances where Temple had not provided production management services for those projects. [58] If her Honour had come to the conclusion that to decide the case on this basis would not be relevantly unfair to Mr Malla, then she would have been required to deal with it on that basis. Of course, if her Honour had come to the conclusion that (for whatever reason) it would be relevantly unfair, then the approach that she took would have been justified. For the reasons I give at [72] to [84] below, her Honour would have been justified in coming to the latter conclusion. [59] That analysis requires consideration of a number of matters. One is that Mr Malla had put in issue the pleading of the effect of cl 9.3, and had said in substance that he would rely on the proper construction of that clause. Another, obviously enough, is that PA1 was proved. Thus, the proper construction and effect of cl 9.3 was one of the matters in controversy. That required the primary judge to consider whether Temple had made good a claim for damages on the proper construction of cl 9.3 and having regard to the evidence of Mr Malla’s involvement in PN 12 and the second stage of Orange. [60] As I have noted, Mr Cook submitted that it would be unfair to permit Temple to argue the case that it now puts, because (had the matter been pleaded properly), his client’s attention might have been directed to the restraint of trade argument. I do not think that this submission should be accepted, at least in its absolute form. As I have said, cl 9.3 does operate as a restraint of trade. But that is true both of cl 9.3 as it is drafted and as it was pleaded in FASC para 6. [61] Mr Cook appeared to accept that this was so. However, he submitted, his client may well have made a forensic decision not to take any restraint of trade point, because he thought that he had a complete answer to the claim as pleaded. Mr Cook noted, in particular, that there was no claim for damages for breach of cl 9.3 articulated in Temple’s pleading. [62] Whilst I accept the theoretical proposition, experience suggests that were there are a number of alternative answers to a claim, each of which is properly arguable, all are likely to be pleaded and supported. I do not accept, as Mr Cook submitted, that s 56 of the Civil Procedure Act 2005 (NSW) requires a party having multiple viable defences (or, for that matter, multiple causes of action) to select the best and abandon the others. [63] In this context, and as Mr Cook submitted, it is to be noted that Temple’s pleaded case based on cl 9.3 focused on protection of its confidential information (by claiming injunctive relief) and on compensation for alleged past misuse of that confidential information (by claiming an account of profits). Each of those claims must have directed attention to the fundamental point: is the restraint of trade valid? That point requires consideration of at least two things. The first is identification of the legitimate interests of Temple which the clause seeks to protect. The second is whether, in all the circumstances, the terms of the restraint are no more than is reasonably required to protect those interests. Put negatively, the restraint is unlawful except to the extent that it protects the legitimate interests of Temple. [64] When the pleaded case is put in context, it is apparent that the real issues are those that I have just identified. The pleader’s incorrect characterisation of cl 9.3, in FASC para 6, is peripheral. It should have been apparent, on anything more than a cursory reading of the FASC as a whole, that Temple was seeking both to enforce the restraint of trade contained in cl 9.3 and to obtain relief for alleged breaches. Those claims could rise no higher than the agreed terms of cl 9.3. The pleader’s erroneous gloss on the words of that clause necessarily directs the reader back to what it was that the parties had actually agreed. And Mr Malla’s defence, making it clear that he would rely not on cl 9.3 as pleaded but on cl 9.3 as drafted and agreed, confirms that his attention had not been diverted by the terms in which FASC para 6 was pleaded. [9.80]  497

Civil Procedure in New South Wales

Films and Casting Temple v Malla cont. [65] In my view, the argument of prejudice based on denial of the opportunity to plead a restraint of trade defence should not be accepted. [66] It does not follow that Temple must succeed on its claim under cl 9.3. It was required to prove that there was a breach and that it suffered loss. And it was required to prove the amount of that loss. [67] There would appear to be little doubt about the first of those matters. Mr Malla did deal with two Indian film projects during the period of the restraint. Temple did not provide production management services in respect of either of those projects.

 [9.90] In Young v Hones [2014] NSWCA 337, the New South Wales Court of Appeal

confirmed that a reply should be used to respond to allegations in the defence. It is not appropriate to use a reply to raise new allegations or causes of action against the defendant. This would require an application to amend the statement of claim.

Banque Commerciale SA (in liq) v Akhil Holdings [9.100]  Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279 [Akhil Holdings Ltd (Akhil) sued the Banque Commerciale (the bank), Deauville Nominees Pty. Limited (Deauville), and a Mr Messara for breach of trust for transferring shares without authority. Deauville was a company controlled by Messara. Each of the three defendants filed defences pleading that the actions were statute barred. Akhil served replies on Deauville and Messara, alleging fraudulent breach of trust by the bank, which overcame the time bar. A copy of the reply to Messara was served on the bank, but Akhil did not file or serve a formal reply to the bank’s limitation defence. If Akhil had made a reply alleging fraud the bank would have been entitled to details of the fraud alleged. The bank did not attend the trial. Akhil lost at trial because it failed to establish a beneficial interest in the shares in question. Akhil appealed and the bank was represented at the appeal. The Court of Appeal made various findings of fact, including that the bank was party to a fraudulent breach of trust, and held that Akhil was entitled to judgment against all three defendants in the action. The bank appealed to the High Court of Australia where one of the main issues was whether the Court of Appeal could make a finding of fraud against the bank when that issue was not raised on the pleadings against it. The fraud allegation was raised only in the pleadings against Deauville and Messara.] MASON CJ AND GAUDRON J (BRENNAN J AGREEING) [17] The argument that, notwithstanding that fraud was neither pleaded nor particularized against the Bank, the Court of Appeal was entitled to make a finding of fraud on the part of the Bank was made by reference to service on the Bank’s solicitors of the Amended Reply to Defence of Third Defendant (Mr Messara). As previously noted, that pleading asserted that the action was for “fraudulent breach of trust by the (Bank) …”. In substance the argument was that, the allegation of fraud having been brought to the notice of the Bank, and the Bank nonetheless having elected not to be present at the hearing, it should not now be allowed to claim the benefit of the rule that, in general, relief should be restricted to that available on the pleadings. [18] The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In Liquidation) [1916] HCA 81; (1916) 22 CLR 490, per Isaacs and Rich JJ at p 517. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party’s right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that 498 [9.90]

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Banque Commerciale SA (in liq) v Akhil Holdings cont. disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, for example, Browne v Dunn, at p 76; Mount Oxide Mines, at pp 517-​518. [19] Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference. In the present case, the Bank not having been present at the hearing, there could be no acquiescence by it in such course, if any, by which Akhil might have attempted to extend the issues at the hearing to encompass a case of fraud as against the Bank. Nor, in our view, can acquiescence be inferred from the Bank’s failure to participate in the hearing coupled with its knowledge that an allegation of fraud on its part had been raised in the amended reply to the defence filed against Mr Messara. That was a bare and unparticularized assertion. In that context, a choice by the Bank to have its liability determined on the basis of fraud would be tantamount to a decision to forego the right to be informed of the case to be made against it. The facts will not support such an inference. Accordingly, Akhil was entitled only to such relief as was available on the pleadings. In particular, it was not entitled to relief on the basis that the Bank was party to a fraudulent breach of trust. The Bank is therefore entitled to judgment in the action on the basis that its defence that the action was statute-​barred was made out.



ASIC v Rich [9.110]  ASIC v Rich [2006] NSWSC 712 AUSTIN J [3]‌Each objection asserted that the line of questioning was outside ASIC’s pleadings and amount to an attempt to establish a previously unpleaded case; … [4]‌To deal with the objections, I shall first consider ASIC’s pleadings (and relevant parts of Mr Rich’s Defence) in light of general principles, and make some observations about the kinds of matters that would and would not fall within the scope of ASIC’s pleaded case. I shall then deal with each objection separately, identifying the line of questioning in a manner intended to reveal whether the evidence to be adduced by the questions is relevant to ASIC’s pleaded case, and if so, its weight or probative value. I shall note the particular submissions made when the objection was taken, and briefly state the reasons for my rulings in light of the general principles I have identified. Pleadings Some relevant principles [5]‌Mr Williams [Counsel for the defendants] contends, correctly, that it is for ASIC to state, by its pleadings, the case that his clients must meet. He relies on the well-​known observations of Mason CJ and Gaudron J in Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279. Their Honours said (at 286): The function of pleadings is to state with sufficient clarity the case that must be met [citing Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490, at 517 per Isaacs and Rich JJ]. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party’s right to this basic requirement of procedural fairness. [9.110]  499

Civil Procedure in New South Wales

ASIC v Rich cont. [6]‌The obligation on ASIC to set out its case against the defendants clearly in its pleadings is enhanced by the considerations that ASIC’s case alleges serious contraventions of the law by the defendants, and that ASIC seeks relief which includes disqualification of the defendants from managing corporations, relief held by the High Court to be a form of penalty (Rich v ASIC (2004) 220 CLR 129). [7]‌The principles stated by Mason CJ and Gaudron J are of fundamental importance but there are some limiting principles, consistent with their Honours’ observations, that need to be kept in mind in the present case. [8]‌First, the plaintiff is entitled to attack in cross-​examination evidence going to matters raised in a defence, though not in the statement of claim. Take a hypothetical case where the plaintiff alleges that the defendant’s business was in a poor financial condition in specified ways and that the defendant breached some duty by failing to disclose the true financial position. Suppose that the defence is that the plaintiff has overlooked a special bank account containing cash reserves which, if taken into account, show that the financial condition of the business is healthy. It would be ludicrous to expect the plaintiff’s statement of claim to anticipate the defendant’s contention and expressly negate it in the statement of claim. It is not a matter of requiring the plaintiff to inform the defendant of the case against him, because the matter of the bank account has been raised by the defendant in his defence. If, at the trial, the defendant adduces evidence about the special bank account and the plaintiff attacks that evidence in cross-​examination, the plaintiff is not departing from his pleaded case, but is rather addressing an allegation raised and made relevant by the defence. [9]‌Secondly, where the defendant adduces evidence purporting to answer the plaintiff’s pleaded case, the plaintiff is entitled to challenge that evidence in cross-​examination even if particular parts of the cross-​examination, viewed in isolation, might suggest a different, unpleaded case. Suppose, in our hypothetical example, the plaintiff challenges the defendant’s evidence about the special bank account by seeking to have the defendant admit, in cross-​examination, that the bank account in fact belonged to a different business operated by the defendant’s wife, negligently treated by the defendant as an asset of his business. Viewed in isolation, the cross-​examination might appear to be directed to showing that the defendant engaged in misleading conduct by representing that an asset of another business was an asset of his business. But when the context is understood, it can be seen that the cross-​examination is permissible because it is directed against the defence to the pleaded case. On the other hand, it would not be permissible for the plaintiff, in final submissions, to rely on this evidence to make out a misleading conduct case that he had not pleaded (assuming no grant of leave to amend).



Young v Hones [9.115]  Young v Hones [2014] NSWCA 337 [Proceedings in the Land and Environment Court over a neighbourhood drainage problem were settled by consent orders. Some years later, one of the parties (Young) attempted to set aside the consent orders on the basis that the problem had not been resolved. She also attempted to sue her lawyer and engineering expert for, inter alia, negligent advice. The lawyer and the expert raised advocate’s immunity and witness immunity respectively. The trial judge ordered that questions of law as to whether the immunity defences were a complete answer to the causes of action be heard separately. He ruled that they were and dismissed Young’s claims. On appeal, Young argued that the trial judge had erred in ruling on the separate questions before the close of pleadings, because she had not had the opportunity to file a reply. Young had intended to raise a further allegation that her lawyer had acted in bad faith and that therefore the advocate’s immunity was not available. The Court of Appeal unanimously rejected her appeal, holding that an allegation of bad faith had to be made in the statement of claim and not in the reply.] 500 [9.115]

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Young v Hones cont. WARD JA [147] As a matter of pleading, it is recognised that new claims or causes of action should not be introduced in a reply and that a reply should not contradict or be inconsistent with the plaintiff’s claim (Justice Blair et al, Bullen & Leake & Jacob’s Precedents of Pleadings, (17th ed 2012, Sweet & Maxwell), Vol 1 at 29; Sir Jack Jacob and Iain Goldrein, Pleadings: Principles and Practice, (1990, Sweet & Maxwell) at 162-​3; the Hon Peter Young and Hugh Selby, Rose’s Pleadings Without Tears in Australia, (1997, Federation Press) at 102). [148] By way of example of a contradictory pleading or departure from the claim that would impermissibly be included in a reply under the then rules in the UK, Jacob and Goldrein refer to Kingston v Corker (1892) 29 LR Ir 364 for the proposition that, if a statement of claim alleges merely a negligent breach of trust, the reply must not assert that such a breach of trust was fraudulent. In Kingston v Corker, a solicitor was sued for breach of trust and, in the alternative, damages were claimed for loss sustained by negligence, misrepresentation and deceit, in relation to the alleged improper investment of funds. The plaintiff sought to raise, in reply to a limitations defence pleaded by the solicitor, an allegation that the breach of trust was fraudulent. The Vice Chancellor, the Hon. Hedges E Chatterton, held that the pleading was bad, either restating a case already made or making a new case. [149] The rationale for the pleading rule, as explained by Young and Selby, is that to insert new matters by way of reply would not assist clarification or definition of the issues in the proceedings and “would inevitably lead to a proliferation of documentation which would not read logically, would delay the trial of the action, and add considerably to its expense”. [150] In my opinion, Ms Young could not have set up an allegation of fraud for the first time in the reply. It would have been necessary (as Ms Young unsuccessfully sought to do) to raise such a claim by way of further amendment to the statement of claim. A reply simply alleging mala fides in the conduct or omissions of which she complained, even assuming it would have been permissible from a pleading point of view, would not (for the reasons I address in relation to ground 4 of the appeal in relation to the lawyer respondents) have been sufficient to preclude reliance by the lawyer respondents on advocate’s immunity. Therefore, nothing turned on the fact that the separate questions relating to advocate’s immunity were heard before the foreshadowed reply was filed by Ms Young. [151] Second, and this applies to all the respondents, it is clear that a forensic decision was made by Ms Young, through her Counsel, not to oppose an order for the matter to proceed on 23 August by way of the determination in advance of the separate questions (whether on the basis that pleadings had not closed or otherwise). The only initial opposition was as to the date for the hearing and that was on the basis that Ms Young might wish to file further evidence in relation to the strike-​out motions, not further evidence to be relied on for the hearing of the separate questions. [152] Mr Newell accepted that he had not contended before the primary judge that the pleadings should have been closed (including a reply filed) before the separate questions were determined (at 18.49), though a reference to Basten JA’s judgment in Donnellan was included in the written submissions. [153] Although Mr Newell sought to qualify the consent that he accepted had been given by Ms Young to the orders made for the hearing of the separate questions, by insisting that what had been agreed was that “the question could be dealt with according to law” (see AT 17.43), the fact is that Ms Young agreed on 2 August 2013 to the determination of the separate questions in advance of the closure of the pleadings and without raising as an objection to that course of action the fact that the pleadings had not closed. It was not suggested at that stage that any further matter would be raised in reply other than that which had been identified as the allegation of mala fides that was said to have been adequately pleaded in the proposed further amended statement of claim. [154] With respect to the primary judge, the preferable course in my opinion would have been for the hearing of the separate questions not to have proceeded until the pleadings had closed. There [9.115]  501

Civil Procedure in New South Wales

Young v Hones cont. could then have been no argument that the scope of the issues in the proceedings was that which was raised by the pleadings as they were to be properly understood. [155] However, the matter having proceeded by consent on the course it did, Ms Young should be bound by her forensic decision in that respect. Unsatisfactory as I accept it will in most cases be for the issue of immunity to be determined before pleadings have closed, the parties here agreed to precisely such a course. The fact that Ms Young does not like the outcome of that course is not a basis for holding that his Honour erred in proceeding with the parties’ agreement to determine the separate questions at the stage of the matter at which he did. [156] In reaching this conclusion, I do not ignore the admonition by Kirby J in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515 at [137]-​[138]. There, his Honour, emphasising the need for restraint in determining summary judgment applications where the law is uncertain “and especially where it is in a state of development”, noted that the court owes its duty to the law. Notwithstanding that the parties there had consented to the summary judgment procedure adopted, his Honour considered that the matter should not have been determined summarily. [157] However, his Honour’s comments must be balanced against the need to apply the case management principles mandated under the Civil Procedure Act 2005 (NSW). If it is consistent with those principles for a judge to adopt, with the consent of the parties, the course that his Honour here adopted, it is not for the party who is unhappy with the result of that course later to contend that the judge should not have so acted. Moreover, the relevant duty to the law to which Kirby J adverted is complied with in a case such as this where the hearing of separate questions involves a final determination of particular disputed issues of law. [158] For completeness, I further note that any error on the part of his Honour in having proceeded with that application at the stage he did would not now lead to the answers to those questions being given in favour of Ms Young, as sought in the draft notice of appeal. All that would have followed from such a conclusion would be that the questions should have been answered, in effect, that it was inappropriate for them to be determined at that stage.

 [9.117]  Part 4 of the UCPR outlines the form of pleadings in order to ensure transparency,

clarity and efficiency in the most important documents of any proceeding. Pleadings define the issues and the scope of the litigation. The pleading documents are to be presented by way of paragraphs that are sequentially numbered, with assertions of fact and law kept separate. The paragraphs are to be brief and are to contain summaries only of the material facts, not the evidence by which those facts are to be proved. Only the effect, not the actual words, of documents and statements referred to in pleadings must be set out. In order to avoid “trial by ambush” by which a defendant may be taken by surprise, there are certain matters specified in UCPR r  14.14 that a plaintiff must specifically plead. UCPR r  14.20 stops parties from pleading the “general issue”. Examples would be where a plaintiff makes a sweeping allegation of “negligence”, or a defendant denies the whole of the plaintiff’s claim, without providing particulars of the allegation or denial.

Uniform Civil Procedure Rules 2005 (NSW) [9.120]  Uniform Civil Procedure Rules 2005 (NSW) rr 14.6–​14.11, 14.14, 14.17–​14.20, 14.22, 14.23 Part 14 –​Pleadings Division 3 –​Form of pleading generally 502 [9.117]

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Uniform Civil Procedure Rules 2005 (NSW) cont. 14.6 Pleadings to be divided into paragraphs (cf SCR Pt 15, r 6; DCR Pt 9, r 2) If a pleading alleges or otherwise deals with several matters: (a)

the pleading must be divided into paragraphs, and

(b)

each matter must, so far as convenient, be put in a separate paragraph, and

(c)

the paragraphs must be numbered consecutively.

14.7 Pleadings to contain facts, not evidence (cf SCR Pt 15, r 7; DCR Pt 9, r 3) Subject to this Part, Part 6 and Part 15, a party’s pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved. 14.8 Pleadings to be brief (cf SCR Pt 15, r 8; DCR Pt 9, r 4) A pleading must be as brief as the nature of the case allows. 14.9 References in pleadings to documents and spoken words (cf SCR Pt 15, r 9; DCR Pt 9, r 5) If any documents or spoken words are referred to in a pleading: (a)

the effect of the document or spoken words must, so far as material, be stated, and

(b)

the precise terms of the document or spoken words must not be stated, except so far as those terms are themselves material.

14.10 Certain facts need not be pleaded (cf SCR Pt 15, r 10; DCR Pt 9, r 6) A party need not plead a fact if: (a)

the fact is presumed by law to be true, or

(b)

the burden of disproving the fact lies on the opposite party,

except so far as may be necessary to meet a specific denial of that fact by another party’s pleading. 14.11 Conditions precedent presumed to have been met (cf SCR Pt 15, r 11; DCR Pt 9, r 7) If it is a condition precedent necessary for a party’s case in any pleading that: (a)

a thing has been done, or

(b)

an event has happened, or

(c)

a state of affairs exists, or has existed at some time or times, or

(d)

the party is ready and willing, or was at all material times ready and willing, to perform an obligation,

a statement to the effect that the condition has been satisfied is taken to be implied in the party’s pleading. 14.14 General rule as to matters to be pleaded specifically (cf SCR Pt 15, r 13; DCR Pt 9, r 9) (1)

In a statement of claim, the plaintiff must plead specifically any matter that, if not pleaded specifically, may take the defendant by surprise. [9.120]  503

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

In a defence or subsequent pleading, a party must plead specifically any matter:



(a)

that, if not pleaded specifically, may take the opposite party by surprise, or



(b)

that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or



(c)

that raises matters of fact not arising out of the preceding pleading.

(3)

Matters which must be pleaded pursuant to subrule (2) include (but are not limited to) fraud, performance, release, statute of limitation, extinction of right or title, voluntary assumption of risk, causation of accident by unknown and undiscoverable mechanical defect and facts showing illegality.

14.17 New matter may be raised in pleading (cf SCR Pt 15, r 16; DCR Pt 9, r 11) A party may plead any matter even if the matter has arisen after the commencement of the proceedings. 14.18 Pleadings to be consistent as to allegations of fact (cf SCR Pt 15, r 17; DCR Pt 9, r 12) (1)

A party must not in any pleading make an allegation of fact, or raise any ground or claim, inconsistent with any of his or her previous pleadings.

(2)

Subrule (1) does not affect the right of a party to make allegations of fact, or raise grounds or claims, in the alternative.

14.19 Pleadings may raise points of law (cf SCR Pt 15, r 18; DCR Pt 9, r 13) A pleading may raise any point of law. 14.20 Pleading the general issue (cf SCR Pt 15, r 27) A pleading may not plead the general issue. Division 4 –​Verification of pleadings 14.23 Verification of certain pleadings (cf SCR Pt 15, r 23(1)-​(7); DCR Pt 10, r 2(1)-​(6)) (1)

This rule applies to proceedings in the Supreme Court and the District Court.

(2)

A party’s pleading (including any amendment of the pleading) must be verified by affidavit. Note: See rule 35.3 as to who may make such an affidavit.

(3)

The affidavit verifying a pleading must state:



(a)

as to any allegations of fact in the pleading, that the deponent believes that the allegations are true, and



(b)

as to any allegations of fact that the pleading denies, that the deponent believes that the allegations are untrue, and



(c)

as to any allegations of fact that the pleading does not admit, that after reasonable inquiry the deponent does not know whether or not the allegations are true.

504 [9.120]

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Uniform Civil Procedure Rules 2005 (NSW) cont. (4)

If the deponent is unable to make an affidavit that complies with subrule (3) in relation to all parts of a pleading, the affidavit may comply with so much of that subrule as can be complied with and state why the affidavit does not comply with the remainder of that subrule.

(5)

Subject to any order of the court, an affidavit made in accordance with subrule (4) is taken to comply with subrule (3). Unless the court otherwise orders, the affidavit verifying a pleading must be subscribed to the pleading.

(6)

 [9.130]  An important objective of pleadings is that they provide a permanent record of the

boundaries of the case and allow the court to know the issues in the proceedings. Another equally important objective is that they provide sufficient information to the parties to allow each of them a fair opportunity to meet the issues in the proceedings.18 Many reviews of civil procedure practice have argued that the pleading process is not sufficiently rigorous in forcing parties to define the issues.19 Case management practice notes in some jurisdictions and lists now supplement the pleading process by requiring certain other documents to be filed at the same time as the statement of claim.20 For example, Practice Note SC CL 5 Supreme Court Common Law Division  –​General Case Management List requires the plaintiff and defendant to file General Case Management documents that contain “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”. Pleading rules are now also interpreted within the context of the “overriding purpose principles” in the CPA and the UCPR. Pleadings are an expression of the adversarial system, prepared by the parties and subject to objection by the opponent. Case management adopts characteristics of an inquisitorial system, where the court attempts to take responsibility for “ensuring that claimants and defendants plainly state the factual ingredients of their case so that the true nature and scope of the dispute can be identified”.21 It is to be noted that supplements to pleadings in the form of, for example, General Case Management documents are not pleadings. Pleadings are said to be closed on the delivery of the last pleading (very often the defence, but sometimes the reply).22 When pleadings are closed each party must by their pleadings have given adequate notice of the case to be made at trial. Pleadings influence the whole of the proceedings. They are the basis for the parties to decide whether to admit certain facts

18 19

20 21 22

See Dare v Pulham (1982) 148 CLR 658; 57 ALJR 80; 44 ALR 117 at (CLR) 664. See Victorian Law Reform Commission, Civil Justice Review: Report 14 (2008) pp 716–​ 718; Sallmann PA and Wright RT, Going to Court: A Discussion Paper on Civil Justice in Victoria (Department of Justice, 2000); Australian Law Reform Commission, Managing Justice (2000) pp 504–​507; Australian Law Reform Commission, Review of the Federal Civil Justice System (DP 62) pp 296–​299; The Law Reform Commission of Western Australia, Review of the Criminal and Civil Justice System in Western Australia (Perth, 1999) p 334; and Woolf H and Woolf B, Access to Justice, Interim Report to the Lord Chancellor on the Civil Justice System of England and Wales (1995) pp 153–​154. At http://​www.lawlink.nsw.gov.au/​practice_​notes/​nswsc_​pc.nsf/​a15f50afb1aa22a9ca2570ed000a2b08/​ 4cd3129c77a5419cca2572ed000ceca8?OpenDocument. See Chapter 2 at [2.290]. Lord Woolf, Access to Justice: Interim Report (Ch 20, p 155 at [7]‌), where the traditional control by parties’ lawyers of pleadings was criticised. See UCPR r 14.27. [9.130]  505

Civil Procedure in New South Wales

not in dispute.23 Making admissions can be an important means of reducing costs and saving time so that the length of the trial is reduced. The pleadings limit the extent of discovery and interrogatories and govern the extent of the relevant evidence. Material facts [9.140] The pleader must start with the cause of action or defence and its elements. The

material facts will be those facts that are critical to supporting each of the elements of the cause of action. For example, in a cause of action concerning breach of contract, the material facts will be those facts that are probative of the following: that the contract exists; that the relevant term was incorporated into the contract; that the term was breached; and that the breach caused the plaintiff’s loss. In Goldsmith v Sandilands (2002)190 ALR 370; [2002] HCA 31, Gleeson CJ said (at ALR 372): The facts in issue in a civil action case emerge from the pleadings, which, in turn, are framed in the light of the legal principles governing the case. Facts relevant to facts in issue emerge from the particulars and the evidence. The function of particulars is not to expand the issues defined by the pleadings, but “to fill in the picture of the plaintiff’s cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial” [Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-​713 per Scott LJ]. The function of evidence is to advance, or cut down, the case of a party in accordance with the rules of statute or common law that determine the nature of the information a court will receive. The primary rule of evidence is that a court will receive, and will only receive, evidence that is relevant to the issues as defined by the pleadings. Evidence is relevant if it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceeding [This is the definition of relevance in the Evidence Act 1995 (NSW). It is not materially different from that given by Sir James Stephen in his Digest of the Law of Evidence, 5th ed (1887), Art 1 at 2, and adopted by McHugh J in Palmer v The Queen [1998] HCA 2; (1998) 193 CLR 1 at 24 [55], fn 54]. The general rule that relevant evidence will be received is qualified by other rules based upon considerations of justice, or practicality.

Charlie Carter v The Shop, Distributive and Allied Employees’ Association of Western Australia [9.150]  Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia (1987) 13 FCR 413 FRENCH J [417] … There are certain levels of generality of pleading which, while they may bring in all facts necessary to establish a cause of action, are insufficient for the purpose of properly informing the defendant of the case it has to meet. In Bruce v Odhams Press Ltd it was said to be insufficient merely to allege in general terms a cause of action. The cause of action must be alleged with particularity. Scott LJ gave the following example:

23

See UCPR Pt 17, Admissions.

506 [9.140]

Initiating Proceedings and Pleadings  Chapter  9

Charlie Carter v The Shop, Distributive and Allied Employees’ Association of Western Australia cont. For example, it would not be sufficient for plaintiff in an action of trespass to plead “the defendant trespassed on my lands and took away and converted to his own use two of my horses” without stating particulars of the time and place when the trespass is alleged to have taken place. A plaintiff must state sufficient particulars of his alleged cause of action, which will enable the defendant either to admit it or deny it or otherwise plead a defence to it. The sufficiency of the pleading may be judged by reference to the necessary condition that it disclose a reasonable cause of action and secondly, by reference to the requirement for sufficient particularity that the respondents know in advance the case they have to meet. In Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 Fisher J considered an application to strike out a statement of claim in proceedings for contravention of s 45 of the Trade Practices Act in respect of price fixing. The relevant paragraph of the statement of claim alleged: In or about mid-​March 1984 the corporate respondents and each of them or some two or more of them made an arrangement or arrived at an understanding the material provisions of which had the purpose, or had or were likely to have the effect, of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices at which the first, second and third respondents, and certain other retailers of Manchester crafts in the Adelaide metropolitan area would sell Sheridan Manchester. Fisher J observed of this passage: “Paragraph 15 of the statement of claim does not state any material [418] facts. It is merely a statement of a conclusion drawn from the facts which are not in the statement of claim. Standing alone, Para 15 does not disclose a reasonable cause of action against the respondents.”

 Evidence [9.160] The means by which the material facts are to be proved is evidence. For example,

evidence could be the oral testimony of witnesses called at the trial, or it could be evidence adduced through documents. Evidence should not be pleaded.24 This means that, unless specific words in a document or a conversation are critical to supporting an element of a cause of action, the pleader should not plead details of the conversation or quote the contents of a document.25 No conclusions of law as materials facts [9.170] Although UCPR r  14.19 permits a party in its pleading to raise any point of law,

pleadings should not contain mere allegations or conclusions of law. For example, if the plaintiff alleges in the statement of claim that the defendant negligently caused damage to the plaintiff and does not provide any further information about the acts of negligence, a conclusion of law is being presented as a material fact. A statement of claim must identify the cause of action, but simply identifying the cause of action will not suffice unless the material facts supporting that cause of action are pleaded as well.

4 2 25

See UCPR r 14.7. See UCPR r 14.9. [9.170]  507

Civil Procedure in New South Wales

Kirby v Sanderson Motors [9.180]  Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44; (2002) 54 NSWLR 135 HODGSON JA (MASON P AND HANDLEY JA AGREEING) [Hodgson JA said in regard to Pt 15 r 13 of the Supreme Court Rules 1970 (NSW), which is equivalent to UCPR r 14.14]: [20] It might appear that these rules do not require that causes of action be stated in pleadings: the requirement is to have a statement of material facts, and indeed to have only such a statement. However, in my opinion –​ (1)

“Material” means material to the claim, that is, to the cause or causes of action which are relied on.

(2)

The requirement of a statement of material facts does not exclude the allegation of legal categories, such as duty of care, fiduciary duty, trust and contract.

(3)

The general requirement to avoid surprise means that material facts must be stated in such a way that a defendant can understand the materiality of the facts, that is, how they are material to a cause of action.



Markisic v Department of Community Services of New South Wales (No 2) [9.190]  Markisic v Department of Community Services of New South Wales (No 2) [2006] NSWCA 321 GILES JA (SANTOW AND IPP JJA AGREEING) [36] It is often convenient, and may be appropriate in order to provide clarity and avoid surprise, to plead the effect in law of the facts pleaded, see Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44; (2001) 54 NSWLR 135 at [20]-​[22] per Hodgson JA. Where that is done, as his Honour said at [22], the pleading “should convey just what cause or causes of action are being relied on”, and it follows that it should also enable it to be seen with clarity what facts are said to make out the cause or causes of action. It is not sufficient simply to assert conclusions of law, such as that a common law duty of care is owed; the pleading must intelligibly state the facts on which the plaintiff relies for the existence of the duty of care (see also Ashrafi Persian Trading Co Ltd v Ashrafinia [2001] NSWCA 243, (2002) Aust Torts Rep 81-​836, in which Heydon JA says at [47] that it is not enough for the plaintiff “merely to mouth general phrases current in analysing the tort of negligence and leave it to the defendant to establish why those general formulae would be insufficient to bring the plaintiff success”).

 Surprise [9.200]  When all the material facts are alleged in the pleadings, the opponent has notice of

the case that must be met. If unpleaded allegations are raised at the trial without notice to the opponent, surprise is the result: see UCPR r 14.14. In former times, surprise or trial by ambush was a characteristic of adversarial tactics in civil proceedings. One of the measures used to discourage that tactical culture is UCPR r 14.14. Strictly speaking, a party is not allowed to prove facts that are not properly alleged in the pleadings, especially if it would be unfair to the other party. However, obligations in regard to avoiding surprise do not relieve the plaintiff from fulfilling his or her legal burden of proof. 508 [9.180]

Initiating Proceedings and Pleadings  Chapter  9

Kasupene v Ajax Foundry [9.210]  Kasupene v Ajax Foundry Pty Ltd [2006] NSWCA 309 MCCLELLAN CJ AT CL (BRYSON JA AND HOEBEN J AGREEING) [McClellan CJ at CL dismissed the appeal and ordered the appellant to pay the respondent’s costs.] [2]‌The appellant was injured on 12 November 2001 when a heavy tray which was being lifted by an overhead crane came down on his right foot. He was employed by a labour hire company, Hussonee Pty Ltd and had been assigned to work at Silverwater in the business owned by the respondent. The appellant sued the respondent and the matter was heard in the District Court. The trial judge entered a verdict for the respondent. The appellant appeals that decision. … The appellant’s submissions [15] In his submissions in this appeal the appellant again conceded that he did not know why the tray dropped on his foot. However, it was submitted that there are only two non-​fanciful possibilities. (a)

The first possibility was that Mr Sam Mai, the crane controller, negligently or deliberately caused the tray to come down on the appellant’s foot;

(b)

The other possibility was the equipment being operated by Mr Mai failed and that caused a tray to come down on the appellant’s foot.

[16] The appellant emphasised the negotiations before trial and the agreement between the parties that the appellant would not plead a failure to adequately repair or maintain or other mechanical failure of the equipment. It was submitted that this meant that there would be no suggestion made by the respondent that the accident was caused by the mechanical failure of the equipment. [17] Accordingly, it was submitted that in the absence of a suggestion of the tray coming down by reason of any malfunction of the equipment and it having been proved that Mr Mai was operating the crane, there was an irresistible inference that the appellant’s injuries were caused by the negligence of Mr Mai and the respondent. It was submitted that when his Honour [the trial judge] said “in this particular case, there are several possibilities as to how the accident occurred –​some would involve negligence on the part of the defendant; others, no negligence at all. It may be, for example that there was a latent defect in the system being operated by Mr Sam Mai. There may have been a failure of the electrical system or some kind of power failure …,” his Honour engaged in impermissible speculation. It was submitted that in the absence of the respondent pleading mechanical failure, the only rational explanation for the accident is negligence in the operator of the crane. [18] It was further submitted that before the respondent could submit that mechanical failure may have caused the accident it was required by Part 14 Rule 14(3) of the Uniform Civil Procedure Rules 2005 to have pleaded this matter in its defence. [19] It was submitted that Rule 14 imposed an evidentiary burden on a defendant when faced with a claim that an accident could have been caused by its negligence to both plead and prove that the accident had a cause for which it was not liable. As the respondent had not pleaded in accordance with the Rules it was submitted that the appellant was entitled to succeed. Resolution of the appeal … [21] The purpose of Rule 14 is to ensure the efficient disposition of litigation and avoidance of “trial by ambush.” In so far as the obligations which the Rule imposes on a defendant are concerned its purpose is to ensure that if there is an answer to the plaintiff’s claim which depends upon some positive assertion of fact, some special claim or a claim that the case is bad in law, adequate notice is given to the plaintiff: Kirby v Sanderson Motors Pty Ltd [2002] NSWCA 44; (2001) 54 NSWLR 135; Bright v Sampson & Duncan Enterprise Pty Ltd (1985) 1 NSWLR 346. [9.210]  509

Civil Procedure in New South Wales

Kasupene v Ajax Foundry cont. [22] However, although it imposes obligations which if not complied with may result in a defendant being precluded from pursuing a particular defence, requiring an adjournment to be granted to the plaintiff or the defendant visited with costs orders, it does not relieve a plaintiff from the obligation to prove its case. In that respect the common law and any relevant statutory provision define the liability of a defendant and the manner of its proof. [23] The circumstances of the present case did not impose an obligation on the respondent to plead in relation to prospective mechanical failure. The respondent did not submit that the accident was explained by mechanical failure. Rather it submitted that unless the appellant could demonstrate that a reasonable possible cause for which the respondent was not responsible, including mechanical failure, had not caused the accident, the appellant could not succeed. He would have failed to prove on the balance of probabilities that the respondent’s negligence was responsible for the accident. … [27] The appellant’s contention is that by reason of the agreement between the parties the approach which his Honour took to the matter was not open. Because it had been agreed that the respondent would not attempt to allege mechanical fault it was submitted that the only conclusion available to his Honour in the circumstances was said to be that the tray fell because of the negligence of the operator. [28] I cannot accept this submission. The exchange between the lawyers, reflected in the request for particulars and the answers, was confined to the circumstance where the respondent attempted to allege mechanical fault. Such a pleading was not made and the submission of the respondent was confined to alleging that because the appellant was unable to exclude mechanical failure as a reason for the accident the inference that the accident would not have occurred but for the negligence of the respondent was not available. In my opinion his Honour was correct to accept this submission. The appellant was always required to prove his case.



Glover v Australian Ultra Concrete Floors [9.230]  Glover v Australian Ultra Concrete Floors Pty Ltd [2003] NSWCA 80 IPP JA (SHELLER AND HODGSON JJA AGREEING) [The appellant appealed a decision at trial that he did not injure himself at work in the way he asserted.] [53] The general impression the defence gave was that the main thrust of the respondent’s resistance at trial was to be the denial of the allegations of negligence and a challenge to the extent of the damages suffered by the appellant. The non-​admission of the accident, coupled with the assertion that worker’s compensation had been paid, would have indicated to the appellant, at least prior to the commencement of the trial, that the proof that the accident occurred as asserted by him would largely be a formality and would not be contested with any vigour. [54] The respondent’s case at trial, however, was a different kettle of fish. Mr Higgins’ testimony that the appellant told him that he had been pushed by his wife and did not say to him that he had hurt his back at work, meant, if accepted, that the appellant was giving an entirely false version as to how he came to be injured. Mr Thompson’s evidence, in substance, also was to the effect that the appellant was not injured as he had alleged. [55] Thus, the respondent’s case at trial was that the appellant lied when he said that he had been injured by slipping and falling at work. This was tantamount to alleging fraud. [58] … The failure to plead the positive case asserted at the trial was, however, contrary to the surprise rule and goes a long way, on its own, in providing a satisfactory explanation for the appellant’s failure to call more witnesses to bolster his case that an accident occurred as alleged by him. 510 [9.230]

Initiating Proceedings and Pleadings  Chapter  9

Glover v Australian Ultra Concrete Floors cont. [59] The ambush theory of litigation was given its quietus by Heydon JA in Nowlan v Marson Transport Pty Limited [2001] NSWCA 346; (2001) 53 NSWLR 116. His Honour gave unqualified approval to the statement of Allsop J in White v Overland [2001] FCA 1333 at [4]‌ that: [I]‌t 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. Heydon JA at [127] observed that it is no longer open to practitioners, even practitioners in personal injury work, “to maintain poker faces, to keep their guards up at all times, and to let opponents who are proceeding in ignorance continue in that course”. His Honour stated further at [128] that: [E]‌ven in personal injury litigation the ambush theory of life has been abandoned in District Court trials as much as in Supreme Court trials. Heydon JA presciently warned at [129] of the prospect of ambushed parties seeking to tender further evidence. [60] The “cards on the table” approach is now common practice in many jurisdictions: See Boyes v Colins (2000) 23 WAR 123 at 143 to 144; Southwell v Tomomoto (1992) 109 FLR 12 at 17; Khan v Armaguard Limited [1994] 1 WLR 1204 at 1209. The public interest in requiring the full disclosure of a party’s case before trial is recognised by Pt 15 r 13 [UCPR r 14.14] which requires parties to plead specifically any matter which, if not so pleaded, may take the other party by surprise. [61] In my opinion, the respondent’s non-​admission plea in answer to the appellant’s detailed description of the accident contained in the statement of claim, together with reliance by the respondent on the workers compensation payments made by it, would have resulted in the appellant being taken by surprise when, during the course of the trial, it was first made plain that the respondent was seeking to make an affirmative case in regard to the question whether the appellant was injured by an accident at work in the manner asserted by him.

 Verification [9.240]  Traditionally, material facts contained in pleadings were not assertions of their truth.

They were merely considered “written identification and communications of the extent of the plaintiff’s claim”.26 UCPR r 14.23 requires a party’s pleading to be verified by affidavit which is made on the pleading. The deponent of the affidavit verifies that the allegations of fact or the denials of fact are, as far as they believe, true. A statement of belief is limited to those assertions of fact made in the pleading to which the verification is subscribed.

Pascoe v Divisional Security Group [9.250]  Pascoe v Divisional Security Group Pty Ltd [2007] NSWSC 211; (2007) 209 FLR 197 WHITE J [34] … The purpose of pleadings is to define the issues for the trial. Whilst a defendant who makes any allegations of fact in the defence is required to depose that he or she believes the allegations to be true, a defendant is not required to depose that he or she believes allegations of fact in the statement of claim, which are admitted, to be true (Uniform Civil Procedure Rules 2005 (NSW), r 14.23(3)).

 26

Jamieson v The Queen (1993) 177 CLR 574; [1993] HCA 48 at [3]‌per Deane and Dawson JJ. [9.250]  511

Civil Procedure in New South Wales

PARTICULARS [9.260]  Particulars are details of the material facts on which the party relies in his or her

pleadings. They limit the generality of pleadings so as to more sharply define the issues but do not modify the cause of action.27

Uniform Civil Procedure Rules 2005 (NSW) [9.270]  Uniform Civil Procedure Rules 2005 (NSW) rr 15.1, 15.3, 15.5, 15.6, 15.9, 15.10 Part 15 –​ Particulars Division 1 –​General 15.1 Pleadings must give all necessary particulars (cf SCR Pt 16, rr 1 and 1A; DCR Pt 9, r 19; LCR Pt 8, r 2) (1)

Subject to this Part, a pleading must give such particulars of any claim, defence or other matter pleaded by the party as are necessary to enable the opposite party to identify the case that the pleading requires him or her to meet.

(2)

Subrule (1) does not require a pleading to give particulars of any claim for interest up to judgment other than those required by rule 6.12(7).

15.3 Allegations of behaviour in the nature of fraud (cf SCR Pt 16, r 2; DCR Pt 9, r 20) A pleading must give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the party relies. 15.5 Allegations of negligence and breach of statutory duty in common law claims in tort (cf SCR Pt 16, r 4; DCR Pt 9, r 22; LCR Pt 8, r 4) (1)

The particulars to be given by a pleading that alleges negligence (whether contributory or otherwise):



(a)

must state the facts and circumstances on which the party pleading relies as constituting the alleged negligent act or omission, and



(b)

if the party pleading alleges more than one negligent act or omission, must, so far as practicable, state separately the facts and circumstances on which the party relies in respect of each alleged negligent act or omission.

(2)

The particulars to be given by a pleading that alleges breach of statutory duty:



(a)

must state the facts and circumstances on which the party pleading relies as constituting the alleged breach of statutory duty, and



(b)

if the party pleading alleges more than one breach of statutory duty, must, so far as practicable, state separately the facts and circumstances on which the party relies in respect of each alleged breach of statutory duty.

15.6 Claims for out of pocket expenses (cf SCR Part 16, rule 5; DCR Part 9, rule 23; LCR Part 8, rule 5) A party pleading who claims damages that include money that he or she has paid or is liable to pay must give particulars of that money.

27

Mummery v Irvings Pty Ltd (1956) 96 CLR 99; [1956] HCA 45; Katsilis v Broken Hill Pty Ltd (1978) 52 ALJR 189.

512 [9.260]

Initiating Proceedings and Pleadings  Chapter  9

Uniform Civil Procedure Rules 2005 (NSW) cont. 15.9 Manner of giving particulars (cf SCR Pt 16, r 6; DCR Pt 9, r 25; LCR Pt 8, r 6) The particulars to be given by a pleading must be set out in the pleading or, if that is inconvenient, must be set out in a separate document referred to in the pleading and filed with the pleading. 15.10 Order for particulars (cf SCR Pt 16, r 7; DCR Pt 9, r 26; LCR Pt 8, r 8) (1)

The court may order a party to file:



(a)

particulars of any claim, defence or other matter stated in the party’s pleading or in any affidavit relevant to the proceedings, or



(b)

a statement of the nature of the case on which the party relies, or



(c)

if the party claims damages, particulars relating to general or other damages.

(2)

Without limiting subrule (1), if a pleading alleges that a person had knowledge or notice of some fact, matter or thing, the court may order that party to file:



(a)

if the pleading alleges knowledge, particulars of the facts on which that party relies, and



(b)

if the pleading alleges notice, particulars of the notice.



Bailey v Federal Commissioner of Taxation [9.280]  Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214 GIBBS J [3]‌Particulars fulfil an important function in the conduct of litigation. They define the issues to be tried and enable the parties to know what evidence it will be necessary to have available and to avoid taking up time with questions that are not in dispute. On the one hand they prevent the injustice that may occur when a party is taken by surprise; on the other they save expense by keeping the conduct of the case within due bounds.

 [9.290] Because particulars are not considered to be pleadings, the opponent is under no

obligation to plead to them in response. Consequently, particulars do not cure defective pleadings, which may be corrected only by formal application to amend.

Boral Bricks v Cosmidis [9.300]  Boral Bricks Pty Ltd v Cosmidis [2013] NSWCA 443 [Cosmidis was a tanker driver employed by D M & B P Wiskich Pty Ltd (Wiskich). After delivering fuel to the Badgery’s Creek premises of Boral Bricks Ltd (Boral), he was injured by a forklift driven by a Boral employee. He sued Boral, who joined Wiskich to the proceedings. In its defence, Boral pleaded the defence under s 151Z of the Worker’s Compensation Act 1987 (NSW) that any damages payable to Cosmidis should be reduced by Wiskich’s negligence as his employer. The defence raised only a general reliance on s 151Z and no particulars were provided of Wiskich’s alleged breaches of duty. The [9.300]  513

Civil Procedure in New South Wales

Boral Bricks v Cosmidis cont. trial judge refused leave to amend the defence and to lead evidence of the alleged breach. Cosmidis obtained damages at trial for Boral’s negligence. One of the grounds of Boral’s appeal related to the trial judge’s handling of Boral’s failure to particularise its defence. The Court of Appeal rejected this ground of appeal.] BASTEN J [56] [T]‌he appellant challenged the contention that particulars were required of the basis on which it alleged negligence on the part of the employer. It pointed out that s 151Z(2) outlined a mechanism for adjustment of damages, as explained above, which operated where there had been no claim made by a worker or the defendant against the worker’s employer and was not, in its terms, expressed to be a defence, as compared with contributory negligence (which was a defence and had been particularised). [57] This last submission, as the appellant recognised, was inconsistent with the reasoning of this Court in Benton v Scott’s Refrigerated Freightways. In that case, Campbell JA stated, with the agreement of Bell JA and McDougall J, at [33]: The material facts that would need to be established for a claim under section 151Z(2)(c) would include identification of the person alleged to be the employer, the material facts by virtue of which that relationship of employment was alleged to exist, the material facts which showed that the worker had taken or was entitled to take proceedings independently of the Act to recover damages from the employer, and any material facts that entered into the quantification of the reduction that was sought in section 151Z(2)(c). As … the contribution that the non-​employer tortfeasor could recover from the employer but for Part 5 of the Workers Compensation Act, and the contribution that the non-​employer tortfeasor is entitled to recover from the employer under section 151Z(2)(d) both depend upon the relative causal efficacy and culpability of the actions of the employer and the non-​employer tortfeasor, the facts material to those matters, and any special facts, that if not pleaded could take the other party by surprise, would need to be pleaded. … [59] Dealing first with the inadequacy of the pleading, whether or not it was part of the operative reasoning in Benton, there can be little basis for disparaging the proposition that, if the defendant wishes to rely upon the benefits it may derive from s 151Z(2) of the Workers Compensation Act, it should identify the material facts relied upon which, if not pleaded, could take the other party by surprise. What those material facts may be in a particular case will depend upon all the circumstances. Those stated in the first sentence of [33] in Benton should be understood as exemplifying the kind of facts which may be material, rather than as a checklist applicable to every case. For example, there will often be no doubt as to the identity of the employer. In Benton itself there was doubt as to the identity of employer, but it was held not to matter: at [50]. [60] Further, in Benton, there was no doubt as to the alleged breach of duty (namely that the step on the side of the truck from which the plaintiff fell was defective) but only as to which of a number of related companies was responsible for it. The present case is rather different: the plaintiff was a driver who attended various premises to deliver fuel. His employer had no control over those premises. This was not a case involving defective equipment supplied by the employer (or a related party) to the worker; nor was it a case where the worker was employed by a labour hire firm to work at a particular site. The real problem for the appellant in the present case was that it had no information on which to base any allegation of a breach of duty by the worker’s employer.

 [9.310]  In practice, the delivery of particulars often leads to the voluntary amendment of

defective pleadings because an order from the court to provide particulars would very likely 514 [9.310]

Initiating Proceedings and Pleadings  Chapter  9

result in a costs order. Further particulars may be supplied by correspondence between the parties.

BWK Elders Australia v Westgate Wool Company [9.320]  BWK Elders Australia Pty Ltd v Westgate Wool Company Pty Ltd (No 2) [2002] FCA 87 MANSFIELD J [20] The tendency in pleadings in recent years has been to address matters of substance rather than matters of form. Thus, as von Doussa J pointed out in Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466, the strict distinction between material facts and particulars has not been rigidly adhered to, and technical objections raised to pleadings on the ground of alleged want of form are not so enthusiastically received. The Court’s focus has been upon ensuring the case is identified with clarity, so that the opposing party knows the case to be met and the issues for trial are identified. The focus upon case management, to ensure the efficient and fair conduct of proceedings, has also led to the emphasis on technical pleadings rules being diverted to an emphasis upon ensuring that, in substance, the objectives of pleadings, as discussed for example by the High Court in Banque Commerciale SA en Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286 per Mason CJ and Gaudron J, are fulfilled.

 Particulars and evidence

Allianz v Newcastle Formwork Constructions [9.330]  Allianz Australia Insurance Ltd v Newcastle Formwork Constructions Pty Ltd [2007] NSWCA 144 MASON P, GILES AND SANTOW JJA [18] The purpose of particulars is to assist in defining the issues at the trial, whereby the opposite party knows the case it has to meet and will not be taken by surprise, so that the evidence to be led can be appropriately confined and costs can be limited by avoiding the expense of preparing to meet issues which will not arise. Giving particulars of the case to be made out has been distinguished from disclosing the evidence by which the case is to be proved, but the distinction is not a clear one and the touchstone must be what is reasonably necessary to achieve the purposes last-​mentioned. Authority is hardly necessary, but there can conveniently be set out from the judgment of Hunt J in Sims v Wran (1984) 1 NSWLR 317 at 321–​2: The fundamental principle in relation to particulars in defamation, as in any other case, is that a party must be made aware of the nature of the case he is called upon to meet: Saunders v Jones (1877) LR 7 Ch D 435 at 451; R v Associated Northern Collieries (1910) 11 CLR 738 at 740; Dare v Pulham (1982) 148 CLR 658 at 664. The object of particulars is to save expense in preparing to meet a case which may never be put: McSpedden v Harnett (1942) 42 SR (NSW) 116 at 119; 59 WN 98; Turner v Dalgety & Co Ltd (1952) 69 WN (NSW) 228 at 229; and to make the party’s case plain so that each side may know what are the issues of fact to be investigated at the hearing: Kelly v Kelly (1950) 50 SR (NSW) 261 at 265; 67 WN 193 at 196; Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 at 219. See, generally, Phillopini v Leithead [1959] SR (NSW) 352 at 358, 359; 76 WN 150 at 152; Commercial Bank of Australia Ltd v Thomson (1964) 81 WN (Pt 1) (N.S.W.) 553 at 557, 558; Ellis v Grant (1970) 91 WN (NSW) 920 at 924, 925. It is not a question of whether

[9.330]  515

Civil Procedure in New South Wales

Allianz v Newcastle Formwork Constructions cont. one party has adequate knowledge of the actual facts; it is a question of whether he has adequate knowledge of what the other party alleges are the facts, for that is the case which he must meet: Turner v Dalgety & Co Ltd (at 229); Phillopini v Leithead (at 359; 152); Emmerton v University of Sydney [1970] 2 NSWR 633 at 635; Bailey v Federal Commission of Taxation (at 219, 220, 221). There is often a fine line between giving particulars of the case which a party proposes to make and disclosing the evidence by which that case is to be proved. It all depends upon what is necessary to guard the other party against surprise. If the other party cannot otherwise be so guarded, it may sometimes be necessary for a party to disclose his evidence, or at least a broad outline of it. The starting point is what is necessary to guard the other party against surprise; the starting point is not what can be said without disclosing the evidence to be led.

 [9.340]  Provided the other party is not treated unjustly, latitude may in practice be given to

adduce evidence beyond the boundaries identified by the particulars.28 However, the latitude available would be affected by the overriding purpose principles in ss 56–​60 of the CPA.

Douglas v John Fairfax & Sons [9.350]  Douglas v John Fairfax & Sons Ltd [1983] 3 NSWLR 126 HUNT J Where a party seeks to lead evidence in support of his pleaded case which is outside the particulars which have been supplied of that case, it is for the trial judge to consider whether such evidence unfairly amounts to a case of which the other party has had insufficient warning: Vlasic v Federal Capital Press of Australia Pty Ltd (1976) 9 ACTR 1, at 6. It is a matter within the discretion of the trial judge whether to permit the evidence (subject in some cases to an amendment of the particulars, but in any event subject to terms so as to meet any prejudice to the other party) or to hold the party whose particulars were deficient to the issues of fact to be investigated as limited by those particulars: Mummery v Irvings Pty Ltd (at 110); Leotta v Public Transport Commission of New South Wales (1976) 50 ALJR 666, at 668; 9 ALR 437, at 446. The exercise of that discretion must necessarily depend upon many things, including the amount of warning that the other party has had that such evidence was to be led. The relief which is granted to a party at the trial must be founded on the pleadings and not upon any particulars which have been given of the matters alleged in those pleadings: Dare v Pulham (1982) 57 ALJR 80, at 82; 44 ALR 117, at 121. What course should usually be followed by the trial judge in the various situations which may arise was discussed in Reiter v Publishing and Broadcasting Ltd [1983] 2 NSWLR 137(n).



Dare v Pulham [9.360]  Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 MURPHY, WILSON, BRENNAN, DEANE AND DAWSON JJ [6]‌ … Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the

28

Vlasic v Federal Capital Press of Australia Pty Ltd (1976) 9 ACTR 1.

516 [9.340]

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Dare v Pulham cont. pleadings (Gould and Birbeck and Bacon (1916) 22 CLR, at pp 517, 518; Sri Mahant Govind Rao v Sita Ram Kesho (1898) LR 25 Ind App 195, at p 207). But where there is no departure during the trial from the pleaded cause of action, a disconformity between the evidence and particulars earlier furnished will not disentitle a party to a verdict based upon the evidence. Particulars may be amended after the evidence in a trial has closed (Mummery v Irvings Pty Ltd [1956] HCA 45; (1956) 96 CLR 99, at pp 111, 112, 127), though a failure to amend particulars to accord precisely with the facts which have emerged in the course of evidence does not necessarily preclude a plaintiff from seeking a verdict on the cause of action alleged in reliance upon the facts actually established by the evidence (Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437, at p 446; 50 ALJR 666, at p 668). (at p 664)

 When are particulars required? [9.370]  UCPR r 15.1 merely states that a pleading must give such particulars as are necessary

to enable the opposite party to identify the case that the pleading requires him or her to meet. The rules in Pt 15 thereafter provide expressly for certain particulars to be given in specific kinds of cases. Two examples are where behaviour in the nature of fraud is being alleged (see UCPR r 15.3), or where there are allegations of negligence and breach of statutory duty in common law claims in tort (see UCPR r 15.5). It is not only sensible but tactically wise to request particulars if a party is served with a defective statement of claim. Any application to the court for an order for particulars (see UCPR r 15.10) should be preceded by a written request for particulars to the opponent. UCPR r 15.10 does not prevent an order for particulars being given prior to a defence being filed. However, it should not be assumed that there is an entitlement to an order for particulars at this early stage.29

STRIKING OUT PLEADINGS [9.380]  The court has power to strike out any pleading if it does not disclose a reasonable

cause of action or a defence, if it has a tendency to cause prejudice, embarrassment or delay in the proceedings, or is otherwise an abuse of the court’s process. The general test for the striking out of pleadings as disclosing no reasonable cause of action has been confirmed by the New South Wales Court of Appeal in Shaw v New South Wales (2012) 219 IR 87; [2012] NSWCA 102. In that case Barrett JA (with whom McClellan CJ at CL and Beazley, McColl and Macfarlan JJA agreed) said the court needs to assess the following: whether the claims in question are so obviously untenable or groundless that there is “a high degree of certainty” that they will fail if allowed to go to trial; and whether this is one of the “clearest of cases” in which the court may accordingly intervene to prevent the claims being litigated. The striking out of pleadings as an abuse of process was addressed by the New South Wales Court of Appeal in New South Wales v Williams [2014] NSWCA 177, which involved an application to strike out parts of a defence on the basis that the matters in question had been conceded by the defendant in earlier criminal proceedings. 29

Hamilton J and Lindsay G, NSW Civil Practice & Procedure (Thomson Reuters subscription service) at [r 15.10.80]. [9.380]  517

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) [9.390]  Uniform Civil Procedure Rules 2005 (NSW) r 14.28 14.28 Circumstances in which court may strike out pleadings (cf SCR Pt 15, r 26; DCR Pt 9, r 17; LCR Pt 8, r 3) (1)

The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading:



(a)

discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or



(b)

has a tendency to cause prejudice, embarrassment or delay in the proceedings, or



(c)

is otherwise an abuse of the process of the court.

(2)

The court may receive evidence on the hearing of an application for an order under subrule (1).



Markisic v Department of Community Services of New South Wales (No 2) [9.400]  Markisic v Department of Community Services of New South Wales (No 2) [2006] NSWCA 321 GILES JA (SANTOW AND IPP JJA AGREEING) [34] Under the UCP Rules, a pleading must contain only a summary of the material facts on which the party relies and not the evidence by which those facts are to be proved (Pt 14 r 7). There must be pleaded specifically any matter which, if not pleaded, may take the opposite party by surprise (Pt 14 r 14). A pleading must give all necessary particulars to enable the opposite party to identify the case the pleading requires him to meet (Pt 15 r 1), and in particular must give particulars of fraud or misrepresentation (Pt 15 r 3). Where there are allegations of negligence or breach of statutory duty, the facts and circumstances constituting the alleged negligent act or omission or the alleged breach of statutory duty must be given, so far as possible separately for each alleged negligent act or omission or breach of statutory duty (Pt 15 r 5). [35] These are particular requirements, but more generally it is necessary that the pleading be intelligible and enable the defendant to know the case which the defendant is called upon to meet, to plead to it and to respond to it by evidence at a trial. That is essential if justice is to be afforded to the defendant, and underlies in part summary dismissal of proceedings and striking out pleadings for vexatiousness, failure to disclose a reasonable cause of action or tendency to cause prejudice, embarrassment or delay (the UCP Rules are Pt 13 r 4 and Pt 14 r 28).

 Pleadings that cause prejudice, embarrassment or delay

Priest v New South Wales [9.410]  Priest v New South Wales [2006] NSWSC 12 JOHNSON J [30] The function of pleadings should be kept in mind in considering the strike-​ out application: Fleet v Royal Society for the Prevention of Cruelty to Animals NSW [2005] NSWSC 926 at paragraphs  47-​53. 518 [9.390]

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Priest v New South Wales cont. [31] The function of pleadings is to state with sufficient clarity the case that must be met by a defendant. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and to define the issues for decision: Banque Commerciale SA En Liquidation v Akhil Holdings Limited [1990] HCA 11; (1990) 169 CLR 279 at 286, 296, 302-​3. The issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible upon the ground of relevance: Banque Commerciale at 296. [32] For a statement of claim to comply with the rules of court, a party should plead, in a summary form, a statement of the material facts upon which the party relies, but not the evidence by which those facts are to be proved: Part 15 r 7 SCR (see now Part 14.7 UCPR). In doing so, the pleadings should be as brief as the nature of the case admits: Part 15 r 8 SCR (see now Part 14.8 UCPR). [33] Pleadings also provide the structure upon which interlocutory processes, such as discovery, are governed and they constitute the record of the matters which the court has resolved and become relevant if, in any subsequent proceedings, any party claims issue estoppel or res judicata: Australian Competition and Consumer Commission v Fox Symes & Associates Pty Limited [2005] FCA 1071 at paragraphs  100-​103. [34] A pleading is embarrassing where it is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him: Gunns Ltd v Marr [2005] VSC 251 at paragraphs 14-​15. [35] In Shelton v National Roads & Motorists Association Limited [2004] FCA 1393, Tamberlin J explained the concept of “embarrassment” with respect to pleadings at paragraph 18: “Embarrassment” in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-​434. [36] A pleading may be embarrassing even though it does contain allegations of material facts sufficient to constitute a cause of action if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Limited (Bryson J, 7 March 1995, BC9504276 at pages 5–​6).

 Pleadings that do not disclose a reasonable cause of action

Silverside Superfunds v Silverstate Developments [9.420]  Silverside Superfunds Pty Ltd v Silverstate Developments Pty Ltd [2008] NSWSC 904 MCLAUGHLIN AJ: [2]‌ … the relief presently sought by the Defendants was an order for the striking out, in whole or in part, of the statement of claim. That application was brought pursuant to the provisions of Part 14, rule 28 of the Uniform Civil Rules 2005. … [10] Irrespective of the outcome of the present application, the proceedings will remain on foot. If the present application is successful, the statement of claim in its present form will be struck out, in whole or in part, and a normal consequence of such a striking out of the pleading would be that leave be granted to the Plaintiffs to file an amended statement of claim. [9.420]  519

Civil Procedure in New South Wales

Silverside Superfunds v Silverstate Developments cont. [11] To the extent that the present strike out application is grounded upon the assertion that the pleading discloses no reasonable course of action, it is proper for the Court to proceed upon the basis that the Plaintiffs, at a final hearing, will be able to establish the various factual matters asserted in the statement of claim. It is not appropriate, therefore, in the present application for the Court to give consideration to any question regarding the strength or the weakness of the Plaintiffs’ case. [12] The present application is to be determined upon the claim of the Plaintiffs as pleaded in the statement of claim. No evidence has been placed before the Court by any party in the hearing of the present application. … [17] In addition, it was submitted on behalf of the applicant Defendants that the statement of claim does not facilitate, and is contrary to, the “just, quick and cheap resolution of the real issues in the proceedings” (within the meaning of section 56 of the Civil Procedure Act 2005), and is contrary to the Uniform Civil Procedure Rules, in that, in particular, in addition to the foregoing complaints concerning the form of the pleading, the statement of claim: (a)

contains numerous allegations of matters of evidence relating to the course of correspondence between the parties, and that such allegations do not constitute allegations of any material fact (paragraphs 12, 14, 20–​39);

(b)

makes allegations that are irrelevant to the claims for relief sought in the amended summons and disclose no reasonable cause of action (paragraph 42–​46, 49–​50 and 58–​65).

… [22] The two foregoing complaints, although distinct, are closely inter-​related. Not only does Part 15 rule 3 of the Uniform Civil Procedure Rules require, in respect to an allegation of fraud, that such an allegation be sufficiently particularised, but, further, it is not possible to establish, upon the face of the pleading, whether a reasonable cause of action is disclosed, unless sufficient particulars are provided in the pleading. [23] The principles regarding the striking out of a pleading upon the ground that no reasonable cause of action is disclosed are well recognised. The Plaintiffs need to establish only that it is arguable, upon the facts alleged, that there be such a cause of action. It is not essential that the Plaintiffs be able to establish that, necessarily, such a cause of action must exist, let alone that it must succeed (see Dey v Victorian Railways Commissioners (1949) 78 CLR 62, General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125, per Barwick CJ at 128–​130).



Shaw v New South Wales [9.430]  Shaw v New South Wales [2012] NSWCA 102; (2012) 219 IR 87 [Two teachers, appointed as “officers” of the NSW Education Teaching Service and therefore employed by the Crown in right of New South Wales, were subject to a mandatory probationary period of 12 months when assigned to work at Bourke Street Public School. Subsequently, the Director-​General of Education annulled their appointment. As a result, they were no longer officers of the Education Teaching Service and Crown employees. They sued the State of New South Wales in the District Court claiming damages for breach of contract, negligence and breach of statutory duty. The plaintiffs claimed the State had breached an implied term of mutual trust and confidence in their contract of employment. The mutual trust and confidence claim was struck out in the District Court. Elkaim SC DCJ ruled that the plaintiffs would not, as a matter of law, be entitled to damages even if they succeeded in establishing such an implied 520 [9.430]

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Shaw v New South Wales cont. term and its breach. Accordingly, such a claim was a waste of time and costs and would amount to an abuse of process. On appeal, the teachers argued the law in Australia was not so clear on the implied term argument as to rule out the possibility of obtaining damages and preventing their claim from going to trial. The State argued there was no implied term of mutual trust and confidence, and filed a notice of motion to strike out the relevant pleading. The Court of Appeal unanimously found that the following matters should proceed to trial: that the employment contract included the implied term of mutual trust and confidence; that the implied term operated despite the statutory basis of the employment; and that damages were recoverable if breach of the implied term was established. The judgment of Barrett JA addressed the basis upon which to strike out pleadings in such circumstances.] BARRETT JA (MCCLELLAN CJ AT CL; BEAZLEY, MCCOLL AND MACFARLAN JJA AGREEING) Grounds of appeal [22] The appellants say in relation to paragraphs 11, 11A and 11C (considered in the light of an assumption that a breach of the implied term of mutual trust and confidence had been established) that the primary judge erred in several respects. [23] The principal argument is that the law as it stands today is not in a state where the unavailability of damages for such breach is so clear as to justify the drastic step of preventing a claim going to trial. Reference is made to the observation of Basten JA in Russell (at [34]) that the unavailability of damages for a breach of the term of mutual trust and confidence is “unclear” in light of the principle in Addis v Gramophone Co Ltd [1909] UKHL 1; [1909] AC 488 (“Addis”). [24] The appellants further say that since the third further amended statement of claim raises the proposition that Addis no longer represents the law in Australia, a District Court judge is entitled to guidance as to how to approach the lack of clarity referred to by Basten JA in Russell. [25] In relation to paragraph 11G, the appellants contend that the primary judge failed to give any or adequate weight to the submission that their probationary status removed them from considerations raised in Johnson and therefore from the ambit of relevant remarks of Spigelman CJ in Paige. The mere fact of probationary status should have been seen as sufficient to raise at least an argument that the appellants were outside the system of industrial relations regulation from which a finding of negation of a cause of action in negligence might otherwise arise. A new matter [26] Although no attempt to do so was made before the primary judge, the respondent now seeks to say that paragraph 4 of the third amended statement of claim (and the parts of the pleading flowing from it) should also be struck out. [27] To that end, the respondent filed a notice of contention to the effect that the primary judge’s decision should be upheld because the alleged term of mutual trust and confidence is not implied. In the course of the hearing of the appeal, the respondent filed a notice of motion in this Court seeking an order that the pleading of the implied term be struck out. The issues [28] Having regard to both the notice of appeal and the notice of contention and notice of motion just mentioned, the parties should be regarded as having put in issue the triable quality of: (a)

the existence of the implied term pleaded in paragraph 4;

(b)

the proposition that the statutory basis of the employment of the appellants and the statutory incidents of that employment leave no scope for the operation of any such implied term; and

(c)

the availability of damages, even if the implied term is included in the contracts and breach of it established.

[29] These questions arise in relation to the case the appellants seek to make in contract. I leave to one side for the moment the claim in tort. [9.430]  521

Civil Procedure in New South Wales

Shaw v New South Wales cont. Triable quality [30] I have said that the “triable quality” of the three matters just mentioned is in issue. There is no dispute that the central inquiry is that indicated by Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125 and, more recently, Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 where Gaudron, McHugh, Gummow and Hayne JJ said at [57]: Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. [31] That formulation has since been re-​affirmed: see Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 at [46]; Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118 at [24]; and, while it was said in Batistatos that the General Steel formulation should not be given “canonical force”, it is convenient, for present purposes, to refer to the criteria laid down by the case law I have mentioned as the “General Steel test”. [32] The question is therefore whether the claims in question are so obviously untenable or groundless that there is “a high degree of certainty” that they will fail if allowed to go to trial; and whether this is one of the “clearest of cases” in which the court may accordingly intervene to prevent the claims being litigated. [33] It was submitted on behalf of the respondent that this test requires refinement in the light of provisions of the Civil Procedure Act 2005. The substance of the submission is that statutory directives about case management may sometimes require the court to put an end to a claim even though it is not found to be of the doomed or hopeless quality indicated by the General Steel test; and that the question of what I have termed “triable quality” may be affected accordingly. … [120] None of the potential obstacles is sufficient to make the appellants’ presently pleaded claims for financial loss caused by breach of the implied term so obviously untenable or groundless that there is “a high degree of certainty” that they will fail if allowed to go to trial. The following propositions arising from that part of the pleading should therefore be allowed to go to trial: (a) that the employment contract included the implied term pleaded in paragraph 4 of the third further amended statement of claim; (b) that the implied term operated despite the statutory basis of the employment of the appellants and the statutory incidents of that employment; and (c) that damages as claimed in paragraph 13 are recoverable if breach of the implied term is established. It follows that, subject to any contrary indication that may arise from s 56 or s 58 of the Civil Procedure Act, the primary judge’s orders striking out paragraphs 11, 11A and 11C of the third further amended statement of claim should be set aside and the respondent’s notice of motion seeking an order striking out paragraph 4 should be dismissed.



New South Wales v Williams [9.440]  New South Wales v Williams [2014] NSWCA 177 [Williams was arrested by police for a larceny offence. During the course of the arrest he, his brother and his mother offered some resistance. All were charged with various resist arrest and hinder 522 [9.440]

Initiating Proceedings and Pleadings  Chapter  9

New South Wales v Williams cont. police offences. The brother and mother were convicted in the Local Court but the convictions were set aside in the Supreme Court. After the intervention of the Attorney-​General, the resist arrest conviction of Williams was referred back to the Local Court, where it too was set aside. The reason was that the initial arrest of Williams allegedly did not comply with s 99(3) of the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) (a provision that was later amended to overcome any ambiguity). The three Williams parties later took legal action against the police in the District Court for assault, battery and false imprisonment. In its defence, the State contended that the arrest and imprisonment of Williams were lawful, and that reasonable force was used against his brother and mother when they hindered the police. The Williams’ sought orders that certain paragraphs of the State’s defence be struck out as an abuse of process under UCPR 14.28(1)(c) or, in the alternative, as disclosing no reasonable defence under UCPR 14.28(1)(a). Their argument was that the State was attempting to litigate a question that had previously been conceded in the criminal proceedings, that is, whether the initial arrest of Williams was lawful. The trial judge acceded to their request, but the New South Wales Court of Appeal unanimously overturned that decision.] EMMETT JA No Reasonable Defence [45] Clearly enough, paragraphs 23, 25 and 28 of the State’s defence disclose a reasonable defence, as a matter of pleading. That is to say, if the State were to establish, as a matter of fact and law, that the conduct of the police officers in relation to Joel constituted a lawful arrest and that the police officers used no more than reasonable force when preventing Gloria and Robert from hindering them in their arrest of Joel, that would be an answer to the claims made by the Claimants. Thus, the Claimants’ contentions can only be that it would be an abuse of process for the State to persist in the allegations made in those paragraphs. Abuse of Process [46] Abuse of process is a misuse of the court’s procedure. While the categories of abuse of process are not closed, abuses of process will normally fall into one of three categories. The first is where the court’s procedures are invoked for an illegitimate purpose. The second is where the use of the court’s procedures is unjustifiably vexatious, oppressive or unfair to one of the parties. The third is where the use of the court’s procedures would bring the administration of justice into disrepute. There is an important public interest in the due administration of justice, and in the maintenance of public confidence in the administration of justice. That public interest is central to the question of abuse of process, and a court may exercise its inherent powers, as well as powers conferred by the UCPR, as and when the administration of justice demands (O’Shane v Harbour Radio Pty Ltd [2013] NSWCA 315 at [101] -​[103]). [47] The Primary Judge based his decision on the proposition that the State should not be allowed to litigate, in the District Court Proceedings, facts that it had already agreed, in the Supreme Court Proceedings, should be determined against it. However, his Honour did not identify the facts that the State is said to have agreed should be determined against it, and it is quite unclear what facts his Honour had in mind. The so-​called “agreement” is dealt with further below. In short, his Honour’s reasoning does not support the orders made by him. [48] Issue estoppel, if established, would be a good answer to the allegation by the State, in the District Court Proceedings, of a matter that had been finally decided in the Supreme Court Proceedings. To establish an issue estoppel, it would be necessary to demonstrate that the parties in both proceedings were the same and that they were in the same interests. That is to say, it would be necessary to establish identity of issues and identity of parties. However, while the Claimants rely on the decision of Harrison AsJ and the conduct of the DPP in the Supreme Court Proceedings, they do not suggest that the State is bound by an issue estoppel that would prevent it from making the allegations that it sought to make in paragraphs 23, 25 and 28 of its defence. [9.440]  523

Civil Procedure in New South Wales

New South Wales v Williams cont. [49] Abuse of process has been referred to as “the extended res judicata doctrine” (see KR Handley, Res Judicata (4th ed 2009, Butterworths), ch 26). Whether there is an abuse of process does not depend upon the existence of an estoppel, and a court may intervene to prevent an abuse in the conduct of subsequent proceedings notwithstanding that the subsequent proceedings are not between the same parties as earlier proceedings (see O’Shane v Harbour Radio Pty Ltd [2013] NSWCA 315 at [105]). On the other hand, it would be easier to show an abuse of process if, as the Claimants contend, the State was a party to the Supreme Court Proceedings and the issue raised by paragraphs 23, 25 and 28 of the State’s defence was decided, or at least conceded, in the Supreme Court Proceedings. I shall say something about each of those matters. … Identity of Issues [59] The Claimants contend that, since the original prosecutions of each of the Claimants turned on the single issue as to the lawfulness or otherwise of Joel’s arrest, the lawfulness of Joel’s arrest was the central issue in the Supreme Court Proceedings. In the Local Court Proceedings against Robert and Gloria, the prosecutor alleged that each of them had committed the offence of obstructing or hindering a police officer in the execution of their duty. An element of that offence, which the prosecution was required to prove, was that the relevant police officer was, at the relevant time, acting in the execution of his or her duty. Robert and Gloria say that they identified execution of duty as a live issue in their defence before the Local Court, both in evidence and in argument. Certainly, as indicated above, the solicitor for Gloria and Robert raised s 99(3) in the course of the prosecution before the Local Court. [60] The Claimants accept that the standard of proof required in a summary prosecution is different from that required in a civil suit and that it is possible that the State could prove in the District Court Proceedings, on the balance of probabilities, the matter that it failed to establish, beyond reasonable doubt, in the Local Court Proceedings. Nevertheless, the Claimants contend, the summary prosecutions were not ones where a defect in the evidence caused the Local Court Magistrate to entertain a doubt. Rather, they say, it was a case in which there was simply no evidence capable of satisfying the requirements of s 99(3) of the LEPR Act. They say that Harrison AsJ’s reasons amounted to a holding, as a matter of law, that the prosecutions against Gloria and Robert should be dismissed as disclosing no prima facie case. … [64] The issue decided by Harrison AsJ [in the Supreme Court] was whether the Local Court Magistrate was wrong, as a matter of law, in failing to give proper consideration to the application of s 99(3) of the LEPR Act, namely, whether, on the proper application of that provision, Joel’s arrest was lawful. Her Honour’s decision involved no issue of fact directed to whether or not the ingredients of the defence afforded by s 99(2) had been established. Those facts remain unresolved. The issue of whether the arrest of Joel was lawful was not determined in the Supreme Court Proceedings. There was no identity between any issue in the Supreme Court Proceedings and the issue that the State seeks to raise in the District Court Proceedings. Concession by the DPP [65] Harrison AsJ said that there was no evidence that the police had concerns in relation to any of the matters addressed in s 99(3) and that, in those circumstances, it would seem that the elements of a lawful arrest were not made out and that therefore an element of the s 546C offences could not be established at any subsequent hearing of the charges against Gloria and Robert. That appears to be the basis upon which her Honour agreed that there would be little utility in remitting the prosecutions to the Local Court for redetermination. While the DPP apparently agreed that there was “little utility” in remitting the matter to the Local Court, the question of utility of such remitter was not explored before the Primary Judge.

524 [9.440]

Initiating Proceedings and Pleadings  Chapter  9

New South Wales v Williams cont. [66] As I have said, the Primary Judge based his decision on the proposition that the State should not be allowed to litigate, in the District Court Proceedings, facts that the State had already agreed, in the Supreme Court Proceedings, should be determined against it. The Supreme Court Proceedings were contested by the DPP. Further, as indicated above, the question before Harrison AsJ, of necessity, could not have involved a finding of fact by her Honour, since the appeal lay only on a ground that involved a question of law alone. There was no scope for the DPP to have agreed that any facts should be determined against the State, assuming that the DPP could bind the State. [67] The Claimants assert that, at best, Sergeant Reid has been very tardy in bringing forward his true reasons for arresting Joel, or the lawyers who represented the prosecutor at the summary trial before the Local Court and on appeal acted incompetently or contrary to instructions. They say that, at worst, the District Court Proceedings are being used to mount a collateral attack on the judgment of Harrison AsJ in the Supreme Court Proceedings by offering evidence tailored to meet s 99(3), after the police learned that the initial reason offered by them was insufficient. [68] However, a collateral attack on an earlier decision of a court is not necessarily an abuse of process. There are circumstances in which it is quite legitimate to make such an attack and to show that an earlier judgment was based on a wrong view of the facts or of the law. Alternatively, it may be legitimate to demonstrate, in such an attack, that a chance was lost at persuading the earlier court that some other view should have been adopted in a finding of fact, such as in the application of a legal standard or the onus of proof or the standard of proof required in the particular case (see Cleary v Jeans [2006] NSWCA 9; 65 NSWLR 355 at [43]). [69] In paragraphs 23, 25 and 28 of its defence, the State asserts that, in arresting Joel, Sergeant Reid acted out of a reasonably formed suspicion that the arrest was necessary to ensure that Joel attended at court. The Claimants point out that Sergeant Reid failed to say so in his two statements and failed to say so in his evidence to the Local Court, “despite precisely that issue having been raised by the defence”. They also point to the fact that Joel was subsequently served with a CAN and was released with no bail, in circumstances where the police knew his address. Thus, they assert, there was no need to arrest Joel in order to ensure his attendance at court, since the police officers knew where Joel lived and they were prepared to rely on a CAN to ensure his attendance at court. [70] Those contentions suggest that the real basis upon which the Claimants say that paragraphs 23, 25 and 28 of the defence should be struck out is that the State should not be permitted to raise lawful arrest as a defence because the evidence before the Primary Judge indicates that that defence could not possibly succeed. That contention assumes that the evidence that was before the Local Court and the Primary Judge is the only evidence that would be available at a trial. That assumption is not justified. In any event, the Primary Judge did not base his decision on a conclusion that the defence tendered by paragraphs 23, 25 and 28 could not possibly succeed on the evidence before him. [71] The requirement for establishing that there is no triable issue is a demanding one and the power to strike out a pleading on the basis that it discloses no reasonable defence, or is an abuse of process, should be exercised only in plain and obvious cases. The power should not be exercised in cases of doubt or difficulty or where the pleading raises a debatable question of law. Once it appears that there is a real issue, whether of fact or law, and that the rights of the parties depend upon it, a court should not dismiss a defence raising such an issue, either on the basis that no reasonable defence is disclosed or as an abuse of process (see Dey v Victorian Railways Commissioners [1949] HCA 1; 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129-​130; Commonwealth v Griffiths [2007] NSWCA 370; 70 NSWLR 268 at [11]-​[12] and Spencer v Commonwealth [2010] HCA 28; 241 CLR 118 at 139-​140). [72] The proposition that the very question that would be tendered by paragraphs 23, 25 and 28 was resolved as a result of the Supreme Court Proceedings cannot be made out. It is not an abuse for the State to endeavour to litigate the question of the lawfulness of Joel’s arrest as a defence to the police tort claim made in the District Court Proceedings.

[9.440]  525

Civil Procedure in New South Wales

New South Wales v Williams cont. Conclusion [73] If the Court of Appeal entertains real doubt about the correctness of a decision at first instance, leave to appeal should be granted if substantial injustice would be done in the event that the decision is wrong (Nationwide News Pty Ltd v Bradshaw (1986) 84 FLR 49 at 56 and 60-​61). In the present case, if the decision of the Primary Judge was wrong, the State will suffer substantial injustice and prejudice insofar as it will be deprived of the right to defend the District Court Proceedings on the basis that the arrest of Joel was justified by reason of the operation of s 99(2) of the LEPR Act, albeit as qualified by the operation of s 99(3). [74] I consider that the Primary Judge erred in ordering that paragraphs 23, 25 and 28 of the State’s defence be struck out.



526 [9.440]

CHAPTER 10

Amendment, Mistakes and Adjournments [10.10] INTRODUCTION......................................................................................................... 527 [10.20] AMENDMENT............................................................................................................. 528 [10.30] Uniform Civil Procedure Rules 2005 (NSW) rr 19.1, 19.2........................... 528 [10.50] Civil Procedure Act 2005 (NSW) ss 14, 16, 56–​61, 64.............................. 529 [10.60] Rayscan Management v Siv Nandan Moodliar........................................ 532 [10.70] Kelly v Mina.................................................................................... 534 [10.80]

Cost, Delay and Justice: The High Court of Australia Recognizes the Importance of Case Management in Civil Litigation............................. 537 [10.100] Hill v Reglon.................................................................................... 537

[10.110] Section 64: Effective date of amendment.................................................... 539 [10.120] AMENDMENTS AFFECTING LIMITATION PERIODS...................................................... 539 [10.120] Civil Procedure Act 2005 (NSW) s 65.................................................... 539 [10.140] Air Link v Paterson (No 2)................................................................... 540 [10.160] Section 65: Mistake in the name of a party.................................................. 545 [10.160] Greenwood v Papademetri.................................................................. 545 [10.170] Preston v Nikolaidis........................................................................... 554 [10.180] IRREGULARITIES AND NULLITIES................................................................................. 555 [10.190] Civil Procedure Act 2005 (NSW) s 63.................................................... 556 [10.210] Deveigne v Askar.............................................................................. 557 [10.220] ADJOURNMENTS........................................................................................................ 568 [10.220] Spencer v NSW Minister for Climate Change and the Environment............... 568 [10.230] Civil Procedure Act 2005 (NSW) s 66.................................................... 568 [10.250] Bank of Western Australia v Callipari..................................................... 569

INTRODUCTION [10.10] The Uniform Civil Procedure Rules 2005 (NSW) (UCPR) concerning the originating

process and pleadings were discussed in Chapter 9. One of the main objectives of the rules concerning pleadings is to ensure that the parties know the case they have to meet. The pleadings are very often drafted at an early stage in the proceedings and, as more information becomes known or decisions are made regarding the issues in dispute, changes or amendments may well have to be made to documents in the proceedings. The court has wide powers to approve amendments and these powers can be exercised at any stage of the proceedings. The court also has a more limited power to permit amendments allowing matters to be raised that would otherwise be statute-​barred. Although there are broad powers to rectify mistakes or omissions, there are some circumstances in which the court’s power to cure mistakes cannot apply. While the court has power to cure procedural irregularities, nullities cannot be cured. When a case comes before the court, an adjournment may be necessary if an amendment is requested. Indeed, adjournments might be requested for many different reasons. This chapter discusses the relevant provisions of the Civil Procedure Act 2005 (NSW) (CPA) and the UCPR that concern amendment, mistakes and adjournments. The overriding purpose principles in the CPA and UCPR are of significant importance to the court’s exercise of these powers.

[10.10]  527

Civil Procedure in New South Wales

AMENDMENT [10.20]  Logic dictates that amendments at the early stages of proceedings will be more easily

obtained than those requested at a later time. This is because an amending party’s opponent has spent fewer resources in preparing their case and sufficient time remains to respond to the new developments without losing trial dates. A plaintiff may, without leave, amend a statement of claim once within 28 days of the filing of the statement of claim. However, if a date has been fixed for trial within that time an order from the court is required to amend the statement of claim: UCPR r 19.1. If the statement of claim is amended within 28 days of its filing but after the defendant has filed a defence, the defendant may amend the defence within 14 days after service of the amended statement of claim: UCPR r 19.1. It is to be noted that the court has power provided in UCPR r 19.4 to disallow amendments made pursuant to UCPR r 19.1. Amendments under UCPR r 19.1 can include an amendment that has the effect of adding or removing a party. If a party is added by such an amendment, the date of commencement of the proceedings for that party is taken to be the date on which the amended document is filed: UCPR r 19.2. This date of commencement conforms to UCPR r 6.28. Section 64 of the CPA governs amendments generally and outside the 28-​day period from filing. If leave is required to amend, applications should be made by notice of motion under UCPR Pt 18. Rule 42.6 indicates that, unless the court otherwise orders, a party that amends a pleading or summons without leave must, after the conclusion of the proceedings, pay the costs occasioned by the amendment.

Uniform Civil Procedure Rules 2005 (NSW) [10.30]  Uniform Civil Procedure Rules 2005 (NSW) rr 19.1, 19.2 19.1 Amending a statement of claim (cf SCR Pt 15, r 12, Pt 20, rr 2 and 2A; DCR Pt 17, rr 2 and 2A; LCR Pt 16, r 2) (1)

A plaintiff may, without leave, amend a statement of claim once within 28 days after the date on which it was filed, but, unless the court otherwise orders, may not amend it after a date has been fixed for trial.

(2)

If a plaintiff amends his or her statement of claim under subrule (1) after the defendant has filed a defence, the defendant may amend his or her defence at any time within 14 days after service of the amended statement of claim.

(3)

A plaintiff’s right to make an amendment under subrule (1) is not affected by any amendment the plaintiff has made under rule 7.22.

19.2 Amendments to add or remove parties (cf SCR Pt 20, r 2(4) and (5); DCR Pt 17, r 2(4) and (5); LCR Pt 16, r 2(3A) and (3B)) (1)

(2)



Subject to subrules (2) and (3), the amendments that may be made under rule 19.1 include an amendment that would have the effect of adding a party to, or removing a party from, the proceedings. An amendment that would have the effect of adding a person as a plaintiff in proceedings in which a solicitor is acting for the current plaintiff may not be made unless, at the time the amendment is made, the same solicitor: (a) is acting for the person to be added, and (b) certifies on the amended document:



(i)

that he or she is acting for the person to be added, and



(ii)

that the person to be added consents to being added as a plaintiff.

528 [10.20]

Amendment, Mistakes and Adjournments  Chapter  10

Uniform Civil Procedure Rules 2005 (NSW) cont. (3)

An amendment that would have the effect of removing a party from the proceedings may not be made unless that party consents to being removed from the proceedings.

(4)

If a person is added as a party under this rule, the date of commencement of the proceedings in relation to that person is taken to be the date on which the amended document is filed.

 [10.40]  Section 64 of the CPA is the main power available to amend documents. This power

can be exercised at any stage of the proceedings. The occasioning of any prejudice to the parties is a relevant consideration when determining whether to permit (or refuse) an amendment.1 However, that consideration is one which is taken into account in the context of s 64 being subject to the overriding purpose in s 56, as well as the relevant considerations in s 57 (Objects of case management) and s 58 (Court to follow dictates of justice) of the CPA.2 The power to amend pleadings at any stage of the proceedings has, of course, been qualified by the High Court ruling in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27.3 Though s 64 is the main amendment power, the court has a wide array of powers that can facilitate amendments as well as other matters. Some of these main powers are reproduced below. For example, s  14 of the CPA is the dispensing power. It provides the court with power to dispense with any requirement of the UCPR if satisfied that it is appropriate to do so. Section  16 provides the court with power to give directions in regard to any aspect of practice or procedure for which there are no UCPR rules or practice notes. It also provides that anything done in accordance with such directions is taken to be validly done. Section 61 provides the court with power to give directions for the “speedy determination of the real issues between the parties”. Section 61 also allows the court to make a wide range of orders, including the striking out of claims, defences and amendments, and dismissing proceedings where there has been a failure to comply with a direction.

Civil Procedure Act 2005 (NSW) [10.50]  Civil Procedure Act 2005 (NSW) ss 14, 16, 56–​61, 64 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. 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.

1 2 3

Fexuto v Lombe and Yates [2006] NSWSC 981 at [42]. See New South Wales v Mulcahy [2006] NSWCA 303 at [25]–​[30]. See also Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [36]–​[41]. [10.50]  529

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. 56 Overriding purpose (cf SCR Part 1, rule 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 civil proceedings to be put in breach of a duty identified in subsection (3):



(a)

any solicitor or barrister representing the party in the 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. 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. 530 [10.50]

Amendment, Mistakes and Adjournments  Chapter  10

Civil Procedure Act 2005 (NSW) cont. (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



(b)

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.

59 Elimination of delay (cf Western Australia Supreme Court Rules, Order 1, rule 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. 61 Directions as to practice and procedure generally (cf SCR Pt 23, r 4; Act No 9 1973, s 68A) (1)

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.

(2)

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.

[10.50]  531

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. (3)

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.

(4)

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.

64 Amendment of documents generally (cf SCR Pt 20, rr 1 and 4; DCR Pt 17, rr 1 and 4) (1)

At any stage of proceedings, the court may order:



(a)

that any document in the proceedings be amended, or



(b)

that leave be granted to a party to amend any document in the proceedings.

(2)

Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.

(3)

An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made.

(4)

If there has been a mistake in the name of a party, this section applies to the person intended to be made a party as if he or she were a party.

(5)

This section does not apply to the amendment of a judgment, order or certificate.



Rayscan Management v Siv Nandan Moodliar [10.60]  Rayscan Management Pty Ltd v Siv Nandan Moodliar [2008] NSWSC 857 EINSTEIN J The overriding purpose rule [14] The lodestar by which the practice and procedure of the Commercial List is steered is to be found in the overriding purpose rule set out in section 56 of the Civil Procedure Act 2005 [“the CPA”]: (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.

532 [10.60]

Amendment, Mistakes and Adjournments  Chapter  10

Rayscan Management v Siv Nandan Moodliar cont. [15] Both the Court, the parties to the proceedings and their legal counsel are required to give effect to and promote this overriding purpose. The CPA also goes on, in sections 57 and 58, to set out the objectives of case management, and to detail a range of matters to which the Court may have regard when making an order or direction, in order to ensure that such orders are in accordance with the dictates of justice … [16] Sections 59 and 60 of the CPA also go on to emphasise the need for the Court to take into account the need to minimise delay and ensure that costs to the parties remain proportionate to the issues in dispute. [17] It is difficult to over-​emphasise the significance which these provisions have had in terms of the constraints placed upon the Commercial List by the exigencies of the complex litigation which constitutes its daily fare. In many ways the transformation of the anterior overriding purpose rules of the Court into statutory form has given a new lease of life to the curial process where, over past decades, case management procedures were alternately hailed or derided. [18] With the passage of time judges continue to approach the due administration of justice conscious of the importance of weighing carefully the alternate claims put forward by those seeking the indulgence of the Court [as for example to make late amendments or to introduce late witness statements or indeed in this case to have an extension of time in a self-​executing order made] and the claims of those resisting such orders [as for example on the grounds that they will suffer irremediable prejudice were the Court to grant such leave]. These are issues which can only be determined on a case-​specific basis. In State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, Kirby J (at 170) observed that courts now take into account the strain which litigation may place upon those involved and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes. At the same time his Honour, with respect entirely correctly, observed that departures from a court-​ordered timetable, whilst relevant to the court’s power to sanction such departure, was not decisive. As his Honour put it “[s]‌uch orders are the servants of justice” (at 170). [19] Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 is a recent decision by the Court of Appeal of particular significance which emphasises what I have indicated in terms of the statutory underpinning of the overriding purpose duty. Relevantly Nicholas J at first instance had refused to grant leave to the applicant to replead and in doing so exercised the discretion solely on the basis that the limit to which leave should be given to replead “has been well and truly reached” by what was effectively the sixth pleading. The holding was that the trial judge was correct to do so. Further and in any event, no error had been identified which would justify this Court of Appeal interfering with the exercise of the discretion. [20] The Chief Justice [with whose reasons Basten and Campbell JJA agreed] put the matter as follows: [28] The respondent invoked the authority of State of Queensland v J L 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 J L 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 [10.60]  533

Civil Procedure in New South Wales

Rayscan Management v Siv Nandan Moodliar cont. of the power to grant leave to amend a pleading under s 64 of the Civil Procedure Act (Cf: Michael Wilson and Partners Ltd v Nicholls [2008] NSWSC 501 at [3]‌–​[8]). [21] The classical statement of the approach to be taken in the exercise of the discretions to permit pleading amendments [and I would add, like case management granting leave to depart from set directions] is found in the opinion of Bowen LJ in Cropper v Smith, in which his Lordship held that: it is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights … I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace. [(1884) 26 Ch D 700 at 710-​711] [22] Whilst this statement remains strictly accurate, I would venture to suggest that, with the advent of sections 56 to 60 of the CPA, the court is now required to consider the degree and type of injustice which each party may suffer as a result of the order sought, and to do so in the context of other factors, such as the elimination of delay and the desire to ensure that disproportionate costs are not incurred in the proceedings. [23] The CPA sections certainly operate to permit the courts to walk the unstable line between handling the mega-​litigation of our time without compromising the courts’ capacity to deal with litigation of a somewhat lesser scale [often equally requiring very urgent treatment].



Kelly v Mina [10.70]  Kelly v Mina [2014] NSWCA 9 BARRETT JA [1]‌The appellant and the respondent are accountants. They conducted a public accountancy practice together from 2007 to 2011. They agree that their association came to an end in 2011 but they disagree about the consequences of its termination. [2]‌That disagreement became the subject of mediation in June 2011. Following the mediation, the parties signed a handwritten document (dated 16 June 2011) headed “Heads of Agreement + Non-​Binding Agreement”  … [3]‌In November 2011, the respondent (as plaintiff) brought an action in the District Court against the appellant (as defendant) to recover sums said by the respondent to be owing, due and payable by the appellant under a contract recorded by the June 2011 document or, perhaps, damages for breach of such a contract. [4]‌The issues raised by the appellant as defendant at trial included that the contract on which the respondent relied was unenforceable for want of consideration and that there were unsatisfied conditions precedent. She filed a cross-​claim alleging that the respondent had repudiated the contract which was no longer binding, that the respondent was, in any event, indebted to her and that he was guilty of misleading or deceptive conduct towards her. [5]‌The primary judge (Kearns DCJ) held that the respondent was entitled to $127,371.39 in respect of his claim and that the appellant was entitled to $8,156.15 in respect of her cross-​claim. He entered judgments accordingly. … 534 [10.70]

Amendment, Mistakes and Adjournments  Chapter  10

Kelly v Mina cont. The appeal [7]‌The appellant appeals on a number of grounds … [8]‌The appellant also seeks to challenge a decision of the primary judge, made on the second day of the trial after argument that occupied most of the first two days, refusing leave to amend the defence and cross-​claim to allege common mistake of the parties. … [10] The questions before this Court are therefore, in essence: (a) (b)

(c)

whether the contract embodied in the first part of the June 2011 document was unenforceable for want of consideration; whether the second part of the document was the source of legally enforceable rights and obligations and, if so, whether particular provisions within it justified non-​payment by the appellant; and whether the discretion with respect to the amendment application miscarried and, if so, what the consequences of that error are for the judge’s substantive decision.

… The hearing and determination of the application for leave to amend [34] … At [the start of the trial], counsel for the appellant moved on a notice of motion which had apparently been filed in court on 2 August 2012 in the course of the Friday motions list and stood over to the then impending trial. By that motion, the appellant sought leave to amend her defence and, as a consequential matter, dismissal of the proceedings. The notice of motion contained no application for leave to amend the cross-​claim. … [36] The gist of the case sought to be made in support of the amendment application (and the related application for summary disposal) was that there had been, in the words of counsel for the appellant, “a simple case of mistaken identity” –​that the June 2011 document “could not possibly have been binding because what it did was purportedly impose obligations on the wrong entities”, that is, “on Ms Kelly and Mr Mina personally, whereas none of their liabilities or assets within the partnership so called were held by them personally” … [39] The hearing of the amendment application lasted from the morning of the first day of the trial to almost the end of the second day. The appellant gave evidence in chief and was cross-​examined. The primary judge delivered judgment at the conclusion of the hearing. … [41] The judge expressed reluctance to “see a party go to Court and potentially lose a case without having had the benefit of putting the whole of the case that party wishes to before the Court”. He was of the opinion, however, that the case before him was one where that should occur … The approach to the amendment question [44] The appellant says that the judge’s decision to refuse leave to amend affected the result of the trial in a fundamentally adverse way entailing miscarriage of justice that requires correction of the interlocutory decision: Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478 at [4]‌-​[8]. [45] The amendment application was governed by s 64 of the Civil Procedure Act 2005 which, in subsection (1), provides that, at any stage of proceedings, the court may order that any document in the proceedings be amended, or that leave be granted to a party to amend any document in the proceedings. Section 64(2) then provides: Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. [10.70]  535

Civil Procedure in New South Wales

Kelly v Mina cont. [46] The judge’s decision was obviously discretionary, so that appellate intervention will be warranted only upon the principles stated in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505. The fact that the decision was a decision on a matter of practice and procedure means that this Court should be slow to interfere and ought not to reverse the judge’s decision unless convinced that it is plainly erroneous: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170. As Bryson JA said in State of New South Wales v Mulcahy [2006] NSWCA 303 at [3]‌, “such appeals are, appropriately, kept on a tight rein”. [47] Particularly in light of the opening words of s 64(2), it is not controversial that the provisions in Part 6 Division 1 of the Civil Procedure Act were binding on the primary judge and that, in accordance with s 58, his Honour was bound to seek to act in accordance with the dictates of justice and, in so doing, to have regard to s 56 concerning the “overriding purpose” of the Act and rules of court in their application to civil proceedings; also that, in addressing the amendment application in the particular statutory context, his Honour was required to take into account a combination of factors identified by the High Court in Aon Risk Services Pty Ltd v Australian National University (2009) HCA 29; (2009) 239 CLR 175 and usefully summarised by Vickery J in Namberry Craft Pty Ltd v Watson [2011] VSC 136 (at [38]) as follows: (a)

Whether there will be substantial delay caused by the amendment;

(b)

The extent of wasted costs that will be incurred;

(c)

Whether there is an irreparable element of unfair prejudice caused by the amendment, arising, for example, by inconvenience and stress caused to individuals or inordinate pressures placed upon corporations, which cannot be adequately compensated for, whatever costs may be awarded;

(d)

Concerns of case management arising from the stage in the proceeding when the amendment is sought, including the fact that the time of the court is a publicly funded resource, and whether the grant of the amendment will result in inefficiencies arising from the vacation or adjournment of trials;

(e)

Whether the grant of the amendment will lessen public confidence in the judicial system; and

(f)

Whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought.

[48] As this Court has emphasised more than once, Part 6 Division 1 of the Civil Procedure Act made substantive and important changes to the law so that considerations of promptness and efficiency in the conduct of civil litigation are afforded a new and special importance which may sometimes provoke a sense of injustice in a party who has failed to proceed with despatch: see, for example, Dennis v Australian Broadcasting Corporation [2008] NSWCA 37; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 at [160]-​[161]; Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Halpin v Lumley General Insurance Ltd [2009] NSWCA 372; Bi v Mourad [2010] NSWCA 17; Richards v Cornford (No 3) [2010] NSWCA 134 … Assessment [51] The judge’s decision to dismiss the application for leave to amend did not involve an erroneous exercise of discretion. [52] The appellant’s explanation for the delay was entirely unsatisfactory. She did not say that the issue of the correct parties had first been drawn to her attention by her lawyers at the conference with counsel on 24 July 2012. Evidence to that effect would have gone a long way towards satisfactory explanation … [57] The judge’s assessment on the issue of adequacy of explanation for delay was soundly based.



536 [10.70]

Amendment, Mistakes and Adjournments  Chapter  10

Cost, Delay and Justice: The High Court of Australia Recognizes the Importance of Case Management in Civil Litigation [10.80]  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” (2010) 39 Common Law World Review 157 The true importance of the High Court’s decision in Aon Risk Services is that the plurality has given a clarification of the application of J L Holdings. That clarification seeks to correct the widely held perception that the ratio of J L Holdings had broad application to all amendments and indeed other interlocutory applications. … It has been argued that J L Holdings has no application for determining leave to amend in NSW courts. The CPA in NSW provides in s 64 that case management principles contained in ss 56-​58 are relevant and important for determining all applications for amendment. For those amendments the determination of leave is measured along three dimensions, namely, rectitude of the decision (ie achieving a just decision), timeliness of the decision and the cost of securing a decision. These dimensions can be perceived to be in conflict if definitions of justice are merely located as that between the parties because the higher the accuracy sought in a judicial decision the greater the costs incurred and the time required. An extended definition of justice inclusive of the interests of all other user[s]‌of the litigation system acknowledges that resources available for administering justice are not unlimited. Achieving “justice” means avoiding delay and restraining costs. This has been recognised in the objectives of the overriding purpose that apply to the court’s power of amendment in NSW and has also been adopted in other common law jurisdictions of the world as well as many jurisdictions in Australia that now expressly speak of speed and cost as well as justice. These principles acknowledge that using resources for one case means they are unavailable for another case. The focus on efficiency is also part of the case management movement and requires judges to exercise supervision over the progression of cases so as to reduce costs and delay. J L Holdings was mindful that efficiency can trespass on the attainment of justice, however J L Holdings merely considered the parties as the main focus of obtaining justice. In the context of the kind of amendment sought in J L Holdings this was perhaps correct. However the High Court in Aon Risk Services has made clear that the concerns expressed in J L Holdings –​that no principle of case management can be allowed to supplant the aim of doing justice between the parties –​are quarantined to applications for clarifying amendments to existing issues. However, where rules of court explicitly apply case management considerations to amendments concerning existing issues the court rules will prevail over the concerns expressed in J L Holdings.

 [10.90] Section  64(3) of the CPA provides power for an amendment to be ordered even

though it would have the effect of adding or substituting a cause of action that had arisen after the commencement of the proceedings.

Hill v Reglon [10.100]  Hill v Reglon Pty Ltd [2007] NSWCA 295 [Items of scaffolding belonging to different commercial parties were wrongfully comingled and distributed across various sites and holding yards. Reglon commenced proceedings against Hill, the receiver of one of the companies, and Citadel as mortgagee in possession of that company’s assets, on the basis that Reglon’s scaffolding had been converted to its use pursuant to an unlawful licence agreement. The trial judge, Windeyer J, found that the entry into the licence agreement was an act of [10.100]  537

Civil Procedure in New South Wales

Hill v Reglon cont. conversion and entered judgment for Reglon in the amount of $1.3 million. The extract below relates to a ground of appeal concerning s 64 of the CPA and the amendment of pleadings even where the matter pleaded arises after the commencement of proceedings.] BEAZLEY JA (SPIGELMAN CJ AND IPP JA AGREEING) Ground 7: cause of action against Citadel [128] The appellants contend that the claim against Citadel should have been dismissed, as the alleged act of conversion upon which Reglon relies did not occur until after the proceedings had been commenced. Reglon’s Summons in the matter was initially filed on 16 February 2006, in which Reglon sought both interlocutory and final relief. The final relief included a claim for damages for conversion of the Reglon scaffolding. The appellants contend that there was no cause of action for conversion against Citadel when the proceedings were commenced, with the consequence that there was no cause of action maintainable based on the cause of action on which Reglon ultimately succeeded. [129] This ground should be rejected. Section 64(1) of the Civil Procedure Act 2005 (NSW) (the Civil Procedure Act) provides that a court may, at any stage of proceedings, order that a document in the proceedings be amended. The power of amendment is to ensure that the court determines the real questions raised by or otherwise depending on the proceedings and includes the purpose of avoiding multiplicity of proceedings: subs (2). Pursuant to subs (3), an amendment may be made notwithstanding that it has the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings. [130] Should the amendment be made for the purposes of adding a cause of action, then the date of commencement of the proceedings in relation to that cause of action is to be taken to be the date on which the amendment is made: see also subs (3). The purpose of that provision relates, inter alia, to the calculation of interest. Section 64 is further aided by r 14.17 of the Uniform Civil Procedure Rules 2005 (NSW) (the UCPR), which provides that a party may plead any matter, even if the matter has arisen after the commencement of the proceedings. [131] Counsel for the appellants refined his argument on this point and made two submissions. The first was that r 14.17, which permitted the pleading of a matter which had arisen after the commencement of proceedings, did not extend to a cause of action. This submission was undoubtedly based upon this Court’s decision in Baldry v Jackson (1976) 2 NSWLR 415, in particular at 419, to which reference is made in the annotations to r 14.17: see “Ritchie’s Uniform Civil Procedure New South Wales” para 14.17.5. It is not necessary to pause to consider the effect, purpose or extent of the operation of r 14.17. Section 64(3) of the Civil Procedure Act […] specifically permits an amendment to add or substitute an action that has arisen after the commencement of the proceedings. [132] As I understand it, this led to a further submission, which was directed to the operation of r 14.17 but may also have extended to s 64, that is, the power of amendment only related to pleadings and this matter was commenced by Summons. However, Reglon claimed in its Summons an order that the appellants pay damages for conversion of the Reglon scaffolding. That is the relief that was ordered. Accordingly, it was not necessary for it to amend its claim in order to be entitled to the relief sought. I perhaps should add that, in any event, the Summons was amended, it appears, on two occasions, with a Further Amended Summons being amended on 7 November 2006 with leave, but not so as to amend the relief sought in respect of the conversion of the Reglon scaffolding. [133] Counsel for the appellants argued, although only faintly, that the cause of action had to accrue before proceedings were commenced. He acknowledged the existence of s 64(3) of the Civil Procedure Act which permitted an amendment to introduce a cause of action that had not accrued at the time that the proceedings were originally commenced. His point, however, seemed to be no more than that there was no amendment to do that. I would reject this argument for the reasons already given. [134] It follows that this ground should be rejected.

 538 [10.100]

Amendment, Mistakes and Adjournments  Chapter  10

Section 64: Effective date of amendment [10.110]  Generally the effective date of an amendment is the date of the original document

that it amends. However, where the amendment has the effect of adding or substituting a cause of action which has arisen after the commencement of the proceedings, or adding a new party, the date of commencement of the proceedings in regard to that cause of action or party is taken to be the date on which the amendment was made:4 see CPA s 64(3), UCPR rr 6.28 and 19.2(4). The position is different if s 65 of the CPA, which is concerned with amendments to the originating process once the relevant limitation period has expired, is engaged.

AMENDMENTS AFFECTING LIMITATION PERIODS Civil Procedure Act 2005 (NSW) [10.120]  Civil Procedure Act 2005 (NSW) s 65 65 Amendment of originating process after expiry of limitation period (cf SCR Pt 20, r 4; DCR Pt 17, r 4) (1)

This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings.

(2)

At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64(1)(b), amend the originating process so as:



(a)

to enable the plaintiff to maintain the proceedings in a capacity in which he or she has, since the proceedings were commenced, become entitled to bring and maintain the proceedings, or



(b)

to correct a mistake in the name of a party to the proceedings, whether or not the effect of the amendment is to substitute a new party, being a mistake that, in the court’s opinion, is neither misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, or



(c)

to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court’s opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process.

(3)

Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced.

(4)

This section does not limit the powers of the court under section 64.

(5)

This section has effect despite anything to the contrary in the Limitation Act 1969.

(6)

In this section, originating process, in relation to any proceedings, includes any pleading subsequently filed in the proceedings.

 [10.130] In addition to the general powers of amendment pursuant to s  64 of the CPA,

the court has power under s 65 to make certain amendments to the originating process to incorporate causes of action, arising from substantially the same facts, that would otherwise

4

Note that s 64 of the CPA does not apply to the amendment of a judgment, order or certificate: see s 64(5). [10.130]  539

Civil Procedure in New South Wales

be statute-​barred because the relevant limitation period has expired. The old rule in Weldon v Neal (1887) 19 QBD 394 precluded parties from amending pleadings in order to incorporate a statute-​barred cause of action. The rule was displaced by the Supreme Court Rules 1970 (NSW), which was confirmed by the New South Wales Court of Appeal in Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 (as noted in the judgment extract below from Air Link Pty Ltd v Paterson (No 2) [2003] NSWCA 251). In addition to allowing amendments that permit the addition or substitution of a new cause of action that arose after the commencement of proceedings, s 65 also provides power to make amendments that correct a mistake in the name of a party (whether or not the effect of the amendment is to substitute a new party) and that change the capacity in which the plaintiff maintains the proceedings. Such amendments are authorised by s 65, despite anything to the contrary in the Limitation Act 1969 (NSW), as long as proceedings were commenced before the expiration of any relevant limitation period. If amendment is made pursuant to s 65 of the CPA, unless the court otherwise orders, the amendment is taken to have been made on the date that the proceedings were commenced. This is called the “relation back principle”.

Air Link v Paterson (No 2) [10.140]  Air Link Pty Ltd v Paterson (No 2) [2003] NSWCA 251; (2003) 58 NSWLR 388 MASON P (BEAZLEY JA AGREEING) Amendment of pleadings and the relation back principle [44] Part 17 r 1(2) [of the District Court Rules (NSW) –​see CPA s 64(2)] states the guiding principle in relation to applications to amend pleadings: All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceedings, or of avoiding multiplicity of proceedings. [45] The court has a broad discretion whether to permit an amendment, but the surrounding principles are well established. In State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 the High Court endorsed a well-​known passage in the judgment of Bowen LJ in Cropper v Smith (1884) 26 Ch D 700 at 710-​711 where his Lordship said: I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy … [46] Part 17 r 4(5A) [see CPA s 65] re-​enacts the common law principle that an amendment duly made shall, unless the court otherwise orders, relate back to the date of the filing of the Statement of Claim. This was the position at common law, as I seek to demonstrate below. But the significance of its express reiteration in r 4 is to put it beyond doubt that the relation back principle can apply in a limitation context, so long as the court gives leave to amend in accordance with rr 1 and 4. [47] When a party amends, the general rule is that the amendment takes effect as if it had always been in the relevant pleading. This in a sense is the very nature of an amendment and it has nothing to do with whether or not limitations issues are in play. [48] The relation back principle has long been firmly established in the law. It is not confined to the interface between statutes of limitation and pleading rules (Liff v Peasley [1980] 1 WLR 781 at 791). It can operate with substantive effect to rescue retrospectively a plaintiff who by an original pleading alleged a cause of action beyond the court’s jurisdiction (Sneade v Wotherton Barytes and Lead Mining Co Ltd [1904] 1 KB 295) … See also Warner v Sampson [1959] 1 QB 297; Baldry v Jackson [1976] 2

540 [10.140]

Amendment, Mistakes and Adjournments  Chapter  10

Air Link v Paterson (No 2) cont. NSWLR 415 at 419; Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676 at 680-​1; Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 at 236. [49] The principle also serves practical functions. For example, an existing Defence can be allowed to stand as responsive to the later-​filed amended statement of claim if the defendant is content to do so; and an amendment to originating process may be allowed by an appellate court without triggering the absurdity of the appellant having to file a fresh notice of appeal. [50] The judgment of Priestley JA in Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 182 demonstrates the antiquity of this relation back rule, which his Honour describes as a power to permit amendments having that effect. His Honour also points out (at 182E) that the decision in Weldon v Neal (1887) 19 QBD 394 (discussed below) confirms rather than denies the existence of such a power (see also McGee v Yeomans [1977] 1 NSWLR 273 at 277 per Glass JA). [51] Even before subrule 4(5A) was inserted, it had been established that a court permitting an amendment had power to displace the application of the relation back principle by ordering that the amendment be dated from a date other than the commencement of the proceedings (Middleton v O’Neill (1943) 43 SR(NSW) 178 at 186; Brook v The Flinders University of South Australia (1988) 47 SASR 119 at 126). This might be especially appropriate if the amendment added a new party. [52] Part 17 r 4(5A) now confirms this general power and its application in the limitation context. No order displacing the relation back principle was made in the present case. If validly made, the amendment will therefore take effect as if the allegation was part of the original statement of claim (Baldry v Jackson [1976] 2 NSWLR 415 at 419, Adam v Shiavon [1985] 1 Qd R 1 at 10). [53] In the 1980s, doubts were raised about the correctness of the assumption that the relation back principle continued to apply, unless displaced by contrary order, where an amendment (now permitted under rule modifications) added a new party or a new cause of action in a limitation context (see Liff v Peasley [1980] 1 WLR 781 at 802-​804; Ketteman v Hansel Properties Ltd [1987] AC 189 at 200; Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 731-​733). How the doubts were resolved in this State in Proctor will be addressed below, after I examine the rule in Weldon v Neal which was the springboard for those doubts. The rule in Weldon v Neal [54] Bowen LJ’s dictum in Cropper qualified the generality of the right to amend by stating that it cannot be exercised where it would do injustice to the other party. Weldon v Neal gave its name to a “settled rule of practice” precluding leave to amend if the proposed amendment would prejudice the rights of the opposite party existing at the date of the amendment. The rule was not confined to amendments sought by plaintiffs (see Horton v Jones (No 2) (1939) 39 SR(NSW) 305 at 314). However, it was usually invoked to explain refusal to permit an amendment of a statement of claim that would introduce a new statute-​barred cause of action which would not be statute-​barred if treated as being covered ex post facto by the initiating process under the relation back doctrine. [55] In McGee, Glass JA said (at 277): Since Weldon v Neal it has been a settled rule of practice that, except in “very peculiar circumstances”, an amendment will not be allowed which sets up a cause of action which, at the time of the amendment, is barred by a statute of limitation. The plaintiff is treated as having already commenced his action in respect of the claims made, and he is not permitted to introduce new claims by amendment for this would be regarded as being in substance, though not in form, the bringing of a new action for claims which are already barred by statute: O’Grady v Botany Wools (Australia) (1964) 64 SR (NSW) 359 at 367. The doctrine does not suggest that the Court lacks power to allow the amendment, but that, in the absence of “very peculiar circumstances”, the judge is bound, in the proper exercise of his discretion, to refuse the application …

[10.140]  541

Civil Procedure in New South Wales

Air Link v Paterson (No 2) cont. [56] Relevant to the issues in this appeal is the fact that this analysis of the Weldon v Neal rule shows that it was always viewed as a “rule of practice” that informed and controlled the general power to permit amendment to pleadings having retrospective effect under the relation back principle. Weldon v Neal was quintessentially a matter of practice and procedure as to the exercise of the power to permit amendments under rules of court conferred in general terms. By characterising the rule as one of “practice”, the Court in Weldon was taking pains not to deny the power to permit an amendment to relate back even though the amended cause of action was otherwise statute-​barred (see Proctor at 182). It must, however be acknowledged that these comments in Weldon and other nineteenth century cases were made in the context of limitation provisions that barred the remedy as distinct from those where the time limit was a condition of the right. But Proctor was not such a case (see below). [57] To characterise the rule in Weldon v Neal as one of practice is not inconsistent with authoritative statements about the way in which a court endeavours to distinguish between amendments establishing a new cause of action for the first time and those which merely recast an existing pleading. In Jordan CJ’s words in Horton (at 315): [T]‌he matter is one of substance, not of form. It is regarded as unjust to a defendant to allow the power to amend to be used to allow a plaintiff to present for the first time a new matter of controversy at a time when it is already barred by statute. To similar effect were the following remarks of Herron J in Penrith Municipal Council v Australian Blue Metal Ltd (1960) 60 SR(NSW) 608 at 615: The rule is not a mere rule of pleading. It is not designed to give effect to a technical rule of pleading, nor is it designed to penalize a party, whether plaintiff or defendant, merely because he has already limited himself to certain allegations from amending his statement of claim or defence to correct such allegations. The rule is one directed to the substance of the claim and seeks to prevent fresh claims being litigated in respect of causes of action as to which, since the writ, the defendant has acquired a valid defence of a statute of limitation. What is prohibited is the bringing forward of a new claim, one essentially different from that which hitherto had been alleged. It is to prevent injustice to a defendant in respect of a cause of action as to which he has already a vested right of immunity. The cases turn upon the introduction of a claim new and different in substance and one which seeks to impose on the defendant for the first time a basis of liability not previously alleged. [58] The focus of the rule was the legal character of the new case on which the plaintiff wished to rely. An amendment might be allowed if it introduced no more than further and better particulars of material facts already pleaded (for example Juric v Dixon Supply Co Pty Ltd [1976] VR 701 (amendment of particulars of negligence to plead non-​compliance with statutory duty); Golski v Kirk (1987) 14 FCR 143 (amendment of particulars of negligent surgical treatment to plead failure to advise of the risks involved)), or if it was sufficiently related to what was already alleged that it would not be unfair to allow it as another way of putting the same claim (for example Harris v Raggatt [1965] VR 779 at 786). But if the facts sought to be added represented a new cause of action or a different legal theory of liability, the amendment would be disallowed (Patterson v Richards [1963] VR 179 at 187, Harris at 785). [59] On these principles, the amendment sought by the respondent would have been disallowed in the proper exercise of a discretion informed by the unmodified rule in Weldon v Neal. Modification of the rule in Weldon v Neal [60] The “finespun distinctions” engendered by the rule in Weldon v Neal (per Glass JA in McGee at 280) prompted its modification by rules of court in many jurisdictions, not always in identical terms. [61] In 1965 the English Rules of Court conferred a power to amend that arguably qualified the rule in Weldon v Neal (RSC 1965 O 20 r 5). English courts disagreed as to its effect (see McGee at 542 [10.140]

Amendment, Mistakes and Adjournments  Chapter  10

Air Link v Paterson (No 2) cont. 278-​9). When the New South Wales Law Reform Commission drafted the rules which were enacted as a schedule to the Supreme Court Act 1970, Pt 20 rr 1 and 4 were framed in slightly different terms to the English model. In McGee, this Court held that the rule in Weldon v Neal had thereby been “totally destroyed” (per Glass JA at 280). So long as the amendment substituting a new cause of action arose out of the same or substantially the same facts, it was open to the court to permit it notwithstanding the earlier expiry of a relevant period of limitation. When Hunt J and Cross J later raised doubts about the matter (in Chapple v Laming [1981] 2 NSWLR 765 and Proctor v Jetway Aviation Pty Ltd [1982] 2 NSWLR 264) they were overruled and reversed by this Court in Proctor, with a stern lecture as to their duties of obedience to higher authority. See also Minister Administering the Environmental Planning & Assessment Act 1979 v San Sebastian Pty Ltd [1983] 2 NSWLR 268 at 314-​5 (Glass JA). In Proctor, McGee was affirmed, explained and applied to a limitation provision that expressly extinguished a cause of action. [62] In Adam v Shiavon [1985] 1 Qd R 1 esp at 7-​8 the Full Court of the Supreme Court of Queensland followed McGee and applied it to the Queensland rule abrogating Weldon v Neal. [63] Implicit in McGee and explicit in Proctor (at 174-​5, 181, 183-​5) was the adoption of the relation back principle in a situation covered by r 4. In Proctor, Priestley JA described the interaction between Pt 20 r 4 and the relation back principle in the following terms (at 183, emphasis added): The decision [in McGee] was one which read the rules of court in the ordinary meaning of their words and thus held that the rules required the courts, at some cost of certainty, to follow a practice designed to achieve in particular cases what in the court’s view would be more meritorious results than under the practice before the introduction of the new rules. It brought about a change of practice in the exercise of a power the court had always had. What would happen more frequently under the new practice would be that leave would be granted to include time expired causes of action in statements of claim and then the rule necessarily implied in cases such as those in the Exchequer Court above referred to and recognized by this Court in Baldry v Jackson [1976] 2 NSWLR 415 at 419, would operate. That rule is that an amendment duly made takes effect from the date of the original document which it amends. Thus a statement of claim permitted to be amended by allowing the insertion of a time expired cause of action is to be regarded as having been in its amended form from the date of first filing, and consequently as having pleaded the cause of action before it was barred (using pre 1969 language) or extinguished. The law simply ignores any logical difficulties created by the doctrines of relation back or retroactivity it uses in various fields … [64] This passage, in a judgment concurred in by Glass JA, is important because (1) it confirms that courts always had the power to permit an amendment in a manner that would attract the relation back principle; and (2) it recognises (by the words “or extinguished”) that the new rule of court applied to both types of limitation provisions that were well-​established by that time. [65] The dual categories of limitation statutes had long been recognised … It was therefore unlikely that those who drafted r 4 intended to confine it to “procedural” limitation statutes. Proctor held that the rule is not thus confined. See also Lloyd Steel Co (Aust) Pty Ltd v Jade Shipping SA (1985) 1 NSWLR 212 (where r 4 was applied to a contractual time bar); Rodgers v Commissioner of Taxation (1998) 88 FCR 61 (Rodgers). This expansive interpretation of r 4 accords with statements about the remedial nature of r 4 and its counterparts, and the consequential need to construe them liberally and beneficially (see for example Bridge Shipping at 260-​1 per McHugh J, with whom Brennan and Deane JJ agreed). … [67] [Any doubts arising from the English cases] were laid to rest by the new subrule (5A) added to Pt 20 r 4 in the Supreme Court Rules in 1989 and to Pt 17 r 4 in the District Court Rules in 1996. [10.140]  543

Civil Procedure in New South Wales

Air Link v Paterson (No 2) cont. I suspect that the main impetus for the subrule was to confirm the power of the court to displace the relation back principle by ordering otherwise, thereby allowing the court to permit an amendment but preserve the defendant’s rights to plead the statute of limitations in a proper case. [68] There is an express modification of the relation back principle where a new party is added (see Supreme Court Rules, Pt 8 r 11(3), District Court Rules, Pt 7 r 11(3)) [see UCPR r 6.28]. What Proctor decided [69] McGee and Proctor have stood unchallenged for many years and there is in any event no reason to doubt their correctness. They represent the settled law in this State as to the scope of the power conferred by r 4. [70] In McGee and Proctor this Court confirmed that the Supreme Court Rules conferred power to allow a statute-​barred cause of action to be added by amendment. The rule in Weldon v Neal was displaced and replaced by a discretion to allow an amendment to be made if the rule’s requirements were met and the justice of the case required it (see McGee at 280, Proctor at 173-​4). Proctor confirmed that Pt 20 r 4 of the Supreme Court Rules applied according to its terms in relation to the addition of new causes of action, without the qualifications suggested by the dicta in Liff and Ketteman. [71] Proctor also represents a considered ruling that Pt 20 r 4 of the Supreme Court Rules is valid, notwithstanding its impact upon a substantive limitation provision in a State enactment. [72] The plaintiff in Proctor had claimed damages arising out of the death of her husband who was a passenger on a charter flight from Sydney to Dubbo. The case bore similarities to the present one in that the original pleading omitted an essential allegation as to the intra-​State nature of the carriage and contained only an irrelevant allegation of negligence. Being an intra-​State flight, the carrier’s liability in Proctor was created by the Civil Aviation (Carriers’ Liability) Act 1967 (NSW), this State’s counterpart of Pt IV of the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) engaged in this appeal. … [74] More than two years after the accident, the plaintiff in Proctor sought leave to amend her statement of claim so that it pleaded the statutory cause of action. Leave was refused by Cross J at first instance who held that s 34 (as incorporated into State law) had operated to extinguish (rather than bar recovery upon) the relevant cause of action. Cross J held that Pt 20 r 4 of the Supreme Court Rules had no effective application to a cause of action that had been extinguished, notwithstanding the ruling in McGee, whose correctness he doubted, which had held otherwise in relation to s 63 of the Limitation Act 1969 (also an extinguishing limitation provision). [75] This Court reversed Cross J and held that r 4 validly empowered the Supreme Court to grant an amendment to the statement of claim effectively to include a cause of action which had otherwise already expired or been extinguished according to statute law. As indicated already, this Court explained McGee and justified its decision by reference to the width and purpose of r 4 and the continued power to apply the relation back principle. Cross J’s attempt to explain or distinguish McGee was firmly rebuffed. Rule 4 was construed as plainly including both types of traditional limitation statutes within its scope … [77] Proctor put to rest in this State any questions about the validity of r 4 in the Supreme Court Rules … [92] As I have sought to demonstrate, the rule in Weldon v Neal and the rules of court abrogating it must be seen as functioning in the context of amendments to proceedings pending in the court. The need for the rule of court is manifested by the sorry history of the case law struggling with Weldon v Neal. Rule 4 requires the amended pleading to arise out of the same or substantially the same facts. This is a legitimate and appropriate modification of Weldon v Neal. It still bears the hallmarks of Weldon v Neal in its concern for the justice to the defendant. The new rule is nevertheless concerned with procedure and matters incidental thereto. In John Pfeiffer the joint judgment of Gleeson CJ, Gaudron, 544 [10.140]

Amendment, Mistakes and Adjournments  Chapter  10

Air Link v Paterson (No 2) cont. McHugh, Gummow and Hayne JJ referred with approval to a formulation put forward by Mason CJ in McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1 at 26-​7 that “rules which are directed to governing or regulating the mode or conduct of court proceedings” are procedural. On this test, rr 1 and 4 are procedural, even in their impact on a provision such as s 34 of the Act. (John Pfeiffer’s willingness to characterise all types of limitation provisions as substantive, at least in the choice of law context, takes the matter no further. Nor does s 78(2) of the Limitations Act 1969 which is arguably not confined to the choice of law context. Section 34 has always been a “substantive” limitation provision.)

 [10.155] In Air Link Pty Ltd v Paterson,5 the High Court on appeal said that the orders of

the Court of Appeal were upheld but supported on different grounds to those set out by the majority of the Court of Appeal. The High Court did not, however, displace what the Court of Appeal said in regard to the relation back principle and the equivalent of s 65 of the CPA. Section 65: Mistake in the name of a party

Greenwood v Papademetri [10.160]  Greenwood v Papademetri [2007] NSWCA 221 [Papademetri was injured after slipping on mud that had escaped onto the footpath outside premises in Marrickville because of construction work at those premises. She filed a Statement of Claim in the District Court alleging negligence and nuisance against Jamiel Antoun, believing him to be the owner of the premises. After unsuccessful attempts at service upon Antoun, a property search revealed that the sole registered proprietor of the premises was in fact Linda Antoun. An Amended Statement of Claim was drafted pleading the actions in the alternative against both Linda and Jamiel Antoun. A Notice of Motion was filed seeking orders to add Linda Antoun as a defendant and to dispense with personal service. Ex parte orders to that effect were made but Linda Antoun had died in the interim. The solicitors for Greenwood, her executrix, then contacted Papademetri asserting that the claim against the deceased was statute-​barred. Papademetri sought by Notice of Motion to add Greenwood to the proceedings in lieu of the deceased. Greenwood sought by Notice of Motion to be joined as a party and an order that the claim against the estate of the deceased was not maintainable because it was out of time. The Judicial Registrar joined Greenwood as a party but declined to rule the claim was out of time. This was because the plaintiff had intended to sue the owner of the premises but had mistakenly sued the wrong person.] CAMPBELL JA (TOBIAS JA AGREEING) [2]‌This is an application for leave to appeal and, if leave is granted, the hearing of the appeal itself. It raises questions concerning the power of a court to add a new party to proceedings after expiry of a limitation period. … Relevant Legislation [24] [The terms of CPA ss 56-​58, 64, 65 were set out but have been omitted.]

5

Air Link Pty Ltd v Paterson (2005) 218 ALR 700; (2005) 79 ALJR 1407; [2005] HCA 39 (10 August 2005). [10.160]  545

Civil Procedure in New South Wales

Greenwood v Papademetri cont. [25] The Uniform Civil Procedure Rules 2005 provide: 6.24 Court may join party if joinder proper or necessary (1) If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party. … 6.28 Date of commencement of proceedings in relation to parties joined If the court orders that a person be joined as a party, the date of commencement of the proceedings, in relation to that person, is taken to be the date on which the order is made or such later date as the court may specify in the order. The Effect of Joinder of a Party on the Operation of Limitation Periods [26] Rule 6.28 UCP Rules has the effect that if a party is joined under rule 6.24, the joinder of that person cannot be treated as having been effective on any date earlier than the date the order for joinder is made. Thus, if it is clear that the party sought to be joined under Rule 6.24 would have an effective limitation defence, the futility of joining that party can provide a reason why the order for joinder should not be made at all. If a trial is needed to decide whether the action was statute-​ barred at the date of joinder, an order under rule 6.28 that the party be joined does not prejudice the availability of any valid limitation defence that the party joined might have. [27] If, however, a party can be joined under section 65 Civil Procedure Act 2005, section 65(3) has the effect, unless the court otherwise orders, that the amendment is taken to have had effect from the date on which the proceedings were commenced. Thus, if a person who was not previously a party can be made a party pursuant to section 65, and the proceedings themselves were commenced before the expiry of any limitation period applicable to that person, any limitation defence that that person would have had, if new proceedings had been commenced against him or her on the date the order was made, becomes unavailable. In this way, section 65 has the practical effect of an amendment to the Limitation Act 1969. Section 65(5) makes explicit that section 65 is intended to have such an effect. [28] It is well established that section 64 provides a discretionary basis upon which amendments can be made to a statement of claim in cases that are not covered by section 65: McGee v Yeomans [1977] 1 NSWLR 273 at 280; Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 171, 180-​1 and 183; Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 719; Bebonis v Angelos (2002) 56 NSWLR 127 at 138-​9; Greater Lithgow City Council v Wolfenden [2007] NSWCA 180. The cases just cited accept that, if such an amendment is made under section 64, that amendment relates back to the date of instituting the proceedings. [29] It is clear from the terms of section 65(4) itself that section 65 does not result in any limitation by implication of the general power conferred by section 64: Greater Lithgow City Council v Wolfenden at [12]. But that does not necessarily mean that the power of amendment under section 64 is totally unrestricted. It is still possible that a limitation on the power under section 64 could arise by implication from a provision other than section 65. In Fernance v Nominal Defendant, Gleeson CJ (with whom Clarke JA agreed) recognized that the power of amendment contained in the former Part 20 rule 1 Supreme Court Rules 1970 (the analogue of the present section 64) provided a basis for amendment to a statement of claim that was independent of Part 20 rule 4 (the analogue of the present section 65). Even so, Gleeson CJ held that Part 20 rule 1 did not stretch sufficiently wide to permit an amendment to the parties to proceedings on any basis other than that provided by the specific rule that dealt with the time as at which an amendment to the parties to proceedings would take effect (the analogue, in broad terms, of the present rule 6.28). Were it otherwise, there would have been repugnancy between the two different rules. [30] I shall assume, without deciding, that the same result as was arrived at in Fernance would arise under the Civil Procedure Act and the UCP Rules –​ie, that the elevation of the former Part 20 rule 1 546 [10.160]

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Greenwood v Papademetri cont. and Part 20 rule 4 into the Act, and some differences of wording that exist between the provisions considered in Fernance and those that are now applicable, are of no substantial effect. [31] Thus, like the Judicial Registrar, I shall focus on whether the amendment that is sought is within section 65(2)(b), and give no independent consideration to section 64. Construction of Section 65(2)(b) Civil Procedure Act [32] I shall state at the outset how, in my opinion, section 65(2)(b) Civil Procedure Act should be read. [33] The power that is conferred by section 65(2)(b) is purposive in its nature. It authorises the court to grant leave to a plaintiff to amend the originating process in whatever way is needed to correct a mistake in the name of a party to the proceedings. The words “whether or not the effect of the amendment is to substitute a new party” do not limit the width of that power. Rather, they make clear that the power can apply in some circumstances where the effect of the amendment is to substitute a new party, and can also apply in some circumstances where the effect of the amendment is not to substitute a new party. The precise order that is appropriate under section 65(2)(b) will depend upon what, in the circumstances of the particular case, is the particular mistake that there has been in the name of a party to the proceedings, and what needs to be done to correct that mistake. [34] Section 65(2)(b) does not confer on the court power to correct any and every mistake that has been made in the name of a party to the proceedings. It applies only to a mistake that, in the court’s opinion, is neither misleading, nor such as to cause reasonable doubt as to the identity of the person intended to be made a party. In some cases where an amendment is sought under section 65(2) (b) there may be considerable argument about whether a mistake in the name of a party has those characteristics. However, no such argument was put to us on the present appeal. [35] Even if a proposed amendment is one whose effect could be described by the language in para (b) of section 65(2), there is still a discretion in the court whether to permit that amendment. Section 65(2) contemplates that any amendment made under section 65(2) will be effected through leave granted under section 64(1)(b). Thus, the discretion of the court concerning whether to grant leave to amend under section 65(2) needs to be exercised in accordance with section 64(2). Section 64(2) itself requires the court to exercise its discretion in accordance with section 58, which in turn requires the court to have regard to the provisions of sections 56 and 57. Even if it were not inherent in the grant of a discretion to a judicial officer, section 58(2)(b) enables the court to have regard, in an application for an order under section 65(2)(b), to matters such as the knowledge that the person proposed to be added as a party had of the proceedings during the limitation period, and the nature and degree of any prejudice that the person sought to be added would suffer if the order were made. [36] No evidence or submission was put to the Judicial Registrar concerning a discretionary reason why she should not make the joinder order, nor is any such discretionary question raised before us. Rather, the entire argument before us has concerned whether power existed to make the joinder order. The Applicable Limitation Period … [49] I note that the Civil Procedure Act was enacted later than the Civil Liability (Personal Responsibility) Act. Thus, when section 65(5) says “this section has effect despite anything to the contrary in the Limitation Act 1969” it is talking about a Limitation Act that has already been recast by the Civil Liability (Personal Responsibility) Act. Thus, section 65(2)(b) can permit what is in substance an extension of a limitation period, even though that limitation period is incapable of extension under the Limitation Act itself. [50] The fact that sections 64 and 65 Civil Procedure Act between them provide the only means by which a limitation period for a cause of action founded on negligence, nuisance, or breach of duty for damages for personal injury can be extended, if the three-​year post discoverability limitation [10.160]  547

Civil Procedure in New South Wales

Greenwood v Papademetri cont. period has expired, focuses attention upon the need for close examination of the appropriateness, in the circumstances of the particular case, of exercising the discretion that is provided by sections 64 and 65. However, as I have said earlier, no argument was based on discretion in the court below, or on the appeal. Any such discretionary argument could well take into account the facts that resulted in the limitation period having expired –​ie, the facts by reference to which the cause of action was discoverable on a particular date. The issue of when this cause of action was discoverable was not litigated in the court below. Nor were arguments concerning culpability for the delay in starting the action, or prejudice. Thus, the approach that the parties have taken to this appeal means that it is being decided purely on the basis of the existence of the power under section 65(2)(b). I cannot help thinking that that is an artificially narrow basis, but it is a basis that the parties themselves have adopted. Did Power Exist to Add Ms Antoun or the Claimant as a Party? [51] One related group of the Claimant’s submissions is that the Judicial Registrar’s orders made on 18 August 2006 are vitiated because Ms Antoun was dead at the time they were made, no grant of probate had issued, and the making of the orders had the effect of depriving the Claimant of the opportunity to argue actual prejudice in an application for extension of time under the Limitation Act. In my view, it is not necessary to decide the first two of those matters. That is because the hearing of the two Notices of Motion on 2 February 2007 gave the Claimant the opportunity to put forward all evidence and argument relating to why the Claimant ought not be made a second defendant in the proceedings pursuant to section 65 Civil Procedure Act. The substantial effect of the order that the Judicial Registrar made on 2 February 2007 on the first Notice of Motion was that, regardless of the validity or legal propriety of the orders that had been made on 18 August 2006, the Claimant should be added as a second defendant in the proceedings. [52] The third matter has no substance. As I have explained earlier, if the three-​ year post discoverability limitation period had expired, there was no opportunity lost to argue actual prejudice in an application for extension of time, because there could not be any extension of time. [53] In the present case, the Judicial Registrar relied on section 65 as the basis of the orders that are appealed against. Two separate questions arise concerning the correctness of her having done so. The first is whether the amendment is one “to correct a mistake in the name of a party to the proceedings”, within the meaning of section 65(2)(b). The second is whether the type of order actually made –​whereby instead of Mr Jamiel Antoun being the only defendant, the Claimant and Mr Jamiel Antoun are both defendants –​is a type of amendment that section 65(2)(b) permits. [54] Bridge Shipping Pty Limited v Grand Shipping SA (1991) 173 CLR 231 concerned a shipment of goods that were damaged in transit. The owner of the damaged goods sued the shipowner in connection with that damage, not knowing that the ship had been let on a bareboat charter. The effect of the charter was that it was not the owner but the charterer that employed the ship’s crew and had issued the bill of lading. After expiry of a limitation period, the shipper sought to amend the initiating process under the Victorian equivalent of section 65(2)(b) to substitute the name of the charterer for the name of the owner. The rule in question in Bridge Shipping, rule 36.01 of the Supreme Court Rules (Vic), provided: [this has been omitted]. [55] McHugh J (with whom Brennan and Deane JJ agreed) said, (at 259-​261): The concluding words of sub-​r (4) “whether or not the effect is to substitute another person as a party” enable a plaintiff to substitute one person for another person as a party to the action. Those words also imply that the fact that the plaintiff intended to sue the person who was sued does not prevent the sub-​rule applying provided that there was a mistake in the name of the person sued. Moreover, a plaintiff may make “a mistake in the name of a party” not only because the plaintiff mistakenly believes that a certain person, whom the plaintiff can otherwise identify, bears a certain name but also because the plaintiff mistakenly believes that a person who answers a particular description bears a certain name. Thus, a 548 [10.160]

Amendment, Mistakes and Adjournments  Chapter  10

Greenwood v Papademetri cont. plaintiff may make a mistake “in the name of a party” because, although intending to sue a particular person whom the plaintiff knows by sight, the plaintiff is mistaken as to that person’s name. Equally, the plaintiff may make a mistake “in the name of a party” because, although intending to sue a person whom the plaintiff knows by a particular description, for example the driver of a certain car, the plaintiff is mistaken as to the name of the person who answers that description. In both cases, the plaintiff knows the person intended to be sued by reference to some property or properties which is or are peculiar to that person but is mistaken as to the name of that person. In the first case, the properties which identify the person are personal characteristics; in the second case, they are the properties which are of the essence of the description of that person. But for the purpose of sub-​r (4) that distinction is irrelevant. In both cases, the plaintiff was mistaken only as to the name of the person intended to be sued. There is no warrant for treating sub-​r (4) as dealing only with the case where the properties which identify the party are inherent properties. That is, there is no warrant for treating sub-​r (4) as dealing only with the case where the plaintiff says: “The person I wish to substitute as a party is that entity which I identified by certain inherent properties peculiar to it but whose name I mistakenly believed was X.” The sub-​rule applies equally to the case where the plaintiff says: “The person I wish to substitute as a party is that entity which I identified by reference to certain properties which are true of it and of no one else and whose name I mistakenly believed was X.” In both cases, a mistake in the name of the party has occurred and can be seen to have occurred only because the person sued does not have or is not identified by some property or properties which is or are peculiar to the person intended to be sued and to no one else. Rule 36.01(4) is a remedial rule and should be given a beneficial interpretation. It is proper to give it the widest interpretation which its language will permit: Holmes v Permanent Trustee Co of NSW Ltd (1932) 47 CLR 113, at p 119. It should be interpreted to cover not only cases of misnomer, clerical error and misdescription but also cases where the plaintiff, intending to sue a person he or she identifies by a particular description, was mistaken as to the name of the person who answers that description. [56] Even though McHugh J in this passage talks of “substituting” one person for another person as a party to the action, that was because the particular case with which the Court was then concerned involved what was clearly a substitution of one entity for another. [57] In the result, the application in Bridge Shipping failed. It failed because Bridge Shipping had at all times intended to sue the owner of the vessel. Its mistake did not concern the name of the entity that was the owner of the vessel. Rather, its mistake was in thinking that the owner of the vessel, rather than the charterer, was the carrier of the goods. [58] The principles stated in Bridge Shipping have been applied in this Court to the construction of Part 20 rule 4 Supreme Court Rules and to the corresponding provisions in the former District Court Rules 1973: eg, Archbishop of Perth v “AA” to “JC” inclusive (1995) 18 ACSR 333 at 349 per Cole JA (with whom Meagher JA agreed); Maamary v Pepsico Australia Pty Ltd [2001] NSWCA 375 at [51] ff per Giles JA (with whom Mason P and Studdert J agreed). In my view they should also be applied to the construction of section 65(2)(b). [59] In Greentree v G D Searle and Company (Supreme Court of NSW, 31 July 1992, unreported) McInerney J considered a situation where various plaintiffs in a class action sought damages arising from their use of a defective product. The proceedings had been commenced against an entity described as “G D Searle and Company”. Those proceedings were begun in the belief that G D Searle and Company had manufactured, designed and marketed the product. No such entity as “G D Searle and Company” existed. Rather, there was an entity called “G D Searle and Co”. Further, G D Searle and Co had carried on the business relating to the product during only part of the time to which the claim related, up to May 1978. From May 1978 until January 1986 another entity, SCI Corp, carried on the business. In January 1986 G D Searle and Co was renamed the Nutrasweet Company, and [10.160]  549

Civil Procedure in New South Wales

Greenwood v Papademetri cont. another entity, that had been incorporated in 1985, adopted the name G D Searle and Co, and, it was alleged, carried on the business thereafter. Application was made under Part 20 rule 4 Supreme Court Rules to substitute the Nutrasweet Company, SCI Corp, and G D Searle and Co for G D Searle and Company. Part 20, rule 4 then provided: (1) Where any relevant period of limitation expires after the date of filing of a statement of claim and after that expiry an application is made under rule 1 for leave to amend the statement of claim by making the amendment mentioned in any of subrules (3), (4) and (5), the Court may in the circumstances mentioned in that subrule make an order giving leave accordingly, notwithstanding that that period has expired. … (3) Where there has been a mistake in the name of a party and the Court is satisfied that the mistake was not misleading or such as to cause reasonable doubt as to the identity of the person intended to be made a party, the Court may make an order for leave to make an amendment to correct the mistake, whether or not the effect of the amendment is to substitute a new party. [60] McInerney J held that there had been a mistake in the name of a party, in the sense explained in Bridge Shipping. This was, in substance, because the plaintiffs had intended to sue the entity that had manufactured, designed and marketed the product, and mistakenly believed that G D Searle and Company had manufactured, designed and marketed the product at all relevant times. [61] McInerney J then considered whether the rule enabled the names of three defendants to be substituted for the name of one defendant. He said (at 14): [T]‌he entity intended to be sued is that entity with the properties described in the statement of claim. What has appeared … is that, on the information supplied by the defendants, there is more than one entity that has such properties. [62] In response to an argument that what was being done was adding parties rather than substituting parties, McInerney J said (at 15): I cannot accept, in principle, that it becomes clear that if more than one party shares certain properties, then in those circumstances, if there has been a mistake in the naming of the party, that it is not possible under this rule to substitute more than one party. The Rule of construction is that the singular form includes the plural (see s 8(b) of the Interpretation Act 1986). I cannot accept this is adding of parties. Adding of parties normally includes the leaving of the original party in the action. In this case this is clearly a substitution of three parties for one party … . [63] The reference to “s 8(b) of the Interpretation Act 1986” is clearly intended to be a reference to s 8(b) Interpretation Act 1987, which provides “in any act or instrument … a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form.” [64] Another decision in which multiple parties replaced a single party is the decision of this Court in McInnes v Wingecarribee Shire Council (1987) 10 NSWLR 660. There, the court considered Part 10 Land and Environment Court Rules 1980, rules 1 and 2 of which substantially reproduced rules 1 and 2 of Part 20 Supreme Court Rules. Various members of an Environmental Preservation Society had objected to the Shire Council concerning a proposed development. After the council granted a development consent, various members of the Society, including Mr McInnes, wished to appeal to the Land and Environment Court against that decision. In the belief that an objection had been lodged by the Society, proceedings were begun in the name of Mr McInnes, expressed to be on behalf of the Society. In fact, neither Mr McInnes, nor the Society itself, had lodged any objection. Only objectors had the standing to appeal. The developer sought dismissal of the appeal on the ground that Mr McInnes lacked standing. Mr McInnes then sought to amend the proceedings by substituting a Mr 550 [10.160]

Amendment, Mistakes and Adjournments  Chapter  10

Greenwood v Papademetri cont. and Mrs Clarke, members of the Society who had lodged an objection, as appellants. The Court held that there had been the type of mistake that attracted the analogue of section 65, and allowed the amendment. Priestley JA, with whom Kirby P and Clarke JA agreed, held (at 669): [T]‌he court in my opinion had power to substitute Mr and Mrs Clarke for Mr McInnes as the applicants in the appeal. [65] It does not appear from the report that any argument was put that there was no power to substitute two appellants for one appellant, but, even so, the decision of the Court clearly assumed that that power existed. … [69] In my view, if it was clear that a plaintiff intended to sue the owner of a particular piece of property, and sued A in the belief that A was the owner of the property, but in fact the owners were A and B, there is no reason why an amendment to add B could not count as an amendment “so as to correct a mistake in the name of a party to the proceedings”. If the plaintiffs in Greentree had initially sued G D Searle and Co (instead of G D Searle and Company) in the belief that it had manufactured, designed and marketed the product through the whole of the time with which the litigation was concerned, I see no reason why it would not have been possible, under a provision like section 65(2) (b), to make an order that had the effect that Nutrasweet Co, SCI Corp, and G D Searle and Co were thenceforth named as defendants. As I have earlier stated, the words “whether or not the effect of the amendment is to substitute a new party” do not limit the width of the power under section 65(2)(b). … [72] In Sullivan v Van der Broek [1999] NSWSC 1177 Windeyer J considered an application brought by a person who had been injured while participating in an event organised by a voluntary unincorporated association, the Nambucca Valley Galah Day Association. The plaintiff sued five people who she thought were members of the organising committee of the association who had the care control and management of the event. Some of the people named as defendants denied they were members of the committee. The plaintiff then applied under Part 20, rule 4 Supreme Court Rules to substitute for the five defendants originally named new defendants consisting of the original five defendants, and four more defendants. That application was brought at a time when the limitation period had expired. [73] Windeyer J accepted (at [8]‌) that the mistake the plaintiff had made “was that all individual members who met that description were not included as defendants in these proceedings.” He adopted McInerney J’s interpretation of Part 20, rule 4(3) in Greentree and said (at [8]): The rule contemplates the substitution of more than one party if they answer a particular description. [74] Windeyer J held, however, that the mistake that had been made by the plaintiff was not a mistake “in the name of a party”, even within the broad reading of that expression laid down by McHugh J in Bridge Shipping. The Statement of Claim did not allege that the original five defendants were the only members of the committee or “the members of the committee”, merely that they were “members of the committee”. The plaintiff was still claiming that the original five defendants were members of the relevant committee. Thus, Windeyer J held that there had been no mistake of the type that the rule was concerned with. [75] Windeyer J noted (at [9]‌) the remark of McInerney J in Greentree that “adding of parties normally includes the leaving of the original party in the action. In this case this is clearly a substitution of three parties for one party”, and observed that McInerney J’s remark accorded with the decision of the Queensland Court of Appeal in Hayward. However, that observation of Windeyer J was obiter. His decision did not depend upon following or accepting Hayward, but (correctly, with respect) upon deciding whether the particular mistake that had been made counted as a “mistake in the name of a party”. [10.160]  551

Civil Procedure in New South Wales

Greenwood v Papademetri cont. [76] In Sibroll Pty Ltd v Mitch Properties Pty Ltd [2007] NSWSC 579 Young CJ in Eq considered an application under sections 64 and 65 Civil Procedure Act. The action in question had been brought by a company in liquidation, seeking recovery of a preference or uncommercial transaction pursuant to section 588FF Corporations Act 2001. Such an action can only be brought by the liquidator, not by the company in liquidation. By the time this error was realised, the three-​year limitation period from the relation-​back day, arising under section 588FF(3) Corporations Act, had expired. The action that named the company as plaintiff had been commenced in time. The solicitor who had drafted the originating process gave evidence that he had been of the view that the company was the appropriate plaintiff, and that he had quite deliberately decided to commence proceedings in the name of the company. [77] Young CJ in Eq dismissed the application. I respectfully agree with that outcome. There had been no mistake in the name of a party, merely a mistake concerning a matter of law about whether an action to recover a preference or uncommercial transaction should be brought by the company in liquidation or by the liquidator. However, in the course of reaching that decision, his Honour said (at [39]): The section does not authorise an additional party to be added, as opposed to substituting one alleged party for another: Hayward v Darling Downs Aircraft Services Pty Ltd [1993] 2 Qd R 153 and Sullivan v Van der Broek [1999] NSWSC 1177 (a decision of Windeyer J). [78] I respectfully disagree with this reading of section 65(2)(b). I doubt that a rigid dichotomy can be drawn between adding an additional party, and substituting one alleged party for another. If it mattered, I see no violence to language in saying that litigation started out with A as the defendant, but then A and B were substituted as the defendant. More importantly, the scope of the power in section 65(2)(b) does not depend upon whether or not the amendment is one that “substitutes” a new party. As earlier explained, I would not follow the first possible reading of the principle in Hayward, and in my view Sullivan v Van der Broek did not have as its ratio that there was never any power under Part 20, rule 4 for an additional party to be added, as opposed to substituting one alleged party for another. … Application to the Facts [86] The Statement of Claim as originally filed proceeded on the basis that Mr Jamiel Antoun had three separate capacities –​that he was the owner of the premises, that he was the occupier of the premises, and that he was the person carrying out the building work that caused the mud to escape. The allegations that he had “permitted” the mud to escape, and that he “failed to keep the public footpath adjacent to his premises free of” the mud are allegations not dependent upon any negligence of Mr Antoun in his capacity as a builder –​they could equally well have been made if someone else had been the builder and Mr Antoun had been merely an owner and occupier. Rather, they are facts that were alleged for the purpose of suing for the tort of public nuisance. … [88] The Judicial Registrar evidently accepted the submission that the relevant mistake was that the Opponent had intended to sue the owner but had made a mistake as to who the owner was. No argument was put to her about there being any distinction, for the purpose of the law of public nuisance, between someone having the capacity of owner and having the capacity of occupier. Nor was any such argument put to us. It is now known that Mr Antoun was not the owner. That, at the least, raises an arguable possibility that he was also not, in the eyes of the law, the occupier. [89] The objective of the amendment is to add a party, so that the defendants to the action, between them, have the capacities that the statement of claim had originally ascribed to Mr Jamiel Antoun, namely those of owner, occupier and builder. It does not widen the scope of the torts alleged against the owner, occupier and builder. In my view, the making of such an amendment falls within the scope of section 65(2)(b). 552 [10.160]

Amendment, Mistakes and Adjournments  Chapter  10

Greenwood v Papademetri cont. [90] No argument has been raised concerning any other reason why it is not appropriate for the amendment to have been made. There are some respects in which the Amended Statement of Claim contains deficiencies in pleading, but no argument was put that these deficiencies were such that the Amended Statement of Claim should not have been permitted to be filed. [91] There is one respect, however, in which the Amended Statement of Claim goes wider than correcting the name of a party. To the extent to which there is doubt about whether Mr Jamiel Antoun, or Ms Linda Antoun was the occupier of the premises, or whether both of them count as occupiers in the eyes of the law, it is, in my view, within the scope of section 65(2)(b) to sue both Mr Jamiel Antoun and the legal representative of Ms Linda Antoun, making allegations further or in the alternative that one of them, or the other, was the occupier. However, it is now known definitely that Mr Jamiel Antoun was not the owner of the premises. Insofar as the Amended Statement of Claim continues to allege that he was the owner of the premises it is mistaken, and does not correct an error in the name of the party originally sued. [92] Because the appeal should succeed on this very narrow ground, leave to appeal should be granted, the appeal should be allowed and the order below set aside. Instead, an order should be made granting leave to the Opponent to file a Further Amended Statement of Claim in the same form as the Amended Statement of Claim, save only that it does not contain an allegation that Mr Jamiel Antoun was the owner of the premises … YOUNG CJ IN EQ … [97] I agree with the orders proposed by Campbell JA, but for the reasons that follow, I do not with respect consider that I can endorse all of his Honour’s reasoning. [98] It must be the case that the order of the Judicial Registrar in August 2006 was a nullity as it was purportedly made against a dead person who had never been served: Deveigne v Askar [2007] NSWCA 45. [99] Accordingly, when asked to set aside her order, the Judicial Registrar ought to have done so, unless she reached the conclusion that, in light of the facts and circumstances as subsisted when she was considering the matter in February 2007, the same order ought to have been remade. [100] However, the way in which the case was conducted below and on appeal means that I need only note these matters and pass on to the merits. [101] The statement of claim as originally filed, so far as is presently relevant states: 1. The defendant is, and was at all material times, the owner and occupier of … land situated at 9 Centennial St, Marrickville. … 3. On or about 30 April 2003 … the defendant had carelessly and negligently carried out certain activities on the said land which resulted in a large quantity of wet slippery mud escaping from the said land and covering the public footpath … thereby creating … a nuisance upon the said public footpath. 4. The defendant was negligent (particulars given). 5. The defendant created or permitted a nuisance upon the public footpath adjacent to his premises (particulars given). [102] On 13 February 2007, after the Judicial Registrar’s decision, a document called “Second Amended Statement of Claim” was filed which claimed that Jamiel Antoun or alternatively Linda Antoun (now deceased) was the owner and/​or occupier of the relevant land, but otherwise left the claims as they were. [103] The second amended statement of claim retains the claim that Jamiel Antoun was the person who actually caused the mud to flood the footpath.

[10.160]  553

Civil Procedure in New South Wales

Greenwood v Papademetri cont. [104] Thus, basically, the original document claimed that Jamiel Antoun was: (a) the builder; and (b) the owner/​occupier. It still seeks to say this, but, in addition, it says that, alternatively, Linda Antoun was the owner/​occupier. [105] The question is whether this amendment after the expiry of the relevant limitation period, can be permitted. [106] The plaintiff is not merely substituting one party for another because of a mistake. The plaintiff seeks to keep the existing action and add a new count against a new party. [107] Generally, this would not be permitted as the Queensland Court of Appeal has said in Hayward v Darling Downs Aircraft Services Pty Ltd [1993] 2 Qd R 153, as Windeyer J said in Sullivan v Van der Broek [1999] NSWSC 1177 and as I said recently in Sibroll Pty Ltd v Mitch Properties Pty Ltd [2007] NSWSC 579. [108] However, I agree with Campbell JA that in the situation where the plaintiff mistakenly thought that A was the proper defendant, whereas it was the jointure of A, B and C, it must be considered a case of substitution not a case of adding a fresh party. This was not a situation considered in the authorities referred to in the preceding paragraph. … [112] I consider that I am bound to follow the decision in Hayward. [113] However, if the situation here were simply that the plaintiff mistakenly thought that Jamiel was the owner and occupier as well as the builder and sought that the case proceed against Jamiel as the builder and Linda’s estate as the owner/​occupier, I would agree on the way the motion was argued below that the appropriate amendment should be made. [114] However, as the claim (albeit now only an alternative claim) remains that Jamiel was the owner/​occupier, the amendment is adding a new party and new cause of action additional to the original claim and in my view is beyond the scope of s 65 of the Civil Procedure Act 2005. [115] It must be remembered that s 65 of the Civil Procedure Act provides only a limited escape from the defence of limitation and that where it is appropriate “to correct a mistake in the name of a party”. [116] To my mind, the present formulation of the plaintiff’s claim demonstrates that the plaintiff made no mistake in the name of the party she wished to sue. [117] Accordingly, my view is that the Judicial Registrar should not have made the order that she did make. Leave to appeal ought to be given and the appeal allowed.



Preston v Nikolaidis [10.170]  Preston v Nikolaidis [2010] NSWSC 427 BARRETT J [2]‌The first matter concerns Mr Zwar and the fact that, although he has, over a long period, been treated as a party (and, indeed, has represented himself to be a party), there has never been any formal step taken to make him a party. The plaintiff says that Mr Zwar is –​and always has been –​a necessary party and that he ought to be joined with retrospective effect at least to July 1994 which is the point at which he was first recognised as a party. The defendants say that there is no need to join Mr Zwar and question whether there is power to join him. [3]‌The proceedings concern the terms of the solicitors’ retainer and a dispute about costs rendered by them. The original first defendant (Mitrofanis Nikolaidis) and the second defendant (Leon 554 [10.170]

Amendment, Mistakes and Adjournments  Chapter  10

Preston v Nikolaidis cont. Nikolaidis) were, at relevant times, two of three solicitors practising in partnership. Mr Zwar was the third member of the firm. [4]‌It follows that he should have been a party from the outset. He needs to be a party to ensure that he, along with the estate of Mitrofanis Nikolaidis and Leon Nikolaidis, is bound by the outcome of the litigation. He has indicated that he will not in the future seek to depart from that outcome, if he remains a non-​party. I do not, however, regard that as a suitable basis on which to secure the finality that will hopefully soon be achieved in this excessively protracted litigation. [5]‌I referred in my earlier reasons to the decision of the Court of Appeal in Newmont Yandal Operations Pty Ltd v The J Aron Corporation [2007] NSWCA 195; (2007) 70 NSWLR 411 and the observation that the court has an inherent power to correct its record to record what it “had pronounced or intended to pronounce” [original emphasis]. The defendants say that such an order could not overcome any limitation defence to which Mr Zwar is entitled. [6]‌I do not need to pursue that question since I am of the opinion that, if the inherent power is for some reason insufficient, a relevant and appropriate power is available under s 65(2)(b) of the Civil Procedure Act 2005 in a way that avoids limitation issues. On principles discussed in Greenwood v Papademetri [2007] NSWCA 221 (particularly at [33] to [35]), that section will support an order making Mr Zwar a party. This case is of the kind referred to by Campbell JA at [69]: In my view, if it was clear that a plaintiff intended to sue the owner of a particular piece of property, and sued A in the belief that A was the owner of the property, but in fact the owners were A and B, there is no reason why an amendment to add B could not count as an amendment “so as to correct a mistake in the name of a party to the proceedings” … . As I have earlier stated, the words “whether or not the effect of the amendment is to substitute a new party” do not limit the width of the power under section 65(2)(b). [7]‌Here, the plaintiff must be taken to have intended to sue all three members of the firm of solicitors, so that Mr Zwar is properly regarded as the equivalent of “B” in the foregoing formulation. [8]‌There will therefore be an order that the plaintiff have leave to amend the summons filed on 24 August 1993 by adding Michael Zwar as a defendant.

 [10.175]  Some other recent cases concerning mistake in the name of a party are East West

Airlines Limited v Turner [2010] NSWCA 53; The Owners of Strata Plan 62658 v Black No Sugar Pty Ltd [2010] NSWSC 408; Allen v Lloyd-​Jones (No. 4) [2010] NSWDC 93; Evans v Pacific National (NSW) Pty Ltd, formerly Asciano Pty Ltd t/​as Freight Corp [2010] NSWDC 12; and Mitry v Business Australia Capital Finance Pty Ltd (in liq) [2010] NSWCA 360.

IRREGULARITIES AND NULLITIES [10.180]  The court has broad power contained in s 63 of the CPA to treat anything done or

omitted to be done, and any failure to comply with the requirements of the CPA or UCPR, as an irregularity. Nullities and irregularities must be distinguished. A nullity is a proceeding or procedural step taken that is so fundamentally flawed that it cannot be regarded as having taken place at all: Re Pritchard (deceased) [1963] Ch 502. An irregularity does not invalidate the proceeding or any step taken, nor any document, judgment or order in the proceeding. A failure to comply with a rule of court is normally held to be an irregularity, which is a matter about which the court has jurisdiction and power to make orders or give directions. The court may, on the application of a party, set aside the proceeding or step, document, judgment or [10.180]  555

Civil Procedure in New South Wales

order in the proceeding or make an order for amendment to rectify the failure, so long as the application is made within a reasonable time and, in any case, before that party takes a fresh step after becoming aware of the failure. Section 63 invests the court with a curative power and is useful for a myriad of circumstances. For example, in Judd v Warwick,6 the plaintiff sued his solicitor. A statement of claim was filed but not served before the expiration of a limitation period. Though the time for service had expired, the plaintiff sent the defendant a sealed statement of claim, thereby purporting service. The defendant complained and the plaintiff sought to have the time to serve the statement of claim extended. Johnstone DCJ held that s 63 applied because: [A]‌failure to serve originating process personally, and a failure to serve a Statement of Claim within the time prescribed, are failures to comply with the rules of court as to time and manner. Thus they are to be treated as procedural irregularities that do not invalidate the proceedings: Tolcher v Gordon [2005] NSWCA 135 at [73], and which may be cured: s 63 of the Civil Procedure Act 2005.

Civil Procedure Act 2005 (NSW) [10.190]  Civil Procedure Act 2005 (NSW) s 63 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)

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.

(2)

Such a failure:



(a)

is to be treated as an irregularity, and



(b)

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

(3)

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,



(b)

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

(4)

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.

 [10.200] Notwithstanding that s  63 of the CPA allows a court to cure irregularities or

failures to comply with the UCPR or CPA, there are some classes of default that may be so fundamental that they render the proceedings a nullity. A nullity would render the proceedings as one considered never to have taken place. In Deveigne v Askar [2007] NSWCA 45, the New South Wales Court of Appeal confirmed that civil proceedings against a deceased person may in certain circumstances amount to a nullity. 6

Judd v Warwick [2007] NSWDC 299.

556 [10.190]

Amendment, Mistakes and Adjournments  Chapter  10

Deveigne v Askar [10.210]  Deveigne v Askar [2007] NSWCA 45; (2007) 69 NSWLR 327; (2007) 239 ALR 370 [Michael Askar was injured in a motor vehicle accident in 1998 and sued Terry Deveigne for negligence. By the time the Statement of Claim was filed in 2000, Deveigne had died, a fact known to all involved in the matter at all material times. The deceased was identified not only as the “defendant” in the Statement of Claim, but also as the “applicant” on notices of motion in the District Court, on a subsequent application for an assessment of costs, and as the “judgment creditor” on a Certificate of Judgment obtained to enforce the costs assessment. The fact of his death was not disclosed to any court exercising jurisdiction in the matter until early 2004. The Statement of Claim was served upon NRMA Insurance (“NRMA”), whose solicitors acted upon its instructions while purporting to act on behalf of the deceased. NRMA made procedural attempts for several years to obtain the benefit of the Certificate of Judgment issued in favour of the deceased as “judgment creditor”. Finally, Bishop DCJ in the District Court rejected NRMA’s application to have the Certificate of Judgment set aside on the basis it was tainted by irregularity. NRMA sought leave to appeal that decision.] HODGSON JA [1]‌I agree with Giles JA and McColl JA that NRMA should be joined, its application for leave to appeal granted, and its appeal dismissed with costs. [2]‌I agree with McColl JA that the District Court had (and this Court has) power to regularise the proceedings by joining NRMA as a defendant, and I agree substantially with her reasons. … It may be that proceedings (or applications) purportedly commenced by a non-​existent person are a nullity; but I am doubtful if proceedings commenced against a non-​existent person are truly a nullity. Certainly in my opinion, proceedings cannot become a nullity because they are not served. The question whether or not proceedings are a nullity is different from the question whether or not a purported order is a nullity, or is liable to be set aside as of right. … MCCOLL JA [27] This case concerns the enigma of the status of proceedings, one of the parties to which pre-​ deceased their commencement … [33] The application before the Court is for leave to appeal from Bishop DCJ’s interlocutory order. The leave application was filed out of time, so an extension of time is also sought. [34] For the reasons I give below, NRMA should be joined as the appellant to the appeal, time to seek leave to appeal should be extended and leave to appeal should be granted as the case raises questions of general principle. The application for leave to appeal on behalf of the first claimant should be dismissed as incompetent. … Submissions … [81] In essence, the competing contentions were, for NRMA, that the proceedings were irregularly commenced and everything which thereafter occurred was an irregularity which could be cured under the Rules. For the respondent, that the proceedings were a nullity from the outset and everything which took place thereafter was similarly a nullity. The irony of the respondent’s position is readily apparent. Consideration [82] To describe a document or a court proceeding as a “nullity” states a conclusion, rather than the reason for reaching that conclusion: Adams v Lambert [2006] HCA 10; (2006) 80 ALJR 679 at [25]; [10.210]  557

Civil Procedure in New South Wales

Deveigne v Askar cont. see also Bounds v The Queen [2006] HCA 39; (2006) 80 ALJR 1380 at [10]; Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 at [154] per Hayne J. Such statements of conclusion, it has been said, “are not necessarily helpful in resolving the rights of parties”, both in the context of administrative decisions and “in the context of proceedings in, and acts and orders of, courts”: Berowra Holdings Pty Ltd v Gordon [2006] HCA 32; (2006) 80 ALJR 1214 at [10] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ); see also Minister for Immigration and Multicultural Affairs v Bhardwaj (at [46]). [83] The joint judgment in Berowra contained the following observations (at [13]): [13] There also is a very real difficulty in characterising proceedings as “invalid”. The institution of an action or other proceeding is the exercise by the litigant of the freedom to invoke the jurisdiction of the judicial arm of government to determine a dispute. That step engages the procedural law appurtenant to the relevant court, which in modern times is found primarily in the Rules. [14] Professor Jolowicz describes procedural law as creating choices or a sequence of choices in the sense that each procedural step taken by a litigant requires the other party or the court to take some action, so affecting the path which the proceedings take towards ultimate disposition. This is the case even where a procedural rule is expressed in mandatory form; if the party to whom it is addressed chooses to disregard it, the normal outcome is that a choice accrues to the other party either to do nothing or to seek an appropriate order from the court. [15] In the adversarial system of justice, choice rests primarily with the parties and it is generally the case that the court’s power of decision or order is exercised upon the application of a party. Generally there is, in law, no restriction upon a person’s right to start an action and to carry it to the point at which a choice is cast upon the defendant to make some response in order to avoid judgment in default. Once the procedural law has been engaged, all parties to the litigation are subject to it. [16] None of the above denies the possibility of a defendant denying the plaintiff’s right to invoke the jurisdiction of the court, for example where the plaintiff’s right is conditional upon there being an action cognisable within that jurisdiction. However, the material point is that that denial must be made within the structure of the relevantly engaged procedural law, and not outside it. Accordingly, the defendant may challenge at an interlocutory level the strength of the plaintiff’s alleged case by seeking to have a plaintiff’s action struck out for failure to disclose a reasonable cause of action, or dismissed as incompetent. Alternatively, the defendant may have recourse to judicial review by a superior court, challenging the right of an inferior court to adjudicate the plaintiff’s claim and seeking orders to prevent the inferior court continuing to hear the claim. However, the invocation of jurisdiction ordinarily enlivens the authority of the court in question at least in the first instance to decide whether it has jurisdiction [Re Macks; Ex p Saint (2000) 204 CLR 158]. (emphasis added) [84] In Berowra, the majority concluded (at [36]) that proceedings commenced by a worker in contravention of s 151C of the Workers Compensation Act 1987 (which required a six months delay before the commencement of court proceedings against an employer for damages) engaged the jurisdiction and procedural rules of the court in question. While the proceedings were vulnerable to an application by the defendant to strike out the initiating process or to move for summary dismissal, they were not a nullity. Nullity and irregularity [85] Before turning to consider the particular consequences of commencing proceedings against a deceased defendant, it is useful to examine decisions in which the courts have considered whether proceedings, or a step in them, constituted a nullity. [86] In Plowman v Palmer [1914] HCA 41; (1914) 18 CLR 339 (at 347 –​349), Isaacs J (with whom Rich J agreed) said “a proceeding taken, where such proceeding is entirely forbidden or excluded by

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Deveigne v Askar cont. the rules … or is not permitted at all at the time it is taken is a nullity or an irregularity … [but] it is sometimes difficult to say on which side of the line a given matter lies, and the line is very thin”. After observing that “[t]‌he power to waive the objection is rather an accompaniment of mere irregularity than a standard of discrimination”, his Honour said: [T]‌he test is: Is there jurisdiction at the time to do the act impeached, even though prior precautions for the protection of a party, or other formalities, are directed; or is the act complained of, in the circumstances entirely unprovided for or prohibited at the time it is done? (emphasis added) [87] In MacFoy v United Africa Co Ltd [1962] AC 152 (at 160), Lord Denning (who delivered the judgment of the Privy Council) observed that no Court had ever attempted to lay down a decisive test for distinguishing between nullities and irregularities, but that a useful one was whether, if “the other side waived the flaw in the proceedings or took some fresh step after knowledge of it … [c]‌ould he afterwards in justice complain of the flaw?” If the other side could complain despite the subsequent step, the “flaw” was a nullity. [88] In Re Pritchard (decd) [1963] Ch 502 (at 520) Upjohn LJ (with whom Danckwerts LJ agreed) accepted that no precise definition of irregularities or “true nullities” was possible. He concluded (at 523), after a review of the authorities, that a defect which was fundamental to the proceedings would make them a nullity. He described the waiver test formulated in MacFoy as “useful … as a good commonsense test”, but agreed with counsel “that it cannot be a completely legal test, for until you have decided whether a proceeding is a nullity, you cannot decide whether it is capable of waiver.” He added that the Court should not readily treat a defect as fundamental and so a nullity, and should be anxious to bring the matter within the umbrella of RSC O 70, r 1, (an irregularity provision) when “justice can be done as a matter of discretion …” [89] His Lordship added (at 523-​524): The authorities do establish one or two classes of nullity such as the following. There may be others, though for my part I would be reluctant to see much extension of the classes. (i) Proceedings which ought to have been served but have never come to the notice of the defendant at all … (ii) Proceedings which have never started at all owing to some fundamental defect in issuing the proceedings. (iii) Proceedings which appear to be duly issued but fail to comply with the statutory requirement. [90] Upjohn LJ held (at 526) that an originating summons which was accepted and sealed in a Local District Registry in Pontypridd, but which, under the terms of RSC O 54 r 4B was required to be sealed in the Central Office in London was a nullity. This was because the writ was not issued in accordance with the only relevant Supreme Court Rule, and, accordingly, the proceedings had not been commenced for the purposes of s 225 of the Supreme Court of Judicature (Consolidation) Act 1925 (UK). Lord Danckwerts, while agreeing with Upjohn LJ, described the originating summons (at 527) as “a nullity [which] has no operation [and] … no more application to the matter to be decided than a dog licence”. [91] Lord Denning MR strongly dissented, describing the majority decision (at 518) as a “blot” on the “copybook”. He said (at 517): The only true cases of nullity that I have found are when a sole plaintiff or a sole defendant is dead: see Tetlow v Orela Ltd, or non-​existence: see Lazar Bros. v Midland Bank; and I would like to see the word “nullity” confined to those cases in future. [92] In Lord Denning’s view, RSC O 70 r 1 could be deployed to remove the originating summons from the Pontypridd registry to London, thus enabling the matter to be heard. [93] It is important to understand Upjohn LJ’s first class of nullity on the context of his critique of Lord Greene’s statement in Craig v Kanssen [1943] 1 KB 256 (at 262) that a person “who is affected by an order which can properly be described as a nullity is entitled ex debito justitiae to have it set [10.210]  559

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Deveigne v Askar cont. aside.” As Upjohn LJ’s discussion (at 519 –​523) reveals, Lord Greene’s description of such proceedings as a “nullity” was not apt to describe proceedings where, because they had not been served, the defendant was entitled to have either the originating process or any consequential order set aside as of right, unless the failure to serve had been waived or the defendant was otherwise estopped. Fundamental to this proposition is the rule of natural justice that a person against whom a claim is to be made must be given a reasonable opportunity to appear and present a case in response: see Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571; Hoskins v Van Den-​Braak (1998) 43 NSWLR 290 (at 293 –​294) per Mason P (Priestley and Beazley JJA agreeing). … [96] The “waiver” test was also approved in Hubbard Association of Scientologists International v Anderson & Just (No 2) [1972] VR 577 (at 579-​580) by the Full Court of the Supreme Court of Victoria (Adam, Little and Gowans JJ). Their Honours described Lord Denning’s test in MacFoy as a “practical test … for distinguishing between those irregularities in proceedings which render the same void or voidable only [as being] whether the irregularity was of such a character as might be waived by the other party”. … The status of proceedings brought by or against a non-​existent person or company [104] Lord Denning said in Re Pritchard that the only true cases of nullity he had found were where “a sole plaintiff or a sole defendant is dead”, an observation Yeldham J quoted with approval in Marshall v DG Sundin [(1989) 16 NSWLR 463] to which I will come shortly. [105] The appellant sought to challenge Lord Denning’s statement, at least insofar as it concerned cases involving a sole defendant, as being unsupported by authority. As to this I would say first, that it is self-​evident that the “person named as the defendant to a writ must be an existing person” and that “a writ cannot be valid, whether served or not, if there is no existing defendant to which the writ can relate and against whom the claim can be enforced”: Kilkenny Engineering Pty Ltd (in liq), Re; Monti v Kilkenny Engineering Pty Ltd (in liq) (1976) 13 SASR 258 at 267 per Wells J. Secondly, as will become apparent, there is authority supporting that proposition in the case of a sole personal, albeit deceased, defendant, as well as a sole, albeit non-​existent, corporation defendant. [106] The general principle was stated by Jordan CJ (with whom Halse Rogers and Street JJ agreed) in United Insurance Co Ltd (in liq) v Lang (1935) 35 SR (NSW) 487 at 495, a case concerning whether a company which had been dissolved could bring proceedings to recover allotment moneys and calls which had become due prior to its dissolution. Jordan CJ said (at 495): [A]‌non-​existent person cannot sue. In the case of a natural person, the English Courts would decline to entertain an action in his name … [107] Jordan CJ considered (at 496 –​497) what a Court hearing an appeal should do when it was found “that in what purports to be an appeal by a plaintiff in an action, the plaintiff has no existence”. He said: If in an action it is sought to contend that the plaintiff … or the defendant … does not exist, or is incapable of authorising the action or the defence, as the case may be … this is not a matter for defence to be disposed of at the trial. The proper way of raising it is for the party aggrieved, as soon as he becomes aware of the matter, to apply to have proceedings stayed, and in such an application he may obtain indemnification for his costs and expenses from the solicitor who has acted without authority … If, however, the Court in the course of an action becomes aware that the plaintiff is incapable of giving any retainer at all, it ought not to allow the action to proceed … and this applies a fortiori when it appears that the supposed party is non-​existent … The verdict for the defendant and the order for costs given by the learned District Court Judge are, of course, nullities, but in the absence of a plaintiff we have no more power to deal with them in the appeal than he had to make them in the action. 560 [10.210]

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Deveigne v Askar cont. [108] Marshall v DG Sundin concerned the characterisation of proceedings commenced on 3 June 1988 in the name of Mr Marshall by his solicitors who were unaware that he had died less than an hour before the statement of claim was filed. The cause of action was in negligence alleged to have caused the deceased to develop right-​sided pleural mesothelioma. In due course a summons was issued seeking an order under s 58 of the Limitation Act 1969 and ancillary orders. On the return of the summons on 2 August 1988 Master Sharpe gave “liberty to file [the] amended summons and statement of claim in court”. The amended summons stated it was brought by Anne Margaret Marshall (as executrix of the estate of the late Donald Raymond Marshall) as, too, did an amended statement of claim which alleged Mrs Marshall was the “legal personal representative” of her late husband’s estate and brought the action for the benefit of the estate under the Law Reform (Miscellaneous Provisions) Act 1944. On 23 September 1988 Mrs Marshall obtained a grant of probate in respect of the Will of her late husband, under which she was named as executrix. [109] Yeldham J concluded that the proceedings were a nullity from the outset applying (at 471) Lord Denning MR’s statement in Re Pritchard (at 517) that “ … the only true cases of nullity … are when a sole plaintiff or a sole defendant is dead … or non-​existent.” He found (at 471) that the fact the executrix had subsequently obtained probate did not assist because, pending the grant of probate, the deceased’s estate was vested in the Public Trustee in accordance with s 61 of the WPA Act and (at 473) that the doctrine of relation back embodied in s 44 and s 61 of the WPA Act, in the case of both executors and administrators in New South Wales, did not “validate as competent an action which was incompetent when it was instituted.” [110] Having reached that conclusion, his Honour also concluded that the position could not be rectified either by recourse to s 81 of the Supreme Court Act [CPA s 63] (the irregularity provision substantially equivalent to s 159 of the District Court Act) or the Rules. As to the initial statement of claim, Yeldham J (at 473-​474) observed that s 81 could not operate to validate the statement of claim when the named plaintiff had pre-​deceased its filing nor could the proceedings be cured by the operation of SCR Pt 8 rr 10 and 11. Those rules could have rectified the position if the deceased had died after the issue of the statement of claim in his name but not in the present circumstances. As his Honour observed, (at 474) the application of those provisions “assumes that the proceedings, up until that time, remain in existence and were valid, an assumption which is erroneous”. In addition “any such order can only be made ‘on the application of any party’ ”, a requirement which, although his Honour did not expressly so state, could not be satisfied having regard to the purported constitution of the proceedings. Yeldham J also concluded (at 474-​475) that the general power of amendment in SCR Pt 20 rr 1 and 4 [CPA s 64 and s 65] could not be prayed in aid of the amended summons and statement of claim; the proceedings were a nullity because, at the time they were filed, the widow had not obtained a grant of probate. Accordingly they suffered from a fundamental defect. [111] Young J (as he then was) followed Marshall v DG Sundin in Darrington v Caldbeck (1990) 20 NSWLR 212. His Honour observed (at (219)) that Yeldham J’s decision appeared to him to be “undoubtedly correct”. Having concluded that s 66G Conveyancing Act 1919 proceedings were a nullity, because they were commenced by executors by representation of an estate to which probate had not been granted at the date of their commencement, his Honour also concluded (at 220) that “it is not possible, the action being a nullity, to amend … ”. [112] Marshall v DG Sundin was also applied in Budimir v McMahon. That was a case with an apparent factual similarity to the present. The Victorian Transport Accident Commission sought to enforce in bankruptcy proceedings a judgment obtained in the County Court. As Merkel J described the situation, “in obtaining the judgment the Transport Accident Commission (‘the TAC’) was exercising its rights of subrogation by standing in the shoes of Mr McMahon in contesting the proceedings.” The judgment was obtained on 6 June 1997 for costs to be taxed. Mr McMahon died on 18 August 1997, a fact unknown both to the TAC and the judgment debtor. The costs were taxed and a Certificate of Costs issued. A Bankruptcy Notice was issued in Mr McMahon’s name on 27 October 1999 claiming the amount of the judgment for the costs to be taxed as well as interest from 10 June 1997. The [10.210]  561

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Deveigne v Askar cont. Registrar of the Federal Court refused an application to set aside the Notice and the matter came before Merkel J. His Honour held (at [6]‌–​[7]), apparently applying Marshall v DG Sundin, “that a Bankruptcy Notice issued in the name of a deceased person is a nullity, and … is liable to be set aside as invalid”. His Honour observed, in passing (at [6]), that “death does not bring to an end the rights of subrogation of the TAC” but that was not a question he was required to determine. [113] The principle that proceedings brought by a non-​existent person, or a person in whom no cause of action is vested, are a nullity has been applied in respect of actions brought by non-​existent companies. In International Bulk Shipping & Services Ltd v Minerals & Metals Trading Corporation of India [1996] 2 Ll R 474, proceedings were held to be a nullity where the plaintiff companies had been dissolved prior to their commencement. Evans LJ (with whom Gibson LJ and Sir Iain Glidewell agreed) said (at 478): The general rule is that an action commenced in the name of a non-​existent person, or company, is a nullity: see The Supreme Court Practice 1995 vol 1, para 15/​6/​1, p 201, citing Lazard Bros & Co Midland Bank Ltd [1933] AC 289 at 296, [1932] All ER Rep 571 at 576 per Lord Wright, Dubai Bank Ltd v Galadari (No 4) (1990) Times, 23 February (Morritt J) and Fielding v Rigby [1993] 4 All ER 294 at 297–​298, [1993] 1 WLR 1355 at 1359. [114] His Lordship concluded (at 479 –​480) that the rule concerning the addition of a party where there had been a misjoinder or non-​joinder of parties contemplated that there was an existing action in which the addition or substitution may be made. Where the proceedings were a nullity there was no existing action, and the rule could not apply. He also upheld (at 479) the primary judge’s rejection of an argument that the objection (that there was no existing action) disappeared if it was recognised that an order made under the joinder rule would “relate back” to the date of the writ, so that the action would continue as if the substituted party was the plaintiff named from the outset. He observed that before s 35 of the Limitation Act 1980 (UK) took effect, although as a general proposition an amendment of a writ or pleading “related back” to the original date of the document amended, this did not apply where the amendment involved either adding a new party or a new cause of action, applying Liff v Peasley [1980] 1 WLR 781 at pp. 803C and 840D (per Lord Justice Brandon) and Ketteman v Hansel Properties Ltd [1987] AC 189. [115] Neither counsel’s researches yielded direct authority for the proposition that proceedings commenced against a dead person are a nullity. The obvious explanation for that dearth of learning is that properly advised plaintiffs do not commence such proceedings or, if they do, rapidly realise their error when they are unable to serve the initiating process and commence proceedings against the deceased’s legal personal representatives. However there are several cases to which reference should be made. … [117] In Dawson (Bradford) Ltd v Dove [1971] 1 QB 330 writs claiming damages in negligence or nuisance were issued in the names of each of two plaintiffs on December 17, 1968 claiming damages against D, their landlord. Unknown to the plaintiffs, D had died on July 28, 1967, appointing the defendants as his executors. By the time the plaintiffs heard of D’s death, the limitation period for suing executors in tort had expired. The plaintiffs applied to the registrar ex parte for leave to amend the writs by substituting the defendants for D, relying on the provisions of RSC O 15, r 6, (which provided that “an action shall not be defeated by reason of the misjoinder of a party or the non-​joinder of any person as a party”, and that “at any stage of the proceedings … the court may on such terms as it thinks just … order any person who ought to have been joined as a party … be added as a party”) O 2, r 1 (in substance in terms of s 159 of the District Court Act 1973), and O 20, r 5 (which provided that “the court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading”). The registrar gave the plaintiffs leave to amend. After the defendants had entered appearances they were given leave to appeal out of time against the registrar’s order. Mackenna J held, allowing the appeal, none of the rules relied upon could remedy the situation. As this case is the clearest case concerning the status of proceedings commenced against a deceased 562 [10.210]

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Deveigne v Askar cont. person and also deals thoroughly with the two English cases in which proceedings commenced in the name of dead plaintiffs were held to be an incurable nullity, it is worth setting out a large portion of his Honour’s reasons (at 333-​336): Two authorities have been cited on the meaning of Ord 15, r 6: Clay v Oxford (1866) LR 2 Exch 54 and Tetlow v Orela Ltd [1920] 2 Ch 24. The first of those cases was a decision of the Court of Exchequer holding that, where an action had been commenced in the name of a dead man, there was no power under the Common Law Procedure Act 1852 to substitute his representatives as plaintiffs. Section 34 of that Act provided that the court might, at any time before the trial of any cause, order that any person not joined as plaintiff should be so joined, or that any person originally joined as plaintiff should be struck out from the cause. Section 222 provided that it should be lawful for the courts at all times to amend all defects and errors in any proceeding or civil cause, and that all such amendments should be made as might be necessary for the purpose of determining in the existing suit the question in controversy between the parties. It was said by Kelly CB, LR 2 Exch 54, 55, that the Act contained no provisions in any part of it for substituting a plaintiff suing in a representative capacity for a deceased man who never had been a party. Bramwell B, at p 55, thought that the powers of amendment conferred by the statute did not apply to a case where there was no plaintiff, and, therefore, no existing suit, and no question in controversy between “parties.” The other judges agreed. [our emphasis] The Supreme Court Rules 1883 took the place of the Common Law Procedure Act 1852, and in 1920, in Tetlow v Orela Ltd [1920] 2 Ch 24, the question was raised once again whether, if an action had been commenced in the name of a dead man, his representative could be substituted as a plaintiff. It was held by Russell J. that there could be no substitution … The RSC. of 1883 relied on by the plaintiff in Tetlow’s case were Ord 16, rr 2 and 11. Ord 16, r 2, provided that, where an action had been commenced in the name of a wrong plaintiff, the court might, if satisfied that it had been so commenced through bona fide mistake and that it was necessary for the determination of the real matter in dispute so to do, order any other person to be substituted. Ord 16, r 11, provided that no cause or matter should be defeated by reason of the misjoinder or nonjoinder of parties and that the court might in any cause or matter deal with the matter in controversy so far as regarded the rights and interests of the parties actually before it, and also that the court might at any stage of the proceedings order that the names of any persons improperly joined as plaintiffs or defendants be struck out, and that the names of any parties, whether plaintiffs or defendants, who ought to have been joined be added. Russell J [1920] 2 Ch 24, 26, thought that rule 2 meant that, where an action had been commenced between two living parties by a living plaintiff and that plaintiff turned out afterwards to be the wrong person, the court could substitute another for him. “But it does not justify the court,” he said, “in creating a plaintiff in an action for the first time.” In the same way, he thought that the “parties” referred to in rule 11 were living persons, and that that rule did not carry the plaintiff any further. He held, for those reasons, that the Rules of 1883 had made no change in the position, which was still as it had been under the Act of 1852. If Ord 16, r 11, of the Rules of 1883 did not, as Russell J held, enable an action commenced in the name of a dead man to be continued in the names of the executors, it must follow, I think, that an action commenced against a dead man could not have been continued against his executors. The language of the rule made no distinction between the power of striking out and adding plaintiffs and that of striking out and adding defendants. If there were no power under the rule to put matters right where there had been no living plaintiff, the rule must have been equally ineffective where there had been no living defendant. If the “parties” referred to in the rule were only living persons, the rule must have excluded the case of dead defendants as well as that of dead plaintiffs.

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Deveigne v Askar cont. Ord 15, r 6, of the Rules of 1965 combines the provisions of the old Ord 16, rr 2 and 11, with each other and with those of the old Ord 16, rr 5, 8 and 39, which are for my purpose immaterial. It adds nothing to rules 2 and 11 which could make the new rule apply to dead plaintiffs or defendants if the old rules did not. If I am to hold that the new rule covers the case of dead defendants, I must, I think, refuse to follow the decision in Tetlow’s case [1920] 2 Ch 24 and also that in Clay’s case (1866) LR 2 Exch 54, which I am not prepared to do. I conceive it to be my duty to follow those old cases unless convinced that they were wrongly decided, which I am not. I turn to the provisions of RSC, Ord 20, r 5, paras (1) to (3). These give power to correct the name of a party if the court is satisfied that the mistake was not such as to cause any reasonable doubt as to the identity of the person intended to be sued. The question is whether the relief sought by the plaintiffs in the present case is merely the correction of a misnomer. I do not think that it is. When the writs were issued, the intention was to sue Mr. Dawson and nobody else. The plaintiffs made no mistake about his name. Their mistake was of a different kind. They believed him to be living when he was in fact dead. To substitute the defendants for Mr. Dawson would not be correcting a mistake about that gentleman’s name. It would be doing something quite different. Ord 2, r 1, as I read its provisions, does not help the plaintiffs here. To commence an action against a dead person can hardly be described as “a failure to comply with the requirements of these rules,” which is the case dealt with by Ord. 2, r. 1. Even if it could be so described, the rule does not give any power to add new parties in substitution for dead men. It only provides that the powers of amending or making orders conferred by the other rules shall be exercisable in the cases with which it is dealing. If the relief required is the addition of new parties, the power to give such relief must be sought in the provisions of Ord 15, r 6, or in those of Ord 20, r 5. If the power is not given by these rules, it is not exercisable under Ord 2, r 1. Since the argument in this case, Master Jacob has referred me to the Law Commission’s White Paper, (1969) Cmnd 4010, entitled Proceedings against Estates and to the Proceedings against Estates Act 1970, passed on May 15, 1970, to implement the commission’s recommendations. Section (2)(b) of that Act provides that rules of court may be made for enabling proceedings purporting to have been commenced against a person who is dead to be treated as having been commenced against his estate. So far as I am aware, no rule has yet been made. The White Paper contains this passage, at p 6: It appears that a writ issued against a deceased person (naming him as a defendant) is a nullity as it is a general principle of High Court jurisdiction (other than in actions in rem in the Admiralty Division) that the court is able to exercise its jurisdiction over the person of the defendant. There is, however, no judicial authority directly supporting this proposition but if it be correct the writ could not be re-​issued in an amended form or validly served and a fresh writ would have to be obtained. … [123] The proposition that proceedings against a deceased defendant are a nullity, finds expression too in actions brought against non-​existent companies. [124] In Re Pritchard Lord Denning referred to Lazard Bros & Co v Midland Bank Ltd [1933] AC 289 as one of the true cases of nullity. In Lazard, the plaintiff sought to recover monies owed to it by the Russian Bank before the Russian Revolution of October 1917. Between October, 1917, and August 3, 1921, numerous decrees of the Government of Russia and orders of various Departments thereof were made and published purporting to nationalise or liquidate all banking corporations in Russia, including the Russian Bank. In October, 1930, L Brothers, having filed an affidavit stating that the Russian Bank was a company registered and domiciled in Russia, obtained leave under Order IX, r 2 of the Rules of the Supreme Court, to issue a writ against the Russian Bank and to serve notice of the writ by sending it by registered post to the former address of the Bank in Moscow. Having signed judgment in default of appearance against the Russian Bank, L Brothers obtained a garnishee order

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Deveigne v Askar cont. nisi against the M Bank attaching all debts due from the M Bank to the Russian Bank. An issue was subsequently directed to be tried whether the M Bank was indebted to the Russian Bank to any and what extent. On the evidence of Russian lawyers who had practised in Russia since the Revolution that the Russian Bank had ceased to exist in and before October, 1930, the House of Lords held that the writ, the judgment and the garnishee proceedings were null and void and must be set aside. [125] Lord Wright (with whose speech all other Law Lords agreed) said (at 296–​297): [I]‌t is clear law, scarcely needing any express authority, that a judgment must be set aside and declared a nullity by the Court in the exercise of its inherent jurisdiction if and as soon as it appears to the Court that the person named as the judgment debtor was at all material times at the date of writ and subsequently non-​existent … if the defendants cannot be before the Court, because there is in law no such person, … the Court must refuse to treat these proceedings as other than a nullity. (emphasis added) [126] In CTG Pty Ltd v Yamamori (Hong Kong) Pty Ltd (1992) 10 ACSR 534 the Court of Appeal of the Northern Territory (Asche Q, Gallop and Martin JJ) described CTG Pty Ltd, a deregistered company, which was the first defendant in the proceedings, as “a litigant with no standing” to pursue orders. The trial judge had not been informed of the deregistration of the company (which had taken place after the proceedings were commenced) and had entertained an application “by it” for summary judgment against the plaintiff on the ground that the plaintiff’s action was statute-​barred. He had also granted the first defendant leave to amend its defence. The fact of the first defendant’s deregistration was revealed in the Court of Appeal which held (at 535) that the order granting leave to amend the defence be set aside on the ground that the deregistered company was not competent to make the application for leave to amend. The Court also ordered that CTG Pty Ltd be removed as a party to the proceedings as from 27 February 1992, the date of deregistration. Consequences of a conclusion of nullity [127] The consequence of proceedings, or a step therein, being a nullity may be profound. Lord Denning explained the general principle in MacFoy (at 160): The defendant here sought to say, therefore, that the delivery of the statement of claim in the long vacation was a nullity and not a mere irregularity. This is the same as saying that it was void and not merely voidable. The distinction between the two has been repeatedly drawn. If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. It is automatically null and void without more ado, though it is sometimes convenient to have the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse. So will this judgment collapse if the statement of claim was a nullity. But if an act is only voidable, then it is not automatically void. It is only an irregularity which may be waived. It is not to be avoided unless something is done to avoid it. There must be an order of the court setting it aside and the court has a discretion whether to set it aside or not. It will do so if justice demands it but not otherwise. Meanwhile it remains good and a support for all that has been done under it … [128] In Cameron v Cole, Latham CJ said (at 584) “if an ‘order’ is null and void ab initio [t]‌here is then no real order of the court”. Accordingly, if proceedings are a nullity, there is no jurisdiction to amend them because “[i]n effect, no proceeding was ever issued, and there is nothing to amend”: Prior v Hannaford [1970] VR 772 (at 778). … Irregularity provisions [137] The severe consequences which flowed from the conclusion that the originating process in Re Pritchard was a nullity led to the introduction in England of a new RSC O 2 rr 1 and 2, the substance [10.210]  565

Civil Procedure in New South Wales

Deveigne v Askar cont. of which, as Master Allen explained in Rust v Barnes [1980] 2 NSWLR 726 (at 730) was adopted in New South Wales by s 81 of the Supreme Court Act 1970 [s 63 CPA], which is in substantially similar terms to s 159 of the District Court Act. [138] At the time the proceedings were commenced, and up to and including the hearing before Bishop DCJ, s 159 of the District Court Act 1973 relevantly provided: … Section 159 was repealed on the coming into force of the Civil Procedure Act 2005, s 63 of which deals with “Directions with respect to procedural irregularities” in similar terms. [139] The new English RSC O 2 r 1 was considered in Harkness v Bell’s Asbestos and Engineering Ltd [1967] 2 QB 729 (at 735), where Lord Denning MR (with whom Diplock and Russell LJJ agreed) said: This rule should be construed widely and generously to give effect to its manifest intentions. I think that any application to the court, however informal, is a “proceeding”. There were “proceedings” in being at the very moment that the plaintiff made his affidavit and his solicitor lodged it with the registrar … This new rule does away with the old distinction between nullities and irregularities. Every omission or mistake in practice or procedure is henceforward to be regarded as an irregularity which the court can and should rectify so long as it can do so without injustice. [140] The operation of s 81 of the Supreme Court Act, in particular, the expression “in the purported commencement of any proceedings” was considered in Australian Coastal Shipping Commission v Curtis Cruising Pty Ltd (1989) 17 NSWLR 734 (at 752–​753) by Priestley JA (with whom Samuels JA agreed). His Honour inferred from the speed with which the new rule emerged after Re Pritchard that “one of the objects of the words ‘purporting to begin’ was Upjohn LJ’s class (ii) nullity”. He then referred, with apparent approval to the passage I have cited from Harkness v Bell’s Asbestos and Engineering Ltd and said: The incorporation of the new English rule into the Supreme Court Act 1970 as s 81 should be taken, in my opinion, to have been done with the intention that it should be construed by New South Wales judges in the wide and generous way laid down in Harkness in 1966. [141] Subsequent cases have adopted the “wide and generous” approach to irregularity provisions: see Italiano v Carbone & Ors [2005] NSWCA 177 at [17] per Spigelman CJ. It should be noted, however, that they are intended to deal with procedural irregularities, not jurisdictional errors of a fundamental kind, such as an ultimate decision made by a decision-​maker who did not have the capacity to exercise the statutory power: Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557 at [97] per Spigelman CJ (Tobias JA agreeing). … Conclusion [172] NRMA did not contest the proposition that proceedings commenced in the name of a non-​ existent person were a true nullity, suffering from the fundamental defect referred to in Re Pritchard; and see too Attorney General of New South Wales v World Best Holdings Ltd. In my view despite NRMA’s submission that the proceedings should only be characterised as irregularly commenced, a submission which as the following discussion reveals I conclude has some force, the orders made in the proceedings on Mr Deveigne’s application, were true nullities in this sense. [173] This conclusion is an unsatisfactory one. It means that many “steps” have been taken in the District Court which are nullities because taken in the name of a deceased person. The application for the proceedings to be dismissed for want of prosecution, and the costs order made by Garling DCJ were nullities because made in the name of a deceased person. A Certificate of Judgment has been entered which is as much use as the “dog licence” to which Danckwerts LJ referred in Re Pritchard. The order Gibson DCJ purported to make displacing the costs order in favour of Mr Deveigne and replacing it with one in favour of NRMA was also a nullity because the application was made in the 566 [10.210]

Amendment, Mistakes and Adjournments  Chapter  10

Deveigne v Askar cont. deceased’s name. It is not to point, therefore, that the respondent did not appeal from Gibson DCJ’s order. It had no effect: Pelechowski v The Registrar Court of Appeal (NSW); MacFoy. [174] Further contrary to her Honour’s view, it was necessary for NRMA to be a party to obtain the benefit of the costs order; but even if her Honour had been disposed to join NRMA pursuant to DCR Pt 7 r 8, that joinder would only have taken effect on 15 April 2004, the date of the hearing before her Honour. [175] The dismissal order was, in my view, effective however, as it was an order the court could make of its own motion: DCR Pt 18 r 3. [176] This does not have the consequence, however, that the proceedings themselves were a nullity. It is appropriate to consider the position had NRMA realised at the outset the significance of the Statement of Claim naming the deceased as the defendant. [177] The authorities concerning proceedings against deceased persons being a nullity all related to proceedings where the deceased was the sole defendant. In this case, the deceased was the nominal defendant, the real defendant was NRMA: McCann, Lawford v Hosth (1974) 5 ALR 57. That fact was implicitly recognised by the requirement that the statement of claim be served both on the defendant and the defendant’s insurer: DCR Pt 24C r 3(1). [178] The statement of claim did not, as it was obliged to do (DCR Pt 5 r 2) contain the name of the defendant; Mr Deveigne was deceased; he had no legal personality: Piggott. Failure to serve the proceedings on him constituted partial non-​compliance with DCR Pt 24C r 3(1); the proceedings were properly served on NRMA in accordance with that rule. There was, in the circumstances, a failure to comply with the rules which, by virtue of s 159 [CPA s 63], was to be treated as an irregularity, not a nullity. This conclusion is consistent with the contemporary approach against treating irregularities as anything more than that, and against treating proceedings as void or as a nullity because of a defect or irregularity: Griffiths v ANZ Banking Group Ltd [2002] SASC 250; (2002) 83 SASR 491 per Doyle CJ (at [51]); see also Stone v ACE-​IRM Insurance Broking Pty Ltd [2003] QCA 218; [2004] 1 Qd R r 173 (at [7]‌) per McPherson JA, (at [21]) per McMurdo J (with whom McPherson JA and Holmes J agreed); Smart v Stewart (1992) 107 FLR 119 (at 124) per Angel J. [179] Thus, unlike Dawson, Foster and Piggott, there was a “real” defendant in existence, the NRMA, which was served, although not named as a party. [180] The commencement of the proceedings, therefore, at least engaged the jurisdiction of the District Court to determine whether it had jurisdiction to make any order having regard to their constitution: KBRV. In my view, the District Court could have entertained a motion brought by NRMA to be joined as a party. It was the real defendant, and its entitlement to be joined could be inferred from the combination of provisions of the MA Act to which I have referred. … [181] It was open to the District Court [to] join NRMA as a party pursuant to the DCR Pt 7 r 8 as a party whose joinder was necessary to ensure that all matters in dispute in the action to be effectually and completely determined and adjudicated upon, at least to determine whether the proceedings should be re-​constituted, for example to join the Public Trustee or to continue against the NRMA. [182] If the Court had joined NRMA pursuant to DCR Pt 7 r 8, its joinder would have dated from the filing of the originating process amended so as to add it as a party: DCR Pt 7 r 11 r (3) (UCPR 6.28). [183] In the present case Mr Davies appeared to accept that in order for the NRMA to gain the benefit of the original costs order, its joinder had to date from the service of the Statement of Claim. The Rules preclude the addition of the NRMA as a party having that effect as the motion to add NRMA as a party was only filed in this Court. I should add, that the Court cannot look to s 159 to override the operation of DCR Pt 7 r 11(3): Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 723 per Gleeson CJ (with whom Clarke JA agreed). [184] The position would be different if it was possible to substitute NRMA as a party pursuant to DCR Pt 11(1)(d). However that rule depends on a party being substituted for “another party or former party”, which cannot apply here. [10.210]  567

Civil Procedure in New South Wales

Deveigne v Askar cont. [185] However it may be questionable whether it was necessary for NRMA’s joinder to date from the service of the Statement of Claim. There are authorities which permit costs orders to be made in favour of non-​parties: see Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; (2004) 48 ACSR 681; Knight v F P Special Assets Ltd (1992) 174 CLR 178; further the indemnity costs rule does not preclude an assessment of cost where the party seeking the assessment is only a nominal party: Dyktynski v BHP Titanium Minerals Pty Ltd [2004] NSWCA 154; (2004) 60 NSWLR 203. [186] These cases support the proposition that despite the fact a “real” party is joined as in this case on appeal, it would still be open to give it the benefit of a costs order, albeit not the one which was a nullity. [187] The question is whether this Court should exercise its discretion to make such an order. In my view it should not.



ADJOURNMENTS Spencer v NSW Minister for Climate Change and the Environment [10.220]  Spencer v NSW Minister for Climate Change and the Environment [2010] NSWCA 75 McColl JA [33] The approach pursuant to which a court would accede even to a late application for an adjournment of legal proceedings which could be accommodated by an appropriate order for costs, in the absence of irreparable prejudice (Stivactas v Michaletos (No 1) [1993] NSWCA 256 per Kirby P (Clarke JA agreeing; Cripps JA dissenting)) is long gone. There is no “right” to an adjournment: cf Aon (at [96], [99]) per Gummow, Hayne, Crennan, Kiefel and Bell JJ.



Civil Procedure Act 2005 (NSW) [10.230]  Civil Procedure Act 2005 (NSW) s 66 66 Adjournment of proceedings (cf Act No 11 1970, s 75) (1)

Subject to rules of court, the court may at any time and from time to time, by order, adjourn to a specified day any proceedings before it or any aspect of any such proceedings.

(2)

If a judicial officer is not available at the time appointed for the hearing of any proceedings, a registrar may adjourn, to a later time on the same day or to a later specified day, any matters listed for hearing by the judicial officer at the appointed time.

 [10.240] Section 66 of the CPA provides the court with discretion, in appropriate circumstances,

to grant an adjournment of proceedings or any aspect of proceedings. Section  66 specifies 568 [10.220]

Amendment, Mistakes and Adjournments  Chapter  10

the grant of an adjournment of proceedings to a “specified day”. In view of the overriding purpose principles governing case management it would not ordinarily be proper to adjourn a matter indefinitely. “When an adjournment is granted, directions should be given to ensure, as far as possible, that the matter will be ready to proceed when next listed.”7 The fact that both parties consent to the adjournment does not mean that an adjournment will necessarily be granted. “[T]‌he parties have no right to control the procedures of the court.”8 The power to grant an adjournment must be exercised in accordance with the overriding purpose principles of the CPA and the UCPR that facilitate the just, quick and cheap resolution of the real issues in the proceedings: see CPA s 56(1). It should be remembered that s  58(1)(a)(ii) refers specifically to orders granting an adjournment and as a consequence the court will take into account the dictates of justice by reference to s 58(2) and thereby ss 56 and 57 of the CPA. It will also consider the effect of an adjournment on court resources; the competing claims of litigants in other cases awaiting hearing in the particular list; the working of the listing system of the particular court or list; and the importance in the proper working of that system of adherence to dates fixed for hearing. If an adjournment is granted, the party whose conduct is responsible for the adjournment is usually ordered to pay the costs incurred by other parties as a result of the adjournment.

Bank of Western Australia v Callipari [10.250]  Bank of Western Australia Ltd v Callipari [2011] NSWSC 138 GARLING J Ex tempore [1]‌In August 2007, Jason Callipari borrowed about $630,000 from the Bank of Western Australia Ltd under a Home Loan Facility. [2]‌A company of which he was the sole director and shareholder, J. Callipari Property Group Pty Ltd, borrowed about $2.5M on a Business Loan Facility from the Bank. [3]‌The Home Loan was secured by a company guarantee which was itself secured by a mortgage over Company property both in NSW and Victoria. The company’s loan was secured by the same mortgages, and also by a guarantee from Mr Callipari. Mr Callipari’s guarantee was secured by mortgages over his property in NSW and Victoria. [4]‌Both loans went into default during 2008. [5]‌The Bank now claims judgment for possession of each of the secured properties and for a monetary sum of an amount over $3.2M. [6]‌On 17 December 2010 the court fixed the present proceedings for a final hearing commencing on 7 March 2011. That order was made with the consent of the solicitors for the defendants. [7]‌On that day Kirby J relevantly made two orders. They were: (a)

an order that the defendants file and serve a sworn defence to the Bank’s amended statement of claim on or before 4 pm on 31 January 2011; and

(b)

an order that the defendants file and serve any affidavits upon which they intended to rely at the final hearing.

7 8

See Civil Trials Bench Book, Judicial Commission of New South Wales, Adjournment: http://​www.judcom. nsw.gov.au/​publications/​benchbks/​civil/​adjournment.html. See, for example, AvSuper Pty Limited v Commonwealth Managed Investments Limited (No 2) [2011] NSWSC 427 at [3]‌. [10.250]  569

Civil Procedure in New South Wales

Bank of Western Australia v Callipari cont. [8]‌Kirby J in making those orders made it plain to the solicitor for Mr Callipari and the Company that he intended that, by giving them to the end of January 2011 to file their defence and the affidavits in support of that defence, he was giving them “ … a final opportunity … the axe is about to descend … to articulate the defence …”. [9]‌The period allowed by the court for these documents to be filed by the defendants was, having regard to the history of the proceedings in the court, a generous one. [10] The defendants did not comply with these orders within the time allowed, nor have they sought to file these documents at any time since the expiry of the period allowed by the court. [11] On 3 March 2011, the matter came before Latham J. Mr Mitchell, solicitor on behalf of Mr Callipari and the Company, made an application for an adjournment of the final hearing but did so without seeking to file a notice of motion, or any affidavit in support, as evidence of any basis for an adjournment. Her Honour declined to grant the adjournment but indicated that the defendants were free to renew their application when the matter was listed for hearing on 7 March 2011. [12] Her Honour also indicated that if any application was to be made that the court would need to be provided with sworn evidence in support. [13] At the commencement of the proceedings on 7 March 2011, Mr Callipari appeared in person for himself and sought leave to appear for the Company. He applied for an adjournment. He provided no affidavit in support of that application, nor did he provide any sworn evidence to support it. That application was, for the reasons then articulated, refused. [14] The Bank then read and tendered the evidence upon which it relied for the orders which it sought. At the conclusion of the evidence, which was admitted largely without objection, Mr Callipari again sought an adjournment. In the circumstances which then existed, I adjourned the proceedings until 10.00 am on Wednesday, 9 March 2011 and made orders requiring Mr Callipari to file a defence and any affidavits upon which he relied in support of that defence by 5.00 pm on Tuesday 8 March 2011. It was made very clear to Mr Callipari at that time what would happen if he did not comply with the court’s order. [15] On 8 March 2011 Mr Callipari filed an affidavit. He did not file a defence. [16] On 9 March 2011, Mr Mitchell, solicitor, appeared for the defendants. He made a further application for an adjournment of the hearing. That application was opposed by the Bank. Mr Mitchell did not have available any evidence which explained why it was that an adjournment application was being made during the course of the final hearing of the proceedings at a time after all of the evidence for the Bank had been read and tendered, except for the affidavit as to the up to date state of indebtedness. Mr Mitchell pointed to the fact that his client had been unrepresented on Monday as a basis as to why the application was being renewed. [17] The granting of an adjournment of the hearing of proceedings is an exercise of the powers of the court in accordance with the Civil Procedure Act 2005. Whenever powers granted by that Act are exercised the court is obliged by s 56(2) of the Civil Procedure Act to give effect to the overriding purpose specified by s 56(1) of the Act, namely, “to facilitate the just, quick and cheap resolution of the real issues in the proceedings”. [18] It is important to note that a party to civil proceedings in this court 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 the directions and orders of the court.” (See s 56(3) of the Civil Procedure Act). [19] The High Court of Australia in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 has made it plain that in considering an application which has the effect of adjourning the hearing of a civil trial, a court should have regard to and take into account a range of matters, including: (a)

the need to maintain public confidence in the judicial system;

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Bank of Western Australia v Callipari cont. (b)

given that courts are a publicly funded resource, inefficiencies in the use of that resource arising from adjournments or vacation of a final hearing are to be avoided;

(c)

whether there is any irreparable element of unfair prejudice in unnecessarily delaying proceedings: see French CJ at [5]‌; and

(d)

the specific terms of the legislation or rules of court which are called upon as a source of power for the granting of the orders sought: See [97] and [98] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.

[20] I note in particular in para 98 of that judgment their Honours say this: [A]‌n 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. [21] I also observe the remarks of Heydon J at paras 137 and 138, where his Honour notes that it is in the public interest generally, and in the interests of parties in particular, for commercial litigation of the kind this court is presently engaged in hearing to be determined as soon as is practicable. [22] I turn then to the particular facts and circumstances of this case. The Bank has established on the evidence tendered to date that the defendants owned a series of properties which were in the general area of and surrounding Mildura in Victoria. Some of the properties were in New South Wales but most were in Victoria. The properties were of various kinds and had various usages, including Mr Callipari’s principal place of residence, the workshops at which he undertook repairs of motor vehicles and other engineering works, rural land upon which grapes were grown, vacant rural land, industrial buildings including factory warehouse type premises, and residential investment properties. [23] I am satisfied that the Bank has established that Mr Callipari was no neophyte in the business of property investment. [24] On 9 August 2007, Mr Callipari entered into a BankWest Lite Plus Home Loan which resulted on 22 August 2007 in an advance of $637,600 by the Bank to Mr Callipari. On 9 August 2007 the Company accepted an offer as a consequence of which the Bank provided financial accommodation in the form of a Business Edge Facility to a limit of $2,562,400. [25] On 22 August 2007, the Bank advanced $2,548,870.50 to the Company pursuant to the Business Loan Agreement. [26] Under the Home Loan Agreement, Mr Callipari was obliged to pay principal and interest in a timely fashion for the period of 30 years fixed by the loan agreement. In the event of default, including the failure to pay either principal or interest, the Bank was entitled to demand immediate payment of all amounts owing under the Home Loan Agreement. [27] The Business Loan Agreement, which was an interest only agreement, established a loan facility for a period of five years and obliged the Company to pay the interest payments on time. A further term of that facility was that the Company was not to exceed the facility limit of $2,562,400. [28] The company entered into a guarantee indemnity in favour of the Bank with respect to the Home Loan Agreement and granted a mortgage over land in both Victoria and New South Wales to support such guarantee. The loan account statements provided by the Bank with respect to the Business Loan Account demonstrate that the loan was first disbursed on 22 August 2007 in accordance with the Company’s discretion. [29] It also demonstrates that the first two interest payments in September and October 2007, whilst they were made, were dishonoured by the paying Bank. The dishonour continued in December 2007 and January 2008. No interest payments were made in February, March, April or May 2008. [30] In June 2008, a net sum of $161,300 was deposited for the credit of the account, which had the result of bringing the arrears of the account up to date and also of permitting an excess sum of about $43,000 to be applied in reduction of the principal which was owing. [10.250]  571

Civil Procedure in New South Wales

Bank of Western Australia v Callipari cont. [31] The authority for this application of funds was put in dispute by Mr Mitchell’s submissions. On the basis of the evidence which is before this court at this stage, I would be satisfied to the extent necessary that this application of funds accorded with what was agreed between Mr Callipari and the Bank. However, if I be wrong in this conclusion, it seems to me that the financial difference in the net position of Mr Callipari and the Company at the present date would be very small indeed. [32] After June 2008, no payments were made of any kind whatsoever by Mr Callipari or the Company on the business loan. The home loan statements put into evidence by the Bank demonstrate that the home loan was first advanced in August 2007. Payments of interest and principal commenced to be made in September 2007. The October 2007 payment of principal and interest was dishonoured, as was the payment made in December 2007, January and February 2008. No payment at all was made after February 2008 until 11 June 2008, when a sum of $35,000 was paid which had the effect of bringing the account back into order. [33] Two further payments of principal and interest were due in June and July 2008. The only payment made with respect to those was the sum of $5,000 on 28 July 2008, which was inadequate to pay for those two monthly accruals. Thereafter no further payment has been received by the Bank on the home loan account. [34] This conduct was sought to be explained by the defendants on 27 October 2008 when their solicitors, Eggleston Mitchell, wrote to the Bank’s lawyers and informed the Bank, on behalf of Mr Callipari and the Company, that “Our client has stopped making repayments on the loan not because he is in financial difficulties but because he has lost confidence in the personnel at the bank”. [35] Self-​evidently, this excuse is not a proper basis for non-​payment of financial obligations. [36] Mr Mitchell has sought to articulate circumstances which he submits would amount to an arguable defence. I would summarise these circumstances in this way: (a)

The entire transaction was entered into by Mr Callipari and the Company and, as a consequence of conduct which would give rise to a finding of a breach of s 51 of the Trade Practices Act 1974 (Cth) [sic], now the Australian Consumer Law, and the availability of relief under that Act directed to setting aside the transaction in whole or in part; and

(b)

The Bank has not properly accounted for the receipt by it in June 2008 of moneys from the sale by the Company of a water entitlement.

[37] Other matters were raised in submission which did not have sufficient particularity to enable me to understand what defence, if any, existed by reason of those matters. [38] The evidence for the Bank demonstrated that the realistically realisable values of the secured properties were less than the total outstanding debt claimed by the Bank to be owing to them. Further delay in the proceedings would only exacerbate that position. There was no evidence for Mr Callipari or the Company of his or its current financial position. It was not submitted that he or it had other available assets which would alleviate this position of which the Bank has given evidence, nor did Mr Callipari or the Company offer to bring any money into court to alleviate the position of the Bank in the event that an adjournment were granted. This evidence satisfies me that the Bank would suffer ongoing prejudice if the adjournment were granted, which is unlikely ever to be able to be remediated. [39] The defences articulated by Mr Mitchell orally, to which I earlier made reference, are not, to my mind, so far as I can discern them, defences to the Bank’s claim. Rather, they may, if they can be established, amount to a basis for a cross-​claim against the Bank for relief of a general equitable kind or else relief in accordance with statutory entitlement. No such cross-​claim has ever been filed. [40] In summary, this application for adjournment is made at a very late stage. No explanation is proffered which is sufficient to explain why the application has only been lately made. The defences which it is argued ought to be allowed to be pleaded are not, upon examination of the limited

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Amendment, Mistakes and Adjournments  Chapter  10

Bank of Western Australia v Callipari cont. material provided, likely to be established as defences to the Bank’s claim, although they may be able to be pleaded as a cross-​claim. [41] The Bank has established a strong case on the evidence so far led for the grant of the relief sought in the principal claim. The defendants have had abundant opportunity to file a defence and affidavits in support and have been consistently in breach of the court’s orders in that respect. To adjourn the matter now would adversely impact on the listing of other matters in the court and the efficiency with which the court is able to attend to the demands of its other work. An adjournment now would not further the overriding purpose set out in s 56 of the Civil Procedure Act and the Bank would suffer irremediable prejudice by an adjournment. [42] In all of those circumstances, I am not satisfied that it is in the interests of justice to adjourn this hearing and I refuse that application. Orders (1)

Application for adjournment refused.



[10.250]  573

CHAPTER 11

Service of Documents [11.10] INTRODUCTION......................................................................................................... 575 [11.20] SERVICE OF DOCUMENTS GENERALLY........................................................................ 576 [11.30] Uniform Civil Procedure Rules 2005 (NSW) r 10.1.................................... 576 [11.50] Uniform Civil Procedure Rules 2005 (NSW) r 10.5.................................... 576 [11.60] Uniform Civil Procedure Rules 2005 (NSW) r 35.8.................................... 577 [11.70] SERVICE OF ORIGINATING PROCESS........................................................................... 578 [11.80] Civil Procedure Act 2005 (NSW) s 63.................................................... 579 [11.90] Uniform Civil Procedure Rules 2005 (NSW) r 6.2..................................... 580 [11.100] Personal service........................................................................................... 580 [11.110] Uniform Civil Procedure Rules 2005 (NSW) rr 10.20, 10.21....................... 581 [11.130] Service constituting personal service........................................................... 583 [11.140] Uniform Civil Procedure Rules 2005 (NSW) rr 10.9–​10.12, 10.22, 10.26........ 584 [11.150] Service by agreement, acknowledgment or undertaking............................. 587 [11.160] Uniform Civil Procedure Rules 2005 (NSW) r 10.6.................................... 587 [11.170] Acceptance of service by solicitor................................................................ 587 [11.180] Uniform Civil Procedure Rules 2005 (NSW) r 10.13.................................. 587 [11.190] Substituted and informal service................................................................. 588 [11.200] Uniform Civil Procedure Rules 2005 (NSW) r 10.14.................................. 589 [11.220] Flo Rida v Mothership Music................................................................ 590 [11.240] Bulldogs Rugby League Club v Williams.................................................. 593 [11.260] Nash v Stewart................................................................................ 595 [11.270] Confirmation of informal service................................................................. 597 [11.280] Waiver of objection to service...................................................................... 597 [11.280] Uniform Civil Procedure Rules 2005 (NSW) r 10.19.................................. 597 [11.290] Service beyond the jurisdiction.................................................................... 597 [11.300] Service outside New South Wales but within Australia................................. 597 [11.330] Service and Execution of Process Act 1992 (Cth) s 20............................... 598 [11.340] Service under UCPR r 10.6.......................................................................... 599 [11.350] Uniform Civil Procedure Rules 2005 (NSW) r 10.6.................................... 599 [11.360] Service outside Australia under UCPR Pts 11 and 11A.................................. 600 [11.390] Uniform Civil Procedure Rules 2005 (NSW) Sch 6..................................... 600 [11.410] Uniform Civil Procedure Rules 2005 (NSW) reg 11.1................................. 603 [11.430] Agar v Hyde.................................................................................... 604 [11.450] Uniform Civil Procedure Rules 2005 (NSW) reg 11.8A............................... 607 [11.470] Uniform Civil Procedure Rules 2005 (NSW) reg 11A.3............................... 609 [11.490] Uniform Civil Procedure Rules 2005 (NSW) reg 11A.9............................... 612

INTRODUCTION [11.10]  Service of various types of documents is required by the Uniform Civil Procedure

Rules 2005 (NSW) (UCPR). For example, the rules specifically require service of the originating process, affidavits and expert reports. Service of particular documents in civil procedure can also be the subject of a specific court order or direction. For instance, the court may make a direction that the parties serve objections to expert reports on a particular date. There are various methods of service (personal service or, service by post, email, fax or DX).1 1

DX Mail is an alternative mail network for hard copy mail. The DX service is used by members in the legal, financial, insurance, government, property and accounting industries. [11.10]  575

Civil Procedure in New South Wales

The method and manner of effecting service can be required by the UCPR or may be the subject of a court order/​direction. Originating process, for example, is generally required to be served personally, although under certain circumstances the UCPR allow other means of service to be considered equivalent to personal service. The court also has power to make an order for substituted service, as when it orders that service be effected by Facebook (which is not a method of service specifically provided for in the rules). This chapter discusses the requirements and methods of service. It also considers service of originating process outside New South Wales, both within and outside Australia.

SERVICE OF DOCUMENTS GENERALLY [11.20]  A party who files a document must as soon as practicable serve copies on each other

active party: see UCPR r 10.1 (extracted at [11.30]). A document is filed when it is lodged at the court registry at which time it is stamped with the court seal. A document can also be filed in court during the proceedings. The rules can also require the time for service in general terms. For example, the rules require affidavits that a party intends to use (but has not filed) be served not later than a “reasonable time” before their intended use:  see UCPR r  10.2. Otherwise, the affidavit may not be used without leave of the court. Service can be proved by filing an affidavit of service in accordance with r 35.8 (see [11.60]).

Uniform Civil Procedure Rules 2005 (NSW) [11.30]  Uniform Civil Procedure Rules 2005 (NSW) r 10.1 Part 10 –​Service of Documents Generally Division 1 –​Service generally 10.1 Service of filed documents (cf SCR Pt 15, r 28) (1)

Unless the court orders otherwise, a party that files a document must as soon as practicable serve copies of the document on each other active party.

(2)

In the case of proceedings in a Local Court, an originating process may, and a defence must, be served on the other parties, on behalf of the party by whom it was filed, by an officer of the Local Court.

Note: See rules 10.7 and 10.8 as to how service is to be effected by a court.

 [11.40] There are various ways of serving a document. See the various methods set out in

UCPR r 10.5 (extracted at [11.50]).

Uniform Civil Procedure Rules 2005 (NSW) [11.50]  Uniform Civil Procedure Rules 2005 (NSW) r 10.5 Division 5 –​Manner of service 10.5 The various methods of service (cf SCR Part 9, rules 3 and 4; DCR Part 8, rules 3, 9 and 12; LCR Part 7, rules 3, 9 and 12) (1)

Subject to these rules, a document may be served on a person:



(a)

by means of personal service, or



(b)

by posting a copy of the document, addressed to the person:

576 [11.20]

Service of Documents  Chapter  11

Uniform Civil Procedure Rules 2005 (NSW) cont.

(i)

to the person’s address for service, or



(ii)

if the person is not an active party, to the person’s business or residential address, or



(c)

by leaving a copy of the document, addressed to the person:



(i)

at the person’s address for service, or



(ii)

if the person is not an active party, at the person’s business or residential address,

with a person who is apparently of or above the age of 16 years and apparently employed or residing at that address, or

(d)

in the case of service on a corporation, by serving the document on the corporation in any manner in which service of such a document may, by law, be served on the corporation.

(2)

In the case of a person having an address for service that is a solicitor’s office address, service of a document on the person may also be effected:



(a)

if the notice advising the address for service includes a DX address, by leaving a copy of the document, addressed to the solicitor, in that DX box at that address or in another DX box for transmission to that DX box, or



(b)

if the notice advising the address for service includes a fax number, by faxing a copy of the document to that number, or



(c)

if the notice advising the address for service includes an electronic service address, by transmitting an electronic copy of the document to that address.

(3)

Unless the contrary is proved, the time at which a document is taken to have been served is:



(a)

in the case of a document that is left in a DX box in accordance with subrule (2)(a), at the end of the second day following the day on which the copy is so left, or



(b)

in the case of a copy of a document that is faxed in accordance with subrule (2)(b), at the end of the first day following the day on which the copy is so faxed.

See clause 13 of Schedule 1 to the Electronic Transactions Act 2000 as to when an electronic copy of a document is taken to have been delivered to an electronic mail address. See also Division 3 of this Part as to how personal service is to be effected.



Uniform Civil Procedure Rules 2005 (NSW) [11.60]  Uniform Civil Procedure Rules 2005 (NSW) r 35.8 Part 35 –​Affidavits 35.8 Affidavit of service not to annex copies of filed documents (cf SCR Part 38, rule 7A; DCR Part 30, rule 10; LCR Part 25, rule 11) (1)

An affidavit of service of a document that has been served must clearly identify the document, but must not annex a copy of the document unless the document has not been filed.

(2)

An affidavit of service must contain:



(a)

a statement as to when, where, how and by whom service was effected, and

[11.60]  577

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

a statement, using as nearly as practicable the actual words used by the person to whom the process was delivered, as to what, if anything, that person said, on the occasion of service, concerning the service or the subject matter of the proceedings, and



(c)

a statement that the deponent is over the age of 16 years, or is of a named class of persons who by virtue of their status, occupation or otherwise must be over that age.



SERVICE OF ORIGINATING PROCESS [11.70]  “Service” is the term used for methods of alerting people that there are proceedings

against them. Service performs a number of important functions. The first is in relation to procedural fairness or natural justice.2 If the plaintiff is going to ask the court to make orders that will affect the defendant, fairness requires that the defendant should be informed of the nature of the action against them and the orders that the plaintiff is seeking. The second is that service establishes the court’s jurisdiction for actions in personam (actions against a person to compel the performance of an act such as the payment of money or the delivery of goods).3 A court cannot exercise any of its powers unless it has jurisdiction over the defendant. This is notwithstanding that there are some procedures that are available ex parte (with only one party present and without service of process or notification to the other party). For example, search orders pursuant to UCPR r 25.19 are made on an ex parte basis because they are made in urgent circumstances in which notice of the order could potentially destroy its effectiveness. The originating process and copies of it are usually filed in the court registry and stamped with the court seal (after satisfying any requirement to pay a filing fee). The original is left with the registry and a stamped copy is usually served on the defendant. An originating process must be served personally on any defendant (UCPR r 10.20(2)). This is because the main purpose of service is to bring proceedings to the attention of the defendant. Proper notice of proceedings is a requirement of natural justice and due process. An “originating process” is defined in the UCPR Dictionary, by reference to s 3 of the Criminal Procedure Act 2005 (NSW) (CPA), as “the process by which proceedings are commenced, and includes the process by which a cross-​ claim is made”. This includes the statement of claim or summons by which proceedings have been commenced, and a statement of cross-​claim and a cross-​summons. Note, however, that personal service of a cross-​claim is not required where the cross-​defendant is already an active party in the proceedings: see r 9.6(1). Rule 6.2(4) (extracted at [11.90]) provides the time for service of originating process after filing. Note that the court may, by order, extend or abridge any time fixed by the rules (r 1.12).

2

3

See, for example, the High Court decision in Annetts v McCann (1990) 170 CLR 596 at [7]‌in which the rules of natural justice were applied to a coronial inquiry so that a Coroner could not lawfully make any finding adverse to the interests of a person without first giving them the opportunity to make submissions against the making of such a finding (Mason CJ, Deane and McHugh JJ). Laurie v Carroll (1958) 98 CLR 310.

578 [11.70]

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In Hunter v Hanson [2014] NSWCA 263, the New South Wales Court of Appeal by majority (McColl and Macfarlan JJA; Emmett JA dissenting) dismissed an application for leave to appeal against the decision of the District Court to extend the time for service of a statement of claim. The respondent in the appeal had sued the applicant for defamation, and had decided to delay service of the statement of claim for two reasons: first, to wait for the delivery of an unconnected Court of Appeal decision with possible implications concerning absolute privilege on similar facts; and second, to avoid aggravating the situation with the applicant in respect of whose conduct the respondent had sought an apprehended personal violence order. The person serving the defendant (usually a professional process server) then completes an affidavit attesting to the fact that the defendant has been served. This is commonly known as an “affidavit of service”. UCPR r 35.8 identifies the important details that must be contained in the affidavit of service:  a statement as to when, where, how and by whom service was effected; a statement as near as practicable to the actual words used by the person to whom the process was delivered, and a statement that the person making the affidavit (the deponent) is over the age of 16 years. If the defendant does not file an appearance or a defence within a time specified on the originating process after process has been served, the plaintiff may be able to obtain a default judgment: see Chapter 15. Service that does not comply with the UCPR could result in the setting aside of default judgment unless the court overlooks the improper service. Section 63 of the CPA gives the court power to treat any failure to comply with the Act or the rules of the court as a procedural irregularity and to make orders confirming the improper service. For further discussion of s 63, see Chapter 10.

Civil Procedure Act 2005 (NSW) [11.80]  Civil Procedure Act 2005 (NSW) s 63 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)

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.

(2)

Such a failure:



(a)

is to be treated as an irregularity, and



(b)

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

(3)

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,



(b)

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

(4)

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.

 [11.80]  579

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) [11.90]  Uniform Civil Procedure Rules 2005 (NSW) r 6.2 6.2 How proceedings commenced (cf SCR Part 4, rules 1 and 3, Part 7, rule 7; DCR Part 5, rules 5 and 6; LCR Part 5, rule 1) (1)

Subject to these rules, the practice notes and any other rules of court, a person may commence proceedings in the court by filing a statement of claim or a summons.

(2)

Subject to these rules, the practice notes and any other Act or law, the plaintiff may choose whether to commence proceedings by statement of claim or by summons.

(3)

Originating process must be served on each defendant.

(3A)

An originating process served in accordance with subrule (3) must include the following:



(a)

the seal of the court on the first page (whether an original sealed copy or a photocopy of a sealed copy),



(b)

the case number or unique identifier,



(c)

the listing date (if allocated by the court registry).

(4)

Subject to subrule (5), originating process is valid for service:



(a)

in the case of proceedings in the Supreme Court, the Land and Environment Court, the Dust Diseases Tribunal or the Local Court, for 6 months after the date on which it is filed, or



(b)

in the case of proceedings in the District Court:



(i)

for 6 months after the date on which it is filed:



(A)

if it is a statement of claim seeking relief in relation only to a debt or other liquidated claim, or



(B)

if the defendant (or at least one of the defendants) is to be served outside New South Wales, or

(5)

(ii)

for one month after the date on which it is filed, in any other case.

Failure to serve originating process within the time limited by these rules does not prevent the plaintiff from commencing fresh proceedings by filing another originating process.

 Personal service [11.100] The originating process usually must be served on the defendant personally:  see

UCPR r 10.20(2). Rule 10.21 provides how personal service is to be effected. See Chapter 9 at [9.20] for the definition of an originating process. The originating process and all further pleadings are to contain an address for service. After the originating process is personally served, other documents usually are not required to be personally served. They may be posted to the recipient’s address or left at his or her address with a person apparently above the age of 16 years and living at the address. If a party has an address for service that is an address of a solicitor’s office, service on that party of all further documents may be by way of their DX address, fax number or electronic service address: see r 10.5. Other documents required to be served personally under the UCPR are: • Notice of Motion: A notice of motion is required to be served personally on a person who is not a party to the proceedings or who is a party, but not an active party: r 18.5. 580 [11.90]

Service of Documents  Chapter  11

• Copy of a judgment before committal or sequestration: A sealed copy of the judgment must be served personally on the person bound by the judgment: r 40.7. • Subpoena:  Subpoenas must be personally served on the addressee:  r  33.5. However, r  10.20(2)(d) permits service by post of subpoenas for production in proceedings in the District Court or the Local Court.

Uniform Civil Procedure Rules 2005 (NSW) [11.110]  Uniform Civil Procedure Rules 2005 (NSW) rr 10.20, 10.21 Division 3 –​Personal service 10.20 Personal service required only in certain circumstances (cf SCR Pt 9, rr 1 and 2; DCR Pt 8, r 3; LCR Pt 7, rr 3 and 20) (1)

Any document required or permitted to be served on a person in any proceedings may be personally served, but need not be personally served unless these rules so require or the court so orders.

(2)

Except as otherwise provided by these rules:



(a)



(b)

any originating process, and any order for examination or garnishee order, in proceedings in the Supreme Court, the Industrial Relations Commission (including the Commission when constituted as the Industrial Court), the Land and Environment Court, the District Court or the Dust Diseases Tribunal must be personally served, and any originating process in the Local Court must be served in one of the following ways:



(i)

it may be personally served on the defendant,



(ii)

it may be left, addressed to the defendant, at the defendant’s business or residential address, with a person who is apparently of or above the age of 16 years and apparently employed or residing at that address,



(iii)

if served by the Local Court, it may be sent by post, addressed to the defendant, to the defendant’s business or residential address in an envelope marked with a return address (being the address of the Local Court but not so identified), and



(c)

any order for examination, garnishee order or subpoena for attendance in proceedings in the Local Court must be served in one of the following ways:



(i)

it may be personally served on the person to whom it is directed,



(ii)

it may be left, addressed to the person to whom it is directed, at that person’s business or residential address, with a person who is apparently of or above the age of 16 years and apparently employed or residing at that address, and



(d)

any subpoena for production in proceedings in the District Court or the Local Court must be served in one of the following ways:



(i)

it may be served personally on the person to whom it is directed,



(ii)

it may be left, addressed to the person to whom it is directed, at that person’s business or residential address, with a person who is apparently of or above the age of 16 years and apparently employed or residing at that address,



(iii)

it may be sent by post, addressed to the person to whom it is directed, to the person’s business or residential address in an envelope marked with the return address of the party at whose request the subpoena was issued. Note: As to service by post, see section 76 of the Interpretation Act 1987.

(3)

If an envelope, posted as referred to in subrule (2)(b)(iii), is returned to the court by the postal authority as having not been delivered to the addressee: [11.110]  581

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

service of the document contained in the envelope is taken not to have been effected, and



(b)

any judgment given or entered on the basis of that service is to be set aside,

and the registrar must so advise the party by whom or on whose behalf it was posted. (4)

Service of a subpoena in accordance with subrule (2)(c)(ii) or (d)(ii) or (iii) is taken to be personal service for the purposes of rule 33.5(1).

(5)

Unless an earlier date is proved, a defendant who enters an appearance is taken to have been personally served with the relevant originating process on the date on which appearance was entered.

(6)

The provisions of this rule concerning the service of originating processes extend to the service of amended statements of claim if the defendant to be served has not filed either a notice of appearance or notice of defence.

10.21 How personal service effected generally (cf SCR Part 9, rule 3; DCR Part 8, rules 3 and 14; LCR Part 7, rules 3 and 14) (1)

Personal service of a document on a person is effected by leaving a copy of the document with the person or, if the person does not accept the copy, by putting the copy down in the person’s presence and telling the person the nature of the document.

(2)

If, by violence or threat of violence, a person attempting service is prevented from approaching another person for the purpose of delivering a document to the other person, the person attempting service may deliver the document to the other person by leaving it as near as practicable to that other person.

(3)

Service in accordance with subrule (2) is taken to constitute personal service.

 [11.120]  The defendant does not have to reside permanently in the jurisdiction to be validly

served. He or she might merely be visiting New South Wales for a short period of time and intending to leave. A court has discretion to decline to proceed if it decides that it is a “clearly inappropriate forum”.4 Personal service can be effected in one of two ways: 1.

If the person being served does not refuse to accept the document, it is validly served “by leaving a copy of the document with the person” being served. In this context, it is not necessary that the nature of the document be described to the defendant. A document can be left with the person even if the document is not taken by that person into his or her physical possession. Service was held to be valid in Ainsworth v Redd,5 where the defendant told the process server to give it to his representative who was standing next to him and afterward the defendant was heard to say: “We’d better look at these”.

2.

If the person being served does not accept the document, a copy of the originating process may be placed “in his or her presence” and the nature of the document explained to the person. In Graczyk v Graczyk,6 the requirement of placing the document in the

4 5 6

Atlasnavios Navegacao, LDA v The Ship “Xin Tai Hai” (No 2) [2012] FCA 1497; 215 FCR 265. Ainsworth v Redd (1990) 19 NSWLR 78. Graczyk v Graczyk [1955] SLR (CN) 1077.

582 [11.120]

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person’s presence was fulfilled by pushing it under a locked door. In Re Hudson; Ex parte G E Crane & Sons Ltd,7 it was satisfied by attaching the document to the front of a locked door and at the same time telling the defendant that this was occurring. As to the requirement that the nature of the document be explained, in Lawindi; Re Elkateb v Elkateb,8 Stone J said that it is not demanding and need not be done if the nature of the document is clear on its face: 13 … Although the word “nature” may be somewhat vague, it is clear that the rule is not very demanding; Re Roberts, ex parte Evans (Hill J, 25 August 1989, unreported), Re Rosenberg; ex parte Westpac Banking Corporation (Spender  J, 21  July 1993, unreported), Rogerson v Tchia (1995) 123 FLR 126. Further, the person served need not be informed of the “nature” of the document orally; Rogerson v Tchia (above). Thus if the “nature” of the document is clear on its face and the document is not placed in an envelope or otherwise concealed, r 2(2) will be satisfied. 14  … the conversation took place in a context where there was some element of assumed knowledge between the parties. In Taylor v Marmaras [1954] VLR 476 it was decided that, where the person served knew the nature of the document from past history in relation to a matter, service would be valid despite the fact that the nature of the document was not clearly stated by the process server.

In circumstances where there is violence or apprehended violence, the process server is permitted to leave the document as close as practicable to the person being served. The central purpose of ensuring service is valid is that the document is brought to the attention of the person being served. If there is any doubt that valid service has taken place, it is prudent to make an application and obtain an order for confirmation of informal service under UCPR r 10.14. Under r 10(14)(3), the court may also direct that, where steps have been taken to serve other than under an order under this rule, the person is taken to have been served on a particular date. This is understood to be if the court is satisfied that procedural fairness has been accorded to the person and that they have actually been put on notice of the claim. Service constituting personal service [11.130]  There are alternative forms of service that are taken to constitute personal service on

various legal and business entities. UCPR r 10.9 provides for service on defendants operating under an unregistered business name, while r  10.10 provides for service on defendants operating under a registered business name. Rule 10.11 provides for service on a partner in a limited partnership. For these entities, personal service is constituted by leaving the document with a person over 16  years of age at the place in which the business is carried on or by sending the document by post, addressed to the defendant at the address of the business. Rule 10.22 concerns personal service on a corporation and it can be effected by personally serving a principal officer of the corporation or by serving the document on the corporation in any other manner prescribed by law. For example, s 109X(1)(a) of the Corporations Act 2001 (Cth) provides that a document may be served on a company by “leaving it at, or posting it to, the company’s registered office”.

7 8

Re Hudson; Ex parte G E Crane & Sons Ltd (1990) 25 FCR 318. Lawindi; Re Elkateb v Elkateb (2001) 187 ALR 479; [2001] FCA 1527. [11.130]  583

Civil Procedure in New South Wales

Service of process on a person under legal incapacity is dealt with in UCPR r 10.12. The rules also address how personal service is to be effected on the Crown Solicitor (r 10.23), on judicial officers (r 10.24) and on an inmate of a correctional centre (r 10.25). An interesting occasion on which personal service can be constituted is where there is strong evidence that the person to be served is “keeping house”. This means that the person to be served remains in premises to which a process server cannot lawfully or practicably obtain access. Rule 10.26 provides for the server to affix the document to the premises and then to post a notice to the person advising them of that fact.

Uniform Civil Procedure Rules 2005 (NSW) [11.140]  Uniform Civil Procedure Rules 2005 (NSW) rr 10.9–​10.12, 10.22, 10.26 10.9 Service of process on defendant operating under unregistered business name (cf SCR Part 64, rule 3; DCR Part 46, rule 2; LCR Part 35, rule 2) (1)

This rule applies to any proceedings against a person in respect of anything done or omitted to be done by the person in the course of, or in relation to, a business carried on under an unregistered business name.

(2)

For the purposes of any such proceedings, any document may be served on the defendant, whether sued in his or her own name or under the unregistered business name:



(a)

by leaving it with a person who is apparently engaged in the business, and apparently of or above the age of 16 years, at any place at which business is carried on under that name, or



(b)

by sending it by post, addressed to the defendant, to any place at which business is carried on under that name,

whether or not the place concerned is within New South Wales. (3)

For the purposes of any such proceedings:



(a)

service of a document in accordance with subrule (2) is taken to constitute personal service, and



(b)

the place at which the document is left, or to which the document is sent by post, is taken to be the place of service of the document, and



(c)

in the case of a document sent by post, the document is taken to have been served at the end of 7 days after the day on which it was sent.

(4)

This rule does not limit any other law with respect to the service of documents.

10.10 Service of process on defendant operating under registered business name (cf SCR Part 64, rule 3) (1)

This rule applies to any proceedings against a person carrying on business under a registered business name in respect of anything done or omitted to be done by the person in the course of, or in relation to, business carried on under that name.

(2)

For the purposes of any such proceedings, any document may be served on the defendant, whether sued in his or her own name or under the registered business name:



(a)

by leaving it with a person who is apparently engaged in the business, and apparently of or above the age of 16 years, at any place at which business is carried on under that name, or



(b)

by sending it by post, addressed to the defendant:



584 [11.140]

(i)

to any place at which business is carried on under that name, or

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Uniform Civil Procedure Rules 2005 (NSW) cont.

(ii)

to the address for service of any person in whose name the business name is registered under the Business Names Act 2002,

whether or not the place concerned is within New South Wales. (3)

For the purposes of any such proceedings:



(a)

service of a document in accordance with subrule (2) is taken to constitute personal service, and



(b)

the place at which the document is left, or to which the document is sent by post, is taken to be the place of service of the document, and



(c)

in the case of a document sent by post, the document is taken to have been served at the end of 7 days after the day on which it was sent.

(4)

This rule does not limit any other law with respect to the service of documents.

10.11 Service of process on partner in limited partnership (cf SCR Part 64, rule 3A) (1)

This rule applies to any proceedings against a partner in a limited partnership (within the meaning of Part 3 of the Partnership Act 1892) in respect of anything done or omitted to be done by any person in the course of, or in relation to, a business carried on by the partnership.

(2)

For the purposes of any such proceedings, any document may be served on the defendant, whether sued in his or her own name or under the firm-​name of the partnership:



(a)

by leaving it with a person who is apparently engaged in the business, and apparently of or above the age of 16 years, at the registered office of the partnership, or



(b)

by sending it by post, addressed to the firm-​name of the partnership, to the registered office of the partnership.

(3)

For the purposes of any such proceedings:



(a)

service of a document in accordance with subrule (2) is taken to constitute personal service, and



(b)

the place at which the document is left as referred to in subrule (2)(a), or to which the document is sent as referred to in subrule (2)(b), is taken to be the place of service of the document, and



(c)

in the case of a document sent as referred to in subrule (2)(b), the document is taken to have been served at the end of 7 days after the day on which it was sent.

(4)

This rule does not limit any other law with respect to the service of documents.

10.12 Service of process on person under legal incapacity (cf SCR Part 63, rule 15) (1)

This rule applies to any proceedings in which a document is required to be served personally on a person under legal incapacity.

(2)

Personal service on a person under legal incapacity may not be effected otherwise than in accordance with this rule.

(3)

If the person under legal incapacity has a tutor in the proceedings, the document may be served on the tutor.

(4)

The document may be served on any person (including the person under legal incapacity) whom the court may, before or after service, approve.

(5)

If the person to be served is a minor and has no tutor in the proceedings, the document may be served:



(a)

on the person, but only if the person is aged 16 years or more, or [11.140]  585

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

on a parent or guardian of the person, or



(c)

if the person has no parent or guardian, on a person with whom he or she resides or in whose care he or she is.

(6)

If the person to be served is a protected person (within the meaning of the NSW Trustee and Guardian Act 2009) and has no tutor in the proceedings, the document may be served:



(a)

if the person has a manager in respect of his or her estate, on the manager, or



(b)

if the person does not have a manager, on a person with whom he or she resides or in whose care he or she is.

(7)

Subject to subrule (8), a document served pursuant to this rule must be served in the manner required by these rules in relation to documents of the same kind.

(8)

In addition to any other service required by these rules:



(a)

a judgment or order requiring a person under legal incapacity to do, or refrain from doing, any act, and



(b)

a notice of motion for the committal of a person under legal incapacity, and

(c)

a subpoena addressed to a person under legal incapacity,



must be served personally on the person. (9)

Subrule (8) does not apply to an order for interrogatories or for discovery or inspection of documents.

10.22 Personal service on corporation (cf SCR Part 9, rule 3; DCR Part 8, rule 12; LCR Part 7, rule 12) Personal service of a document on a corporation is effected: (a)

by personally serving the document on a principal officer of the corporation, or

(b)

by serving the document on the corporation in any other manner in which service of such a document may, by law, be served on the corporation.

10.26 Personal service on person who “keeps house” (cf DCR Pt 8, r 13; LCR Pt 7, r 13) (1)

If a person keeps house (that is, remains in premises to which a person attempting service cannot lawfully or practicably obtain access), the person attempting service may serve the document on the person keeping house:



(a)

by doing one of the following:



(i)

placing the document in the mail-​box for the premises,



(ii)

affixing the document to an outer door of the premises,



(iii)

if the person attempting service cannot lawfully or practicably obtain access to any such mail-​box or door, affixing the document to some part of the premises, or to some fence or wall surrounding the premises, as near as practicable to the principal door or entrance to the premises, and



(b)

within 24 hours after doing so, by posting a notice to the premises, addressed to the person keeping house, informing the person of the fact that the document has been so placed or affixed.

(2)

Service in accordance with subrule (1) is taken to constitute personal service.



586 [11.140]

Service of Documents  Chapter  11

Service by agreement, acknowledgment or undertaking [11.150] Service of any document, including originating process, may be effected “in

accordance with any agreement, acknowledgment or undertaking by which the party to be served is bound” (UCPR r 10.6). For example, a contract can stipulate an agreement that service in regard to judicial proceedings will be effected in accordance with the contract rather than the rules of court. However, such an agreement must specifically pertain to the mode of service. In Mondial Trading Pty Ltd v Interocean Marine Transport Inc,9 an agreement concerning the appropriate jurisdiction to bring a claim was held not to encompass an agreement as to mode of service. In a case where a bank (the mortgagee) commenced proceedings against the mortgagor for possession of land the subject of a mortgage due to the mortgagor’s default in payments under the mortgage, the court held that a statement of claim could be served by leaving it at the mortgaged property because the mortgage included an express term to that effect: Westpac Banking Corp v Thurairajah [2009] NSWSC 442 at [6]‌per Barrett J. Note that r 10.6 also includes any “acknowledgment or undertaking” in regard to service.

Uniform Civil Procedure Rules 2005 (NSW) [11.160]  Uniform Civil Procedure Rules 2005 (NSW) r 10.6 Division 2 –​Manner of service 10.6 Service in accordance with agreement between parties (cf SCR Pt 9, r 9; DCR Pt 8, r 15; LCR Pt 7, r 15) (1)

In any proceedings, any document (including originating process) may be served by one party on another (whether in New South Wales or elsewhere) in accordance with any agreement, acknowledgment or undertaking by which the party to be served is bound.

(1A)

In relation to the service of an originating process in proceedings on a claim for possession of land, the agreement, acknowledgment or undertaking referred to in subrule (1) must be made after the originating process is filed but before it is served.

(2)

Service in accordance with subrule (1) is taken for all purposes (including for the purposes of any rule requiring personal service) to constitute sufficient service.

 Acceptance of service by solicitor [11.170]  Personal service requirements may be dispensed with if a party’s solicitor accepts

service. The solicitor accepting service must make a notation on the document as evidence that he or she has accepted service on behalf of the person to be served.

Uniform Civil Procedure Rules 2005 (NSW) [11.180]  Uniform Civil Procedure Rules 2005 (NSW) r 10.13 10.13 Acceptance of service by solicitor (SCR Pt 9, r 7; DCR Pt 8, rr 6 and 7; LCR Pt 7, rr 6 and 7)

9

Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 60 ALJR 277; 65 ALR 155. [11.180]  587

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. If a solicitor notes on a copy of: (a)

any originating process, or

(b)

any other document required or permitted to be served in any proceedings, but not required to be personally served,

that he or she accepts service of the document on behalf of any person, the document is taken to have been duly served on that person on the date on which the note is made or on such earlier date of service as may be proved.

 Substituted and informal service [11.190]  Substituted service may be available where it is not practicable for personal service

to take place. Instead of personal service or the mode of service required by the rules, the court may order that such other specified steps be taken in order to bring the document to the attention of the person concerned. Typically, substituted service orders are made when the defendant has been evading service. There are two matters to be satisfied: 1.

Substituted service may be directed by the court only where the kind of service required by the rules “cannot practicably” be undertaken. To establish this, evidence should be led that a prior attempt to serve in accordance with the rules failed or that such service would be futile. Mere cost or inconvenience to a plaintiff will not be persuasive. Affidavit evidence will need to explain why service is not practicable or why previous attempts failed.

2.

The steps proposed to be taken in lieu of service pursuant to the rules must address “the purpose of bringing the document to the notice of the person concerned”. There should be evidence showing that the substituted service is reasonably likely to bring the proceedings to the defendant’s attention.10 Affidavit evidence is required deposing to the inquiries that have been made, and support must be provided about the efficacy of any proposed alternative ways of bringing the proceedings to the attention of the party to be served.

In Munkarra v Fisher,11 the plaintiff was injured in an accident involving a motor cycle in Darwin. The offending motor bike was registered and insured in Western Australia, and the rider was a German national who held a Northern Territory and international driver’s licence. Immigration records showed that he had arrived in Australia two years earlier, and there was no record that he had left. At the time of the accident he was resident in the South Darwin Caravan Park, and his current address was unknown. The insurance company with which the bike was insured was known. Because the plaintiff did not know the prospective defendant’s address, he sought substituted service on the insurance company. The plaintiff showed that the application was not urgent and that incomplete checks of official records (driving licences, electoral rolls, phone books etc) had been undertaken. The court directed that further checks be undertaken with, for example, the German embassy and German clubs in the relevant areas.

10 11

Chappell v Coyle (1985) 2 NSWLR 73; Amos Removals & Storage Pty Ltd v Small (1981) 2 NSWLR 525. Munkarra v Fisher (1980) 5 NTR 3.

588 [11.190]

Service of Documents  Chapter  11

It is a question of degree as to how much effort is required by the plaintiff to locate the defendant prior to obtaining an order for substituted service. Inquiries might be made of employers, employees, commercial contacts and family, as well as searches of property information authorities (eg, councils, land title offices), the electoral roll and on the internet. If an address can be found, registered post or service on the spouse might be an alternative substitute. Even if such searches are fruitless, the information obtained might be useful for supporting the efficacy of the alternative steps that are suggested. For example, if information is obtained that the person to be served is active in a particular trade or profession, advertisements in specific trade or professional publications might be suggested. The degree of urgency will also be taken into account. For example, in Amos Removals & Storage Pty Ltd v Small,12 a summons was issued on a Thursday that had to be served by 5 pm Friday and there were 19 defendants who were spread across New South Wales. Under those circumstances, substituted service was allowed. In Violi v Commonwealth Bank of Australia [2015] NSWCA 152, the New South Wales Court of Appeal by majority (Bergin  CJ in Eq and Sackville  AJA; Emmett  JA dissenting) overturned a decision of the District Court that had dismissed an application to set aside default judgment. The District Court had held that an order for substituted service had been complied with and the applicant had not established grounds for failing to file a defence in time. But the Court of Appeal majority held that applying for default judgment requires meticulous compliance with the UCPR so that court officials can ascertain that all preconditions for default judgment have been satisfied. In the case at hand, the affidavit of service by the respondent bank had not clearly proved that service had been effected because it merely asserted that service in accordance with the substituted service order had taken place without providing the actual facts of service. The Court found that the Bank’s affidavit of service did not establish satisfactorily that service of the court documents had been effected. Importantly, the Court determined that actual facts of service were required, and that it would be insufficient “merely [to assert] personal service or service in accordance with a substituted service order”.

Uniform Civil Procedure Rules 2005 (NSW) [11.200]  Uniform Civil Procedure Rules 2005 (NSW) r 10.14 10.14 Substituted and informal service generally (cf SCR Pt 9, rr 10 and 11; DCR Pt 8, rr 5 and 16; LCR Pt 7, rr 5 and 16) (1)

If a document that is required or permitted to be served on a person in connection with any proceedings:



(a)

cannot practicably be served on the person, or

(b)

cannot practicably be served on the person in the manner provided by law,



the court may, by order, direct that, instead of service, such steps be taken as are specified in the order for the purpose of bringing the document to the notice of the person concerned. (2)

12

An order under this rule may direct that the document be taken to have been served on the person concerned on the happening of a specified event or on the expiry of a specified time.

Amos Removals & Storage Pty Ltd v Small [1981] 2 NSWLR 525. [11.200]  589

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (3)

If steps have been taken, otherwise than under an order under this rule, for the purpose of bringing the document to the notice of the person concerned, the court may, by order, direct that the document be taken to have been served on that person on a date specified in the order.

(3A)

An application for an order under this rule must be supported by an affidavit by the applicant that includes:



(a)

a statement as to the applicant’s knowledge of the whereabouts of the person to be served, and



(b)

a statement as to any communications that have occurred between the applicant and the person to be served since the cause of action in the proceedings arose (including any communications by telephone, fax or electronic mail).

(4)

Service in accordance with this rule is taken to constitute personal service.

 [11.210]  The court’s power to make an order for substituted service depends on the applicant

establishing the impracticability of service in accordance with the rules. In Flo Rida v Mothership Music Pty Ltd [2013] NSWCA 268 (extracted below), the court held that there was insufficient evidence to establish the impracticability of service in accordance with the rules. Therefore, an order for substituted service was not made.

Flo Rida v Mothership Music [11.220]  Flo Rida v Mothership Music Pty Ltd [2013] NSWCA 268 [An American rapper by the name of Flo Rida entered into a contract to perform at a music festival in Newcastle in October 2011. However, he failed to appear. When the promoter received information that the rapper was visiting Australia in April 2012 for radio engagements, a statement of claim was filed against Flo Rida and his agent in the District Court seeking damages for breach of contract. An order freezing Flo Rida’s assets in Australia was also obtained. An attempt at service of documents in Victoria failed. An order for substituted service was then made in the District Court permitting service of originating process by email and by posting a message on Facebook. By this time, Flo Rida had left Australia. The defendants failed to file a defence or appear and default judgment was entered against them. Flo Rida then appealed against the judgment on the ground that the District Court should not have made the order for substituted service. The New South Wales Court of Appeal (Macfarlan, Ward and Gleeson JJA) unanimously upheld his appeal.] MACFARLAN JA [14] In her judgment of 18 April 2012, the primary judge referred as follows to the questions of jurisdiction and substituted service: 10 This brings me to the form of the application for substituted service … 11 … in the Federal Magistrates Court (Byrne v Howard [2010] FMCAFAM 509), Brown FM made an order for substituted service via Facebook and other electronic means including email ([17] to [28]). Such an order could conceivably cover Twitter accounts as well as Facebook accounts if that was necessary. Similar evidence was put before the learned magistrate in that case to the evidence that is before me today. 12 I pause to note that the nature of Facebook has been carefully explained in a number of judgments, including Facebook, Inc. v Callverse Pty Ltd [2008] AUDND 11 at [5]‌, where 590 [11.210]

Service of Documents  Chapter  11

Flo Rida v Mothership Music cont. Facebook was in fact the applicant. The international reach of Facebook is such that it is a matter of notorious fact. 13 Service by email is not controversial, and I note that orders for substituted service via email were made in Specsavers Pty Ltd v Buyinvite Pty Ltd [2012] FCA 230, Bellingen Shire Council v Lamir-​Pike [2010] NSWLEC 195 and Asteron Life Limited v Franck [2009] NZHC 450 (noting an example of additional service on Facebook in Axe Market Gardens v Craig Axe (CIV: 2008-​485-​2676, High Court Wellington, 16 March 2009, Gendall A J), at [9]‌). ………………. The order for substituted service [15] For these reasons, the primary judge made the following order for substituted service: (4) An order that substituted service be effected on the second defendant by: (a) sending a copy of the Statement of Claim, Notice of Motion dated 13 April 2012, Affidavit of Stephanie Borg sworn 13 April 2012, Orders of Gibson DCJ dated 13 April 2012, together with a copy of this order, by email transmission to the recipients [who were not identified]; and (b) sending a message to the second defendant via the provision to do so appearing on his Facebook page (referred to in the Affidavit of Stephanie Borg sworn 17 April 2012) to the following effect: On Friday, 13 April 2012, Mothership Music Pty Ltd commenced proceedings against you in the District Court of New South Wales, Australia seeking damages for breach of contract in respect of your non-​appearance on 22 October 2011 at the ‘Fat as Butter’ Concert at Camp Shortland, The Foreshore Newcastle. In addition, the Court ordered that you do not diminish your assets in Australia below $80,000 and also made additional ancillary orders. These orders were renewed today together with an order that you may be served by the sending to you of this message by your Facebook page. Full details and copies of all relevant documents can be obtained by contacting [specified solicitors with contact details]. If you do not file a defence to these proceedings within 28 days of service, the Court may enter judgment against you without any further notice to you. …………………….. The District Court’s territorial jurisdiction [17] The District Court is an inferior court of limited jurisdiction which is defined by statute (Falls Creek Ski Lifts Pty Ltd v Yee (1995) 37 NSWLR 344 at 345 -​349 per Gleeson CJ, with whom Rolfe AJA agreed). As a result, common law principles concerning the jurisdiction of superior courts, which have inherent as well as statutory jurisdiction, are of little, if any, relevance in determining whether the District Court has jurisdiction in particular cases. [18] Section 44 of the District Court Act 1973 identifies the subject matter of actions over which the District Court is to have jurisdiction. Section 47 identifies the necessary territorial connection. [19] The existence of a sufficient territorial connection under s 47 depends on due service. This is defined as service of the initiating process on the defendant “by or under this Act” or in accordance with the Service and Execution of Process Act 1992 (Cth) (“SEPA”). The latter Act permits service elsewhere in Australia than New South Wales, but not outside Australia. [20] [T]‌he reference to service “by or under this Act” includes service in accordance with the Uniform Civil Procedure Rules (“UCPR”). …………………………. [28] Personal service on the defendant is the primary means of service for which Part 10 of the UCPR provides. That did not occur in relation to Flo Rida. The question then is whether UCPR r 10.14 permitted the making of an order for substituted service on him, that is, service other than by personal service. Unless the primary judge’s order for substituted service was properly made and overcame the [11.220]  591

Civil Procedure in New South Wales

Flo Rida v Mothership Music cont. apparent lack of jurisdiction to proceed with the action against Flo Rida, the appeal must succeed and the primary judgment for damages set aside. The order for substituted service [29] The factual circumstances in relation to which the making of the order for substituted service needs to be considered are as follows. According to the evidence, Flo Rida was in New South Wales on 12 April 2012 and in Victoria on 14 April 2012, and was likely to be returning to the United States on or soon after 19 April 2012 (see [6]‌and [10] above). The evidence thus suggested that Flo Rida was in Australia when the order for substituted service was made on 18 April 2012 but did not show whether he was then in New South Wales or elsewhere in Australia. However, the latter is not of present significance as, whilst in Australia but outside New South Wales, he could have been personally served with the District Court Statement of Claim under the provisions of the Service and Execution of Process Act 1992. [30] UCPR r 10.14, which is contained in Part 10 of the UCPR and therefore applicable in the District Court, relevantly provides as follows: [provisions of UCPR r. 10.14 recited]. [31] It is convenient to consider first whether an order for substituted service under this rule could properly have been made if the evidence had indicated that Flo Rida had departed Australia before the order was made. In my view this would not have been a proper use of the power conferred by r 10.14. The legislature, acting through the Uniform Rules Committee, has refrained from giving jurisdiction to the District Court based on personal service of its process outside Australia and, in respect of the Supreme Court, has carefully confined the circumstances in which jurisdiction so based may be exercised. It would be a subversion of the policy underlying these provisions to permit avoidance by the simple device of a substituted service order. [32] This conclusion derives support from the decision of Austin J in ASIC v Sweeney (No 2) [2001] NSWSC 477; 38 ACSR 743. It is unnecessary to repeat his Honour’s helpful analysis of the authorities, including Laurie v Carroll [1958] HCA 4; 98 CLR 310. It is sufficient to note that in holding that there could not be substituted service of a writ issued out of the Supreme Court of Victoria, a superior court of record, if the writ could not be served personally at the time it was issued, the High Court in Laurie v Carroll observed: “Were it otherwise the strict conditions regulating and limiting service out of the jurisdiction upon defendants abroad would be ineffective; for they could be avoided by obtaining an order for substituted service within the jurisdiction” (at 325). In other words, “want of jurisdiction cannot be overcome by an order for substituted service” (ibid at 332). [33] Rogers CJ Comm D’s observation in Arhill Pty Ltd v General Terminal Company Pty Ltd (1990) 23 NSWLR 545 at 551 that “a foreigner, resident abroad, will not lightly be subjected to a local jurisdiction” accorded with this approach. His Honour referred in this context to Siskina v Distos Compania Naviera S.A. [1979] AC 210 in which at 254 -​255 Lord Diplock described the jurisdiction of local courts over foreigners as “exorbitant” jurisdictions, running “counter to the normal rules of comity among civilised nations”, and said that any rules that allow foreign service, and that therefore create an exception to jurisdiction being territorial, should be construed strictly in “favour of the foreigner”. [34] The decision of McClellan CJ in Filipowski v Frey [2005] NSWLEC 166 is not inconsistent with my conclusion. Unlike the present case, that case was concerned with the making of an order for substituted service by a superior court of record, the Land and Environment Court, and with a situation in which the defendant, as his Honour found, was within the jurisdiction when proceedings were commenced because he had voluntarily submitted to it (at [22]). [35] My conclusion referred to in [31] above is also supported by the text of r 10.14 which refers to a document which “cannot practicably be served on a person” or “cannot practicably be served on a person in the manner provided by law”. Both these alternatives contemplate the existence of a practical difficulty in service. They do not embrace a situation where the relevant document cannot lawfully be served on the defendant because he is outside Australia. 592 [11.220]

Service of Documents  Chapter  11

Flo Rida v Mothership Music cont. [36] However, as Austin J recognised in ASIC v Sweeney, an order for substituted service may, depending upon the circumstances, be made in respect of a defendant who is overseas if personal service on that defendant whilst overseas would be permissible, for example where service of a Supreme Court Statement of Claim could be effected in accordance with Part 11 of the UCPR. (As I have noted earlier, Part 11 is not applicable to the District Court.) Similarly, it may, depending on the circumstances, be appropriate to make a substituted service order in respect of a defendant who is outside New South Wales but may be served elsewhere in Australia under the Service and Execution of Process Act. [37] Returning to the present case, the question is whether the order for substituted service was properly made on 18 April 2012 when the evidence suggested that Flo Rida was leaving Australia on the next day or soon thereafter. In my view the order ought not to have been made in the absence of evidence that the means of substituted service sanctioned by the order were likely to bring service of the statement of claim to Flo Rida’s attention whilst he was in Australia. Due to the apparent proximity of his departure, there was no basis in the evidence for any confidence that that would occur. In the absence of that confidence, the effect of the order was tantamount to ordering substituted service on a defendant who was overseas and not lawfully able to be personally served overseas. As I have indicated, it is not permissible to make an order for substituted service in those circumstances. It is unnecessary to consider in the present case whether the position would have been different if the evidence had indicated, which it did not, that Flo Rida had left, or intended to leave, Australia for the purpose of evading service. [38] I should add in conclusion that in my view the evidence before the primary judge did not in any event constitute a sufficient basis for the making of the substituted service order insofar as that order provided for notice to be given to Flo Rida by means of Facebook. The evidence … did not establish, other than by mere assertion, that the Facebook page was in fact that of Flo Rida and did not prove that a posting on it was likely to come to his attention in a timely fashion (see Chappell v Coyle [1985] 2 NSWLR 73 at 77). [39] Similarly, the order was defective insofar as it related to substituted service by email as the intended recipients of the emails were not identified in the order.

 [11.230]  The court will make an order for substituted service of an originating process if it is

satisfied that the method of substituted service sought by the applicant/​plaintiff is one which will in all reasonable probability be effective in bringing the proceedings to the knowledge of the defendant.

Bulldogs Rugby League Club v Williams [11.240]  Bulldogs Rugby League Club Ltd v Williams [2008] NSWSC 822 [Sonny Bill Williams was alleged to have breached his contract to play Rugby League for the Bulldogs Rugby League Club Ltd when he left Australia to play Rugby Union for a club in France. Bulldogs Rugby League Club Ltd and the National Rugby League Limited (NRL) commenced proceedings by way of summons against Williams in the Supreme Court of NSW. The summons proved difficult to serve personally on Sonny Bill Williams. Mr O’Reilly was the solicitor acting for the NRL.] AUSTIN J [3]‌There are two applications before the Court today. The first is an application by the plaintiffs, filed by leave in court today, for an order under Part 10 rule 14(2) and (3) of the Uniform Civil Procedure Rules that service of the amended summons, notice of motion of 5 August and affidavits be taken to have been served on the first defendant by 8am on 6 August 2008 (Sydney time), … [11.240]  593

Civil Procedure in New South Wales

Bulldogs Rugby League Club v Williams cont. Service of process [19] The first issue for consideration is whether to make orders of a curative kind concerning the service of process and affidavits on the first and second defendants. When this matter was first before me I made orders for abridgement of service in circumstances said to be urgent, and brought the matter back before the Court on 5 August. An application was made on 28 July for orders for substituted service, but it was denied and so the plaintiffs attempted to effect personal service on the first defendant, who had left Australia on 26 July. [20] On 5 August I was informed that those attempts at personal service –​which were detailed at some length, particularly in Mr O’Reilly’s affidavit of 5 August –​had been unsuccessful. I was persuaded that it was appropriate at that stage to make orders for substituted service. I made orders for substituted service on the first defendant. I made orders requiring that substituted service be effected by taking several steps, namely service of copies of the documents at five addresses of the Toulon Rugby Club, leaving copies at the address of the first defendant’s property in suburban Sydney, leaving copies at the registered office of his company and sending text messages to what appeared to be his mobile phone number and the mobile phone number of Mr Nasser. [21] Mr O’Reilly’s affidavit dated today indicates that this method of substituted service was substantially implemented, but not entirely. My understanding is that everything was done, except that of the five addresses for the Toulon Rugby Club, service of the documents at two of those addresses (addresses at football stadiums) was not effected within the time specified by my orders, and service at a post office box address was not effected quite as directed. [22] So far as the latter is concerned, the documents were posted at the post office connected to that post office box, rather than being left at the post office box, because the process server found that the post office box, which was in the street, was locked. Posting the documents from inside the adjacent post office was sensible in the circumstances. [23] So far as the stadiums are concerned, Mr O’Reilly’s evidence, on information and belief, is that the process server attended the two addresses on Tuesday 5 August 2008 Toulon time, but found that the clubhouses at the stadiums were locked and had no letterbox. Rather than leave the documents on a public footpath, the process server left the premises and returned to both clubhouses on the next day, Wednesday 6 August. He found that one of the clubhouses was open on that day, and he handed the documents to the manager of the clubhouse, who said that he would provide the documents to the director of Rugby Club Toulonnais. That was after 8am Sydney time, but it was still on Wednesday 6 August. [24] Something else of significance happened, namely that in addition to substantial compliance with the requirements for substituted service on the first defendant, it appears that eventually personal service was effected on him. Mr O’Reilly’s evidence, on information and belief, is that the process server attended the training ground of Toulon Rugby Club with copies of a letter to the first defendant and sealed documents on 7 August, and observed the defendant training with the Toulon Rugby Team. [25] The process server went onto the training pitch and called out for the first defendant that he had documents for him. He threw the documents in the direction of the first defendant. The documents were picked up by a trainer of the Toulon Rugby Team who handed them to the first defendant, and in doing so said, “Williams, c’est pour toi”. It seems to me that those events constitute personal service. [26] I am satisfied, in all the circumstances, that the documents that are the subject of the orders for substituted service have been adequately brought to the attention of the first defendant, and therefore I will make the “curative” order sought. The orders for substituted service were substantially complied with by the required time of 8 am on Wednesday 6 August.

 594 [11.240]

Service of Documents  Chapter  11

[11.250] In Nash v Stewart (extracted below), Barrett J held that an order for substituted

service could not be made in respect of personal service of a subpoena to give evidence.

Nash v Stewart [11.260]  Nash v Stewart [2010] NSWSC 513 BARRETT J [1]‌These proceedings are listed for hearing commencing on 26 May 2010. [2]‌The first, second, fifth and sixth defendants seek an order for substituted service in relation to a subpoena requiring the attendance at the hearing of a person whose affidavit they wish to read in their case. They are obviously apprehensive that the person’s non-​attendance and the consequent inability to make him available for cross-​examination may result in a situation where the affidavit cannot be relied on. [3]‌I am not confident that the court can, consistently with the Uniform Civil Procedure Rules 2005, make an order for substituted service in respect of a subpoena requiring a person to attend to give evidence. [4]‌The rule concerning service of subpoenas is within Part 33. Rule 33.5(1) says: A subpoena must be served personally on the addressee. [5]‌The words “must be served personally” –​and particularly “must” –​indicate, to my mind, that the only permitted mode of service of a subpoena is “personal service” as provided for in Division 3 of Part 10 of the rules. Division 3 of Part 10 is headed “Personal Service”. [6]‌Within Division 3 of Part 10, rule 10.20(1) makes it clear that personal service is compulsory, not optional, in cases where the rules require it. Rule 10.20(1) is as follows: Any document required or permitted to be served on a person in any proceedings may be personally served, but need not be personally served unless these rules so require or the court so orders. [7]‌Thus, where the rules require personal service, the relevant document “needs” to be served personally. [8]‌Also within Division 3 of Part 10, rule 10.21(1) then states the general method of effecting personal service on a person: Personal service of a document on a person is effected by leaving a copy of the document with the person or, if the person does not accept the copy, by putting the copy down in the person’s presence and telling the person the nature of the document. [9]‌The provisions about personal service in Division 3 of Part 10 include a provision that deals with service of a subpoena for attendance and relaxes, to some extent, the procedure otherwise required. I refer to rule 10.20(2)(c) which allows such a subpoena to be left at the person’s business or residential address with someone apparently of or above the age of 16 years. But this provision applies only to proceedings in the Local Court; and significantly, I think, service in that particular manner is, by rule 10.20(4), deemed to be “personal service for the purposes of rule 33.5(1)”. That, to my mind, reinforces the supremacy of rule 33.5(1) in relation to subpoenas requiring attendance. [10] Provision for orders for substituted service is made by rule 10.14. That rule is within Division 2 of Part 10 headed “Manner of service”. Division 2 begins, in rule 10.5, by setting out a number of modes of service that may be adopted in relation to “a document”, but with the opening qualification, “Subject to these rules”. [11] That qualification makes it clear that any particular mode of service required elsewhere in the rules is not detracted from by rule 10.5. Again, therefore, the supremacy of rule 33.5(1) in relation to subpoenas is recognised and reinforced. [11.260]  595

Civil Procedure in New South Wales

Nash v Stewart cont. [12] It is then necessary to look at the terms of rule 10.14 itself: [10.14 set out in judgment]. [13] Rule 10.14 thus relates to a “document” that “is required or permitted to be served on a person in connection with any proceedings”. It allows the court to dispense with service and to direct some other method of notification “instead of service”. Significantly, I think, rule 10.14 does not, in terms, refer to a document required or permitted to be served personally. For that reason, and because it is located in Division 2, dealing with service generally, and not Division 3, dealing with personal service, I have strong reservations as to whether rule 10.14 allows the court to dispense with service and order some other method of notification where the rules positively require personal service. [14] It is, I think, noteworthy that the statutory provisions applying to the Supreme Court contain no provision such as the former s 100AP(4) of the Justices Act 1902 that allowed rules to be made regarding substituted service of subpoenas; nor is there any equivalent of the of the former rule 11 in Part 2 of the Local Court Rule 2000 which empowered the court to order substituted service of a subpoena. [15] Another provision of the Uniform Civil Procedure Rules reinforces the impression that personal service is the only permitted mode of service of a subpoena ad testificandum. Rule 33.6(1) says that an addressee need not comply with the requirements of a subpoena to attend to give evidence unless conduct money has been “handed or tendered to” the person by a particular time. These are notions wholly consistent with personal service in the full and literal sense and sit uncomfortably with any other method of service. [16] I note that in Registrar of the Court of Appeal v Maniam (No 1) (1991) 25 NSWLR 459, it was held that payment or tender of conduct money might be made through someone else; but the rule under consideration there (rule 8(5) of the Criminal Procedure Rules of the District Court, now no longer in force) spoke of payment or tender. Those rules were in a form previously common (see, for example, rule 37.3(1) of the Supreme Court Rules 1970 as they stood before the revision of 1 May 2004 to accommodate the harmonised subpoena rules) and still found in some statutes (see, for example, s 109E of the Children and Young Persons (Care and Protection) Act 1998 and s 60 of the Service and Execution of Process Act 1992 (Cth)). Under those provisions, the condition is that conduct money has been “paid or tendered”. [17] A quite different dimension is added by the word “handed”, as distinct from “paid”, in the provision with which I am now concerned. The words “handed or tendered to”, read together, connote the placing of money into the person’s hand or offering it in such a way that the person may take it if he or she chooses to do so. [18] Mr Carroll of counsel referred to Sleiman v Afeich [2005] NSWSC 992 where Hamilton J said, without discussion or analysis, that earlier orders made by another judge with respect to a subpoena “may be characterised as either orders for substituted service within rule 10.4 of the UCPR, or as orders dispensing with a requirement of the rules of court on a specified condition pursuant to section 14 of the CPA”. It is clear, I think, that Hamilton J intended to refer to rule 10.14, not rule 10.4, and I read his Honour’s observations in that light. However, as I have said, there is no discussion or analysis in that case which, in any event, did no more than speculate upon possible bases on which earlier orders may have been made. [19] In relation to the first possible basis, I am, for the reasons I have stated, not persuaded that, as a matter of construction, rule 10.14 is applicable in a case to which rule 33.5(1) applies. Another example of the expression of strong reservations as to whether substituted service could be ordered where the rules require personal service is found in In the Estate of Johanson (unreported, NSWSC, Powell J, 28 August 1992), which concerned a citation to take probate in respect of which a requirement of personal service applied. [20] As to the possibility of dispensing with the rules of court pursuant to s 14 of the Civil Procedure Act 2005, it must be acknowledged that the s 14 power is a broad one and, as counsel pointed out, must, in the light of s 57 and s 58, be exercised so as to promote the objectives stated in s 56. 596 [11.260]

Service of Documents  Chapter  11

Nash v Stewart cont. [21] But a subpoena to attend to give evidence is something that carries penal consequences in case of disobedience. Someone who does not attend can be arrested and may be punished for contempt. That, I have no doubt, is why personal service is required, and why no clear method (or, as I think is probably the case, no method at all) is provided for allowing some remoter and less secure method of notification. Penal consequences should not be triggered by any such remoter and less secure method. [22] In any event, the only power the court has under s 14 of the Civil Procedure Act is a power to “dispense with any requirement of the rules of court”. It is by no means clear how this would justify not only putting to one side the requirement of personal service but also sanctioning as valid and effective some alternative method of notification as a potential basis for arrest and committal. Section 14 does not allow the court to re-​write the rules of court. [23] I am not prepared to make an order for substituted service as sought by the applicants.

 Confirmation of informal service [11.270] An application for confirmation of informal service is made retrospectively. If

despite service being effected it did not comply with the rules of court and the proceedings have nevertheless been brought to the attention of the person served, an application for an order can be made that the defendant has been taken to be served on a date specified by the court. Satisfying the court that the defendant has been accorded procedural fairness and that the proceedings have in fact been brought to his or her attention is very important. Waiver of objection to service

Uniform Civil Procedure Rules 2005 (NSW) [11.280]  Uniform Civil Procedure Rules 2005 (NSW) r 10.19 10.19 Waiver of objection to service (cf DCR Part 8, rule 5(3)) A party who files a document in reply to a document alleged to have been served on that party is taken to have waived any objection to the fact or manner of service unless he or she files and serves notice of the objection together with the document so filed.

 Service beyond the jurisdiction [11.290]  In the absence of statutory authority, the originating process at common law must

be served within the boundaries of the court’s jurisdiction. This would mean that a New South Wales originating process could not be served outside New South Wales or outside Australia. Statute law has provided the means to overcome such impediments. Service outside New South Wales but within Australia [11.300] Service within Australia but outside New South Wales is effected in accordance

with the Service and Execution of Process Act 1992 (Cth) (SEPA) or the UCPR. Service of [11.300]  597

Civil Procedure in New South Wales

originating process in Supreme Court proceedings is to be effected in accordance with either UCPR r 10.3 (Service of originating process in Australia) or SEPA ss 13–​16. Persons who are then joined as a party may seek to have the proceedings transferred under the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) to the Supreme Court of another State or Territory (or the Federal Court or Family Court if appropriate). [11.310]  Rule 10.3 requires that a party endorse on the originating process a statement as

to whether it intends to proceed under the UCPR or SEPA. Interstate service has customarily been effected through SEPA because the UCPR does not address such service in explicit terms. No prior leave of the court is required for SEPA service. The SEPA endorsement on originating process documents should attach the “Notice to the Defendant” in accordance with the SEPA Form 1. Service of originating process in civil proceedings is dealt with in Pt 2 of Div 1 of the Act, while service of subpoenas is under Pt 3. Service of other documents may be effected in accordance with any applicable rules of court. [11.320]  Service for proceedings in courts other than the Supreme Court is governed by SEPA.

A person served with an originating process under that Act may apply to the court that issued the process for an order staying the proceedings. This is on the ground that a court of another State has jurisdiction to determine all the matters in issue between the parties and is the appropriate court to determine those matters:  s 20(3). Section 20(4) sets out the matters the court is to take into account in such an application, including the places of residence of the parties and of the witnesses likely to be called in the proceedings; the place where the subject matter of the proceedings is situated; the financial circumstances of the parties; any agreement between the parties about the court or place in which the proceedings should be instituted; the law that would be most appropriate to apply in the proceedings; and whether a related or similar proceeding has been commenced against the person served or another person. However, the fact that the proceeding was commenced in the place of issue is specifically not to be taken into account. To avoid delay or undue expense, the court may impose conditions on the orders as it considers “just and appropriate”: s 20(5). Section 21 provides that a court of a State or Territory (other than the place of issue) must not restrain a party from taking a step in such proceedings on the ground that the place of issue is not the appropriate forum for the proceedings.

Service and Execution of Process Act 1992 (Cth) [11.330]  Service and Execution of Process Act 1992 (Cth) s 20 Stay of proceedings (1) ( 2) (3)

(4)

This section does not apply in relation to a proceeding in which the Supreme Court of a State is the court of issue. The person served may apply to the court of issue for an order staying the proceeding. The court may order that the proceeding be stayed if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters. The matters that the court is to take into account in determining whether that court of another State is the appropriate court for the proceeding include: (a) the places of residence of the parties and of the witnesses likely to be called in the proceeding; and (b) the place where the subject matter of the proceeding is situated; and

598 [11.310]

Service of Documents  Chapter  11

Service and Execution of Process Act 1992 (Cth) cont.

(c)

the financial circumstances of the parties, so far as the court is aware of them; and



(d)

any agreement between the parties about the court or place in which the proceeding should be instituted; and



(e)

the law that would be most appropriate to apply in the proceeding; and



(f)

whether a related or similar proceeding has been commenced against the person served or another person;

but do not include the fact that the proceeding was commenced in the place of issue. (5)

The court’s order may be made subject to such conditions as the court considers just and appropriate in order to facilitate determination of the matter in issue without delay or undue expense.

(6)

The court may determine the application for an order without a hearing unless the applicant or a party objects.

(7)

For the purposes of determining the application, the court may hold a hearing by audio link or audiovisual link.

(8)

A person who is entitled to practise as a barrister, solicitor or both before a court in:



(a)

the place of issue; or



(b)

another State in which a person is participating in the hearing by audio link or audiovisual link;

has a right of audience before the court at the hearing. (9)

This section does not affect the court’s power to stay a proceeding on a ground other than the ground mentioned in subsection (3).

(10)

This section does not affect the operation of:



(a) the Jurisdiction of Courts (Cross-​vesting) Act 1987; or



(b)

a corresponding law of a State.

 Service under UCPR r 10.6 [11.340] The UCPR provide for the service, in any proceedings, by one party on another

(whether in New South Wales or elsewhere) of any document (including originating process) in accordance with any agreement, acknowledgement or undertaking by which the party to be served is bound: r 10.6.

Uniform Civil Procedure Rules 2005 (NSW) [11.350]  Uniform Civil Procedure Rules 2005 (NSW) r 10.6 10.6 Service in accordance with agreement between parties (cf SCR Part 9, rule 9; DCR Part 8, rule 15; LCR Part 7, rule 15) (1)

In any proceedings, any document (including originating process) may be served by one party on another (whether in New South Wales or elsewhere) in accordance with any agreement, acknowledgment or undertaking by which the party to be served is bound.

[11.350]  599

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (1A)

In relation to the service of an originating process in proceedings on a claim for possession of land, the agreement, acknowledgment or undertaking referred to in subrule (1) must be made after the originating process is filed but before it is served.

(2)

Service in accordance with subrule (1) is taken for all purposes (including for the purposes of any rule requiring personal service) to constitute sufficient service.

 Service outside Australia under UCPR Pts 11 and 11A [11.360]  Service of documents outside Australia is governed by Pts 11 and 11A of the UCPR.

Part 11, which applies to Supreme Court proceedings, includes service by private means (Div 1), in accordance with “harmonised rules” (Div 1A), and through diplomatic channels (Div 2). Part 11A provides for the service of judicial documents outside of Australia under the Hague Convention (on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters) and covers service abroad of local judicial documents (Div 2), default judgment following service abroad of initiating process (Div 3) and local service of foreign judicial documents (Div 4). [11.370] Unless the defendant files a notice of appearance, service by private means under Pt 11

of Div 1, and through diplomatic channels under Div 2, must be followed by leave of the court to continue the proceedings: r 11.4. It has long been regarded as an assertion of extra-​territorial jurisdiction and potentially invasive of foreign sovereignty to permit service within a foreign jurisdiction. Proceedings in the District Court should be transferred to the Supreme Court to obtain leave to proceed: r 44.7. Service by private means is the more common and acceptable method of service today, since diplomatic methods of service are generally slower and handled more cautiously. [11.380] Causes of action specified in Sch 6 of the UCPR provide the basis for originating

process that may be served on an overseas defendant. The causes of action are generally those that arise in NSW or concern property or acts within NSW. However, any defendant who is domiciled or ordinarily resident in NSW, or who has agreed to submit to the court’s jurisdiction, may be served overseas regardless of whether the cause of action is specified in Sch 6: r 11.2. Schedule 6 was amended in 201613 to effectively expand the circumstances in which originating process may be served without leave outside of Australia where the person overseas has been properly joined. Where a defendant is served but fails to appear, leave may be granted to proceed if the applicant shows that the cause of action has a real and substantial connection to Australia as a whole. This has widened the capacity of parties to serve process outside the jurisdiction and has reduced the need to demonstrate damage or breach in any particular State.

Uniform Civil Procedure Rules 2005 (NSW) [11.390]  Uniform Civil Procedure Rules 2005 (NSW) Sch 6 Schedule 6 –​Service outside of Australia without leave (Rule 11.4) An originating process may be served outside of Australia without leave in the following cases: 13

Uniform Civil Procedure (Amendment No 83) Rule 2016 (NSW), in effect 9 December 2016.

600 [11.360]

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

when the claim is founded on a tortious act or omission:



(i)

which was done or which occurred wholly or partly in Australia, or



(ii)

in respect of which the damage was sustained wholly or partly in Australia,

(b)

when the claim is for the enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract which:



(i)

was made or entered into in Australia, or



(ii)

was made by or through an agent trading or residing within Australia, or



(iii)

was to be wholly or in part performed in Australia, or



(iv)

was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court,

(c)

when the claim is in respect of a breach in Australia of any contract, wherever made, whether or not that breach was preceded or accompanied by a breach outside of Australia that rendered impossible the performance of that part of the contract that ought to have been performed in Australia,

(d)

when the claim:



(i)

is for an injunction to compel or restrain the performance of any act in Australia, or



(ii)

is for interim or ancillary relief in respect of any matter or thing in or connected with Australia, where such relief is sought in relation to judicial or arbitral proceedings commenced or to be commenced, or an arbitration agreement made, in or outside Australia (including without limitation interim or ancillary relief in relation to any proceedings under the International Arbitration Act 1974 of the Commonwealth or the Commercial Arbitration Act 2010), or



(iii)

without limiting subparagraph (ii), is an application for a freezing order or ancillary order under Division 2 of Part 25 in respect of any matter or thing in or connected with Australia,

(e)

when the subject matter of the claim is land or other property situated in Australia, or any act, deed, will, instrument, or thing affecting such land or property, or the proceeding is for the perpetuation of testimony relating to such land or property,

(f)

when the claim relates to the carrying out or discharge of the trusts of any written instrument of which the person to be served is a trustee and which ought to be carried out or discharged according to Australian law,

(g)

when any relief is sought against any person domiciled or ordinarily or habitually resident in Australia (whether present in Australia or not),

(h)

when any person outside of Australia is:



(i)

a necessary or proper party to a proceeding properly brought against another person served or to be served (whether within Australia or outside Australia) under any other provision of these rules, or



(ii)

a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the court,

(i)

when the claim is for the administration of the estate of any deceased person who at the time of his or her death was domiciled in Australia or is for any relief or remedy which might be obtained in any such proceeding,

(j)

when the claim arises under an Australian enactment and:



(i)

any act or omission to which the claim relates was done or occurred in Australia, or [11.390]  601

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(ii)

any loss or damage to which the claim relates was sustained in Australia, or



(iii)

the enactment applies expressly or by implication to an act or omission that was done or occurred outside Australia in the circumstances alleged, or



(iv)

the enactment expressly or by implication confers jurisdiction on the court over persons outside Australia (in which case any requirements of the enactment relating to service must be complied with),

(k)

when the person to be served has submitted to the jurisdiction of the court,

(l)

when a claim is made for restitution or for the remedy of constructive trust and the alleged liability of the person to be served arises out of an act or omission that was done or occurred wholly or partly in Australia,

(m)

when it is sought to recognise or enforce any judgment,

(n)

when the claim is founded on a cause of action arising in Australia,

(o)

when the claim affects the person to be served in respect of his or her membership of a corporation incorporated in Australia, or of a partnership or an association formed or carrying on any part of its affairs in Australia,

(p)

when the claim concerns the construction, effect or enforcement of an Australian enactment,

(q)

when the claim:



(i)

relates to an arbitration held in Australia or governed by Australian law, or



(ii)

is to enforce in Australia an arbitral award wherever made, or



(iii)

is for orders necessary or convenient for carrying into effect in Australia the whole or any part of an arbitral award wherever made,

(r)

when the claim is for relief relating to the custody, guardianship, protection or welfare of a minor present in Australia or who is domiciled or ordinarily or habitually resident in Australia (whether present in Australia or not),

(s)

when the claim, so far as it concerns the person to be served, falls partly within one or more of the above paragraphs and, as to the residue, within one or more of the others of the above paragraphs.

Note 1: Originating process includes a document that initiates a civil proceeding as well as a cross claim or third party claim. Note 2: If a proceeding is instituted in the court and originating process is served outside of Australia under this Schedule but the court later decides that it is more appropriate that the proceeding be determined by a court of another Australian jurisdiction, the court may transfer the proceeding to that other court under the Jurisdiction of Courts (Cross-​vesting) Act 1987 and may make an order for costs against the party who instituted the proceeding in the court rather than in the transferee court.

 [11.400] Where service of originating process is not allowed under Sch 6, leave may be sought

and obtained in accordance with the requirements of UCPR r 11.5 if the court is satisfied the claim has a real and substantial connection with Australia. Notice in the approved form must be served upon the person served: UCPR r 11.7. A court may, on application by a person who has been served outside Australia, dismiss or stay the proceeding or set aside the service of originating process on grounds set out in UCPR r 11.6.

602 [11.400]

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Uniform Civil Procedure Rules 2005 (NSW) [11.410]  Uniform Civil Procedure Rules 2005 (NSW) reg 11.1 Application of Part 11.1 Application of Part (1)

This Part applies to proceedings in the Supreme Court.

(2)

For the purposes of this Part, a reference to Australia includes a reference to the external Territories.

11.2 Operation of Commonwealth laws and Hague Convention This Part does not require the leave of the Supreme Court for any service or other thing that may be effected or done under any law of the Commonwealth, the Hague Convention or Part 11A. Note: Part 11A deals with the service of judicial documents under the Hague Convention. 11.3 Division does not apply to service in New Zealand of documents for or in certain trans-​Tasman proceedings This Division (which contains rules on service outside of Australia) does not apply to service in New Zealand of an originating process for, or of any other document to be served in or for, a proceeding an originating process for which may be served in New Zealand under Division 2 of Part 2 of the Trans-​Tasman Proceedings Act 2010 of the Commonwealth. 11.4 Cases for service of originating process (1)

Originating process may be served outside of Australia without leave in the circumstances referred to in Schedule 6.

(2)

This rule extends to originating process to be served outside Australia in accordance with the Hague Convention.

11.5 When allowed with leave (1)

In any proceeding when service is not allowed under Schedule 6, an originating process may be served outside of Australia with the leave of the court.

(2)

An application for leave under this rule must be made on notice to every party other than the person intended to be served.

(3)

A sealed copy of every order made under this rule must be served with the document to which it relates.

(4)

An application for leave under this rule must be supported by an affidavit stating any facts or matters related to the desirability of the court assuming jurisdiction, including the place or country in which the person to be served is or possibly may be found, and whether or not the person to be served is an Australian citizen.

(5)

The court may grant an application for leave if satisfied that:



(a)

the claim has a real and substantial connection with Australia, and



(b)

Australia is an appropriate forum for the trial, and



(c)

in all the circumstances the court should assume jurisdiction.

11.6 Court’s discretion whether to assume jurisdiction (1)

On application by a person on whom an originating process has been served outside of Australia, the court may dismiss or stay the proceeding or set aside service of the originating process.

(2)

Without limiting subrule (1), the court may make an order under this rule if satisfied: [11.410]  603

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

that service of the originating process is not authorised by these rules, or



(b)

that the court is an inappropriate forum for the trial of the proceeding, or



(c)

that the claim has insufficient prospects of success to warrant putting the person served outside Australia to the time, expense and trouble of defending the claim.

11.7 Notice to person served outside Australia If a person is to be served outside of Australia with an originating process, the person must also be served with a notice in the approved form informing the person of: (a)

the scope of the jurisdiction of the court in respect of claims against persons who are served outside Australia, and

(b)

the grounds alleged by the plaintiff to found jurisdiction, and

(c)

the person’s right to challenge service of the originating process or the jurisdiction of the court or to file a conditional appearance.

11.8 Time for filing appearance Except when the court otherwise orders, a defendant who has been served outside of Australia must file an appearance within 42 days from the date of service.

 [11.420] The following extract from the decision of the High Court in Agar v Hyde (2000)

201 CLR 552 discusses whether an assessment of the strength of the plaintiff’s case is a relevant matter to be considered when determining whether leave to proceed will be given.

Agar v Hyde [11.430]  Agar v Hyde (2000) 201 CLR 552; 173 ALR 665; 74 ALJR 1219; [2000] HCA 41 [Hyde and Worsley were young rugby players who suffered severe spinal injuries in separate rugby games. They sued relevant parties involved in the games as well as administrators of the sport for negligence in the conduct of the match and the rules under which it was played, and for their failure to modify the rules of the game locally so as to require scrummaging and other play to take place safely. They also sought leave to join as defendants a wider group of people who were responsible for rugby at the international level. The judge at first instance dismissed their applications to join the overseas parties and set aside service of process upon them. This was on the grounds there was no relevant proximity between the respective parties to give rise to duties of care, and the judicial discretion under Pt 10 r 1A [now UCPR r 11.2 and Sch 6]. In exercising the discretion against the applications, the judge specifically took into account that requiring a foreigner to defend a claim should be exercised with restraint and that establishing liability against the international administrators of the sport would be difficult in the cases at hand. Hyde and Worsley appealed successfully to the Court of Appeal. The High Court then granted leave to appeal.] GAUDRON, MCHUGH, GUMMOW AND HAYNE JJ [25] These two appeals raise questions about the assumption and exercise of jurisdiction by the Supreme Court of New South Wales over defendants who have been served with originating process outside Australia. Both appeals are brought by defendants who were served outside Australia with a Statement of Claim by which (in each case) the plaintiff claimed damages for personal injuries he sustained when playing rugby union football in a match conducted in New South Wales … … 604 [11.420]

Service of Documents  Chapter  11

Agar v Hyde cont. [47] The applicable Rules [UCPR Pt 11], however, mark the departure from the models based on the Chancery practice and do not require leave to serve out of the jurisdiction and do not require that the party seeking to serve out demonstrate a prima facie entitlement to the relief sought in the originating process. All that the applicable Rules say is that “the plaintiff shall not proceed against [a defendant served outside Australia who has not entered appearance] except with the leave of the Court”. The applicable Rules are silent about what matters can or should be taken into account in granting or refusing that leave. [48] Part 10 r 1A [now UCPR r 11.2 and Sch 6] of the applicable Rules permits the service of originating process outside Australia only in certain specified cases. If a defendant served outside Australia has not entered an appearance, an applicant for leave to proceed must demonstrate that one or more of the cases set out in r 1A [Sch 6] applies. Those cases are described either as “where the proceedings are founded on” a particular kind of claim, or as “where the subject matter of the proceedings” is of a particular kind. [49] To take the particular paragraphs which the respondents relied on in these matters, it was said that the originating process in each action might be served outside Australia because: (a) … the proceedings are founded on a cause of action arising in the State; … (d) … the proceedings are founded on a tort committed in the State; (e) …  the proceedings, wholly or partly, are founded on, or are for the recovery of damages in respect of, damage suffered in the State caused by a tortious act or omission wherever occurring; … (i) … the proceedings are properly brought against a person served or to be served in the State and the person to be served outside the State is properly joined as a party to the proceedings. [50] In deciding whether Pt 10 r 1A [now UCPR r 11.2 and Sch 6] applied, and thus permitted service outside Australia of the originating process in these two actions, attention must be directed to the way in which the claims made by the respondents are framed. The paragraphs speak of “proceedings [which] are founded on” a specified matter such as a cause of action arising in the State or a tort committed in the State. That focuses attention upon the nature of the claim which is made. That is, is the claim a claim in which the plaintiff alleges that he has a cause of action which, according to those allegations, is a cause of action arising in the State? [51] The inquiry just described neither requires nor permits an assessment of the strength (in the sense of the likelihood of success) of the plaintiff’s claim. The Court of Appeal was wrong to make such an assessment in deciding whether the Rules permitted service out. In so far as the contrary was held in Bank of America v Bank of New York (1995) ATPR ¶41-​390 it should be overruled. The application of these paragraphs of r 1A depends on the nature of the allegations which the plaintiff makes, not on whether those allegations will be made good at trial. Once a claim is seen to be of the requisite kind, the proceeding falls within the relevant paragraph or paragraphs of Pt 10 r 1A, service outside Australia is permitted, and prima facie the plaintiff should have leave to proceed. [52] Often enough, the statement of claim will reveal all that it is necessary to know to assess whether a plaintiff’s claim is of the requisite kind. But that may not always be so. For example, the place of making of a contract, or the place of breach of a contract, may not appear from the pleading and some evidence may be required to establish that a relevant paragraph of Pt 10 r 1A is engaged. And where, as here, a plaintiff relies on Pt 10 r 1A(1)(i), which provides for service outside the State on a person who is properly joined as a party to proceedings “properly brought against a person served or to be served in the State”, other considerations may arise in deciding both whether the joinder is proper and whether the action is “properly brought”. Those questions may, however, be [11.430]  605

Civil Procedure in New South Wales

Agar v Hyde cont. left to one side in the present cases because (subject to one consideration to which it will be necessary to return) it is clear that each of the proceedings is “wholly or partly … founded on, or [is] for the recovery of damages in respect of, damage suffered in the State caused by a tortious act or omission wherever occurring”. The claim in each of the present matters is framed in negligence and alleges that tortious acts or omissions caused the damage which the respondent suffered when injured in New South Wales. The intersection of applications for leave to proceed and applications to set aside service [53] In some cases, an application for leave to proceed will not be opposed. It is an application which may be made without serving notice of the motion on the defendant. Where the application is made without notice to a defendant, there will be no occasion to consider any question about the strength of the plaintiff’s claim. If, however, as was the case in each of these matters, the application for leave to proceed is opposed, and is joined with an application by parties served outside Australia to set aside service or to have the Court decline to exercise its jurisdiction, other considerations arise. It is necessary, in such a case, to recall that there are different issues raised on the hearing of an application for leave to proceed from those that arise on the hearing of applications to set aside service or to decline to exercise jurisdiction. [54] Central to the inquiry on an application for leave to proceed is whether the originating process makes claims of a kind which one or more of the paragraphs in Pt 10 r 1A [now UCPR r 11.2 and Sch 6] mention. If the originating process makes such a claim, r 1A provides that the process may be served outside Australia and, on proof of service of the process, the Court’s jurisdiction is, prima facie, properly invoked over the party who has been served. In the absence of some countervailing consideration, leave to proceed should then be given. [55] On an application to set aside service, or to have the Court decline to exercise jurisdiction, attention might be directed to any of a number of features of the proceeding, the claims made in it, or the parties to it, in aid of the proposition that the Court should not exercise jurisdiction. Part 10 r 6A [UCPR r 11.7] is cast in general terms and it would be wrong to attempt some exhaustive description of the grounds upon which the rule might be invoked. Nevertheless, it may be expected that three common bases for doing so are first, that the claims made are not claims of a kind which are described in Pt 10 r 1A [UCPR r 11.2 and Sch 6] secondly, that the Court is an inappropriate forum for the trial of the proceeding and thirdly, that the claims made have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claims. Whether the Rules prescribe a different test for determining questions of inappropriate forum from that developed at common law [Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538] is a question which we need not stay to consider. In these cases, it is necessary to deal only with the last of the bases we have mentioned. It was on this that the appellants chiefly relied. Insufficient prospects [56] If service was authorised by the Rules, and has been properly effected, the Court’s authority to determine the issues that are raised by the proceeding has been regularly invoked. If the Court is not persuaded that it is an inappropriate forum for trial of the proceedings, it will have reached that conclusion having given due weight to the considerations of comity and restraint which we mentioned earlier. Only then do the prospects of success of a claim made in originating process served outside Australia fall for consideration. [57] It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court’s jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways [Dey v Victorian 606 [11.430]

Service of Documents  Chapter  11

Agar v Hyde cont. Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 per Dixon J; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 130 per Barwick CJ] but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. [58] It was suggested, in the present matters, that some less demanding test should be adopted in cases where a defendant served overseas seeks to have that service set aside. There are at least two reasons why that should not be done. First, and most fundamentally, what is the criterion which is to be applied? Are proceedings to be terminated upon a prediction (on what almost invariably will be less evidence and argument than would be available at trial) of the “likely” or “probable” outcome of the proceeding? That cannot be so. It would be wrong to deny a plaintiff resort to the ordinary processes of a court on the basis of a prediction made at the outset of a proceeding if that prediction is to be made simply on a preponderance of probabilities. And if it is not to be enough to persuade the court that it is more probable than not that the case against a defendant will fail, and some higher test (less than that now applied in applications for summary judgment) is to be applied, how is that test to be described? The attachment of intensifying epithets, such as “very” or “highly”, offers little useful guidance for those judicial officers who would have to apply the test and who would have to do so, often enough, in a busy practice list. Such a test would be unworkable. [59] Secondly, as the present proceedings show, the application of some different, and lower, test in favour of overseas defendants would lead to unacceptable results. It would mean that proceedings must continue to trial against those defendants who happen to have been served with the originating process within the jurisdiction, but can be brought to a summary end by those who are served overseas even where the claims against the local and overseas defendants are identical. [60] For these reasons, the same test should be applied in deciding whether originating process served outside Australia makes claims which have such poor prospects of success that the proceeding should not go to trial as is applied in an application for summary judgment by a defendant served locally. [61] The appellants submitted that the respondents’ claims against them were doomed to fail: first, because the claims made were statute barred and secondly, because the appellants owed no duty of care to the respondents. We deal first with the appellants’ alleged duty of care. … The appeals to this Court should each be allowed with costs.

 [11.440] Service of documents on overseas defendants may be effected through diplomatic

channels under Div 2 of Pt 11. This relates to service of documents in countries that are not signatories to a relevant international convention such as the Hague Convention. In such cases, the Commonwealth Attorney-​General must provide a declaration that it is appropriate for diplomatic channels to be employed for service, upon the Attorney being satisfied of the matters outlined in UCPR r 11.10.

Uniform Civil Procedure Rules 2005 (NSW) [11.450]  Uniform Civil Procedure Rules 2005 (NSW) reg 11.8A Application of Division 11.8A Application of Division This Division does not apply to any document that is intended to be served on a person outside Australia in accordance with the Hague Convention.

[11.450]  607

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. Note: Division 2 of Part 11A deals with the service of local judicial documents in a country (other than Australia) that is a party to the Hague Convention. 11.9 Definitions (cf SCR Part 10, rule 7) In this Division: “applicant” means the person by whom an application is made under rule 11.10 (1) (a). “participating country” means:

(a)

any country that is a signatory to an international convention with respect to the service of documents in that country to which Australia is a signatory, or



(b) in relation to particular proceedings, any other country declared by the Attorney General, or by some other person authorised by the Attorney General for the purposes of this definition, by notice filed in the proceedings, to be a country to which this Division applies.

“undertaking as to expenses” means an undertaking by an applicant or his or her solicitor to pay to the registrar an amount equal to the sum of all expenses incurred in consequence of the request for service. 11.10 Filing of requisite documents (cf SCR Part 10, rules 8, 9 and 10) (1)

A person requiring a document to be served in a participating country may file the following documents in the Supreme Court:



(a)

an application to the principal registrar of the Supreme Court that a sealed copy of a document be transmitted to that country for service on the person specified in the application as the person to be served,



(b)

if the applicant requires service of the document under an international convention with respect to the service of documents to which that country and Australia are both signatories, a statement to that effect,



(c)

the document to be served and (unless English is an official language of the country concerned) a translation of the document,



(d)

if any special manner of service is required, a request for service in that manner and (unless English is an official language of the country concerned) a translation of the request,



(e)

an undertaking as to expenses,

together with such further copies of those documents as the principal registrar may direct. (2)

A translation of a document referred to in subrule (1):



(a)

must be in an official language of the country in which service is required, and



(b)

must bear a certificate by the translator, in that language, stating his or her qualifications and certifying that the translation is a correct translation of the document.

11.11 Procedure on filing and lodgment (cf SCR Part 10, rules 11 and 12) (1)

After all relevant documents have been filed as referred to in rule 11.10, the principal registrar of the Supreme Court must seal them and send the lodged documents to the Director-​General of the Attorney General’s Department for transmission for service, together with such letter of request (if any) as may be necessary.

608 [11.450]

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Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

A certificate as to service, attempted service or non-​service of any document so sent that is issued by:



(a)

a judicial authority or other responsible person in the country concerned, or

(b)

a British or Australian consular authority in the country concerned,



is evidence of the matters stated in the certificate. 11.12 Recovery of unpaid expenses (cf SCR Part 10, rule 13) If an applicant who has given an undertaking as to expenses does not, within 7 days after service on the applicant of an account of expenses incurred in relation to his or her application, pay to the principal registrar of the Supreme Court the amount of the expenses, the Supreme Court: (a)

may order the applicant to pay the amount of the expenses to the principal registrar, and

(b)

may stay the proceedings, until payment is made, so far as concerns the whole or any part of any claim for relief by the applicant.

 [11.460] Service under the Hague Convention14 is an alternative means of effecting service

outside of Australia. Service of local judicial documents overseas and of documents to obtain default judgment in the local court after satisfactory service overseas are governed by Divs 1 and 2 of Pt 11A of the UCPR. This is the only mode of service to be used in relation to a judicial document of the Supreme Court where the Convention applies, and that is where the document is judicial or extrajudicial, the address of the person is known, it relates to a civil or commercial matter, and the transmission is between countries that are signatories to the Convention: UCPR r 11A.3. Details of the applications to be made and how they are to be dealt with are set out in UCPR rr 11A.4–​11A.8.

Uniform Civil Procedure Rules 2005 (NSW) [11.470]  Uniform Civil Procedure Rules 2005 (NSW) reg 11A.3 11A.3 Application of Division (1)

Subject to subrule (2), this Division applies to service in a Convention country of a local judicial document.

(2)

This Division does not apply if service of the document is effected, without application of any compulsion, by an Australian diplomatic or consular agent mentioned in Article 8 of the Hague Convention.

11A.4 Application for request for service abroad (1)

A person may apply to the Registrar, in the Registrar’s capacity as a forwarding authority, for a request for service in a Convention country of a local judicial document.

(2)

The application must be accompanied by 3 copies of each of the following documents:



(a)

a draft request for service abroad, which must be in the approved form,



(b)

the document to be served,

14

Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (1965). [11.470]  609

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(c)

a summary of the document to be served, which must be in the approved form,



(d)

if, under Article 5 of the Hague Convention, the Central Authority or any additional authority of the country to which the request is addressed requires the document to be served to be written in, or translated into, the official language or one of the official languages of that country, a translation into that language of both the document to be served and the summary of the document to be served.

(3)

The application must contain a written undertaking to the Court, signed by the legal practitioner on the record for the applicant in the proceedings to which the local judicial document relates or, if there is no legal practitioner on the record for the applicant in those proceedings, by the applicant:



(a)

to be personally liable for all costs that are incurred:



(i)

by the employment of a person to serve the documents to be served, being a person who is qualified to do so under the law of the Convention country in which the documents are to be served, or



(ii)

by the use of any particular method of service that has been requested by the applicant for the service of the documents to be served, and



(b)

to pay the amount of those costs to the Registrar within 28 days after receipt from the Registrar of a notice specifying the amount of those costs under rule 11A.6 (3), and



(c)

to give such security for those costs as the Registrar may require.

(4)

The draft request for service abroad:



(a)

must be completed (except for signature) by the applicant, and



(b)

must state whether (if the time fixed for entering an appearance in the proceedings to which the local judicial document relates expires before service is effected) the applicant wants service to be attempted after the expiry of that time, and



(c)

must be addressed to the Central Authority, or to an additional authority, for the Convention country in which the person is to be served, and



(d)

may state that the applicant requires a certificate of service that is completed by an additional authority to be countersigned by the Central Authority.

(5)

Any translation required under subrule (2) (d) must bear a certificate (in both English and the language used in the translation) signed by the translator stating:



(a)

that the translation is an accurate translation of the documents to be served, and



(b)

the translator’s full name and address and his or her qualifications for making the translation.

11A.5 How application to be dealt with (1)

If satisfied that the application and its accompanying documents comply with rule 11A.4, the Registrar:



(a)

must sign the request for service abroad, and



(b)

must forward 2 copies of the relevant documents:



(i)

if the applicant has asked for the request to be forwarded to a nominated additional authority for the Convention country in which service of the document is to be effected –​to the nominated additional authority, or



(ii)

in any other case –​to the Central Authority for the Convention country in which service of the document is to be effected.

610 [11.470]

Service of Documents  Chapter  11

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

The “relevant documents” mentioned in subrule (1) (b) are the following:



(a)

the request for service abroad (duly signed),



(b)

the document to be served,



(c)

the summary of the document to be served,



(d)

if required under rule 11A.4 (2) (d), a translation into the relevant language of each of the documents mentioned in paragraphs (b) and (c).

(3)

If not satisfied that the application or any of its accompanying documents complies with rule 11A.4, the Registrar must inform the applicant of the respects in which the application or document fails to comply.

11A.6 Procedure on receipt of certificate of service (1)

Subject to subrule (5), on receipt of a certificate of service in due form in relation to a local judicial document to which a request for service abroad relates, the Registrar:



(a)

must arrange for the original certificate to be filed in the proceedings to which the document relates, and



(b)

must send a copy of the certificate to:



(i)

the legal practitioner on the record for the applicant in those proceedings, or



(ii)

if there is no legal practitioner on the record for the applicant in those proceedings –​the applicant.

(2)

For the purposes of subrule (1), a certificate of service is in due form if:



(a)

it is in the approved form, and



(b)

it has been completed by a certifying authority for the Convention country in which service was requested, and



(c)

if the applicant requires a certificate of service that is completed by an additional authority to be countersigned by the Central Authority, it has been so countersigned.

(3)

On receipt of a statement of costs in due form in relation to the service of a local judicial document mentioned in subrule (1), the Registrar must send to the legal practitioner or applicant who gave the undertaking mentioned in rule 11A.4 (3) a notice specifying the amount of those costs.

(4)

For the purposes of subrule (3), a statement of costs is in due form if:



(a)

it relates only to costs of a kind mentioned in rule 11A.4 (3) (a), and



(b)

it has been completed by a certifying authority for the Convention country in which service was requested.

(5)

Subrule (1) does not apply unless:



(a)

adequate security to cover the costs mentioned in subrule (3) has been given under rule 11A.4 (3) (c), or



(b)

to the extent to which the security so given is inadequate to cover those costs, an amount equal to the amount by which those costs exceed the security so given has been paid to the Registrar.

11A.7 Payment of costs (1)

On receipt of a notice under rule 11A.6 (3) in relation to the costs of service, the legal practitioner or applicant, as the case may be, must pay to the Registrar the amount specified in the notice as the amount of those costs.

(2)

If the legal practitioner or applicant fails to pay that amount within 28 days after receiving the notice: [11.470]  611

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

except by leave of the Court, the applicant may not take any further step in the proceedings to which the local judicial document relates until those costs are paid to the Registrar, and



(b)

the Registrar may take such steps as are appropriate to enforce the undertaking for payment of those costs.

11A.8 Evidence of service A certificate of service in relation to a local judicial document (being a certificate in due form within the meaning of rule 11A.6 (2)) that certifies that service of the document was effected on a specified date is, in the absence of any evidence to the contrary, sufficient proof that: (a) service of the document was effected by the method specified in the certificate on that date, and (b)

if that method of service was requested by the applicant, that method is compatible with the law in force in the Convention country in which service was effected.

 [11.480] Division 3 of Pt 11A deals with the obtaining of default judgment following service

abroad of initiating process in Hague Convention cases. In accordance with the Convention, where the appropriate certificate of service has been filed and the served defendant has not appeared or filed a notice of address for service, a court may enter default judgment only where service was effected properly and within time defined as “sufficient”:  UCPR r 11A.10. The Convention through Pt 11A protects an overseas defendant in this way, providing circumstances in which the power to enter default judgment may be restricted or set aside: UCPR rr 11A.11, 11A.12.

Uniform Civil Procedure Rules 2005 (NSW) [11.490]  Uniform Civil Procedure Rules 2005 (NSW) reg 11A.9 11A.9 Application of Division This Division applies to civil proceedings for which an initiating process has been forwarded following a request for service abroad to the Central Authority (or to an additional authority) for a Convention country. 11A.10 Restriction on power to enter default judgment if certificate of service filed (1)

This rule applies if:



(a)

a certificate of service of initiating process has been filed in the proceedings (being a certificate in due form within the meaning of rule 11A.6 (2)) that states that service has been duly effected, and



(b)

the defendant has not appeared or filed a notice of address for service.

(2)

In circumstances to which this rule applies, default judgment may not be given against the defendant unless the Court is satisfied that:



(a)

the initiating process was served on the defendant:



(i)

by a method of service prescribed by the internal law of the Convention country for the service of documents in domestic proceedings on persons who are within its territory, or



(ii)

if the applicant requested a particular method of service (being a method under which the document was actually delivered to the defendant or to his

612 [11.480]

Service of Documents  Chapter  11

Uniform Civil Procedure Rules 2005 (NSW) cont. or her residence) and that method is compatible with the law in force in that country, by that method, or

(iii)

if the applicant did not request a particular method of service, in circumstances where the defendant accepted the document voluntarily, and



(b)

the initiating process was served in sufficient time to enable the defendant to enter an appearance in the proceedings.

(3)

In subrule (2) (b), “sufficient time” means:



(a)

42 days from the date specified in the certificate of service in relation to the initiating process as the date on which service of the process was effected, or



(b)

such lesser time as the Court considers, in the circumstances, to be a sufficient time to enable the defendant to enter an appearance in the proceedings.

11A.11 Restriction on power to enter default judgment if certificate of service not filed (1)

This rule applies if:



(a)

a certificate of service of initiating process has not been filed in the proceedings, or



(b)

a certificate of service of initiating process has been filed in the proceedings (being a certificate in due form within the meaning of rule 11A.6 (2)) that states that service has not been effected,

and the defendant has not appeared or filed a notice of address for service. (2)

If this rule applies, default judgment may not be given against the defendant unless the Court is satisfied that:



(a)

the initiating process was forwarded to the Central Authority, or to an additional authority, for the Convention country in which service of the initiating process was requested, and



(b)

a period that is adequate in the circumstances (being a period of not less than 6 months) has elapsed since the date on which initiating process was so forwarded, and



(c)

every reasonable effort has been made:



(i)

to obtain a certificate of service from the relevant certifying authority, or



(ii)

to effect service of the initiating process,

as the case requires. 11A.12 Setting aside judgment in default of appearance (1)

This rule applies if default judgment has been entered against the defendant in proceedings to which this Division applies.

(2)

If this rule applies, the Court may set aside the judgment on the application of the defendant if it is satisfied that the defendant:



(a)

without any fault on the defendant’s part, did not have knowledge of the initiating process in sufficient time to defend the proceedings, and



(b)

has a prima facie defence to the proceedings on the merits.

(3)

An application to have a judgment set aside under this rule may be filed:



(a)

at any time within 12 months after the date on which the judgment was given, or

[11.490]  613

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

after the expiry of that 12-​month period, within such time after the defendant acquires knowledge of the judgment as the Court considers reasonable in the circumstances.

(4)

Nothing in this rule affects any other power of the Court to set aside or vary a judgment.

 [11.500] Division 4 of Pt 11A provides for service local service of foreign judicial documents,

including the due form, the manner of service, and the circumstances in which the issue of service may require reference to the Attorney-​General’s Department of the Commonwealth.

614 [11.500]

CHAPTER 12

Discovery, Subpoenas and Interrogatories [12.10] INTRODUCTION......................................................................................................... 616 [12.20] PRELIMINARY DISCOVERY........................................................................................... 617 [12.30] Preliminary discovery for “identity or whereabouts”.................................... 617 [12.40] Preliminary discovery for deciding whether or not to commence proceedings................................................................................................ 617 [12.50] Procedure................................................................................................... 618 [12.60] Uniform Civil Procedure Rules 2005 (NSW) rr 5.1–​5.8.............................. 618 [12.70] Roads & Traffic Authority v Australian National Car Parks.......................... 621 [12.80] Roads and Traffic Authority v Care Park................................................. 624 [12.90] Hatfield v TCN Channel Nine.............................................................. 632 [12.100] Rinehart v Nine Entertainment............................................................. 639 [12.110] NOTICES TO PRODUCE............................................................................................... 648 [12.120] Uniform Civil Procedure Rules 2005 (NSW) rr 21.9–​21.13......................... 648 [12.140] Uniform Civil Procedure Rules 2005 (NSW) rr 34.1–​34.3........................... 649 [12.145] Patonga Beach Holdings v Lyons.......................................................... 650 [12.150] DISCOVERY OF DOCUMENTS..................................................................................... 653 [12.160] Problems caused by the discovery process................................................... 653 [12.170] Managing Justice: A Review of the Federal Civil Justice System..................... 654 [12.200] Civil Justice Review............................................................................ 655 [12.210] Managing Discovery: Discovery of Documents in Federal Courts.................. 658 [12.220] Palavi v Radio 2UE............................................................................ 659 [12.230] The discovery process................................................................................. 661 [12.250] Uniform Civil Procedure Rules 2005 (NSW) rr 21.1–​21.8........................... 663 [12.260] Practice Note SC Eq 11...................................................................... 666 [12.270] In the Matter of Mempoll, Anakin and Gold Kings.................................... 667 [12.280] Graphite Energy v Lloyd Energy Systems................................................ 670 [12.330] The discovery process illustrated................................................................. 672 [12.340] Priest v New South Wales................................................................... 674 [12.350] Priest v New South Wales................................................................... 682 [12.351] Technology and discovery........................................................................... 683 [12.352] Practice Note SC Gen 7...................................................................... 684 [12.353] Discovery in the Information Age.......................................................... 685 [12.354] Electronic discovery reference model...................................................... 685 [12.355] When Discovery and Technology Meet: The Pre-​discovery Conference........... 686 [12.356] Technology assisted review (TAR)................................................................ 690 [12.357] McConnell Dowell Constructors v Santam.............................................. 691 [12.359] Measuring and Validating the Effectiveness of TAR................................... 694 [12.360] SUBPOENA TO PRODUCE........................................................................................... 694 [12.370] Uniform Civil Procedure Rules 2005 (NSW) rr 33.1–​33.13......................... 695 [12.380] Setting aside a subpoena............................................................................. 700 [12.390] Grounds for setting aside a subpoena to produce....................................... 701 [12.410] Setting aside a subpoena –​oppression........................................................ 703 [12.410] NSW Commissioner of Police v Tuxford.................................................. 703 [12.420] Setting aside a subpoena –​no legitimate forensic purpose.......................... 708 [12.420] Attorney-​General (NSW) v Chidgey....................................................... 708 [12.430] Liristis v Gadelrabb........................................................................... 713 [12.440] O’Shane v Harbour Radio................................................................... 714 [12.445] Lowery v Insurance Australia............................................................... 720

 

615

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[12.450] Non-​compliance......................................................................................... 723 [12.450] J P Morgan Trust v Kapetanovic........................................................... 723 [12.460] INTERROGATORIES...................................................................................................... 726 [12.470] Uniform Civil Procedure Rules 2005 (NSW) rr 22.1–​22.6........................... 727 [12.480] Ahmad v South Western Sydney Local Health District................................ 729 [12.490] IMPLIED UNDERTAKING.............................................................................................. 734 [12.500] Hearne v Street................................................................................ 734 [12.510] Premier Travel v Satellite Centres of Australia.......................................... 738

INTRODUCTION [12.10] This chapter examines some of the different ways to gather information (mainly

documents) in civil cases using the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). This information may be used by the parties to determine the strength and weakness of their claim (or defence). This can promote settlement. The information can also be used to prepare for trial and can be used, if admissible, as evidence in the trial. There are various mechanisms in the UCPR which allow parties to gather information. The information can be obtained between the parties or from third parties. These mechanisms can be used by agreement between the parties (ie, by consent without the need to make a formal application to the court) or by filing and serving the appropriate documents with the court (such as a subpoena to produce) or by obtaining a court order. To obtain a court order the parties will usually be required to file a notice of motion seeking specific orders together with an affidavit which is evidence that supports the order/​s being made. This chapter will consider the following mechanisms used under the UCPR to obtain information. These are: • preliminary discovery; • notices to produce; • discovery; • subpoenas; and • interrogatories. This chapter also introduces discovery of “electronically stored information” (ESI) as many documents are now created, communicated and stored electronically. To address the large increase in ESI, and therefore the increase in potentially discoverable documents, technology-​ assisted review relying on artificial intelligence has been adopted. Evidence can also be prepared by drafting affidavits, obtaining expert reports, conducting medical examinations or property inspections and, by eliciting admissions by issuing a notice to admit (see Chapter 13). Of course, parties can gather information on their own accord, for example, by making a request pursuant to legislation for information held by governmental agencies (such as the Freedom of Information Act 1982 (Cth) or the Government Information (Public Access) Act 2009 (NSW)), or by hiring a private investigator to gather information that can be potentially used as evidence in the hearing. This chapter is not concerned with all the ways to gather evidence but rather is limited to the above mentioned mechanisms for gathering evidence under the UCPR. These mechanisms (except preliminary discovery) are only available to the parties after pleadings have been filed and have usually closed. Claims for privilege may be raised in response to these mechanisms to resist the production or access to documents (see Chapter 14). 616 [12.10]

Discovery, Subpoenas and Interrogatories  Chapter  12

PRELIMINARY DISCOVERY [12.20]  An order for preliminary discovery is made before the commencement of proceedings.

Prior to the UCPR, the purpose of an order for preliminary discovery was only to ascertain the identity of a prospective party. However, the UCPR have expanded the ambit of such orders so that information can be ordered that could assist a party to determine whether they should commence an action. An order for preliminary discovery can require documents to be produced and/​or a person to be orally examined in court so an applicant can determine the identity or whereabouts of a prospective party to be sued (r 5.2). An order for the discovery of documents can be made so that an applicant can decide whether or not an action should be brought (r 5.3 and r 5.4). Preliminary discovery for “identity or whereabouts” [12.30]  The court may order preliminary discovery for “identity or whereabouts”, where:

1.

the applicant has made “reasonable enquiries” and is “unable to sufficiently ascertain the identity or whereabouts of a person for the purpose of commencing proceedings against the person”; and

2.

some person other than the applicant “may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts of the person concerned”.

An order for preliminary discovery for “identity or whereabouts” can be: 1.

an order for the other person to attend court for “examination” (including an order that the person produce on examination any document or thing); or

2.

an order that the other person must “give discovery to the applicant of all documents that are or have been in the other person’s possession and that relate to the identity or whereabouts of the person concerned”.

Prior to the UCPR, an order for preliminary discovery did not enable a prospective plaintiff to find out the location of the defendant. For example, in Survival & Industrial Equipment (Newcastle) Pty Ltd v Owners of the Vessel “Alley Cat” (1992) 36 FCR 129, the plaintiff, having issued its writ in rem against “the owners of the vessel Alley Cat”, and having issued an arrest warrant, could not effect service of either the writ or the warrant because they did not know the whereabouts of the vessel Alley Cat (the plaintiff was required to personally serve the vessel). The plaintiff sought to use an order for preliminary discovery (under the Federal Court Rules 2011 (Cth)) to examine the vessel’s solicitor as to his knowledge about the whereabouts of the vessel. The court held that preliminary discovery could not be used to find out the location of the vessel. However, applying the UCPR to the facts of this case could result in a different outcome, namely the solicitor could be questioned in court to ascertain the location of the vessel. Preliminary discovery for deciding whether or not to commence proceedings [12.40]  Under UCPR r 5.3, the court may order preliminary discovery against a prospective

defendant of all documents in the person’s possession relating to the applicant’s entitlement to relief where it appears to a court that: [12.40]  617

Civil Procedure in New South Wales

1.

the applicant “may be entitled to make a claim for relief”;

2.

the applicant has made “reasonable inquiries”;

3.

the applicant has been “unable to ascertain sufficient information to determine whether or not to commence proceedings”;

4.

the “prospective defendant may have or have had possession of a document or thing that can assist in determining whether the applicant is entitled to a claim for relief”; and

5.

inspection of the document or thing would assist the applicant to decide whether or not to commence proceedings.

Discovery can also be ordered against a non-​party  –​where it appears to the court that a person who is not a party to proceedings may have possession of a document that relates to any question in the proceedings, the court may order discovery to the applicant of all documents relating to that question (UCPR r 5.4). Procedure [12.50] It is important to remember that the judge has the discretion to make an order

under Pt 5 of the UCPR. If the substantive proceedings have not yet commenced, then the order would be sought by filing a summons (which would be the originating process) with a supporting affidavit. Applications for preliminary discovery under the UCPR must: 1.

be supported by affidavit which addresses the requirements of particular rules (eg, that the applicant has made all reasonable inquiries, that the information sought will assist);

2.

be personally served, together with the supporting affidavit.

The court may make orders relating to the costs of the applicant or any person against whom the order is made or any party in relation to preliminary discovery (UCPR r 5.8).

Uniform Civil Procedure Rules 2005 (NSW) [12.60]  Uniform Civil Procedure Rules 2005 (NSW) rr 5.1–​5.8 Part 5 –​Preliminary discovery and inspection 5.1 Definitions (cf Federal Court Rules, O 15A, r 1) In this Part: “applicant” means an applicant for an order under this Part. “identity or whereabouts” includes the name and (as applicable) the place of residence, registered office, place of business or other whereabouts, and the occupation and sex, of the person against whom the applicant desires to bring proceedings, and also whether that person is an individual or a corporation. 5.2 Discovery to ascertain prospective defendant’s identity or whereabouts (cf Federal Court Rules, O 15A, rr 3, 5 and 9) (1)

This rule applies if it appears to the court that:



(a)

618 [12.50]

the applicant, having made reasonable inquiries, is unable to sufficiently ascertain the identity or whereabouts of a person (“the person concerned”) for the purpose of commencing proceedings against the person, and

Discovery, Subpoenas and Interrogatories  Chapter  12

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

some person other than the applicant (“the other person”) may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts of the person concerned.

(2)

The court may make either or both of the following orders against the other person:



(a)

an order that the other person attend the court to be examined as to the identity or whereabouts of the person concerned,



(b)

an order that the other person must give discovery to the applicant of all documents that are or have been in the other person’s possession and that relate to the identity or whereabouts of the person concerned.

(3)

A court that makes an order for examination under subrule (2)(a) may also make either or both of the following orders:



(a)

an order that the other person must produce to the court on the examination any document or thing that is in the other person’s possession and that relates to the identity or whereabouts of the person concerned,



(b)

an order that the examination be held before a registrar.

(4)

An order under this rule with respect to any information, document or thing held by a corporation may be addressed to any appropriate officer or former officer of the corporation.

(5)

A person need not comply with the requirements of an order under subrule (2)(a) unless conduct money has been handed or tendered to the person a reasonable time before the date on which attendance is required.

(6)

If the other person incurs expense or loss in complying with an order under subrule (2)(a), and the expense or loss exceeds the amount paid to the person under subrule (5), the court may order the applicant to pay to that person an amount sufficient to make good the expense or loss.

(7)

Unless the court orders otherwise, an application for an order under this rule:



(a)

must be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of information, documents or things in respect of which the order is sought, and



(b)

must, together with a copy of the supporting affidavit, be served personally on the other person.

(8)

An application for an order under this rule is to be made:



(a)

if it is made in relation to proceedings in which the applicant is a party, by notice of motion in the proceedings, or



(b)

in any other case, by summons.

(9)

This rule applies, with any necessary modification, where the applicant, being a party to proceedings, wishes to claim or cross-​claim against a person who is not a party to the proceedings.

5.3 Discovery of documents from prospective defendant (cf Federal Court Rules, O 15A, rr 6, 7 and 9) (1)

If it appears to the court that:



(a)

the applicant may be entitled to make a claim for relief from the court against a person (“the prospective defendant”) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and



(b)

the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and [12.60]  619

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(c)

inspection of such a document would assist the applicant to make the decision concerned,

the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person’s possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief. (2)

An order under this rule with respect to any document held by a corporation may be addressed to any officer or former officer of the corporation.

(3)

Unless the court orders otherwise, an application for an order under this rule:



(a)

must be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of documents in respect of which the order is sought, and



(b)

must, together with a copy of the supporting affidavit, be served personally on the person to whom it is addressed.

(4)

This rule applies, with any necessary modification, where the applicant, being a party to proceedings, wishes to decide whether or not to claim or cross-​claim against a person who is not a party to the proceedings.

5.4 Discovery of documents from other persons (cf Federal Court Rules, O 15A, r 8) (1)

The court may order that a person who is not a party to proceedings, but in respect of whom it appears to the court that the person may have or have had possession of a document that relates to any question in the proceedings, must give discovery to the applicant of all documents that are or have been in the person’s possession and that relate to that question.

(2)

Unless the court orders otherwise, an application for an order under this rule:



(a)

must be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of documents in respect of which the order is sought, and



(b)

must, together with a copy of the supporting affidavit, be served personally on the person to whom it is addressed.

5.5 Discovery and inspection generally (cf Federal Court Rules, O 15A, r 10) Division 1 of Part 21 applies to and in respect of the discovery and inspection of documents the subject of an order for discovery under this Part in the same way as it applies to the discovery and inspection of documents the subject of an order for discovery under that Division. See also rule 23.8 with respect to inspection of property. 5.6 Security for costs (cf Federal Court Rules, O 15A, r 11) An order under this Part may be made subject to a condition requiring the applicant to give security for the costs of the person against whom the order is made. 5.7 Privilege (cf Federal Court Rules, O 15A, r 2) An order under this Part does not operate so as to require the person against whom it is made to produce any privileged document that the person could not be required to produce: (a)

if the applicant had commenced proceedings against that person, or

(b)

if that person had otherwise become a party to proceedings to which the applicant is a party, or

620 [12.60]

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

if the person had been served with a subpoena for production of the document in proceedings to which the applicant is a party.

5.8 Costs and other expenses (cf SCR Pt 52A, r 26; DCR Pt 39A, r 5; Federal Court Rules, O 15A, rr 4 and 11) (1)

On any application for an order under this Part, the court may make orders for the costs of the applicant, of the person against whom the order is made or sought and of any other party to the proceedings.

(2)

The costs in respect of which such an order may be made include:



(a)

payment of conduct money, and



(b)

payments made on account of any expense or loss in relation to the proceedings, and



(c)

the costs of making and serving any list of documents, and



(d)

the costs of producing any documents for inspection, and



(e)

the costs of otherwise complying with the requirements of any order under Division 1 of Part 21, as applying to the discovery and inspection of documents the subject of an order for discovery under this Part.



Roads & Traffic Authority v Australian National Car Parks [12.70]  Roads & Traffic Authority of NSW v Australian National Car Parks Pty Ltd (2007) 47 MVR 502; [2007] NSWCA 114 [The New South Wales Court of Appeal considered UCPR r 5.2. In this case, a Local Court magistrate ordered the RTA to provide preliminary discovery (pursuant to UCPR r 5.2) to Australian National Car Parks Pty Ltd. The RTA appealed against the orders for preliminary discovery. Australian National Car Parks Pty Ltd (the respondent) operated car parks. It required entrants to obtain and display a ticket or pass. Some entrants parked without doing so and the respondent wished to sue them on contracts said to derive from the Conditions of Entry on display. The respondent knew only the registration number of 294 vehicles and the day on which each car was parked without paying. Any claim brought against the driver of the car on the occasion in question would involve less than $100 because the Conditions of Entry said to ground the contract relevantly stated: Entering the car park will constitute acceptance of the following conditions. … 2. You are required to obtain a valid ticket or pass and display this ticket or pass clearly within the motor vehicle while parked in this car park. If you fail to do so, or if your ticket or pass expires, then ANCP may seek liquidated damages agreed at [$88] (reduced to [$66] if paid within 14 days) from you together with any resulting legal or other costs ANCP may incur. The RTA maintained a Register of Registrable Vehicles pursuant to the Road Transport (Vehicle Registration) Act 1997 (the Act) and the Road Transport (Vehicle Registration) Regulation 1998. Regulation 15 specified that the Register was to include, among other things, the name of the person who owns or manages the vehicle, the identification details of the vehicle, the vehicle’s garage address and each registered operator’s name, residential address and address for service of notices. The respondent sought preliminary discovery from the RTA of the 294 owners of the vehicles so it could sue them for breach of contract. The court noted that it would be open to a litigant to issue a subpoena for production of specified information relevant to particular proceedings; or for a member of the public to make an application under the Freedom of Information Act 1982 (now Government Information (Public Access) Act 2009 (NSW)), and for a plaintiff to bring a suit in equity for discovery [12.70]  621

Civil Procedure in New South Wales

Roads & Traffic Authority v Australian National Car Parks cont. against the RTA pursuant to the principles in Norwich Pharmacal Co v Commissioner of Customs and Excise Commissioners [1974] AC 133.] MASON P (WITH MCCOLL JA AND BELL J AGREEING) [2]‌ … The preliminary discovery rule contains threshold requirements. But, subject to them, an order rests upon the favourable exercise of a judicial discretion … Some general principles relating to UCPR r 5.2 [11] The application must be made on notice to the person perceived to have the information (r 5.2(7)(b)) and be supported by an affidavit stating the facts on which the applicant relies and specifying the kinds of information, documents or things in respect of which the order is sought (r 5.2(7)(a)). [12] Rule 5.2(1)(a) implies that the applicant intends to sue the person whose identity is sought. Demonstration of such intention is obviously pertinent to a favourable exercise of the discretion to order preliminary discovery (Re Application of Cojuangco (1986) 4 NSWLR 513 at 521). This does not mean that such intention must be immutably fixed or unqualified. [13] The rule’s predecessor in the Supreme Court was amended in 1974 to eliminate a requirement that the applicant establish a prima facie case against the intended defendant, but that issue is relevant to the exercise of discretion (Stewart at 139–​40; Levis v McDonald (1997) 75 FCR 36 at 41). [14] Rule 5.2(1) effectively states two threshold requirements. First, the applicant must be unable sufficiently to ascertain the identity or whereabouts of the intended defendant despite having made reasonable inquiries. What is reasonable is a question of fact in all the circumstances. The availability of other means of ascertainment (eg resort to the FOI Act) does not in itself make it unreasonable to claim an alternative remedy under the rule (see Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 at 307). The cost, delay and uncertainty of alternative measures is relevant to the rule’s “reasonable inquiries” component. [15] Secondly, the applicant must show that the respondent to the application “may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts” of the prospective defendant. “Identity or whereabouts” is given an extended definition in r 5.1 to include: the name and (as applicable) the place of residence, registered office, place of business or other whereabouts, and the occupation and sex, of the person against whom the applicant desires to bring proceedings, and also whether that person is an individual or a corporation. [16] The appellant correctly submits that the information, document or thing that is sought must itself have the requisite tendency in ascertaining identity or whereabouts. However, the words “may” and “tends to assist” in r 5.2(1)(b) show that the applicant does not have to establish in advance that the desired information, document or thing will necessarily reveal the identity or whereabouts of the prospective defendant. So too do the consequential powers in sub-​r (2), being powers to order the person to attend for examination “as to” the identity or whereabouts of the intended defendant, or to give discovery of documents “that relate to” that matter. [17] There is no basis in the text or context for reading down the words “tends to assist in ascertaining” so that they read “established”. The information, document or thing need not be the last piece in a jigsaw puzzle. [18] The applicant must also obtain the favourable exercise of a judicial discretion. I see no reason why that discretion may not be exercised by the framing of a limited order or the imposition of appropriate conditions, including (as in the present case) conditions as to reimbursement of reasonable expenses (see also sub-​r (6)). Particular issues in the appeal [19] The orders under appeal (1) require the RTA to give discovery in respect of the registered operator of the 294 vehicles identified by registration number in an appendix to the summons; and (2) require the respondent to pay the RTA’s reasonable costs in complying with the order for discovery. 622 [12.70]

Discovery, Subpoenas and Interrogatories  Chapter  12

Roads & Traffic Authority v Australian National Car Parks cont. [20] A form of Payment Notice used by the respondent against a defaulting driver is in evidence. The annexure to the summons reveals the respondent as having issued a numbered payment notice on a specified date for each of the vehicles identified by their registration number. The specimen payment notice contains details of the type and make of the car and the time and date of the alleged parking in breach of the Conditions Notice displayed on site. The time span covers the period 15 December 2005 to 18 January 2006. [21] The application was opposed on two broad grounds. Do the RTA records tend to assist in ascertaining the drivers? [22] This was the main argument pressed in this Court. The RTA submits that the information under its control does not tend to assist in ascertaining the identity or whereabouts of “the person concerned”, within the meaning of r 5.2(1)(b). [23] The RTA submits, correctly, that subr (1)(a) makes it plain that “the person concerned” must be the person against whom the applicant intends to commence proceedings. And the RTA is also correct in its submission that the rule requires the “information … document or thing” (referred to in para (b)) itself to tend to assist in ascertaining the identity or whereabouts of that intended defendant. The RTA submits that the assistance hypothesised is assistance to the applicant as a potential litigant, not assistance to the court per se. I agree. [24] But the RTA seeks to go further, submitting that the information in its Register goes no further than identifying a potential witness or someone who may be able to assist the applicant with its enquiries. This is said to fall outside the threshold requirement. In my view, this submission draws a distinction without a difference in the present context. [25] The registration scheme is described in s 15 of the Act as “a system of registration of registrable vehicles that are used on roads or road related areas that … enables the identification of each registrable vehicle that is used on a road or a road related area, and of the person responsible for it”. As indicated, the Register is to include details as to “garage address” (defined in s 4 of the Act), and both the person who owns or manages the vehicle and the “registered operator” of a vehicle. “Registered operator” is defined in s 4 of the Act to mean “a person recorded in the Register as a person responsible for the vehicle”. [26] The putative contract claim would lie against the driver of the car on the day in question. It is not suggested that there is some basis for inferring that the driver was the owner’s agent as a matter of contract law. But discovery of the owner and registered operator would enable the applicant to know details of the person with day to day control of the vehicle. For many households, the person who owns or manages the vehicle garaged at that address will be its only driver. For practically all households, the owner will know who was the driver on a particular day. [27] Whether or not a court trying a civil claim could infer the identity of the driver of the vehicle on the day in question from this information alone (and I imply no view either way on that matter), the information would certainly assist the respondent in its task of establishing the driver on the day in question. Perhaps further enquiries are necessary –​for example, to determine the number of persons capable of holding a driver’s licence who are likely to have had access to the car on the day and time in question. Perhaps the respondent can gather additional evidence by way of admissions from its prospective defendant or from surveillance at the “garage address”. The possibility that additional evidence may be required to make out a prima facie case of identifying the driver does not mean that the information in the Register lacks utility or forensic worth as regards the driver’s identity or whereabouts. As stated, preliminary discovery is not restricted to applicants seeking the last piece of a jigsaw. [28] The learned magistrate recorded that the applicant had made it clear that additional steps needed to be taken to ascertain the identity of prospective defendants after the discovered material [12.70]  623

Civil Procedure in New South Wales

Roads & Traffic Authority v Australian National Car Parks cont. was obtained. Her Honour held that discovery nevertheless tended to assist in that endeavour because it gave information which then led to other steps to be taken to identify the person concerned. Like Malpass AJ, I see no error in this approach on the particular facts. The reasoning does not assert that anything that could, with additional information, lead to determining identity would satisfy the threshold requirement. Has the applicant made its own “reasonable inquiries”? [29] The application was opposed in the Local Court on the basis of an affidavit sworn by Mr P J Youngman, the manager of the Records Access Unit of the RTA. It was contended that preliminary discovery should be refused because the applicant would be side-​stepping the procedures applicable under the FOI Act in relation to a request by a member of the public to access details of the registered operator. Mr Youngman swore that: 4. Each year the RTA receives hundreds of FOI applications from persons seeking details of the registered operator of NSW registered vehicles. Upon payment of a fee, the RTA routinely processes those applications where sufficient information is provided. Such applications are usually accompanied by detail of the make and model of vehicle, VIN number, engine number and description, which enables the RTA to ensure that it has identified the correct vehicle, as vehicles can be sold, and number plates can be wrongly recorded by the applicant, changed or transferred. 5. On receipt of the application the RTA consults the person whose personal details are sought to provide them with an opportunity to comment on whether they object to their personal information being released. The RTA reviews any reply together with the reason for the request for information before deciding whether the information should be released. The applicant has a right to an Internal Review and, if still not satisfied with the decision, an appeal to the Ombudsman and/​or the Administrative Decisions Tribunal. [30] The opponent did not suggest that it had made an FOI request. Indeed, its case was that the cost and delay involved in such a procedure meant that the FOI route did not constitute “reasonable inquiries” within the first threshold requirement of the preliminary discovery rule. [31] The opponent has alternative rights. If, unlike members of the public generally, it can bring itself within the scope of the preliminary discovery rule and obtain a favourable exercise of the judicial discretion, then it may escape the toils and delays of the FOI regime. [32] The Magistrate invited the parties to adjourn the matter in order to supplement the sparse evidence about the FOI processes. The applicant was willing to do so, but the RTA preferred to have the matter dealt with on the spot. In light of this, and the evidence in the Youngman affidavit, it is hardly surprising that her Honour concluded that it would not be reasonable for the applicant to have to make individual applications that were costly and slow. This finding of fact was, in my view, clearly correct. [Appeal dismissed. The RTA was ordered to provide preliminary discovery.]



Roads and Traffic Authority v Care Park [12.80]  Roads and Traffic Authority of New South Wales v Care Park Pty Limited [2012] NSWCA 35 [A Local Court Magistrate ordered that the RTA give preliminary discovery pursuant to UCPR r 5.2 of information identifying the registered owners of 1,397 vehicle licence plates. Care Park operated a car park in a similar fashion to the car park operated in Roads & Traffic Authority of NSW v Australian National Car Parks Pty Ltd (2007) 47 MVR 502. An appeal to a single Supreme Court judge (Adams J) failed. The RTA appealed to the Court of Appeal. A five-​judge bench was constituted as the RTA

624 [12.80]

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Roads and Traffic Authority v Care Park cont. contended that the 2007 RTA case was wrongly decided. The appeal focused on three possible interpretations of r 5.2.] YOUNG JA [24] The RTA lodged an appeal by leave to the Supreme Court which was heard by Adams J who dismissed it, though his Honour varied the order made by the Magistrate for costs. The RTA seeks leave to appeal from that decision to this Court. [25] This concurrent application came on for hearing on 9 February 2012. Mr P H Greenwood SC and Mr J Zerilli appeared for the RTA and Mr J Stoljar SC and Ms K Dawson appeared for Care Park. [26] The relevant Rule governing such applications is UCPR 5.2 [rule set out in judgment]. [27] It is necessary to refer also to the definitions in Rule 5.1 which defines the term “identity or whereabouts” as follows: includes the name and (as applicable) the place of residence, registered office, place of business or other whereabouts, and the occupation and sex, of the person against whom the applicant desires to bring proceedings, and also whether that person is an individual or a corporation. [28] It is apparent that there are difficulties of interpretation with respect to Rule 5.2. There are at least three possible constructions, which I will note in summary to be expanded later as follows: A. There are two threshold or jurisdictional barriers for an applicant to surmount, namely: (1) that he or she has made reasonable inquiries; and (2) the defendant may have information to assist. All other factors are in the realm of discretion. B. As well as the matters referred to in A, the applicant must at least also show that he or she has, at the time of the application, the purpose of commencing proceedings against the person in question. C. In order to sue, a plaintiff must have certain details. The purpose noted in 5.2.1(a) refers to collecting that detailed information. … [33] The basic complaint of the appellant before Adams J and before us is that the Court should adopt what I have called “Interpretation B” noted earlier. On this test the RTA submits, the Magistrate’s findings do not demonstrate that Care Park had “the purpose of commencing proceedings against the person” in respect of which the information was being sought. This is because, as the RTA contends, “person concerned” must mean the owner of the vehicle and Care Park might not actually commence proceedings against that person as he or she was not the person who parked the car; indeed, it might not sue at all. [34] It was common ground that, statistically, operators of car parks appear to sue only 100 out of 10,000 reported defaults. The most common proceedings are against persistent offenders who regularly park without payment. In most cases, reasons for this include that the owner of the vehicle settles the claim or satisfies the operator that, in the circumstances, no fee was payable because the car was only parked whilst the occupiers were shopping in a store which had arranged free parking with the respondent for the store’s customers or that the parking was for less than the maximum period for which free parking is permitted. [35] The appellant says that a person whose prime purpose is to issue paper demands, but only takes proceedings in about one per cent of cases, has not demonstrated that the information it requested is being sought for the purpose of commencing proceedings. [36] Adams J followed the 2007 RTA case and thus rejected the appellant’s submissions. In effect his Honour adopted Interpretation A. Subsequently, Latham J refused to give leave to appeal in a similar case on the grounds that Adams J was clearly correct; see RTA v Australian National Car Parks Pty Ltd [12.80]  625

Civil Procedure in New South Wales

Roads and Traffic Authority v Care Park cont. [2011] NSWSC 1183. The RTA says that the 2007 RTA case was wrongly decided. Hence, a bench of five judges is considering this matter. … [39] The RTA, submits that the Magistrate and Adams J applied the wrong test, that Interpretation B is correct and that an applicant for preliminary discovery under the Rule must satisfy the court that the information is sought “for the purpose of commencing proceedings”. It submits that this element is a jurisdictional matter, a threshold requirement and that the 2007 RTA case wrongly relegated it to a matter of discretion. Further, it submits that purpose is to be determined objectively and does not depend on the expressed intention of the party making the application. … [43] The RTA submits that preliminary discovery is not for obtaining information as to the identity of people who may or may not have a liability to the applicant so that it can send letters of demand to them: it is limited to occasions when someone wishes to sue a person and needs to ascertain their identity for that purpose. [44] Mr Stoljar and Ms Dawson put that Adams J’s decision was clearly correct. The Rule must be construed beneficially, not with undue technicality. Any misuse can be dealt with by the appropriate use of discretion. [45] They also put that the decisions of the Magistrate and of Adams J were evaluative decisions and should not be disturbed lightly on appeal. This is, of course so, but the prime thrust of the RTA’s submission is that the wrong test was applied below, with a focus on the applicant’s intention, rather than a focus on the objective purpose of the application. … [52] Interpretation C is largely based on the fact that the “for the purpose …” phrase is an adverbial phrase. The question then is, what does it modify? The answer is: sufficient information about the identity of the person so that he or she may be sued. On this basis, there is no need for any inquiry as to whether the applicant has a purpose to commence proceedings. [53] Interpretation C does combine nicely with Rule 5.1 so that under 5.2(1)(a) the Court is shown that the applicant has made reasonable inquiries and also that the body of information that the applicant has falls short of what is required to sue. [54] The fact that the phrase is an adverbial phrase and that Interpretation C may be nearest to the literal meaning of the Rule may make this interpretation technically correct. However, there are a number of reasons why I do not favour it. [55] First, the flavour of the authorities on the Rule is that it should be applied beneficially, purposively and not technically; see eg Hooper v Kirella [1999] FCA 1584; 96 FCR 1, 11. [56] Secondly, Pt 5.1 focuses on a person who desires to bring proceedings. [57] Thirdly, no previous decision either in this Court or the Federal Court has contemplated such an interpretation, nor does any counsel for the parties suggest it. [58] Fourthly, Interpretation C runs contrary to what Hunt J said in Re Application of Cojuangco at 521 that: the applicant must intend to commence proceedings against the person so identified. [59] Fifthly, it runs contrary to the whole concept behind this Rule, that is, that the process is in aid of pending or intended actions. In equity the Court was accustomed to follow the view of Lord Redesdale in Mitford on Pleadings (4th ed p 185). This passage was quoted and adopted by Malins VC in Reiner v Marquis of Salisbury (1876) 2 Ch D 378, 384:

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Roads and Traffic Authority v Care Park cont. This jurisdiction is exercised to assist the administration of justice in the prosecution or defence of some other suit either in the Court itself or in some other court. [60] Where there was no such suit, the Bill for Discovery was demurrable. Thus, in Cardale v Watkins [1820] EngR 207; (1820) 5 Madd 18; 56 ER 801, the whole report states: A bill was filed merely for a discovery, but stated no purpose for which the discovery was sought. A demurrer was put in and allowed; THE VICE-​CHANCELLOR [Sir John Leach], observing that a Court of Equity does not compel discovery for the mere gratification of curiosity, but in aid of some other proceeding either pending or intended, and that there must be allegations to that effect. [61] Cardale v Watkins is the basis of the opinion in Bray on Discovery (p 611) which was adopted by the Full Federal Court in Hooper v Kirella at p 9. [62] Although the Federal Court observed that its preliminary discovery rule (identical to our 5.2) departed from the old equity rule in important respects, it stated at p 11 that it “plainly contemplates that the applicant needs to ascertain the identity of the relevant person in order to institute a proceeding in the Court against him or her.” [63] Hooper v Kirella confirms the view that both under the Rule as well as with the former equitable process the procedure exists to assist a person who desires to commence proceedings, but does not have the necessary information. [64] It follows from previous decisions that whether one looks to expressed intention or objective purpose, so long as the purpose is present at the time of the application, it matters not that it is abandoned afterwards, except to the extent that any information obtained may have to be destroyed. [65] I should note that, whilst generally, the New Zealand authorities and the Australian authorities run on similar lines, the New Zealand provision speaks of an applicant who “is entitled to claim”; see eg Hetherington Ltd v Carpenter [1997] 1 NZLR 699 (CA). [66] Interpretation B suffers from the problem that it promotes an adverbial phrase into a requirement. [67] Whilst Interpretation B does catch hold of the traditional rule that the discovery must be in aid of a pending or intended proceeding in the court, it actually introduces a higher threshold by substituting “sole or major purpose” for the traditional “intended”. [68] The word “purpose” is one which can have many shades of meaning depending on context. As Viscount Radcliffe said in Chandler v DPP [1964] AC 763, 794-​5: All controversies about motives or intentions or purposes are apt to become involved through confusion of the meaning of the different terms and it is perhaps not difficult to show by analysis that the ideas conveyed by these respective words merge into each other without a clear line of differentiation. Nevertheless a distinction between motive and purpose, for instance, is familiar enough in ordinary discussion … [69] Purpose may be discovered by looking at objective facts such as the situation where a person hasSto prove the purpose of expending money on legal fees for defence of a criminal prosecution was for the purpose of earning his income (eg Putnin v Commisisoner of Taxation (1991) 27 FCR 508). However, often the only guide to an actor’s purpose will be his or her statements of intention. The cases, eg Re Application of Cojuangco at 521, use the words “purpose” and “intention” interchangeably. [70] To my mind, so inflating the concept of purpose (particularly bearing in mind the chameleon quality of that word as noted earlier) is not to be followed. The word here means no more than that the applicant has an intention or desire to commence proceedings if, after inquiry, that still is perceived as a proper course to take. [71] It is erroneous to elevate the use of the word “purpose” into a jurisdictional requirement. [12.80]  627

Civil Procedure in New South Wales

Roads and Traffic Authority v Care Park cont. [72] It is to be noted that the Rule speaks of the purpose of the applicant. It must follow that the court must look at the substantial and dominant purpose. [73] It was open to both the Magistrate and Adams J to find the purpose of the application by focussing on the respondent’s intention which was not shown to be a sham. [74] For the reasons set out above, I do not consider that either Interpretation C or B is correct. I favour Interpretation A which I consider is close to the wording and which is a practical non technical approach and is consistent with the previously decided cases. [75] On Interpretation A being accepted, it follows that Magistrate Maloney and Adams J made a finding of fact that there was the relevant purpose and that finding must stand. Thus, even if the Court were to adopt Interpretation B, the appeal would still fail. [76] I respectfully agree with Barrett JA at [120]-​[121] that enquiries which would reveal the identity of the registered owner of a vehicle “relate to” the identity of the person who parked the vehicle. [77] As to the 2007 RTA case, in my view it was correctly decided. In saying that, I bear in mind that every judicial decision is directed to deciding the points in issue in the particular case. It would be possible to read the 2007 RTA case as if it also decided matters which were not before that court. One can hardly say that the decision was wrong on that basis. … BARRETT JA [94] The discretion to make an order under rule 5.2(2) is enlivened only if the court is satisfied as to the matters in both rule 5.2(1)(a) and rule 5.2(1)(b). It is rule 5.2(1)(a) that calls for particular examination in this case. [95] The second definition in rule 5.1 is of special importance. Read in the light of that second definition, rule 5.2(1)(a) directs attention to the question whether the “applicant” (that is, according to the first definition, the person seeking an order under rule 5.2(2)) has made reasonable inquiries and, having done so, has been unable to sufficiently ascertain certain information about “a person” (including the name and, as applicable, the place of residence, registered office, place of business or other whereabouts, and the occupation and sex of “the person against whom the applicant desires to bring proceedings”) for the purpose of commencing proceedings against “the person”. [96] Attention is directed to the information that the applicant’s reasonable inquiries to date have produced regarding the person referred to in the second rule 5.1 definition, that is, “the person against whom the applicant desires to bring proceedings”. The question is whether the applicant, having obtained that information, has been unable “to sufficiently ascertain the identity or whereabouts of” that person “for the purpose of commencing proceedings against the person”. [97] The “purpose of commencing proceedings” is thus the yardstick against which sufficiency of information in the applicant’s possession is measured, not something that the applicant must have. It is the objective sufficiency of the possessed information to fulfil the “purpose” of commencing proceedings to which the court must have regard, not the question whether the applicant has a purpose of commencing proceedings. That objective sufficiency will be determined by the requirements of the rules of court prescribing the particulars of a defendant to be given in (and in connection with) an originating process of the kind appropriate to the particular proceedings. [98] The mental state that the applicant must be found to have regarding the bringing of proceedings is indicated by the words “the person against whom the applicant desires to bring proceedings”. The task of the court is to decide whether the applicant has established that he or she has such a “desire”. [99] Rule 5.2(1)(a) is, in relevant respects, similar to the rule considered in Lynx Engineering Consultants Pty Ltd v The ANI Corporation Ltd (No 2) [2007] FCA 1510; (2007) 163 FCR 372. Order 15A rule 3(1) of the Federal Court Rules then in force provided: 628 [12.80]

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Roads and Traffic Authority v Care Park cont. Where an applicant, having made reasonable inquiries, is unable to ascertain the description of a person sufficiently for the purpose of commencing a proceeding in the Court against that person (in this rule called the person concerned) and it appears that some person has or is likely to have knowledge of facts, or has or is likely to have or has had or is likely to have had possession of any document or thing, tending to assist in such ascertainment, the Court may make an order under subrule (2). [100] Order 15A rule 1 contained a definition as follows: description includes the name, and (as applicable) the place of residence, registered office, place of business, occupation and sex of the person against whom the applicant desires to bring a proceeding, and also whether that person is an individual or a corporation. [101] Siopis J said (at [26]): Order 15A r 3 permits an applicant to obtain information limited to the ascertainment of the description of the person or persons against whom he or she desires to commence a proceeding. [102] Having thus identified the person in respect of whom information could be sought as the person against whom the applicant “desires to commence a proceeding” (as referred to in the definition of “description”), his Honour continued: The definition of “description” in O 15A r 1 is indicative of the limited nature of the information which is available to an applicant under this rule –​being the basic information needed to commence a proceeding, namely, the name, address, sex and occupation of the person to be sued, and whether that person is a natural person, or a corporation. The fact that O 15A r 1 provides that the definition of “description” “includes” these items of information, emphasises the limited scope of the information that is obtainable under this rule. [103] And then: Accordingly, this rule will have application where the applicant has already identified a cause of action against an anonymous person or persons and desires to commence a proceeding against that person or those persons, but is unable to do so because of the absence of the necessary information. [104] By stating in this way the circumstances in which the now superseded Federal Court rule had application, Siopis J was identifying the matters that must “appear to the court” (to use the terminology in our rule 5.2(1)) before it can exercise the discretion conferred by the rule. His observations about the findings necessary to make the discretion available are, in my opinion, equally applicable to the provisions of the Uniform Civil Procedure Rules now under consideration. [105] One of the findings on which the power to make an order depends is a finding that the applicant “desires” to commence proceedings against a particular person whose particulars are insufficiently known to fulfil the purpose of commencing proceedings against him or her, with sufficiency for that purpose being determined in the way already mentioned. [106] The “desire” of the applicant might, in one sense, be seen as a subjective matter but it would, I think, be wrong to think that regard should only be had to what the applicant says about what he or she wishes to do. The relevant desire must be what Lopes LJ, in Midland Railway Co v Robinson (1887) 37 Ch D 386 at 405, referred to as “a bona fide desire” and not merely “a capricious desire” unsupported by any ground for believing that the object of the desire can be realised. In Lyle & Scott Ltd v Scott’s Trustees [1959] AC 763 at 779, Lord Reid said that he would not hold a desire “proved by some equivocal words or acts”. The existence of a serious question to be tried is sometimes said to depend on whether there is a substantial question of fact or law, or both, which the claimant “bona fide desires to have tried”: Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438. The same quality of genuinely held and objectively based desire is relevant [12.80]  629

Civil Procedure in New South Wales

Roads and Traffic Authority v Care Park cont. in the present context. It is therefore for an applicant under rule 5.2 to do more than simply assert some subjective desire. [107] I turn now to the 2007 RTA case and to the question of what was there decided about threshold requirements. I have already set out paragraph [12] of the judgment. It is necessary to quote also paragraphs [14] and [15]: Rule 5.2(1) effectively states two threshold requirements. First, the applicant must be unable sufficiently to ascertain the identity or whereabouts of the intended defendant despite having made reasonable inquiries. What is reasonable is a question of fact in all the circumstances. The availability of other means of ascertainment (eg resort to the FOI Act) does not in itself make it unreasonable to claim an alternative remedy under the rule (see Hughes Aircraft Systems International v Civil Aviation Authority (1995) 217 ALR 303 at 307). The cost, delay and uncertainty of alternative measures is relevant to the rule’s “reasonable inquiries” component. Secondly, the applicant must show that the respondent to the application “may have information, or may have or have had possession of a document or thing, that tends to assist in ascertaining the identity or whereabouts” of the prospective defendant. “Identity or whereabout[s]‌” is given an extended definition in r 5.1 to include: the name and (as applicable) the place of residence, registered office, place of business or other whereabouts, and the occupation and sex, of the person against whom the applicant desires to bring proceedings, and also whether that person is an individual or a corporation [108] There is reference here, in the description of the “two threshold requirements”, to “the intended defendant” and “the prospective defendant”. Part of the “two threshold requirements” is therefore a finding that there is an “intended defendant” or “prospective defendant”. This is consistent with the observation of Mason P at paragraph [12] that rule 5.2(1)(a) implies that “the applicant intends to sue the person whose identity is sought”. [109] It is true that paragraph [12] goes on to say that “[d]‌emonstration of such intention is obviously pertinent to a favourable exercise of the discretion to order preliminary discovery”. But I do not read anything in paragraph [12] or elsewhere in the judgment as saying that demonstration of the intention is not, in the first instance, part of the “threshold requirements”, as implied by the references in paragraphs [14] and [15] to “the intended defendant” and “the prospective defendant”. It follows that I respectfully do not share the opinion of McCallum J in Liu v The Age Ltd [2012] NSWSC 12 (at [76]) that the reasoning in the 2007 RTA case was that a plaintiff’s state of mind as to the future commencement of proceedings against the person concerned is appropriately regarded as a pertinent factor in the exercise of the discretion, but not as a condition precedent to the exercise of the power, provided the application is brought for a proper purpose. [110] Demonstration of a relevant state of mind of the applicant as to future commencement of proceedings was, in my opinion, seen in the 2007 RTA case as going to the availability of the discretion to order discovery. In that way, the state of mind does not first arise for consideration when the question of exercise of the discretion is being addressed. It plays a part in the decision as to the existence of the court’s power to exercise the discretion, although it may subsequently become relevant again to the question of exercise. At that later point, it may be appropriate to assess the quality of the applicant’s state of mind with respect to the bringing of the particular proceedings against the particular person and, for example, to consider whether it is insubstantial or misguided so as to make any proceedings merely speculative, doomed to fail or otherwise not deserving of the discretionary assistance that the court is empowered by rule 5.2 to give. [111] But while a finding as to the applicant’s state of mind is necessary at the threshold, it is, in my opinion, incorrect to regard the necessary finding as one that the applicant “intends” to bring proceedings; and to the extent that a different view forms any part of the decision of this court in the 630 [12.80]

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Roads and Traffic Authority v Care Park cont. 2007 RTA case, that view should not be accepted. Having regard to the second definition in rule 5.1 and its impact on the meaning of rule 5.2(1)(a) in the way I have already described, the state of mind that must be found at the threshold is that the applicant “desires” to bring proceedings. [112] It follows, in my opinion, that the correct construction of the rules is Young JA’s “Interpretation B”, but with “desire to commence” substituted for “purpose of commencing”. [113] The difference between intention (or purpose) and desire will be of little consequence in many cases, since a search for what someone “desires” will often bring to light the thing that they “intend” and demonstrate what their “purpose” is; and likewise something that a person intends or in respect of which they have a purpose is, of its nature, something that they desire, since, in the ordinary course, everyone has a desire to effectuate their intentions and purposes. As a matter of language, however, a desire may be characterised as something less fixed and certain than an intention or a purpose. A person with an intention or purpose has progressed to a degree of determination stronger than that of a person with only a desire. [114] On what I consider to be its correct construction, rule 5.2(1)(a) does not require the court to inquire into the applicant’s intention so far as proceedings against the prospective defendant are concerned; but it does make necessary an inquiry into the applicant’s desire in that regard. To inquire into intention (or purpose, which was regarded as the same thing), as both the magistrate and the primary judge did, was therefore to embark on a course that lies beyond the scope of the rule. But the positive conclusions to which they came as a result of the inquiry into intention and purpose indicate even more strongly the existence of the matter into which they should have inquired, that is, a desire on the part of Care Park. [115] It follows that, if the inquiry into intention or purpose made by the magistrate and upheld by the primary judge addressed the correct subject (in the sense of “intention to do or purpose of doing what?”), the result of that inquiry should be accepted as having determined the existence of the requisite “desire” so that, despite deviation in that respect from the course the rules dictate, appellate intervention is not warranted. [116] But did the inquiry into intention or purpose in the courts below address the correct subject? The intention or purpose of Care Park, as found by the magistrate and accepted by the primary judge, was to bring debt recovery proceedings against the owner of each relevant vehicle as recorded in RTA’s register unless Care Park, having received and considered the information brought to light through the discovery order, decided, for some cogent reason, not to proceed. Such reasons would include (a) inability of Care Park to find the person despite having the information from the register; (b) its being shown to Care Park’s satisfaction that it was someone other than the owner who had parked the vehicle in the relevant car park at the relevant time; and (c) the debt (or some smaller negotiated sum) being paid after initial contact by Care Park and before action. [117] In other words, the intention or purpose, as found, was a conditional one, the condition being that some factor making it pointless, as a practical matter, to implement the intention or purpose did not emerge once the identity of the owner had become known and normal pre-​action steps had been taken. That conditional intention or purpose was held to be sufficient for the purposes of the rules as interpreted by the magistrate and the primary judge. [118] On the construction I consider to be correct, the question that should have been addressed is whether Care Park had a “desire” to commence proceedings against each owner. The issue is therefore whether a “desire” that is conditional in the way I have described is nonetheless a “desire” of the kind with which the rules are concerned. In my opinion, it is. Someone who says, “I wish to be taken to visit my son tomorrow unless he comes to visit me today” has a present and subsisting desire about what is to happen tomorrow, albeit a desire formulated in a way that makes it clear that it will be abandoned in a stated event. The desire exists and will continue to exist unless and until terminated by the happening of that event. Assume the person merely says, “I wish to be taken to visit my son tomorrow.” The fact that it is later learned that the son is away and will not be available [12.80]  631

Civil Procedure in New South Wales

Roads and Traffic Authority v Care Park cont. tomorrow, so that an attempted visit will be futile and no visit is ultimately made, does not mean that the desire does not exist when expressed. [119] In the present case, it was open to conclude on the findings made that Care Park had, at the time it made its application for identity discovery, a genuinely held and soundly based desire to sue the owner of each relevant vehicle, albeit a desire that might be abandoned for good reason later discovered by Care Park. That was a desire of the kind relevant to the activation of the court’s discretion to make the order that was sought. It was therefore open to conclude that the threshold requirements for the exercise of the discretion had been satisfied and that the discretion was properly exercisable. [120] One other matter should be mentioned. Care Park sought information from RTA about the identity of the owners of certain vehicles but did not claim a right of action against those persons. It knew it could sue only a person who had parked a vehicle. Identification of the owner would, however, tend to assist in identifying whether it was the owner who had parked the vehicle and, if not, who had. That would be sufficient to satisfy the test in rule 5.2(1)(b). On that approach, the person concerned would be the person who parked the vehicle rather than the owner as such. [121] The order obtained from the Local Court was for the production of documents concerning each vehicle that would identify the owner as recorded by RTA. Whether they are properly described as documents which “relate to” the identity of the parker for the purposes of rule 5.2(2)(b) was not directly addressed in the course of argument. However, the term “relate to” is one of potentially broad and variable connotation; and part of the context in which it appears is the qualifying condition that the person against whom discovery is sought have information which “tends to assist in ascertaining the identity” of the prospective defendant. That context requires that a document which provides such assistance will be a document which relates to the person’s identity. Accordingly, the language of rule 5.2(2) does not require an answer different from that which would otherwise follow from the construction of r 5.2(1). [122] For reasons differing from those of Young JA, I agree that the primary judge’s conclusion was correct, even though the process by which the conclusion was reached was not. I therefore agree with the disposition of the leave application and the appeal that Young JA proposes. [Beazley, Basten and Campbell JJA agreed with the orders proposed by Young JA for the reasons given by Barrett JA. Appeal dismissed.]



Hatfield v TCN Channel Nine [12.90]  Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 [The applicant sought orders that the respondents give preliminary discovery of any episode of, and the transcript of any episode of, the television series known as “Underbelly: The Golden Mile” (“the series”) in which the applicant is named, depicted (by an actor or picture or otherwise) and/​or referred to. The applicant sought those orders to determine whether she had a claim in defamation against any of the respondents, and whether she might be entitled to urgent injunctive relief enjoining the first and second respondents from broadcasting such parts of the series which she considered might defame her. The television series would be broadcast before 11 April 2010. The applicant was concerned that the series was based on or would mirror the book by John Silvester and Andrew Rule entitled “Underbelly: The Golden Mile” (“the book”). The book is primarily, but not exclusively, concerned with events that took place in Kings Cross in the mid to late 1980s and the Wood Royal Commission in the 1990s. Chapter 3 of the book contains references to the plaintiff and her alleged relationship with John Ibrahim. The applicant appealed against a primary judge’s refusal 632 [12.90]

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Hatfield v TCN Channel Nine cont. to grant preliminary discovery. The book was admitted as evidence in the application for preliminary discovery.] MCCOLL JA (YOUNG AND SACKVILLE JJA AGREED WITH CONCLUSIONS) Preliminary discovery [45] All parties accepted the primary judge’s statement of the principles concerning an application for preliminary discovery pursuant to UCPR 5.3. However Nine also emphasised the discretionary nature of such relief, contending that it was material, in determining whether to make a preliminary discovery order, for the Court to decide whether the appellant might be successful in obtaining an interlocutory injunction to restrain an allegedly defamatory publication. No doubt Screentime did not address this aspect of UCPR 5.3 because the appellant did not foreshadow seeking an interlocutory injunction against it, having conducted the application on the presumption that Screentime had already published the series to employees and/​or agents of Nine. [46] It is convenient to set out the key principles relevant to an application for preliminary discovery. To a large part these are taken from the primary judge’s exposition of the jurisprudence in this area which was accepted by all parties. Some of the principles are drawn from case law developed in relation to Federal Court Rules O 15A r 6. There are textual differences between the two provisions. No party suggested anything turned on those differences for the purposes of this case. [47] First, “[i]‌n order for it to ‘appear’ to the Court that the applicant ‘may be entitled’ to make a claim for relief, it is not necessary for the applicant to show a prima facie or pleadable case”: Morton v Nylex (at [25]). [48] Secondly, while “the mere assertion of a case is insufficient … [i]‌t will be sufficient if there is reasonable cause to believe that the applicant may have a right of action against the respondent resting on some recognised legal ground”: Morton v Nylex (at [25]). [49] Thirdly, “belief requires more than mere assertion and more than suspicion or conjecture. [It] is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action”: St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 (at [26](d)) per Hely J, referring in turn to John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679 (at [13], [14], [17] and [73]) per Emmett J. The use of the word “may” indicates the court does not have to reach “a firm view that there is a right to relief”: Telstra Corp Ltd v Minister for Broadband, Communications and the Digital Economy [2008] FCAFC 7; (2008) 166 FCR 64 (at [58]). [50] Fourthly, the requirement that the matters set out in UCPR 5.3 “appear[s]‌” to the court to establish an entitlement to an order under the rule may be wider than the requirement in the Federal Court Order 15A r 6 that there “is reasonable cause to believe”: see Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399; (2006) 69 IPR 595 (at [22]) per Young CJ in Eq; Papaconstuntinos v Holmes à Court [2006] NSWSC 945 (at [17]) per Simpson J; Hornsby Shire Council v Valuer General of NSW [2008] NSWSC 1179 (at [33]) per Adams J. Nevertheless Hely J’s statement in St George Bank Ltd (at [26](e)) remains apposite, namely that “whilst uncertainty as to only one element of a cause of action might be compatible with the ‘reasonable cause to believe’ required by subparagraph (a), uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe”. [51] Fifthly, “the question posed by [UCPR 5.3(1)(a)] … is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective respondent [but] … whether the applicant has sufficient information to make a decision whether to commence proceedings in the Court. Accordingly, an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to the respondent and the possible strength of those defences”:  St George Bank Ltd (at [26](f)) (emphasis in original); see also Morton v Nylex (at [33]). [12.90]  633

Civil Procedure in New South Wales

Hatfield v TCN Channel Nine cont. Thus application of the rule will not be precluded by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief, as there might be matters of defence which could defeat a prima facie case: Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 1500 (at [41]) per Lindgren J; referred to with approval by the Full Federal Court (French, Weinberg and Greenwood JJ) in Telstra Corp Ltd (at [60]). [52] Sixthly, as Hely J said in St George Bank Ltd (at [26](a)), “the Rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the Court, exercised in the particular circumstances of each case”. … Identification [67] The primary judge accepted (at [105]) that the evidence demonstrated the appellant would be, or was likely to be, depicted or portrayed in the series as a constable of police played by the actor Jessica Tovey. Nine did not dispute this proposition. It was also not dispute[d]‌by Screentime in the correspondence the primary judge extracted (at [77]). Rather, its contention was that the series was not, nor would be, capable of conveying any defamatory imputation about the appellant as foreshadowed in her solicitor’s correspondence. … [70] In my view Screentime’s contention should be rejected. [71] It is an essential element in the cause of action in defamation that the matter complained of be published of and concerning, that is to say that it identify, the plaintiff. If a person is not named in a publication he or she may establish that it was published of and concerning him or herself by adducing evidence of facts which would enable a person who read, saw or heard the publication reasonably to understand it referred to him or her. The test of whether words that do not specifically name the plaintiff refer to the plaintiff or not is whether the words are “such as reasonably in the circumstances would lead persons acquainted with the plaintiff to believe that he was the person referred to”: David Syme & Co v Canavan [1918] HCA 50; (1918) 25 CLR 234 (at 238); quoted with approval in Universal Communication Network Inc trading as New Tang Dynasty v Chinese Media Group (Aust) Pty Ltd and Chan [2008] NSWCA 1; (2008) Aust Torts Reports 81-​932 (at [42]) per McColl JA (Mason P and Young CJ in Eq agreeing); see also Mirror Newspapers Ltd v World Hosts Pty Ltd [1979] HCA 3; (1979) 141 CLR 632. [72] Screentime’s submission fails to have regard to the body of evidence capable of supporting the proposition that the person identified as the character “Constable Wendy” could reasonably be understood to be a reference to the appellant. … [83] As I have said, the book was admitted without objection and was capable of being used for all purposes. It is unnecessary, in my view, to decide whether the book is based on the series or vice versa. There was clearly a strong basis for inferring some connection, having regard to the title, the statements which appear on the front of the book and the photograph of the actor who portrays Mr Ibrahim in the series on the back. The Book Tie-​In Agreement also supported the inference of some connection. Despite the two clauses the primary judge quoted, other clauses provided for Screentime to pay royalties to the books authors and for their names to appear in the series’ credits. [84] Even without the direct link for which the appellant contended, however, the book was material the appellant could use to support an inference that viewers of the series could reasonably understand that the character identified as “Constable Wendy” in the series was a portrayal of her. It was not necessary at the stage of preliminary discovery that the appellant adduce evidence which would be admissible on a final hearing to establish particular facts, in order to determine whether there is a serious issue to be tried as to those facts: Geoffrey W Hill & Associates v King (1992) 27 NSWLR

634 [12.90]

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Hatfield v TCN Channel Nine cont. 228 (at 230) per McLelland J (as his Honour then was); referred to with approval in International Finance Trust Co Ltd v New South Wales Crime Commission [2008] NSWCA 291; (2008) 232 FLR 37 (at [13]) per Allsop P (with whom Beazley JA agreed). Reasonable inquiries [85] Although the primary judge said (at [92]) there was no issue that the appellant had made reasonable inquiries for the purposes of UCPR 5.3(1)(a), Screentime contested that proposition. It contended that it had argued at trial, and submitted again on appeal, that the appellant had not made reasonable inquiries because she had not approached the authors of the book and asked them whether they had based the book on the television series. This submission appears to have been overlooked by the primary judge, but it should be rejected in this Court. [86] What constitutes “reasonable inquiries” is a question of fact, to be considered in all the circumstances of the particular case, which includes the relationship (if any) between the applicant and the prospective defendant (Steffen v ANZ Banking Group [2009] NSWSC 666 (at [15]) per McDougall J) and, I would add, the relationship (if any) between the prospective defendant and any source of information. [87] The authors of the book were clearly in the Screentime’s “camp”; the appellant could not be criticised for not approaching them, let alone not calling evidence from them: cf Payne v Parker [1976] 1 NSWLR 191. A claim for relief [88] I have set out the Civil Procedure Act definition of “claim for relief”. There is force in Screentime’s contention that that expression means, in UCPR 5.3, a claim for final, rather than interlocutory, relief. However, assuming that to be so, that requirement was satisfied here, as the appellant submitted, because any application for an interlocutory injunction would be accompanied by a statement of claim pleading a case in defamation as a basis for final injunctive relief. Furthermore the submission did not go to that part of the appellant’s application which sought preliminary discovery to determine whether to commence defamation proceedings. Whether the appellant has demonstrated error warranting appellate intervention [89] The primary judge concluded the appellant had done no more than assert an entitlement to sue or that she had a case both because he concluded she had not established the requirement of publication essential to a cause of action in defamation (at [100] –​[104]) and because (at [105]): “[h]‌aving regard to the fact that all of the relevant episodes and the series will have to be considered from the position of the ordinary reasonable viewer in context, no preliminary view can be formed about the potentially tortious nature of what is broadcast until that occurs.” In my view the appellant has demonstrated error on his Honour’s part in both these respects. Publication [90] According to the primary judge (at [19]), Screentime promoted the series on its website on 18 February 2010 under the heading “Productions” as a “DRAMA SERIES FOR THE NINE NETWORK”. Relevantly the promotion read: “The cops were bent and the crims were cool. And together they ran the most exciting street in Australia.” … “Then, in 1995, ‘tomorrow’ came and the Wood Royal Commission cleaned out the Black Empire within the NSW Police.” … “UNDERBELLY: The Golden Mile is the story of the excesses of the empire, the collapse of the empire, the chaos that followed, and the ultimate victory of strong and honest police … seen through the eyes of some of the most sexy, charming, corrupt and deadly people of the time.” [12.90]  635

Civil Procedure in New South Wales

Hatfield v TCN Channel Nine cont. “Underbelly: The Golden Mile John Ibrahim …” [91] The same website drew the reader’s attention under the heading “Reviews and Related Articles” to publications which clearly foreshadowed and/​or were reviews of the upcoming series. Two were dated August 2009 (apparently when the series was being filmed: primary judgment (at [22])), and may best be described as “related articles”. However that which appeared on “TV FIX” was described as “UNDERBELLY: THE GOLDEN MILE FIRST REVIEW, TV FIX, JANUARY 2010”, while those in the Daily Telegraph (“KINGS OF THE CROSS SMELLING LIKE ROSES IN THE NEXT UNDERBELLY”) and on ninemsn (“THIRD UNDERBELLY FOCUSES ON SYDNEY’S SLEAZE”) were both dated January 2010. [92] According to the primary judge (at [21]), a person accessing the first respondent’s website on 18 February 2010 saw a promotion stating “Underbelly 3: The Golden Mile –​Underbelly is returning soon with a brand new series, The Golden Mile” [93] The promotion read: “Underbelly: The Golden Mile is set in Kings Cross in 1989, where bent cops, straight cops, cool criminals and colourful characters all converged to make their mark. But by 1995 the Wood Royal Commission had put the ‘black empire’ under threat of collapse as strong and honest police fought to take back control of the most infamous strip in Australia.” [94] The appellant’s application for preliminary discovery necessarily depended on inviting the court to draw inferences from the best material she could access. [95] In my view the evidence the appellant adduced demonstrated that Screentime was promoting a series called “Underbelly: The Golden Mile”, which it said it [had] made for the “Nine Network”, a description the primary judge applied (at [3]‌) as a descriptor of Nine (and its affiliates), and on the same day Nine was promoting the imminent broadcast of the same series. Both were using substantially similar promotional material. In my view it was an available inference that Nine had viewed the series prior to agreeing to broadcast it –​presumably pursuant to a commercial arrangement. It would defy commonsense to accept it would broadcast, or agree to purchase for broadcast, a series sight unseen, let alone promote it as extensively as the billboard photograph evidence revealed: primary judgment (at [29]). [96] The primary judge (at [102]) inferred that there may not have been publication between Nine and Screentime because there may be an “unusual or … unlikely … arrangement” between them “whereby [Screentime] does not part with possession of the recordings that [Nine] is due to broadcast until some date closer to the screening time, which date has not yet arrived.” The Court was not taken to any material which supported the existence of such an arrangement. If it existed it was within the respondents’ ability to prove it, just as Screentime sought to dispel the notion of collusion between the authors of the book and the series’ screenplays by producing the Book Tie-​In Agreement. The fact they did not do so supports the inference no such arrangement existed. In my view the more available inference is that which I have drawn. Further any such conclusion was contrary to Mr Leopold’s frank statement to the primary judge in the course of submissions that Screentime “could hardly … say we have not published to Channel 9” –​a publication he sought to discount by adopting Nine’s submissions about the colourable nature of the appellant’s claim insofar as she sought to rely on inter-​ respondent publication: see trial transcript, 3 March 2010 at p 52.26. [97] Further the material which appeared on Screentime’s website to which the date January 2010 was attributed clearly supports the inference that the authors of the articles had had access to one or more episodes of the series for the purposes of review. [98] Finally, as it is apparent the series has been filmed and is ready for broadcast, it is apparent that the screenplays –​which were part of the materials sought in the application for preliminary 636 [12.90]

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Hatfield v TCN Channel Nine cont. discovery –​must at least have been published to the director and the actors who took part in the filming. [99] In my view the primary judge erred in concluding (at [102]) that there was “no satisfactory evidence that there has been a relevant publication of the series or any part of it by one defendant to any other defendant.” In my view the appellant also established that all, or part, of the series had been published to third party reviewers. Whether the evidence demonstrated the series may be defamatory of the appellant [100] In my view the material I have set out in relation to the issue of identification also supported the inference at the level necessary for an application for preliminary discovery (not requiring demonstration of a prima facie or even pleadable case) that the series may defame the appellant. [101] That material, as I have found, identified the appellant, as the person to be played by Jessica Tovey in the series, as having had a sexual relationship with Mr Ibrahim. The contents of the book established that there were extrinsic facts capable of supporting one or more true innuendos (Grubb v Bristol United Press Ltd [1963] 1 QB 309), including that Mr Ibrahim had been named in the Wood Royal Commission as “a new power in the drug scene”, that he was “a genuine Kings Cross gangster type” and that he had identified himself while on a dive trip with the appellant as a “crook” and that his body bore scars consistent with that self-​description; and that the appellant had attended a murder scene with which Mr Ibrahim had somehow been involved. [102] The primary judge (at [105]), with respect, tested the question of whether the appellant had established the series was likely to depict her in an “arguably defamatory” manner at too high a level –​requiring her, in effect, to know what was in the very publications she was seeking access to in order to determine whether she should commence proceedings. It was not incumbent upon her to establish that she had an “arguable” case, only that she “may be entitled to make a claim for relief”. In my view the primary judge erred in concluding that she was not so entitled. The objective evidence established at the requisite level both that the series may depict the appellant, that it had been published and that it may be defamatory of and concerning her. It was not necessary, as his Honour appears to have believed, that he be able to reach a “firm view that there [was] a right to relief”: Telstra Corp Ltd (at [58]). [103] A similar error, with respect, was made by the primary judge in dealing with whether the appellant may be entitled to make a claim for an interlocutory injunction. Critically, in rejecting this claim, his Honour adopted (at [108], [112] –​[113]) the reasons he had given in rejecting the appellant’s case that she may have a claim in defamation. This meant, in a sense, that the other discretionary considerations his Honour considered had little, or no, significance; although some, as shall become apparent, are relevant to the issue of whether his Honour might in the ultimate exercise of his UCPR 5.3 discretion have granted the relief sought. Exercise of the discretion [104] In my view the evidence before the primary judge satisfied subparagraphs (a), (b) and (c) of UCPR r 5.3. It rose above the level of mere assertion. It was reasonably capable of inclining the mind towards the fact that the appellant may have a claim for relief of the nature she foreshadowed against Nine and Screentime. [105] As I have said, the fact that Nine has indicated that it would resist any application for an interlocutory injunction on the basis of justification is a relevant, but not determinative, factor to be taken into account in considering the exercise of the UCPR 5.3 discretion. Accepting that the exercise of the discretion will be guided by whether an order is necessary in the interests of justice (Cojuangco), the Court should consider both the imputations the appellant contends might be conveyed based on the information substantially gleaned from the book, and, too, the extent to which Nine may be able to justify such imputations. [106] In my view, just as the book establishes that the series may defame the appellant, so, too, ­chapter 3 of the book makes it likely that any defamatory depiction of the appellant will be [12.90]  637

Civil Procedure in New South Wales

Hatfield v TCN Channel Nine cont. substantially based on events which came to light during the Wood Royal Commission or which were otherwise the subject of public discussion at about that time. That is apparent, too, from the promotional material. It can be inferred that Nine would be able to adduce evidence of the events and conversations referred to in c­ hapter 3 of the book. That inference is as available, in my view, as the inference that the series may convey imputations of the nature of those the appellant alleged were conveyed by the book –​a proposition the respondents did not dispute. Although, as I have said, the question of justification will ultimately have to be determined by a jury, there is, at the level of the material available for the purposes of the present application, sufficient information to conclude that it cannot be said a defence of justification is not available: cf Bonnard (at 284). [107] It would not be in the interests of justice to grant a preliminary discovery order to enable the appellant to consider whether she should commence proceedings for an interlocutory injunction in such circumstances. [108] I would also take into consideration in the exercise of the discretion the importance of leaving free speech unfettered: Bonnard (at 284). [109] The common law recognises that people have an interest in their reputation and that their reputation may be damaged by the publication of defamatory matter about them to others: Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 238 CLR 460 (at [1]‌) per French CJ, Gummow, Kiefel and Bell JJ. The common law also recognises that in considering whether to restrain an allegedly defamatory publication, the court should take into account the significance of the value of free speech: O’Neill. [110] Consistently with these two principles, the objects of the Defamation Act 2005 (NSW) (and corresponding legislation in all Australian States and Territories), include: 3 … (b)

to ensure that the law of defamation does not place unreasonable limits on freedom of expression and, in particular, on the publication and discussion of matters of public interest and importance, and

(c)

to provide effective and fair remedies for persons whose reputations are harmed by the publication of defamatory matter …

[111] Both objects may be seen to adopt the principles set out in Article 17 (“[n]‌o one shall be subjected … to unlawful attacks on his honour and reputation”) and Article 19 (“[e]veryone shall have the right to freedom of expression”) in the International Covenant on Civil and Political Rights (“ICCPR”). Regard may be had to the ICCPR, and Article 19 in particular, to give content to the concept of “freedom of expression” in s 3(b) of the 2005 Act and to emphasise (if emphasis be necessary) that that concept is not confined to freedom of speech in the sense of the right of the media to report on and discuss matters of public interest (cf Lange v Australian Broadcasting Corporation [1997] HCA 25; (1997) 189 CLR 520; Australian Broadcasting Corp v O’Neill [2006] HCA 46; (2006) 227 CLR 57) but extends to all kinds of information whether fact, fiction or “faction” (a literary genre where factual information is presented with some of the freedom for interpretation and intuitive insights that fiction allows: Macquarie Dictionary Online) as it appears the series may be: see Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20; (1995) 183 CLR 273 (at 287) per Mason CJ and Deane J; cited with approval in Kartinyeri v Commonwealth [1998] HCA 22; [1998] HCA 22; (1998) 195 CLR 337 (at [97]) per Gummow and Hayne JJ. [112] The Wood Royal Commission dealt with matters fundamental to the administration of justice in this State: the integrity of the Police Service. The appellant was a police officer whose conduct, it is apparent, was rendered “infamous” (book, at p 48) by the evidence given during the Wood Royal Commission. That status emerged some fifteen or so years ago, at least when the evidence referred to in ­chapter 3 of the book was given. Her past is, accordingly, in the public domain: cf O’Neill (at [14]

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Hatfield v TCN Channel Nine cont. referring with approval to Slicer J’s dissenting reasons for refusing the plaintiff injunctive relief in the Tasmanian Court of Appeal below). [113] In such circumstances, it can be said that the appellant has lost whatever right of privacy she might be entitled to in respect of that aspect of her reputation: see generally John Fairfax Publications Pty Ltd v Hitchcock [2007] NSWCA 364; (2007) 70 NSWLR 484. [114] It might be accepted that the series is “faction” and that to the extent Screentime has embellished the appellant’s character issues of freedom of expression in the sense often referred to in the authorities in this area do not arise. However, as I have said, one of the objects of defamation law in Australia is “to ensure that the law of defamation does not place unreasonable limits on freedom of expression”. The evidence did not support the proposition that the Court should accede to an application for preliminary discovery to ascertain whether whatever literary flourishes the authors of the screenplay have used, or whatever form of method acting Ms Tovey may have deployed to play her character, should be restrained prior to the series being broadcast. [Appeal dismissed]



Rinehart v Nine Entertainment [12.100]  Rinehart v Nine Entertainment Co Holdings Ltd [2015] NSWSC 239 [By summons, Gina Rinehart sought an order pursuant to UCPR r 5.3 for preliminary discovery of: (a)

Episode 2 of the defendant’s mini-​series “House of Hancock” scheduled to be broadcast on the evening of 15 February 2015;

(b)

All documents that are or have been in the possession of the defendant relating to or evidencing attempts by the defendant, its servants or agents, to ascertain or establish the portrayal of incidents of the life of the plaintiff and/​or her father, including statements attributed to them as factually true.

The application was granted.] GARLING J [7]‌I should say a little about the parties. In doing so, I should note that this application has come to the court in the duty list, and has been heard in circumstances of real urgency. The time available to me to prepare lengthy, extensive, well-​drafted and carefully crafted reasons for my decision is non-​ existent. These reasons are necessarily shorter than otherwise would be desirable, but the simple fact is that it is in the interests of the parties that this matter be determined today. [8]‌The plaintiff is Georgina Hope Rinehart. I am told by the affidavit in support of her application, that she is the chairperson of the Hancock Group, a corporate group including Hancock Prospecting Pty Ltd, which is a large investor and employer in Perth, Brisbane and the Pilbara. It is claimed to be the owner of the largest land-​based mine construction project in Australia. The major project under construction is one which has both domestic and international implications, and has a number of major Asian companies as minority partners. The product of the Roy Hill Mining project is intended to be sold to Asia. Directly, and indirectly, the project employs over 5,500 Australian workers, and, by extension, many more contractors, subcontractors and small businesses, whose livelihood is derived from being directly, or indirectly, involved in such a project. Mrs Rinehart’s solicitor, who has acted for her for a considerable period of time, says that her reputation is an essential component of her business. [9]‌The defendant is named as Nine Entertainment Holdings Limited. It is unclear whether that company, or other companies in the Channel Nine stable, such as TCN Pty Ltd and/​or Nine Network [12.100]  639

Civil Procedure in New South Wales

Rinehart v Nine Entertainment cont. Australia Pty Ltd, is the correctly named defendant. Senior counsel, who has appeared for the named defendant, has, entirely appropriately, not taken any issue with the precise name of the defendant (which will be provided to the Court as soon as is practicable) but, in all respects, senior counsel has put submissions on behalf of any, and all of the companies that might fall within the Channel Nine stable. [10] Channel Nine is the television network which broadcasts around Australia, and which is the group that intends to broadcast the program at the heart of this application. The Program –​“The House of Hancock” [11] For some considerable period of time there has been foreshadowed the broadcast of a program –​ variously called a telemovie, television movie, a six-​episode mini-​series, or something similar –​entitled the “House of Hancock”. In the promotions for the program “House of Hancock”, it has been variously described as a drama, something which is based partly in fact and something which has been partly dramatised. [12] Mr Gyngell, who is the chief executive officer of the Nine Entertainment Company, in an email of 30 January 2015, described the program in these terms: The program to which your letter refers is a dramatised account of events focusing on the personal relationships between family members, each of whom are iconic in the minds of the Australian public. It seeks to depict this chapter of Australian history, and the personal and professional achievements and struggles of the key players in an honest and entertaining way. [13] On 2 February 2015, Channel Nine’s lawyers, in a letter of that date, described it in this way: The mini-​series is a dramatised depiction of the very public history of the Hancock dynasty. It is based upon extensive research and reliance upon reputable sources, including material from various court proceedings. In such a colourful family saga, there is no one version of what is the true story. The producers, however, believe the mini-​series is a fair and balanced account of events. [14] The evidence establishes that the plaintiff has not been asked directly to give her account of any of the events, the subject of the mini-​series or the show. [15] On 2 February 2015, the solicitors for Ms Rinehart wrote to Mr Gyngell, and described what they understood to be the content of the series, and expressed concern that the series is being marketed or advertised as a true story. The letter made a request for a pre-​publication review of the series to “identify factual inaccuracies which will or are likely to impact or damage our client’s valuable reputation and/​or business relationships”. In response to that letter, the letter of 2 February 2015 from the solicitors for Channel Nine was sent, which declined the request to undertake a pre-​publication review, somewhat tangentially describing the request as one to, effectively, “edit the mini-​series”. [16] A further request was made by email at 1.44pm on Thursday, 12 February 2015. This request came at a time after the first of the two episodes of the “House of Hancock” story had been broadcast. A transcript of that show has been tendered in evidence. I have had occasion to read quickly through the transcript, which is an incomplete way of fully understanding what was shown in the first episode, but it is fair to say that the episode covered both the personal life of the plaintiff, her father and members of her family, and also features of the business, both past and present, of the Hancock Group. [17] With respect to the second episode, which is intended to be telecast this coming Sunday evening, 15 February 2015, the plaintiff asks the Court to draw inferences about the content of the show from a mixture of promotional material and public comments made by an apparently reliable, and apparently objective television critic, Mr Peter Ford. I say apparently reliable and apparently objective, because Mr Ford had been a guest on “A Current Affair”, a program broadcast by Channel Nine on Wednesday 11 February 2015, at 7.13pm, and made comments without demur, contradiction or protest from Channel Nine. 640 [12.100]

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Rinehart v Nine Entertainment cont. [18] With respect to the second episode, Mr Ford and the producer of the program, Mr Cordell, made the following remarks on “A Current Affair”. First, according to Mr Cordell the program is a drama, and the producers were not intending to make a documentary. Mr Cordell said that he was not at all surprised that some of the main players would be uncomfortable about the episode which he described in this way: This is a big, explosive “Dallas”-​type drama, and a lot of it we did not have to make up. A lot of it is on the public record. [19] Second, the Channel Nine reporter, in the course of this show, introduced a segment of the “House of Hancock” with these words: For those who doubt the authenticity of “House of Hancock”, here’s a scene from the drama. She went on to say: And here’s the real thing. Immediately after that comment, the producer, Mr Cordell, is seen and heard to say: We quite happily defend anything and everything in our film, even though parts of it have been created, as firmly grounded in truth. [20] Third, in the course of this interview, Mr Ford, in the presence of the Channel 9 host, Ms Tracey Grimshaw, and the producer of the “House of Hancock”, Mr Cordell, said, amongst other things, the following: This is a ripping yarn. Look, I think it’s a great piece of television. It is gripping. You simply could not sit down and make this stuff up. It is straight out of “Dynasty”. In his presence, Ms Grimshaw concluded the interview by saying: Entertainment reporter, Peter Ford says “House of Hancock” is one of the best dramas of the year, with even a more explosive conclusion this Sunday. Mr Ford added: I think it is must-​see television on Sunday night, except for Mrs Rinehart. She should definitely make plans to go out to dinner next Sunday night. The producer, Mr Cordell, added the following: And I think by the end of series, you know, Australians will better understand her and hopefully will have a little more sympathy for the person she’s become. [21] On the following day, Thursday 12 February 2015, at 8.22am, Mr Ford, who had been allowed by Channel 9 to view the second episode, either in its final form or in its near final form, was interviewed on a radio station. He said this: Now, on Monday, I had to be somewhat cryptic about the “House of Hancock” part 2, because I had signed an embargo, which is now lifted, and I can tell you, I have seen part 2 of “House of Hancock”, and if Mrs Rinehart was unhappy with what she saw last Sunday night, she should definitely go out to dinner next Sunday night, because it’s like twenty times worse about her. They make her look like an obsessed, vindictive shrew. I felt very sorry for her. I actually don’t know the woman at all. I’ve never met her. And I can’t believe that somebody could truly be that sour about life. But that’s the picture they have painted of her. [22] The radio interviewer asked, perhaps tongue in cheek, whether Mr Gyngell, the CEO of Channel Nine, ought be applying for any jobs at the Hancock Group. Mr Ford doubted that he should. Further, Mr Ford said this: But there’s a very final scene in the “House of Hancock”. If you stick around to watch it, I reckon your jaw will drop. I reckon it’s going to have everybody talking on Monday. [12.100]  641

Civil Procedure in New South Wales

Rinehart v Nine Entertainment cont. [23] Earlier in the week, Mr Ford had made other comments about the second episode on Radio Station 6PR. He said that he was not allowed, by virtue of the embargo, to give away any details. But he did comment that if Mrs Rinehart was unhappy with last night show, “Boy, she should make some other plans for next Sunday night.” He also said, when asked by the interviewer in what was somewhat curiously described as a “philosophical question”, whether he thought that the average viewer watching a show like “House of Hancock” would think that what they were seeing is exactly what happened, or would they take it with a grain of salt. Mr Ford said: In Perth, of course, you’re very close to it, that it probably all seems very real. To people, I think, on the East Coast, it is still despite all the publicity, still seems like an episode of “Dynasty”. So in that sense, now the point is, also when you are putting together a story like Mrs Rinehart’s and Lang’s and Rose’s, you’ve got to take shortcuts. That’s the reality. You cannot, you are not making a documentary, you are going to have to, you know, do hybrid characters. You are going to have to create scenes that perhaps never happened, and in doing so, there’s no doubt you are going to hurt some people along the way. So it’s almost collateral damage. [24] Further, he went on to say: My gut feeling was most people would probably come away only having confirmed whatever it was they thought of Rose and Gina. I don’t think anybody came away with any great revelations or different opinion. For better or for worse, I think next Sunday night will change people’s opinion about her. [25] These revelations and comments about the show contained in the evidence filed by Mrs Rinehart, have not been the subject of any contradictory evidence put before the Court by the defendant. Conclusions about the Program [26] Having regard to all of the evidence before the Court, it seems to me that the plain and obvious inference to be drawn from the totality of these remarks, and, in particular, the remarks made and broadcast by Channel Nine at 7.30pm on 11 February 2015 on “A Current Affair”, is that there is a real prospect that statements will be made and published in the second episode of the “House of Hancock” which are not entirely accurate, perhaps, even probably, have been made up, and do not accurately reflect the truth. Accordingly, I draw an inference that some or all of what is to be published in the second episode may give rise to imputations defamatory of Mrs Rinehart’s reputation. [27] I have couched this finding in hesitant terms. I have not seen the second episode, nor have the lawyers for Mrs Rinehart. However, I draw the inference, which I have spoken about, from what has been published in the promotional lead-​up material, and in the absence of any contradictory material. It is an inference drawn solely for the purpose of this application, and in no way reflects what may be the fact from the script of the episode or from the viewing of it. [28] Accordingly, I conclude from this that the plaintiff has proved in this application, the existence of a real issue about whether the content of the program will be reasonably accurate and truthful, and whether statements which will be made are defamatory of the plaintiff’s reputation. Reasonable Inquiries [29] Subject, then, to the consideration of the phrase “reasonable inquiries” of r 5.3(1)(a) of the UCPR, I am satisfied that the plaintiff is a person who may be entitled to make a claim for relief against Channel Nine (or the relevant company within its group). That claim for relief would include the claim for a prepublication injunction. To satisfy the Court that the threshold issue of r 5.3(1)(a) has been satisfied, the plaintiff must show that she has made reasonable inquiries to obtain relevant information sufficient to enable her to make the decision discussed in that sub-​rule. [30] By letters dated 2 February 2015 and 12 February 2015, the plaintiff made a request to the relevant people for access to both the first and the second episode of “House of Hancock”. Those requests have either been refused, or else simply ignored. 642 [12.100]

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Rinehart v Nine Entertainment cont. [31] The defendant’s senior counsel has indicated that the defendant opposes the application for preliminary discovery. This approach maintains what appears to be a considered view that the applicant, Mrs Rinehart, is not entitled to and should not be given, in the absence of a Court order, access to the program, in particular the second episode. Senior counsel for the defendant submitted that I would interpret the phrase “reasonable inquiries” in r 5.3(1)(a) of the UCPR by having regard to the time at which any request was made. I accept that that is one relevant factor. Another relevant factor is that the applicant has to be able to come to the view that they are a person entitled to make a claim for relief in accordance with the rule. And accordingly, although the principal request was only made within the last few days, I do not think that the shortness of time before this application was brought means that any inquiry is unreasonable. [32] The fact is that regardless of when the inquiry was made, the defendant was not going to reveal the contents of the program to Mrs Rinehart before it was televised. [33] Accordingly, I am satisfied that each of the three threshold matters in r 5.3 of the UCPR have been established. However, that is not an end of the matter. Discretion [34] In the way in which this application has been argued, it is probably the beginning, because, as authority makes plain, the Court has a discretion as to whether or not it should make an order that the prospective defendant must give discovery to the applicant of the claimed documents. [35] Wherever the Court is considering the exercise of its discretion, and the making of an order under the UCPR, it is obliged by the Civil Procedure Act to give effect to the overriding purpose set out in s 56(1) of the Act. The overriding purpose is in the following terms: The overriding purpose of this Act and of the 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. I will bear in mind the statutory requirements on the Court to seek to give effect to that overriding purpose. [36] The defendant argued that even if the first three threshold questions were established, the court would not, in the exercise of its discretion, make the orders sought. In so arguing, it relied upon the following matters. [37] First, that it was a practical futility to make the order for preliminary discovery, because there was only a very low or remote prospect of success of the plaintiff being able to obtain from the court an injunction to prevent publication of the second episode. [38] Secondly, the defendant submitted that that prospect of success was the same whether or not the pre-​publication injunction was sought with respect to a claim in defamation, or a claim in injurious falsehood, both of which causes of action the plaintiff’s counsel had described as being reasonably available on the material before the court. [39] Thirdly, the defendant argued that in considering the exercise of its discretion, the court would have careful regard to the importance of the principle of free speech, and the desirability of not restricting free speech in any way. [40] Fourthly, the defendant argued that the issues likely to arise in the second episode which may adversely affect the reputation of the plaintiff, Mrs Rinehart, were already in the public domain, and accordingly the interests of justice would not be served by making the orders sought. In making that submission, the defendant drew strength from the fact that, notwithstanding expressions of concern by Mrs Rinehart prior to the publication of the first episode of the “House of Hancock”, she had not commenced any action for damages, nor had she claimed any defamation, or other cause of action, arising out of the first episode of the “House of Hancock” which was broadcast last Sunday night.

[12.100]  643

Civil Procedure in New South Wales

Rinehart v Nine Entertainment cont. [41] Finally, the defendant identified detriment to it from the making of the order for preliminary discovery with respect to the publication of the second episode. The defendant did not claim specific detriment in the sense that it would be complex, costly or otherwise an undue burden on it to provide a copy of the show to the lawyers for the plaintiff, accompanied by appropriate restrictions of confidentiality, but rather argued that any breach of the principle of free speech was of significant detriment to the effective maintenance of that principle in a free democracy. Prospect of Success in Obtaining Pre-​Publication Injunction [42] It is necessary, in considering the exercise of my discretion and these submissions, to return to the principal submission upon which much time was occupied in argument; namely, whether there is a remote or very low prospect of the plaintiff being able to obtain an injunction to prevent publication of the show. I will consider that issue by reference, initially, to any cause of action for such injunction based on an action for defamation. [43] Time does not permit a lengthy description of all of the legal principles which underlie whether or not a pre-​publication injunction is available to combat a threatened defamation. It is appropriate to attempt to summarise those principles, which are further enunciated in the decision of the High Court of Australia in Australian Broadcasting Commission v O’Neill [2006] HCA 46; (2006) 227 CLR 57, at [18] and [19] in the joint judgment of Gleeson CJ and Crennan J, and, as well in the judgment of Kirby J at [142]-​[144]. [44] Putting it shortly, I accept that the test for whether an injunction prior to publication would be granted involves, first, the application of the ordinary principles for the grant of any interlocutory injunction; namely, a court will ask whether a plaintiff has shown that there is a serious question to be tried as to their entitlement to relief, whether they have shown that they are likely to suffer injury which damages would not be an adequate remedy, and that the balance of convenience favours the granting of an injunction. [45] Second, to those general principles, I add, and take account of this statement in O’Neill, by Gleeson CJ and Crennan J at [18]: In the context of a defamation case, the application of those organising principles will require particular attention to the considerations which courts have identified as dictating caution. Foremost amongst those considerations is the public interest in free speech. A further consideration is that in the defamation context, the outcome of a trial is especially likely to turn upon issues that are by hypothesis unresolved. Where one such issue is justification, it is commonly an issue for jury decision. In addition, the plaintiff’s general character may be found to be such that even if the publication is defamatory, only nominal damages will be awarded. (citations omitted) [46] It has been said in many earlier authorities that, with respect to pre-​publication injunctions in defamation, the power of the court is exercised with great caution, and further, that if there is any real room for debate as to whether the statements complained of are defamatory, the injunction will be refused. As well, it has generally been said in the earlier authorities that if there is any real ground for supposing that the defendant may succeed upon a ground of defence, such as privilege or truth or public benefit, the injunction will be refused: see Stocker v McElhinney (No. 2) [1961] NSWR 1043 at 1048 per Walsh J. [47] In Hatfield v TCN Channel Nine Pty Ltd [2010] NSWCA 69, each of the members of the Court said that in considering the exercise of its discretion, the Court should pay careful attention to the question of whether or not the chance of success in obtaining a pre-​publication injunction can properly be described as low, extremely low, or remote. Sackville AJA said at [165] of that decision: That the appellant’s chances of obtaining an interlocutory injunction are extremely low or remote is in my opinion a powerful consideration militating against exercise in her favour of the discretion conferred by r 5.3.

644 [12.100]

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Rinehart v Nine Entertainment cont. [48] Having regard to the urgent nature of this application, which is one for a form of preliminary discovery, the court is necessarily approaching the determination of whether the prospect of obtaining an injunction prior to publication is low, extremely low or remote or on the basis of quite limited material [sic]. For example, the court does not have the content of the proposed publication; it has merely comments about it. It does not have material which enables it to form a view, even on a prima facie basis, as to whether financial loss or damage may ensue. [49] But, as the decision in Hatfield makes plain, when considering an application of this kind, each case must clearly turn on its own facts. A good example of this is, that, in Hatfield, whilst preliminary discovery was being sought of episodes of a mini-​series, called “Underbelly: The Golden Mile”, the plaintiff was in possession of a book which had been published upon which the miniseries was clearly based. On the facts of that case, that book and the intended broadcast were largely, if not entirely, based upon evidence which had been given in a publicly conducted Royal Commission. In addition, in that case the primary judge and the Court of Appeal were free to make their decision with a careful analysis of all of that material and with the benefit of some time, as the telecast of the mini-​series was not imminent. Discernment [50] I intend to approach this application by asking whether I am satisfied, on the material before me, that the prospect of the plaintiff obtaining a pre-​publication injunction, based on claim in defamation, is so low or remote as to mean that there is a practical futility in the granting of an order for preliminary discovery. Regardless of where the legal onus lies, the defendant faces a much higher hurdle than does a plaintiff to satisfy the Court that the prospect of obtaining a pre-​publication injunction is low, extremely low or remote. [51] If nothing else, if the comments of Mr Ford during, and the contents of “A Current Affair” broadcast on Channel Nine on 11 February 2015, and the later remarks of Mr Ford, are to be taken as being reasonable statements, objectively made, about the program, I am not persuaded that a suggestion that a broadcast of a program that makes an individual look like an obsessed, vindictive shrew could be regarded as having such low prospects of a pre-​publication injunction as to fall within the description of low, very low or remote. Nor can I be satisfied by reference to anything else described by Mr Ford that the episode does not give rise to or may not give rise to imputations which are seriously defamatory of Mrs Rinehart’s character. [52] I need also to consider, when considering whether or not a prepublication injunction should be granted, the issue of whether the defendant would seek to justify the contents of those imputations. [53] Senior counsel for the defendant submits that his client will, if sued, or alternatively in response to an application for a pre-​publication injunction, rely upon a defence of justification of the matters to be published. Senior counsel points to the fact, that that is a matter of considerable weight to be taken into account in determining whether a pre-​publication injunction should run. I accept the legal principles to which I have earlier made reference which require this Court, should it consider exercising its discretion to grant a pre-​publication injunction, to be cautious in its approach, and particularly cautious about making a decision in the presence of, or the likely availability of a justification defence. As McColl JA said at [65] in Hatfield: The court should also be cautious about making a decision about whether or not a defendant may be able to mount a justification defence in the absence of material indicating the nature of the allegedly defamatory material. [54] I accept that the evidence before this Court, primarily to be derived from annexures to the affidavit of the defendant’s solicitor, indicate that there have already been a number of publications about the plaintiff. One, a particularly lengthy publication, describes her quest for respect and gratitude. There are other publications, the detail of which I have been taken to, and to which I have had regard. Whether or not that is the material upon which a justification defence would be based is, of course, unknown, and unable to be established at this stage. [12.100]  645

Civil Procedure in New South Wales

Rinehart v Nine Entertainment cont. [55] I do not express any final or formed conclusion about the prospects of success of the plaintiff obtaining a pre-​publication injunction, but, on the material before me in this case, I am not prepared to find that such prospects are low, remote or extremely low, or otherwise of a kind, which would mean that a claim for such relief is a practical futility. Injurious Falsehood [56] The plaintiff also relied upon a claim for relief based upon the tort of injurious falsehood. The law relating to that tort is far from settled in respect of the extent of it. In those circumstances, and because it is unnecessary for me to express any view about it, I do not do so. It is unnecessary for me to have regard to that, in order to consider the exercise of the discretion in this case. Principle of Free Speech [57] The defendant drew the attention of the Court to the proposition that, in exercising its discretion, the importance of the principle of free speech and the importance of leaving free speech unfettered is to be considered and given prominence. I have not the slightest doubt that such principle is important, and I have paid careful attention to it. It must be said, in the Australian context, that it is not a wholly unconstrained principle. The tort of defamation provides a constraint, as does the very availability of a pre-​publication injunction. However, I do carefully have regard to that principle in considering whether or not the order for preliminary discovery should be made. It will be necessary to weigh it in the balance with my conclusion on the likelihood of, or prospect of, obtaining pre-​ publication injunction relief. [58] The third matter upon which the defendant relied was that the issues likely to arise in the second episode are already in the public domain, and it is not in the interests of justice to make the preliminary discovery order. That submission was largely based upon the letter written by the plaintiff’s solicitor on 12 February 2015, in which, based upon the promotional material and the statements to which I have earlier referred which had been made publicly. The defendant submitted that the reputational issues raised in the letter from the plaintiff’s solicitor are already in the public domain. [59] As I have said, by reference to the annexures to the affidavit of the defendant’s solicitor, there is no doubt that there have been many published stories about the plaintiff’s character, reputation, personality, business affairs and private affairs. In that sense, and in the respects set out in those documents, the plaintiff is a public figure of some notoriety. No doubt, as a consequence of what has been previously been published, people will have a view about the plaintiff and her reputation. [60] However, the determination of whether the matters likely to arise in the second episode are already in the public domain is necessarily made on the basis of incomplete material. The defendant has not placed the second episode before the Court. It may in due course be tendered to the Court, and the contents of it, and other publicity about the plaintiff, may be a very good reason why a pre-​ publication injunction is not granted. But I must determine this application, at this preliminary stage, on the material I have. I am wholly unpersuaded that the sort of defamatory imputations which might arise in the second episode, are already in the public domain. [61] Finally, I note that the defendant submitted that there was a detriment to the defendant’s position by any breach of the principle of free speech. To the extent that that is so, I take it into account. Conclusion [62] I come, then, to consider by a balance of all of those matters, whether it is in the interests of justice to make the order sought, for preliminary discovery. I have, of course, weighed in favour of the order that Mrs Rinehart through her lawyers has put: that there is a possibility of a serious defamation; that they cannot determine whether they have a claim for relief unless they see the material; that the claim for relief upon which they rely is to be a pre-​publication injunction; and that the plaintiff’s reputation is important to her business and that her business is a substantial one. I note, although this has not been specifically addressed, that one factor which weighed in the discretionary balance in Hatfield was the financial capacity of the plaintiff in that case to proffer an undertaking as to damages which would be 646 [12.100]

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Rinehart v Nine Entertainment cont. required in the event that a pre-​publication injunction was to be made. That does not seem to me, in the context of this present application, to be a matter to which I should give any weight. [63] On the other side, as I have said in the exercising of the discretion, I am not persuaded that the prospect of obtaining a pre-​publication injunction is so low as to indicate it is one of practical futility, nor am I persuaded that so powerful is the right to free speech, and so detrimental is any impact upon it, that it is sufficient to outweigh the balance in favour of making the order. [64] Accordingly, I conclude that I am satisfied, in the exercise of my discretion that an order under r 5.3 of the UCPR for preliminary injunction ought be made. I propose shortly to make it. [65] An issue arises, however, as to precise terms of that order, upon which I will now hear the parties. (Counsel addressed) [66] I make the following orders: (1)

Pursuant to rule 5.3 of the Uniform Civil Procedure Rules 2005, I order that the defendant forthwith discover, or cause to be discovered to the plaintiff a digital video disc of Episode 2 of the program “House of Hancock” (“the DVD”) scheduled to be broadcast on the evening of Sunday, 15 February 2015.

(2)

I order that the DVD discovered to the plaintiff only be viewed by the plaintiff, senior and junior counsel presently retained by the plaintiff, Mr Mark Wilks and his associate solicitor presently acting, Ms Kim Hamilton, Mr Brad Ross and Mr Tad Watroba.

(3)

I order that the named persons have access to the DVD for the sole purpose of considering whether the plaintiff personally may be entitled to make a claim for relief from the Court against the defendant and whether or not she should commence proceedings against the defendant.

(4)

I order that the DVD provided by way of discovery is not to be copied or reproduced in any way unless:



(a)

essential for the purpose of the plaintiff and Mr Watroba viewing the contents of the program; and



(b)

only to the extent necessary to be reproduced in evidence to be tendered to this Court in any claim for relief which the plaintiff may bring.

(5)

I direct the parties to confer about whether there is a more efficient electronic means by which the contents of the DVD can be securely electronically transmitted to the plaintiff and Mr Watroba, other than by making a copy of it.

(6)

I order that any copy of the DVD not itself be copied or further distributed, and that the custody of such copy be limited to Mr Wilks and Ms Hamilton, unless essential for the obtaining of instructions from the plaintiff and the viewing of it by her and Mr Watroba. In such event, any such copy is to be forthwith returned to the custody of Mr Wilks.

(7)

I order that no later than 9.15pm tonight, the solicitors for the plaintiff are to notify the solicitors for the defendant by electronic mail of any decision to commence proceedings to make a claim for relief by way of pre-​publication injunction with respect to the broadcast of the episode of the House of Hancock on Sunday, 15 February 2015. I order that any such notification also be provided to the Court through my Associate.

(8)

If the plaintiff intends to commence proceedings, I order that the solicitors for the plaintiff provide to the solicitors for the defendant no later than 8am, Saturday 14 February 2015, a copy of the pleadings to be relied upon and all evidence in support of such application.

(9)

I order that if the defendant wishes to rely upon any evidence or other material, it is to be provided by electronic mail to the solicitors for the plaintiff by no later than 11.15am, [12.100]  647

Civil Procedure in New South Wales

Rinehart v Nine Entertainment cont. 14 February 2015. In the event that such application is made, or is to be made, I fix it for hearing before me at 12 noon tomorrow, 14 February 2015. I direct that a copy of any electronic exchange of pleadings or evidence be provided to my Associate. (10)

I direct that a copy of Episode 2 of the “House of Hancock”, which is to be discovered to the plaintiff, be provided to the Court in a securely sealed package by delivery to the Court security staff by 10am, 14 February 2015.

(11)

I reserve all questions of costs.

(12)

I stand over the balance of the relief sought in the Summons in these proceedings to 2pm Friday 20 February 2015.



NOTICES TO PRODUCE [12.110] The UCPR allow parties to serve notices to produce any specified document or thing

on another party. Notices to produce act in a similar way to subpoenas but they do not need to be filed with the court. After a party is served with a notice, it needs to provide inspection of the document or thing within a reasonable time. Reasonable time is taken to be 14 days after service of the notice. Again, there is a limitation placed on notices in personal injury actions (UCPR r 21.12).

Uniform Civil Procedure Rules 2005 (NSW) [12.120]  Uniform Civil Procedure Rules 2005 (NSW) rr 21.9–​21.13 Division 2 –​Notice to produce before hearing 21.9 Definitions (1)

In this Division:

“notice to produce” means a notice to produce referred to in rule 21.10. “party A” means a party to whom another party is producing, or being asked to produce, documents or things for inspection. “party B” means a party who is producing, or being asked to produce, documents or things for inspection. (2)

For the purposes of this Division, a document or thing is to be taken to be relevant to a fact in issue if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or thing would be admissible in evidence.

21.10 Notice to produce for inspection by parties (cf SCR Pt 23, r 2 (1); DCR Pt 22, r 2 (1), (1A) and (2)) (1)

Party A may, by notice served on party B, require party B to produce for inspection by party A:



(a)

any document or thing that is referred to in any originating process, pleading, affidavit or witness statement filed or served by party B, and



(b)

any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue.

648 [12.110]

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Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

A notice to produce may specify a time for production of all or any of the documents or things required to be produced.

21.11 Production under notice to produce (cf SCR Pt 23, r 2 (3) and (4); DCR Pt 22, r 2 (3) and (4)) (1)

Unless the court orders otherwise, party B must, within a reasonable time after being served with a notice to produce:



(a)

produce for party A’s inspection such of the documents or things referred to in the notice (other than privileged documents) as are in party B’s possession, and



(b)

serve on party A, in respect of any document that is not produced, a notice stating:



(i)

that the document is a privileged document, or



(ii)

that the document is, to the best of party B’s knowledge, information and belief, in the possession of a person identified in the notice, or



(iii)

that party B has no knowledge, information or belief as to the existence or whereabouts of the document.

(2)

For the purposes of subrule (1):



(a)

unless party B establishes to the contrary, 14 days or longer after service of the notice is to be taken to be a reasonable time, and



(b)

unless party A establishes to the contrary, less than 14 days after service of the notice is to be taken to be less than a reasonable time.

21.12 Personal injury claims (cf SCR Pt 23, r 5, Pt 24, r 1 (3); DCR Pt 22, r 5) In any proceedings on a common law claim: (a)

for damages arising out of the death of, or bodily injury to, any person, or

(b)

for contribution in respect of damages so arising,

a party is not required to comply with a notice to produce in relation to a document or thing that has not been referred to in any originating process, pleading, affidavit or witness statement filed or served by that party unless the court, for special reasons, orders otherwise. 21.13 Costs and expenses of compliance (cf r 33.11) (1)

The court may order party A to pay the amount of any reasonable loss or expense incurred by party B in complying with a notice to produce.

(2)

If an order is made under subrule (1), the court must fix the amount or direct that it be fixed in accordance with the court’s usual procedure in relation to costs.



Uniform Civil Procedure Rules 2005 (NSW) [12.140]  Uniform Civil Procedure Rules 2005 (NSW) rr 34.1–​34.3 Part 34 Notices to produce at the hearing 34.1 Notice to produce to court (cf SCR Part 36, rule 16; DCR Part 28, rule 18; LCR Part 23, rule 9)

[12.140]  649

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (1)

A party may, by notice served on another party, require the other party to produce to the court, or to any examiner:



(a)

at any hearing in the proceedings or before any such examiner, or



(a1)

at any time fixed by the court for the return of subpoenas, or



(b)

by leave of the court, at some other specified time,

any specified document or thing. (2)

The other party must comply with a notice to produce:



(a)

by producing the notice or a copy of it, and the document or thing, to the court, or to the examiner authorised to take evidence in the proceeding as permitted by the court, at the date, time and place specified for production, or



(b)

by delivering or sending the notice or a copy of it, and the document or thing, to the registrar at the address specified for the purpose in the notice, so that they are received not less than 2 clear days before the date specified in the notice for production.

34.2 Production under notice to produce to court (cf SCR Part 36, rule 16; DCR Part 28, rule 18; LCR Part 23, rule 9) (1)

Unless the court orders otherwise, the other party must produce the document or thing in accordance with the notice to produce, without the need for any subpoena for production, if the document or thing is in his or her possession.

(3)

Except by leave of the court, a party may not search for, or inspect, any document or thing that has been produced by another party under this rule but not admitted into evidence.

34.3 Costs and expenses of compliance (cf rule 33.11) (1)

The court may order the party requiring production to pay the amount of any reasonable loss or expense incurred by the party required to produce in complying with a notice to produce.

(2)

If an order is made under subrule (1), the court must fix the amount or direct that it be fixed in accordance with the court’s usual procedure in relation to costs.



Patonga Beach Holdings v Lyons [12.145]  Patonga Beach Holdings Pty Ltd v Lyons [2009] NSWSC 869 BARRETT J [1]‌I am dealing with the plaintiff’s interlocutory process filed on 12 August 2009 in these proceedings brought under s 459G of the Corporations Act 2001 (Cth) in respect of a statutory demand served on the plaintiff by the defendants. [2]‌The interlocutory process relates to a notice to produce served by the defendants on the plaintiff pursuant to rule 21.10 of the Uniform Civil Procedure Rules 2005. That notice, by its terms, requires the plaintiff to produce for inspection to the defendants documents described in its paragraphs 1, 2 and 3 as follows: 1. Any dealing or agreement concerning the unregistered leasehold to Colo Investments Limited of the premises situated in Vanuatu being leasehold title number 11/​OD22/​069 located at Rue de Paris, Port Vila, Vanuatu. 650 [12.145]

Discovery, Subpoenas and Interrogatories  Chapter  12

Patonga Beach Holdings v Lyons cont. 2. Any dealing being a transfer or assignment of the leasehold estate of the premises situated in Vanuatu being leasehold title number 11/​OD22/​069 located at Rue de Paris, Port Vila, Vanuatu from Club Vanuatu Limited to any party other than Colo Investments Limited. 3. Any documents establishing Robert Osborne as the sole beneficial interest holder in Colo Investments Limited and Lakehouse Investments Limited. [3]‌At an early stage of the hearing of the interlocutory process, Mr Simpkins SC, who appeared for the defendants, foreshadowed an application for the fixing of a return date for a notice under rule 34.1 requiring the plaintiff to produce to the court documents of the descriptions 1, 2 and 3 in the existing notice under rule 21.10. Argument then proceeded by reference to both rules. It is the contention of the plaintiff that a notice calling for the production of documents according to the descriptions 1, 2 and 3 is not authorised by either rule 21.10 or rule 34.1. [4]‌[Rule 21.10 was set out] [5]‌The part of the rule upon which the defendants rely is rule 21.10(1)(b). [6]‌[Rule 34.1 was set out] [7]‌The defendants accept that they cannot sustain item 3 of the existing notice under rule 21.10 (or, more particularly, rule 21.10(1)(b)) but contend that rule 34.1 will support all of items 1, 2 and 3. The plaintiff’s contention is that neither item 1 nor item 2 refers to a “specific document … that is clearly identified in the notice”, as mentioned in rule 21.10 (1) (b) and that none of items 1, 2 and 3 refers to a “specified document” as mentioned in rule 34.1. [8]‌Differences between the two rules were referred to by Brereton J in Norris v Kandiah [2007] NSWSC 1296 at [3]: There are important and fundamental distinctions between a notice to produce under r 21.10 and a notice to produce under r 34.1. Rule 21.10, appearing as it does in Pt 21 of the Rules, is a process of discovery. A notice under r 34.1, appearing in Pt 34 entitled Notice to Produce to Court and following notices to produce at the hearing including opinions is a process akin to a subpoena for production. I endeavoured to explain the differences between the process of discovery and that of a subpoena for production in A Pty Ltd v Z [2007] NSWSC 899. One of the critical differences is that the touchstone of discovery is the concept of relevance to a fact in issue in the proceedings, whereas subpoenas for production are not necessarily limited to documents relevant to a fact in issue, but may extend to documents relevant to credit. [9]‌Brereton J went on to make observations about rule 21.10 referring specifically to what had been said by Young CJ in Eq in Penrith Rugby League Club Limited v Brown [2004] NSWSC 1182. Brereton J said at [4]: Part 21 r 10 authorises service of a notice to produce, in respect of documents referred to in originating processes, pleadings, affidavits and witness statements, and “any other specific document or thing that is clearly identified in the notice and is relevant to a fact in issue”. The limitations with the requirement that there be a “specific document” and that it be “clearly identified” were explained by Young CJ in Eq in Penrith Rugby League Club Ltd v Brown [2004] NSWSC 1182. As his Honour explained, the rule was not intended to subject a recipient to any kind of general discovery obligation. The words “clearly identified” mean that there must be something more specific than a matter which can be ascertained by the ordinary processes of construction and employing extrinsic evidence; it must be pointed out in a manner distinct and free from confusion. The requirement for specificity connotes something that is identified, and not merely identifiable. His Honour upheld a submission that it would be insufficient to identify a box containing a number of unspecified documents, or a lever arch folder containing a number of unspecified documents; identification of the specific documents was required. [12.145]  651

Civil Procedure in New South Wales

Patonga Beach Holdings v Lyons cont. [10] Brereton J then stated his conclusion on the matter before him at [5]‌: In my view, this notice does not clearly identify specific documents, but calls for classes of documents. It was not the intent of this rule to enable notices to be given requiring production of classes of identifiable documents, as distinct from specific identified documents. Accordingly, in my view, this notice is not a valid exercise of the power to serve a notice to produce under r 21.10, and I would set it aside on that basis. [11] It is thus clear that, in rule 21.10, the combination of “specific document” and “clearly identified” means that a notice can relate only to a document describe by means of characteristics peculiar to itself, such as a letter of a given date written by X to Y, or the minutes of a meeting of directors of Z Limited held on a given date. A notice relating to all letters written by X to Y in 2008 or the minutes of all meetings of the directors of Z Limited held in 2008 would not be permitted because referring to a class of document as distinct from what Harrison AsJ in Douglas Corporation v Currico Nominees [2007] NSWSC 113 termed “the individual document sought” is not a permissible course. [12] The language used in rule 34.1. –​“specified document” –​is different. The word “specified” here means, in my view, the same as “described” or “identified”, so that a notice under rule 34.1 plays in relation to a party the role that is played under rule 33 by a subpoena in relation to a non-​party. [13] The requirement under rule 33 is that a subpoena to produce documents “identify” the document to be produced (see rule 33.3(4)(a)), that is, cut the document out from the universe of documents by some description or specification. [14] It is permissible for a subpoena to call for, for example, all documents recording oral communications between A and B within a stated period and referring to a particular company: see Lane v Registrar of the Supreme Court [1981] HCA 35; (1981) 148 CLR 245. Such a subpoena satisfies the requirement that there be “specified with reasonable particularity the documents that are required to be produced”. These are the words of Jordan CJ in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 573. What is impermissible, again using the words of Jordan CJ, is that a person be required to search for or produce all such documents as he or she may have in his or her possession or power relating to a particular subject matter. Jordan CJ continued: It is not legitimate to use a subpoena for the purpose of endeavouring to obtain what would be in effect discovery of documents. [15] That observation was made in relation to a non-​party but it holds good in the rule 34.1 context in relation to a party upon whom a notice under that rule is served. A like principle is that the recipient of a subpoena or rule 34.1 notice to produce must not be put into a position of having to judge the legal effect of a document or its capacity to prove something. Thus, it is impermissible to require the production of, for example, any document proving or tending to prove that X was in Sydney at any time on 1 January 2009. [16] An issue in these s 459G proceedings is whether it is arguable that there was, in terms of clause 5(c)(ii), (iii) or (v) of a deed of 20 December 2007, a “disposal” of the leasehold in Vanuatu, or a “disposal” of “any beneficial interest” in that leasehold, or a “disposal” of “Osborne’s interest or that of an entity related to him in Colo Investments”. [17] The first two paragraphs of the existing rule 21.10 notice and the foreshadowed rule 34.1 notice are concerned with the matter of disposal of the leasehold or an interest in it, while the third paragraph is concerned with the question of disposal of an interest in Colo Investments. [18] My assessment in relation to rule 21.10, leaving aside paragraph 3 of the notice which it is conceded cannot be supported under that rule, is that each of paragraph 1 and paragraph 2 fails to satisfy the requirement defined by the words “specific document” and “clearly identified” construed in the way to which I have referred. 652 [12.145]

Discovery, Subpoenas and Interrogatories  Chapter  12

Patonga Beach Holdings v Lyons cont. [19] When it comes to rule 34.1 and the application for a date for return of a notice to produce under that rule cast in the same terms, my conclusion is that paragraph 2 is unobjectionable because it identifies the document sought with precision, and in a way that does not cast on the recipient any unacceptable burden of interpretation or assessment; but the same cannot be said of paragraph 1 and paragraph 3. [20] Paragraph 1 uses the word “concerning”. That word is extremely wide and would potentially cause to come within the description a multitude of documents. The leasehold property is, it appears, some kind of resort and agreements “concerning” it might well be taken to include agreements for the mowing of the lawns. It is not to the point to say, as I understood Mr Simpkins to say, that the description must be construed in the context of the issues in the case and read down accordingly. The High Court emphasised in Lane’s case (above) that the recipient of a subpoena must take it as he or she finds it and comply faithfully regardless of views he or she may have about its intended scope or purpose. The same is true of a rule 34.1 notice to produce. [21] Paragraph 3 is also objectionable in the rule 34.1 context. It requires the recipient to form a view on the question whether a document establishes or proves or might establish or prove the subsistence of “a sole beneficial interest” in a particular person. That goes squarely to a matter of legal conclusion and is therefore beyond the permitted scope of rule 34.1. [22] In the result, therefore, the notice under rule 21.10 dated 10 August 2009 included in the annexure A to the affidavit of Angela Mary Frost affirmed on 12 August 2009 is set aside. [23] The defendants may, however, serve on the plaintiffs a notice to produce under rule 34.1 in the form of annexure C to the affidavit of Alexander Ronayne sworn 18 August 2009, but with paragraphs 1 and 3 thereof omitted.



DISCOVERY OF DOCUMENTS [12.150]  Discovery enables the parties to obtain documents from each other. Discovery of

specific documents can occur by a party issuing a notice to produce which specifies documents for production (see UCPR r 21.10 discussed at [12.120]). The discovery process is where one party seeks documents within a class or classes of documents or samples of documents within a class from the other party. Discovery can be agreed to informally between the parties or it can be the subject of a court order. The party providing discovery creates a list of the relevant documents and then makes the documents available to be inspected by the party that seeks discovery. The disclosure and inspection of documents in the discovery process is subject to privilege (see Chapter 14). Discovery is intended to promote a fair trial:  Percy v General Motors Holden Pty Ltd [1975] 1 NSWLR 289 at 292. Discovery reduces surprise in litigation as it can enable the parties to be aware of the case to be met at trial. Discovery also permits parties to have access to documents held by the other side which may support their case (and therefore be used as evidence in the hearing). Discovery takes place after pleadings have closed, so that the parties are aware of the issues that are in dispute. The ambit of discovery is defined by court order by reference to a class of documents. Problems caused by the discovery process [12.160]  The delay and the costs of discovery have been the subject of much criticism. For

example, the Australian Law Reform Commission conducted its review of the civil justice [12.160]  653

Civil Procedure in New South Wales

system in its Managing Justice Inquiry and found that discovery was a major contributor to the costs of litigation.

Managing Justice: A Review of the Federal Civil Justice System [12.170]  Australian Law Reform Commission, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (1999) 6.67 In almost all studies of litigation, discovery is singled out as the procedure most open to abuse, the most costly and the most in need of court supervision and control. This issue is dealt with in this and subsequent chapters. Discovery is an essential litigation tool. Under the common law Peruvian Guano test [Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, applied in Australia in Temmler v Knoll Laboratories (Aust) Pty Ltd (1969) 43 ALJR 363 and Mulley v Manifold (1959) 103 CLR 341] a document relevant to a question in issue is discoverable if it would lead to a train of inquiry which would either advance a party’s own case or damage that of the adversary. The discovery process enables parties to obtain information relevant to their own and the other party’s cases and to request other parties to produce relevant documents. 6.68 Problems with discovery result from party responses to discovery requests. Parties may obstruct or subvert disclosure, refusing to provide or destroy or conceal relevant documentation which might have assisted the other side. In some circumstances the party requesting discovery is “fishing” –​seeking disclosure of significant numbers of documents, perhaps with the intention of creating sufficient aggravation or embarrassment to encourage settlement, or hoping to uncover material which will remedy a weak case or lead to new causes of action. In other instances, parties volunteer vast numbers of documents, not to be helpful and cooperative but as a mechanism to hide a single incriminating document which might now be lost in the detail. The discovery process is used strategically by parties. Such tactics can result in significant costs, involve repeated interlocutory hearings and be very time consuming. Blake Dawson Waldron partner, Geoffery Gibson, noted that [i]‌n the hands of a litigant with a deep pocket, the weapon of discovery is very ominous. So also it is in the hands of a zealot or crank … There is no doubt that in some cases discovery is not only useful but determinative, and that people have been able to uncover, and prove, and get compensation for, substantial wrongs that would not have surfaced without discovery. But we have to ask if the price is too high. Mr Eric Braun, special litigation counsel for Telstra, commented that “[d]‌iscovery, and particularly general discovery, is the bane of the large litigation process”. The law firm Arthur Robinson & Hedderwicks commented that “[i]n large scale commercial litigation, it is our experience that there is no interlocutory process more in need of reform than discovery” … 6.71 Restricted discovery may allow more careful, proportionate disclosure. It also can change the ethics of discovery. Parties no longer disclose all relevant documents but those subsumed in the categories of documents agreed. Practitioners noted that some lawyers seek to hide “smoking gun” documents with self justifications that the documents are technically outside the categories of documents required to be disclosed. The Commission was told this can be a real temptation in litigation. Justice Sackville said the solution to this problem [of hiding documents outside categories] is not to go back to general discovery but rather to further develop and strengthen ethical rules in the area. … 6.73 The Commission’s deliberations support flexible but effective controls on discovery. The process needs supervision and control but, in setting such controls courts should note that discovery is an essential part of the process. The information obtainable through discovery is required to facilitate settlement as well as to present at trial. [footnotes omitted]

 654 [12.170]

Discovery, Subpoenas and Interrogatories  Chapter  12

[12.180] The Peruvian Guano test (from Compagnie Financiere et Commerciale du Pacifique

v Peruvian Guano Co (1882) 11 QBD 55) is that a document is discoverable if it is relevant to a train of inquiry which would either advance a party’s own case or damage that of the adversary. This broad test has been limited by UCPR r  21.2 (extracted at [12.250]) which confines the scope of discovery to classes of documents.

Civil Justice Review [12.200]  Victorian Law Reform Commission, Civil Justice Review: Report (2008) pp 434–​437 [This report identified the key problems with discovery and recommended that the court take greater control of the discovery process, for example, by limiting the costs to be charged by lawyers to a client in respect of discovery.] 5.4.1 Expense, scale and delay The principal criticisms about discovery are that the objectives of the process are either not being achieved or can only be achieved at great cost. Chief Justice Spigelman of the NSW Supreme Court has remarked on the cost of discovery: 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. These concerns have been echoed by Chief Justice Michael Black of the Federal Court, who believes that courts “need to take a more interventionist role to avoid having trolley loads of documents being wheeled into court when hardly any of them are likely to be referred to and when every page will add to the cost of the litigation”. It has been observed “that the scope of discovery is generally where costs blow out: if you say you’re going to discover everything, the process essentially becomes endless”. Chief Justice Doyle of the South Australian Supreme Court has expressed alarm that “the average person can’t afford to get involved in substantial civil litigation, even a fairly well-​off person; to me it would be an absolute nightmare personally to be involved in a significant civil case”. Chief Justice Doyle is critical of discovery and believes “discovery has become a scourge. We have to rein it in if we can”. Journalist Elisabeth Sexton has written that “[d]‌iscovery, including reviewing and coding documents, commonly comprises half the total expense of a case”. The exorbitant costs involved in marshalling and assembling huge quantities of documents of varying degrees of relevance to a case are invariably accompanied by claims for inflated photocopying expenses. The Bar noted in its submission in response to the Consultation Paper that “anecdotal evidence suggests that [discovery] is one of the most expensive steps in the interlocutory process”. Yet the Bar queried whether in some cases the expenditure incurred by parties justified the cost of the exercise. In a further submission the Bar commented that: Many judges, legal practitioners and clients agree that the rules on discovery should be amended, as the current rules are clearly distorting the delivery of justice significantly, with some plaintiffs and defendants using the costs associated with discovery to impose unreasonable cost (and resource) pressures on the other party. The Law Institute also expressed concern about “huge” discovery expenses and noted that “in every case, it stands as a major step involving both time and cost, notwithstanding that different cases require substantially different concentration on discovery”. Concerns about costs were also echoed by law firms Slater & Gordon and Allens Arthur Robinson at the AIJA seminar mentioned earlier. The Bar suggested that a possible reason for the excessive cost of discovery is a culture within some sections of the legal profession not to leave any stone unturned, or to search for the smoking gun. [12.200]  655

Civil Procedure in New South Wales

Civil Justice Review cont. The Bar cited Justice Ipp’s comments that this attitude results in mountains of documents being produced (sometimes hundreds of thousands) that require weeks or even months to read, analyse and digest, and then to copy and index. In the end, the usual result is that the number of those documents that are critical to the result of the trial are substantially less than fifty. The Chief Justice of the Western Australian Supreme Court, Wayne Martin, has similarly commented that “the ‘no stone unturned’ approach to litigation is very expensive, often more expensive than the parties can afford, and entirely disproportionate to the value of the subject matter in issue”. In the C7 litigation Justice Sackville observed that in addition to locating and producing documents the parties must devote equally massive resources to inspecting the documents that have been produced. They must also collate and analyse documents that are helpful (and, indeed, those that are unhelpful) to their respective contentions. In the electronic age, when deleted e-​mails or other documents stored in digital form can generally be retrieved, albeit sometimes with great difficulty, the process of production and inspection of documents becomes an industry in itself. As suggested above, the expansive scope of discovery results in the production of often unnecessary and/​or largely irrelevant documents, which only increases costs and causes delay in the progress of an action. In addition to legal costs, discovery also consumes the time and resources of the discovering party. The ALRC has estimated that “the cost of executive and management time involved in complying with discovery obligations may be as great as, or greater than, legal costs”. Legal arguments relating to access to documents, for example whether documents are covered by legal professional privilege or public interest privilege as well as arguments about confidentiality and appropriate safeguards for access to confidential material, can be yet another source of cost. Interlocutory disputes about discovery delay not only the discovery process but also the progress of the proceeding generally. The conduct of parties and solicitors in relation to discovery and the inherent flaws in discovery processes have been strongly criticised by judges in numerous cases in Australia. Some of these cases are mentioned below. In BT Australasia Pty Ltd v State of New South Wales & Telstra [1998] FCA 479, discovery was costly, wasteful and unmanageable. In a judgment arising out of an application for further and better discovery, Justice Sackville stated: I have repeatedly said that all parties to this litigation have given insufficient attention to the need to control their own request for discovery in the interests of keeping the discovery process within manageable bounds. One consequence of the approach taken by the parties is that discovery in this case has assumed mammoth proportions. A second is that the parties are in continuous disputation as fresh discovery issues are raised, each said to require the time of the Court to resolve. Not only is this extraordinarily costly and, in my opinion, wasteful, but it diverts attention from the need, in a case that has now been going for three years, to prepare for trial. It also imposes a disproportionate burden on the Court. In Trade Practices Commission v Santos Limited & Sagosco Holdings Limited (1992) ATPR 41, the process of discovery lasted for approximately one year. Justice Heerey noted that discovery was a “major cause of delay” in the case. He observed that discovery, including inspection, consumes vast amounts of time and money. It tends to generate numerous disputes over issues like privilege and confidentiality which can become ends in themselves. In the present case it may have been a mistake to have a general unqualified order for discovery. 656 [12.200]

Discovery, Subpoenas and Interrogatories  Chapter  12

Civil Justice Review cont. In a Consultation Paper produced by the Law Reform Commission of Western Australia (LRCWA) it was observed that that the problems with discovery resulted from practitioners being “recruited into an burgeoning army engaged in discovery, inspecting, filing, listing copying, storing, carrying about and otherwise dealing with 100 000 documents which had been accumulated for the purposes of the litigation”. Problems caused by the volume and complexity of discovery are also at issue in current proceedings between Biota and GlaxoSmithKline. The case concerns allegations of breach of contract for the development and marketing of the influenza drug Relenza. At the time of writing the case was expected to go to trial in 2008 in the Victorian Supreme Court. According to a 2007 newspaper article GlaxoSmithKline has been gathering information from 25 countries in 17 languages and has spent $40 million on the discovery process alone. It was further estimated that GlaxoSmithKline has 120 legal professionals working on the discovery process. 5.4.2 Abuse Justice Ipp has identified three categories of discovery abuse: 1.

making unnecessarily broad discovery requests

2.

withholding information to which the requesting party is entitled and

3.

providing many irrelevant documents to overwhelm the other side [or to improperly conceal documents].

Justice Ipp noted: The purpose of the discovery system is to provide each side with all of the relevant documentary information in each party’s possession so as to avoid trial by ambush. Although discovery, generally speaking, may have served that aim, its cost is often prohibitive. Some litigants impose costly, even crushing burdens on their opponents either by excessive demands for documents or by offloading an avalanche of unassorted files on the party demanding discovery, hoping that the searcher will be so exhausted that the damaging items will be overlooked or never reached. Instead of discovery being an essential element in the pursuit for justice it is too often a crippling obstacle to the speedy resolution of disputes. These concerns were echoed in submissions by Maurice Blackburn, which claimed that “one of the main problems with discovery is the use by major defendants of discovery cost as a tool to exhaust the plaintiff’s resources”. Maurice Blackburn cited the example of the Multiplex class action, at 436 where it said that the defendants contended to the Court that they be forced to undertake a $28 million discovery exercise. This then underpinned an application by the defendant for a commensurate amount of security for costs which the plaintiff could not meet. The docket judge made it clear that he would not order discovery of this magnitude and the defendant’s estimates then became modest. The actual extent of discovery abuse is not clear. The Australian Law Reform Commission has noted that “discovery is too often examined through the lens of the large commercial case”. The Law Reform Commission of Western Australia observed that “although there are well-​documented instances of problems with discovery in large commercial and banking cases, there is no recent empirical data on the costs and benefits of discovery in relation to other cases”. … In relation to abuse by legal practitioners, there is also a divergence of opinion about whether there is a significant problem. For example, on the one hand Slater & Gordon raised concerns about what it considers to be the widespread and serious abuse of legal professional privilege in connection with discovery. On the other hand, Allens Arthur Robinson argued that practitioners take their discovery obligations seriously and denied abuse was widespread. [12.200]  657

Civil Procedure in New South Wales

Civil Justice Review cont. 5.4.3 Document destruction Recent reforms in Victoria have attempted to address one form of discovery abuse, namely, the destruction of documents. In the McCabe case Justice Eames exercised his discretion to strike out the defence of British American Tobacco [McCabe v British American Tobacco Australia Services Limited [2002] VSC 73]. He concluded that the plaintiff’s prospects of a fair trial had been irretrievably damaged by the unavailability of destroyed discoverable material. He found that in March 1998, a process of destruction of documents was undertaken which resulted in as many as 30 000 documents being destroyed. Justice Eames commented: Central to the conduct of a fair trial in civil litigation is the process of discovery of documents … The party which controls access to the documents must ensure that its opponent is not denied the opportunity to inspect and use relevant documents, and it must disclose fully and frankly what has become of documents which have been in its possession, custody or control … The process of discovery in this case was subverted by the defendant and its solicitors … with the deliberate intention of denying a fair trial to the plaintiff, and the strategy to achieve that outcome was successful. It is not a strategy which the Court should countenance, and it is not an outcome which, in the circumstances of this case, can now be cured so as to permit the trial to proceed on the question of liability. On appeal Justice Eames’ decision was overturned and the Victorian Court of Appeal proceeded to formulate a narrow test for determining when it was appropriate to sanction a defendant for the destruction of documents prior to the commencement of proceedings. Professor Sallmann was subsequently commissioned by the Victorian Attorney-​General to report on the most appropriate approach to destruction of documents. Professor Sallmann reported that “the narrowness of the [existing] test means that only the most extreme, deliberate and blatant instances of document destruction would be covered”. New rules, which came into effect on 1 September 2006, imported the structure and substance of Professor Sallmann’s recommendations. The Victorian Crimes (Document Destruction) Act 2006 (the Document Destruction Act) and Evidence (Document Unavailability) Act 2006 (the Document Unavailability Act) amended the Victorian Crimes Act 1958 and Evidence Act 1958 respectively. The Document Destruction Act introduced new criminal consequences and the Document Unavailability Act introduced new civil consequences for “document destruction” and “document unavailability”. Both Acts deal with the destruction, concealing or rendering of a document illegible, undecipherable or incapable of identification. [footnotes omitted]



Managing Discovery: Discovery of Documents in Federal Courts [12.210]  Australian Law Reform Commission, Managing Discovery: Discovery of Documents in Federal Courts, Report No 115 (2011) “Trolley load litigation” 12.25 Concerns have been expressed about lawyers, when conducting discovery, unnecessarily providing their opponents with vast numbers of documents. This has been called “trolley load litigation” and “trial by avalanche”. Former Chief Justice Black of the Federal Court has spoken of the need to “avoid having trolley loads of documents being wheeled into court when hardly any of them are likely to be referred to and when every page will add to the cost of the litigation”. 12.26 Trolley load litigation has been attributed to several causes. First, computer technology now allows for the storage and more efficient retrieval of vast numbers of documents. Secondly, in an 658 [12.210]

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Managing Discovery: Discovery of Documents in Federal Courts cont. adversarial legal system, lawyers may pursue their clients’ interests aggressively in pursuit of winning the case –​including, for example, trying to “wear down” the other party with masses of often irrelevant material. Finally, where the scope of discovery is unclear, too many documents may be discovered defensively, for fear of not fulfilling one’s discovery obligations –​and perhaps in fear of disciplinary action for professional misconduct. There may be other explanations for vast volumes of documents being unnecessarily discovered, but a combination of these reasons may well contribute to the problem. 12.27 A trolley load of documents will not, of course, always signal discovery abuse, but excessive and wasteful discovery might conflict with a number of professional and ethical duties, including, for example, a lawyer’s duty to: • “act with competence, honesty and candour” and be “frank in their responses and disclosures to the court”; [see Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) (ACSR) r 4.1.3; r 19.1] • facilitate the “just resolution” of disputes, “according to law” as “quickly, inexpensively and efficiently as possible”;[see CPA s 56] • act with fairness, in particular not abuse court processes; • narrow the issues in dispute and identify relevant material and thereby reduce the volume of potentially discoverable documents; [see ACSR r 17] • appraise the case and exercise personal judgment about the existence and relevance of documents in the proceedings; [see ACSR r 17] • exercise reasonable competency and skill in the conduct of a matter –​a duty arising from a lawyer’s duty of care to the client; [see ACSR r 4.1.3; Rogers v Whitaker (1992) 175 CLR 479] • advise –​to “seek to assist the client to understand the issues in the case and the client’s possible rights and obligations … sufficiently to permit the client to give proper instructions” [see ACSR r 7.1] [some footnotes omitted]



Palavi v Radio 2UE [12.220]  Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 (8 September 2011) [The plaintiff commenced proceedings for defamation against 2UE arising out of statements about her sexual conduct with rugby league players. Part of 2UE’s defence was that the statements made about the plaintiff were true and to support the defence 2UE sought discovery of a number of mobile phones/​iphones that were believed to have incriminating photos and texts stored on them. The phones were not discovered. The judge at first instance struck out two imputations in the plaintiff’s statement of claim based on her failure to comply with discovery obligations. The plaintiff appealed.] ALLSOP P (MACFARLANE JA CONCURRING AND MCCOLL JA DISSENTING) [70] The primary judge accepted that the power to dismiss or strike out proceedings should be sparingly used. He stated that he was guided in the exercise of the power by what Johnson J had said in Clark v New South Wales [2006] NSWSC 673; 66 NSWLR 640 at [100]–​[104], as follows: • [100] The principles surrounding the consequences of destruction of potential evidence by a party have emerged largely from cases where destruction has occurred before the commencement of proceedings. • [101] Applications for a stay or dismissal of proceedings (Fuji) or entry of a verdict for the defendant (British American Tobacco Australia Services Limited v Cowell) have not been granted. Where destruction of potential evidence or fabrication of evidence has occurred after proceedings have commenced (Arrow Nominees), dismissal of proceedings has been ordered. In cases where material [12.220]  659

Civil Procedure in New South Wales

Palavi v Radio 2UE cont. is intentionally suppressed but is finally produced (Logicrose), the Court has taken the view that the Court’s processes have not been defeated and that the proceedings should be allowed to proceed. • [102] In other cases, the issue has been left to the drawing of inferences adverse to the party who has destroyed the material prior to trial, applying the principles in Allen v Tobias and Katsilis. Whether an adverse inference will be drawn, and the strength of the inference, will depend upon the particular circumstances of the case. In a clear case of conscious destruction of material which was likely to be used in evidence, a strong inference adverse to the destroying party may be drawn with the ultimate inference being of the type referred to in Marsden v Amalgamated Television Services Pty Limited. • [103] However, the remedies available in such circumstances are not confined to the drawing of appropriate inferences. If the conduct of the destroying party may be characterised as an abuse of process, then the power of the court to stay or dismiss proceedings may be utilised in an appropriate case. This power is to be exercised sparingly. • [104] Ordinarily, a party is entitled to initiate and continue proceedings with the court determining those proceedings on their merits. Where, however, a party to proceedings intentionally destroys material which is significant to the determination of the proceedings, and such destruction occurs after the proceedings have been commenced, then a clear foundation would appear to exist for the court to call in aid its power to stay or dismiss the proceedings. The court will have in mind the interests of the individual parties to the civil proceedings, but also the protection of the administration of justice and the integrity of the courts and the system of justice generally. Resolution of an application for a stay or dismissal of the proceedings will consider the question whether a fair trial may take place in the absence of the destroyed material even where an appropriate inference may be drawn adverse to the destroying party. [71] (The cases to which Johnson J referred in short form are: Fuji Xerox Australia Pty Ltd v Lee [2003] QSC 303; British American Tobacco Australia Services Ltd v Cowell [2002] VSCA 197; 7 VR 524; Arrow Nominees Inc v Blackledge [2000] EWCA Civ 200; Logicrose Ltd v Southend United Football Co Ltd (No 1) (1998) 132 SJ 1591; Times, March 5, 1988 (Chancery Division); Allen v Tobias [1958] HCA 13; 98 CLR 367; Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181; and Marsden v Amalgamated Television Services Pty Ltd [2001] NSWSC 510). … [93] Johnson J set out principles attending the exercise of such a power in Clark at [100]–​[108]. No party submitted that this was an erroneous expression of the matter. As far as they go, they contain no error. They need, however, to be qualified by the following. None of the cases from which Johnson J drew his expression was governed by the Civil Procedure Act. I have previously expressed the view that the provisions of that Act (of course informed by conforming existing principle) now govern procedure in this State: Hans Pet Constructions v Cassar [2009] NSWCA 230; Bi v Mourad [2010] NSWCA 17; Richards v Cornford (No 3) [2010] NSWCA 134; McMahon v John Fairfax Publilcations Pty Ltd [2010] NSWCA 308. It is to be recognised that under the Civil Procedure Act, s 56(3) a party to a civil proceeding is under a statutory duty to assist the court to further the over-​riding purpose (in s 56(1)) and to that effect participate in the processes of the court and to comply with directions and orders. To a degree this may be seen as a duty of imperfect obligation, not sounding in damages; but it is a duty nevertheless, and a real one. Significant public resources are devoted to the administration of justice. The Parliament has recognised and expressed the duty of those using the courts (and the resources devoted to them) to act responsibly, honestly and to further the just, quick and cheap resolution of proceedings. This recognition should form the framework of the exercise of power described by Johnson J in Clark. Of course, the power should not be exercised merely to punish a defaulter; of course, risk of significant prejudice should normally be demonstrated; of course, the power should be used sparingly; of course, the power should be used proportionately; but, if grounds are made out otherwise for the exercise of such a power, a recognition of the content and purpose of the statutory duty in s 56(3) assists in the assessment of deciding whether the power should be exercised. The deliberate destruction of discoverable material in knowing defiance of discovery obligations that produces the real risk of impairment to the case of the other side may lead to restrictions on what points litigants can run or to the striking out of all or parts of their claims. 660 [12.220]

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Palavi v Radio 2UE cont. [94] Here, the fairness of the trial was put in jeopardy by the deliberate and abusive destruction of evidence central to the case rendering further proceedings unsatisfactory in that they would be unfair and unjust to the respondent. The fairness of the trial and whether it has been put at risk require an evaluation of the potential consequence of the abusive conduct and all the other circumstances. The extent of the evaluation depends on the circumstances. The trial has to be fair to both parties and the order must be just to both parties. It is hardly fair to the defendant to require it to do its best with the evidence it can otherwise muster, in circumstances where the plaintiff, by conduct that was deliberate and an abuse of the court’s process destroys relevant evidence of real significance to the case knowing of her obligations and knowing of the relevance of the material. [95] Here, the legitimate findings of the primary judge more than amply provided a foundation for his orders. On the findings, the applicant deliberately disposed of two phones that contained relevant material of real significance to the propounding of the defence of the respondent. This was brought about by the knowing and deliberate conduct of a plaintiff who comes to court seeking redress. It plainly amounted to an abuse of process. It created a not insignificant risk to the ability of the respondent successfully to propound its defence. The respondent may (without this material) still have been able to do so; but a real and substantial risk was deliberately created by the applicant that could be seen, at least, to impair that defence. Taking into account, in particular, all the considerations in the Civil Procedure Act, ss 56 and 58, like the primary judge, I would strike out imputations 3(a) and (b)(i).

 The discovery process [12.230]  The process for discovery under the UCPR can be summarised as follows (Party A is

the party receiving discovery and Party B is the party giving discovery): 1.

Party A files and serves a notice of motion (with supporting affidavit) seeking discovery from Party B pursuant to UCPR r 21.2. The notice of motion will specify the order for discovery of documents within a class or classes of documents or samples of documents within a class (r 21.2). A “class of documents” is defined by relevance to the facts in issue, or by the type of documents within a class, or in “such other manner as the court considers appropriate in the circumstances” (r 21.3).

2.

The notice of motion is heard (this is an interlocutory hearing) and the court may order discovery of documents within a class or classes of documents or samples of documents within a class (r 21.2). The court does not order general discovery.

3.

Within 28 days of the order (or as the order specifies), Party B prepares a list of documents (r 21.3) which is divided into two parts (documents in the possession of Party B and documents which were in possession of Party B in the last six months). The list needs to describe the documents. The list also states whether privilege is claimed in respect of the documents and the circumstances that give rise to privilege being claimed. If the documents are not in the possession of Party B then Party B needs to indicate who he or she believes has possession of the documents.

4.

Discovery does not apply to an “excluded document” (see definition in r  21.1), but note the court may declare a document not to be an excluded document. “Excluded documents” do not have to be included in the list (r 21.3(1)).

5.

The list must be accompanied by a supporting affidavit by Party B (r  21.4(2)) and a solicitor’s certificate of advice (r 21.4(3)). The affidavit deposed by Party B verifies the list [12.230]  661

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and must state the specific matters listed in r 21.4(2). The solicitor’s certificate of advice must state the matters set out in r 21.4(3) namely that the solicitor has advised Party B as to the obligations arising under an order for discovery and the solicitor is not aware of documents that are not on the list. 6. Party B then makes the documents “readily accessible and capable of convenient inspection” for Party A (r 21.5). 7.

There is a continuing obligation on Party B to make available subsequently discovered documents (r 21.6). This means that documents which become known after discovery has been carried out are to be made available to Party A. Privileged documents that cease to be privileged also need to be made available.

8.

Except with the court’s leave (permission), no information from a document obtained as a result of discovery is to be disclosed, or used in other legal proceedings. The exception to this rule is if the document has been received into evidence in open court (r 21.7).

9.

The court will not order discovery in personal injury cases unless the court “for special reasons” orders otherwise (r  21.8). Special reasons will exist if discovery is necessary for a fair trial. In Percy v General Motors Holden Pty Ltd [1975] 1 NSWLR 289, the plaintiff sued the defendant in respect of personal injury arising out of a motor car accident that he claimed was caused by the defendant’s negligent manufacture of the car. The plaintiff sought discovery of documents relating to the issue of negligence in and about the manufacture, design and use of the assembly and parts. Rath J granted an order for discovery and said at 292: I should consider whether discovery is necessary in the interests of a fair trial. The present case is different in kind from the “running down” type of case and will presumably involve much technical evidence. It is clear that the defendant would have virtually exclusive knowledge of many aspects of its design and manufacture, and I think that in the interests of justice in this case the plaintiff should have access to such information in so far as that access is necessary for the proper preparation of his case. In my opinion, the plaintiff is entitled in the present case to an order that the defendant should file and serve a list … of documents relating to the issue of negligence in and about the manufacture, design and use of the assembly and parts referred to in par 8 of the statement of claim.

[12.240]  It is important to highlight Practice Note SC Eq 11 Disclosure in the Equity Division,

which was issued on 22 March 2012 and commenced on 26 March 2012. It applies to all new and existing proceedings in the Equity Division, except in the Commercial Arbitration List. In short, it requires that: • the court will not order disclosure until the parties have served their evidence, unless there are “exceptional circumstances” necessitating disclosure. “Exceptional” means not normal, or usual, something out of the ordinary but not unique;1 • there will be no order for disclosure in the Equity Division unless it is necessary for the resolution of the real issues in dispute in the proceedings. “Necessary” means not essential, but reasonably required for the fair disposition of the matter;2 1 2

Leighton International v Hodges [2012] NSWSC 458 at [19]–​[20]. Graphite Energy Pty Ltd v Lloyd Energy Systems Pty Ltd [2014] NSWSC 1326 at [19].

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• any application for disclosure, consensual or otherwise, must be supported by an affidavit setting out: a.

why the disclosure is necessary for the resolution of the real issues in dispute in the proceedings;

b.

the classes of documents sought; and

c.

the likely cost of disclosure.

Practice Note SC Gen 7 Supreme Court –​Use of technology also deals with discovery. The focus of the practice note in relation to discovery is ESI. Practitioners are required to advise their opponents at an early stage of the proceedings of potentially discoverable ESI and to meet to agree on how discovery of ESI will occur. Despite detailed and formal rules, judges can vary the requirements of court rules so as to tailor discovery to a particular case.3 The making of orders in relation to discovery is subject to the overriding purpose and should give effect to it.4

Uniform Civil Procedure Rules 2005 (NSW) [12.250]  Uniform Civil Procedure Rules 2005 (NSW) rr 21.1–​21.8 Part 21 –​Discovery, inspection and notice to produce documents Division 1 –​Discovery and inspection 21.1 Definitions (cf SCR Pt 23, r 1; DCR Pt 22, r 1) (1)

In this Division: “excluded document,” in relation to proceedings the subject of an order for discovery, means any of the following documents:



(a)

any document filed in the proceedings,



(b)

any document served on party A after the commencement of the proceedings,



(c)

any document that wholly came into existence after the commencement of the proceedings,



(d)

any additional copy of a document included in the list of documents, being a document that contains no mark, deletion or other matter, relevant to a fact in question, not present in the document so included,



(e)

any document comprising an original written communication sent by party B prior to the date of commencement of the proceedings of which a copy is included in the list of documents,

but does not include any document that the court declares not to be an excluded document for the purposes of those proceedings. “list of documents” means a list of documents referred to in rule 21.3. “order for discovery” means an order referred to in rule 21.2. “party A” means a party to whom another party is giving discovery, or being ordered to give discovery, of documents.

3

4

See, for example, Civil Procedure Act 2005 (NSW) s 61(1) (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.). Giles v Commonwealth of Australia (No 2) [2014] NSWSC 1531 at [44]–​[45]. [12.250]  663

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. “party B” means a party who is giving discovery, or being ordered to give discovery, of documents. “party B’s affidavit” means an affidavit prepared in relation to the list of documents under rule 21.4. See the Dictionary for further definitions including, in particular, a definition of possession. (2)

For the purposes of this Division, a document or matter is to be taken to be relevant to a fact in issue if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence.

21.2 Order for discovery (cf SCR Pt 23, r 3(1), (2) and (3); DCR Pt 22, r 3(1), (2) and (3)) (1)

The court may order that party B must give discovery to party A of:



(a)

documents within a class or classes specified in the order, or



(b)

one or more samples (selected in such manner as the court may specify) of documents within such a class.

(2)

A class of documents must not be specified in more general terms than the court considers to be justified in the circumstances.

(3)

Subject to subrule (2), a class of documents may be specified:



(a) (b)



(c)

(4)

An order for discovery may not be made in respect of a document unless the document is relevant to a fact in issue.

by relevance to one or more facts in issue, or by description of the nature of the documents and the period within which they were brought into existence, or in such other manner as the court considers appropriate in the circumstances.

21.3 List of documents to be prepared (cf SCR Pt 23, r 3(5) and (6); DCR Pt 22, r 3(5) and (6)) (1)

Party B must comply with an order for discovery by serving on party A a list of documents that deals with all of the documents (other than excluded documents) referred to in the order.

(2)

The list of documents:



(a)

must be divided into two parts:



(i)

Part 1 relating to documents in the possession of party B, and



(ii)

Part 2 relating to documents that are not, but that within the last 6 months prior to the commencement of the proceedings have been, in the possession of party B, and



(b)

must include a brief description (by reference to nature and date or period) of each document or group of documents and, in the case of a group, the number of documents in that group, and



(c)

must specify, against the description of each document or group in Part 2 of the list of documents, the person (if any) who party B believes to be in possession of the document or group of documents, and



(d)

must identify any document that is claimed to be a privileged document, and specify the circumstances under which the privilege is claimed to arise.

(3)

Party B must comply with the requirements of subrule (1):



(a)

within 28 days after an order for discovery is made, or



(b)

within such other period (whether more or less than 28 days) as the order may specify.

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Uniform Civil Procedure Rules 2005 (NSW) cont. 21.4 Affidavit and certificate supporting list of documents (cf SCR Pt 23, r 3(5), (6) and (7); DCR Pt 22, r 3(5), (6) and (7)) (1)

The list of documents must be accompanied by:



(a)

a supporting affidavit, and



(b)

if party B has a solicitor, by a solicitor’s certificate of advice.

See rule 35.3 as to who may make such an affidavit. (2)

The affidavit referred to in subrule (1)(a) must state that the deponent:



(a)

has made reasonable inquiries as to the documents referred to in the order, and



(b)

believes that there are no documents (other than excluded documents) falling within any of the classes specified in the order that are, or that within the last 6 months before the commencement of the proceedings have been, in the possession of party B (other than those referred to in Part 1 or 2 of the list of documents), and



(c)

believes that the documents in Part 1 of the list of documents are within the possession of party B, and



(d)

believes that the documents in Part 2 of the list of documents are within the possession of the persons (if any) respectively specified in that Part, and



(e)

as to any document in Part 2 of the list of documents in respect of which no such person is specified, has no belief as to whose possession the document is in,

and must state, in respect of any document that is claimed to be a privileged document, the facts relied on as establishing the existence of the privilege. (3)

The solicitor’s certificate of advice referred to in subrule (1)(b) must state that the solicitor:



(a)

has advised party B as to the obligations arising under an order for discovery (and if party B is a corporation, which officers of party B have been so advised), and



(b)

is not aware of any documents within any of the classes specified in the order (other than excluded documents) that are, or that within the last 6 months before the commencement of the proceedings have been, in the possession of party B (other than those referred to in Part 1 or 2 of the list of documents).

21.5 Documents to be made available (cf SCR Pt 23, r 3(9) and (10); DCR Pt 22, r 3(9) and (10)) (1)

Subject to the requirements of any Act or law, Party B must ensure that the documents described in Part 1 of the list of documents (other than privileged documents):



(a)

are physically kept and arranged in a way that makes the documents readily accessible and capable of convenient inspection by party A, and



(b)

are identified in a way that enables particular documents to be readily retrieved,

from the time the list of documents is served on party A until the time the trial of the proceedings is completed. (2)

Within 21 days after service of the list of documents, or within such other period or at such other times as the court may specify, party B must, on request by party A:



(a)

produce for party A’s inspection the documents described in Part 1 of the list of documents (other than privileged documents), and



(b)

make available to party A a person who is able to, and does on party A’s request, explain the way the documents are arranged and assist in locating and identifying particular documents or classes of documents, and [12.250]  665

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(c)

provide facilities for the inspection and copying of such of the documents (other than privileged documents) as are not capable of being photocopied, and



(d)

provide photocopies of, or facilities for the photocopying of, such of the documents as are capable of being photocopied, subject to:



(i)

party A’s solicitor undertaking to pay the reasonable costs of providing those photocopies or facilities, or



(ii)

if party A has no solicitor, party A providing to party B an amount not less than a reasonable estimate of the reasonable costs of providing those photocopies or facilities.

21.6 Subsequently found documents to be made available (cf SCR Pt 23, r 3(8); DCR Pt 22, r 3(8)) If at any time after party B’s affidavit is made, and before the end of the hearing, party B becomes aware: (a)

that any document within the class or classes specified in the relevant order for discovery (not being an excluded document) but not included in Part 1 of the list of documents is within, or has come into, party B’s possession, or

(b)

that any document included in Part 1 of the list of documents which was claimed to be a privileged document was not, or has ceased to be, a privileged document,

party B must forthwith give written notice to party A of that fact, and comply with rule 21.5 in respect of the document, as if the document had been included in Part 1 of the list of documents and the list had been served on the date of the giving of the notice. 21.7 Discovered documents not to be disclosed (cf SCR Pt 23, r 3(11) and (12); DCR Pt 22, r 3(11) and (12)) (1)

No copy of a document, or information from a document, obtained by party A as a result of discovery by party B is to be disclosed or used otherwise than for the purposes of the conduct of the proceedings, except by leave of the court, unless the document has been received into evidence in open court.

(2)

Nothing in subrule (1) affects the power of the court to make an order restricting the disclosure or use of any document, whether or not received into evidence, or the operation of any such order.

21.8 Personal injury claims (cf SCR Pt 23, r 5; DCR Pt 22, r 5) In any proceedings on a common law claim: (a)

for damages arising out of the death of, or bodily injury to, any person, or

(b)

for contribution in respect of damages so arising,

an order for discovery may not be made in relation to any document unless the court, for special reasons, orders otherwise.



Practice Note SC Eq 11 [12.260]  Practice Note SC Eq 11 Disclosure in the Equity Division Disclosure in the Equity Division Commencement 1.

This Practice Note was issued on 22 March 2012 and commences on 26 March 2012.

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Discovery, Subpoenas and Interrogatories  Chapter  12

Practice Note SC Eq 11 cont. Application 2.

This Practice Note applies to all new and existing proceedings in the Equity Division, except in the Commercial Arbitration List.

Purpose 3.

This Practice Note is for the guidance of practitioners in preparing cases for hearing in the Equity Division with the aim of achieving the just, quick and cheap resolution of the real issues in dispute in the proceedings.

Disclosure 4.

The Court will not make an order for disclosure of documents (disclosure) until the parties to the proceedings have served their evidence, unless there are exceptional circumstances necessitating disclosure.

5.

There will be no order for disclosure in any proceedings in the Equity Division unless it is necessary for the resolution of the real issues in dispute in the proceedings.

6.

Any application for an order for disclosure, consensual or otherwise, must be supported by an affidavit setting out[:]‌ the reason why disclosure is necessary for the resolution of the real issues in dispute in the proceedings; the classes of documents in respect of which disclosure is sought; and the likely cost of such disclosure.

Costs 7.

The Court may impose a limit on the amount of recoverable costs in respect of disclosure.



In the Matter of Mempoll, Anakin and Gold Kings [12.270]  In the Matter of Mempoll Pty Limited, Anakin Pty Limited and Gold Kings (Australia) Pty Limited [2012] NSWSC 1057 [The Plaintiffs sought relief under s 233 of the Corporations Act 2001 (Cth) for breach of fiduciary duty and under s 68 of the Fair Trading Act 1987 (NSW). Immediately after the commencement of the proceedings, on 28 June 2012 and 29 June 2012, the Plaintiffs issued notices to produce to the Defendants. Further notices to produce were issued to the Defendants on 18 July 2012 and a subpoena was then issued at the request of the Plaintiffs to another entity, PAAC Group Pty Ltd, on 28 June 2012. The Defendants sought to set aside the notices and the subpoena due to Practice Note SC Eq 11.] BLACK J [12] Practice Note SC Eq 11 does not, in terms, apply to notices to produce because such notices do not seek an order for “disclosure of documents”. However, in Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd [2012] NSWSC 502 at [23]-​[24] Stevenson J observed that: It would subvert the intended operation of the Practice Note if parties could avoid its operation by adopting the expedient of serving a notice to produce, rather than seeking an order for disclosure. Indeed, if a notice to produce was served with the object of avoiding the operation of the Practice Note, such service might well constitute an abuse of the Court’s process. [12.270]  667

Civil Procedure in New South Wales

In the Matter of Mempoll, Anakin and Gold Kings cont. [13] I agree with the views expressed by Stevenson J, and as his Honour observed, the Court will be ready to set aside a notice to produce in an appropriate case if it appears to involve the subversion of the operation of the Practice Note. Equally, an application may be made for leave to issue a notice to produce nunc pro tunc, having regard to any evidence which is led to support the need for disclosure. [14] I turn now to the question whether exceptional circumstances are established in this case. I approach that question having regard to the purpose which is served by Practice Note SC Eq 11 which, as McDougall J noted in Leighton International v Hodges [2012] NSWSC 458 at [4]‌-[​7], is the latest step taken by the Court in its efforts to deal with the costs of litigation, particularly so far as it concerns the costs of discovery of electronic material. The manner in which proceedings will be conducted in the vast majority of cases in the Equity Division of this Court, as contemplated by that Practice Note, was well described by Bergin CJ in Eq in Armstrong Strategic Management and Marketing Pty Ltd v Expense Reduction Analyst Group Pty Ltd [2012] NSWSC 393 at [65]-​[66], commencing with the plaintiff’s service of the evidence including documents on which it relies, followed by the defendant’s service of the evidence including the documents on which it relies, so that the real issues in proceedings are confined not only by the pleadings but also by the evidence. That approach will serve the purpose of the Practice Note, of seeking to do what can be done in the vast majority of cases to avoid unnecessary discovery. [15] However, the Practice Note itself contemplates that the Court may make an order for disclosure before the parties, or one of them, have served their evidence where there are “exceptional circumstances necessitating disclosure”. In Leighton International v Hodges above at [19] McDougall J noted that there can be no all encompassing definition of “exceptional circumstances”; what is required is an assessment of the relevant provision and its application in the particular case; and such circumstances require something more than circumstances which are regularly, routinely or normally encountered. His Honour observed at [20], in a passage which was approved by Stevenson J in Baseline Constructions above at [30], that: As a matter of language, something is exceptional if it is out of the ordinary or unusual. To my mind, the exceptional circumstances referred to in paragraph 4 of the Practice Note must be circumstances that are not normal, or usual; they must be something out of the ordinary; they need not be unique; but however one characterises them they are not “exceptional” at large but “exceptional” because they necessitate disclosure. [16] This approach is supported by several subsequent decisions of this Court. In Naiman Clarke Pty Ltd v Tuccia [2012] NSWSC 314 at [26], Ball J noted that the Practice Note does not prohibit disclosure before evidence is served and also observed that the requirement of exceptional circumstances might be met where information necessary for one party’s case was solely within the knowledge of another party from which disclosure was sought. In Danihel v Manning [2012] NSWSC 556 at [16] Bergin CJ in Eq noted that “exceptional circumstances”, for the purposes of Practice Note, may be established by demonstrating the necessity to obtain documents to fairly prepare a case for trial, that is, that the party is unable to serve its evidence without certain documents. [17] In Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2012] NSWSC 913 at [17], Gzell J reviewed these authorities and emphasised the need for “caution against setting the bar too high”. His Honour observed that: To be exceptional the circumstance need not be unique or unprecedented or very rare. What is needed is an appraisal of all the circumstances and the context in which the expression must be satisfied. Are there circumstances necessitating disclosure before evidence in the sense that the party’s case cannot be put without the disclosure? Are those circumstances exceptional?. [18] The Practice Note also provides that disclosure will be ordered only when it is “necessary” for the resolution of the real issues in dispute. I agree with McDougall J’s observation in Leighton International at [22] that this contemplates that disclosure is shown to be: 668 [12.270]

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In the Matter of Mempoll, Anakin and Gold Kings cont. reasonably necessary for disposing of the matter fairly or in the interests of a fair trial. In that case, at [55], his Honour allowed disclosure where the Plaintiff did not have sufficient documents otherwise to make out its case. [19] In the present case, I am comfortably satisfied that “exceptional circumstances” are established, and that the documents sought to be produced are necessary for the fair disposal of the matter and in the interests of a fair trial. The fundamental premise of Mr Ho’s case, both in respect of the claims that are pleaded and also in his evidence as set out in his affidavit of 27 June 2012, is that there was a substantial inequality of information between himself and the Defendants. His evidence is that, for example, he was not given notice of the meetings of directors or shareholders of the relevant companies and did not attend such meetings; that he trusted his business partners and advisers; and that both the accountant for BBQ King and the First and Second Defendants deflected requests for financial information in relation to the restaurants. He contends that, for these reasons, he had no reason to believe that the value of the shares in the companies was other than what he claims was represented to him when he sold those shares in 2009. It is not, of course, necessary to determine at this stage whether those allegations are correct or not. They may or may not be made good at the trial. However, they identify a context where the Plaintiffs contend that information was not known to them which was necessary to properly value the shares, and that those shares were sold at undervalue based on misrepresentations. Again, those allegations may or may not be established at a final hearing. [20] In my view, this case is very different from the more common situation where each party has access to the information necessary to make good their respective cases. For Mr Ho to establish his case, he needs to show not only that he lacked the relevant information, which is the contention advanced in his affidavit, but also needs to establish the content of that information. This can readily be illustrated. If the Defendants were, reasonably, to seek particulars of the extent of undervalue at which of the shares are alleged to have been sold [sic], then a constructive response would need to take into account the information that Mr Ho presently contends he was not provided. Whether the shares in the companies were sold at undervalue goes not only to the quantum of any damages but also to whether the causes of action in oppression and misleading and deceptive conduct are established because, if the shares were not sold at an undervalue, those claims may well fail. [21] In my view, which I understand to be consistent with that which has been adopted in the authorities to which I have referred above, a situation where highly relevant information is solely or largely in the possession of one party may well give rise to exceptional circumstances for the purpose of the Practice Note, and I consider that it does so in this case. I am reinforced in that view because it seems to me that the disclosure of the relevant information, sooner rather than later, is consistent with the objective of the just, quick and cheap resolution of the real issues in dispute, as contemplated by s 56 of the Civil Procedure Act 2005 (NSW). Access to that information will allow the Plaintiffs to take expert advice as to the matters which they may press in evidence at a final hearing; will allow them to prepare to lead expert evidence in the proceedings, notwithstanding that the form of such evidence will depend upon further directions of the Court; and will allow both parties to be in a position to assess the strengths and weaknesses of their respective cases from a more informed standpoint. All of these factors seem to me to be factors which support both the existence of exceptional circumstances and the necessity of disclosure for the conduct of a fair trial. [Ordered that documents sought in Notices to Produce dated 28, 29 June and 18 July 2012 and Subpoena to Produce dated 28 June 2012 be disclosed pursuant to Practice Note SC Eq 11.]



[12.270]  669

Civil Procedure in New South Wales

Graphite Energy v Lloyd Energy Systems [12.280]  Graphite Energy Pty Ltd v Lloyd Energy Systems Pty Ltd [2014] NSWSC 1326 [The plaintiffs claimed they had lent $3.6 million to the first defendant (Lloyd). The case had an expedited final hearing. By letter dated 29 August 2014, the plaintiffs sought an order for discovery and production of documents in 15 categories. On the same day, the plaintiffs served on the first defendant a notice to produce under UCPR r 24.10 (“the notice”), requiring production of a further ten documents or categories of document. By notice of motion filed on 9 September 2014, the plaintiffs sought an order pursuant to UCPR r 21.2 that Lloyd provide discovery as sought in the 29 August letter, and an order (said to be pursuant to UCPR 21.11) that Lloyd produce for inspection the documents referred to in the notice. The defendants objected to discovery generally on the ground that it was premature, and to various categories on grounds of the width of their description and relevance, and to some paragraphs of the notice.] BRERETON J [11] UCPR r 21.2 provides that the Court may order that Party B give discovery to Party A of documents within a class or classes specified in the order, which classes may be specified by relevance to one or more facts in issue, by description of the nature of the documents and the period within which they were brought into existence or in such other manner as the Court considers appropriate in the circumstances. In respect of proceedings in the Equity Division, Practice Note SC Eq 11 (“the Practice Note”) states that the Court will not make an order for disclosure of documents until the parties to the proceedings have served their evidence, unless there are exceptional circumstances necessitating disclosure [par 4]; and unless it is necessary for the resolution of the real issues in dispute in the proceedings [par 5]. [12] The defendants submitted that the evidence was not yet complete, and that there would likely be further requests for disclosure after it was complete, so that, absent exceptional circumstances, no order should be made, and there were not exceptional circumstances. [13] The intent of the Practice Note was that, ordinarily, formal discovery should be deferred until the parties had served their affidavits. This was intended to serve two main purposes: first, to reduce the burden of discovery by ordering it only after the issues had not only been defined by the pleadings (where relevant), but had also been refined by the affidavit evidence, and thus limiting its scope; and secondly, to avoid the mischief of parties constructing their affidavit evidence around the discovered documents, by requiring them first to commit their case to affidavits [cf Armstrong Strategic Management and Marketing Pty Ltd & Ors v Expense Reduction Analysts Group Pty Ltd & Ors [2012] NSWSC 393, [65]-​[66] (Bergin CJ in Eq); Leighton International v Hodges; Thiess v Reinforced Earth [2012] NSWSC 458, [15]-​[16] (McDougall J); In the matter of Mempoll Pty Ltd, Anakin Pty Ltd and Gold Kings (Australia) Pty Ltd [2012] NSWSC 1057, [14] (Black J); Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2012] NSWSC 913, [3]‌(Gzell J); Bauen Constructions Pty Ltd v NSW Land and Housing Corporation [2014] NSWSC 683, [26] (Ball J)]. The Practice Note is an important initiative in endeavouring to reduce the cost of discovery, the burden of which was perceived to [be] increasing. For that reason, the court has stated, more than once, that it will not countenance attempts to circumvent the Practice Note. [14] That said, the Practice Note provides guidance as to the practice of the Court in respect of disclosure. It is not a statute, nor is it a rule of the Court. It guides, but does not govern, the disclosure process. It must yield to the requirements of the individual case, although the importance of its purpose means that it will be in a rare case that the Court will depart from its guidance. [15] In my view, the proper interpretation and application of the Practice Note does not require that exceptional circumstances be established on this motion to warrant an order for discovery at this stage. Both parties have in substance served their evidence. The chief protagonists on each side (Mr Kinghorn and Mr McLachlan respectively) have served their evidence in chief, and Mr Kinghorn has also served an affidavit in reply; all that remains outstanding is, on the part of the defendants, an affidavit from Mr Geoff Vince and an expert report from Mr Alan Farrer of PKF Lawler (or his nominee), 670 [12.280]

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Graphite Energy v Lloyd Energy Systems cont. leave to serve which by 15 October and 31 October 2014 respectively was granted on 15 September; and on the part of the plaintiffs any additional lay evidence in reply (to Mr Vince’s affidavit) which is to be served by 15 October 2014. Two previous directions had been made for service of the defendants’ evidence, and Mr Vince’s affidavit was overdue. [16] The Practice Note does not require that all the evidence has been served; nor could it sensibly do so, as a key purpose of disclosure is for a party to obtain documents which it can tender, and discovery might well create a requirement to serve additional evidence. The purpose of the Practice Note, as explained above, has been achieved, in that each party has committed its case to affidavit by serving its evidence-​in-​chief. The issues are identifiable from the affidavits. The circumstance that an affidavit in reply and an expert report is yet to be finalised does not mean that in substance the purpose of the note has not been achieved. [17] Alternatively, if I be wrong in that conclusion, I would be satisfied that in this case there are exceptional circumstances warranting the ordering of discovery at this stage. McDougall J has characterised the requirement for exceptional circumstances as “not normal, or usual; … something out of the ordinary; they need not be unique; … not ‘exceptional’ at large, but ‘exceptional’ because they necessitate disclosure” [Leighton, [20]; see also The Owners Strata Plan SP 69567 v Baseline Constructions Pty Ltd [2012] NSWSC 502, [30]-​ [31] (Stevenson J)]. I respectfully agree with the following observations of Gzell J in Leda Manorstead v Chief Commissioner (at [17]): I do not dissent from any of these observations but caution against setting the bar too high. As was said in Kelly (Edward), to be exceptional the circumstance need not be unique or unprecedented or very rare. What is needed is an appraisal of all the circumstances and the context in which the expression must be satisfied. Are there circumstances necessitating disclosure before evidence in the sense that the party’s case cannot be put without disclosure? Are those circumstances exceptional? [See also Metgasco Ltd v Minister for Resources and Energy [2014] NSWSC 908, [22] (Davies J); In the Matter of Mempoll, [17] (Black J); RSA (Moorevale Station) Pty Ltd v VDM CCE Pty Ltd [2013] NSWSC 534, [34] (Stevenson J)]. [18] In my view, sufficiently exceptional circumstances to warrant ordering discovery at this stage in this case are amply established by a combination of the advanced if incomplete state that the evidence has reached, the circumstances that the evidence is not complete being attributable to the default of the defendants, and the proximity of the expedited final hearing. [19] Insofar as par 5 of the Practice Note provides that discovery will be ordered only where necessary, that reflects a longstanding requirement, formerly contained in the rules (and still provided, in respect of interrogatories, by UCPR r 22.1(4)), that discovery would be ordered only where it was necessary. This provision was consistently interpreted to mean, not essential, but reasonably required for the fair disposition of the matter [Schutt v Queenan & Anor [2000] NSWCA 341, [12] (Mason P); In the matter of Gerard Cassegrain & Co Pty Ltd [2011] NSWSC 241, [20]-​[23]]. This has been variously described as “what is reasonably necessary for the disposing fairly of the cause or matter” [Boyle v Downs [1979] 1 NSWLR 192, 205 (Cross J); Yamazaki v Mustaca [1999] NSWSC 1083], or “necessary in the interests of a fair trial” [Percy v General Motors-​Holden Pty Ltd [1975] 1 NSWLR 289, 292 (Rath J)]; or “reasonably required or legally ancillary” to the achievement of a fair trial, not “essential” but to be “subjected to the touchstone of reasonableness” [Pelechowski v Registrar, Court of Appeal [1999] HCA 19; (1999) 198 CLR 435 (Gaudron, Gummow and Callinan JJ)]. That approach applies to the similar phrase in the Practice Note: in Leighton, McDougall J said (at [22]): In the context of the practice note, the disclosure (either pre-​evidence or at all) must be shown to be reasonably necessary for disposing of the matter fairly or in the interests of a fair trial. [See also In the matter of Mempoll [18]; and James v Royal Bank of Scotland Group plc [2013] NSWSC 402, [16] (Stevenson J)]. [12.280]  671

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Graphite Energy v Lloyd Energy Systems cont. [20] The affidavit of the plaintiffs’ solicitor Mr Mattiussi addresses the requirements of the Practice Note as to the reasons why disclosure is necessary for the resolution of the real issues in dispute, the classes of documents in respect of which disclosure is sought, and the likely cost of such disclosure. It identifies the issue in respect of which discovery is said to be required as the ability of the first defendant to repay the loan, which is plainly an issue in the proceedings. Evaluation of the ability of Lloyd to repay will necessarily involve review and analysis of its financial position, which will primarily be established by its own financial records, and that it discovery in respect of that issue is necessary in the relevant sense [sic]. [21] Aside from necessity, the touchstone for discovery is relevance to a fact in issue in the proceedings. UCPR r 21.2(2) provides that a class of documents must not be specified in more general terms than the Court considers to be justified in the circumstances, and UCPR r 21.2(4) provides that an order for discovery may not be made in respect of a document unless the document is relevant to a fact in issue. UCPR r 21.1(2) provides: [A]‌document or matter is taken to be relevant to a fact in issue if it could, or contains material that could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence. [22] Thus, while r 21.2(1) permits classes of documents to be specified, not only by relevance to one or more facts in issue, but alternatively by description of the nature of the documents and the period within which they were brought into existence or in such other manner as the Court considers appropriate in the circumstances, nonetheless discovery cannot be ordered except in respect of documents that are relevant to a fact in issue. This means that it must always be possible to show a connection between the class and a fact in issue, and where a class is specified in some other manner than by relevance to a fact in issue, it must be apparent that the class so described will capture only documents that are relevant to a fact in issue. For this reason, it is highly preferable that classes be specified by relevance to a fact in issue –​unless it is self-​evident that the class is a sub-​class of documents that relate to a fact in issue. … [Discovery was ordered.]

 The discovery process illustrated [12.330]  The following two interlocutory judgments delivered by Johnson J in the Supreme

Court in Priest v New South Wales are useful to explain the discovery process. In the first judgment, the plaintiff sought orders for discovery against the State. The second judgment deals with the defendant’s default in complying with discovery. Priest claimed he was injured as a result of his employer’s negligence (the New South Wales Police Service, which is sued as the “State of New South Wales”). The plaintiff served as a New South Wales Police Officer from 1983 to 2002. He sued the defendant for negligence and breach of contract. He claimed he suffered psychiatric injury from alleged victimisation as a “whistle blower”. Priest’s negligence claim was pleaded in his statement of claim in the following way: 6. At all material times, the Defendant owed to the Plaintiff a duty of care to provide a safe system of work, which included a duty to take all reasonable steps to protect the Plaintiff against the risk of physical, mental or psychiatric injury. 672 [12.330]

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7. As part of its abovementioned duty of care to the Plaintiff, the Defendant owed to the Plaintiff a duty to take all reasonable steps to keep confidential any and all information which might identify the Plaintiff as a person who undertook investigations into the activities of other police officers and to keep such information confidential from the officers about whom information was obtained by the Plaintiff. 8. The Plaintiff was, during the course of his employment with the Police Service, required to follow the orders and directions of superior officers in the Police Service. Therefore, as part of the abovementioned duty of care to the Plaintiff, the Defendant owed a duty to the Plaintiff to ensure that any and all such orders and directions were reasonable in the circumstances and took into account the physical, mental and emotional well-​being of the Plaintiff. 9. The Defendant was at all material times under a duty to the Plaintiff to take reasonable care for his safety by exercising proper control and authority over those officers under its care and control who supervised or worked with the Plaintiff. … 65. The Plaintiff claims that from November 1998, the Defendant, by its servants or agents, breached the duty of care it owed to the Plaintiff and that from September 1999 he suffered injury and damage in consequence. Particulars of Breach of Duty of Care

(a) Failure to provide a safe work environment;

(b) Failure to properly resource and staff Cabramatta Police Station during the period during which the Plaintiff was assigned at that station;

(c) Failure to develop and implement systems of work which ensured that the Plaintiff was not exposed to harassment, victimisation or inappropriate treatment;

(d) Failure to develop and implement a system whereby the Plaintiff was protected and kept free from victimisation and harassment as a result of the fact that he made complaints to the Police Integrity Commission and others;

(e) Failure to take any or any adequate steps to prevent victimisation or harassment of the Plaintiff when it became apparent that such victimisation was occurring;



(f) Failure to provide any or any adequate training in relation to the making of complaints about corrupt activity within the NSW Police Service;

(g) Failure to provide any or any adequate counselling to the Plaintiff at the time when he instituted complaints to the NSW Crime Commission and to the Police Integrity Commission; (h) Failure to provide any or any adequate counselling to the Plaintiff at any time after he instituted complaints to the NSW Crime Commission and to the Police Integrity Commission;

(i) Failure to provide any trauma debriefing, trauma counselling in respect of involvement in policing and investigations into violent crime;



(j) Failure to adequately supervise and monitor senior members of the Police Service in respect of their treatment of the Plaintiff;

(k) Failure to supervise and monitor officers at Cabramatta Police Station to ensure that the Plaintiff was kept free from victimisation and harassment;

(l) Failure to prevent the disclosure of the Plaintiff’s identity as the person who made a complaint to the Police Integrity Commission;

(m) Failure to take any preventative steps to protect the Plaintiff once the disclosure had been made that the Plaintiff had made a complaint to the Police Integrity Commission;

(n) Failure to provide any rehabilitation training to the Plaintiff after the Parliamentary Inquiry had completed;

(o) Failure to take any or any adequate steps so as to prevent information concerning the Plaintiff’s identity to be revealed during the course of the PIC investigation; [12.330]  673

Civil Procedure in New South Wales

(p) Failure to provide any or any adequate counselling, psychiatric assistance, debriefing or other such assistance to the Plaintiff, from September 1999 onward, during the course of his employment; (q) Failure to provide any or any adequate ongoing vocational guidance, counselling, therapy, debriefing or other such assistance to the Plaintiff following his last day of active service in the Police Service and prior to his medical retirement in 2002;

(r) Failure to take any or any adequate measures to ensure that the Plaintiff was placed in positions within the Police Service which would minimise the risk of any further physical or psychiatric injury;



(s) Failure to take any or any adequate measures to prevent the Plaintiff from being supervised by any person who was named by the Plaintiff in his complaints to the PIC and the NSW Crime Commission;

(t) Transferring the Plaintiff to Campbelltown Police Station in a uniformed position in April 2000;

(u) Failure to ensure that the Plaintiff’s prospects of promotion were not hindered and were not seen to be hindered by his involvement in the charges against senior members of the Police Service;



(v) Failure to take reasonable steps to ensure that the Plaintiff was not subjected to unnecessary stress, fear and concern for his future in the NSW Police Service by reason of the proper discharge of his duties;

(w) Failure to take reasonable steps to reduce or eliminate the stress, fear and concern for the Plaintiff’s future in the NSW Police Service by reason of the proper discharge of his duties.

Priest v New South Wales [12.340]  Priest v New South Wales [2006] NSWSC 12 (31 January 2006) [The plaintiff sought an order for discovery due to difficulty in obtaining direct witness evidence to prove his case. Further, he claimed that documents such as internal policies and protocols were uniquely in the possession of the defendant. The judge allowed the order for discovery as the unusual and exceptional factors satisfied the “special reasons” test. The order was under the former Supreme Court Rules 1970 (NSW) (which are the same as the relevant UCPR).] JOHNSON J The “special reasons” test [126] The Plaintiff makes a common law claim for damages arising out of alleged bodily injury. Accordingly, Part 23 r 2(1)(b) and rule 3 SCR do not apply to allow for discovery unless the Court, for special reasons, otherwise orders: Part 23 r 5 SCR (see now Part 21.8 UCPR). [127] The creation of the “special reasons” test in Part 23 r 5 SCR in 1996 strengthened what was always a prima facie prohibition upon discovery in claims for personal injury: Haywood v Collaroy Services Beach Club Limited [2003] NSWSC 43 at paragraph 15. The rule represents an intention that discovery in personal injury cases will be rare, and will be ordered only where special reasons are made out: Haywood at paragraph 20. [128] Not surprisingly, there is no definition of “special reasons” in the SCR (or UCPR). The Shorter Oxford Dictionary defines “special” as meaning “of such a kind as to exceed in some way that which is usual or common” and also “exceptional in character, quality or degree”. The application of Pt 23 r 5 SCR (Pt 21.8 UCPR) should be approached giving to “special reasons” the meaning that expression would ordinarily convey in common English usage, whilst having particular regard to the statutory setting in which the language is used: B v Gould (1993) 67 A Crim r 297 at 300. The core of the requirement for “special reasons” is that there be something unusual or different to take the matter

674 [12.340]

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Priest v New South Wales cont. the subject of the discretion out of the ordinary course: Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531 at 535–​6 (paragraph 18); Binks v North Sydney Council [2001] NSWSC 27 at paragraphs 9–​10. [129] The Plaintiff submits that special reasons exist in this case for the making of an order for limited discovery. It is submitted that the Plaintiff’s case has arisen in extraordinary circumstances and falls well outside the normal range of personal injury cases. At the heart of the Plaintiff’s claim, it is submitted, is the conduct by very senior officers of the New South Wales Police in allegedly victimising the Plaintiff when he became a “whistle blower” in relation to the under-​resourcing and alleged corruption in policing in the Cabramatta area. The Plaintiff submits that serious issues were raised in this respect, involving Legislative Council inquiries at the hearing of which the Plaintiff was called to give evidence. [130] The Plaintiff submits that one of the facts which would give rise to special reasons is the difficulty facing him in obtaining direct witness evidence concerning alleged victimisation and harassment of the Plaintiff for his whistle blowing activities. It is submitted that discovery of documents by the Defendant is the only way to address this difficulty. It is submitted that many of the classes of documents sought in discovery are internal documents uniquely in the possession of the Defendant. They include relevant policies and protocols in relation to persons who make protected disclosures, but include internal documentation relating to the manner in which those policies were applied (if at all) to the Plaintiff. The documents sought also relate to the alleged “quota” for crime reporting, internal directives not to make drug-​related arrests in the Cabramatta area and funding documents in relation to Local Area Commands in Cabramatta and surrounding areas. Discovery is also sought of internal reviews by the New South Wales Police into the conduct of its own senior officers in relation to the Plaintiff. [131] Mr Semmler QC [Priest’s Counsel] emphasised that the issues in the case need to be tried fairly. He referred to Percy v General Motors Holden Pty Limited (1975) 1 NSWLR 289 at 292 where Rath J, in the context of an earlier statutory regime for discovery in personal injury matters, described the proper approach as being whether discovery was necessary in the interests of a fair trial. In Percy, Rath J at 292 observed that it was clear that the defendant would have “virtually exclusive knowledge of many aspects” of the design and manufacture of the relevant vehicle and that, “in the interests of justice in this case, the plaintiff should have access to such information insofar as that access is necessary for the proper preparation of his case”. Mr Semmler QC submitted that similar considerations applied to this case both with respect [to] the existence of “special reasons” and the categories of documents which were sought under the order for limited discovery. He submitted that it would be unfair to deprive the Plaintiff of the opportunity to have available to him the information which had been carefully categorised. [132] It was submitted that, in the absence of discovery, the Plaintiff may be unable to obtain evidence required to support his own case and attack the Defendant’s case: Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341 at 345. In addition, it is submitted that the material requested will assist in narrowing the facts in dispute between the parties and will assist of disposing fairly of the proceedings. Upon these bases, the Plaintiff submits that special reasons exist for the making of an order for particular discovery in this case. [133] Mr Maconachie QC [NSW’s Counsel] submitted that the Plaintiff had failed to demonstrate “special reasons” for the making of a discovery order. He submitted that no special reasons had been advanced in this case “other than that there is an approach to this case as though it was another Royal Commission” (Transcript, 23 June 2005, page 53.54). [134] I am satisfied that the Plaintiff has demonstrated “special reasons” for an order for limited discovery to be made in this case. In broad terms, I accept the Plaintiff’s submissions concerning the presence of “special reasons”. The claim has unusual features which takes it out of the ordinary run of personal injury claims. I am satisfied that there are unusual and exceptional factors in this case so as to satisfy the threshold “special reasons” test. [12.340]  675

Civil Procedure in New South Wales

Priest v New South Wales cont. Discretion to order discovery [135] Having satisfied the “special reasons” test, it is necessary for the Plaintiff to establish that the Court’s discretion ought be exercised in his favour by the making of an order for discovery under Part 23 r 3(1)-​(3) SCR (Part 21.2 UCPR) … [136] The Defendant resisted the making of an order for discovery and made submissions contending that some of the categories of documents were not relevant or that compliance with an order would be oppressive. For the purpose of exercising discretion to make an order for discovery, the Court should consider the relevance of the classes of documents to the issues in the proceedings in accordance with the principles in National Australia Bank Limited v Idoport Pty Limited [2000] NSWCA 8 at paragraph 5ff; Economos v Bowlers Club [2000] NSWSC 1065 at paragraph 46ff. Once the Court exercises its power to make an order under Part 23 r 3 SCR, the question of relevance of documents to a fact in issue is superseded by the terms of the Court’s order. The question for the parties thereafter is whether a document under consideration falls within the terms of the Court’s order, regardless of whether the party who was subject of the order believes the document to be relevant to a fact in issue: Falk v Finlay [1999] NSWSC 1284 at paragraph 43. If the Court decides to make an order for discovery, a class of documents shall not be specified in more general terms than the Court considers to be justified in the circumstances: Part 23 r 3(2) SCR. [137] With respect to the issue of oppression, the Court is required not to specify a class of documents in more general terms than the Court considers to be justified in the circumstances: Part 23 r 3(2) SCR. It may be taken that the task of complying with discovery is, to some extent, burdensome. To comply with the order, a party is required to undertake often extensive searches for documents. The test of oppression must be considered against this background. The term “oppressive” is often used to signify considerations which justify the exercise of the power to control procedures to prevent injustice where the procedures are “seriously and unfairly burdensome, prejudicial or damaging” and “productive of serious and unjustified trouble and harassment”: Hamilton v Oades [1989] HCA 21; (1988–​1989) 166 CLR 486 at 502; Trade Practices Commission v Arnotts Ltd (No. 2) (1989) 88 ALR 90 at 102–​103. Particular categories of documents [138] I turn then to consider the categories of documents sought on discovery by the Plaintiff and specific objections to those categories advanced by the Defendant. … [140] The Plaintiff submits that the categories of documents sought are appropriate in that: (a)

the documents sought are relevant to a matter in issue;

(b)

they are for a clear forensic purpose in the litigation; and

(c)

the terms used are clear and unambiguous.

[141] Mr Semmler QC accepted that an order for particular discovery would place some burden upon the limited resources available within the New South Wales Police. However, he emphasised that one of the designated functions of the Legal Services Section was to comply with orders for discovery. The Plaintiff submitted that the documents sought were relevant and that the task of complying with such an order would not be oppressive. [142] The evidence of Sergeant Popov revealed limited resources within the Legal Services Section of the New South Wales Police which could be devoted to compliance with any order for discovery although he accepted that attending to a discovery order fell within the duties of Litigation Co-​ Ordinator in that Section. The task would now fall to Mr Green, the Litigation Co-​Ordinator, who has assumed carriage of this matter (Transcript, 23 June 2005, page 30). [143] Paragraphs 1 and 2 in the Plaintiff’s Amended List of Categories of Documents to be Discovered by the Defendant (Exhibit A) (“Plaintiff’s Amended List”) seeks the following documents:

676 [12.340]

Discovery, Subpoenas and Interrogatories  Chapter  12

Priest v New South Wales cont. 1. All protocols, manuals, directions, procedures and policies (in any format) which would have applied to police officers working in the Cabramatta LAC between 1 January 1999 and 30 April 2000 relating to: (a) the occupational health and safety of police officers; (b) victimisation, bullying and harassment in the NSW Police Service; (c) the process for officers making complaints about corruption within the NSW Police Service; (d) the assistance (by way of counselling, protective arrangements, the prevention of disclosure of their identity or otherwise) available to police officers who made complaints about more senior members of the NSW Police Service to the Assistant Police Commissioner or the Police Commissioner; (e) the assistance (by way of counselling, protective arrangements, the prevention of disclosure of their identity or otherwise) available to police officers who made complaints about more senior members of the NSW Police Service to the Internal Affairs Division of NSW Police Service; (f) the assistance (by way of counselling, protective arrangements, the prevention of disclosure of their identity or otherwise) available to police officers who made complaints about more senior members of the NSW Police Service to the NSW Crime Commission; (g) the treatment of police officers who made complaints about members of the NSW Police Service to or assisted the Police Integrity Commission; (h) the debriefing and counselling of police officers in respect of their involvement in policing and investigations into violent crime; (i) the treatment or assistance to be provided to police officers suffering from or showing signs of physical or psychiatric injury; (j) the arrangement to be taken to prevent police officers from contracting or suffering further physical or psychiatric injury when those officers are already suffering from or showing signs of physical or psychiatric injury; (k) the supervision and monitoring of police officers at the level of local Area Commander and above; (l) to the rehabilitation, training, protection or assistance to be provided to persons after making submissions to a Parliamentary Inquiry about the functioning of the NSW Police Service; 2. All protocols, manuals, directions, procedures and policies (in any format) which would have applied to police officers between February 2001 and August 2002 in relation to the assistance, including vocational guidance, counselling, therapy and debriefing to be provided to police officers in the period between their last day of active service as a police officer and before their medical retirement is granted. [The defendant submitted that paras 1 and 2 were so broad as to be oppressive, and were also irrelevant. The plaintiff submitted that the periods were confined and were relevant to the pleadings. Johnson J noted that there would be some burden placed on the defendant in complying with the subpoena, however, his Honour was not satisfied that the task would be oppressive so as to stand in the way of an order for discovery. Johnson J was also satisfied that the documents sought were relevant by reference to the pleadings.] [146] Paragraphs 3, 4, 5, 7 and 8 of the Plaintiff’s Amended List seek the following classes of documents: 3. The plaintiff’s complete personnel file (including all disciplinary files) held by the NSW Police Service. [12.340]  677

Civil Procedure in New South Wales

Priest v New South Wales cont. 4. The plaintiff’s complete personnel file (including all disciplinary files) in respect of his secondment to office of the Minister for Police between December 2001 and August 2002. 5. The plaintiff’s complete medical file (if it be separate to the personnel file) … 7. All documents containing records of the leave (of whatever kind) taken by the plaintiff during the course of his employment with the NSW Police Service. 8. All documents containing records of the wages (including allowances and penalties) paid to the plaintiff from 1 January 1999 to the date of his termination of his employment with the NSW Police Service. [147] The Defendant submits that paragraphs 3, 4, 5, 7 and 8 within the Plaintiff’s Amended List are not oppressive, but may easily be dealt with by way of subpoena. In circumstances where I propose to order the Defendant to give discovery with respect to other categories of documents, I am satisfied that the order should extend to the categories of documents contained in paragraphs 3, 4, 5, 7 and 8 of the Plaintiff’s Amended List. I am satisfied that the classes of documents sought in these paragraphs are relevant to the proceedings and that the requirements of Part 23 r 3(2) SCR have been met. [148] Paragraph 6 of the Plaintiff’s Amended List seeks discovery of the following documents: All documents containing records of the hours worked by the Plaintiff during the period from March 1997 to February 2001. [149] The Defendant submits that paragraph 6 is vague in the extreme and is not relevant to issues in the proceedings. The Plaintiff submits that the category contained within paragraph 6 is relevant to the proceedings by reference, inter alia, to paragraphs 18, 65(a), 65(b), 65(r), 69, 70 and 71 of the SASC [the second amended statement of claim]. I am not satisfied that the task involved in compliance with paragraph 6 would be oppressive. The requirements of Part 23 r 3(2) SCR have been met. I am satisfied that the documents are relevant to issues in the proceedings. The order for discovery should extent [sic] to paragraph 6 of the Plaintiff’s Amended List. [150] Paragraphs 9, 10 and 11 of the Plaintiff’s Amended List seeks discovery of the following categories of documents: 9. All documents (in any format) forwarded to or collected by the Local Area Commander of Cabramatta in relation to the Plaintiff for the period of 1 March 1997 to date in relation to: (a) Disciplinary inquiries; (b) Complaints made by the Plaintiff; (c) Complaints made in respect of the Plaintiff; (d) Performance issues in respect of the Plaintiff; (e) Any and all documents in relation to the Plaintiff’s medical condition; (f) Reports, notes, letters, correspondence or any other document in relation to the Internal Affairs complaints against the Plaintiff; (g) Reports, notes, letters, correspondence or any other document in relation to the Plaintiff’s participation in the PIC; (h) Reports, notes, letters, correspondence or any other document in relation to the Plaintiff’s participation in the Parliamentary Inquiries. 10. All documents (in any format) forwarded to or collected by the Internal Affairs Division of the NSW Police Service in relation to the Plaintiff, including (but not limited to) correspondence, records, diary entries, notes, witness statements, investigation results, reports and memoranda. 11. All documents (in any format) forwarded to or collected by Assistant Police Commissioner Small in relation to the Plaintiff between 1 January 1999 and 31 December 2001.

678 [12.340]

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Priest v New South Wales cont. [151] The Defendant submits that paragraphs 9 and 10 in particular are broad and not demonstrated by the Plaintiff to be relevant to the issues properly defined by the pleadings. It was the evidence of Sergeant Popov that some 80 archive boxes are held at the Legal Services Section repository which relate to the involvement of that Section in the Legislative Council inquiries. If an order was made in terms of paragraph 9(h), Sergeant Popov said that an examination of the contents of the 80 boxes would be required to determine if any document related to the Plaintiff and, if so, whether any public interest immunity claim might attach to it. Sergeant Popov estimated that it would take two days for a person to examine the contents of each of the 80 boxes for this purpose. With respect to paragraph 9(g), Sergeant Popov testified that very extensive searches would be required to determine if documents fell within this category (Transcript, 23 June 2005, page 26.45). The Plaintiff submits that the documents sought in paragraph 9 are relevant to paragraphs 23 to 56 of the SASC and paragraphs 6 to 19 of the Amended Defence, that the documents sought in paragraph 10 are relevant to paragraphs 50 and 65 of the SASC and paragraph 3 of the Amended Defence and the documents sought in paragraph 11 are relevant to paragraphs 23 to 56 of the SASC and paragraphs 6 to 19 of the Amended Defence. [152] Having regard to the issues in the proceedings, I am satisfied that the categories of documents referred to in paragraphs 9, 10 and 11 of the Plaintiff’s Amended List are relevant to the proceedings. I am not satisfied that an order for discovery with respect to these categories would be oppressive. The requirements of Part 23 r 3(2) SCR have been met. In my view, the opening words of paragraph 9 (documents forwarded to or collected by the Cabramatta Local Area Commander) should operate to confine the classes of documents to be examined. Further, the Defendant has the advantage that the documents relating to the Legislative Council inquiries are consolidated into some 80 boxes. It is not necessary for the Defendant to locate and gather together these documents from different locations. It might be thought, in any event, that the Defendant would examine the contents of these boxes for its own purposes in preparation for this litigation, given the relevance of the Legislative Council inquiries and the role of the Plaintiff in them. I am inclined to agree with Mr Semmler QC’s submission that the estimated time given by Sergeant Popov for examining the contents of the boxes is rather longer than might reasonably be expected, especially given that Sergeant Popov does not have a detailed understanding of the actual volume of documents in the boxes (Transcript, 23 June 2005, pages 25–​26, 31–​32). The order for discovery will extend to paragraphs 9, 10 and 11 of the Plaintiff’s Amended List. [153] Paragraphs 13, 14, 15 and 17 of the Plaintiff’s Amended List seek discovery of the following categories of documents: 13. All records (in any format) relating to the steps taken by the NSW Police Service to prevent disclosure of the identity of the Plaintiff and provide him counselling and assistance, following his complaints to the NSW Crimes Commission and Police Commissioner in July 1999. 14. All records (in any format) relating to the steps taken by the NSW Police Service to prevent disclosure of the identity of the Plaintiff and provide him counselling and assistance, following his complaints to the Police Integrity Commission in November 1999. 15. All records (in any format) relating to the steps taken by the NSW Police Service to provide the Plaintiff with counselling, protection from victimisation and harassment and assistance, following complaints made between December 1999 to August 2002. 17. All records relating to the steps taken by the NSW Police Service to prevent further physical or psychiatric injury, once the Plaintiff was diagnosed or suspected as suffering from psychiatric injury. [154] The Defendant submits that each of paragraphs 13, 14, 15 and 17 call for a judgment to be made by the Defendant as to whether something falls within the relevant category. The Plaintiff submits that paragraph 13 in the Plaintiff’s Amended List is relevant to paragraphs 30 to 34, 70 and 72 of the SASC, that paragraph 14 is relevant to paragraphs 35 to 39, 70 and 72 of the SASC, that

[12.340]  679

Civil Procedure in New South Wales

Priest v New South Wales cont. paragraph 15 is relevant to paragraphs 40 to 65, 66, 69, 70 and 72 of the SASC and that paragraph 17 is relevant to paragraphs 9A, 10, 11, 65 to 72 of the SASC and paragraphs 2, 3 and 25–​27 of the Amended Defence. Given the issues identified in the pleadings and the nature of the claim brought by the Plaintiff, I am satisfied that the categories of documents sought in paragraphs 13, 14, 15 and 17 of the Plaintiff’s Amended List are relevant to the proceedings. [155] Although the use of the term “relating to” in these paragraphs requires the Defendant to exercise a judgment as to the documents falling within the categories, the mere use of that expression does not in itself impose an unreasonable burden upon the Defendant. The test is whether the categories of documents are identified sufficiently clearly in the circumstances of the case: Lucas Industries Limited v Hewitt (1978) 18 ALR 555 at 573; Spencer Motors Pty Ltd v LNC Industries Ltd (1982) 2 NSWLR 921 at 929–​930; Southern Pacific Hotels Services Inc v Southern Pacific Hotel Corporation Limited (1984) 1 NSWLR 710 at 719. With respect to each of these categories, the documents are confined to records concerning the Plaintiff. In the circumstances of the present case, I do not consider that the task required to comply with these paragraphs would be oppressive and I am satisfied that the documents sought are relevant to the proceedings. They should be included in the order for discovery. [156] The Defendant submits that the Plaintiff’s Amended List seeks irrelevant documents, involving an oppressive process, in paragraphs 16, 18, 19, 20, 21 and 30 of the Plaintiff’s Amended List which seek discovery of the following categories: 16. All documents (in any format) relating to offers, requests or directions for counselling, psychiatric assistance or debriefing for the Plaintiff during the course of his employment with the NSW Police Service. 18. All records relating to the assistance, including vocational guidance, counselling, therapy and debriefing provided to the Plaintiff in the period between his last day of active service as a police officer and before his medical retirement was granted. 19. Copies of all rostering and tasking records pertaining to Cabramatta LAC during the period of 1997–​2001 for police officers in relation to investigations into criminal offences. 20. Copies of all rostering and tasking records pertaining to Liverpool LAC during the period of 1997–​2001 for police officers in relation to investigations into criminal offences. 21. Copies of all rostering and tasking records pertaining to Green Valley LAC during the period of 1997–​2001 for police officers in relation to investigations into criminal offences. 30. Report by Detective Senior Constable Cook of Organised Crime South Eastern Asian Crime Agency (OCSEA) dated November 1999 and all related documents. [157] The Plaintiff submits that paragraph 16 is relevant to, inter alia, paragraphs 10, 11, 16, 33, 53, 64, 65(g), 65(h), 65(p), 65(q), 65(r), 66 and 69 of the SASC. It is submitted that paragraph 18 relates to paragraphs 63, 64 and 70 of the SASC and paragraphs 2 and 24 of the Amended Defence. The Plaintiff submits that paragraph 19 relates to, inter alia, paragraphs 10, 11, 23 to 52 of the SASC and paragraphs 2, 6 to 17 of the Amended Defence. The Plaintiff submits that paragraph 20 relates, inter alia, to paragraphs 10 and 11 of the SASC and paragraph 2 of the Amended Defence. The Plaintiff submits that paragraph 21 in the Plaintiff’s Amended List relates to paragraphs 19 to 21 of the SASC. The Plaintiff submits that paragraph 30 relates to paragraphs 35 to 39 of the SASC and paragraphs 2, 3 and 11 of the Amended Defence. [158] I am satisfied that the documents sought in paragraphs 16 and 18 are relevant and that it has not been demonstrated that the process of discovery of these categories would be oppressive. Both categories relate expressly to the Plaintiff. These categories will be included in the order for discovery. [159] Paragraphs 19, 20 and 21 seek copies of all “rostering and tasking records” pertaining to Cabramatta, Liverpool and Green Valley Local Area Commands during a four-​year period between 1997 and 2001 “for police officers in relation to investigations into criminal offences”. Prima facie, these are broad categories of documents. They extend beyond daily, weekly or monthly rosters at the 680 [12.340]

Discovery, Subpoenas and Interrogatories  Chapter  12

Priest v New South Wales cont. relevant police stations. They include so-​called “tasking records”. Sergeant Popov said in his affidavit (paragraph 12) that compliance with these paragraphs would involve an onerous exercise. It would be necessary to undertake a search of all documents held by each Local Area Command. Post-​1999 records are held at the relevant Local Area Command Offices. Pre-​1999 records are held at a central repository. [160] The Plaintiff submits that the management of the Cabramatta Local Area Command, its resourcing and its approach to the rostering and tasking for investigations into drug-​related crime are essential to the allegations made by the Plaintiff in this matter. It is submitted that identical documents are sought for the Liverpool and Green Valley Local Area Commands for the purposes of comparing the way in which Cabramatta adopted a different approach for the investigation and arrest for drug-​ related crime in those areas. [161] However, paragraphs 19 to 21 are not confined to investigations into drug-​related crime. The paragraphs refer to investigations into criminal offences generally without any further qualification or restriction. I consider that categories 19, 20 and 21 are specified in more general terms than are justified in the circumstances: Part 23 r 3(2) SCR. In my view, it would be oppressive to require discovery of these broad categories, in particular for such a lengthy period. I decline to order discovery in terms of paragraphs 19 to 21 of the Plaintiff’s Amended List. [162] With respect to paragraph 30 of the Plaintiff’s Amended List, the Defendant submits that the inclusion of the words “and all related documents” renders compliance with the paragraph oppressive. In my view, there is force in this submission. An order for particular discovery with respect to paragraph 30 excluding the words “and all related documents” may be appropriate. However, I am not asked to make an order in those terms and such a document might be obtained by way of subpoena or notice to produce. I consider that category 30 is specified in more general terms than are justified in the circumstances: Part 23 r 3(2) SCR. I am not prepared to make an order in terms of paragraph 30 in its present form. [163] Paragraphs 22, 23, 24, 25, 26, 27, 28, 29, 31, 32, 35 and 36 of the Plaintiff’s Amended List seek discovery of the following categories of documents: 22. All documentation, memorandum and notes (in any format) relating to Operational Crime Review Records involving Cabramatta Police Station from 1997 to 2002. 23. All records, documentation, reports and memoranda (in any format) in relation to arrest “quotas” to be met by Cabramatta LAC during 1997–​2001. 24. All policy documents, memoranda and instructions concerning the way in which the policing of drug related crimes should be undertaken in the Cabramatta LAC during 1997–​2001. 25. All documents which record the total of drug related arrests within the Cabramatta LAC during the period of 1998 to 2001. 26. All records, documents and memoranda relating to the allocation of budgetary resources from the NSW Police Service to Cabramatta LAC during the period 1998–​2001, such not to include [sic]. 27. Copies of arrests and charges as contained on the COPS system pertaining to the Plaintiff whilst he was performing policing duties [sic] Cabramatta LAC from 1 January 1999 to 31 December 2000. 28. All documents containing annual summary statistics for Cabramatta LAC from 1998 to 2000 in relation to heroin overdoses, murders, attempted murders, shoot with intent, malicious wounding, assaults with intent and assault. 29. All correspondence, notes and documents (in any format) in relation to complaints made by members of the public and/​or community organisations about drug related crimes within the Cabramatta LAC from 1997 to 2001. … 31. Operational RETZ reports into the conduct of former Assistant Commissioner Lola Scott from 1999 to present. [12.340]  681

Civil Procedure in New South Wales

Priest v New South Wales cont. 32. All documents received or collected by the Internal Affairs Division of the NSW Police Service covering investigations into the activities of former Assistant Commissioner Clive Small and Detective Inspector Deborah Wallace, former crime manager of Cabramatta of 1999 to 2000 which name or refer to the Plaintiff. … 35. All documents, briefing notes and material instigated by or received by Greater Hume Region Commander, Chris Evans into drugs and organised crime in Cabramatta between 1 September 1999 to 31 December 2001. 36. All Entries in the diaries for the years 1997 to 2001 of: (a)  former Superintendent Peter Horton; (b)  former Commissioner Peter Ryan; (c)  former Deputy Commissioner Jeff Jarrod; (d)  former Assistant Commissioner Clive Small; (e)  Inspector Deborah Wallace; in relation to: (i)  the Plaintiff; (ii)  the policing of drug related crime in Cabramatta LAC; (iii)  the instigation of Internal Affairs complaints against the Plaintiff; (iv)  the resourcing of Cabramatta LAC. [164] The Defendant submitted that an order in terms of paragraphs 22, 23, 24, 25, 26 and 27 would require the Defendant to make judgments about the class of documents required in an impermissible way. It was submitted that paragraphs 28, 29 and 35 seek documents which are not relevant to the subject matter of the proceedings. The Plaintiff has identified in the submission entitled “Relevance of Document by Reference to the Amended List” of 23 June 2005 the parts of the SASC and Amended Defence to which it is said these categories relate. I am satisfied that the categories of documents sought in these paragraphs are relevant to the proceedings. Although it may be necessary for the Defendant to exercise a degree of judgment to identify the documents falling within some of these categories, I am satisfied that the categories of documents are identified sufficiently clearly in the circumstances of the case: Lucas Industries Limited v Hewitt; Spencer Motors Pty Limited; Southern Pacific Hotels Services Inc. I am satisfied that the requirements of Part 23 r 3(2) SCR have been met concerning these categories. I do not consider that it would be oppressive to require the Defendant to comply with these categories of documents as part of the order for discovery. [165] I do not consider that my ruling with respect to the Defendant’s strike-​out application stands in the way of a determination on the merits of the Plaintiff’s discovery application. [166] In summary, I propose to order the Defendant to give particular discovery to the Plaintiff of the categories of documents referred to in paragraphs 1 to 32, 35 and 36 of the Plaintiff’s Amended List (Exhibit A) with the exception of paragraphs 19, 20, 21 and 30. I note that paragraphs 33, 34 and 37 to 42 were not pressed by the Plaintiff.



Priest v New South Wales [12.350]  Priest v New South Wales [2007] NSWSC 41 (2 February 2007) [The defendant was ordered by Johnson J to produce documents in respect of the discovery orders. Twenty-​ seven boxes, containing more than 100 lever-​ arched folders, were delivered to Justice Johnson’s chambers. The case was again before Johnson J in the Supreme Court to determine whether the defendant’s discovery obligations had been discharged.] 682 [12.350]

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Priest v New South Wales cont. JOHNSON J [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 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] FCA 403; (2003) 129 FCR 182; Badraie v Commonwealth of Australia [2005] NSWSC 1195; (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. [36] As I have observed, the Defendant bears the onus of proof on the application to exclude Category 27 from the order for discovery. I have given consideration to adopting an approach that, in effect, enough is enough. If the Defendant has not, despite the numerous opportunities it has had to date, demonstrated that the relief it seeks should be granted, then the line should be drawn at this time. I am satisfied, however, that the interests of justice do not call for that approach. [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. [The defendant was directed to comply with discovery and was ordered to pay the plaintiff’s costs.]

 Technology and discovery [12.351]  In some cases, especially in large commercial cases, discovery may involve voluminous

documents. In the Supreme Court, if the physical documents for discovery exceed 500, the court may require the parties to consider providing discovery and inspection in the form of an electronic database. Where the discoverable documents include ESI, parties must try to agree on the scope of discovery required, the format of their respective discovery databases and lists and the style of document identification. Matters relevant to the format of discovery databases, and the exchange of electronic data generally (including court documents) are outlined in the Supreme Court of New South Wales Practice Note SC Gen 7 Supreme Court  –​Use of Technology (see [12.352]). The practice note provides suggested fields relevant to the suitable [12.351]  683

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identification of electronic data for the purpose of discovery. The interaction of information technology and discovery is considered further in [12.353] and [12.355].

Practice Note SC Gen 7 [12.352]  Practice Note SC Gen 7 Supreme Court –​Use of Technology This Practice Note was issued on 9 July 2008 and commenced on 1 August 2008. Electronic exchange of discovery lists and documents 10. Where parties have discoverable ESI, efficiency dictates that any discovery and production of such information be given electronically to avoid the need to convert it to a paper format. In such cases the Court, as a general rule, will require the parties to: • create electronic lists of their discoverable ESI material • give inspection by production of databases containing copies of discoverable ESI created in accordance with an agreed protocol. Host and attachment documents must not be separated in this process and • change original file names to document identification numbers. 11. Where the parties have more than 500 documents that are not ESI, as a general rule the Court will expect the parties to consider the use of technology to discover and inspect such documents along with any ESI. Decisions about the appropriate use of technology will be better informed if the parties have identified early in the proceedings the scope of discovery and the categories of documents likely to be discovered. 12. Practitioners must advise their opponents at an early stage of the proceedings of potentially discoverable electronically stored information and meet to agree upon matters including: • the format of the electronic database for the electronic discovery, noting that metadata, mark-​ up or other “hidden” data will be automatically discovered if native format is used. Because of potential costs, the Court would ordinarily expect it should only be discovered where the relevance outweighs the cost • the protocol to be used for the electronic discovery including electronically stored information • the type and extent of the electronically stored information that is to be discovered • how legacy or deleted data is to be dealt with. The existence of ESI that is not reasonably or readily accessible should be disclosed between the parties, but the Court would ordinarily expect that it would not need to be retrieved unless necessary for the conduct of the proceedings • whether electronically stored information is to be discovered on an agreed without prejudice basis • without the need to go through the information in detail to categorise it into privileged and non-​ privileged information and • without prejudice to an entitlement to subsequently claim privilege over any information that has been discovered and is claimed to be privileged under s 118 and/​or s 119 of the Evidence Act 1995 and/​or at common law. Such ESI could be produced separately on a CD-​ROM or DVD and appropriately marked to enable the Court to determine any privilege issue. 13. In many cases where there is a substantial amount of ESI the parties should consider producing the material in its searchable native format, rather than by production of document images. 14. If a party chooses to produce document images rather than originals of ESI, the costs of providing access to hardware, software or other resources to enable inspection of original electronic material should be agreed by the parties. … [ESI means “electronically stored information” and includes emails, webpages, word processing files, images, sound recordings, videos and databases stored in any device.]

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Discovery in the Information Age [12.353]  Michael Legg, Discovery in the Information Age, Australian Law Reform Commission Guest Blog posted on 29 October 2010 The interaction of information technology and discovery is usually described with superlatives such as revolutionary, paradigm-​shifting, game-​changing. It is all that, and probably more, as the litigation process is not immune to changes in society (except for horsehair wigs and robes) and the changes wrought by information technology are on-​going. Documents now originate and exist as computer files, e-​mail and instant messaging are taking the place of telephone calls, postal letters and even conversations, and other technologies such as SMS, blogging and social networking sites continue to evolve. Electronically stored information (ESI) is commonplace in our personal lives and in the operation of businesses, public entities, and private organizations. Not surprisingly it has become commonplace in many disputes before the court. How do the courts and court users respond to ESI? ESI differs from paper information • Volume –​creation of ESI is growing at an exponential rate. • Variety of sources –​versions of a single document may be stored electronically in multiple places (eg, on the computer hard drives of the document’s creator, reviewers, and recipients; on the company server; on backup tapes, on USB drives, PDAs and home computers). • Variety of formats –​ESI includes Word, Excel, Powerpoint, and a host of other formats. • Dynamic –​the information can change with time or through the routine operations of the information technology environment. • Hidden information: metadata and embedded data. • Dependent on system that created it to be comprehensible which may necessitate access to that system, which can become problematic as systems become obsolescent. • Difficult (although not impossible) to delete.



Electronic discovery reference model [12.354] Electronic discovery reference model (EDRM) was founded by attorney George

Socha and technologist Tom Gelbmann, in May 2005 to address the perceived lack of standards and guidelines in the e-​discovery industry. EDRM was acquired by Duke Law School in the United States in 2016. EDRM is a community of e-​discovery and legal professionals who create practical resources to improve e-​discovery and information governance:  see https://​ www.edrm.net. Among EDRM’s first projects was the creation of the EDRM diagram, which mapped the stages of e-​discovery and has since become an industry-​wide standard for managing the e-​discovery process. The diagram and a brief description of the steps taken from the EDRM website is set out below. The EDRM website explains the steps in greater detail. EDRM Stages • Information Governance –​Getting your electronic house in order to mitigate risk and expenses should e-​discovery become an issue, from initial creation of ESI through its final disposition. • Identification  –​Locating potential sources of ESI and determining its scope, breadth and depth. • Preservation –​Ensuring that ESI is protected against inappropriate alteration or destruction. • Collection –​Gathering ESI for further use in the e-​discovery process (processing, review, etc). [12.354]  685

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Electronic discovery reference model cont. Electronic Discovery Reference Model Processing Preservation Information Governance

Identification

Review

Production

Presentation

Collection Analysis

Volume

Relevance

• Processing  –​Reducing the volume of ESI and converting it, if necessary, to forms more suitable for review and analysis. • Review –​Evaluating ESI for relevance and privilege. • Analysis –​Evaluating ESI for content and context, including key patterns, topics, people and discussion. • Production –​Delivering ESI to others in appropriate forms and using appropriate delivery mechanisms. • Presentation  –​Displaying ESI before audiences (at depositions, hearings, trials, etc), especially in native and near-​native forms, to elicit further information, validate existing facts or positions, or persuade an audience.



When Discovery and Technology Meet: The Pre-​discovery Conference [12.355] Michael Legg and Nicholas Turner, “When Discovery and Technology Meet: The Pre-​ discovery Conference” (2011) 21 Journal of Judicial Administration 54 Scope of Discovery Because of the costs and burdens (if not impossibility) of reviewing increasingly vast volumes of electronic data, it makes sense for producing parties to negotiate with requesting parties in advance to define the parameters of discoverable information. During a pre-​discovery conference, lawyers should seek to narrow the scope of their client’s discovery obligations by: • narrowing the list of custodians of potentially relevant records, • limiting the relevant time frame, • considering alternative sources of information that may be cheaper and easier to access, • understanding how a client’s IT systems function so that how and where information is stored can be used to explain why certain sources of data will or will not contain relevant information, • agreeing on a search strategy to harvest potentially relevant ESI, and • excluding irrelevant computer systems. 686 [12.355]

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When Discovery and Technology Meet: The Pre-discovery Conference cont. In short, the lawyer’s goal is to narrow the scope of discovery to what is truly relevant to the case so that instead of providing a costly and burdensome blanket preservation plan, it can target with precision the ESI that has any bearing on the case. In Australia the scope of discovery was historically determined by the “train of inquiry test” but has now been narrowed to a “direct relevance test” in the Federal Court, South Australia, Queensland and in New South Wales. [Victorian Law Reform Commission, Civil Justice Review (2008) p 438.] Judges can vary court rules so as to tailor discovery to a particular case. [See eg Civil Procedure Act 2005 (NSW) s 61.] For example, in the Federal Court the court will also ask whether discovery is necessary at all and if so for what purposes, whether those purposes can be achieved by a cheaper means, such as disclosure only in relation to particular issues, the use of defined categories of documents, or discovery in stages. The likely cost of discovery is weighed against its likely benefit. More generally, a judge’s case management powers in relation to discovery are frequently subject to overriding or overarching purposes of achieving justice while minimising cost and delay. [See eg Civil Procedure Act 2005 (NSW) s 56.] The rules defining the scope of discovery in Australia and the case management powers of Australian judges allow for the tailoring of discovery obligations to a particular case. Accessible/​Inaccessible  ESI … The time and expense required to retrieve documents and electronic data depends primarily on whether such information is kept in an accessible or inaccessible format. Whether electronic data is accessible or inaccessible turns largely on the media on which it is stored. ESI may be classified into the following five categories, listed in order of most accessible to least accessible: 1. 2. 3. 4.

5.

active online data (hard drives, for example); near-​line data (typically, robotic storage devices such as optical disks); offline storage/​archives (removable optical disks or magnetic tape media which can be labeled and stored in a shelf or rack); backup tapes (devices like tape recorders that read data from and write it onto a tape; they are sequential access devices which are typically not organized for retrieval of individual documents or files); and erased, fragmented or damaged data (such data can only be accessed after significant processing).

The first three categories are typically identified as accessible, and the latter two as inaccessible. Information deemed “accessible” is stored in a readily usable format, although the time it takes to access the data may vary, but the data does not need to be restored or otherwise manipulated to be usable. “Inaccessible” data is not readily usable. For example, backup tapes must be restored, fragmented data must be de-​fragmented, and erased data must be reconstructed, all before the data is usable. Lawyers need to have a clear understanding of their client’s information technology system and the likely costs associated with retrieval requirements. In most cases involving a corporate client, the lawyer should consult with the client’s IT personnel to understand where the ESI resides, the limitations of the client’s document-​retention system, determine what is accessible versus inaccessible data, and evaluate the size and scope of potentially relevant information. Without this information, the lawyer may agree to discovery obligations under which the client may incur substantial costs. This point is illustrated by a US case where a lawyer agreed to use search terms to locate potentially responsive emails on his client’s backup tapes. The lawyer failed to understand the magnitude of the agreement and/​or the client’s IT system. The result was a $6 million bill for his client to process, review and produce the data containing the search terms. In Australia the Courts are alive to the fact that requiring the production of inaccessible data will be time-​consuming and costly. [See eg Slick v Westpac Banking Corp (No 2) [2006] FCA 1712 and New Cap Reinsurance Corporation Ltd (in liq) v Renaissance Reinsurance Ltd [2007] NSWSC 258 and Leighton Contractors Pty Ltd v Public Transport Authority of WA [2007] WASC 65 at [21] (“the cost and [12.355]  687

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When Discovery and Technology Meet: The Pre-discovery Conference cont. inconvenience to the defendant must be considered in the context of the value of the subject matter involved and the financial position of the defendant”).] The discussion of the ESI sought by one party and its accessibility by the other party can offer the opportunity to avoid discovery disputes, and if the judge is present at the conference, to educate the judge as to the competing positions. Format of ESI … The parties should include in their discussion the types of files that will be included in the production. An important threshold issue is whether the documents will be provided as TIFF (Tagged Image File Format) or PDF (Portable Document Format) files, or instead in the native file format. Native file format means the default file format a computer program uses to store data on a drive or disk. For example, producing a Word document in native file format means producing it as a Word file, rather than as a printed hard copy document, PDF, or other formatted file. To view a file in its native format it is necessary to access a computer program that it is compatible with. TIFF and PDF files are types of “petrified” electronic documents. One way to think of them is the equivalent of a photocopy, except viewable on a computer screen. These types of files may be made so that they are searchable, or so that a user can sort them by selected metadata fields such as sender, recipient, date sent/​received, etc. A Word document or e-​mail produced as a TIFF or PDF file may be scrubbed of metadata, or redacted. The advantage of TIFF and PDF files is that they cannot be edited, they are viewable on most computers even if the recipient does not have the same proprietary software and the recipient will not be able to see any redacted material. If the production will include a file type that does not typically display well in a static TIFF or PDF image format such as large Microsoft Excel spreadsheets, the parties should discuss whether the production should include any native files and how this impacts the load file requirements. Equally to be able to access blind-​copy recipients in an email may require native format rather than hard copy. As alluded to above the parties should include in their discovery plan whether hard copy and electronic documents will be produced in a searchable format. Hard copy documents that are scanned and produced with optical character recognition (OCR) in the load files are searchable. OCR translates images of text into actual text characters, which makes it possible to search the text. ESI is produced as searchable if either extracted text or OCR is produced along with the static images. A file produced natively, such as a Microsoft Excel spreadsheet, is also searchable. Most lawyers faced with the prospect of reviewing documents electronically will include the requirement that produced documents include OCR and/​or extracted text. The cost for processing and obtaining OCR and/​or extracted text should be explored and evaluated in light of the efficiency brought by being able to easily search, identify and manage key documents during the course of the litigation. … Metadata Metadata is essentially data about data. It is ancillary electronic information needed to manage the primary electronic information. Metadata may be classified into a number of distinct types, including substantive (or application) metadata, system metadata, and embedded metadata: • Substantive metadata, is “created as a function of the application software used to create the document or file” and reflects substantive changes made by the user. This category of metadata reflects modifications to a document, such as prior edits or editorial comments, and includes data that instructs the computer how to display the fonts and spacing in a document. Substantive metadata is embedded in the document it describes and remains with the document when it is moved or copied. It is rarely relevant to litigation. • System metadata “reflects information created by the user or by the organization’s information management system.” Examples of system metadata include data concerning “the author, date 688 [12.355]

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When Discovery and Technology Meet: The Pre-discovery Conference cont. and time of creation, and the date a document was modified.” System metadata may be relevant if the authenticity of a document is questioned or if establishing “who received what information and when” is important to the claims or defenses of a party. • Embedded metadata consists of “text, numbers, content, data, or other information that is directly or indirectly inputted into a [n]‌ative [f]ile by a user and which is not typically visible to the user viewing the output display” of the native file. Examples include spreadsheet formulas, hidden columns, externally or internally linked files (such as sound files), hyperlinks, references and fields, and database information. This type of metadata is often crucial to understanding an electronic document. Parties should discuss during a discovery conference whether metadata should be included or excluded from discovery obligations. … In some cases, metadata can be of minimal importance. In others, it can be critical. If there could be an issue as to when an e-​mail was sent or received, if it was read, whether a document was copied or modified, or who wrote and commented on a document, then serious consideration should be given to the production of documents in native file format. Alternatively ESI could be produced in searchable TIFF or PDF form with appropriate metadata fields provided in a discovery database. In White v Graceland College Center for Professional Development, the plaintiff was allowed to require the production of metadata as without the metadata she would be unable to confirm or contradict the timing that the documents were authored, and timing was a critical issue in relation to the termination of the plaintiff’s employment. Similarly in Chevron Corp v Stratus Consulting Inc dealing with allegations of fraudulent activity between Respondents and a court-​appointed expert the Court accepted that access to metadata should be granted as it may “demonstrate definitively the authorship, development, and drafting” of the electronic documents at issue. Equally, US courts have found that “Metadata has become ‘the new black’ with parties increasingly seeking its production in every case”. To avoid unnecessary discovery disputes about whether metadata is needed and the need to perform discovery twice when metadata is not included but the Court orders that it is to be provided it is important that parties fully discuss their ESI and the requirements for discovery early in the evolution of a case. Finding Responsive ESI –​Search Strategies Historically documents to be produced or inspected as part of discovery were reviewed through a manual review by a person. Such a review, then and now, was seen as being the most accurate and complete way in which to determine relevance, privilege and confidentiality, despite studies questioning the accuracy of human beings. Due to limitations on lawyer review capacity and client budgets a manual review of every piece of ESI is rarely feasible. As a result, litigation lawyers turn to various tools and methodologies to help identify, cull and sort ESI for the purposes of relevance, privilege and confidentiality. The most commonly used search methodology today is the use of “keyword searches” of full text and metadata as a means of filtering data for producing responsive documents. The term “keyword searches” refers to setbased searching using simple words or word combinations, with or without Boolean operators. Boolean operators include “AND”, “OR” and “NOT” which are commonly used with Google, AUSTLII or commercial providers of legal resources such as LexisNexis and Thomson. The ability to perform keyword searches against large quantities of evidence has represented a significant advance in using automated technologies and reducing the cost and time to locate documents. Basic keyword searching techniques have been widely accepted both by courts and parties as sufficient to define the scope of their obligation to perform a search for relevant documents. Keyword searches work best when the legal inquiry is focused on finding particular documents and when the use of language is relatively predictable. For example, keyword searches work well to find all documents that mention a specific individual or date, regardless of context. However, simple keyword [12.355]  689

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When Discovery and Technology Meet: The Pre-discovery Conference cont. searching alone is often inadequate. This is because simple keyword searches end up being both over-​ and under-​inclusive in light of the inherent malleability and ambiguity of spoken and written English. Keyword searches identify all documents containing a specified term regardless of context, and so they can possibly capture many documents irrelevant to the user’s query. The problem of the relative percentage of “false positive” hits or noise in the data is potentially huge, amounting in some cases to huge numbers of files which must be searched to find responsive documents. On the other hand, keyword searches have the potential to miss documents that contain a word that has the same meaning as the term used in the query, a synonym, but is not specified. People may also devise terms or acronyms or use jargon that the person devising the search is not aware of. Keyword searches can also exclude common or inadvertently misspelled instances of the term (eg, “Phillip” for “Philip,” or “strik” for “strike”). So too, it is well known that even the best of optical character recognition (OCR) scanning processes introduce a certain rate of random error into document texts, potentially transforming would-​be keywords into something else. More advanced forms of searching are available.

 Technology assisted review (TAR) [12.356]  Technology assisted review (TAR) has been defined as “[a]‌process for Prioritizing or

Coding a Collection of Documents using a computerized system that harnesses human judgments of one or more Subject Matter Expert(s) on a smaller set of Documents and then extrapolates those judgments to the remaining Document Collection”:  Maura R.  Grossman and Gordon V. Cormack, “The Grossman-​Cormack Glossary of Technology-​Assisted Review” (2013) 7 Fed Cts L Rev 1 at 31. TAR is employed in the review stage and possibly the analysis stage of EDRM. In the review stage, TAR examines ESI for relevance, and in the analysis stage may be able to evaluate the ESI for other characteristics such as privilege or particular issues or topics. Today most TAR employs a form of artificial intelligence called machine learning. More specifically, TAR employs supervised machine learning. This involves a senior lawyer with a very good grasp of the issues in the case coding the ESI for relevance (and possibly other issues) and the system learning from the lawyer’s analysis. This is elaborated on below by Justice Vickery of the Supreme Court of Victoria. TAR technology is not uniform, with different vendors employing their own proprietary software. As a result while general descriptions are accurate, there are likely to be differences in the operation of particular software. For a more detailed discussion of the operation of TAR, see Shannon Brown, “Peeking Inside the Black Box: A Preliminary Survey of Technology Assisted Review (TAR) and Predictive Coding Algorithms for Ediscovery” (2016) 21 Suffolk Journal of Trial & Appellate Advocacy 221; Technology Assisted Review Guidelines (Bolch Judicial Institute, Duke Law, 2019). TAR was expressly accepted as an acceptable way to search for relevant ESI in appropriate cases for the first time in the US decision of Da Silva Moore v Publicis Groupe, 287 FRD 182 (SDNY 2012). In that decision, US Federal Magistrate Andrew Peck stated: The Court recognizes that computer-​ assisted review is not a magic, Staples-​ Easy-​ Button, solution appropriate for all cases. The technology exists and should be used where appropriate, but it is not a case of machine replacing humans: it is the process used and the interaction of man and machine that the courts needs to examine. 690 [12.356]

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What the Bar should take away from this Opinion is that [TAR] is an available tool and should be seriously considered for use in large-​ data-​volume cases where it may save the producing party (or both parties) significant amounts of legal fees in document review. … As with keywords or any other technological solution to ediscovery, counsel must design an appropriate process, including use of available technology, with appropriate quality control testing, to review and produce relevant ESI.

Magistrate Peck went on to cite the US equivalents of the overriding purpose and proportionality as supporting the use of TAR which was quicker and cheaper, frequently more accurate than human-​review, but at least as accurate as human-​review. Similarly, Vickery J noted extra-​curially, “discernment and judgment is called for”: Peter Vickery, “Managing the Paper:  Taming the Leviathan” (2012) 22(2) Journal of Judicial Administration 51 at 69. For example, some documents are not amenable to a TAR process, typically those without significant text content, such as spreadsheets: see Money Max Int Pty Limited (Trustee) v QBE Insurance Group Limited [2018] FCA 1030 at [166].

McConnell Dowell Constructors v Santam [12.357]  McConnell Dowell Constructors v Santam (2016) 51 VR 421 VICKERY J [This proceeding involved a claim arising from the design and construction of a natural gas pipeline in Queensland. The construction contract at the centre of the case and an associated arbitration had generated approximately 4 000 000 electronic or PDF documents. McConnell Dowell has reduced the number of documents said to be relevant to the present proceeding from approximately 4 000 000 to approximately 1 400 000. The question for the court was whether predictive coding or technology assisted review was a permissible approach to undertaking discovery.] [5]‌The very large number of documents involved in the proceeding calls for special management. The cost of traditional discovery processes in a case such as this dictates that they are not appropriate. The prospect of McConnell Dowell’s solicitors conducting the manual review of 4 000 000 documents for relevance in a cost effective manner is unrealistic. Even with a reduction to 1 400 000 documents, say following use of de-​duplication technology,1 for example, a junior solicitor taking one minute to review and catalogue each of the 1 400 000 documents for relevance in an initial review exercise would take over 23 000 hours, equating to over 583 working weeks. This time does not include the time or cost of a senior solicitor to conduct a review of the process to ensure that only relevant documents are discovered. Following the manual review and provision of the reviewed documents by the providing party to the other parties, relevant documents would then be required to be inspected, reviewed and assessed by the other parties, giving rise to further rounds of delay, and potentially massive cost and expense. [6]‌This process puts all parties at risk of bearing these costs in the event of losing the case and suffering an adverse costs order. Thus, employing a traditional manual discovery process can work to place the cost-​benefit of conducting litigation in a large document case at serious risk. [7]‌In this case, traditional manual discovery of the plaintiff’s documents is not likely to be either cost effective or proportionate. Predictive coding (or TAR) [18] The use of computer technology to assist parties manage discovery has been recognised and endorsed in other jurisdictions. [19] Pyrrho Investments Ltd v MWB Property Ltd [[2016] EWHC 256 (Ch) (Pyrrho)] was a case decided in the High Court of the United Kingdom. Initially the case involved some 17.6 million documents. This number was reduced to approximately 3.1 million by the use of de-​duplication technology. The English Civil Procedure Rules require a party to make “a reasonable search for documents” which must [12.357]  691

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McConnell Dowell Constructors v Santam cont. comply with the obligation for the discovery to be “proportionate”. Master Matthews described the process of predictive coding and endorsed its use. He described the cost involved as “proportionate”. [20] The TAR process is far more sophisticated than a word search facility. In effect, the software enables a computer to be “trained” to recognise concepts in the electronic documents fed into the system which are relevant to the issues in the proceeding. Master Mathews in Pyrrho described the TAR process as follows: [T]‌he predictive coding process runs more or less like this. First of all, the parties will settle a predictive coding protocol, setting out the process in more detail, including definition of the data set, sample size, batches, control set, reviewers, confidence level and margin of error. Then criteria (perhaps agreed, perhaps unilateral) must be decided upon for inclusion of documents in the process. Those criteria will include who had the documents (“custodians”) and the date range, but perhaps also whether the documents contained any of the keywords chosen. Certain types of documents, not having any or any sufficient text, will be excluded (they will have to be considered manually). The resulting documents are “cleaned up”, by removing repeated content (eg email headers or disclaimers) and words that will not be indexed (eg because not useful in assessing relevance). Then a representative sample of the “included” documents is used to “train” the software. In the present case, Mr Spencer suggests that it will comprise 1600-​1800 documents (a size set by the size and variety of the entire document set). A person who would otherwise be making the decisions as to relevance for the whole document set (ie a lawyer involved in the litigation) considers and makes a decision for each of the documents in the sample, and each such document is categorised accordingly. It is essential that the criteria for relevance be consistently applied at this stage. So the best practice would be for a single, senior lawyer who has mastered the issues in the case to consider the whole sample. Where documents would for some reason not be good examples, they should be deselected so that the software does not use them to learn from. The software analyses all of the documents for common concepts and language used. Based on the training that the software has received, it then reviews and categorises each individual document in the whole document set as either relevant or not. The results of this categorisation exercise are then validated through a number of quality assurance exercises. These are based on statistical sampling. The sampling size will be fixed in advance depending on what confidence level and what margin of error are desired. The higher the level of confidence, and the lower the margin of error, the greater the sample must be, the longer it will take and the more it will cost. The samples selected are (blind) reviewed by a human for relevance. The software creates a report of software decisions overturned by humans. The overturns are themselves reviewed by a senior reviewer. Where the human decision is adjudged correct, it is fed back into the system for further learning. (It analyses the correctly overturned documents just as the originals were analysed.) Where not correct, the document is removed from the overturns. Where the relevance of the original document was incorrectly assessed at the first stage, that is changed and all the documents depending on it will have to be re-​assessed. The process of sampling is repeated as many times as required to bring the overturns to a level within agreed tolerances, and so as to achieve a stability pattern. This is usually not less than 3, making 4 rounds in total. … The trend of overturns should be lower from round to round. Ultimately there will be a final overturn report within the agreed tolerance, so that the expense of further rounds of review will not be justified by the reduced chance of finding further errors, and the list of relevant documents can be produced. Although the number of documents that have to be manually reviewed in a predictive coding process may be high in absolute numbers, it will be only a small proportion of the total that need to be reviewed in the present case. Thus –​whatever the cost per document of manual review –​provided that the exercise is large enough to absorb the up-​front costs 692 [12.357]

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McConnell Dowell Constructors v Santam cont. of engaging a suitable technology partner, the costs overall of a predictive coding review should be considerably lower. It will be seen that, because the software has to be trained for every case, each use of the predictive coding process is bespoke for that case. [21] As to accuracy of the TAR process, reference is made to Irish Bank Resolution Corporation Ltd v Quinn [[2015] IEHC 175 (Irish Bank)]. [22] In Irish Bank, the High Court of Ireland dealt with another case involving large scale discovery. The initial keyword search resulted in 1.7 million documents of potential relevance and after de-​ duplication that number reduced to 680 809 documents. The plaintiff sought orders from the court that the defendants make discovery with the assistance of predictive coding. Fullam J described the process in detail. His Honour set out the requirements of discovery under the Irish Rules and stated: The making of an order of discovery is premised on the documents being relevant and necessary for the fair disposal of the cause or matter or for saving costs. While there is no specific reference in rule 12 to the concept of proportionality, the courts increasingly refer to it as a relevant factor in assessing whether the necessity requirement has been satisfied on the facts of a particular case. [23] Fullam J agreed that the process of technology assisted review was appropriate and reliable, observing: 66.The evidence establishes, that in discovery of large data sets, technology assisted review using predictive coding is at least as accurate as, and, probably more accurate than, the manual or linear method in identifying relevant documents. Furthermore, the plaintiff’s expert, Mr. Crowley exhibits a number of studies which have examined the effectiveness of a purely manual review of documents compared to using TAR and predictive coding. One such study, by Grossman and Cormack, highlighted that manual review results in less relevant documents being identified. The level of recall in this study was found to range between 20% and 83%. A further study, as part of the 2009 Text Retrieval Conference, found the average recall and precision to be 59.3% and 31.7% respectively using manual review, compared to 76.7% and 84.7% when using TAR. What is clear, and accepted by Mr. Crowley, is that no method of identification is guaranteed to return all relevant documents. 67.If one were to assume that TAR will only be equally as effective, but no more effective, than a manual review, the fact remains that using TAR will still allow for a more expeditious and economical discovery process … 69.Pursuant to the legal authorities which I have cited supra, and with particular reference to the albeit limited Irish jurisprudence on the topic, I am satisfied that, provided the process has sufficient transparency, Technology Assisted Review using predictive coding discharges a party’s discovery obligations under Order 31, rule.12. [24] In another United Kingdom case, David Brown v BCA Trading [[2016] EWHC 1464 (Ch)], Registrar Jones adopted and applied the decision of Master Matthews and acknowledged that the protocols concerning technology assisted review used in the Technology and Construction Court were appropriate. Registrar Jones ordered that discovery in the proceeding could proceed by way of predictive coding. [25] In Rio Tinto v Vale [2015 WL 872294 (SDNY), 14 Civ 3042 (RMP)(AJP) (2 March 2015)], Judge Peck of the United States District Court (Southern District of New York) discussed the use of Computer Assisted Review in American courts and highlighted that it was now accepted as “black letter law” in the United States.

 [12.358] The TAR process described in McConnell Dowell Constructors v Santam, where

there is a seed or training set reviewed by a senior lawyer to train the artificial intelligence [12.358]  693

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system followed by a number of rounds of sampling and correction, may be refined or undertaken using an alternative approach called continuous active learning: the human review and software training process are melded together; review and training occur simultaneously. From the outset, the software continuously analyzes the entire document collection and ranks the population based on relevancy. Human coding decisions are submitted to the software, the software re-​ranks the documents, and then presents back to the human additional documents for review that it predicts as most likely relevant. This process continues until the TAR team determines that the predictive model is reasonably accurate in identifying relevant and nonrelevant documents, and that the team has identified a reasonable number of relevant documents for production. See Technology Assisted Review Guidelines (Bolch Judicial Institute, Duke Law, 2019) 5.

This approach does not require an expert to code the seed set, rather coding begins and the AI learns continuously from how the reviewed documents are coded.

Measuring and Validating the Effectiveness of TAR [12.359] David Grossman, Measuring and Validating the Effectiveness of Relativity Assisted Review, Relativity White Paper, February 2013 http://​www.edrm.net/​papers/​measuring-​and-​validating-​the​effectiveness-​of-​relativity-​assisted-​review The field of information retrieval has defined two core metrics for assessing the effectiveness of a search or document categorization tool. The first is precision, or the ratio of responsive documents in a collection to those responsive documents retrieved. For example, if we retrieve 100 documents and five of them are good, we have 5 percent precision. This might sound bad, but it doesn’t tell the whole story. Suppose there were only five documents to find in the whole collection. As a result, we need another measurement: recall. Recall is the ratio of responsive documents to the total number of responsive documents in the full collection. If there were only five documents worth reading in the whole collection, and we had a system that found all five of them, recall would be 100 percent. Assisted Review introduces another related metric called overturn rate. An overturn occurs when the category in which Assisted Review places a document is changed or overturned by a subject matter expert upon review, i.e. when a responsive document is found to be non-​responsive or vice versa. Sampling is done to determine when the workflow should end, providing data on the effectiveness of the workflow at a current point in time. Let’s say we have a new sample of 1,000 documents, of which 100 are deemed responsive. If we review them and find out 10 documents are non-​responsive, we would deem the overturn rate 10 percent. Note that the overturn rate essentially provides an updated value of precision and recall, because the numerator in both ratios is the number of correctly labeled documents. Hence, 90 of the 1,000 documents are now responsive, instead of 100, so precision drops accordingly. Overturns on non-​responsive documents are simply indicators of improvements to precision and recall, while overturns on responsive documents are directly tied to reductions in precision and recall. Essentially, overturn is just an easier-​to-​understand term for ratios such as precision and recall.



SUBPOENA TO PRODUCE [12.360]  A subpoena to produce documents can be issued on third parties or parties to the

litigation. A subpoena contains a schedule of called for documents which the issuing party seeks to have produced to the court. Once a subpoena is filed in court and served it becomes an order of the court. The person or entity that is served with a subpoena to produce will need 694 [12.359]

Discovery, Subpoenas and Interrogatories  Chapter  12

to gather the documents that are caught by the subpoena and then produce the documents to the court by the return date stated on the subpoena. Failure to comply with a subpoena is contempt of court. However, a subpoena to produce may not be complied with if the person or entity who has been subpoenaed seeks to have the subpoena set aside as an abuse of process on the ground that it lacks a legitimate forensic purpose or is oppressive or has an improper purpose. A person or entity can claim privilege over subpoenaed documents in order to resist access being granted to the party issuing the subpoena.

Uniform Civil Procedure Rules 2005 (NSW) [12.370]  Uniform Civil Procedure Rules 2005 (NSW) rr 33.1–​33.13 Part 33 –​Subpoenas 33.1 Definitions (cf SCR Pt 37, r 1) (1)

In this Part: “addressee” means the person who is the subject of the order expressed in a subpoena. “conduct money” means a sum of money or its equivalent, such as pre-​paid travel, sufficient to meet the reasonable expenses of the addressee of attending court as required by the subpoena and returning after so attending. “issuing officer” means an officer of the court who is empowered to issue a subpoena on behalf of the court. “issuing party” means the party at whose request a subpoena is issued. “registrar,” in relation to proceedings in respect of which a subpoena is sought or issued,  means:

(a) in relation to the Supreme Court, the principal registrar, and (a1) n relation to the Industrial Court, the industrial registrar referred to in section 207 of the Industrial Relations Act 1996, and (b) in relation to the District Court:

(i)

the principal registrar, or



(ii)

the registrar of the District Court for the proclaimed place (within the meaning of the District Court Act 1973) where the subpoena was issued, or where the subpoena is returnable, whichever is applicable, and

(c) in relation to a Local Court, the registrar of the Local Court where the subpoena was issued. “subpoena” means an order in writing requiring the addressee: (a) to attend to give evidence, or (b) to produce the subpoena or a copy of it and a document or thing, or (c) to do both of those things. and includes a summons to that effect under section 165 of the Industrial Relations Act 1996. (2)

To the extent that a subpoena requires the addressee to attend to give evidence, it is called a subpoena to attend to give evidence.

(3)

To the extent that a subpoena requires the addressee to produce the subpoena or a copy of it and a document or thing, it is called a subpoena to produce.

See also rules 7.3, 10.12, 10.20, 31.20, 31.22 and 31.23 with respect to the issue and service of subpoenas. 33.2 Issuing of subpoena (cf SCR Pt 37, r 2) (1)

The court may, in any proceeding, by subpoena order the addressee: [12.370]  695

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

to attend to give evidence as directed by the subpoena, or



(b)

to produce the subpoena or a copy of it and any document or thing as directed by the subpoena, or



(c)

to do both of those things.

(2)

An issuing officer must not issue a subpoena:



(a)



(b)

if the court has made an order, or there is a rule of the court, having the effect of requiring that the proposed subpoena: (i) not be issued, or (ii) not be issued without the leave of the court and that leave has not been given, or requiring the production of a document or thing in the custody of the court or another court.

(3)

The issuing officer must seal with the seal of the court, or otherwise authenticate, a sufficient number of copies of the subpoena for service and proof of service.

(4)

A subpoena is taken to have been issued on its being sealed or otherwise authenticated in accordance with subrule (3).

33.3 Form of subpoena (cf SCR Pt 37, r 3) ( 1) (2) (3) ( 4) (5) (6) (7) ( 8) (9)

A subpoena must be in the approved form. A subpoena must not be addressed to more than one person. Unless the court orders otherwise, a subpoena must identify the addressee by name or by description of office or position. A subpoena to produce must: (a) identify the document or thing to be produced, and (b) specify the date, time and place for production. A subpoena to attend to give evidence must specify the date, time and place for attendance. The date specified in a subpoena must be the date of trial or any other date as permitted by the court. The place specified for production may be the court or the address of any person authorised to take evidence in the proceeding as permitted by the court. The last date for service of a subpoena: (a) is the date falling 5 days before the earliest date on which an addressee is required to comply with the subpoena or an earlier or later date fixed by the court, and (b) must be specified in the subpoena. If the addressee is a corporation, the corporation must comply with the subpoena by its appropriate or proper officer.

33.4 Setting aside or other relief (cf SCR Pt 37, r 4) (1)

The court may, on the application of a party or any person having a sufficient interest, set aside a subpoena in whole or in part, or grant other relief in respect of it.

(2)

An application under subrule (1) must be made on notice to the issuing party.

(3)

The court may order that the applicant give notice of the application to any other party or to any other person having a sufficient interest.

33.5 Service (cf SCR Pt 37, r 5) (1)

A subpoena must be served personally on the addressee.

696 [12.370]

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Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

The issuing party must serve a copy of a subpoena to produce on each other active party as soon as practicable after the subpoena has been served on the addressee.

33.6 Compliance with subpoena (cf SCR Pt 37, r 6) (1)

(2) (3)

( 4)



(5)

(6) ( 7)

An addressee need not comply with the requirements of a subpoena to attend to give evidence unless conduct money has been handed or tendered to the addressee a reasonable time before the date on which attendance is required. An addressee need not comply with the requirements of a subpoena unless it is served on or before the date specified in the subpoena as the last date for service of the subpoena. Despite rule 33.5(1), an addressee must comply with the requirements of a subpoena even if it has not been served personally on that addressee if the addressee has, by the last date for service of the subpoena, actual knowledge of the subpoena and of its requirements. The addressee must comply with a subpoena to produce: (a) by attending at the date, time and place specified for production and producing the subpoena or a copy of it and the document or thing to the court or to the person authorised to take evidence in the proceeding as permitted by the court, or (b) by delivering or sending the subpoena or a copy of it and the document or thing to the registrar at the address specified for the purpose in the subpoena, so that they are received not less than 2 clear days before the date specified in the subpoena for attendance and production. In the case of a subpoena that is both a subpoena to attend to give evidence and a subpoena to produce, production of the subpoena or a copy of it and of the document or thing in any of the ways permitted by subrule (4) does not discharge the addressee from the obligation to attend to give evidence. Unless a subpoena specifically requires the production of the original, the addressee may produce a copy of any document required to be produced by the subpoena. The copy of a document may be: (a) a photocopy, or (b) in any electronic form that the issuing party has indicated will be acceptable. (c) (Repealed)

33.7 Production otherwise than on attendance (cf SCR Pt 37, r 7) ( 1) (2) (3) (4) (5)

This rule applies if an addressee produces a document or thing in accordance with rule 33.6(4)(b). The registrar must, if requested by the addressee, give a receipt for the document or thing to the addressee. If the addressee produces more than one document or thing, the addressee must, if requested by the registrar, provide a list of the documents or things produced. The addressee may, with the consent of the issuing party, produce a copy, instead of the original, of any document required to be produced. The addressee may at the time of production inform the registrar in writing that any document or copy of a document produced need not be returned and may be destroyed.

33.8 Removal, return, inspection, copying and disposal of documents and things (cf SCR Pt 37, r 8) The court may give directions in relation to the removal from and return to the court, and the inspection, copying and disposal, of any document or thing that has been produced to the court in response to a subpoena. [12.370]  697

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. 33.9 Inspection of, and dealing with, documents and things produced otherwise than on attendance (cf SCR Pt 37, r 9) (1)

This rule applies if an addressee produces a document or thing in accordance with rule 33.6(4) (b).

(2)

On the request in writing of a party, the registrar must inform the party whether production in response to a subpoena has occurred, and, if so, include a description, in general terms, of the documents and things produced.

(3)

Subject to this rule, no person may inspect a document or thing produced unless the court has granted leave and the inspection is in accordance with that leave.

(4)

Unless the court orders otherwise, the registrar may permit the parties to inspect at the office of the registrar any document or thing produced unless the addressee, a party or any person having sufficient interest objects to the inspection under this rule.

(5)

If the addressee objects to a document or thing being inspected by any party to the proceeding, the addressee must, at the time of production, notify the registrar in writing of the objection and of the grounds of the objection.

(6)

If a party or person having a sufficient interest objects to a document or thing being inspected by a party to the proceeding, the objector may notify the registrar in writing of the objection and of the grounds of the objection.

(7)

On receiving notice of an objection under this rule, the registrar:



(a)

must not permit any, or any further, inspection of the document or thing the subject of the objection, and



(b)

must refer the objection to the court for hearing and determination.

(8)

The registrar must notify the issuing party of the objection and of the date, time and place at which the objection will be heard, and the issuing party must notify the addressee, the objector and each other party accordingly.

(9)

The registrar must not permit any document or thing produced to be removed from the office of the registrar except on application in writing signed by the solicitor for a party.

See rule 1.3(2) with respect to the meaning of the reference to a solicitor for a party. (10)

A solicitor who signs an application under subrule (9) and removes a document or thing from the office of the registrar, undertakes to the court by force of this rule that:



(a)

the document or thing will be kept in the personal custody of the solicitor or a barrister briefed by the solicitor in the proceeding, and



(b)

the document or thing will be returned to the registry in the same condition, order and packaging in which it was removed, as and when directed by the registrar.

See rule 1.3(3) with respect to the meaning of the reference to a solicitor who removes a document or thing from the office of the registrar and the reference to the personal custody of the solicitor. (11)

The registrar may, in the registrar’s discretion, grant an application under subrule (9) subject to conditions or refuse to grant the application.

33.10 Disposal of documents and things produced (cf SCR Pt 37, r 10) (1)

Unless the court orders otherwise, the registrar may, in the registrar’s discretion, return to the addressee any document or thing produced in response to a subpoena.

(2)

Unless the court orders otherwise, the registrar must not return any document or thing under subrule (1) unless the registrar has given to the issuing party at least 14 days’ notice of the intention to do so and that period has expired.

698 [12.370]

Discovery, Subpoenas and Interrogatories  Chapter  12

Uniform Civil Procedure Rules 2005 (NSW) cont. (3)

(Repealed)

(4)

The addressee must complete the notice and declaration in the subpoena and produce the subpoena (or copy of the subpoena) with the documents produced to the court under the subpoena.

(5)

Subject to subrule (6), the registrar may, on the expiry of 4 months from the conclusion of the proceeding, cause to be destroyed all the documents produced in the proceedings in compliance with a subpoena, that were declared by the addressee to be copies.

(6)

The registrar may cause to be destroyed those documents, declared by the addressee to be copies, that have become exhibits in the proceeding when they are no longer required in connection with the proceeding, including on any appeal.

33.11 Costs and expenses of compliance (cf SCR Pt 37, r 11) (1)

The court may order the issuing party to pay the amount of any reasonable loss or expense incurred in complying with the subpoena.

(2)

If an order is made under subrule (1), the court must fix the amount or direct that it be fixed in accordance with the court’s usual procedure in relation to costs.

(3)

An amount fixed under this rule is separate from and in addition to:



(a)

any conduct money paid to the addressee, and



(b)

any witness expenses payable to the addressee.

33.12 Failure to comply with subpoena–​contempt of court (cf SCR Pt 37, r 12) (1)

Failure to comply with a subpoena without lawful excuse is a contempt of court and the addressee may be dealt with accordingly.

(2)

Despite rule 33.5(1), if a subpoena has not been served personally on the addressee, the addressee may be dealt with for contempt of court as if the addressee had been so served if it is proved that the addressee had, by the last date for service of the subpoena, actual knowledge of the subpoena and of its requirements.

(3)

Subrules (1) and (2) are without prejudice to any power of the court under any rules of the court (including any rules of the court providing for the arrest of an addressee who defaults in attendance in accordance with a subpoena) or otherwise, to enforce compliance with a subpoena.

33.13 Documents and things in the custody of a court (cf SCR Pt 37, r 13) (1)

A party who seeks production of a document or thing in the custody of the court or of another court may inform the registrar in writing accordingly, identifying the document or thing.

(2)

If the document or thing is in the custody of the court, the registrar must produce the document or thing:



(a)

in court or to any person authorised to take evidence in the proceeding, as required by the party, or



(b)

as the court directs.

(3)

If the document or thing is in the custody of another court, the registrar must, unless the court has otherwise ordered:



(a)

request the other court to send the document or thing to the registrar, and



(b)

after receiving it, produce the document or thing: [12.370]  699

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(i)

in court or to any person authorised to take evidence in the proceeding as required by the party, or



(ii)

as the court directs.

 Setting aside a subpoena [12.380] In Waind v Hill & National Employers Mutual General Association Ltd [1978]

1 NSWLR 372 at 381, Moffitt P set out the three stages arising in respect of a subpoena to produce: [T]‌here are at least two steps in the procedure of having a third party bring documents to court, and in their use thereafter. Indeed, on a correct view, there are three steps. The first is obeying the subpoena, by the witness bringing the documents to the court and handing them to the judge. This step involves the determination of any objections of the witness to the subpoena, or to the production of the documents to the court pursuant to the subpoena. The second step is the decision of the judge concerning the preliminary use of the documents, which includes whether or not permission should be given to a party or parties to inspect the documents. The third step is the admission into evidence of the document in whole or in part; or the use of it in the process of evidence being put before the court by cross-​examination or otherwise. It is the third step which alone provides material upon which ultimate decision in the case rests. In these three steps the stranger and the parties have different rights, and the function of the judge differs. Upon the first step the person to whom the subpoena is addressed may seek to, and have, the subpoena set aside on the ground that it was improperly issued and an abuse of the power to compel the production of documents in any one of a number of ways. Such a case is where the subpoena is used for the purpose of discovery. The essential feature of discovery in this connection, as appears from Burchard’s case and Small’s case [(1938) 38 S.R. NSW  564] is that the person to whom the subpoena is addressed will have to make a judgment as to which of his documents relate to issues between the parties. It is oppressive to place upon a stranger the obligation to form a judgment as to what is relevant to the issue joined in a proceeding, to which he is not a party. Hence it is an abuse of the use of a subpoena to impose this obligation. It follows that it is an abuse to use any subpoena, ie even to a party to obtain discovery. … The issue of a subpoena may involve an abuse of the power in other ways and … objection to production to the court may be on other grounds. Thus, it would be an improper use of the subpoena if it were not sought for the purpose of the litigation, but for some spurious purpose, such as to inspect the documents in connection with other proceedings, or for some private purpose, or in collusive proceedings to give them publicity. A witness might argue the documents must be sought for some undefined spurious reason, as they have no conceivable relation to the proceedings. The court would jealously consider any of such submissions having regard to the invasion of the private rights of the stranger occasioned by the operation of the subpoena.

As the extract explains above, a person or entity served with a subpoena has standing to set aside the subpoena on the grounds that it is an abuse of process. Under UCPR r 33.4, a subpoena may be set aside on “the application of a party or any person having a sufficient interest”. Prior to UCPR 33.4, the authorities on standing of a party to set aside a subpoena issued on a third party were not settled. However, in Street v Luna Park Sydney Pty Ltd [2006]

700 [12.380]

Discovery, Subpoenas and Interrogatories  Chapter  12

NSWSC 95, Brereton J referred to the conflicting authorities and concluded that the position under UCPR 33.4 now makes it clear that a party has standing to set aside a subpoena. His Honour said:

6 Although it might be said that the balance of that authority weighs in favour of the view that a party does not automatically have standing to apply to set aside a subpoena addressed to a third party in the absence of an interest in the subject documents, at least two judges of this Court, Powell and Hunter  JJ, have expressed the view that being a party to proceedings is of itself sufficient to confer standing. With great respect to what was said by McLelland J, which faithfully follows the words of the then rule, that view gives insufficient weight to the considerations referred to by Powell J in Botany Bay, that setting aside a subpoena is an aspect of the Court’s inherent power to stay abuses of its process in which –​for reasons expressed by Hunter J in Brand –​a party has an interest quite apart from any interest in the documents. In my view a party to proceedings has a sufficient interest in the regular conduct of those proceedings to invoke the Court’s power to set aside a subpoena for production of documents whether or not it has an interest in the subject documents.



7

In any event, this is all now by-​the-​by, since under the Uniform Civil Procedure Rules, which replace former Pt 37 r 8, UCPR rule 33.4(1) now provides that the Court may on the application of a party or any person having a sufficient interest set aside a subpoena in whole or in part or grant other relief in respect of it, thereby resolving the conflict in the authorities to which I have referred in favour of the view that it is sufficient that the applicant be a party to proceedings, whether or not the applicant has an interest in the subject documents. Accordingly, the plaintiffs have standing to make the application which they bring.

Other interested parties to set aside a subpoena would be a person who claims privilege or public interest immunity. In addition, the subpoena recipient may wish to set aside the subpoena. Grounds for setting aside a subpoena to produce [12.390]  A subpoena can be set aside, whole or in part, on the grounds that it is an abuse of

process because of the following: • A subpoena cannot be used as a substitute for discovery: The Commissioner for Railways v Small (1938) 38 SR 654 at 574 and NSW Commissioner of Police v Tuxford [2002] NSWCA 139 at [19] (see [12.410]). An issuing party is “not entitled to procure the issue of the subpoena for the purpose of fishing, that is, endeavouring not to obtain evidence to support their case, but to discover whether they had a case at all, or to discover the nature of the case of the defendant”: NSW Commissioner of Police v Tuxford [2002] NSWCA 139 at [27]. • A subpoena cannot be oppressive. A subpoena may be oppressive if it has insufficient particularisation of the documents called for. This creates oppression because the recipient is required to judge what documents are caught by the subpoena. A subpoena could also be oppressive where compliance is too onerous. This is demonstrated where an excessive burden is placed on the producing party, for example, in NSW Commissioner of Police v Tuxford (see [12.410]). Tuxford called for all “originals or copies” of documents that were located in many locations. This was found to be oppressive.

[12.390]  701

Civil Procedure in New South Wales

• A subpoena cannot have an improper purpose. For example, the subpoena may seek documents not for the purpose of the litigation but for some spurious purpose such as a private purpose or for use in other proceedings. • An absence of the apparent relevance of documents is a sufficient ground to have it set aside, see Trade Practices Commission v Arnotts Limited (No 2) (1989) 21 FCR 306. • A subpoena must have a legitimate forensic purpose: see [12.400]. A subpoena which is an abuse of process may be set aside before the recipient is put to the trouble of gathering the documents sought: NSW Commissioner of Police v Tuxford [2002] NSWCA 139 at [21]. [12.400] A subpoena without a legitimate forensic purpose is an abuse of process and

its recipient can apply to the court to have it set aside. The test for determining whether a subpoena has a legitimate forensic purpose was considered in Attorney-​General (NSW) v Chidgey (2008) 182  A  Crim R 536; [2008] NSWCCA 65 (applying R v Saleam [1999] NSWCCA 86). The test is a two-​step process. Before access is granted (or an order to produce made), the party issuing the subpoena must: (1) identify a legitimate forensic purpose for which access is sought; and (2) establish that it is “on the cards” that the documents will materially assist his or her case. It is necessary for the party who issued the subpoena (and who is calling on the documents to be produced) to “identify expressly and precisely the legitimate forensic purpose for which access to documents is sought”. This was made clear in the cases of Principal Registrar of the Supreme Court v Tastan (1994) 75 A Crim R 498 at 504A; R v Saleam (1989) 16 A Crim R 14 at 18C; R v Saleam [1999] NSWCCA 86; and Attorney-​General (NSW) v Chidgey (2008) 182 A Crim R 536; [2008] NSWCCA 65. The onus is on the party that issued the subpoena to identify the legitimate forensic purpose: R v Saleam (1989) 16 A Crim R 14 at 18C. There will be a need to identify the issue(s) in dispute in the trial, what the subpoenaing party’s case will be on that issue or those issues, how the subpoenaed documents will assist the subpoenaing party in his case and the concrete grounds for believing that the documents will in fact so assist: Carroll v Attorney General (NSW) (1993) 70 A Crim R 162 at 182. Legitimate forensic purpose is different to mere relevance:  Attorney-​General (NSW) v Chidgey (2008) 182  A  Crim R 536; [2008] NSWCCA 65 at [59]–​[60]. As stated by Mahoney  AP in Carroll v Attorney General (NSW) (1993) 70 A  Crim R 162 at 181–​ 182 an issuing party “could not claim to look at the documents merely to see whether they contained something which might be relevant to help his case”. Mahoney AP said at 181, 182: [I]‌t is not the right of a party to litigation, merely by subpoenaing documents from a third party, to achieve inspection of them. As I have said, the court must, in general, be satisfied that the documents are relevant to an issue for decision by the court in the litigation. It is not open to a party, as on a “fishing expedition”, to subpoena documents merely in order to determine whether they may be relevant and may be of assistance to his case in the proceeding. … But mere relevance is not enough:  thus, it is not enough for the party to show only and without more that the document plainly shows and shows only that his case cannot be made

702 [12.400]

Discovery, Subpoenas and Interrogatories  Chapter  12

out. It is not enough for the party to say: “The documents are relevant in the sense that prima facie they establish the case against me: therefore I am entitled to see them and to tender them.” In the case in which the party did not know what was the nature or the contents of the documents, the position would be plain. He could not claim to look at the documents merely to see whether they contained something which might be relevant or help his case … But, in my opinion, it is not sufficient for a party subpoenaing the document to say “the document is relevant because, if it does anything, it establishes the case against me”. He must be able to indicate that the document is relevant in the sense that it may assist his case. In the present case, that could not be claimed. Nor was it shown. At best, the claim was: “I wish to see the document to see if it may assist my case.” That, in my opinion, is not sufficient.

Mahoney  AP’s approach was confirmed in Attorney-​ General (NSW) v Chidgey (2008) 182 A Crim R 536; [2008] NSWCCA 65 at [59]. The expression “on the cards” has been treated as meaning “likely”, see ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 at [9]‌–​[14], [22]. A clear statement of the “on the cards” test is that of the trial judge quoted by the Court of Appeal in ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd at [22]: It must be shown that it is likely the documentation will materially assist on an identified issue, or there is a reasonable basis beyond speculation that it is likely the documentation will.

Attorney-​General (NSW) v Chidgey (2008) 182  A  Crim R 536; [2008] NSWCCA 65 was approved in ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 and Lipton v R [2010] NSWCCA 175. Setting aside a subpoena –​oppression

NSW Commissioner of Police v Tuxford [12.410]  NSW Commissioner of Police v Tuxford [2002] NSWCA 139 [The plaintiffs (Tuxford and others) sued the State of New South Wales in the District Court in respect of the conduct of senior police officers which they alleged constituted the torts of negligence, false imprisonment, and intentional infliction of nervous shock. The plaintiffs issued a subpoena on the New South Wales Commissioner of Police which contained 66 numbered paragraphs in the schedule to the subpoena. The Commissioner filed a notice of motion in the District Court seeking to set aside the subpoena as an abuse of process. The Commissioner claimed that the subpoena was oppressive and lacked a legitimate forensic purpose. The District Court judge (Sidis DCJ) did not set aside the subpoena. The Commissioner appealed to the Court of Appeal.] BROWNIE AJA (SPIGELMAN CJ AND IPP AJA AGREEING) [7]‌The subpoena in question required the claimant to produce the documents listed in the Schedule to the subpoena. The Schedule commenced with the words: “The following documents created or prepared between 1 February 1997 and 1 June 1998”. There followed sixty-​six numbered paragraphs. Paragraph 1 was in these terms: (1) All briefing papers prepared, approved, or received by the following members of the NSW Police Service relating to an investigation into the activities of Operation BAX (SIU): Originals or copies in the care, custody or control of the following members of the Police Service:-​ (a) Commissioner Peter RYAN; (b) Assistant Commissioner Jeff JARRETT; (c) Assistant Commissioner Mal BRAMMER;

[12.410]  703

Civil Procedure in New South Wales

NSW Commissioner of Police v Tuxford cont. (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n)

Assistant Commissioner Clive SMALL; Chief Superintendent Rod HARVEY; Assistant Commissioner Christine NIXON; Inspector Rick CAMPBELL; Superintendent John URE; Arthur ABRAHAM; Assistant Superintendent John DOLAN; Chief Inspector MATHEWS; Inspector Phillip DOUGLAS; Inspector Van der GRAF; Commander –​Special Services Group.

(a) (b) (c) (d) (e) (f)

Originals or copies filed or maintained in the following offices of the Police Service: Commissioners Office; Internal Affairs; Crime Agencies; Human Resources; Comprehensive Audit Section; Operation GYMEA.

[8]‌Broadly speaking, the succeeding paragraphs followed this general format, identifying documents by a description and then commonly referring to persons who might have the documents mentioned, or offices where they might be found. Sometimes, there was not a list of persons, and sometimes there was not a list of offices. Sometimes only one office was identified. In contrast, paragraph 61 called for the production only of “All Restorative Justice Group Records relating to Operation BAX and its members”. [9]‌The claimant filed a notice of motion, seeking an order setting aside the subpoena, and filed an affidavit in support, sworn by Sergeant Capper, who within the Police Service was responsible for the co-​ordination of responses to subpoenas. … [10] The point taken by Sergeant Capper’s affidavit, upon which topic he was extensively cross-​ examined, was that the subpoena called for the production of “all” documents of various descriptions, including “originals or copies” of those documents in the care, custody or control of various named persons or filed or maintained in various named offices. Much of the cross-​examination of Sergeant Capper was directed to demonstrating that there were some protocols established within the Police Service such that, if the protocols were followed, it should be relatively easy to identify and locate each document, of the description contained in the subpoena. However, as he said, that was not what the subpoena called for. [11] Some of the cross-​examination of Sergeant Capper, and some of the submissions made in the District Court and in this Court proceeded on the basis that the subpoena should be read down so that, for example, paragraph 1 required the production of all briefing papers answering the description set out, originals or copies of which were in the care, custody or control of the persons mentioned, or originals or copies of which were filed or maintained in the offices mentioned. [12] Even read down in this way, the subpoena calls for “all” documents, and it refers explicitly to “originals or copies” held by or for the person named, or in the offices named, and it is neither right to say that a person served with a subpoena can read it down in this manner, nor that a party who requests the issue of the subpoena can say to the recipient that the subpoena should or even might be read down in this way. In the ordinary course of events, a subpoena is a peremptory order of a court, to be obeyed unless the court makes an order to the contrary. It should be framed in terms of sufficient precision and certainty, to enable the recipient to know what he or she must produce, and 704 [12.410]

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NSW Commissioner of Police v Tuxford cont. to enable the court to give a just ruling, if there is to be a suggestion that the recipient should be punished for failing to produce all of the documents called for. [13] The claimant’s first point, that the subpoena was couched in terms that were too wide, and demanded far too much work to be done, locating and then collecting the documents called for, was in my view amply made out. Paragraph 1 of subpoena referred to certain briefing papers, and sought the production not only of the originals of these papers, but also all copies held by fourteen named persons or at six named offices. Sergeant Capper spoke of the difficulty, not so much in identifying, locating, collecting and producing the originals or a copy or some copies of these documents, but of the difficulties in identifying, locating and retrieving all of the copies mentioned in the subpoena. [14] The learned primary judge, Sidis DCJ, accepted the submission advanced by the opponents, that this was an inadequate response to the subpoena given the seriousness of the allegations made in the pleadings: the Police Service had protocols which, if observed, should have enabled Sergeant Capper or some other member of the Police Service to identify and then locate the original or a copy or some copies of each of the documents. That was correct, but the subpoena went further, requiring all copies of these documents, held by or for the persons mentioned, of in the offices mentioned, and the protocols did not go that far. [15] A number of paragraphs of the subpoena, including paragraph 1, for the production of copies of records filed or maintained in the office of “Operation GYMEA” [sic]. Sergeant Capper spoke of this as a joint task force involving the State Crime Commissions and police services of the various States throughout Australia, focussed upon organised crime. He said that to comply with the terms of the subpoena, so far as concerned the records of this task force, would involve searching in excess of a million documents, and that there were hundreds of police officers who might hold copies of documents. [16] The subpoena also referred, in several of its paragraphs, to records held at the office of “Operation ANCRUM” and “Operation JADE”. The former reference is to a task force which apparently investigated the conduct of Task Force BAX, and the latter a body which inquired into the findings of Operation ANCRUM. Sergeant Capper said that there were fifty-​eight archive boxes of material held in relation to Operation ANCRUM, which records might include information that also related to Operation GYMEA. Various matters were put to him in cross-​examination, but the central thrust of his evidence on the point remains undisturbed: to comply with the subpoena, as drafted, required this mass of material to be examined. [17] No attempt was made, either in the District Court or in this Court, to justify the demand for the production of all of the copies of these documents, and on this ground alone, given the numbers of documents involved, and the fact that they are or may be located in so many places, means that the subpoena was oppressive. [18] The claimant also contended that the subpoena was an abuse of process in that it sought what amounted to discovery from the claimant. For that purpose, and in the context of this particular case, the claimant was content to be treated as an interested party, rather than as a stranger to the principal litigation. [19] It is plain beyond argument that a subpoena cannot be used as a substitute for discovery: The Commissioner for Railways v Small (1938) 38 SR 564 at 574. Unhappily, in the course of the debate in the District Court, this question became obscured by the attention given to the limitations now imposed by the District Court Rules in relation to discovery. Whatever the position in relation to discovery more generally, for all that appears, if in this case the opponents had been able to justify it, they might well have been able to obtain an order for discovery against the defendant, pursuant to provisions of Part 22 rule 7. However, all those questions seem to me to be irrelevant. The practical effect of the subpoena was, the claimant contended, a substitute for discovery; and that contention seems entirely justified on the material before the Court.

[12.410]  705

Civil Procedure in New South Wales

NSW Commissioner of Police v Tuxford cont. [20] Next, the claimant contended that the subpoena lacked a legitimate forensic purpose. Once again, it is plain beyond argument that, if documents are produced on subpoena, and objection is taken to their being inspected, inspection should not be permitted unless and until the party who procured the issue of the subpoena identifies a legitimate forensic purpose. In that context it is said that a party is not entitled to go on a fishing expedition, nor should the court do so: Small at 575; R v Saleam (1989) 16 NSWLR 14 at 17–​18; and Attorney General for New South Wales v Stuart (1994) 34 NSWLR 667 at 681. See too Air Canada v Secretary for State for Trade [1983] 2 AC 394 at 439 and 453 and Alister v The Queen [1983] HCA 45; (1984) 154 CLR 404 at 414. [21] However, it is not necessary for the recipient of a subpoena to actually produce the documents to the court, and then to argue that inspection should not be permitted. The respondent may instead move to set aside the subpoena: Principal Registrar of the Supreme Court v Ali Tastan (1994) 75 A Crim R 498. [22] In that case, at 504, Barr AJ, as he then was, said: It is the duty of the Court, where the issue is raised, to require the party calling on a subpoena to produce documents to identify expressly and precisely the legitimate forensic purpose for which access to documents is sought and to refuse access unless such an identification is made. [23] The opponents did not, either in the District Court or in this Court, attempt to do this, except in terms of the utmost generality, and without reference to the numbered paragraphs of the subpoena. In the District Court, it was apparently thought that it was the obligation of the judge herself to go through the paragraphs of the subpoena, and to give rulings on the sixty-​six paragraphs. However, it was the obligation of the opponents to justify the subpoena, and in a case such as the present one, to do it by reference to the sixty-​six paragraphs, either individually or, where appropriate, by grouping different paragraphs together. [24] I have summarised the issues, raised by the pleadings, above: claims for damages for personal injuries in negligence, for false imprisonment, and for intentionally causing nervous shock; there was also a claim for exemplary damages; and there was a defence putting in issue the allegation that the senior officers mentioned had acted unlawfully. It is easy to see that an issue might arise upon the ultimate trial as to the lawfulness of what the senior officers and other officers of the Police Service did. Nevertheless, the obligation of the opponents was to point to the legitimate forensic purpose of the subpoena in the manner stated by Barr AJ. [25] Paragraph 1 is set out above. In brief, it required the production of briefing papers relating to an investigation into the activities of Operation BAX, created or prepared between 1 February 1997 and 1 June 1998. The “raid”, as the opponents described it, and the consequent alleged false imprisonment occurred in October 1997. The evidence does not disclose just what might be embraced by the expression “briefing papers” or the expression “Operation BAX (SIU)”, but no submissions were advanced about these questions. The opponents addressed no submissions, directed to paragraph 1 particularly. Indeed, apart from cross-​examining Sergeant Capper, principally on the question of how documents might be identified, located and retrieved, they proffered no evidence. [26] One can readily visualise that some documents which might accurately be described as briefing papers relating to the investigation mentioned might throw some light on the issues raised by the pleadings, but the opponents need to go further. [27] In the language of Jordan CJ in Small at 575, the opponents were not entitled to procure the issue of the subpoena for the purpose of fishing, that is, endeavouring not to obtain evidence to support their case, but to discover whether they had a case at all, or to discover the nature of the case of the defendant. In the language of Lord Wilberforce in Air Canada at 439 there must be something beyond speculation, some common ground for belief that takes the case beyond a mere fishing expedition. [28] Counsel for the opponents said, at different points, that his clients believed or that they suspected that the mass of documents called for by the subpoena, considered as a whole, would show 706 [12.410]

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NSW Commissioner of Police v Tuxford cont. that the senior officers mentioned had no basis, or no proper basis for acting as they did, so that the detention of the opponents amounted to a false imprisonment. However the matter was taken no further. There was nothing in the pleadings or in the evidence that supports the mere statement from the bar table of a belief or suspicion held. Further, nothing was said, concerning the documents called for in paragraph 1. Practically speaking, the opponents left it to us to work out for ourselves what the documents called for might show. In my respectful view, the proposition has only to be stated in full to be seen to be unacceptable. [29] Paragraph 2 called for the production of “all electronic messages approved prepared or received by the following members of the NSW Police Service relating to the investigation into the activities of Operation BAX (SIU)”, and it then identified fifteen persons, and seven offices. The expression at the commencement of the Schedule fixed the period in question as that between 1 February 1997 and 1 June 1998. On the material before us, it seems that the subpoena was oppressive, and one cannot infer that this part of the subpoena had a legitimate forensic purpose. One can see that many of the documents might have that purpose, but some of them, and perhaps a large number of them will not. The opponents have not discharged the onus concerning their legitimate forensic purpose. Further, the evidence of Sergeant Capper points to the oppressiveness of the subpoena: many, perhaps most of the documents mentioned can be readily enough identified and located, but others, for example e-​mails, are not capable of ready identification. On the evidence, a great amount of work is needed to identify them, and then to retrieve them. [30] Paragraph 3 refers to “all briefing papers supplied to the Minister for Police by the Police Service relating to the investigation into the activities of Operation BAX”, held in the office of the Commissioner for Police. It requires the production of all the originals or copies filed or maintained in that office. Subject to this, and subject to a possible question about the meaning to be attached to the expression “briefing papers”, about which no submissions were advanced, I am inclined to think that this fragment of the subpoena could have been supported, but there may be a question as to its legitimate forensic purpose, not so far explored. [31] Paragraphs 4 to 14 and 29 refer to various records which one might expect to have been brought into existence concerning applications made under the Listening Devices Act 1984 or the Telecommunications (Interception) Act 1979 (Cth), all in relation to a search warrant. As a general proposition, it seems likely that documents of this nature might throw light on the issue of the lawfulness of the supposed detention of the opponents, but the subpoena is still cast in terms of such generality as to be oppressive, so that this part of the subpoena at least should be set aside. Thus, paragraphs 4, 5, 7–​11, 13 and 14 use the expression “relevant to any member of Operation BAX (SIU)”; paragraph 12 refers to “all transcripts of recorded telephone messages between any member of Operation and any other person”; and the subpoena covers the period of sixteen months, already mentioned. [32] Paragraph 15 requires the production of “all profiles prepared by the NSW Police Service in relation to any member of Operation BAX (SIU) –​(supply staff list)”. It may be that the drafter of the subpoena intended that the subpoena omit the words “supply staff list” and that some list be inserted into the subpoena before it was issued, but this did not happen. In its present form the paragraph simply cannot stand, but assuming that these three words had been omitted and that a list of names had been inserted, following the general pattern of the other paragraphs of the subpoena, one is still left to wonder at the legitimate forensic purpose. What precisely is a “profile” in this context? How would the production of these profiles go to the resolution of any of the issues raised by the pleadings? [33] Paragraph 16 is simply breathtaking. It reads: “All surveillance logs including all written, typed or electronically recorded and any source evidence relied on in making the said surveillance logs”, and it then refers to five named offices. There is no limitation at all as to the persons the subject of the surveillance, nor of the expression “any source evidence relied on in making the said surveillance log”. One hardly needs to look at the evidence of Sergeant Capper. This paragraph, by itself, is plainly [12.410]  707

Civil Procedure in New South Wales

NSW Commissioner of Police v Tuxford cont. oppressive, and can hardly be thought to have a legitimate forensic purpose, unless appropriately limited. [34] Given the above findings, I propose to deal with the succeeding fifty paragraphs of the subpoena only very briefly, merely noting again that the opponents did not attempt to justify any of the individual paragraphs, as distinct from attempting to justify the subpoena globally, and in general terms. Further, the cross-​ examination of Sergeant Capper was mostly directed to the questions concerning the identification and retrieval of the documents mentioned, without going on to examine the questions involved in the retrieval of all copies of the documents. [35] Some of the paragraphs of the subpoena appear to require the claimant to identify likely or possible witnesses, for example paragraphs 19, 22, 25, 43, 55 and 56. [36] Other paragraphs are on their face both oppressive and apparently indicative of a lack of legitimate forensic purpose: paragraphs 20, 28 and 31. Thus, paragraph 20 referred to the duty books and diaries of “all police involved in the investigation into the activities of Operation BAX”. It followed the usual general format, but included the words “including but not limited to” the persons and offices then named. Paragraph 28 referred to the duty books, official note books or any other hand written records “for all staff involved in Operation ANCRUM”, without limiting those documents to Operation ANCRUM, or any other particular topic. Paragraph 31 referred to records of “any conversation between any member of Task Force BAX and any investigation team member” in a specified period. [37] Others seem to raise questions about the legitimacy of the forensic purpose of the subpoena: paragraphs 45 -​47, which referred to various documents “from 23 October 1997 to date”. [38] Paragraph 54 refers to the duty books for the opponents “and other plaintiffs”. Given that the opponents claim to be conducting the litigation as representative of others, who had not been identified at the time of the issue of the subpoena, this is plainly impermissible. [39] I have quoted paragraph 61 at [6]‌above. On the material before us, it is not possible to not know what the forensic purpose of this paragraph was. The opponents have not discharged the relevant onus. [Appeal allowed. The subpoena was set aside and the plaintiffs were ordered to pay the Commissioner’s costs in the District Court in relation to the notice of motion, and in the Court of Appeal.]

 Setting aside a subpoena –​no legitimate forensic purpose

Attorney-​General (NSW) v Chidgey [12.420]  Attorney-​General (NSW) v Chidgey (2008) 182 A Crim R 536; [2008] NSWCCA 65 [The respondent was charged with five offences of supplying a prohibited drug. The offences arose in circumstances where the respondent supplied Ecstasy tablets to undercover police officers. The conduct in which the undercover police officers engaged in order to obtain the drugs was authorised under an authority to conduct a controlled operation, granted pursuant to the Law Enforcement (Controlled Operations) Act 1997 (NSW). In the course of the committal proceedings, the respondent issued to the Commissioner of Police a subpoena for production, requiring the production of, inter alia, documents that were completed by police in accordance with the Controlled Operations Act and Regulations, including but not limited 708 [12.420]

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Attorney-General (NSW) v Chidgey cont. to the applications made for the approval of the controlled operation. The Commissioner of Police sought an order that this part of the subpoena be set aside as an abuse of process, on the ground that there was no legitimate forensic purpose in seeking access to those documents. The respondent (bearing the onus) submitted that the legitimate forensic purpose for production was that the documents contained information that would assist the defence insofar as they would go towards challenging the admissibility of the evidence (pursuant to s 138(1)(b) of the Evidence Act 1995 (NSW), “Exclusion of improperly or illegally obtained evidence”). The respondent suggested that there was some impropriety or contravention of a law in the issuing of the authorities, which as of consequence, resulted in the charges being laid against the respondent. The magistrate rejected that there was a legitimate forensic purpose in the terms identified by the respondent, but determined that there was another legitimate forensic purpose in allowing the respondent to “check that there has been compliance with form” in the issuing of the controlled operations authorities. Although not an original party to the proceedings, the Attorney General for New South Wales appealed against this finding, pursuant to s 5F of the Criminal Appeal Act 1912 (NSW), which allows an appeal from an interlocutory decision.] BEAZLEY JA (JAMES AND KIRBY JJ AGREEING) Principles governing legitimate forensic purpose [58] The principles that govern the application of a party to produce documents pursuant to a subpoena are well settled. In this regard, the basic principle was stated by Jordan CJ in Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 575: [A]‌party is no more entitled to use a subpoena … than he is a summons for interrogatories, for the purposes of “fishing”, ie, endeavouring, not to obtain evidence to support his case, but to discover whether he has a case at all … (Emphasis added) (Citations omitted) Mere relevance not sufficient [59] It is not sufficient for a party seeking production of documents to merely establish that such documents are or may be relevant. This is apparent from the comments of Mahoney AP in Carroll v Attorney-​General for New South Wales (1993) 70 A Crim R 162. In that case, Mahoney AP was concerned with the question whether access should be given to certain documents that had been subpoenaed in criminal proceedings. His Honour said, at 181: [T]‌he court must, in general, be satisfied that the documents are relevant to an issue for decision by the court in the litigation. It is not open to a party, as on a “fishing expedition”, to subpoena documents merely in order to determine whether they may be relevant and may be of assistance to his case in the proceeding. (Emphasis added) [60] His Honour stated, at 182, that whilst a party must show, or it must appear, that the subpoenaed documents are relevant to an issue in the proceedings, “mere relevance is not enough”. His Honour continued: In the case in which the party did not know what was the nature or the contents of the documents, the position would be plain. He could not claim to look at the documents merely to see whether they contained something which might be relevant or help his case. But in this case it is accepted that the documents are affidavits directed to showing “that there are reasonable grounds for” the “suspicion or belief” referred to in s 16(1). Accordingly, prima facie the documents are relevant to the issue to be decided, viz, whether there was in fact no material that could reasonably justify the relevant belief. But, in my opinion, it is not sufficient for a party subpoenaing the document to say “the document is relevant because, if it does anything, it establishes the case against me”. He must be able to indicate that the document is relevant in the sense that it may assist his case. In the present case, that could [12.420]  709

Civil Procedure in New South Wales

Attorney-General (NSW) v Chidgey cont. not be claimed. Nor was it shown. At best, the claim was: “I wish to see the document to see if it may assist my case.” That, in my opinion, is not sufficient. [61] Senior counsel for the respondent submitted that the judgment of Mahoney AP did not represent a majority statement on this issue, nor had it been endorsed or applied in later decisions. [62] Neither Kirby ACJ (as his Honour then was) (who dissented on the facts) nor Hunt AJA (who agreed with Mahoney AP in the result) made any reference to “mere relevance”. However, each applied a test of “forensic purpose” and the need for it to be “on the cards” that the documents would “materially assist the accused”. Accordingly, the second element of the “test”, that is, that it must be “on the cards” that documents would materially assist the case, subsumes in it the notion that “mere relevance” is insufficient. Documents may be relevant even if they do not assist a party’s case. To that extent therefore, there is no difference in principle in the test applied by each of the members of the Court. [63] But in any event (and contrary to the respondent’s submissions) the statement of Mahoney AP has been applied in subsequent decisions in New South Wales and Victoria: see Propend Finance Pty Ltd v Commissioner of the Australian Federal Police (1994) 72 A Crim R 278 at 282–​283; Bruce Harvey v State of New South Wales (Supreme Court of New South Wales, per Johnson J at 3–​4, 15 June 2005, unreported); R v Robinson (1996) 89 A Crim R 42 at 61; Gardiner v Regina [2006] NSWCCA 190; (2006) 162 A Crim R 233 at [88]; and Re Don [2006] NSWSC 1125 at [6]‌. The correct test [64] The test for determining whether a party is required to produce documents pursuant to a subpoena was stated by Simpson J (Spigelman CJ and Studdert J agreeing) in Regina v Saleam [1999] NSWCCA 86 at [11], in the following terms: The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is “on the cards” that the documents will materially assist his case. So much was established in earlier proceedings brought by this applicant: R v Saleam (1989) 16 NSWLR 14, per Hunt CJ at CL; see also R v Ali Tastan (1994) 75 A Crim R 498 per Barr AJ, as he then was. (I will refer to this case as R v Saleam [1999].) [65] The genesis of the expression “on the cards” is to be found in the judgment of Gibbs CJ in Alister v R [1983] HCA 45; (1984) 154 CLR 404 at 414. In Alister, the High Court was concerned with a subpoena issued to the Australian Security Intelligence Organisation (ASIO) in the course of a criminal trial for conspiracy to murder and attempt to murder. The police (acting upon information provided by an informant) had been able to foil the conspiracy, which involved an intention to murder by exploding a bomb near the intended victim’s home. The case was notorious –​the accused members of Ananda Marga had been suspected of placing a bomb outside the Hilton Hotel in Sydney, in an attempt to kill the Prime Minister of India. The subpoena had required ASIO to produce all files and documents relating to the informant in respect of ASIO’s investigation of Ananda Marga. The Attorney General for the Commonwealth objected to the production on security-​based public interest grounds. [66] Gibbs CJ, at 414, noted that the applicants who had sought the production of the documents were not able to state whether or not the documents existed, or if they did, whether they were likely to assist the applicant’s case. His Honour observed, however, that it was not unreasonable to believe that documents were in existence and that “one would guess that any reports … would be adverse to the applicants”. His Honour referred to the conflicting position in England as to the circumstances in which a court would inspect documents in a case where public interest immunity was claimed. It is necessary to set out that passage in full, in order to understand the context in which his Honour introduced the terms “on the cards”. He said: 710 [12.420]

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Attorney-General (NSW) v Chidgey cont. Just as in the balancing process the scales must swing in favour of discovery if the documents are necessary to support the defence of an accused person whose liberty is at stake in a criminal trial, so, in considering whether to inspect documents for the purpose of deciding whether they should be disclosed, the court must attach special weight to the fact that the documents may support the defence of an accused person in criminal proceedings. Although a mere “fishing” expedition can never be allowed, it may be enough that it appears to be “on the cards” that the documents will materially assist the defence. (Emphasis added) (Citations omitted) [67] It is both important and instructive to understand the manner in which Gibbs CJ saw this test operating at a practical level. He said, as a continuation of the passage just quoted: If, for example, it were known that an important witness for the Crown had given a report on the case to ASIO it would not be right to refuse disclosure simply because there were no grounds for thinking that the report could assist the accused. To refuse discovery only for that reason would leave the accused with a legitimate sense of grievance, since he would not be able to test the evidence of the witness by comparing it with the report, and would be likely to give rise to the reproach that justice had not been seen to be done. [68] The approach of Gibbs CJ in Alister has been consistently adopted and applied in this State. An early, useful example is Principal Registrar of the Supreme Court v Tastan. Barr AJ (as his Honour then was) said, at 499, that there will be no legitimate forensic purpose if, “all the party is doing is trying to get hold of the documents to see whether they may assist him in his case”: see The Commissioner for Railways v Small. His Honour noted that there was nothing in the case before him that made it appear to be “on the cards” that anything contained in the subpoenaed documents was likely to materially assist the accused in his defence. His Honour considered, at 506, that the defendant wanted access to the documents “to see whether he had a [defence]”. [69] Hunt J (Carruthers and Grove JJ agreeing) applied the “on the cards” test in an earlier Saleam case:  R v Saleam (1989) 16 NSWLR 14, and permitted access to documents in circumstances that were redolent of the example given by Gibbs J in Alister. The subpoena in this case had been issued during the appeal process. It was argued that there was material in the subpoenaed material that would indicate that there had been a miscarriage of justice at trial. The accused had been told by a police officer seconded to the Ombudsman’s office … “that there were discrepancies in the police case” at the trial. It was not disputed that such a statement had been made. The accused claimed that the subpoenaed material would be relevant to impugn the credit of the principal Crown witness at trial. The Court allowed access to the documents on the basis that it was “at least ‘on the cards’ that the documents in question would assist the appellant in his appeal and that there was therefore a legitimate forensic purpose for the production of the documents”. [70] The Attorney General indicated that Simpson J’s formulation in R v Saleam [1999] represented the commencement of a line of authority in which the test for the production of, or access to, documents, was specifically stated as comprising two steps: a legitimate forensic purpose and that it was “on the cards” that the documents would materially assist the case. However, in stating the test in this specific “two step” way, her Honour did not state any new principle. As I have already stated at [64], in the authorities that preceded R v Saleam [1999], including Alister, the courts, in determining whether access would be granted to documents sought on subpoena, have always applied a test that involves determining whether each of the factors identified by Simpson J had been established. … [80] I see no reason to depart from the language used by Simpson J in this Court in R v Saleam [1999]. To do so only invites confusion. This Court has already stated what the test is and in my opinion, should continue to apply that test in accordance with the language used in the form in which it has stood since Alister and R v Saleam [1999].

[12.420]  711

Civil Procedure in New South Wales

Attorney-General (NSW) v Chidgey cont. Legitimate forensic purpose as found by the Magistrate [81] At this point it is necessary to return to the legitimate forensic purpose as found by the Magistrate to determine whether, in accordance with the principles stated in R v Saleam [1999], there is a legitimate forensic purpose and whether it is “on the cards” that the material subpoenaed will assist the respondent’s defence at trial. [82] It was relevant to the Magistrate’s determination that the documents subpoenaed were documents that were required to be brought into existence by the provisions of s 5(2A) of the Law Enforcement (Controlled Operations) Act. The Magistrate considered that the respondent should be allowed access to the documents to “check” that there had been compliance with the requirements of s 5(2A). He said that this was a legitimate forensic purpose. His Honour then found that if there had been non-​compliance with s 5(2A), it was “on the cards” that there could be mounted an argument under s 138 of the Evidence Act. The Attorney General challenged the correctness of this reasoning. [83] In this case, the nature of the documents, or at least some of them, was known at the time of the issue of the subpoena. Paragraph 3 of the schedule to the subpoena required production of at least the documents that had been brought into existence to satisfy the requirements of s 5(2A) of the Law Enforcement (Controlled Operations) Act. To that extent, it could not be said that the respondent was seeking to ascertain whether any documents existed, and if they existed, what those documents were. The s 5(2A) documents would be relevant to the criminal proceedings, because they were brought into existence for the purposes of authorising the purchase side of the supply transaction, which formed the actus reus of each offence with which the respondent was charged. The question remains, however, whether it has been demonstrated that it is “on the cards” that those documents will materially assist the respondent’s case. [84] Notwithstanding that the subpoena sought documents that were identifiable, I am of the opinion that the legitimate forensic purpose identified by the Magistrate amounts to no more than a proposition that the respondent was entitled to engage in a “fishing expedition” to ascertain whether there had been compliance with s 5(2A). That is apparent from the terms in which the Magistrate identified the forensic purpose. There was no material before the Magistrate to indicate that there had been, or might have been, non-​compliance with s 5(2A). [85] This is acknowledged in his Honour’s comment that there should be access to the documents to enable the respondent to check whether there had been compliance with s 5(2A). In other words, the Magistrate identified the legitimate forensic purpose in terms that meant the respondent needed to have access to the documents “to discover whether he has a case at all”: see The Commissioner for Railways v Small at 575. As Jordan CJ stated in that case, a party is not entitled to use a subpoena for that purpose. [86] This was not a case like, or analogous to, the example given in Alister where an important witness had given a pre trial report so that it could be said that it was “on the cards” that the document “would materially assist” the respondent by permitting cross-​examination of the witness based on the earlier report. Nor was it a case like that which Hunt J had dealt with in Saleam, where there was some evidence that there was a problem with the evidence given at trial and the material subpoenaed may have revealed whether that was the case. Here, there was no suggestion that the police witnesses had made earlier statements that should be available for the purposes of cross-​examination. Nor was there any suggestion whatsoever that there was any failure to follow correct procedures, or that any wrongdoing had been engaged in. In short, there was nothing at all to suggest that it was “on the cards” that the subpoenaed material would “materially assist the respondent’s case”. [87] It follows, in my opinion, that the Magistrate erred in law in allowing access to the material referred to in para 3 of the Schedule to the subpoena.

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Attorney-General (NSW) v Chidgey cont. Proposed orders … 1.

Appeal allowed;

2.

Set aside the determination of the Magistrate, his Honour G Cocks, made on 21 July 2006, dismissing the application to set aside paragraph 3 of the schedule to the subpoena issued on 24 May 2006;

3.

Strike out paragraph 3 of the subpoena.



Liristis v Gadelrabb [12.430]  Liristis v Gadelrabb [2009] NSWSC 441 BRERETON J [1]‌These proceedings, between the plaintiff Tony Liristis and the defendant Julia Gadelrabb, for specific performance of an alleged oral contract for the sale of land, are listed for hearing before Ward J to commence on Thursday 30 April 2009 for two days. A central issue is whether the alleged oral contract on which the plaintiff sues was in fact made. In that respect, the evidence is word against word –​the plaintiff’s word apparently supported by his father, Mr Tasos Liristis, against the word of the defendant. [2]‌On 15 April 2009, the defendant issued a subpoena to produce, addressed to the Police Commissioner, returnable on 24 April 2009, requiring production of: 1.

Complete copy of criminal records specifically those regarding any convictions for dishonesty and in particular perjury, and any convictions under the Oaths Act 1900 NSW in relation to a Mr Tony Liristis, [address and date of birth suppressed];

2.

Complete copy of criminal records, specifically those regarding any convictions for dishonesty and in particular perjury, and any convictions under the Oaths Act 1900 NSW in relation to a Mr Tasos Liristis …

[3]‌By Notice of Motion filed on 20 April 2009, the plaintiff seeks an order setting aside the subpoena, contending that it is without legitimate forensic purpose and is an abuse of process. [4]‌It will be apparent from the above short summary of the issues in the principal proceedings, and it is not controversial, that the respective credit of the plaintiff and his father on the one hand and of the defendant on the other, will be important and probably determinative. It cannot be contended that the existence of a conviction for dishonesty would not be relevant to the question of credit. Moreover, even documents which, though not evidencing a conviction for dishonesty, enabled a party to establish or tend to establish that the other had made false statements when under an obligation to tell the truth, could legitimately provide the basis for cross-​examination as to credit (under (NSW) Evidence Act 1995, s 103(2)). [5]‌I do not understand it ever to have been a proper objection to a subpoena that it seeks documents relating only to credit. Indeed, one of the fundamental distinctions between the processes of subpoenas for production and discovery is that subpoenas, unlike discovery, may be used to obtain documents relevant only to questions of credit, for the purpose of assisting cross-​examination as to credit. It is true that in Fried v National Australia Bank [2000] FCA 911; (2000) 175 ALR 194, Weinberg J in the Federal Court of Australia said that it was inappropriate to permit a subpoena to stand which does little more than to trawl for documents that may be used to impugn the credit of a particular witness. I do not disagree with that observation, but that is not to say that it is inappropriate to permit a subpoena to stand that seeks documents that may be used to impugn the credit of a particular [12.430]  713

Civil Procedure in New South Wales

Liristis v Gadelrabb cont. witness, as distinct from merely trawling for such documents. The concept of “trawling” in this context is the same as that of “fishing”. It is not fishing to seek documents when there are reasonable grounds to think that fish of the relevant type are in the pond or, as it has been expressed in other cases, that it is “on the cards” that relevant documents (even if they are relevant only to credit) will be elicited by the subpoena. [6]‌There is evidence before the Court on the present application that Mr Tony Liristis was prosecuted on a charge of perjury, convicted in the District Court, and appealed successfully to the Court of Criminal Appeal, which allowed the appeal and quashed the conviction, and ordered a new trial. Mr Liristis was not acquitted by the Court of Criminal Appeal; a new trial was ordered. There is no evidence at this stage as to whether the new trial proceeded, nor if so, what was its outcome. There is, therefore, ample reason to suppose that there may be in the possession, custody or power of the Police Commissioner criminal records relating to convictions for dishonesty, and in particular perjury. [7]‌It is not necessary for a party called upon to sustain the relevance or the propriety of a subpoena to show that there is likely to be a document in every category of that called for by the subpoena. Were it otherwise, the pursuit of relevant evidence would be unduly constrained by a requirement to craft subpoenas which were so narrow in their scope that relevant documents easily escape its reach. In short, there is reason in this case to think there are documents relating to convictions for dishonesty, and in particular perjury, in relation to Mr Tony Liristis; and there is a legitimate forensic purpose for the issue of the subpoena in the terms in which it is expressed in that respect. [8]‌So far as the second paragraph of the subpoena is concerned, however, in respect of his father Mr Tasos Liristis, there is no evidence before me on this application, nor any reason to suppose, that there would be any such documents in existence. I readily accept that documents that tended to show that Mr Tasos Liristis had been guilty of an offence of dishonesty would be the legitimate object of a subpoena, for the purposes of impugning his credit. I also accept that not much evidence would be required to show sufficient reason to justify a subpoena couched in relatively narrow terms for such documents. Even some basis for a suspicion –​as slight as some instruction from a client that the client believed that the person in question had been prosecuted for such an offence –​might suffice. But in this case there is absolutely nothing to suggest, nor any reason to suppose, that there are any such documents in existence so far as Mr Tasos Liristis is concerned. In respect of him, the subpoena is therefore nothing more than a fishing expedition, to see whether any such documents are in existence. Accordingly, paragraph 2 of the subpoena cannot be sustained. [9]‌The rules of Court now authorise the Court to set aside subpoenas in whole or in part [UCPR r 33.4(1)]. It follows that this subpoena should be set aside in respect of paragraph 2 of the Schedule, but not in respect of paragraph 1. [10] I order that paragraph 2 of the schedule to the subpoena to produce issued at the request of the defendant to the NSW Police Commissioner dated 15 April 2009 be set aside.



O’Shane v Harbour Radio [12.440]  O’Shane v Harbour Radio Pty Ltd [2014] NSWSC 93 [In defamation proceedings brought by a former Magistrate, the Judicial Commission of New South Wales (the “Commission”) applied to set aside two subpoenas issued to it for the production of certain documents relating to any complaints that may have been made against the plaintiff, Ms Patricia O’Shane. The subpoenas were issued at the behest of the defendants to these proceedings, Harbour Radio Pty Ltd (“Harbour Radio”) and Alan Jones. By notice of motion filed 24 January 2014 714 [12.440]

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O’Shane v Harbour Radio cont. Ms O’Shane also applied to set the subpoenas aside. The first of the two subpoenas was set aside by consent; however, argument proceeded in respect of the second subpoena. The defamation proceedings alleged that the imputations from the defamatory broadcast were: (a)

[Ms O’Shane] is such a bad Magistrate that she should be removed from her office as a Magistrate.

(b)

[Ms O’Shane] failed in her duties as a Magistrate by delivering diabolically bad decisions.

(c)

[Ms O’Shane] failed in her duty as a Magistrate by delivering decisions which are wrong in law.

(d)

[Ms O’Shane] has been so grossly derelict in her duty as a Magistrate to deserve to be the subject of an adverse finding by the Judicial Commission.] BEECH-​JONES  J [36] In Attorney General for New South Wales v Chidgey [2008] NSWCCA 65 (“Chidgey”), at [59] Beazley JA (as her Honour then was), with whom James and Kirby JJ agreed, reiterated that it is not sufficient for a party seeking production of documents pursuant to a subpoena to merely establish that the documents sought are or may be relevant to the issues in the proceedings. Her Honour approved the following statement by Simpson J (with whom Spigelman CJ and Studdert J agreed) in R v Saleam [1999] NSWCCA 86 at [11] as stating the relevant standard that must be met (Chidgey at [64]): The principles governing applications [for an order that documents not be produced] are no different from those governing applications for access to documents produced in answer to a subpoena. Before access is granted (or an order to produce made) the applicant must (i) identify a legitimate forensic purpose for which access is sought; and (ii) establish that it is “on the cards” that the documents will materially assist his case. [37] The second aspect of this test, namely that it is “on the cards” the documents sought will materially assist a party’s case, warrants closer analysis. In Chidgey Beazley JA rejected the submission that a line of authority in Victoria which construed this phrase as being equivalent to a test requiring that there be a “reasonable possibility that the [documents sought] would materially assist the defence” should be followed (at [74]). Her Honour did not consider that test to be inconsistent with Saleam, but nevertheless rejected its adoption because her Honour considered that further elaboration of the phrase “on the cards” only invited confusion (Chidgey at [80]). Further, her Honour disapproved of a passage in a judgment of Adams J in Roads & Traffic Authority of NSW v Conolly [2003] NSWSC 327; 57 NSWLR 310, to the effect that if the material sought by a subpoena exists and is relevant to an issue in the proceedings “it will almost invariably be logically the case” that there will be the requisite chance that it will assist a party’s case (cited in Chidgey at [77]). Her Honour considered that this statement was inconsistent with the proposition that merely establishing the relevance of the material sought was not sufficient to justify the issue of a subpoena (Chidgey at [79]). [38] I was also referred to a passage from the judgment of Brereton J in Portal Software International Pty Ltd v Bodsworth [2005] NSWSC 1115 at [25] where his Honour stated the test of sufficiency to justify a subpoena as being that the material “could ‘possibly throw light’ on the issues in the substantive proceedings, or that it appears to be ‘on the cards’ that they will do so”. Again, this approach appears to be inconsistent with the requirement that it be “on the cards” that the documents sought “will materially assist” a party’s case (see ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd [2009] NSWCA 307 at [18]). It is this latter test that I must apply. [39] Nevertheless, it is necessary to note that the “on the cards” test is applied prospectively and thus at a time when the party issuing the subpoena will usually not know what documents will be caught or what they will say. If they did, then they would probably not need to issue the subpoena in the first place. Further, the “on the cards” test does not deny the possibility, which may be a strong one, that the documents will not assist and may in fact damage the subpoenaing party’s case. This is illustrated by the judgment of Gibbs CJ in Alister v R [1984] HCA 85; 154 CLR 404 (“Alister”), which was cited by Beazley JA in Chidgey at [65]ff as the source of the “on the cards” test. In Alister Gibbs CJ required production to the Court of any reports given to ASIO by an important Crown [12.440]  715

Civil Procedure in New South Wales

O’Shane v Harbour Radio cont. witness concerning the accused, even though there were no “ground[s]‌to suppose that any such reports were favourable to the applicant’s case” and that “if one [was] to speculate [any such report] would be adverse to the applicants” (at [6]). This approach, in part at least, reflects the degree of speculation necessarily involved in this aspect of the test involving, as it does, an assessment in advance of the trial of the likelihood that documents which have not yet been produced or inspected will assist a party. [40] Further, in a particular case it may be that it is “on the cards” that the documents sought will assist the case of both parties. It is not uncommon in adversarial litigation for both parties to consider that the one piece of evidence is supportive of their respective cases, especially as most litigation involves a contest over more than one factual issue. The same piece of evidence can sometimes cut both ways. Equally, the one source of material can often help both sides. A common example is a subpoena issued in personal injuries proceedings for the injured plaintiff’s file concerning their admission to hospital immediately after the accident in question. Clearly the plaintiff would be allowed to subpoena the file as one could easily draw the conclusion that it was likely to be “on the cards” that the documents would materially assist their case. However, it would be counter-​intuitive if it was concluded that the defendant could not seek the production of the same material to test, amongst other matters, the plaintiff’s assertions as to what injuries were suffered and to see if any record was made by the hospital recording the plaintiff’s version as to how the accident occurred. Thus in such a case it would be “on the cards” that the file would contain documents that would materially assist both parties’ case. The subpoena to the Commission [41] The disputed subpoena to the Commission sought production of the following documents: 1.

Any complaint to the Judicial Commission concerning Magistrate Patricia June O’Shane from 1993 to date.

2.

Any reports, including reports on preliminary and other investigations into complaints concerning Magistrate Patricia June O’Shane from 1993 to date.

3.

Any response to any complaint by Magistrate Patricia June O’Shane, or any statements provided by Ms O’Shane to the Judicial Commission in relation to any complaint, from 1993 to date.

4.

Any determination or finding or document recording the result of an investigation into Magistrate Patricia June O’Shane, from 1993 to date, including:



a)

any summary dismissal;



b)

any reference to the conduct division;



c)

any report to the Governor;



d)

any report to the relevant head of jurisdiction;



e)

any supplied to Ms O’Shane herself.

[42] Thus the documents sought are not restricted to any specific time or to any specific case involving Ms O’Shane, such as the nine decisions particularised in the further amended defence. The documents sought potentially span a long period, given that the proceedings the subject of the appeal in McCormack v Langham were decided in September 1991. The Judicial Commission has been in operation since at least that time. [43] Otherwise the documents sought reflect the complaint structure created by the Judicial Officers Act that I have already described. Paragraph 1 reflects the requirement in s 17 that a complaint must be made in writing. Paragraph 2 appears to seek the results of the preliminary examination that the Commission must undertake in respect of a complaint (s 18). Paragraph 3 reflects the obligation of the Commission to afford a judicial officer procedural fairness, and the fact that it can be expected that a judicial officer will respond to a complaint made against them. Paragraph 4 encompasses the various outcomes of a complaint that I have described. 716 [12.440]

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O’Shane v Harbour Radio cont. [44] Mr Richardson sought to justify the subpoena on two related bases. First, he submitted that the documents sought had sufficient connection to the defence of substantial truth. Secondly, he submitted that the documents sought had sufficient connection to Ms O’Shane’s claim for aggravated damages, which was said to have put in issue the falsity of the pleaded imputations on a wider basis than that raised by the defence of substantial truth. Further, to the extent that it was necessary for him to show that it was “on the cards” that the material would assist his client’s case, Mr Richardson pointed to the fact that the Commission is a repository of material concerning allegations of poor behaviour in respect of judicial officers. Having regard to the material that I have referred to earlier, he submitted that it had been shown that it was “on the cards” that this material would assist in demonstrating his clients’ defence that the imputation to the effect that Ms O’Shane was a bad Magistrate was substantially true, and disprove the falsity of that imputation which was a component of her claim for aggravated damages. [45] Counsel for Ms O’Shane adopted the arguments of senior counsel for the Commission, Mr Clarke SC. I will address Mr Clarke SC’s submissions shortly, but at this point I note that my findings as to the evidentiary relevance of the media reports involve a rejection of so much of his submissions that contended that it was speculation to even suppose the existence of any complaints against Ms O’Shane. Bearing in mind those findings, I will address the submissions by considering whether the subpoena is justified first by reference to the defence of substantial truth, and then by the claim for aggravated damages. Defence of substantial truth [46] The first question is whether the defence of substantial truth justifies the issue of a subpoena to the extent it seeks material extending beyond the nine particularised cases. I have already accepted that there is a basis for concluding that there were a number of complaints extending beyond those cases, such as those involving Mr Jordan and the complaints referred to by Ms O’Shane in giving evidence before Smart AJ. Mr Richardson submitted that it was “on the cards” that there were other complaints and, even if they did not lead to Ms O’Shane’s removal, it is still “on the cards” that they will assist in establishing the truth of the imputations pleaded so as to meet the requisite test. [47] The difficulty with this aspect of Mr Richardson’s submissions is that it does not explain the nexus between the defence as particularised and so much of the material sought that extends beyond the nine cases. I have already set out an extract from the Court of Appeal’s judgment in O’Shane concerning the approach to be adopted to that defence (at [14]). Harbour Radio and Mr Jones bear the onus of proving the substance of the imputations. To date they have indicated that they seek to do so by pointing to Ms O’Shane’s conduct in nine cases and at present they are confined to those nine cases. No relevant connection between Ms O’Shane’s conduct in any other case and that defence as particularised was identified during argument and I cannot discern any. [48] In the end result Mr Richardson was reduced to identifying the significance of complaints about Ms O’Shane’s conduct in other cases to the pleaded defence of substantial truth as follows: [A]‌ ssuming we picked up from this subpoena another complaint, there would be no impediment to the defendant[s] making an application to amend to adding a 10th complaint so long as it was done if I can paraphrase in the manner as the others were done as outlined in paragraph 117 [of the Court of Appeal’s judgment in O’Shane]. [49] In fact, this submission reveals that in this respect the subpoena is truly a “fishing expedition”. The only identified basis for seeking the material concerning complaints about unparticularised cases in relation to the defence of substantial truth is that it may provide material that can support an amendment to the particulars to raise further instances of alleged improper conduct on the part of Ms O’Shane. This reverses the proper course of litigation. Parties must first make allegations in a pleading and thus raise an issue for determination before they can seek to engage the various compulsive processes of evidence collection, such as issuing subpoenas. This process offers some protection to third parties by ensuring that they are only subjected to being required to comply with [12.440]  717

Civil Procedure in New South Wales

O’Shane v Harbour Radio cont. subpoenas which have a sufficient connection to an allegation which has been properly and clearly pleaded and responded to by the other party to the litigation. It follows that I do not accept that the pleading of substantial truth by Harbour Radio and Mr Jones can support the width of the subpoena to the extent it seeks documents concerning cases heard by Ms O’Shane extending beyond the nine particularised ones. [50] The next question that arises is whether the defence of substantial truth can support the subpoena to the extent it seeks documents in respect of the nine particularised cases. As noted, the material before the Court is capable of founding a reasonable basis for believing that three of those cases were the subject of complaints which were treated with such seriousness as to warrant referral to the Conduct Division. Such a referral could only occur if the Commission formed at least one of the opinions in s 15(2)(a) or (b) and considered that it otherwise justified the attention of the Conduct Division. Further the material indicates a reasonable basis for believing that there might have been a complaint in respect of the Kanaan matter. I have already indicated that there was a reasonable basis for believing there were a number of other complaints. This could include the other five cases that are particularised in the amended defence, especially as the matters raised in respect of those cases suggest that there was something that might warrant a complaint being made. Further, the fact that some Conduct Division hearings are conducted in private means that the absence of any report of a hearing of the Conduct Division in relation to any complaint other than those which were reported is not indicative that such a hearing did not take place. [51] Nevertheless, it is difficult to discern any relevant connection between proof of the errors of law or misconduct complained about in the particulars to the defence of substantial truth and the material sought to be obtained by the subpoena. [52] In O’Shane, Beazley P contemplated the matters particularised in the defence of substantial truth being proved by the tender of the appeal judgments in the seven cases in which appeals were brought and the tender of the transcript and associated material concerning the hearing of those cases where either an error beyond that found by this Court on appeal or misconduct was alleged (O’Shane at [97]). The material sought to be obtained from the Commission, even in relation to the nine particularised cases, appears irrelevant to the establishment of the errors and misconduct particularised in the defence of substantial truth. The subpoena does not seek to capture any source material which seeks to prove the particular allegations. [53] However, the material referred to by Beazley P in O’Shane at [97] may not be exhaustive of the type of material that may assist Harbour Radio and Mr Jones in establishing their defence in a manner consistent with their particulars. Even at this relatively early stage of the litigation it can be envisaged that there is scope for further material to be obtained which could bear upon the deliberations of the tribunal of fact at the point of considering whether such of the matters particularised for the nine cases that it finds are established warrant a conclusion that any one or more of the imputations pleaded are substantially true. If the tribunal of fact was to find that some or all of the particulars were made out, the question would then arise as to whether their establishment meant that the imputations were substantially true. Merely because Ms O’Shane, or any other judicial officer, made errors of law does not necessarily mean that they are “bad”, deserving of removal from office, or failed in their duties, etc. If the position were otherwise, the judicial system would very quickly consume itself. [54] In respect of the seven particularised decisions that were the subject of appeals and presently assuming that they were the subject of the complaints to the Commission, it could be expected that Ms O’Shane’s response to any such complaint would address the circumstances in which the alleged error or misconduct occurred, and that she would provide an explanation for her conduct. Potentially such an explanation could play a significant role in any assessment of the ultimate question raised by the imputations as to her fitness and standing to be a judicial officer. For example, a belligerent response by a judicial officer to a finding by this Court that they had failed to afford procedural fairness may reveal such a lack of insight as to what is required to fulfil their duties as to raise an issue as to their fitness to remain in office. At the very least it would be material that could be relied on to rebut or at 718 [12.440]

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O’Shane v Harbour Radio cont. least test any suggestion that any error on the judicial officer’s part was an excusable mistake. Further, a consideration of Ms O’Shane’s response is unlikely to be of much benefit without considering the complaint that she was responding to. [55] The complaint and Ms O’Shane’s response are the documents sought by paragraphs 1 and 3 of the subpoena. Paragraphs 2 and 4 of the subpoena seek to capture any report of the Commission or a Conduct Division. Again this material is likely to include a discussion of the circumstances in which the alleged error or misconduct occurred and a summary or explanation of any response given by Ms O’Shane. Further, it is to be recalled that one aspect of imputation (d) is that Ms O’Shane’s conduct was such as to warrant her being “the subject of an adverse finding by the Judicial Commission”. To that end it is at least reasonably arguable that any material from the Commission adverting to whether her conduct in relation to any of the nine cases warrants such a finding may be relevant and admissible, or failing that at least of assistance, in the establishment of that part of imputation (d). [56] It follows that I am satisfied that, to the extent the subpoena seeks documents in relation to the nine cases particularised in the defence of substantial truth, the subpoena is neither a “fishing expedition” or otherwise lacking a legitimate forensic purpose. There is a reasonable basis for believing that there is material which has a relevant connection to the defence of substantial truth. To reiterate, such material is likely to reveal Ms O’Shane’s explanation of the circumstances in which any of the particularised errors or instances of misconduct were said to have occurred, and to be relevant to ascertaining whether any error or misconduct was such as to warrant an adverse finding of the kind referred to in imputation (d). [57] However, Mr Clarke SC also submitted that, even if the Court was satisfied of those matters, Harbour Radio and Mr Jones still had to demonstrate that it was “on the cards” that the documents sought would materially assist their case. I have discussed this concept above. As noted, Mr Richardson pointed to the fact that the Commission was a repository of complaints as a matter indicating that it was “on the cards” that any material obtained would assist his clients. I do not accept that a reasonable belief that there have been complaints about one or more of the nine particularised cases to the Commission is by itself enough to satisfy this aspect of the test. As noted, Ms O’Shane performed a judicial function for over twenty years. It is likely that she has decided thousands of cases which, as noted, will at most have only had one winner. It is very likely that the performance of that task over such a long period will have generated such a sense of grievance amongst some losing litigants that they will lodge complaints. The mere fact that a complaint or number of complaints is lodged with the Commission does not, of itself, mean that it is “on the cards” that material concerning those complaints will support a defence that seeks to justify an imputation that a person was a “bad” judicial officer. [58] However, there is other material suggesting that it is “on the cards” that material concerning any of the nine cases will materially assist Harbour Radio and Mr Jones. I have already noted that there is a reasonable basis for believing that three of the nine cases led to complaints which were considered to be of sufficient seriousness as to warrant referral to the Conduct Division. There is a reasonable basis for believing that there may have been a complaint in the Kanaan matter. There is a reasonable basis for believing that another unspecified matter which might have been one of the nine particularised cases was referred to the Conduct Division. Otherwise, as already stated, seven of the nine cases have been the subject of successful appeals. Some of the judgments are expressed in strong terms indicating that any complaint in respect of those seven cases may have had a reasonable basis. [59] The combination of these factors is sufficient for the Court to be satisfied that it is “on the cards” that any documents caught by the subpoena in relation to the nine cases particularised in the defence of substantial truth will materially assist Harbour Radio and Mr Jones in establishing that defence.

 [12.440]  719

Civil Procedure in New South Wales

Lowery v Insurance Australia [12.445]  Lowery v Insurance Australia Ltd [2015] NSWCA 303 [The applicants, Mr and Mrs Lowery, made an insurance claim in respect of their car that was stolen and destroyed by fire. The insurer declined to make payment. The applicants commenced proceedings in the District Court against the insurer for payment. The insurer filed five subpoenas seeking documents relating to the applicants, their son and the person who controlled the car park from which the vehicle was taken. The purpose of the subpoenas was to obtain material which might provide a basis for challenging either the accounts given by those individuals of the circumstances surrounding the loss of the vehicle, or to challenge more generally the credibility of each. The applicants sought to set aside the subpoenas on the basis that they lacked a legitimate forensic purpose. The District Court judge did not set the subpoenas aside. The applicants sought leave to appeal in the Court of Appeal.] BASTEN JA Grant of leave to appeal [3]‌As explained by Emmett JA, the breadth of the material sought, both in terms of time and subject matter, cast doubt on the legitimacy of the exercise. Nevertheless, that factor alone would not warrant this Court intervening in relation to an interlocutory judgment of the District Court concerning a matter of practice and procedure, for which leave is required for an appeal. [District Court Act 1973 (NSW), s 127(2)(a).] Further, this is not a case where those subject to the subpoenas complained of the requirements imposed on them. The material had been supplied to the Court in response to each subpoena prior to the hearing of the motion: as a result, although the notice of motion filed on 15 December 2014 sought to have each subpoena set aside, the judge treated the motion as seeking, effectively, to restrict access to the material which had been produced to the Court. [4]‌In most circumstances, error at an interlocutory stage will give rise to a right of appeal from the final judgment. It is often preferable to rely upon the availability of relief from the final orders, at which stage it will be apparent whether an interlocutory error has proved material to the outcome. Nevertheless, in circumstances where an avoidable injustice may be averted by early intervention (such as the undue prolongation of a trial) leave may be granted to appeal from an interlocutory judgment. [5]‌A grant of leave is not warranted on these bases in the present case. Rather, a grant of leave must be justified by reference to the possible precedential value of the judgment. That will rarely arise from an unreported judgment of the District Court which has not been uploaded to the internet. However, two factors warrant a different approach in the present case. First, the respondent, responsible for issuing the subpoenas, is an insurance company and a repeat litigant in the courts. It is plausible that a successful strategy developed by one insurer will become known to others. Secondly, an exercise of the kind undertaken in the present case will be available in every case where the credibility of a party, or even a material witness, is sought to be put in issue. These factors, together with one additional element, warrant a grant of leave to appeal. The additional element is that, on their face, the subpoenas test the boundaries of a legitimate forensic exercise. Scope of subpoenas –​principles [6]‌I agree, for the reasons given by Emmett JA, that each of the five subpoenas was, in effect, a fishing expedition and not for a legitimate forensic purpose. However, because the purpose of the grant of leave to appeal is to ensure that misconceptions about the appropriate role of a subpoena do not remain, it is important to note both the scope of what is being decided and that which is not being determined. [7]‌To determine the issues in dispute it is necessary to have regard to the pleadings. The applicants relied on the terms of the policy and the theft and destruction of the vehicle. The defence to the claim relied upon an allegation of failure to co-​operate with the respondent’s investigation of the claim, in part by not providing information and taking part in an interview regarding the claim, with the result 720 [12.445]

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Lowery v Insurance Australia cont. that the respondent’s position was prejudiced. There was no pleading of fraud, but no doubt the credibility of the applicants, their son, who had custody of the vehicle at one point, and the controller of the car park (Mr Rapa) were in issue. The insurer was entitled to resist the claim on the basis that the applicants had not proved that the vehicle was taken and destroyed without their consent or connivance, without raising an affirmative defence. [8]‌At the time the subpoenas were issued, the applicants had not filed any affidavits in support of their case. However, by the time that the notice of motion came on for hearing, the applicants had filed affidavits sworn by each of the four individuals. Further, the purpose of standing over parts of the subpoenaed material for determination by the trial judge as to the access to be granted appeared to accept the possibility that an issue as to credibility might arise in the course of the trial. The issues relating to credibility must involve the circumstances surrounding the loss the vehicle, or extraneous matters suggesting dishonesty. [9]‌As explained by Moffitt P in Waind v Hill and National Employers’ Mutual General Association Ltd there are three steps involved in the procedure for having third parties bring documents to court pursuant to a subpoena, the first being obedience to the subpoena, the second being determining access and the third being admission into evidence of the document. Different issues will arise with respect to: (a) the person having ownership or control of the documents, (b) the party seeking production and access, (c) the party opposing production or access, and (d) a person who is neither a party to the proceedings nor an owner of the documents, but whose interest may be affected, either as a witness or simply as person whose privacy is invaded. [10] Because the ultimate justification for compulsory production and disclosure of information which might otherwise remain confidential, is the legitimate furtherance of judicial proceedings, regard must be had to permissible uses. Tender of the document in evidence is undoubtedly a permissible use; nevertheless, prior to the trial, both materiality and admissibility may be difficult to determine. Where documents were properly produced, that consideration will permit the deferral of inspection by one party or the other until the trial is underway. However, material may be permissibly used in the course of cross-​examination even if it is inadmissible in form, or may not become admissible until a later stage of the proceedings. [11] Decisions as to access to material produced under subpoena should be addressed by reference to two factors, which may not be adequately reflected in earlier decisions. First, the mass creation of electronic records of transactions provides new and growing sources of information about individuals with a high degree of particularity as to place and time. Relevantly for present purposes, electronic records of mobile communications fall into this category. (Records of electronic payments fall into a similar category.) This consideration has, in its turn, spawned concern as to unjustifiable intrusions on individual privacy. Secondly, whether a forensic purpose is legitimate or not must depend on matters of practice and procedure governing a trial. While that has always been so, the rules of evidence have changed over time. Some rules are directed against the production of documents recording “protected confidences”. There are general constraints on admission of “credibility evidence”. Cross-​ examination as to credibility is now governed by s 103 of the Evidence Act. Evidence in rebuttal of answers given by a witness under cross-​examination is governed by the terms of s 106 of the Evidence Act. [12] Questions of relevance, or “apparent relevance”, commonly arise in circumstances where the third party required to answer a subpoena complains on the ground of oppression, so that the burden of producing the documents is to be weighed against their apparent forensic value in the proceedings. [Commissioner for Railways v Small [1938] NSW St Rp 29; (1938) 38 SR(NSW) 564 (Jordan CJ) referred to by Waddell J in Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 926G.] That is not the present context. Similarly, the concept of a “fishing expedition” may be relied upon by a third party resisting discovery. In this context, the search is described as speculative, in the sense that it will not be known whether any relevant documents may be uncovered. Again, that is not the present context. In the present context the documents have been located and produced: to the extent that

[12.445]  721

Civil Procedure in New South Wales

Lowery v Insurance Australia cont. the issues can be identified from the pleadings, their value in the proceedings will depend upon their content, not their existence. In that situation, there may be something to be said for a two-​stage process of inspection, whereby inspection may be permitted initially in relation to material patently capable of being used in the proceedings and inspection deferred with respect to so much of the remainder as is conceivably usable, but where an informed decision could only be made in the course of the trial. [13] The latter course in fact has limited value. It is most likely to arise in circumstances where a question has been put in cross-​examination and a denial received, which it may be sought to contradict. However, unless there is some basis to put the question, with implications adverse to the witness, that will not happen. In that circumstance, useful access to the material must often be sought for the purpose of the cross-​examination. Similarly, as noted, there are limits on the extent to which cross-​examination going only to credit can be the subject of contradiction, which should allow a determination for the purposes of access before the time for the document to be deployed. [14] In the present case, the trial judge did not inspect the documents himself in order to determine whether, on the basis of the pleadings and the affidavit evidence filed for the applicants, there was material which might potentially satisfy a legitimate forensic purpose. That is not to say that such a course should have been followed: the issue simply does not arise. In those circumstances, the subpoenas must be dealt with on the same basis. Determination of appeal [15] First, the subpoena issued to the Commissioner, NSW Police Force, contained six descriptive paragraphs. Paragraph 6, referring to all documents and records “relating to thefts or any reported incidents occurring at or in relation to the property located at [the car park from which the motor vehicle was taken]”, was rejected. Paragraph 5, which referred to documentation relating to the theft of the motor vehicle, was not challenged by the applicants. The remaining paragraphs, 1-​4, were in the following form: Your complete record file relating to [person identified by name and date of birth] including but not limited to all criminal records, all complaints, reports and any documentation relating to any incidents involving [the named person]. [16] In his judgment of 29 January 2015, the primary judge allowed access to material which fell within the category of “all criminal records” in each of these paragraphs. That order excised “all complaints, reports and any documentation relating to any incidents involving” each of the named individuals. However, the excision was on a limited basis, as that aspect of the subpoena was “stood over to the trial to the trial judge.” [17] With respect to the excisions made from paragraphs 1-​4 in relation to police records, there was no justification for allowing the material to stand over for consideration by the trial judge. There was no foreseeable case presented by counsel for the respondent in which the kind of material, not forming part of a criminal record and not relating to the incident in issue, could be used. [18] So far as the remaining reference to “all criminal records” (unrelated to the incident) were concerned, it would be necessary for there to be offences of dishonesty, which might be the subject of cross-​examination. The remaining reference was not so limited. Had it been more limited, it might have been objectionable on a different basis, namely that it would have required an independent third party to form a judgment as to what was and what was not covered by the subpoena. [19] In those circumstances, paragraphs 1-​4 should have been set aside. Were it otherwise, the Police Commissioner could be required to produce the criminal records of every person who is a party to any judicial proceedings, or likely to be a witness in such proceedings. That is not a possibility which should readily be contemplated. [20] Secondly, with respect to the subpoenas issued to Roads and Maritime Services, seeking registration records for “all vehicles registered by or in the name of” one of the four individuals 722 [12.445]

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Lowery v Insurance Australia cont. identified above (being the applicants, their son and Mr Rapa) could have served no legitimate forensic purpose having regard to the pleadings and the affidavit evidence filed. The primary judge gave no reasons for allowing a subpoena in that form: it should have been set aside. (Paragraph 3, identifying records for the Mercedes Benz, was not opposed, although one may doubt the legitimacy of such disclosure with respect to prior owners.) [21] Thirdly, three subpoenas sought records from telecommunications companies, namely Vodafone, Telstra and Optus. Each contained records described by reference to a mobile number and an individual, identified by name and date of birth, in the following form: Phone records for mobile number xxx in the name of xxx including but not limited to, any records, reports, printouts, transcripts, call logs, statements, notes, correspondence and any other documents relating to calls made from 26 December 2013 to 26 June 2014. [22] The respondent submitted that the applicants, their son and Mr Rapa had all provided affidavits or statements referring to communications between them around the time of the loss and destruction of the motor vehicle. The respondent does not expect to obtain transcripts of those conversations, but merely whether or not there were communications and where each person was at the time of the communication. Such details may possibly be available from call logs. [23] However, there are a number of respects in which this language was too broad to be justifiable, even on a speculative basis. The justification for seeking such records of communications, other than those between the four named parties, is the ability to identify where a particular individual (or at least his or her telephone) was, if in use, at a particular time. There is a sense in which it appears that such an exercise may have been sought to be undertaken, because it could be. There was no submission that any of the four individuals concerned was believed to be at any place, other than they had indicated, at or about the time the vehicle was taken. The potential intrusion in privacy was not warranted by any identifiable forensic purpose. [24] A different conclusion might have been reached with respect to communications between the identified mobile phone numbers within a reasonable period on either side of the day of the incident. A period of three months on either side was not reasonably justifiable; nor was the scope, covering the total activity on all four phones. [25] It is not the function of the Court to redraft the subpoenas: accordingly, each should be set aside in full. … [Emmett JA agreed with Basten JA that leave be granted to appeal, the appeal be allowed and the subpoenas be set aside. Adamson J, in dissent, held that notwithstanding the width of the categories sought in the subpoenas, it was open to the District Court judge to find that the subpoenas were not an abuse of process. Some footnotes omitted.]

 Non-​compliance

J P Morgan Trust v Kapetanovic [12.450]  J P Morgan Trust Australia Ltd v Kapetanovic [2007] NSWSC 1423 [The plaintiff sued to recover in excess of $570,000 together with an order for possession of two properties against the security of which that money was advanced. The plaintiff issued a subpoena on Lupco Angelovski who was at the relevant time a solicitor trading as B J Murphy, Angelovski &

[12.450]  723

Civil Procedure in New South Wales

J P Morgan Trust v Kapetanovic cont. Associates. The defendants contended that Mr Angelovski was the solicitor who acted on behalf of the defendants in the mortgage transaction which is the subject of the present proceedings. The subpoena was served upon Mr Angelovski by a licensed process server. The plaintiff’s solicitors had written to Mr Angelovski on numerous occasions regarding compliance with the subpoena. This correspondence plus an affidavit of service sworn by the process server was annexed to an affidavit sworn by the plaintiff’s solicitor. The solicitor failed to produce documents. The plaintiff applied for the issue of a warrant in respect of non-​compliance with the subpoena to produce. The judge issued a warrant for the arrest of Mr Angelovski.] HARRISON J [7]‌Ms Morgan’s affidavit [the plaintiff’s solicitor] also annexes copies of the following correspondence: (a)

A facsimile dated 9 October 2007 from the plaintiff’s solicitors to Mr Angelovski. The transmission of that facsimile was unsuccessful.

(b)

A facsimile dated 16 November 2007 from the plaintiff’s solicitors to Mr Angelovski.

(c)

A facsimile dated 4 December 2007 from the plaintiff’s solicitors to Mr Angelovski.

(d)

A facsimile dated 5 December 2007 from the plaintiff’s solicitors to Mr Angelovski.

[8]‌The facsimile of 16 November 2007 recited that on 9 October 2007 Mr Angelovski acknowledged service of the subpoena upon him. The letter alleged that on five separate occasions he had failed to comply with the subpoena. The letter continued as follows: The subpoena was first returnable on 9 October 2007. We contacted you after you failed to produce documents and you informed us that you had only just retrieved your file from storage and would produce it on the next occasion. We attempted to contact your office on several occasions following our conversation with you on 9 October 2007 but were informed that your telephone number, email and facsimile numbers had been disconnected. The subpoena has been further returnable on 16 October 2007, 23 October 2007, 30 October 2007 and 13 November 2007. No documents were produced on any of those occasions. [9]‌The letter then went on to inform Mr Angelovski that the subpoena had been “re-​listed” for 28 November 2007 at 9.00am and that the plaintiff would call upon it on that date. It reminded Mr Angelovski that a subpoena is an order of the court and that a failure to comply with it may amount to a contempt. Further, the letter informed Mr Angelovski that should documents not be produced the plaintiff would seek instructions to issue a notice of motion to enforce the subpoena including possibly an order that he be brought before the court to explain his continuing failure to comply with it. [10] The facsimile of 4 December 2007 was in similar, but more detailed, terms. It informed Mr Angelovski that the subpoena would be called upon at 9.00am on 5 December 2007. It concluded with the request that Mr Angelovski contact the writer “as a matter of urgency”. [11] The facsimile of 5 December 2007 informed Mr Angelovski in no uncertain terms that the plaintiff would be making application to the duty judge at noon on 5 December 2007 for the issue of a warrant for his arrest. It annexed a copy of the notice of motion and a copy of the affidavit of Ms Morgan sworn 5 December 2007 to which I have referred. 5 December 2007 [12] The matter came before me as the duty judge at 12.50pm on 5 December 2007 as foreshadowed. Mr Casselden of counsel appeared at that time for the plaintiff. After reading the affidavit of Ms Morgan and hearing submissions from counsel I indicated that I would be prepared to issue a warrant for the arrest of Mr Angelovski. However, I suggested that in advance of that occurring, the solicitor for the 724 [12.450]

Discovery, Subpoenas and Interrogatories  Chapter  12

J P Morgan Trust v Kapetanovic cont. plaintiff should attempt to contact Mr Angelovski once more to inform him of what I had proposed. The matter was adjourned at 1.00pm and came back before me at 2.08pm. I was informed by counsel that calls to Mr Angelovski’s telephone were unanswered except for a diversion to voicemail. [13] I issued the warrant which was made returnable before me yesterday at 10.00am. 6 December 2007 [14] Mr Angelovski appeared before me at 10.00am yesterday. He was unrepresented by counsel or a solicitor. He was provided with a further affidavit of Ms Morgan sworn 6 December 2007 which deposed to a series of conversations with Mr Angelovski in detail on 9 October 2007, 15 November 2007, 27 November 2007 and 4 December 2007. Ms Morgan also deposed to a series of further conversations with Mr Angelovski on 5 December 2007 between 8.20am and 5.00pm. It is important to set out Ms Morgan’s recollection of what Mr Angelovski said to her on each occasion. [15] In the first conversation of 5 December 2007 Mr Angelovski allegedly said to Ms Morgan: I have my file. There is a very important document showing Elvis’ signature which is covered by the subpoena and needs to be in the file. I have fallen behind in my filing. Can you give me time to locate the document and I will get my file to you by lunchtime today? Please adjourn until tomorrow morning. [16] In the second conversation Mr Angelovski is alleged to have said the following: I am not in the office, so I will do my best to get the documents to you. It will not be possible to get them to your office by 10.00am. If I send you the file, can you copy the documents for me? I will call you when I get to the office. Then you can organise for a courier to come and collect the documents. [17] In a voicemail message left at approximately 3.10pm, Mr Angelovski said the following: I am ready to release the file. We need to organise a courier. Please call me straight away. [18] In the third conversation Mr Angelovski is alleged to have said the following: I will arrange a courier to get the documents to you right away. Can you please fax me a copy of the subpoena. [19] Finally, during the fourth conversation on that day Mr Angelovski is alleged to have said the following: There is nothing to produce in the file; it is the remnants of a file. There is a notation on the file saying that the client has taken the documents. The original signed copies get sent to the lender and I keep unsigned file copies and our account. They are not on the file anymore. [20] At my suggestion, Mr Angelovski entered the witness box and gave evidence. At the time of preparing these reasons I had not been provided with a transcript of the evidence which he gave. For that reason I make the following comments with a degree of circumspection. [21] Mr Angelovski has been a solicitor of this Court for approximately 15 years. He acknowledged, although it ought in the circumstances to have been self-​evident, that a subpoena could not, and ought not to, be lightly disregarded by a member of the public and particularly by a member of the legal profession. Mr Angelovski apologised for any inconvenience which he had caused and for his conduct since the service of the subpoena upon him. He described why he had not produced documents in answer to the subpoena. [22] In my opinion, for reasons that have not been satisfactorily explained, Mr Angelovski failed properly or adequately to comply with the subpoena which had been served upon him either by the production of documents in a timely way or by the giving of a satisfactory explanation, if he had one, why no documents could be produced. Mr Angelovski did neither of these things. In this

[12.450]  725

Civil Procedure in New South Wales

J P Morgan Trust v Kapetanovic cont. last respect I observe that in my view the “explanation” proffered by him in the witness box was unsatisfactory. Even without the benefit of the transcript of that evidence it is possible to say that there were inconsistencies between what Mr Angelovski said in the witness box and some of the material deposed to by Ms Morgan in the affidavits to which I have referred. He did not treat the subpoena as a matter of priority as he should have. Costs [23] The plaintiff sought costs of and incidental to the subpoena issued on 28 September 2007 on and from 9 October 2007. I consider that in the circumstances Mr Angelovski should pay those costs. I so order.



INTERROGATORIES [12.460] Discovery by interrogatories is a procedure where a party may be ordered to

answer specified questions. The questions are usually answered on oath and can be tendered as evidence in the trial. They can be ordered at any stage of proceedings. An example of the form of interrogatories is set out in the case of O’Brien v Little; Walsh v Little [2007] NSWSC 64. Interrogatories must relate to the issues in the pleadings. They will be necessary if they relate to matters where proof by other evidence may be difficult or expensive: Lang v Australian Coastal Shipping Commission [1974] 2 NSWLR 70. In summary, the UCPR provide that: 1.

A party can seek an order from the court to administer interrogatories. This can be made at any stage of proceedings. A draft of the questions is to be filed with the application seeking the order. An order will only be made if it is “necessary”.

2.

The answering party may be ordered to answer specified questions.

3.

The answers are usually required to be verified by affidavit.

4.

A party may object to answering on the basis that it does not relate to any matter “in issue” between the parties, the question is vexatious or oppressive and/​or the answer would disclose privileged information.

5.

If a party provides insufficient answers the court may make orders for further answer and verification by affidavit or for the interrogated party to attend for oral examination. The court also has power to give or make such judgment or other order as it thinks fit including stay, dismissal, or striking out of defence.

6.

The answers can be tendered as evidence in the trial.

7.

No order will be granted in personal injury actions unless the court is satisfied that “special reasons” exist.

8.

A party can object to answering interrogatories (UCPR r  22.2). In Vanacom Pty Ltd v Morgan Brooks Pty Ltd [2006] NSWSC 46, Campbell J observed that under UCPR r 22.1(4), the Court was not to make an order for interrogatories unless the Court was satisfied that the order was necessary at the time it was made. The court did not make an

726 [12.460]

Discovery, Subpoenas and Interrogatories  Chapter  12

order as the plaintiff’s evidence in chief had not been filed and it was premature for any interrogatories at all to be delivered at the time in question. Campbell J also considered an application for further discovery.

Uniform Civil Procedure Rules 2005 (NSW) [12.470]  Uniform Civil Procedure Rules 2005 (NSW) rr 22.1–​22.6 Part 22 –​Interrogatories 22.1 Interrogatories (cf SCR Pt 24, rr 1–​6; DCR Pt 22A, rr 1–​6) (1)

At any stage of the proceedings, the court may order any party to answer specified interrogatories.

(2)

An application for such an order must be accompanied by a copy of the proposed interrogatories.

(3)

In the case of proceedings on:



(a)

a claim for damages arising out of the death of, or bodily injury to, any person, or



(b)

a claim for contribution in relation to damages so arising,

such an order is not to be made unless the court is satisfied that special reasons exist that justify the making of the order. (4)

In any case, such an order is not to be made unless the court is satisfied that the order is necessary at the time it is made.

(5)

An order to answer interrogatories:



(a)

may require the answers to be given within a specified time, and



(b)

may require the answers, or any of them, to be verified by affidavit, and



(c)

in circumstances in which rule 35.3 authorises someone other than the party to whom the order is addressed to make the relevant affidavit, may specify the person to make the affidavit, or the persons from whom the person to make the affidavit may be chosen, in relation to the interrogatories or any of them.

22.2 Objections to specific interrogatories (cf SCR Pt 24, r 6(3)) A party may not object to being ordered to answer an interrogatory except on the following grounds: (a)

the interrogatory does not relate to any matter in issue between that party and the party seeking the order,

(b)

the interrogatory is vexatious or oppressive,

(c)

the answer to the interrogatory could disclose privileged information.

22.3 Answers to interrogatories (cf SCR Pt 24, rr 4 and 6; DCR Pt 22A, rr 4 and 6) (1)

A party who has been ordered to answer interrogatories must do so within the time required by the order by serving a statement of answers on all other active parties.

(2)

Such a statement:



(a)

must deal with each interrogatory specifically, setting out each interrogatory followed by the answer to it, and

[12.470]  727

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

must answer the substance of each interrogatory without evasion, and



(c)

to the extent to which, and in the manner in which, the order so requires, must be verified by affidavit.

See rule 22.6 as to the admission in evidence of answers to interrogatories. 22.4 Insufficient answer (cf SCR Pt 24, r 8; DCR Pt 22A, r 8) (1)

If a party who has been ordered to answer interrogatories under rule 22.1 fails to answer an interrogatory sufficiently within the time specified in the order or, if no such time is specified, within 28 days after being served with the order, the court:



(a)

may order the party to make a further answer, and to verify that further answer by affidavit, or



(b)

may order the party or, as the case requires, any person of the kind referred to in rule 35.3(1), to attend to be orally examined.

(2)

This rule does not limit the power of the court under rule 22.5.

22.5 Default (cf SCR Pt 24, r 9) (1)

If a party who has been ordered to answer interrogatories under rule 22.1 or 22.4 fails to answer an interrogatory sufficiently, the court may give or make such judgment or such order as it thinks fit, including:



(a)

if the party in default is a plaintiff, an order that the proceedings be stayed or dismissed as to the whole or any part of the relief claimed by the party in the proceedings, or



(b)

if the proceedings were commenced by statement of claim and the party in default is a defendant, an order that the party’s defence be struck out.

(2)

If a party has a solicitor, an order under rule 22.1 or 22.4 need not, for the purposes of enforcement of the order by committal or sequestration, be served personally.

(3)

If an order under rule 22.1 or 22.4 is not served personally on a party having a solicitor, the order may not be enforced by committal of any person, or by sequestration of any person’s property, if that person shows that he or she did not have notice of the order within sufficient time to comply with the order.

22.6 Answers to interrogatories as evidence (cf SCR Pt 24, r 10; DCR Pt 22A, r 10) (1)

A  party:



(a)

may tender as evidence one or more answers to interrogatories without tendering the others, and



(b)

may tender as evidence part of an answer to an interrogatory without tendering the whole of the answer.

(2)

If the whole or part of an answer to an interrogatory is tendered as evidence, the court:



(a)

may look at the whole of the answer, and



(b)

if it appears to the court that any other answer or any part of an answer is so connected with the matter tendered that the matter tendered ought not to be used without that other answer or part, may reject the tender unless that other answer or part is also tendered.

 728 [12.470]

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Ahmad v South Western Sydney Local Health District [12.480]  Ahmad v South Western Sydney Local Health District [2018] NSWSC 1327 DAVIES J On 16 December 2014 the plaintiff underwent a laparoscopic cholecystectomy at Bankstown Lidcombe Hospital. On 19 December 2014, following the detection of a bile leak, the plaintiff was again taken to theatre where it was ascertained that his common bile duct had been transected during the earlier operation. A Roux-​en-​Y loop was constructed and hepaticojejunostomy to the common hepatic duct was performed. The plaintiff commenced proceedings against the Hospital for negligence by a statement of claim filed on 14 March 2017. The plaintiff filed a notice of motion on 17 April 2018 seeking that the defendant answer Interrogatories served by the plaintiff in January 2018. [12] Since this is a claim for damages for personal injury the plaintiff must show in accordance with r 22.1(3) that there are special reasons why interrogatories should be allowed and must show that it is necessary for the order to be made. [13] In Ahmed El Hayek v Josslyn Vasic & Anor; QBE Insurance (Australia) Limited v Wesfarmers Federation Insurance Pty Ltd [2010] NSWSC 1498 Garling J said: [50] Whilst it is clear that “special reasons”, as a phrase, is an inexact one, capable of some elasticity in interpretation: see Keating v South East Sydney Illawarra Area Health Service (Supreme Court of NSW, 7 July 2006, unreported) at [24]-​[25] per Hall J, it is necessary for an applicant for an order to show that there is something unusual or different which takes the matter out of the ordinary course: Priest v State of New South Wales [2006] NSWSC 12 at [126] to [128] per Johnson J; Keating at [24]; Boscolo at [18] per French J (as his Honour then was). [51] Typically, but not exclusively, what will take the matter “out of the ordinary” is: (a) an inability to obtain the requisite factual material without the exercise of the discretion; (b) that the applicant is in a position of some disability or disadvantage; (c) the complexity of the subject matter is such that without the exercise of the discretion, real prejudice will result to the applicant; (d) that in order to achieve the just, quick and cheap resolution of the real issues in the proceedings, the discretion should be exercised. [52] In addition, as with all questions of discovery, an issue of relevance must be satisfied, namely that the material sought to be discovered, and the answers to interrogatories will relate to a fact in issue. There are also other discretionary considerations. [14] In Edwards v Hornsby Shire Council [2014] NSWSC 600, a case where personal injury damages were claimed, Schmidt J said: [16] The question of necessity must be approached as meaning “reasonably necessary for the disposing fairly of the cause or matter” or “necessary in the interests of a fair trial” (see Boyle v Downs [1979] NSWLR 192 at 205 per Cross J and Percy v General Motors-​Holden’s Pty Ltd [1975] 1 NSWLR 289 at 292 per Rath J). [17] Further, as discussed by Ward J in In the matter of Gerard Cassegrain & Co Pty Ltd –​ Cassegrain v Gerard Cassegrain & Co Pty Ltd [2011] NSWSC 241 at [27] and [31]: “[27] Where the interrogatories seek information “within the knowledge of the defendants”, it might be expected that the test of necessity will be readily satisfied (as it was, for example, in Keating v South East Sydney Illawarra Area Health Service). … [31] In Spedley Securities Ltd (in liq) v Yuill (No 4) (1991) 5 ACSR 758 Cole J said, of the principles applicable regarding interrogatories, (at [762]): 1. “The object of interrogatories is to discover the truth. It has also the advantage of saving expense. When inquiry is made as to a matter which is entirely within the [12.480]  729

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Ahmad v South Western Sydney Local Health District cont. knowledge of the defendant and not within the knowledge of the plaintiff, and is relevant to the case, I do not know of any rule why the defendant should not be interrogated about it”: Potter’s Sulphide Ore Treatment Ltd v Sulphide Corporation Ltd (1911) 13 CLR 101 at 111; Smith Kline & French Laboratories Ltd v Inter-​Continental Pharmaceuticals (Australia) Pty Ltd (1969) 123 CLR 514 at 518. 2. Generally speaking, a party may interrogate his opponent as to every relevant matter on which he could examine him, if he thought fit to call him as a witness at the trial: Lyell v Kennedy (1883) 8 App Cas 217 at 234; Hawkes v Schubach [1953] VLR 468 at 471; Coal Cliff Collieries Pty Ltd v C E Heath Insurance Broking (Australia) Pty Ltd (1986) 5 NSWLR 703 at 709.” [18] It is no answer to a proposed interrogatory that a document produced on subpoena deals with the topic or that a specific question is answered by the content of the document. Answers which are sought by the interrogating party must be material in the sense that they may enable that party to maintain its case and may be pursued, even if they destroy the opponent’s case. A party is also entitled to seek admissions. As Ward J also discussed at [26]: “It is recognised that a legitimate purpose of interrogatories is that the answers will inform the plaintiff as to evidence to be obtained and may save the expense of proving part of its case (Attorney-​General v Gaskill (1882) LR 20 Ch D 519 at 527 per Jessel MR, applied in Taylor v Santos Ltd [2000] SASC 305 and Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd (No 2) [2008] WASC 204).” The interrogatories [15] It is convenient first to set out the interrogatories to which answers have been given. 2Q. In relation to the performance of the procedure on 18 December 2014: (a) Was the principal surgeon Dr Lim and if not, who was it? (b) Was the principal surgeon: (i) A specialist surgeon?; or (ii) A registrar and if the latter, specify the number of years he had been a surgical registrar. 2A.    (a) Yes. (b) A Senior Registrar with FRACS in her first year post fellowship. … 5Q. Set out in detail exactly what steps were taken by the principal surgeon in the performance of the procedure including (but not limited to): … (e) Did the surgeon transect the common hepatic duct? 5A. (e) Yes. … 11Q. Was Dr Kourtesis present at any period(s) during the procedure and if so: (a) Specify the stages at which he was present and; (b) Set out in detail what parts of the procedure he performed. 11A. No. … 14Q. Did Dr Ooi attend the procedure and if so: (a) At what stage in the procedure did he attend; (b) What actions, if any, did he take as part of the procedure? 14A. No. 730 [12.480]

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Ahmad v South Western Sydney Local Health District cont. [16] Dr Lim was the doctor who carried out the surgery. Dr Kourtesis was the consultant surgeon under whose care the plaintiff was admitted to the hospital. Dr Ooi was the doctor to whom Dr Lim spoke during the operation before it was converted to an open cholecystectomy via a right upper quadrant incision. [17] One other matter should be mentioned before proceeding to discuss the disputed interrogatories. As I have noted, the statement of claim asserted, and the defence agreed, that the common bile duct had been transected. However, both Professor Cox and Professor Richardson [expert witnesses] refer at various places in their reports to the common hepatic duct being transected. Similarly, the particulars assert that the common hepatic duct was transected. The assertion in the statement of claim derived from Professor Merrett’s notes of the operation he carried out on 19 December 2014 involving the construction of a Roux-​en-​Y loop and the hepatico-​jejunostomy. [18] Mr Butcher of counsel explained the anatomy to me in this way: What happens is that the left and right hepatic ducts bring biliary fluid from the lobes of the liver. They come down and join and they are called the common hepatic duct. Then the common hepatic duct joins the cystic duct which is the duct that brings the biliary fluid, the bile from the gallbladder. When the cystic duct and the common hepatic duct merge they become the common bile duct. There is no doubt that anatomically it is different to the common hepatic duct … [19] Although Mr Butcher said that the parties would need to sort out what were perhaps semantic differences (but maybe not, given the anatomy) between the doctors the matter did not directly affect the interrogatories. However, it resulted in amendments to questions 5(e), 6, 7 and 8. Further, question 5(e) asked if the surgeon transected the common hepatic duct, and the defendant agreed that she did. The disputed interrogatories [20] It should first be said that I consider that special reasons exist for the administering of interrogatories generally in this case. The matters referred to in sub-​paragraphs [51] (a), (c) and (d) of Ahmed El Hayek all have relevance in the present case. I have also had regard, in reaching the views set out below, to what Hall J said in Keating v South East Sydney Illawarra Area Health Service (Supreme Court (NSW), Hall J, 7 July 2006, unrep) at [13] to [18] concerning the importance of having information at an early stage, especially in medical negligence cases, to ensure a level playing field and for minimising costs. [21] Where I have concluded that an interrogatory should be answered, I have done so bearing in mind what Schmidt J said in Edwards regarding the interrogatory being necessary. [22] I will now deal with each of the disputed interrogatories in turn, using the amended form put forward at the hearing of the motion. 1Q. Prior to obtaining the Plaintiff’s consent to the performance of a laparoscopic cholecystectomy on 18 December 2014, was anything said by the Defendant by way of advice to the Plaintiff concerning the proposal to perform surgery and if so, for each occasion such advise was given: (a) Specify who, on behalf of the Defendant, provided the said advice; (b) When was the advice given? 1A. The Defendant objects to answering the interrogatory. What was said by the Defendant to the Plaintiff was/​would be within the knowledge of the Plaintiff. [23] In my opinion, the objection taken is not a proper one. A party may only object to answering an interrogatory on one of the three grounds set out in r 22.2. Further, in In the matter of Gerard Cassegrain & Co Pty Ltd –​Cassegrain v Gerard Cassegrain & Co Pty Ltd [2011] NSWSC 241, Ward J (as her Honour then was) said: [34] Relevantly, for the purpose of considering some of the objections made the present application (sic), whether the interrogating party can prove the matter in question by [12.480]  731

Civil Procedure in New South Wales

Ahmad v South Western Sydney Local Health District cont. some other means has been said not to be a ground for refusing the interrogatory (Lyell v Kennedy (1883) 8 App Cas 217 at 228; James v Davies(1883) 9 VLR (L) 140). In Lyell, in the House of Lords, the Lord Chancellor at 228 said: It is no sufficient objection that the plaintiff may have, and to some extent (on his own shewing) has, other means of proving the facts inquired after. Admissions of facts by the defendant might simplify the proof and materially diminish the expense of trial. [35] Mr Ashhurst submits that there would seem to be no authority to support the proposition that an interrogatory is not necessary either because the party who is being interrogated intends to give evidence or alternatively that there are other witnesses than the interrogated party who could give evidence regarding the fact in issue. I have similarly been unable to find any. Indeed, the opposite seems to be the case. In James v Davies, where the interrogatories sought to be administered related to an action for seduction and the objection was that the court would not exercise its discretion to allow interrogatories in favour of a party who already has the information (especially when the answers might affect the moral character of the other party), Williams J (with whom Holroyd J and Stawell CJ concurred) said: The principal objection raised is that the plaintiff has already the knowledge or means of knowledge of which he seeks. That was a good objection at one time, but it is no longer so. Though the plaintiff may have that information, he may wish to have it corroborated; and he cannot have that better than out of the defendant’s own mouth; it might relieve him from the necessity of calling several witnesses (my emphasis) [24] It is also clear that particulars (a), (b) and (c) allege a failure to provide appropriate advice prior to the operation. The defendant, in its written submissions, says that it is oppressive to answer that question because of the width of the enquiries that would need to be made, and difficulties with recollecting events that occurred so long ago. However, the proceedings were brought within time, and the need for the question arises by virtue of the absence of adequate notes made at the time, as the experts have observed. [25] In my opinion, this question should be answered. 3Q. As at the date of the performance of the procedure, set out in detail the training which by then had been received by the principal surgeon in the performance of: (a) Laparoscopic cholecystectomy; (b) Open cholecystectomy; (c) Open cholecystectomy using the fundus down approach; (d) Cholecystectomy of an intrahepatic gallbladder. 3A. The Defendant objects to answering the interrogatory. The training of the principal surgeon is not put in issue by the particulars of negligence and is irrelevant to any fact/​matter in issue. 4Q. As at the date of the performance of the procedure, set out the approximate number of occasions the principal surgeon had performed, as a principal surgeon, if any: (a) Laparoscopic cholecystectomy; (b) Open cholecystectomy; (c) Open cholecystectomy using the fundus down approach; (d) Cholecystectomy of an intrahepatic gallbladder. 4A. The Defendant objects to answering the interrogatory. The number of operative procedures/​ cholecystectomies carried out by the principal surgeon is not relevant to any of the pleaded particulars of negligence and is irrelevant to any fact/​matter in issue. [26] In his report of 23 May 2016 Professor Richardson said (at p.10): Often the more junior staff have little experience in performing open cholecystectomies. He also said (at p.13): The procedure was performed by Dr Lim. I do not know what seniority or level of experience Dr Lim had. It does not appear that he (sic) was a consultant surgeon as advice 732 [12.480]

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Ahmad v South Western Sydney Local Health District cont. was sought from Dr Ooi who is a consultant surgeon, intraoperatively. … I would have a number of criticisms of the conduct of the operative procedure: (a) Lack of involvement of a more experienced surgeon. … I do not know what experience Dr Lim had in performing an open cholecystectomy for acute cholecystitis. Bankstown Hospital is a large teaching hospital with experienced sub-​speciality surgeons in hepato-​biliary surgery who could have been called on for assistance. … In my opinion it is indefensible that a more experienced surgeon was not called to be involved when the decision to convert to an open procedure was made. An open cholecystectomy for acute cholecystitis is a difficult and uncommon procedure and there is a significant risk of injury to the bile duct. [27] Those comments of Professor Richardson make highly relevant the experience of Dr Lim in carrying out the procedures identified in the interrogatories. Simply knowing, as interrogatory 2A(b) discloses, that Dr Lim was a Senior Registrar with FRACS in her first year post fellowship does not give the sort of information that Professor Richardson clearly needs to provide an opinion about whether it was appropriate for Dr Lim to continue with this operation in the absence of either a more experienced surgeon, or a sub-​speciality surgeon, being present. When there is no dispute that Dr Lim transected the common bile duct, the answers to these interrogatories are necessary and should be provided. 5Q. Set out in detail exactly what steps were taken by the principal surgeon in the performance of the procedure including (but not limited to): (a) What dissection plane(s) were used (by reference to the gallbladder and/​or liver) (and if the dissection plane varied, include this in your answer); (b)  What steps were taken to identify the cystic duct; (c)  What steps were taken to identify the cystic artery; (d)  What steps were taken to identify the common hepatic duct; (e)  What steps were taken to identify the common bile duct? 5A. (a)-​(d) The Defendant objects to answer the interrogatory. The steps taken by the principal surgeon in the performance of the procedure do not relate to any matter in issue, is vexatious or oppressive and is unnecessary. (I will assume that the defendant would equally object to answering 5A(e).) [28] In his report dated 23 May 2016 Professor Richardson said (at p.13): There are a number of well described techniques to avoid damage to the bile duct during cholecystectomy. Firstly, at the time of laparoscopic cholecystectomy it is important to achieve what is called a critical view of safety. This is where all of the tissue is dissected in the cholecystohepatic triangle so that there are two and only two structures entering the gallbladder-​these are the cystic duct and cystic artery. If the procedure is converted to an open procedure this requirement should still be met. There is no evidence in the operation report that this was done. Additionally, at the time of open cholecystectomy it is mandatory to delineate the junction of the cystic duct with the common hepatic duct. There is no evidence from the medical record that this was done. There is no evidence in the medical record that Rouviere’s sulcus was identified –​this may be particularly useful to prevent bile duct injury in the difficult cholecystectomy. Because of these failures Dr Lim mistook the common bile duct for the cystic duct and divided the common hepatic duct thinking it was the cystic duct. The most common reason for damage to the bile duct is that the surgeon does not check the anatomy appropriately and the common bile duct/​common hepatic duct is mistaken for the cystic duct. [29] It is difficult to accept the defendant’s objections. The significant matters in the extract above are the lack of evidence from the operation report about what was done. That is a critical matter [12.480]  733

Civil Procedure in New South Wales

Ahmad v South Western Sydney Local Health District cont. for determining whether or not the duct was transected with or without negligence. The expert report makes those matters relevant. Since there is a defence pleaded in reliance on s 5O of the Civil Liability Act 2002 (NSW), I must assume the defendant will lead evidence. The way the operation was performed will have to be disclosed. It is hard to see, in those circumstances, how it is oppressive to do it now. [30] This interrogatory should be answered.



IMPLIED UNDERTAKING [12.490] Any entitlement by a party to inspect documents produced after discovery or

subponea, or obtain answers to interrogatories, has an implied undertaking that the party will not use the documents for any other purpose other than for the conduct of the proceedings. Once a document is admitted as evidence in a proceeding, then subject to any other order that the court may make (eg, a non-​publication order) the information is public and the party is released from the implied undertaking. The obligation is discussed in Hearne v Street (2008) 235 CLR 125 extracted at [12.500]. Note that a party can seek leave of the court to be released from the implied undertaking: see Premier Travel v Satellite Centres of Australia [2004] NSWSC 864 extracted at [12.510].

Hearne v Street [12.500]  Hearne v Street (2008) 235 CLR 125 HAYNE, HEYDON AND CRENNAN JJ The extent of the “implied undertaking” … [96] Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise [Bourns Inc v Raychem Corp [1999] 1 All ER 908 at 916 [19]; affd [1999] 3 All ER 154 at 169-​170], to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence. The types of material disclosed to which this principle applies include documents inspected after discovery [Riddick v Thames Board Mills Ltd [1977] QB 881; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32-​33; [1995] HCA 19], answers to interrogatories [Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509 at 510-​511; Ainsworth v Hanrahan (1991) 25 NSWLR 155], documents produced on subpoena [Eltran Pty Ltd v Westpac Banking Corporation (1990) 25 FCR 322], documents produced for the purposes of taxation of costs [Bourns Inc v Raychem Corp [1999] 3 All ER 154 at 169-​170], documents produced pursuant to a direction from an arbitrator [Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 33, 39, 46-​47 and 48], documents seized pursuant to an Anton Piller order [Cobra Golf Inc v Rata [1996] FSR 819], witness statements served pursuant to a judicial direction [Central Queensland Cement Pty Ltd v Hardy [1989] 2 Qd R 509; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217 at 223; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229] and affidavits [Medway v Doublelock Ltd [1978] 1 WLR 710; [1978] 1 All ER 1261; Re Addstone Pty Ltd (in liq); Ex parte Macks (1998) 30 ACSR 156]. … [97] It is common to speak of the relevant obligation as flowing from an “implied undertaking” [Eg, Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 304, 309, 319, 320 and 321; Crest Homes Plc v Marks [1987] AC 829 at 853]. 734 [12.490]

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Hearne v Street cont. [98] It may be noted that the general law protection is often buttressed by protection from rules of court. Thus until 15 August 2005, the New South Wales Supreme Court Rules 1970, Pt 65 r 7, prevented strangers to litigation from having access to documents or things on the court file without the leave of the Court: see also Practice Note No 97 [(1998) 43 NSWLR 1]. From 1 March 2006, Practice Note SC Gen 2 prescribed procedures in relation to access to Supreme Court files. The most important paragraphs are: 6.

Access to material in any proceedings is restricted to parties, except with the leave of the Court.

7.

Access will normally be granted to non-​parties in respect of:





pleadings and judgments in proceedings that have been concluded, except in so far as an order has been made that they or portions of them be kept confidential;





documents that record what was said or done in open court;





material that was admitted into evidence; and





information that would have been heard or seen by any person present in open court, unless the Judge or registrar dealing with the application considers that the material or portions of it should be kept confidential. Access to other material will not be allowed unless a registrar or Judge is satisfied that exceptional circumstances exist.

… “Implied undertaking” is an obligation of substantive law [105] Originally the restriction on the use of documents generated by litigious processes depended on an express undertaking [Richardson v Hastings (1844) 7 Beav 354 [49 ER 1102]; Hopkinson v Lord Burghley (1867) LR 2 Ch App 447]. Then in Williams v The Prince of Wales Life, &c, Co [(1857) 23 Beav 338 at 340 [53 ER 133]], Sir John Romilly MR, while requiring an express undertaking, put the matter in terms of legal rights: “[I]‌t is not the right of a Plaintiff, who has obtained access to the Defendants’ papers, to make them public.” The following year the protection was not said to rest on an express undertaking, but on a “rule” that “where documents have been produced in obedience to an order of this Court, the Court has a right to say to the person who has obtained their production: ‘Those documents shall never be used by you except under the authority of the Court’ ” [Reynolds v Godlee (1858) 4 K & J 88 at 92 [70 ER 37 at 39] per Sir William Page Wood V-​C]. In Alterskye v Scott [[1948] 1 All ER 469 at 470-​471. Cf the reading given to the case in Distillers Co (Biochemicals) Ltd v Times Newspapers Ltd [1975] QB 613 at 618; Riddick v Thames Board Mills Ltd [1977] QB 881 at 896; Ainsworth v Hanrahan (1991) 25 NSWLR 155 at 163], although Jenkins J referred to a concession by counsel that his client obtained discovery on an “implied undertaking”, in the operative part of his reasoning he did not analyse the matter in terms of “undertaking”, either express or implied, but in terms of an “implied obligation not to make an improper use of the documents.” And other judges have preferred to the language of “implied undertaking” the words “implied obligation” [Riddick v Thames Board Mills Ltd [1977] QB 881 at 901 per Stephenson LJ; Home Office v Harman [1981] QB 534 at 541 and 545 per Park J and 563-​564 per Dunn LJ] or “obligation” [Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 312 per Lords Simon of Glaisdale and Scarman; State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224 at 229 per King CJ; Akins v Abigroup Ltd (1998) 43 NSWLR 539 at 548 per Mason P] or “duty” [Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 302 per Lord Diplock and 314 per Lords Simon of Glaisdale and Scarman]. Another formula is that the party obtaining discovery is “taken to undertake to the court that the documents obtained on discovery will not be used for any purpose other than the action in which they are produced” [Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 38 per Hayne JA (emphasis added)]. In Harman v Secretary of State for the Home Department [[1983] 1 AC 280 at 313] Lords Simon of Glaisdale and Scarman, who accepted the general rule of limited use but disagreed with the majority about applying it to documents read in open court, said: Imposed by law the obligation is formulated as arising from an undertaking exacted by the court from the party and his solicitor to whom the documents are disclosed. It is the condition upon which discovery is ordered. (emphasis added) [12.500]  735

Civil Procedure in New South Wales

Hearne v Street cont. Lord Denning MR in Riddick v Thames Board Mills Ltd [[1977] QB 881 at 896] said: A party who seeks discovery of documents gets it on condition that he will make use of them only for the purpose of that action, and no other purpose. (emphasis added) [106] The fact that the role of the word “undertaking” is merely to indicate the way in which an “obligation” which is “imposed by law” as a “condition” of discovery binds the disclosee highlights the substantive nature of the obligation. There is nothing voluntary about the “undertaking”. The implied undertaking not to make collateral use of documents disclosed on discovery arises automatically as an incident of the discovery process. It is in no sense implied as a result of dealings between the parties. The discloser may well not have thought of the implications of giving discovery and the disclosee may well not have turned his mind to the matter of what use he can make of the documents outside the action. Had he thought of it, he might well have wanted full freedom to do what he liked with the material, particularly if his own discovery is non-​existent or very limited. So the obligation is not to be likened to a term implied in a contract between the parties to the litigation. On the contrary, it is an obligation to the court, not the other party, which is implied. It is for that reason that its breach is treated as contempt. The obligation is imposed as a matter of law. [Bourns Inc v Raychem Corp [1999] 1 All ER 908 at 915 [16] per Laddie J.] [107] The expression “implied undertaking” is thus merely a formula through which the law ensures that there is not placed upon litigants, who in giving discovery are suffering “a very serious invasion of the privacy and confidentiality of [their] affairs”, any burden which is “harsher or more oppressive … than is strictly required for the purpose of securing that justice is done.” [Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 308.] To that statement by Lord Keith of Kinkel of the purpose of the “implied undertaking” may be added others. In Riddick v Thames Board Mills Ltd [[1977] QB 881 at 896] Lord Denning MR said: Compulsion [to disclose on discovery] is an invasion of a private right to keep one’s documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party –​or anyone else –​to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice. In Harman v Secretary of State for the Home Department [[1983] 1 AC 280 at 300] Lord Diplock said: The use of discovery involves an inroad, in the interests of achieving justice, upon the right of the individual to keep his own documents to himself; it is an inroad that calls for safeguards against abuse, and these the English legal system provides … through its rules about abuse of process and contempt of court. In Watkins v A J Wright (Electrical) Ltd [[1996] 3 All ER 31 at 42] Blackburne J said: In my judgment, a serious inroad into [the safeguards referred to by Lord Diplock] and, therefore, into the utility of the discovery process in the just disposal of civil litigation would occur if it were open to a litigant (or his solicitor) to enjoy the fruits of discovery provided by the other side, but avoid the risk of committal for contempt for acting in breach of the countervailing implied obligation on the ground that he was unaware of the existence of the undertaking. I take the view that it does not lie in the mouth of a person to plead ignorance of the legal consequences of the discovery process. To speak in terms of “undertaking” serves: a useful purpose in that it confirms that the obligation is one which is owed to the court for the benefit of the parties, not one which is owed simply to the parties; likewise, it is an obligation which the court has the right to control and can modify or release a party from. 736 [12.500]

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Hearne v Street cont. It is an obligation which arises from legal process and therefore is within the control of the court, gives rise to direct sanctions which the court may impose (viz contempt of court) and can be relieved or modified by an order of the court. [Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 764-​765 per Hobhouse J; [1991] 3 All ER 878 at 885]. Staughton LJ said: “[A]‌lthough described as an implied undertaking it is a rule which neither party can unilaterally disclaim.” [Mahon v Rahn [1998] QB 424 at 453.] The importance with which the courts have viewed the obligation under discussion is indicated by the fact that although it can be released or modified by the court, that dispensing power is not freely exercised, and will only be exercised where special circumstances appear [Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 37]. Circumstances under which that relaxation would be allowed without the consent of the serving party are hard to visualise, particularly where there was any risk that the statement might be used directly or indirectly to the prejudice of the serving party. [Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 775 per Hobhouse J; [1991] 3 All ER 878 at 895.] [108] Hence Hobhouse J [Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 764; [1991] 3 All ER 878 at 885, approved in Mahon v Rahn [1998] QB 424 at 454 per Staughton LJ] was correct to conclude: The expression of the obligation as an implied undertaking given to the court derives from the historical origin of the principle. It is now in reality a legal obligation which arises by operation of law by virtue of the circumstances under which the relevant person obtained the documents or information. Third party obligations [109] The primary person bound by the relevant obligation is the litigant who receives documents or information from the other side pursuant to litigious processes. The implied undertaking also binds others to whom documents and information are given. For example, expert witnesses, who are not parties, commonly receive such documents and information and are bound by the obligation. It is likely that, in the future, documents and information will be provided to persons funding litigation, who will likewise be bound by the obligation. In Harman v Secretary of State for the Home Department the person in contempt was the party’s solicitor [[1983] 1 AC 280 at 300]. In Hamersley Iron Pty Ltd v Lovell [(1998) 19 WAR 316] it was the party’s industrial advocate. In Watkins v A J Wright (Electrical) Ltd [[1996] 3 All ER 31 at 43] it was a person who was not qualified as a solicitor in the forum, but engaged in day-​to-​day conduct of the litigation. Laddie J thought “it would be just as much a contempt of court for, say, a shorthand writer or court usher to disclose discovery documents outside the action as it would be for one of the parties to do so.” [Bourns Inc v Raychem Corp [1999] 1 All ER 908 at 916 [18].] In both England and Australia, these instances have been broadened into a wider and coherent principle. Thus Hobhouse J said: “[A]‌ny person who knowingly … does acts which are inconsistent with the undertaking is himself in contempt and liable to sanctions” [Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 at 765; [1991] 3 All ER 878 at 886]. In Watkins v A J Wright (Electrical) Ltd [[1996] 3 All ER 31 at 41] Blackburne J said: I cannot accept the submission that ignorance of the implied undertaking provides a person with a defence to proceedings for contempt arising out of his breach of the implied undertaking. As is well known, the implied undertaking arises by implication of law on the giving of discovery in the course of a civil action where discovery is required to be given. He also rejected a submission that third parties could not be bound by the obligations created by the “implied undertaking”. He said [[1996] 3 All ER 31 at 43]: “I see no basis for confining the scope of the undertaking to those who are parties to the action, to whom discovery has been given, and to the solicitor or solicitors on the record.” As noted above, he held that a person engaged in day-​to-​day conduct of litigation on behalf of a litigant was bound –​an expression not irrelevant to Messrs Hearne [12.500]  737

Civil Procedure in New South Wales

Hearne v Street cont. and Tierney, who were certainly engaged in day-​to-​day conduct of a struggle which included but was wider than litigation, and included an attempt to nullify the litigation by legislative means. [110] Turning to Australian authorities, in Esso Australia Resources Ltd v Plowman [(1995) 183 CLR 10 at 33], Mason CJ (with whom Dawson and McHugh JJ agreed) said: It would be inequitable if a party were compelled by court process to produce private documents for the purposes of the litigation yet be exposed to publication of them for other purposes. No doubt the implied obligation must yield to inconsistent statutory provisions and to the requirements of curial process in other litigation, eg discovery and inspection, but that circumstance is not a reason for denying the existence of the implied obligation. In Hamersley Iron Pty Ltd v Lovell [(1998) 19 WAR 316 at 334-​335] Anderson J (Pidgeon and Ipp JJ concurring) said: “The implied undertaking is binding upon anyone into whose hands the discovered documents come, if he knows that they were obtained by way of discovery”. And Ryan J said in Spalla v St George Motor Finance Ltd [(2004) 209 ALR 703 at 717 [40]]: “To be effective, the undertaking must bind the litigant by whom it is given and his or her privies.” [111] If this principle did not exist, the “implied undertaking” or obligation on the litigant would be of little value because it could be evaded easily. That is why Lord Denning MR said in Riddick v Thames Board Mills Ltd [[1977] QB 881 at 896]: “The courts should … not allow the other party –​or anyone else –​to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice.” [Does the failure of Lord Denning MR to refer to notice indicate that it is not necessary? In the present case the question does not matter. There was notice, and the residents did not contend that there could be liability without notice: indeed they submitted that knowledge that the documents were obtained by compulsory court process was necessary.]. And in the same case [[1977] QB 881 at 902] Stephenson LJ also said: “[I]‌t is important to the public and in the public interest that the protection should be enforced against anybody who makes improper use of it.” Use with knowledge of the circumstances would be improper use. [112] There is no support in the authorities for the idea that knowledge of anything more than the origins of the material in legal proceedings need be established. In particular, there is no support for the idea that knowledge of the “implied undertaking” and its consequences should be proved, for that would be to require proof of knowledge of the law, and generally ignorance of the law does not prevent liability arising.



Premier Travel v Satellite Centres of Australia [12.510]  Premier Travel v Satellite Centres of Australia [2004] NSWSC 864 CAMPBELL J [1]‌This is the hearing of a notice of motion which is brought by the plaintiffs. They seek leave to use certain documents which were produced to the Court on 5 and 8 March 2004 by Messrs Yandells solicitors in proceedings which they propose to commence in the Common Law division of the Court, against that firm. The evidence shows that the firm has been notified of the intention of the plaintiffs to seek this leave of the Court, and that that firm has consented to the order being made. In those circumstances I shall make it. [2]‌The second order which is sought is an order that the plaintiffs have leave to use certain documents which were produced to the Court by a total of 21 different parties in the preparation of their respective books of accounts and financial statements and for their taxation returns and affairs. The principle that is applied when the Court decides whether or not to release or to permit documents which have been produced to the Court on subpoena, and have not been read out in open Court, is 738 [12.510]

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Premier Travel v Satellite Centres of Australia cont. that the release of the documents will not be allowed save in special circumstances and when such use will not occasion any injustice to the person who produced the documents under subpoena. Deciding whether special circumstances have been made out involves a balancing exercise which takes into account the particular nature of the material produced, the policy underlying the implied undertaking as to using the documents for the purpose of the proceedings in which they were produced, and any other relevant factors, and asks whether the needs of justice are better served by relieving from or maintaining the undertaking; see Wellness Pty Ltd v Hamilton-​Bond & Ors [2002] NSWSC 1259 at paragraph [8]; Springfield Nominees Pty Ltd v Bridgelands Securities Limited (1992) 38 FCR 217 at 225. [3]‌The evidence shows that all of the documents which are sought are ones which relate to the financial affairs of companies in which a Mr Cox had been involved. Mr Cox has unfortunately begun to suffer from an Alzheimer like disease, the consequence of which is his recollection of the transactions in which his companies have engaged are unreliable. The companies were ones which involved joint ventures between interests associated with Mr Cox, and interests of other people. Attempts have been made to sort out the accounts of those joint venture companies, but Mr Eggleston, the accountant who has been seeking to carry out that task, has been unable to complete it. He finds that there are payments, of millions of dollars to interests associated with a Mr Bourke, or people connected with Mr Bourke, and also to a company known as Satellite, which is one of the joint venture vehicles, which he cannot adequately account for. [4]‌Mr Eggleston has become a director of Satellite, and hence has come under the statutory obligation to maintain the books and records of that company. For that purpose, and also for the purpose of making more accurate the books of account of the various plaintiff companies, he seeks to use the documents which have been produced on subpoena by those 21 entities. [5]‌The documents which have been produced on subpoena by those two entities are all documents in the nature of ordinary accounting records. They are the type of documents which can provide the other side to a transaction in which one of the plaintiff companies had been involved. [6]‌All of the recipients of the subpoenas have been written to. Some of them have consented to the documents being used for the purpose for which it is sought to use them. Two of them have complained that they have not been paid for their efforts in seeking the documents out, and say that they do not consent until they are paid. The significant power which a solicitor has to require, by an order which the Court will issue as of course, a party to go to time and trouble in searching out documents is one which is entrusted to solicitors on the basis that they are meticulous in performing the obligation which the Court Rules impose on the issuer of a subpoena to pay the reasonable costs and expenses of someone served with a subpoena in searching out the documents. In the present case, the solicitors who have issued the subpoenas undertake to the Court that they will pay the proper expenses of the issue of those from whom the subpoenas were issued and who have complained about not being paid. [7]‌There are some recipients of subpoenas who have not responded to the request for consent at all. There are others where the person who has responded has said in effect, “It is not my position to consent, I need to seek someone else’s permission before I can consent”, and then nothing more has been heard. [8]‌The nature of the documents, and the nature of the use to which is sought to make them, is such that in my view it is appropriate to grant the orders which are sought. [9]‌I make orders 1 and 2 in the notice of motion dated 3 August 2004. I will return the affidavits. I stand the matter over before the Registrar on Monday 20 September 2004 for directions.



[12.510]  739

CHAPTER 13

Preparing and Presenting Evidence [13.10] INTRODUCTION......................................................................................................... 742 [13.20] WITNESS PREPARATION............................................................................................... 742 [13.30] Uniform Civil Procedure Rules 2005 (NSW) rr 31.1, 31.2........................... 742 [13.40] Ethical and Effective Witness Preparation................................................ 743 [13.50] AFFIDAVITS................................................................................................................. 750 [13.60] Legal requirements for affidavits.................................................................. 751 [13.100] Uniform Civil Procedure Rules 2005 (NSW) rr 31.4, 35.3–​35.7B................. 751 [13.110] Oaths Act 1900 (NSW) ss 26, 26B, 27, 27A, 32, 34................................ 754 [13.120] Oaths Regulation 2011 (NSW) regs 3–​7, Sch 1....................................... 757 [13.130] Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) ss 3, 19B....... 759 [13.140] Fastlink Calling v Macquarie Telecom.................................................... 760 [13.150] Practical Litigation in the Federal Court of Australia: Affidavits.................... 766 [13.160] Drafting affidavits........................................................................................ 766 [13.170] How to Draft an Affidavit................................................................... 767 [13.180] Ying v Song..................................................................................... 768 [13.190] False swearing............................................................................................. 770 [13.190] Oaths Act 1900 (NSW) ss 29–​31, 33.................................................... 770 [13.200] Revised Professional Conduct and Practice Rules 1995.............................. 771 [13.210] Practical Litigation in the Federal Court of Australia: Affidavits.................... 772 [13.220] DPP v Marijancevic........................................................................... 772 [13.230] Written or oral evidence.............................................................................. 778 [13.230] Practical Litigation in the Federal Court of Australia: Affidavits.................... 778 [13.240] Oral or Written Evidence..................................................................... 778 [13.250] EXPERT EVIDENCE....................................................................................................... 779 [13.260] Overview of the Evidence Act............................................................... 779 [13.270] Dasreef v Hawchar............................................................................ 779 [13.280] Admissibility of Expert Evidence............................................................ 780 [13.300] Case management of expert evidence......................................................... 782 [13.300] Concurrent Expert Evidence................................................................. 782 [13.310] Uniform Civil Procedure Rules 2005 (NSW) rr 31.19, 31.20....................... 784 [13.320] Practice Note SC Eq 5........................................................................ 785 [13.340] Harris v Bellemore............................................................................. 786 [13.350] Conduct of experts..................................................................................... 787 [13.360] Expert Witnesses............................................................................... 787 [13.370] Uniform Civil Procedure Rules 2005 (NSW) rr 31.22, 31.23, 31.27, Sch 7....... 789 [13.380] Investmentsource v Knox Street Apartments............................................ 792 [13.390] Disclosure of expert reports......................................................................... 795 [13.390] Uniform Civil Procedure Rules 2005 (NSW) rr 31.28–​31.30, 31.36.............. 795 [13.400] Salzke v Khoury................................................................................ 797 [13.410] Joint expert................................................................................................. 807 [13.420] Uniform Civil Procedure Rules 2005 (NSW) rr 31.37–​31.45....................... 807 [13.430] Practice Note SC Gen 10.................................................................... 809 [13.460] Single Experts.................................................................................. 811 [13.480] Da Hui Wu v Statewide Developments................................................... 811 [13.500] Court-​appointed expert.............................................................................. 813 [13.510] Uniform Civil Procedure Rules 2005 (NSW) rr 31.46–​31.54....................... 814 [13.520] Joint conferences of expert witnesses prior to trial....................................... 815 [13.530] Uniform Civil Procedure Rules 2005 (NSW) rr 31.24–​31.26....................... 815 [13.540] Practice Note SC Gen 11.................................................................... 816 [13.560] Tabet v Mansour.............................................................................. 819 [13.570] Gillett v Robinson............................................................................. 820  

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Civil Procedure in New South Wales

[13.580] Concurrent expert evidence........................................................................ 826 [13.590] Concurrent Expert Evidence................................................................. 826 [13.610] Concurrent Expert Evidence................................................................. 828 [13.620] NOTICE TO ADMIT..................................................................................................... 828 [13.630] Uniform Civil Procedure Rules 2005 (NSW) rr 17.1–​17.4........................... 828 [13.650] Uniform Civil Procedure Rules 2005 (NSW) r 42.8.................................... 829 [13.670] MEDICAL EXAMINATIONS.......................................................................................... 830 [13.680] Uniform Civil Procedure Rules 2005 (NSW) rr 23.1–​23.5........................... 830 [13.690] Rowlands v NSW.............................................................................. 831 [13.700] INSPECTION AND TESTING OF PROPERTY.................................................................. 832 [13.700] Uniform Civil Procedure Rules 2005 (NSW) r 23.8.................................... 832 [13.710] Cadence Australia v Chew.................................................................. 832

INTRODUCTION [13.10]  Chapter  12 discussed one important source of evidence for proving or disproving

claims, namely discovery of documents. This chapter looks at another important source, lay and expert witnesses. As a result, the chapter discusses witness preparation and affidavits. It also examines how courts may manage expert evidence through taking the evidence concurrently, requiring opposing experts to consult and identify points of agreement/​disagreement, use of a joint expert witness, court-​appointed experts and otherwise limiting or managing the way in which experts may give evidence. This chapter also examines the requirements for notices to admit, medical examinations, and inspection and testing of property which are other methods for obtaining evidence.

WITNESS PREPARATION [13.20] Rules  31.1 and 31.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)

set out when evidence at trial is to be given orally or by affidavit or witness statement. The witness may need to be prepared to give their evidence in writing or orally or, as r 35.2 allows for the cross-​examination of the person who made an affidavit, for both.

Uniform Civil Procedure Rules 2005 (NSW) [13.30]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.1, 31.2 31.1 Manner of giving evidence at trial (1)

This rule applies to a trial of proceedings commenced by statement of claim, or in which a statement of claim has been filed.

(2)

Subject to subrules (3), (4) and (5) and to the provisions of the Evidence Act 1995, a witness’s evidence at a trial must be given orally before the court.

(3)

The court may order that all or any of a witness’s evidence at a trial must be given by affidavit or, subject to rule 31.4, by witness statement.

(4)

Unless the court orders otherwise, evidence of facts must be given by affidavit if the only matters in question are:



(a)

interest up to judgment in respect of a debt or liquidated claim, or



(b)

the assessment of damages or the value of goods under Part 30, or



(c) costs.

742 [13.10]

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont. (5)

Unless the court otherwise orders, at any trial on an assessment of the amount to be recovered by a plaintiff after default judgment has been given, the following evidence may be given by affidavit:



(a)

evidence of the identity of any motor vehicle,



(b)

evidence of the damage sustained by a motor vehicle in a particular collision,



(c)

evidence of the reasonable cost of repairing that damage.

31.2 Evidence of witnesses at other hearings Subject to rule 31.1, evidence in chief of any witness at any hearing must be given by affidavit unless the court orders otherwise.



Ethical and Effective Witness Preparation [13.40]  Michael Legg, Ethical and Effective Witness Preparation, CLE Presentation1 1. Truth. “Liars when they speak the truth are not believed” –​Aristotle. Telling the truth is the beginning and end of witness preparation. Witnesses need to understand that lawyers can explain bad facts or put the focus on positive facts, but it is impossible to resuscitate a witness caught in a lie. When a witness is found to be deceptive the trier of fact will discount or even disregard their evidence. The High Court in Edwards v R (1993) 178 CLR 193 accepted that the telling of a lie will affect the credit of the witness who tells it. The effect of a lying witness upon the trier of fact may be illustrated by Li v The Herald and Weekly Times [2007] VSC 109, a case in which the media reported that Ms Li was using her herbal medicine practice to provide sexual services to clients who then sought reimbursement from Medicare, resulting in Ms Li commencing proceedings for defamation, where the judge observed: [238] Making all due allowances for Ms Li, she is one of those witnesses who falls into the category of a witness who should not be believed unless the evidence concerns non-​ contentious matters, is corroborated by some other credible evidence or is admitted by the defendants. I am satisfied that the affirmation she made meant nothing to her. … On three occasions, it was necessary for the Court to remind her that she had made an affirmation to tell the truth and that if she did not tell the truth, she could be prosecuted for perjury. She was warned on the third day of evidence early in her cross-​examination, once in the following day, and also on the fifth day. The Court warned her because, in my opinion, she was making up the evidence as she was speaking. It was very apparent to the Court that she was lying in respect to the particular matters which were the subject of cross-​examination. In addition, she was cross-​examined about an affidavit which she swore on 17 October 2006. The trial of the proceeding commenced in February last year and was aborted. She was ordered to pay costs. Application was made later that year by the defendants to stay the proceeding until the costs were paid. She swore an affidavit on 17 October 2006. The thrust of her response to the application was that she was not in a position to pay the costs and it would be unjust if she was not permitted to continue the proceeding. Her affidavit failed to reveal that she owned a piece of real estate. She deposed to the fact that she did own one property, which was in the name of Abbie Li, but failed to disclose an East Melbourne property in the name of Cui Li, which is her Chinese name. She was asked about this omission

1

An earlier version of this paper may be found at Legg M, “Preparing Witnesses Effectively and Ethically” (2003) 41(11) Law Society Journal 60. [13.40]  743

Civil Procedure in New South Wales

Ethical and Effective Witness Preparation cont. and her evidence was far from satisfactory. The Court again had to remind her that when she swore an affidavit, she was bound to tell the truth. Again, she appeared to the Court to have some difficulty with this concept. In my view, the omission in that affidavit reflects upon her credibility. The judge at [246] further opined more generally that “[w]‌hen an affidavit or a statutory declaration is prepared, the focus of the document is on a particular subject. If the document omitted a matter of substantial importance which was the subject of evidence given much later, then a doubt would be raised with respect to the honesty and accuracy of the witness”. Make telling the truth in the [witness’s] own self-​interest –​you lie you lose. 2. Question and Test the [Witness’s] Evidence. “The pure and simple truth is rarely pure and never simple” –​Oscar Wilde The core reason for witness preparation is to deal with the legal and evidentiary issues in the case. However, while witness preparation is a necessity as it is a key ingredient to effective representation, it may also involve ethical dilemmas –​namely the potential conflict between the duty to the court to act with honesty and candour, and the duty to represent a client competently and diligently. To ensure ethical practice lawyers should be aware of Advocacy Rules 43 and 44 of the Professional Conduct and Practice Rules: A.43. A practitioner must not suggest or condone another person suggesting in any way to any prospective witness (including a party or the client) the content of any particular evidence which the witness should give at any stage in the proceedings. A.44. A practitioner will not have breached Rule A.43 by expressing a general admonition to tell the truth, or by questioning and testing in conference the version of evidence to be given by a prospective witness, including drawing the witness’s attention to inconsistencies or other difficulties with the evidence, but must not coach or encourage the witness to give evidence different from the evidence which the witness believes to be true. See also Kennedy v The Council of The Incorporated Law Institute of New South Wales (1939) 13 ALJR 563, 564 (Rich J) (solicitor engaged in misconduct when he “strove to influence a witness in what she would say and did so in an improper manner”). There are some clear examples of conduct that breaches the Professional Conduct and Practice Rules, such as overtly encouraging a witness to testify falsely and instructing the witness to say they do not know or cannot recall when they do. However, it is ethical to obtain, test and organise information from a witness. Indeed trying to ascertain what happened usually means getting the witness’s initial version and probing it. The aim is not to change the witness’s story but instead to test the story. Testing the witness’s testimony will mean getting the witness to fill in gaps in their story, to explain inconsistencies in their story or with other evidence, and to provide explanations as to why certain actions were or were not taken. For example a witness recalls events in one sequence but that does not accord with the dates on letters exchanged between the parties. Is the witness mistaken or are the letters incorrectly dated? An explanation is necessary. Organising the testimony means lawyers should give a witness the context of the case so that they understand where their testimony fits in and its relevance. It also allows a witness to appreciate why various parts of their testimony are more or less important. Context can also mean explaining how the law applies to the facts and what other evidence (including documents) will be put forward to prove the case. An understanding of the context also allows a witness to better deal with unanticipated lines of questioning because they have the bigger picture. Justice Sheppard has observed that: In many cases there will have been lengthy correspondence extending over a long period; as well there may have been internal memoranda, diary entries and telexes; and there may be complex contractual documents which the witness must have considered at the time they came into existence. The witness’s understanding of all these documents and their consistency, or otherwise, with his oral evidence will be matters which counsel will need to 744 [13.40]

Preparing and Presenting Evidence  Chapter  13

Ethical and Effective Witness Preparation cont. discuss fully with him. A witness who is not familiar with the documents and the problems that they may create for him may do himself grave injustice notwithstanding that he may be a most honest and reliable person. The Honourable Ian Sheppard AO, QC, “Communications with Witnesses Before and During their Evidence” (1987) 3(1) Australian Bar Review,  29–​42. Testing a witness’s evidence does have some difficult gray areas that practitioners need to be aware of. The fact that a witness’s lawyer is challenging their evidence as part of the testing process may convey the impression to the witness that they are somehow wrong as to their recollection or that it is in their best interests to adapt their testimony. Lawyers need to guard against this impression. It therefore behooves a lawyer to be very clear about the first principle –​tell the truth. If complying with ethical requirements is not enough, the vigorous lawyer should remember that a witness that changes their story to please their lawyer may create fertile ground for the cross-​examiner who finds inconsistencies in the witness’s testimony. It is advisable to exhaust the witness’s recollection of events first, before seeking to test them. This way the lawyer does not inadvertently alter the recollection. Exhausting the witness’s recollection involves using a couple of simple techniques –​ask open-​ended questions that do not suggest a particular answer and begin with broad general questions and then narrow down to particular issues. For example, in a negligence or product liability case it is better to ask the witness what did they see while handling the product at issue, and then whether they saw any writing or notices on the product, before explaining that the existence of a warning may mean that a defendant has discharged their duty of care and there would be no liability. If the witness is asked about the presence of a warning or instructed upon the law at the very beginning it may colour their response. If the warning was present it is better to know that and to focus on its adequacy [than] to divert time and money to develop a case around a false fact. A [witness’s] evidence may also be influenced by other witnesses. Advocacy Rule 46 therefore provides: A.46. A practitioner must not confer with, or condone another practitioner conferring with, more than one lay witness (including a party or client) at the same time, about any issue: (a) as to which there are reasonable grounds for the practitioner to believe it may be contentious at a hearing; or (b)  which could be affected by, or may affect, evidence to be given by any of those witnesses. A.47. A practitioner will not have breached Rule A.46 by conferring with, or condoning another practitioner conferring with, more than one client about undertakings to a court, admissions or concessions of fact, amendments of pleadings or compromise. In short, the rules prohibit a practitioner from interviewing lay witnesses together where the issue under discussion is contentious or the discussion of the issue could affect the evidence to be given by either of the witnesses. In Day v Perisher Blue (2005) 62 NSWLR 731, a personal injury case arising from an accident at a ski resort, it emerged in cross-​examination that the following had taken place: • one witness had discussed his evidence with four other witnesses, and they had told him “what they were likely to say”; • a teleconference took place between the defendant’s solicitor and witnesses for the defendant to give the witnesses an opportunity “to understand better the court process and what will be expected of them”; • the witnesses “went through” their statements during this teleconference; • a follow-​up letter had been sent in which the solicitor provided one particular witness with some possible areas of questioning (to be passed on to the other witnesses); and [13.40]  745

Civil Procedure in New South Wales

Ethical and Effective Witness Preparation cont. • a document of unknown provenance called “Witness Protocols for Court Cases and Arbitration Hearings”, which was in at least one witness’s possession, warned that cases are “Not about facts about credibility”, “Lawyers lead you up the garden path then shut the gate behind you” and “Lawyers are there to destroy your credibility not establish the facts”. The Court of Appeal ordered that there be a new trial, on the basis that the trial judge, insofar as he had relied on the evidence of the respondent’s witnesses, erred given the improper coaching of the witnesses and the papers were sent to the Legal Services Commissioner. Sheller JA at [30] also commented as follows: It has long been regarded as proper practice for legal practitioners to take proofs of evidence from lay witnesses separately and to encourage such witnesses not to discuss their evidence with others and particularly not with other potential witnesses. For various reasons, witnesses do not always abide by those instructions and their credibility suffers accordingly. In the present case, it is hard to see that the intention of the teleconference with witnesses discussing amongst themselves the evidence that they would give was for any reason other than to ensure, so far as possible, that in giving evidence the defendant’s witnesses would all speak with one voice about the events that occurred. Thus, the evidence of one about a particular matter which was in fact true might be overborne by what that witness heard several others say which, as it happened, was not true. This seriously undermines the process by which evidence is taken. What was done was improper. The interviewing of lay witnesses together remains “a most undesirable practice”. See Mobileciti Pty Ltd v Vodafone Pty Ltd [2009] NSWSC 899 at [90]. The practice has also been deplored in relation to expert witnesses. See Roads Corporation v Love [2010] VSC 253. 3. Listening. “To listen closely and reply well is the highest perfection we are able to attain in the art of conversation” –​Francois de La Rochefoucauld Almost everyone has failed to listen in a day-​to-​day conversation and appreciates that if they don’t pay attention or think they are being asked about one thing when another is intended matters can become confused and misleading impressions given. In court that confusion can be even more costly. The first piece of advice to give a witness is simple –​listen to the question. Next a witness should be told to make sure they understand the question. If they don’t understand the question, then they should say so and ask the questioner to explain, repeat or rephrase the question. Witnesses need to understand that lawyers sometimes ask convoluted, compound, vague or ambiguous questions and it is not the job of the witness to untangle them but instead for the lawyer to ask a clear question. Witnesses should also be wary of certain types of questions that a lawyer may ask deliberately, such as questions that purport to summarise earlier testimony, which include imprecise language such as “regular”, “common”, “average”, “frequent”, “normal” or “substantial”. The witness does not need to be argumentative but should make sure that their understanding of a word or concept is the same as the lawyers. For example a witness may think regular church attendance is every Christmas and Easter while the questioner may think it means every Sunday. Imprecise terms such as “regular” are to be avoided unless the witness or examining lawyer has defined them. 4. Answering. “Many attempts to communicate are nullified by saying too much” –​ Robert Greenleaf After listening the witness must then answer. A few tips can assist here as well. Witnesses should be told: (1)

answer clearly and succinctly;

(2)

if you don’t know the answer, say “I don’t know,” or if you don’t remember the answer, say “I don’t remember” but don’t confuse the two as not remembering implies that you did know the answer at some point in the past;

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Preparing and Presenting Evidence  Chapter  13

Ethical and Effective Witness Preparation cont. (3)

don’t speculate, guess or assume which links back to the need to listen and comprehend;

(4)

do not volunteer information, answer only the question asked; and

(5)

correct mistakes and if you realize you have been inaccurate or incomplete, say so.

These tips also come with a couple of provisos. As most cross-​examination uses leading questions there may be little room to expand upon answers during cross-​examination so the witness may be forcibly made succinct. If a witness is asked a question that they feel cannot be answered with a “yes” or a “no” they should understand that they can convey the difficulty to the Court by saying it is a not a yes or no, black and white answer. If forced to answer in that fashion their difficulty will at least let the lawyer know that there may be need for re-​examination to clarify that point. In addition, the advice not to assume may be overridden if the witness is specifically asked to do so by the barristers or Court, although this is more likely with an expert witness than a lay witness. Lastly witnesses should not be allowed to develop a mind-​set that they will only answer a question if it is phrased exactly as they understand the facts to be as this can result in misleading testimony. For example a witness is asked “Was the car that you saw at the accident blue?” The witness honestly believes it was turquoise. To answer “No” without elaboration may be misleading or at least unnecessarily time-​consuming. The use of commonsense is invaluable. 5. Documents. “Desultory reading is delightful, but to be beneficial, our reading must be carefully directed” –​ Seneca Most judges will give far greater weight to a document created contemporaneously with an event the subject of litigation than witnesses’ recollections. For example in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 221, Justice Goldberg stated: The evidence in the affidavits is variously five to seven years and nine to 11 years after the events they record and in the ordinary course of human experience recall after such a period is imperfect; all the more so is such recall subject to unreliability when the recall is for the purpose of rebutting allegations against the witnesses. The documentary evidence which came into existence contemporaneously with events and the reasonable inferences which may be drawn from the contents of those documents are more likely to be an accurate record of the authors’ views than recall between five and 11 years later. See also Lloyd’s Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 72 ALR 643 at 654 (“No confidence can be reposed in the worth of his testimony. I much prefer to rely on the evidence of the contemporaneous documents”) and Ron Hodgson (Holdings) Pty Ltd v Westco Motors (Distributors) Pty Ltd (1980) 29 ALR 307 at 310 (“in general, I consider the documentary evidence more reliable than much of the oral evidence which has been given”). The increased use of email for business correspondence has had a corresponding effect on the importance of documentary evidence. The Chief Justice of Western Australia, Wayne Martin in his address, Improving Access to Justice through the Procedures, Structures & Administration of the Courts to the Australian Lawyers Alliance Western Australian State Conference, 21 August 2009 has observed: [In commercial cases] the documents tell the story and if they are contemporaneous, are generally much more likely to be reliable than a witness with an interest in the case orally putting his or her slant upon the events some years after they occurred. Enthusiasm for communication by email often means that there is an indelible contemporaneous record of communications between the parties, which gives a clear guide to the likely events. That guidance is often more reliable than the later oral testimony of witnesses. It is therefore prudent to ensure that a witness reviews relevant documents and reads them thoroughly. If a document contains an error then the witness should be told to point it out so that an explanation can be sought. Documents will frequently be used to refresh a witness’s memory due to the passage of time. While this is proper the lawyer must be careful to ensure they are refreshing and [13.40]  747

Civil Procedure in New South Wales

Ethical and Effective Witness Preparation cont. not “reconstructing” memory so that the concerns raised under point 2 above are equally applicable here. Exhaust the witness’s memory before testing it. Lawyers also need to be careful to only use documents produced as part of discovery, and not lawyer created diagrams or summaries, as opposing lawyers are entitled to call for their production if the witness has used them to refresh their memory out of court. Lawyers should be familiar with the rules on the waiver of privilege and section 34 of the Evidence Act 1995 (NSW) and (Cth) which provides that: The court may, on the request of a party, give such directions as are appropriate to ensure that specified documents and things used by a witness otherwise than while giving evidence to try to revive his or her memory are produced to the party for the purposes of the proceeding. See also Lowe v Lang [2000] NSWSC 309, (Unreported, Hamilton J, 30 March 2000), MGICA (1992) Limited v Kenny and Good Pty Ltd (1996) 135 ALR 743 and Andrew Ligertwood and Gary Edmond, Australian Evidence (5th ed 2010) at [7.84]. Further, pursuant to section 122(6) of the Evidence Act 1995 (NSW) and (Cth) client legal privilege is lost in respect “of a document that a witness has used to try and revive the witness’s memory about a fact or opinion”. 6. Mock Examinations. “Practice, the master of all things” –​Augustus Octavius Witnesses may be prepared for trial by having them engage in mock direct and cross examinations –​ rehearsals. This technique does not appear to be very prominent in Australia but is standard in the United States where a witness will be examined by the attorney who will conduct the direct examination at trial and then be crossed by another attorney working on the case while videotapes role and trial consultants make notes. The pervasive use of mock examinations seems to come from the fact that many cases are high stakes, the trier of fact is a jury whose expectations of witnesses are coloured by Hollywood and television, but most likely because the other side is doing it as well. The lack of mock examinations in Australia may also be traced to the use of barristers who traditionally would not meet with witnesses before trial as it was thought unnecessary. When mock examinations are considered in light of Advocacy Rules 43 and 44 it is clear that they are not forbidden from use in New South Wales. Mock examinations can be used to familiarise a witness with the process, put them at ease with testifying and test how they respond to cross-​examination. The manner in which evidence is conveyed can be improved through a number of techniques, some as simple as just letting a witness see how they look on the video and letting them respond to potential questions. However, care must be taken as shown by a review of just two techniques –​suggesting word choice and moulding witness demeanour. Word choice can be as innocent as advising a witness not to use jargon, slang or colloquial expressions, and getting a witness to clarify their answers. For example a witness that insists on describing someone under the influence of alcohol as “stoned” or “plastered” might be told that it is better not to use slang and to refer to them as “having been drinking alcohol”. Similarly someone who describes the same person as “inebriated” might be advised to use simpler language. However, the connotation that is conveyed changes because of the shades of meaning inherent in language –​ “stoned” may mean using drugs to some people while “plastered” may connote excessive drinking rather than just drinking. Equally instructing a witness to be confident, friendly or contrite alters the impression that they convey which may also affect the credibility that their evidence is accorded. Thus too many rehearsals may make your witness think they are Jack Nicholson, but as most witnesses are not Jack Nicholson, they may become overconfident or appear false or unnatural. Ideally a lawyer should only need to advise a witness to be themselves and use words they feel comfortable with. However, a nervous and imprecise witness can harm a case and use up valuable court time if not given assistance. Another advantage of mock examinations is for the lawyers –​it makes them become familiar with the case, view the case from their [opponents’] perspective and lets them develop their examination 748 [13.40]

Preparing and Presenting Evidence  Chapter  13

Ethical and Effective Witness Preparation cont. skills. In the US where there is no division between barristers and solicitors the mock examination is frequently used to teach junior lawyers how to conduct direct and cross-​examinations. 7. Confidentiality and Privilege. “All confidence which is not absolute and entire, is dangerous” –​Francis Beaumont The lawyer needs to be certain to distinguish between a party witness for whom legal professional privilege/​client-​lawyer privilege applies and an unrelated non-​party witness to whom privilege may not apply (eg lack of confidentiality). The existence of privilege means that conversations and the preparation process are not discoverable. It does not mean that a witness cannot be questioned about how frequently or how long they spent in preparation with their lawyer. Such a line of questioning may be subject to evidentiary objections (irrelevant or prejudicial, confusing or undue waste of time) but it is not protected by privilege, only the content of the discussion is protected. The need for confidentiality should be explained to all witnesses. Clients should be told not to speak with anyone about the case that is not identified with their lawyer. Third party witnesses, consistent with Advocacy Rules 49 and 50, should be told that there is no property in a witness and they are free to speak to whoever they like, but equally they are under no obligation to speak with anyone. In addition all witnesses should be admonished to not discuss confidential matters, which is almost everything they discussed with the lawyer, in public areas. 8. Practical Matters. “The apparel oft proclaims the man” –​William Shakespeare, Hamlet, Act I, Scene iii The experience of appearing in court and giving testimony is not something that the general populous has had. As a result the lawyer should cover the practicalities of the day in court. This means advising the witness of basic matters such as what to wear, the location of the court and the time to attend. In addition it is advisable to go through the general procedure that will take place in the court, such as being called to testify, being sworn and the sequence of examination, cross-​examination and re-​ examination, as well as objections and the need for the judge to make rulings. If a witness knows what to expect and their experience corresponds with those expectations they will be comfortable with the process which can relieve anxiety and lead to a better performance on the stand. When dealing with third party witnesses keep in mind that they are not bound to testify unless subpoenaed. If there is ever a doubt that a witness may not turn up then it is prudent to serve a subpoena on them. However, witnesses may not take kindly to the process server that knocks on their door at night or ambushes them at work. As a result it is usually a good idea to tell the witness that they will be subpoenaed. The lawyer can even explain to them that it is in their interests to be subpoenaed as then it cannot be said that they are voluntarily giving evidence to harm the other [side’s] case. 9. Evaluate the Witness. “Don’t think there are no crocodiles because the water is calm” –​Malayan Proverb After going through the above witness preparation techniques it is useful to assess the witness’s readiness to testify. The lawyer should attempt to gauge the witness’s confidence or nervousness. An overconfident witness and an unduly nervous witness are both likely to under-​perform. Most witnesses will be nervous to some degree about testifying. For example it may be the fear of public speaking, forgetfulness as to details, not knowing an answer or concern as to how they will hold up under cross-​examination. Once the source of anxiety has been identified it can be addressed. How to address anxiety varies with the source of the anxiety but there are a couple of general responses to almost all nervous witnesses. Reassure a witness through explaining that most witnesses share the same concerns but it does not make them unsuitable to testify. In fact a little nervousness is a positive thing because it will mean the witness is on their toes. Explain that the witness preparation process they have been through (or will go through) equips them to deal with testifying. As a lay witness they are not expected to be experts in courtroom testifying.

[13.40]  749

Civil Procedure in New South Wales

Ethical and Effective Witness Preparation cont. Occasionally witnesses will be over-​confident. They may see themselves being the star who tells everyone what really happened. In this situation you may want to advise the witness that the opposing lawyers are highly skilled and that they need to keep their wits about them. However, it is usually sufficient to give a pep talk that exhorts the witness to be calm and not to get angry and fight with the lawyer questioning them. Equally, the witness should not be fooled into thinking that the opposing lawyer is their friend. Instead, the witness should concentrate on the questions that are being asked and answer them correctly, regardless of the tone or approach taken by the lawyer. Remind the witness that their job is to truthfully answer the questions put to them. At the end of the preparation process leave the witness with only a couple of reminders so that they are not overburdened with procedural matters to recall and can concentrate on the substance of their testimony. Exactly which reminders a lawyer may give a witness will depend on what areas the particular witness needs assistance with. 10. Witness Appreciation. “At the bottom of things, most people want to be understood and appreciated” –​ Buddha Most of the above advice has focused on telling the witness what to do. The lawyer should be certain to let the witness ask them questions about anything the witness does not understand or that worries them. Get the witness to provide feedback on whether they understand the advice given to them. Ask the witness if they perceive that they have any conflicts or vulnerabilities that could present a problem in their testimony. This could be prior unrelated criminal offences or potentially embarrassing statements made to, or relationships with, other witnesses. The time constraints on witness preparation can see lawyers reduce the preparation process to a few words prior to the witness being called to testify. While this may save time it is not a replacement for actual interaction with a witness which gives the greatest insight into how they will perform in court. Lawyers may find it useful to have standard precedents or crib sheets that serve as a reminder of the general topics to discuss and ensure completeness. Frequently, the third party witness or the busy client sees the litigation as a distraction that takes up time they could profitably be using to do something else with that is more important to them. While law is a profession, it is also a service, and as such the lawyer needs to be flexible when dealing with witnesses and appreciative of the time they give. [Please note that the advocacy and conduct rules in the above extract have now been replaced with the conduct rules under the Legal Profession Uniform Law: see rr 69 –​75 in the Legal Profession Uniform Conduct (Barristers) Rules 2015 and rr 24 –​26 in the Legal Profession Uniform Conduct (Solicitors) Rules 2015.]



AFFIDAVITS [13.50] An affidavit is written evidence that is given under oath or affirmation before an

authorised person. They can be substantive documents setting out a witness’s evidence in a fulsome manner or they can be more procedural as with an affidavit verifying pleadings or a list of documents and affidavits of service. The distinction is not always clear as affidavits of service or an affidavit in support of an application for security for costs will often contain substantive evidence that will be crucial to the success of a motion. The drafting and swearing of an affidavit requires an appreciation of the requirements in the UCPR, the Oaths Act 1900 (NSW) and the Evidence Act 1995 (NSW). This chapter focuses on the UCPR and the Oaths Act. However, the requirements of the Evidence Act are touched on at [13.150] through the excerpt from Justice Emmett’s article on affidavits. 750 [13.50]

Preparing and Presenting Evidence  Chapter  13

Legal requirements for affidavits [13.60] All affidavits must be sworn or affirmed in accordance with the Oaths Act 1900

(NSW). An affidavit is sworn when it is taken on oath. An affirmation substitutes the words “solemnly, sincerely and truly declare and affirm” for the word “swear” or for any other word or words to the like effect and omitting the words “so help me God”. An affidavit may be sworn or affirmed before a justice of the peace or an Australian legal practitioner. [13.70]  A Handbook for Justices of the Peace in New South Wales (revised 2017) page 26

(available at https://​www.jp.nsw.gov.au/​Documents/​JP-​handbook-​full.pdf) sets out the wording that may be used when an affidavit is sworn or affirmed: If the deponent chooses an oath If the deponent chooses to take an oath, it is recommended that the word ‘swear’ is used. An oath may also (but does not have to) refer to the person’s religious or sacred beliefs (eg ‘God’, ‘Buddha’ etc). It is not necessary for the deponent to hold a holy book when swearing their oath, but the deponent may choose to do so. Acceptable forms of words for an oath include: JP: ‘Do you swear that the contents of this your affidavit are true and correct to the best of your knowledge and belief?’ The deponent must give an affirmative response such as ‘So help me God’, ‘I do’, ‘Yes’ or (if unable to speak) a physical sign such as nodding. or: Deponent (before the JP): ‘I swear that the contents of this my affidavit are true and correct to the best of my knowledge and belief’. If the deponent chooses an affirmation If the deponent chooses to make an affirmation, two acceptable forms of words are: JP: ‘Do you solemnly, sincerely and truly declare and affirm that the contents of this your affidavit are true and correct to the best of your knowledge and belief?’ The deponent must give an affirmative response such as ‘I do’, ‘Yes’ or (if unable to speak) a physical sign such as nodding. or: Deponent (before the JP): ‘I solemnly, sincerely and truly declare and affirm that the contents of this my affidavit are true and correct to the best of my knowledge and belief’. [13.80]  The person who swears or affirms the affidavit is referred to as the deponent. A person

who may be a deponent is set out in UCPR r 35.3. Apart from the specific requirements of the UCPR, a deponent should, where possible, be a person who can attest to the truth of the facts from their own knowledge. Put another way, they are not reporting matters told to them by another person. [13.90]  Rule 31.4 of the UCPR also makes provision for witness statements. The content of a

witness statement and affidavit will often be similar but a witness statement is not given under oath or affirmation. A witness statement must be signed by the witness. However, it is not until the witness testifies to the truth of the statement when called at a hearing to give evidence that a party may put the witness statement into evidence.

Uniform Civil Procedure Rules 2005 (NSW) [13.100]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.4, 35.3–​35.7B 31.4 Court may direct party to furnish witness statement (1)

The court may direct any party to serve on each other active party a written statement of the oral evidence that the party intends to adduce in chief on any questions of fact to be decided at any hearing (a witness statement). [13.100]  751

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

A direction under subrule (1):



(a)

may make different provision with regard to different questions of fact or different witnesses, and



(b)

may require that notice be given of any objection to any of the evidence in a witness statement and of the grounds of any such objection.

(3)

Each witness statement must be signed by the intended witness unless the signature of the witness cannot be procured or the court orders otherwise.

(4)

If an intended witness to whose evidence a witness statement relates does not give evidence, no party may put the statement in evidence at the hearing except by leave of the court.

(5)

If the party serving the statement calls as a witness at the hearing any person whose witness statement has been served pursuant to a direction under subrule (1):



(a)

that person’s witness statement is to stand as the whole of his or her evidence in chief, so long as that person testifies to the truth of the statement, and



(b)

except by leave of the court, the party may not adduce from that person any further evidence in chief.

(6)

A party who fails to comply with a direction given under this rule may not adduce evidence to which the direction relates, except by leave of the court.

(7)

This rule does not deprive any party of the right to treat any communication as privileged and does not make admissible any evidence that is otherwise inadmissible.

(8)

An application by a party for an order that the party not be required to comply with a direction under this rule in respect of any proposed witness or witnesses (whether or not such a direction has been given) may be made without serving notice of motion.

35.3 Persons who may make affidavit (1)

If a party is required by these rules to file an affidavit or to verify any matter by affidavit, such an affidavit may be made by the party or:



(a)

if the party is a person under legal incapacity, by the party’s tutor, or



(b)

if the party is a corporation, by a member or officer of the corporation or (if it is in liquidation) by its liquidator, or



(c)

if the party is a body of persons lawfully suing or being sued:



(i)

in the name of the body, or



(ii)

in the name of any member or officer of the body, or

(iii)

in the name of any other person associated with the body,



by a member or officer of the body, or



(d)

if the party is the Crown or an officer of the Crown suing or being sued in his or her official capacity, by an officer of the Crown, or



(e)

if the proceedings are being brought in the plaintiff’s name by some other person pursuant to a right of subrogation:



(i)

by that other person, or



(ii)

if that other person is a corporation, by a member or officer of the corporation or (if it is in liquidation) by its liquidator.

(2)

Such an affidavit may also be made, in relation to proceedings in the Local Court:



(a)

752 [13.100]

by the party’s solicitor, or by a commercial agent with respect to debt collection (within the meaning of the Commercial Agents and Private Inquiry Agents Act 2004), in relation only to proceedings on an application for: (i)

an instalment order, or

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont.

(ii)

an order for examination, or



(iii)

a writ of execution, or



(iv)

a garnishee order, or

(v)

default judgment (but only in the Small Claims Division), or



(b)

by a person holding a licence as a real estate agent, strata managing agent or on-​site residential property manager within the meaning of the Property, Stock and Business Agents Act 2002 in relation only to:



(i)

proceedings on an application referred to in paragraph (a), or



(ii)

the filing of a certificate under section 51 of the Consumer, Trader and Tenancy Tribunal Act 2001.

(2A)

If more than one person is qualified to make an affidavit on behalf of a party, it is sufficient for such an affidavit to be made (subject to subrules (1) and (2)) by any one or more of them.

(3)

Subject to any order of the court, the person by whom an affidavit is made must be a person having knowledge of the facts deposed to in the affidavit.

(4)

If an affidavit is made by a person other than the party required to file or verify the affidavit, the affidavit must set out the facts that qualify the person to make the affidavit.

(5)

Subject to subrule (1), a requirement of these rules for an affidavit as to any matter may be satisfied by separate affidavits made by separate persons in relation to separate aspects of that matter.

35.3A Heading to affidavit The heading to an affidavit must include the name of the deponent and the date on which the affidavit is made. 35.4 Format of affidavit dealing with more than one matter If the body of an affidavit alleges or otherwise deals with more than one matter: (a)

it must be divided into paragraphs, and

(b)

each matter must, so far as convenient, be put in a separate paragraph, and

(c)

the paragraphs must be numbered consecutively.

35.5 Alterations If there is any interlineation, erasure or other alteration in the jurat or body of an affidavit, the affidavit may not be used, except by leave of the court, unless the person before whom the affidavit is sworn initials the alteration and, in the case of an erasure, rewrites in the margin of the affidavit any words or figures written on the erasure and signs or initials them. 35.6 Annexures and exhibits (1)

A document to be used in conjunction with an affidavit may be made:



(a)

an annexure to the affidavit, or



(b)

an exhibit to the affidavit.

(2)

An annexure to an affidavit must be identified as such by a certificate endorsed on the annexure (and not on a page separate from the annexure) signed by the person before whom the affidavit is made.

(3)

The pages of an affidavit, together with any annexures, must be consecutively numbered in a single series of numbers.

(4)

An exhibit to an affidavit must be identified as such by a certificate attached to the exhibit entitled in the same manner as the affidavit and signed by the person before whom the affidavit is made. [13.100]  753

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (5)

An exhibit to an affidavit must not be filed.

(6)

If any other party so requires, a party who serves an affidavit to which a document is an exhibit:



(a)

must produce the document for inspection by that other party, or



(b)

must provide a photocopy of the document to that other party, or



(c)

must produce the document at some convenient place to enable it to be photocopied by that other party.

35.7 Affidavits by persons who cannot read An affidavit made by a blind or illiterate person may not be used unless: (a)

the affidavit bears a certificate referred to in section 27A of the Oaths Act 1900, or

(b)

the court is otherwise satisfied:



(i)

that the affidavit was read to the deponent in the presence of the person before whom it was made, and



(ii)

that it appeared to that person that the deponent understood the affidavit.

35.7A Name of legal practitioner or commissioner for affidavits on affidavit (1)

A legal practitioner who takes and receives an affidavit concerning any matter within the jurisdiction of the court must, by use of a stamp or otherwise, add, legibly below the legal practitioner’s signature, the legal practitioner’s name and address together with the word “barrister” or “solicitor”, as the case requires.

(2)

A commissioner for affidavits who takes and receives an affidavit concerning any matter within the jurisdiction of the court, must, by use of a stamp or otherwise, add, legibly below the commissioner’s signature, the commissioner’s name and address together with the words “commissioner for affidavits”.

(3)

In this rule, commissioner for affidavits means a person who is authorised by the Chief Justice of the Supreme Court, under section 27(2) of the Oaths Act 1900, to take and receive affidavits.

35.7B Each page of affidavit to be signed Each page of an affidavit must be signed by the deponent and by the person before whom it is sworn.



Oaths Act 1900 (NSW) [13.110]  Oaths Act 1900 (NSW) ss 26, 26B, 27, 27A, 32, 34 26 Before whom oaths or affidavits may be taken (1)

Any oath declaration or affidavit required for the purpose of any court or for the purpose of the registration of any instrument in the State of New South Wales or for the purpose of any arbitration may be taken or made:



(a)

in any place in the said State before any justice of the peace for the said State, and



(b)

in any country or place out of the said State before a notary public, or before any person having authority to administer an oath in that country or place, and



(c)

in any country or place out of the said State before a British Consular Officer or an Australian Consular Officer exercising his or her functions in that country or place. …

754 [13.110]

Preparing and Presenting Evidence  Chapter  13

Oaths Act 1900 (NSW) cont. (2)

In this section:



Australian Consular Officer means a person referred to in section 3 (a)–​(d) of the Consular Fees Act 1955 of the Commonwealth.



Note: Those paragraphs refer to:



(a)

an Australian Diplomatic Officer or an Australian Consular Officer, or



(b)

the person holding or acting in the office of Secretary of the Department of Foreign Affairs and Trade or an officer of the Department acting with the authority of the Secretary, or



(c)

an employee of the Commonwealth authorised, in writing, by the Secretary, or



(d)

an employee of the Australian Trade Commission authorised, in writing, by the Secretary.



British Consular Officer means a British Ambassador, Envoy, Minister, Chargé d’Affaires, Secretary of Embassy or Legation, Consul-​General, Acting Consul-​General, Consul, Acting Consul, Vice-​Consul, Acting Vice-​Consul, Proconsul, Consular Agent and Acting Consular  Agent.

26A Witnessing of statutory declarations for other jurisdictions If it is permitted by another State, a Territory or the Commonwealth, a justice of the peace may take, receive or witness a statutory declaration within New South Wales for use in relation to the other State, Territory or the Commonwealth. 26B Appointee of foreign authority may, in certain circumstances, administer oath (1)

In this section foreign authority means a court, judge, person or body authorised by the law of a place outside New South Wales to take or receive evidence in that place.

(2)

For the purpose of proceedings (other than criminal proceedings) before a foreign authority, the foreign authority, or a person authorised by the foreign authority to take and receive evidence in New South Wales, may administer an oath to a person in New South Wales for the purpose of taking and receiving that evidence subject, in the case of a foreign authority that is not a court or judge, to the consent of the Chief Justice of the Supreme Court being first obtained.

27 Authority to take and receive affidavits (1)

An Australian legal practitioner is, except in so far as the Chief Justice of the Supreme Court by order under his or her hand otherwise directs, authorised to take and receive, subject to subsection (4), affidavits concerning any matter within the jurisdiction of any court or required for the purpose of registering an instrument in New South Wales or for any other purpose to be effected in New South Wales.

(2)

The Chief Justice may, by commission under the seal of the Supreme Court, authorise as many other persons as the Chief Justice may think necessary to take and receive affidavits concerning any matter within the jurisdiction of any court.

(3)

(Repealed)

(4)

The authorisation of an Australian legal practitioner by subsection (1) has effect subject to any rule made by any court in respect of any affidavit made concerning any matter within its jurisdiction.

(5)

(Repealed)

27A Affidavits by persons unable to read If it appears to the person before whom an affidavit is made (the authorised person) that the person making the affidavit (the deponent) is blind or illiterate, the authorised person must certify, in or below the jurat: [13.110]  755

Civil Procedure in New South Wales

Oaths Act 1900 (NSW) cont. (a)

that the affidavit was read to the deponent in the presence of the authorised person, and

(b)

that it appeared to the authorised person that the deponent understood the affidavit, and

(c)

that the deponent subscribed the affidavit (by signature or mark) in the presence of the authorised person.

28 Fees Every person authorised to act under a commission issued pursuant to subsection (2) of section 27 shall receive such fees as may be prescribed by the rules made under the Civil Procedure Act 2005. 32 Person may make declaration instead of oath (1)

This section applies to the making of an affidavit by a person before a justice or other person authorised to take an affidavit when the justice or other person is satisfied, having regard to any matter thought relevant (including age and capacity to hear, understand or communicate) that the person is not competent to take an oath.

(2)

The affidavit by the person is to be allowed, as if it were taken on oath, so long as:



(a)

the justice or other person tells the person that it is important to tell the truth, and



(b)

the person makes a declaration, by responding appropriately when asked, that he or she will not tell lies in the affidavit.

(3)

However, the affidavit is not to be allowed if the justice or other person is satisfied that:



(a)

the person does not understand the difference between the truth and a lie, or



(b)

the person is not able to respond rationally to questions.

(4)

It is to be presumed, unless the contrary is established to the satisfaction of the justice or other person, that the person understands the difference between the truth and a lie and is able to respond rationally to questions.

(5)

This section does not make evidence admissible if it would otherwise be inadmissible.

(6)

In this section, affidavit includes a deposition and a statement made in an information or complaint.

34 Identification of person making statutory declaration or affidavit (1)

A person who takes and receives a statutory declaration or affidavit in this State (an authorised witness):



(a)

must see the face of the person making the declaration or affidavit, and



(b)

must know the person who makes the declaration or affidavit or confirm the person’s identity in accordance with the regulations, and



(c)

must certify on the declaration or affidavit in accordance with the regulations that this section has been complied with.

Maximum penalty (on summary conviction before the Local Court): 2 penalty units. (2)

An authorised witness may request a person who is seeking to make a statutory declaration or affidavit to remove so much of any face covering worn by the person as prevents the authorised witness from seeing the person’s face.

(3)

The regulations may make provision for or with respect to compliance with this section and, in particular, may:



(a)

provide that a person is not known to an authorised witness unless the authorised witness has known the person for a minimum specified period, and



(b)

provide for the steps that will satisfy the requirement to confirm the identity of a person making a statutory declaration or affidavit (including prescribing the kinds of documentation that may or must be relied on for that purpose), and

756 [13.110]

Preparing and Presenting Evidence  Chapter  13

Oaths Act 1900 (NSW) cont.

(c)

exempt an authorised witness from the requirement to comply with subsection (1) (a) for medical or other reasons.

(4)

A failure to comply with this section does not affect the validity of any statutory declaration or affidavit.

(4A)

This section does not apply in respect of a person who takes and receives a statutory declaration or affidavit if the declaration or affidavit is made or required to be made:



(a)

for the purposes of proceedings in:



(i)

the High Court, or



(ii)

the Federal Court, or



(iii)

the Family Court, or



(iv)

the Federal Circuit Court, or



(v)

any other court created by the Commonwealth Parliament, or



(b)

for the purposes of, or in connection with, any matter arising under, a law of the Commonwealth, or



(c)

in connection with the administration of a Commonwealth Government department or agency.

(5)

In this section:



face and face covering have the same meanings as they have in the Law Enforcement (Powers and Responsibilities) Act 2002.



Oaths Regulation 2011 (NSW) [13.120]  Oaths Regulation 2011 (NSW) regs 3–​7, Sch 1 3 Definitions (1)

In this Regulation:



identification document means any of the following:



(a)

a primary photographic identification document within the meaning of the Real Property Regulation 2008,



(b)

a primary non-​photographic identification document within the meaning of the Real Property Regulation 2008,



(c)

a Medicare card, pensioner concession card, Department of Veterans’ Affairs entitlement card or other entitlement card issued by the Commonwealth or a State Government,



(d)

a credit card or account (or a passbook or statement of account) from a bank, building society or credit union,



(e)

an electoral enrolment card or other evidence of enrolment as an elector,



(f)

a student identity card, or a certificate or statement of enrolment, from an educational institution,



(g)

in the case of an inmate (within the meaning of the Crimes (Administration of Sentences) Act 1999) –​an inmate identification card, or other document containing information

[13.120]  757

Civil Procedure in New South Wales

Oaths Regulation 2011 (NSW) cont. identifying the inmate, prepared or used by the correctional centre in which the inmate is held,

(h)

in the case of a forensic patient (within the meaning of the Mental Health (Forensic Provisions) Act 1990) –​a residential identity card, or other document containing information identifying the patient, prepared or used by the mental health facility, correctional centre or other place in which the patient is detained,



(i)

in the case of a patient (within the meaning of the Mental Health Act 2007) other than a forensic patient –​a residential identity card, or other document containing information identifying the patient, prepared or used by the mental health facility to which the patient is admitted,



(j)

a police identification card issued to a police officer by the Commissioner of Police. special justification has the same meaning as it has in section 19B of the Law Enforcement (Powers and Responsibilities) Act 2002. the Act means the Oaths Act 1900.

(2)

Notes included in this Regulation do not form part of this Regulation.

Part 2 –​Identification of persons making statutory declarations and affidavits 4 Exemption from requirement to see a person’s face An authorised witness is exempted from the requirement under section 34 (1) (a) of the Act to see the face of a person making a statutory declaration or affidavit if: (a)

the person is wearing a face covering, and

(b)

the authorised witness is satisfied that the person has a special justification for not removing the face covering.

Note: A special justification includes having a legitimate medical reason for not removing the face covering. 5 Period of time that authorised witness must know person A person is not known to an authorised witness for the purposes of section 34 (1) (b) of the Act unless the authorised witness has known the person for a period of at least 12 months. 6 Confirmation of identity of person not known to authorised witness (1)

An authorised witness satisfies the requirement under section 34 (1) (b) of the Act to confirm the identity of a person making a statutory declaration or affidavit only if, before the declaration or affidavit is made, the authorised witness sights an original or certified copy of an identification document in respect of the person.

(2)

For the purposes of this clause, an authorised witness cannot rely on an identification document if it is:



(a)

a document with an expiry date that has expired (other than in the case of an Australian passport that has been expired for less than 2 years), or



(b)

a document that has been cancelled, or



(c)

a document referred to in paragraph (d) of the definition of identification document in clause 3 (other than a credit card or passbook) that is more than one year old, or



(d)

a document referred to in paragraph (e) or (f) of the definition of identification document in clause 3 that is more than 2 years old.

(3)

For the purposes of this clause, a copy of a document may be certified as a true copy of the original only by a person (other than the authorised witness) authorised to take and receive statutory declarations under section 21 of the Act.

758 [13.120]

Preparing and Presenting Evidence  Chapter  13

Oaths Regulation 2011 (NSW) cont. 7 Matters to be certified on statutory declaration or affidavit (a)

For the purposes of section 34 (1) (c) of the Act, an authorised witness certifies that section 34 of the Act has been complied with by certifying the following matters in a certificate on the declaration or affidavit:



(a)

that the authorised witness either:



i.

saw the face of the person making the declaration or affidavit, or



ii.

did not see the face of the person because of a face covering, but is satisfied that the person had a special justification for not removing the covering,



(b)

that the authorised witness either:



i.

knows the person, or



ii.

has confirmed the person’s identity based on an identification document presented to the authorised witness,



(c)

if the authorised witness has relied on an identification document to confirm the identity of the person –​that the document that the authorised witness relied on is the document that is specified by the authorised witness in the certificate.

(2)

A certificate may (but need not) be in the Form set out in Schedule 1.

Schedule 1 Form for certificate under section 34 (1) (c) of the Act (Clause 7 (2)) Certificate under section 34 (1) (c) of Oaths Act 1900 *Please cross out any text that does not apply I [insert name of authorised witness], a [insert qualification to be authorised witness], certify the following matters concerning the making of this *statutory declaration/​affidavit by the person who made it: 1

*I saw the face of the person or *I did not see the face of the person because the person was wearing a face covering, but I am satisfied that the person had a special justification for not removing the covering.

2

*I have known the person for at least 12 months or *I have confirmed the person’s identity using an identification document and the document I relied on was [describe identification document relied on]. [insert signature of authorised witness] Date:



Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) [13.130]  Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) ss 3, 19B 3 Interpretation (1)

In this Act: …



face means a person’s face:



(a)

from the top of the forehead to the bottom of the chin, and



(b)

between (but not including) the ears. [13.130]  759

Civil Procedure in New South Wales

Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) cont.

face covering means an item of clothing, helmet, mask or any other thing that is worn by a person and prevents the person’s face from being seen (whether wholly or partly). …

19B Failure to remove face covering (1)

A person who is required by a police officer in accordance with section 19A to remove a face covering must not, without special justification, fail or refuse to comply with the requirement.



Maximum penalty:



(a)

in the case of a person who is required to remove a face covering following a request made to the person under section 14 (Power of police officer to request disclosure of driver or passenger identity) –​50 penalty units or 12 months imprisonment, or both, or



(b)

in any other case –​2 penalty units.

(2)

A person has a special justification for not removing a face covering if (and only if):



(a)

the person has a legitimate medical reason for not removing the face covering, or



(b)

the person has any other excuse for not removing the face covering that is an excuse of a kind prescribed by the regulations.

(3)

The onus of proof of a special justification lies on the person claiming to have the special justification.



Fastlink Calling v Macquarie Telecom [13.140]  Fastlink Calling Pty Ltd v Macquarie Telecom Pty Ltd [2008] NSWSC 299 BARRETT J [1]‌Two preliminary questions have arisen in these proceedings in which the plaintiff, by originating process filed on 22 January 2008, makes application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on it by the defendant. [2]‌The first question is whether a document filed by the plaintiff with the originating process on 22 January 2008 is in truth an affidavit. If it is, there is then a question whether a copy of it was served by the plaintiff on the defendant. The questions arise from s 459G(3): An application is made in accordance with this section only if, within those 21 days:

(a)

an affidavit supporting the application is filed with the Court; and



(b)

a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.

[3]‌If the first question is answered adversely to the plaintiff, the condition in s 459G(3)(a) is not satisfied because no “affidavit supporting the application” was filed with the court within the relevant period of 21 days, that is, the period of 21 days after service of the statutory demand. If the second question arises and is answered adversely to the plaintiff, the condition in s 459G(3)(b) is not satisfied because “a copy of the supporting affidavit” was not served within that period of 21 days. Either non-​ compliance will mean that the court has no power to set aside the statutory demand and is compelled to dismiss the s 459G application: David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265. [4]‌The document propounded by the plaintiff as “an affidavit supporting the application” begins:

760 [13.140]

Preparing and Presenting Evidence  Chapter  13

Fastlink Calling v Macquarie Telecom cont. AFFIDAVIT Name ANA JEBRIL Address 1212/​87-​98 Liverpool Street Sydney NSW 2000 Occupation Director Date I Ana Jebril do solemnly declare: The space against “Date” is blank. [5]‌After eleven numbered paragraphs containing statements by Ana Jebril comes the following: SWORN at Greenacre Signature of deponent (sgd) A Jebril Signature of witness Name of witness Hilal Chouman Address of Witness L1, 134A, Waterloo Road Greenacre NSW 2190 Capacity of witness Solicitor The space against “Signature of witness” is blank. [6]‌There is an annexure to the document on which the following appears: This [sic] annexure marked “A” referred to in the affidavit of Ana Jebril sworn on 21 January 2008. (sgd) H Chouman Hilal Chouman Solicitor [7]‌The defendant says that the undated document signed by Ms Jebril is not an affidavit because she does not purport either to “say on oath” or to “affirm”. She uses the words “solemnly declare”. In addition, no signature appears in the space for the signature of the person before whom the affidavit is made, with the result that there is no indication that a person authorised to do so performed the function necessary to cause the document to be an affidavit. … [15] No statute of New South Wales deals comprehensively or exhaustively with the procedures involved in the creation of affidavits. The Oaths Act 1900, to which reference will be made presently, presupposes certain principles of the unwritten law and builds upon them. It is to those principles that I now turn. [16] Bacon’s Abridgement (Matthew Bacon, A New Abridgement of the Law, London 1832), at page 124, defines or describes an affidavit as follows: An affidavit is an oath in writing, signed by the party deposing, sworn before, and attested by him who hath authority to administer the same. [17] An oath was central to an affidavit. An affidavit usually began: I [name] of [address], [occupation], being duly sworn make oath and say as follows: [18] The jurat at the end was typically: Sworn at [place] this [day] of [month] in the year [year], Before me. [Signature and designation of person administering oath] [19] The deponent’s oath, essential to the character of a written statement as an affidavit, was administered by the administering official’s instructing the deponent to take the Bible in his or her hand and to say the words: I swear by Almighty God that this is my name and handwriting and that the contents of this my affidavit are true.

[13.140]  761

Civil Procedure in New South Wales

Fastlink Calling v Macquarie Telecom cont. [20] In the United Kingdom, provision was made by the Oaths Act 1888 for a person without religious belief (or with a religious belief precluding the swearing of an oath) to make, instead of an oath, a “solemn affirmation” causing an affidavit to take the following form: I, [name] of [address], [occupation], do solemnly and sincerely affirm as follows. [21] For the jurat, the usual form for an affidavit made by affirmation was: Affirmed at [place] this [day] of [month] in the year [year], Before me [Signature and designation of official before whom affirmation made] [22] The words to be spoken upon making an affidavit by affirmation were to this effect: I solemnly, sincerely and truly declare and affirm that this is my name and handwriting and that the contents of this my affidavit are true. [23] In New South Wales, s 12 of the Oaths Act 1900 provides that, when an oath is required to be taken by a person “who objects to take an oath”, the person may instead make a “solemn affirmation in the form of such oath”, but with the words “solemnly, sincerely and truly declare and affirm” substituted for “swear” and with the words “so help me God” or other like words omitted. Positive objection to the taking of an oath is a pre-​condition to the making of an affirmation. [24] By s 11A of the Oaths Act, the manner of taking an oath, for the purposes of an affidavit, is consistent with that described at paragraph [19] above. While the form of oath most often administered is one applicable to persons having a religious belief in the Bible (or the Old Testament alone), a person who has some different form of religious belief and does not object to taking an oath will be sworn in some manner binding on his or her conscience. An adherent of the Muslim religion may thus be sworn on the Koran; and in R v Moore (1892) 40 WR 304, a native of India who said he had a religion, believed in the existence of a God and respected “all religious things” was sworn on the Bible. … [30] I turn now to the deficiencies in the document signed by Ms Jebril. The first is the use of the operative words “do solemnly declare” in the place where Form 40 contemplates use of the words “say on oath” or “affirm”. The word “declare” does not signify that the deponent swears or that the deponent affirms. These are the only alternatives contemplated by the Oaths Act for an affidavit. But Ms Jebril’s document itself resolves the doubt or ambiguity. The words “SWORN at Greenacre” show that she made her statements on oath. The use of the words “do solemnly declare” therefore cannot stand in the way of a conclusion that the document is an affidavit sworn by Ms Jebril. [31] I consider next the absence from the jurat of any signature of a person by whom the oath was administered, even though the “witness” is named in typewriting as Mr Chouman and his “capacity” is stated to be “solicitor”. (A solicitor has authority under s 27 of the Oaths Act to take and receive affidavits.) [32] In Ex parte Hall (1839) 8 Law J N S 211 (Queen’s Bench), an affidavit sworn before a Commissioner was, by the Commissioner’s mistake, not signed by him in the jurat. Upon being satisfied that the affidavit had been made in due time, the Court of Queen’s Bench allowed the omission to be remedied. A less benign approach was taken in R v The Inhabitants of Bloxham [1844] EngR 973; (1844) 6 QB 528; 115 ER 197. Lord Denman CJ confessed to having been party to the decision in Ex parte Hall and said that “the indulgence was one which ought not to have been granted”. The Bloxham case concerned an affidavit complete and regular on its face except for omission of the words “Before me” preceding the signature of the official before whom it was sworn. There was thus no statement within the document itself that the deponent had appeared before the official to swear the oath. All four members of the Court of Queen’s Bench were of the opinion that the question whether a document is an affidavit is to be answered solely by reference to the content of the document itself. 762 [13.140]

Preparing and Presenting Evidence  Chapter  13

Fastlink Calling v Macquarie Telecom cont. The absence of the words “Before me” was fatal. The same approach to the same deficiency was taken by the Court of Exchequer in Graham v Ingleby and Glover [1848] EngR 92; (1848) 1 Ex 651; 154 ER 277. [33] These cases raised, by implication, the question whether the events surrounding the signing of the relevant document might be separately and subsequently proved. In Ex parte Hall, it seems that the court did inquire into the circumstances. In the other two cases, the document alone was considered, with the possibility of extrinsic evidence impliedly rejected –​no doubt for reason stated by Parke B in Bill v Bament [1841] EngR 645; (1841) 8 M&W 317; 151 ER 1060: If the subsequent signature of the judge could have the effect of making it good by relation, all errors might be corrected afterwards and we should not know where to stop. [34] The later case of Eddowes v Argentine Loan and Mercantile Agency Co (1890) 68 WR 629 referred to the possibility of separate and subsequent proof of relevant events. The deficiency was again the omission of the words “Before me” above the signature of the person who had taken the affidavit. Cotton LJ said, after referring to a rule of court similar to rule 35.1 of the Uniform Civil Procedure Rules (see paragraph [40] below): If it is shown to our satisfaction that this affidavit was, in fact, sworn before a person who had authority to administer the oath in the place where the affidavit was sworn, we are authorised, notwithstanding the defect in the form of the jurat, to direct that it be placed, or allowed to remain upon the file. [35] It is significant that Cotton LJ referred to the defective document as an “affidavit”. In Ex parte Hall also the document was referred to as an “affidavit”, despite the absence of the Commissioner’s signature. This is because the quality of a document as an affidavit does not depend on its content but on the factual circumstances in which it was subscribed. [36] This point is emphasised in United States decisions. In Wiley v Bennett 68 Tenn 581 (1877), for example, it was said of an affidavit not attested by the issuing clerk that “[t]‌he fact that it was sworn to is the substantial matter, and the omission of the clerk to do his duty by attesting it, cannot be allowed to prejudice the party”. In Gossard v Vawter 21 NE 2d 416 (1939), the Supreme Court of Indiana stated the “majority view” among United States courts at that point to be that omission of a jurat “is not fatal to the validity of the affidavit, so long as it appears, either from the instrument itself or from evidence aliunde, that the affidavit was in fact duly sworn to before an authorised officer” [emphasis added]. To like effect is following passage in the judgment in Land Clearance for Redevelopment Authority v Zitko 386 SW 2d 69 (1965), concerning the absence of a jurat: The jurat is not such a part of an affidavit that its omission will render the affidavit a nullity, at least where the affidavit is otherwise properly executed. Thus, ordinarily a jurat is not essential to an affidavit if the fact of the due administration of the oath is otherwise shown. [emphasis added] [37] More recently, in State of Tennessee v Keith and Collins 978 SW 2d 861 (1998), the Supreme Court of Tennessee said: [W]‌e are not confined to the four corners of the affidavit in determining whether it has been properly sworn. Accordingly, we conclude that although it is preferable that every affidavit contain a completed jurat, an incomplete or defective jurat does not invalidate a warrant issued upon probable cause if it is proven by extrinsic evidence that the supporting affidavit was properly sworn by the affiant. [38] It is not unusual for the court to receive evidence of the circumstances surrounding the creation and signing of a document said to be an affidavit. In both Radiancy (Sales) Pty Ltd v Bimat Pty Ltd [2007] NSWSC 962; (2007) 25 ACLC 1216 (White J) and Abraham v Joada Shiskey Co Pty Ltd [2007] NSWSC 931 (Hammerschlag J), judges of this court have recently addressed the question whether an [13.140]  763

Civil Procedure in New South Wales

Fastlink Calling v Macquarie Telecom cont. affidavit was actually sworn and subscribed before the person who appeared to have taken it. In the former case, it was found that the signature was a forgery and that no oath or affirmation had been administered, so that a supposed affidavit was not an affidavit at all. There is no reason of principle why the same process of inquiry should not be undertaken when it is sought to prove the positive rather than the negative. [39] The document now before me, which is signed by Ms Jebril and states that it was “sworn”, will properly be regarded as an affidavit if, as a matter of fact, it was sworn by her before Mr Chouman, the solicitor whose name appears after “Name of witness”. Lacking his signature, it is an irregular affidavit but nonetheless an affidavit, provided that the factual matter to which I have just referred is proved. [40] That brings me to rule 35.1 of the Uniform Civil Procedure Rules: Irregularity does not invalidate affidavit (cf SCR Part 38, rule 5; DCR Part 30, rule 5; LCR Part 25, rule 5) An affidavit may, with the leave of the court, be used despite any irregularity in form. [41] The message here is that an affidavit which is irregular may be used in proceedings if the court so allows. If Ms Jebril’s purported affidavit is shown by extrinsic evidence to have been sworn before Mr Chouman, it will, for reasons stated, be properly regarded as an affidavit, albeit one in which there is an “irregularity of form” as mentioned in rule 35.1. Its use in court will then be dependent upon a grant of leave under that rule. But, as I have said, its character as an affidavit –​and therefore as a document of the kind contemplated and required by s 459G(3)(a) of the Corporations Act –​will be established. [42] The plaintiff has sought to adduce evidence from Mr Chouman by reading a purported affidavit of his. The content of the purported affidavit is as follows: 1.

I am the solicitor on the record for Plaintiff, Fastlink Calling Pty Ltd A.C.N 110 228 101, Supreme Court of New South Wales Case Number 1189/​08 concerning S.459G Corporations Law.

2.

I filed an Originating Process in that matter dated 21 November [sic] 2008 together with an Affidavit of Ana Jebril a copy annexed herewith and marked with the letter “A”.

3.

Ana Jebril swore the Affidavit and placed her signature on the Affidavit before me at Greenacre. I unintentionally and due to oversight at the time did not place my signature in the “Signature of Witness” part of the Affidavit.

[43] The defendant says that this document is not itself an affidavit and therefore should not be received because, while the jurat is complete and the two signatures appear, the operative words are “do solemnly declare”, not “say on oath” or “affirm”. But in this case also, the words “Sworn at Greenacre” appear and it must be accepted that the statements were made on oath. [44] Objection was taken to Mr Chouman’s affidavit on the basis that his statement that “Ana Jebril swore the Affidavit” is not a statement of fact but a statement of legal conclusion. Given that this part of the solicitor’s affidavit merely repeats something to which he would have attested had he signed the jurat, I intend to accept and rely on his statement. [45] Mr Chouman has sworn that the document a copy of which is annexed to his own affidavit and marked “A” is a copy of the affidavit sworn by Ms Jebril before him. The document signed by Ms Jebril, as “filed with the Court” (s 459G(3)(a)) consists of nine sheets stapled together. The first is a cover sheet. The second contains the narrative, Ms Jebril’s signature and the incomplete jurat. The other seven sheets, which together make up the single annexure referred to in the document, consist, as to five sheets, of a copy of a statement of claim filed in Common Law Division proceedings and, as to the remaining two sheets, a copy of a document that appears to contain a brief statement of the issues raised in these proceedings.

764 [13.140]

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Fastlink Calling v Macquarie Telecom cont. [46] The annexure “A” to Mr Chouman’s affidavit, by contrast, consists of copies of four of those nine sheets only, being the cover sheet, the sheet containing narrative, Ms Jebril’s signature and the incomplete jurat and each of the two sheets containing a brief statement of the issues raised in the Common Law Division proceedings. The four sheets annexed to Mr Chouman’s affidavit are copies of the first, second, eighth and ninth sheets of Ms Jebril’s document in the court file. The annexure to Mr Chouman’s affidavit contains no copy of any of the five pages making up the Common Law Division statement of claim included in the annexure to Ms Jebril’s document. [47] Mr Chouman’s affidavit thus cannot prove that Ms Jebril swore before him the affidavit of nine pages filed with the originating process on 22 January 2008. The most it can prove, if it proves anything, is that Ms Jebril swore before Mr Chouman an affidavit of four pages in the form of its annexure “A”. The annexures to an affidavit are, of course, an integral part of it: Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409; (2000) 158 FLR 338. There is, in any event, a question whether the four pages attached to Mr Chouman’s affidavit are properly regarded as an annexure. The annexure note or certificate on the four pages is signed by the deponent, not (as required by rule 35.6(2) of the Uniform Civil Procedure Rules) by the person before whom the affidavit was made. There is thus no verification by a person authorised to take affidavits that the four pages were annexed at or before the time the oath was administered. Because Mr Chouman’s affidavit cannot prove the matter crucial to the plaintiff’s application, I do not pause to consider the effect of that deficiency. [48] The court cannot find that the document of nine pages signed by Ms Jebril and filed with the originating process on 22 January 2008 was signed by her before and attested by Mr Chouman. There can therefore be no finding that he administered an oath to her in relation to the document or that it is an “affidavit”. Since it is not suggested by the plaintiff that any other affidavit was filed within the period of 21 days specified in s 459G, there is no basis on which the court can conclude that an affidavit supporting the application in the originating process was “filed with the Court” as contemplated by s 459G(3)(a). The first of the preliminary questions is therefore answered in the negative and adversely to the plaintiff. [49] It is therefore unnecessary to consider the second question, that is, whether a copy of the affidavit supporting the application was served on the defendant, so as to satisfy the condition in s 459G(3)(b). It is, however, relevant to observe that the document served on the defendant (as tendered by it to the court) was the document of four pages a copy of which was annexed to Mr Chouman’s affidavit, not a copy of the document of nine pages filed with the court. It follows that, even if it had been found that the document in the court file signed by Ms Jebril was an affidavit, it would have been impossible to find that a copy of that affidavit had been served by the plaintiff on the defendant, whether within the period of 21 days referred to in s 459G or at all. [50] I have mentioned only in passing, to this point, that the document signed by Ms Jebril does not record in its body the date on which it was sworn, in that there is a blank space after “Date” (see paragraph [4]‌above). Surprisingly, one might think, Mr Chouman’s affidavit sworn in what has turned out to be a vain attempt to patch things up does not identify the date on which Ms Jebril swore the affidavit before him. However, the cover sheet of Ms Jebril’s affidavit carries the date 21 January 2008 and the annexure note (see paragraph [6] above) refers to “the affidavit of Ana Jebril sworn on 21 January 2008”. That deficiency would therefore not have stood in the way of a finding that the document was an affidavit, had that conclusion otherwise been available. [51] In the result, the plaintiff has failed to prove that the application now before the court was, in the words of s 459G(3), “made in accordance with this section”. The court therefore has no jurisdiction to make an order setting aside the statutory demand. The originating process will accordingly be dismissed with costs.



[13.140]  765

Civil Procedure in New South Wales

Practical Litigation in the Federal Court of Australia: Affidavits [13.150]  Justice Arthur R Emmett, “Practical Litigation in the Federal Court of Australia: Affidavits” (2000) 20 Australian Bar Review 28 Admissible evidence Evidence given by way of affidavit must be admissible in the same way as evidence given orally. Clearly, evidence given by way of affidavit is different in structure from evidence given orally. That is to say, affidavit evidence will be in narrative form whereas oral evidence will, for the most part, be in the form of questions and answers. Nevertheless, the narrative must be in a form that is admissible. It is not appropriate to deal in this context with the law of evidence generally. However, it is appropriate to make some observations about infringements that are regularly found in connection with affidavits. Relevance There is sometimes a tendency, particularly with an urgent matter, for an affidavit to be based on notes prepared by a lay witness. A lay witness will not necessarily be versed in the intricacies of the law of evidence and may include irrelevant statements. Such statements should not be allowed to creep into an affidavit. … Hearsay Save for the exceptions provided for in the rules and the Evidence Act, hearsay is equally inadmissible in affidavits as in oral evidence. However, even where hearsay is permissible, it should be given in proper form. The [Evidence Act s 75] permit evidence at interlocutory hearings to be given on information and belief. … The deponent must give the source and ground of the information relied on. Where, for example, the information is derived from an oral communication from another person, the terms of that communication should be deposed to as best as possible. Hearsay is sometimes disguised in the form of an unqualified statement. However, unless the ground is laid for the deponent to be able to make such a statement, such a statement is inadmissible. For example, an affidavit may contain the following statement: On 1 April 1999 Bloggs drove a motor car recklessly down George Street. Unless the qualification of the witness to make such a statement is also contained in the affidavit, the statement is inadmissible. Thus, it may be that the deponent makes the statement because he has been informed that it is the fact and believes that it is so. If that is his qualification, he should say so. The evidence would then only be admissible in circumstances where hearsay would be admissible. On the other hand, if the deponent can give the evidence first hand, it should be prefaced by evidence such as: On 1 April 1999 I was familiar with Bloggs because I have known him for some time. On that day I was standing on the footpath in George Street when I observed a motor car being driven by Bloggs. I watched the car as it zig zagged from one side of George Street to another.

 Drafting affidavits [13.160]  An affidavit must comply with the requirements as to form and the rules of evidence

as set out above. The approved form for an affidavit is Form  40. The acquisition of the information needed for the drafting process will also benefit from following the suggestions 766 [13.150]

Preparing and Presenting Evidence  Chapter  13

for witness preparation as set out above. However, judges and legal practitioners have also provided suggestions as to best practice for drafting affidavits which include:2 • identify the deponent and their relationship to the dispute; • set out the matters in the affidavit in a logical manner  –​this may or may not be a chronological sequence; • use the witness’s own words; • conversations should be stated in direct speech, that is, the first person –​I said, she said; • state facts the witness has personal and actual knowledge of, not opinions or assumptions unless the affidavit is for an expert witness; • be concise but complete; • use headings and in longer affidavits, a table of contents; • avoid irrelevant material; • avoid hearsay, except in interlocutory applications, as an affidavit must be confined to facts the witness can prove from direct knowledge; and • avoid making submissions or arguments.

How to Draft an Affidavit [13.170]  JP Bryson QC, “How to Draft an Affidavit” (1985) 1 Australian Bar Review 250 The principal contribution to an affidavit is what the witness can say. Counsel contributes to drafting an affidavit: • knowledge of the law of evidence and of the practice about the form in which evidence is received; • understanding the issues, relevance; • capacity to marshal facts in order, and with circumstances, so as to produce what the reader can regard as a complete narration; • command of the English language: grammar, spelling and punctuation; • knowledge of the rules and practices of the court about the form of affidavits. The use of affidavits saves time for the court. The evidence in chief emerges quickly. This advantage is only worth having if the evidence is clear and readily comprehensible, and is admissible. Many affidavits are formal; they put before the court facts which could not be disputed, and collect the history of the litigation, or of dealings in a trust, or they show what has happened in a long correspondence, or prove the results of searches; things that could be proved orally, with additional time and trouble, without any advantage to be gained by observing the witness’s demeanour and forming a view on his credit. On the other hand, affidavits may deal with the substance of the party’s case and with matters which can be expected to be disputed. An affidavit is the sworn evidence of a witness. What is taking place is a communication between the witness and the court. An affidavit is not an opportunity for counsel to open his mind to the court. But they usually sound like a barrister talking. In a formal affidavit this is not important. Where there is to be an issue about the facts deposed to, the affidavit is much more use if the witness comes

2

White R, “Overview of the Evidence Act” (2010) 34 Australian Bar Review 71 at 104–​ 107; Young P, “Affidavits” (The 2008 Judges Series –​Affidavit Evidence in the Federal Court and Supreme Court, College of Law, Sydney, 13 February 2008); Bryson J, “Affidavits” (1999) 18 Australian Bar Review 166; Young P, “Affidavits –​Part II” (1992) 66 Australian Law Journal 298; Apps A, “Affidavits –​Part I” (1992) 66 Australian Law Journal 163; and Bryson J, “How to Draft an Affidavit” (1985) 1 Australian Bar Review 250. [13.170]  767

Civil Procedure in New South Wales

How to Draft an Affidavit cont. through. The witness bears the primary responsibility; he is putting his oath to the document and (if it is false) perjuring himself. Counsel’s many responsibilities include responsibility to the witness for what counsel leads him into swearing. When challenged about passages in their affidavits witnesses sometimes resort to saying: “I did not notice that when I read it”; “My lawyer put that in”; or “I don’t understand that part”. A witness is not likely to say any of these about his oral evidence. If the witness takes any of these lines, not much credit will be given to him or his affidavit. He will not take these lines if he really participated in the preparation of his affidavit. Except for formal affidavits, it is not possible to draft an affidavit properly without seeing the witness. When you see him, do not do all the talking –​get him to talk. If this takes time, you must use time. The document you produce must be something which the witness will regard as his own document. He may be drifting along in the belief that because you are drafting the affidavit, all will be well and he need not think about it. Do not let this happen. Put on him the task of reading through the draft and telling you it is correct, or where it should be corrected. It is important to draw from the witness, and to get down in his affidavit, his relevant evidence, complete, as understood by him, and unembellished by anyone else’s interpretation. He will only forget the embellishment and disavow it later. The court will soon compare or contrast the comprehension and powers of expression shown in cross-​examination with the language of the affidavit. While the witness should come through, and his affidavit should be his expression, not yours, an affidavit should not sound like ordinary speech, because ordinary speech will not serve the purpose. A spoken stream of consciousness leaves the critical hearer with an accumulation of further questions to ask; matters left incomplete and impressions not based on the speaker’s words but on other forms of expression; tones of voice, significant pauses, nudges and winks. Few people have the self-​discipline to pursue a statement of one matter completely before turning to another. Almost everybody finds it very difficult to do what the courts require, and relate the terms of a statement or conversation rather than its effect produced on their own minds. Counsel must get the witness to face up to what took place, and say what took place; and then get that down, with clear expression, in words. The witness’s story must be told with circumstances so as to give the reader an impression that there has been a complete narration of the relevant facts. If the evidence is of a conversation, it must say when it took place, where it took place, and who was there. It must say what each of those present said, or whether they said nothing. It must say what they said, and not give the results in indirect speech. If the witness has an exact recollection he should set it out, but if he is speaking to the best of his recollection without a precise memory of the words used, he should say so. If he says he sent a letter, he should say how.



Ying v Song [13.180]  Ying v Song [2010] NSWSC 1500 WARD J [1]‌This matter involves a dispute between former family members over shares in the second defendant (Budget Scaffold Supplies Pty Ltd, to which I will refer as BSS) and in respect of amounts recorded at one stage in the financial records of BSS as a shareholder loan from the plaintiff (Ming Ying) to the company. 768 [13.180]

Preparing and Presenting Evidence  Chapter  13

Ying v Song cont. [2]‌Ming Ying’s sister (Hua Ying) was formerly married to the first defendant (Lida Song). There are Family Court proceedings presently on foot between the couple (that I was told have been stayed pending the outcome of these proceedings). Mr Song explains the family relationship as the reason for his involvement in the events which have led to the present dispute with his former brother-​in-​law, Ming Ying. [3]‌There is a stark difference in the version of the relevant events proffered by Ming Ying and that proffered by Lida Song. According to Ming Ying, he paid some $106,025 to acquire shares in BSS, shares which Lida Song later transferred back to himself, without Ming Ying’s consent, in 2005. Ming Ying, in these proceedings, seeks declaratory relief in relation to those shares and in relation to $106,000 of the funds he says he paid to the company for their acquisition and other funds he says were later provided to the company (in the order of some $30,775). According to Lida Song, however, the shares were only transferred to Ming Ying (and the company’s records recorded shareholder loans by Ming Ying) as part of an attempt to present a false impression of Ming Ying’s assets in Australia to the Department of Immigration so as to assist in Ming Ying’s attempt to obtain permanent residency in Australia. … [189] There was also criticism of the many and various attempts to adduce affidavit evidence from Ming Ying (some of which were referred to in one of the interlocutory judgments I gave in this matter). Again, I do not think Mr Ying can fairly be criticised for the difficulties that were occasioned in this regard. It seems to me that the fault is more likely to lie on inadvertence by those responsible for the preparation of the affidavit evidence (perhaps due to an assumption that certification of translation of the affidavit and the like was a formality that would not be subjected to the scrutiny given by Counsel for the defendant or the rulings made by me). In any event, I doubt that Mr Ying had any hand in the decision-​making as to how his affidavits were to be formally sworn, translated and witnessed. [190] That said, it was apparent from reviewing the affidavits that much of the later affidavit evidence must have been prepared by cutting and pasting material from Mr Ying’s earlier affidavits –​ even material that had in the interim been corrected by other affidavits sworn by Mr Ying. Neither Mr Ying (nor for that matter his sister) accepted that this was the case but it beggars belief that a witness (whose various affidavits seem to have been translated by different people over the years) would recall in almost precisely the same words various conversations (or revert to earlier versions of conversations that in the interim had been corrected). This may diminish the reliability and hence the weight to be accorded to that evidence (on any of the various versions). [191] I note that in Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674 Palmer J, there considering the weight to be attributed to two affidavits dealing with critical discussions in virtually identical terms in circumstances where the evidence was that the solicitor who prepared the affidavits had “copied and pasted” portions from each, noted that: [I]‌t is totally destructive of the utility of evidence by affidavit if a solicitor or anyone else attempts to express a witness’ evidence in words that are not truly and literally his or her own. Save in the case of proving formal or non-​contentious matters, affidavit evidence of a witness which is in the same words as affidavit evidence of another witness is highly suggestive either of collusion between the witnesses or that the person drafting the affidavit has not used the actual words of one or both of the deponents. Both possibilities seriously prejudice the value of the evidence and Counsel usually attacks the credit of such witnesses, with good reason. Where the identity of evidence is due to collusion, the devaluation of the evidence is justified but where, as in the present case, the identity of evidence is due entirely to a mistake on the part of a legal adviser, a witness’ credit and a party’s case may be unjustly damaged. [192] Similar caution was shown by Sperling J in Seamez v Mclaughlin [1999] NSWSC 9 when he said that: [13.180]  769

Civil Procedure in New South Wales

Ying v Song cont. Having regard to a high degree of similarity in content, detail, terminology and sequence (particularly in relation to conversations) between the affidavits of the three witnesses, I am satisfied that the affidavits cannot have come into existence without direct or indirect collaboration. [193] His Honour noted that: [a]‌cceptance of one of the three accounts of the events … means not only that the other two are not genuinely recollected, independent accounts. It also means that the authors of those other accounts have misstated the way in which their respective accounts came into existence, and seriously so. The credit of the others would then be worthless. [194] Those cases were considering the position where the cut and paste versions were as between different witnesses evidence. More close to the present case, in Dialog Pty Ltd v Addease Pty Ltd [2003] FCA 1359, Cooper J did not accept as the witness’ independent recollection evidence produced by way of a “cut and paste” exercise. [195] The way in which Ming Ying’s affidavit evidence seems to have been prepared (and the fact that as at 5 November 2009 he appears to have deposed to a version of events which by then he had already appreciated was incorrect) must give rise to doubts as to whether any particular version of the affidavit evidence represents a reliable recollection of events uninfluenced by what he had said earlier or what had been contained in earlier affidavits. [196] Apart from the fact that this reduces the confidence I might otherwise be able to place in the affidavits recounting Mr Ying’s own recollection of events –​as opposed to my impression that they reflect to a large extent a cut and paste exercise by one of his lawyers, the inconsistencies across different affidavits sworn by Mr Ying (which may well have been a function of the cutting and pasting of earlier affidavits) nevertheless leads me to view the affidavit evidence of Mr Ying with some caution. On Mr Ying’s own oral evidence, not all of his affidavit evidence was correct and nor was it necessarily complete in any particular affidavit. This casts doubt on the general reliability of Mr Ying’s recollection.

 False swearing

Oaths Act 1900 (NSW) [13.190]  Oaths Act 1900 (NSW) ss 29–​31, 33 29 Penalty for swearing falsely in affidavits Except as provided by section 33, every person wilfully swearing falsely in any affidavit made before any such justice of the peace or other person so authorised to take affidavits, shall be deemed guilty of perjury and shall incur and be liable to the same pains and penalties as if the person had wilfully sworn falsely in open Court in a judicial proceeding in the Supreme Court. 30 Untrue document purporting to be affidavit Where a person wilfully makes and subscribes a document that purports to be, but is not, an affidavit taken and received in accordance with the requirements of section 11A, knowing it to be untrue in a material particular not related to any requirement or formality necessary for the making of an affidavit, that person is guilty of an offence and:

770 [13.190]

Preparing and Presenting Evidence  Chapter  13

Oaths Act 1900 (NSW) cont. (a)

upon conviction on indictment –​liable to imprisonment for 5 years, or

(b)

upon conviction by the Local Court –​liable to a penalty not exceeding 5 penalty units or imprisonment for a term not exceeding six months.

31 Alternative verdict where false swearing not proved Where, on the trial of a person for false swearing in an affidavit, it appears that the document purporting to be the affidavit was not taken in accordance with the requirements of section 11A but the jury is satisfied that the accused wilfully made and subscribed the document knowing it to be untrue in a material particular not related to any requirement or formality necessary for the making of an affidavit the accused may be acquitted of the offence charged and convicted of an offence under section 30. 33 False statements (1)

Any person who, having made an affidavit under section 32, wilfully makes a false statement in the affidavit, knowing the statement to be false, is taken to be guilty of perjury if the making of the statement, had it been on oath, would by law have been perjury.

(2)

No prosecution for an offence referred to in subsection (1) is to be commenced without the sanction of the Attorney General.



Revised Professional Conduct and Practice Rules 1995 [13.200]  The Law Society of New South Wales, Revised Professional Conduct and Practice Rules 1995 (Solicitors’ Rules) rule 17 Solicitors Rules –​17 –​Preparation of affidavits 17.1

If a practitioner is:



17.1.1

aware that a client is withholding information required by an order or rule of a court, with the intention of misleading the court; or



17.1.2

informed by a client that an affidavit, of the client, filed by the practitioner, is false in a material particular;



and the client will not make the relevant information available, or allow the practitioner to correct the false evidence; the practitioner must, on reasonable notice, terminate the retainer and, without disclosing the reasons to the court, give notice of the practitioner’s withdrawal from the proceedings.

17.2

A practitioner must not draw an affidavit alleging criminality, fraud, or other serious misconduct unless the practitioner believes on reasonable grounds that: 17.2.1

factual material already available to the practitioner provides a proper basis for the allegation;

17.2.2

the allegation will be material and admissible in the case, as to an issue or as to credit; and

17.2.3

the client wishes the allegation to be made after having been advised of the seriousness of the allegation.



[13.200]  771

Civil Procedure in New South Wales

Practical Litigation in the Federal Court of Australia: Affidavits [13.210]  Justice Arthur R Emmett, “Practical Litigation in the Federal Court of Australia: Affidavits” (2000) 20 Australian Bar Review 28 False swearing A person before whom an affidavit is made must not permit the swearing of an affidavit that he or she knows is false. Further, such a person should not permit an affidavit to be sworn if the person has reason to believe that the deponent does not understand the contents of the affidavit or the nature of an oath or affirmation. [Bourke v Davis (1889) 44 Ch D 110] It is a regular occurrence to read affidavits that contain obvious mistakes that would have been detected had the deponent taken the trouble to read the affidavit before swearing it. Such mistakes might be purely typographical or they may be direct inconsistencies with earlier material. A practitioner who is responsible for the taking of an affidavit should be assiduous to ensure that the deponent has read and understands its contents. The duty of a person who administers an oath in relation to an affidavit is to satisfy himself or herself that the witness thoroughly understands that to which the witness is going to swear. A person who administers an oath should not be satisfied on that question by anyone but the witness himself or herself. Affidavit evidence can only be entitled to the same weight as oral evidence if those who swear affidavits realise that the obligation of the oath is as serious when making an affidavit as it is when making statements in the witness box. It is axiomatic that legal practitioners must not partake in the preparation of false affidavits. [Myers v Elman [1939] 4 All ER 484] Even if, at the time when an affidavit is made, a practitioner has no good reason to suppose that the affidavit is untrue, the practitioner has a duty to the court to inform the client that the opponent must be told of facts that subsequently come to the knowledge of the practitioner, being facts that show clearly that the original affidavit was untrue. If the client refuses to assent to that course, the practitioner should cease to act. The conscious withholding of information from an affidavit that creates a misleading impression is equally reprehensible. [In re Thom (1918) 18 SR (NSW) 70] It is of the greatest importance that any mere casuistry in the presentation of evidence should be strictly avoided by those entrusted with the responsible duties of a legal practitioner. It may be easy, by casuistical reasoning, to reconcile one’s mind to a statement that is in fact misleading, by considering that the deponent is not under any obligation to make a complete disclosure. By that means, a practitioner may be led into presenting a statement of fact that, although it is not directly untrue, presents a body of information that is misleading and conceals from the court the true state of facts that the deponent is professing to place before it. On the other hand, it is not the duty of a legal practitioner to verify every fact asserted by a prospective deponent. Where a practitioner is dealing directly with a witness in relation to a matter on which the witnesses could be expected to have complete and accurate knowledge, the practitioner would be entitled to rely on the witness, unless there were other circumstances to put the practitioner on notice of enquiry as to the veracity of the facts asserted by the witness. [El-​Kalza v Thompson (1991) ANZ Conv R 11] However, where a witness asserts facts that the practitioner knows could not possibly be within the knowledge of the witness, the practitioner could well have an obligation to obtain some verification or corroboration.



DPP v Marijancevic [13.220]  Director of Public Prosecutions (DPP) v Marijancevic; DPP v Preece; DPP v Preece (2011) 33 VR 440; [2011] VSCA 355 [Three accused were on trial for drug manufacture and trafficking. The prosecution case relied on evidence obtained by search warrants executed by Victoria Police. The trial judge found that affidavits 772 [13.210]

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DPP v Marijancevic cont. in support of the warrant put before the issuing magistrate were signed but not sworn or affirmed. Therefore, the trial judge found that the search warrants were invalid and the evidence was illegally obtained (it was obtained in contravention of s 81 Drugs Poisons and Controlled Substances Act 1981 (Vic)). The trial judge ruled that the evidence obtained under the relevant warrants was excluded. The DPP appealed. This case highlights the requirements for sworn written evidence which applies in both civil and criminal proceedings.] WARREN CJ, BUCHANAN AND REDLICH JJA [22] Detective Senior Constable Richards, the officer who eventually executed one of the search warrants testified that he drafted it and then gave it to Detective Senior Sergeant McIntyre. He believed that the affidavit in support of it was duly sworn. He, together with other officers entered the premises the subject of the warrant in the belief that the warrants authorised entry. [23] Detective Senior Sergeant McIntyre testified that the affidavit was prepared by staff, proofed and then signed in the presence of Detective Inspector Davies. McIntyre said he did not take the oath but that he thought signing the document committed him to the truthfulness of its contents. The practice employed with respect to these warrants was the only one he had ever experienced. He said he had never been required to swear on the bible or make a verbal utterance. He understood the expression “sworn” was achieved by acknowledging what was in the document and that by signing he was “swearing” it. McIntyre had no specific memory of police training on the point during his senior sergeant’s course. [24] McIntyre’s practice was to go into Davies’ office and sign in front of him or sit at his desk on the other side of a glass petition, sign, drop the affidavit on the desk of Davies to witness. McIntyre said that although Davies could be in a different room by virtue of the glass petition, he was always able to see him, McIntyre, signing. McIntyre said he never thought about the oath. Because of the importance of his evidence we should refer to it in further detail. [25] In his evidence Senior Sergeant McIntyre testified as follows: [Ibid 714.] My understanding signing the affidavit in the manner that I did was of committing myself to the truthfulness of the content of the affidavit and it was part of the process to have that affidavit validated to submission to a court for the issue of a warrant. His Honour then asked Senior Sergeant McIntyre the following questions: [Ibid 714–​717.] HIS HONOUR: What’s your definition of affidavit? –​Well, in respect to a search warrant it’s the –​the Form 708A which is the Victoria Police Form that contains the information for, or in support of –​ Are you saying that you were unaware that an affidavit had to be sworn? –​Well, I was of the belief the process I was going through was swearing the affidavit. MR PAPAS: Had you had any training in the course of your –​either detective training or initial training or subsequent training, the one you mentioned, so that –​I’ve identified three lots of training, but you tell us how many times you’ve been trained as a police officer? –​ I’ve been trained numerous times. I have got no specific recollection of training in respect to that particular aspect of taking out affidavits. The most like –​well, my research in the last few days is there is information within various manuals in respect to it, and it may very well have been something that was touched upon. HIS HONOUR: Did you read the affidavit before you signed it? –​ Yes. Doesn’t it say, “I, Stephen McIntyre, Detective Senior Sergeant, at the Clandestine Laboratory Squad, make oath and say”? –​ Yes. What does “make oath” mean? –​Well, my interpretation at that point of time, and it has been up until today, or yesterday, that I was making oath by acknowledging that document. How were you doing that? What did you want –​to make oath, what does an oath mean to you? You’ve been in court, I’m sure, on countless occasions when people have gone into the witness box and taken the oath? –​ Yes. Is that right? –​I’d never considered the subject. [13.220]  773

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DPP v Marijancevic cont. Of what an oath means? –​In respect to the taking out of an affidavit for a search warrant, it’s not something I had ever turned my mind to. You understand when someone goes in the witness box, and you’ve done it no doubt yourself countless times, you’re taking an oath when you swear on the Bible? –​ Yes. That’s what it means? –​I understand that, Your Honour. Well, how can you read this “make oath and say” without understanding what oath means? It just beggars belief. MR PAPAS: What did you understand –​ HIS HONOUR: Well, no, could he answer the question, please? –​I’m sorry, Your Honour, I was unaware of –​what was the question? I’m putting to you that I just can’t understand how you wouldn’t –​? –​ Okay.  –​understand what oath means in affidavit, in the first three lines, four lines of it? –​This is a practice, and the only process in respect to taking out affidavits I’ve ever experienced. I have never had to swear on a Bible or make a verbal utterance in the course of taking out hundreds of search warrants by way of an affidavit. MR PAPAS: When would you have first started being the person who was the deponent for affidavits in relation to search warrants, just as best you can, which year? –​Probably around about 1991, in respect probably at that stage to stolen good, search warrants. Later on when I was promoted to the rank of sergeant there would have been drug warrants and –​ So that’s a deponent? –​ Yes. HIS HONOUR: Just –​let’s go back to the facts. Sworn at, that wasn’t filled out. Why was that? –​I have got no explanation as to why that wasn’t filled out. Or the date? –​It should have been. Well, the word “sworn”, what does that mean to you? –​Well, my understanding that by acknowledging what was in that document, by way of signing it, I was swearing it. Is there anything in what we call the jurat, as you know in witness statements –​? –​ Yes. –​of acknowledgments, “I hereby acknowledge this is true and correct in the belief if it’s wrong I’m subject to the penalties of perjury”, that sort of phrase? –​ Yes. There’s nothing like that there, is there? –​No, there isn’t. There’s nothing to indicate that it’s true and correct, is there? –​No, Your Honour. Except it says the words “sworn at”? –​ Yes. You say the word “sworn” has no meaning to you at all? –​Well, I’d never turned my mind to the actual document as, as I said. But the process I always accepted, that by doing the signing of that document I was accepting the truthfulness of the document and the contents of the document, and that would suffice. At no stage had I even turned my mind to it, because it’s the only practice I have ever seen. MR PAPAS: What did you consider in relation perjury? Were you subject to perjury if you told a lie in any of these documents? –​Yes, definitely. HIS HONOUR: How? –​By virtue of –​ You hadn’t taken an oath? –​Well, in my mind I had. How had you taken an oath? –​By virtue of witnessing and signing on that –​ All you’ve done is sign your name and someone’s witnessed it. There’s not even an attestation that this is true and correct? –​That’s my understanding as of yesterday, that’s correct, Your Honour. You were saying this is a common practice in Victoria Police? –​I’m saying this is the only practice I’ve ever seen in Victoria Police. [26] Senior Sergeant McIntyre further told his Honour that he had followed this practice in obtaining every warrant he had ever been involved in, throughout his career. That led his Honour to suggest to the prosecutor that Inspector Davies, the person before whom the affidavit was signed, should also be called to give evidence and that someone of much higher rank should be called to explain to the court how the practice had evolved in the clear face of what the law required. Later the 774 [13.220]

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DPP v Marijancevic cont. same day his Honour reiterated that he needed to have someone in authority from the Victoria Police that could explain such a practice and how it had evolved. [Ibid 724, 727.] [27] Following the completion of Senior Sergeant’s evidence-​in-​chief and further discussion with counsel, his Honour ruled that the relevant search warrant had been improperly or illegally obtained as there was no supporting affidavit as required by s 81(1) of the Drugs Poisons and Controlled Substances Act. As the warrant was unlawful, the entry on to the land and premises, the subject of the warrant, was in fact a trespass. His Honour then referred to the foreshadowed application under s 138(1) of the Evidence Act that the evidence should be excluded because of that illegality. His Honour made a brief reference to the joint judgment of the High Court in Ridgeway v The Queen, in which the concept of impropriety was described as conduct “inconsistent with minimum standards of acceptable police conduct in all the circumstances”. His Honour considered it had been established on the balance of probabilities that the trespass and the non-​swearing of the affidavit constituted improper conduct. [28] Following lengthy discussions with counsel concerning the relevant warrant and other warrants that had been issued, the prosecutor then responded to the trial judge’s earlier request and called Superintendent Guerin to testify that when he learned that Senior Sergeant McIntyre had not sworn on oath as to the truth and accuracy of the contents of the affidavit, he made enquiries from various working groups in the crime departments and ascertained from some 25 detectives that they all consistently followed a process similar to that described by Senior Sergeant McIntyre. [29] After discovery of what had occurred in this case, Guerin said that a bulletin was sent out to police concerning the requirements for the swearing of affidavits. [35] The trial judge then sought to summarise Senior Sergeant McIntyre’s evidence in the following series of questions: [Ibid 1034–​1035.] HIS HONOUR: What you’re saying is you failed to give any thought to the issue of whether you were swearing an affidavit or not? –​No, the –​I was certainly conscious of making sure it was filled out correctly with all the right information in there, that it was all lawful, that there was no perjury in there –​ But you failed to give any thought to the issue of what the word “oath” means? –​ Yes. And what the words “sworn at” mean? –​No, I wouldn’t say sworn –​oh, well, yes, you’re right. The word “sworn”, probably not “at”. No, the word “sworn”, you failed to give any thought to the meaning of that word? –​Yes, Your Honour. I believe, yep. Because if you had you would have realised it means more than just signing a document in front of someone witnessing it? –​I believed that it had consequences attached to those words and it –​ No, no, the word “sworn”, when you go in the witness box you swear. To a police officer the word “sworn” has a particular meaning, doesn’t it? –​I suppose it does, in some ways, Your Honour. Your whole working life is to do with giving sworn evidence, correct? –​ Yes. And if you’d given any thought to the meaning of “sworn” when you’re making these affidavits you would have understood that you weren’t actually swearing? –​That’s correct, Your Honour. And if in fact you had given any thought to it and gone to the material that you now know is available, no doubt you wouldn’t have continued the practice? –​I can guarantee I wouldn’t have, Your Honour. [36] Senior Sergeant McIntyre also stated a number of times that he knew it was important to get the process right as he knew that otherwise he could potentially lose the evidence if he had not done things properly. [Ibid 1045.] [37] It was only in the final questions of counsel for the third respondent in cross-​examination that the suggestion was made for the first and only time that it was untruthful for Senior Sergeant McIntyre to claim that he had never turned his mind to the way in which he should swear those affidavits. He said: [13.220]  775

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DPP v Marijancevic cont. I always thought I was appropriately swearing them and therefore I never thought any further of it. I have thought about it the affidavit process, I’ve thought about the appropriateness of the form itself but I have never thought about the oath. This is all a deliberate cutting of corners because in your own words you were just simply too busy to do it the right way? Correct? –​No that’s not correct. How easy would it have been to pull that bible out of your desk and do it properly? –​Too easy for me not to have done it. [Ibid 1052.] [38] Following the completion of Senior Sergeant McIntyre’s evidence, his Honour, responding to a submission from the first respondent who was then unrepresented, made plain that on his view of the evidence so far it did not seem to be the case that the impropriety or behaviour was deliberate. [Ibid 1056.] It can be inferred from those observations that in spite of the evidence of Guerin and Hermans, there was nothing in the demeanour or manner in which Senior Sergeant McIntyre gave his evidence that caused the trial judge to doubt the veracity of his explanation. [39] Inspector Davies was then called. He confirmed that his practice, like Senior Sergeant McIntyre’s, was to sign the affidavit without requiring an oath to be administered. Inspector Davies said that he understood that in signing the document the person signing was swearing that it was true and correct. As had Senior Sergeant McIntyre, he testified that he had never seen an oath administered in relation to the swearing of a search warrant. He testified that swearing an affidavit for a search warrant only required what he did and that it was his understanding that in signing the document the police officers were attesting to the truthfulness of the content of the document and were swearing that it was true. He acknowledged he would have received training as a senior sergeant concerning affidavits. He said the affidavits would be signed by the deponent in his presence. He did not have a bible and was ignorant of specific instructions. He had an independent recollection of police at Moorabbin police station being required to swear affidavits. Davies said he knew how to take the affidavit of a member of the public but he had never sworn a policeman on an affidavit. He was unable to explain to the court the distinction between an affidavit made by a member of the public and an affidavit by a member of the police force. … [52] The substance of the trial judge’s reasons for excluding the evidence is to be found in the conclusions to his reasons of 18 October. He considered that to admit the evidence derived from the warrants would be “to ensure that the conviction of the accused is bought at too high a price by reasons of curial approval of the practice”. His Honour continued [Transcript 1260 –​ 1261]: The issuing magistrate was deceived and the integrity of the court was undermined. To approve the bypassing of that requirement by sanctioning the witness of a signature as an equal replacement to an oath would devalue the meaning the of an oath [sic]. To take an oath binds the conscience. Our whole court system relies on oath taking, whether in the witness box or by affidavit. To admit the evidence here, in the face of a systemic practice of avoiding the taking of an oath when making affidavits, would strike at the very heart of the system of taking evidence. So I have said it has not been satisfactorily explained to me why this practice had developed. Cutting corners or culture were mentioned. Either involves a state of mind that, in my view, devalues the significance of the oath. The swearing of an oath would take, at the most, 15 seconds. Was it embarrassing for the crime squad police to raise the bible or make an affirmation in front of other members? Was it considered that to require an oath cast doubt upon the veracity of the member? Was it an inconvenience to be disposed of? Whatever the reason it reflect poorly upon the police members involved. Police, and for that matter, lawyers should not sanction a culture that pays lip service to such a fundamental requirement as the swearing of an oath. The court, by a wink or a nod, should not undermine the protection given to a citizen by s 81(1) of the Drugs Poisons and Controlled Substances Act and should not condone the integrity of the oath. To condone the practice of Senior Sergeant McIntyre and others, would be an acknowledgment that the taking of the oath is an inconvenient charade. 776 [13.220]

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DPP v Marijancevic cont. The practice of not requiring the affidavits in support of warrants to be sworn on oath or affirmed. [53] We should say something as to the endemic practice employed within certain sections of Victoria Police of not requiring the accuracy and truthfulness of the contents of affidavits in support of warrants to be sworn to on oath or by affirmation. [54] The importance of making an affidavit in order to obtain a search warrant can hardly be gainsaid. Trials in courts in Victoria and in all other states and territories proceed upon the basis that the evidence that founds the findings of fact, which determine the guilt or innocence of those accused of crimes, is given on oath or by affirmation. Similarly, the reasonable grounds of which a magistrate must be satisfied before he issues a warrant authorising a member of the police force to enter and search land, premises or a vehicle and seize any thing or document and carry it before the Court, can only be established by evidence on oath or by affidavit. [55] An affidavit is the written form of sworn oral testimony. It is an ancient method of providing evidence in court. [Evidence obtained under the relevant warrants should be excluded] Until 1989, whenever police needed to obtain a warrant they were required to physically attend court and give sworn oral evidence before a magistrate as to the facts relied on to support the granting of a warrant. This was a clear and long standing indicator of the significance and gravity of obtaining a warrant. The 1989 Act amended the provision to enable evidence to be given orally on oath or on sworn affidavit. [Magistrates Court (Consequential Amendments) Act 1989 Schedule cl 42.56.] The new alternative methods from 1989 onwards did not justify or contemplate a derogation of standards –​the evidence was still required to be sworn. [56] The fundamental role which oaths and affirmations play in our system of criminal law is readily apparent. The requirements of s 81 of the Act are not a mere technical ancillary to obtaining a search warrant. Just as courts proceed upon the basis of testimony sworn or affirmed, so do magistrates issue search warrants on the basis of testimony sworn or affirmed. [57] A search warrant authorises an entrance upon property and the seizure of property which would otherwise constitute an unlawful trespass. The common law has jealously guarded private property rights and has upheld the right of property owners to exclude other people and the state. Search warrants, which are obtained ex parte, displace those rights. As the Court said in George v Rockett: The enactment of conditions which must be fulfilled before a search warrant can be lawfully issued and executed is to be seen as a reflection of the legislature’s concern to give a measure of protection to [property] interests. To insist on strict compliance with the statutory conditions governing the issue of search warrants is simply to give effect to the purpose of the legislation. [(1990) 170 CLR 104, [5]‌.] Similarly, Lockhart J in Crowly v Murphy said: Notwithstanding that Commonwealth and State legislation governs the law of entry, search and seizure in Australia today, it is necessary to bear in mind the fundamental legal conception of the freedom of the individual in his home or premises. It is the cardinal principle in the light of which the statutory authority for the issue and execution of search warrants is read. Even today, there is no right of common law to enter a person’s home or premises for the purposes of search or seizure without the permission of the owner or occupier, except in the case of a search for stolen goods. Entry without such permission or authority of a valid warrant is to commit a trespass and to render the trespasser liable to damages. [(1981) 52 FLR 123, 142. See also R v Burrell [2001] NSWSC 120, [25].] [58] To proffer to a magistrate material which is not sworn or affirmed in order to obtain a search warrant has a tendency to subvert a fundamental principle of our law. [Appeal dismissed].

 [13.220]  777

Civil Procedure in New South Wales

Written or oral evidence

Practical Litigation in the Federal Court of Australia: Affidavits [13.230]  Justice Arthur R Emmett, “Practical Litigation in the Federal Court of Australia: Affidavits” (2000) 20 Australian Bar Review 28 There is a general tendency at the present time for evidence in chief to be adduced in written form, either by means of affidavit or by means of written statement (see, for example, [UCPR r 31.4]). Where evidence is uncontroversial, it is clearly convenient that the evidence be adduced in a written form. Such a procedure is capable of saving time and avoiding misunderstanding and confusion. However, where evidence is controversial, particularly where credibility of the witness is involved, the adducing of the evidence in written form is often undesirable and can be quite unfair. An honest witness, albeit nervous in unfamiliar and overbearing surroundings, will be better able to defend in cross-​examination evidence given by the witness in his or her own words. With the very best of intentions, a lawyer who settles an affidavit or a witness statement will invariably reduce the language of the witness to the lawyer’s own language. That may entail changes in meaning and emphasis that, although not intended, may expose a witness to unnecessary difficulties in the course of cross-​ examination. On the other hand, a dishonest witness will always be assisted by having evidence put into credible form by a lawyer. Where an assessment of credit is required, a judge will have a much better prospect of assessing a witness who gives evidence in chief orally rather than being exposed to cross-​examination immediately upon entering the witness box. …

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Oral or Written Evidence [13.240]  Justice PW Young and Christopher Curtis, “Oral or Written Evidence” (1997) 71 Australian Law Journal 459 To my mind written evidence in chief usually leads to a cheaper and better conducted trial. It is true that there is greater expense in preparing the written statement of evidence (which might be in affidavit or statement form), but most of this work would have to be done in any event in preparation for trial. … If the judge has a pre-​trial of proceedings and permission is given (as it always is in New South Wales) for the judge to read all the statements before the trial commences, then up to 50% of the hearing time can be saved. … The judge also has an advantage at the start of the trial. The judge can see the whole picture of the plaintiff’s case from the written evidence and does not have to fit pieces of a jigsaw together as he or she has to do with oral evidence. … The witness also has an advantage. Despite courts becoming far more user-​friendly, many witnesses are still overawed and do not give of their best. Every barrister has had the problem of the witness who gave his or her statement confidently in the barrister’s chambers, forgetting vital aspects in the witness box. … It is often said that written evidence is too much the product of the lawyers’ minds than the clients’. This criticism is often made out, but that is the fault of the lawyers’ preparation rather than that of the system. Indeed it is naïve to believe that the same factor does not influence oral evidence. After a witness has gone through his or her statement four or five times with lawyers, at least short evidence in chief becomes as much a lawyer-​polished version of the truth as a lawyer prepared affidavit.

 778 [13.230]

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EXPERT EVIDENCE [13.250]  The UCPR r 31.18 provides:



“expert”, in relation to any issue, means a person who has such knowledge or experience of, or in connection with, that issue, or issues of the character of that issue, that his or her opinion on that issue would be admissible in evidence. “expert witness” means an expert engaged or appointed for the purpose of: (a) providing an expert’s report for use as evidence in proceedings or proposed proceedings, or (b) giving opinion evidence in proceedings or proposed proceedings. “expert’s report” means a written statement by an expert (whether or not an expert witness in the proceedings concerned) that sets out the expert’s opinion and the facts, and assumptions of fact, on which the opinion is based.

Overview of the Evidence Act [13.260]  Justice RW White, Overview of the Evidence Act, 30 October 2010 http://​www.supremecourt. justice.nsw.gov.au/​Documents/​Publications/​Speeches/​Pre-​2015%20Speeches/​White/​white301010. pdf In modern-​day litigation, the use of expert witnesses has been retained, and has certainly become a well-​entrenched, ubiquitous feature of trials. There is a vast range of matters that the court must determine which attracts the provision of “expertise” claimed to assist the court. Examples range from calling experts in fields of “hard sciences”, such as engineers, chemists, physicists, biologists and medical practitioners, to persons with expertise in broader disciplines, such as accountants, valuers, genealogists and economists. Broadly, the Evidence Act continues to recognise the potential utility of expert evidence by providing that the opinion rule3 does not exclude expert evidence in certain circumstances. This is contained in s 79(1), which states: If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.

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Dasreef v Hawchar [13.270]  Dasreef Pty Ltd v Hawchar [2011] HCA 21 [Mr Hawchar recovered in respect of silicosis caused when he was employed by Dasreef. Hawchar relied on evidence from Dr Basden (chemist and engineer) who provided an opinion on the procedures that an employer could utilise to reduce the risk of a silica-​related injury. The exposure standard for respirable silica was a time-​weighted average of 0.2mg/​m3 over a 40-​hour working week. Dr Basden estimated that the dust concentration generated in Mr Hawchar’s breathing zone was a thousand or more times greater than 0.2mg/​m3. The primary judge used Dr Basden’s evidence (his estimate that the level of respirable dust was a thousand or more times greater than 0.2mg/​m3) as an integer to calculate that the levels of silica dust to which Mr Hawchar had been exposed in the course of working for Dasreef were greater than the prescribed maximum level of exposure.] FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ [30] Section 79(1) of the Evidence Act must be understood in its statutory context. Section 76(1) of the Evidence Act provides that “[e]‌vidence of an opinion is not admissible to prove the existence of a 3

The “opinion rule” is set out in s 76 of the Evidence Act 1995 (NSW): Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed. [13.270]  779

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Dasreef v Hawchar cont. fact about the existence of which the opinion was expressed”. That exclusionary rule is referred to in the Evidence Act as “the opinion rule”. Subsequent provisions of the Evidence Act provide a number of exceptions to the opinion rule. Section 79(1) provides that: If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge. [31] Section 76(1) expresses the opinion rule in a way which assumes that evidence of an opinion is tendered “to prove the existence of a fact”. That manner of casting the rule does not, as might be supposed, elide whatever distinction can be drawn between “opinion” and “fact” or invoke the very difficult distinction which sometimes is drawn between questions of law and questions of fact. It does not confine an expert witness to expressing opinions about matters of “fact”. Rather, the opinion rule is expressed as it is in order to direct attention to why the party tendering the evidence says it is relevant. More particularly, it directs attention to the finding which the tendering party will ask the tribunal of fact to make. In considering the operation of s 79(1) it is thus necessary to identify why the evidence is relevant: why it is “evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding” [See Section 55(1) of the Evidence Act]. That requires identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving. [32] To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence “has specialised knowledge based on the person’s training, study or experience”; the second is that the opinion expressed in evidence by the witness “is wholly or substantially based on that knowledge”.



Admissibility of Expert Evidence [13.280]  Miiko Kumar, “Admissibility of Expert Evidence: Proving the Basis for an Expert’s Opinion” (2011) 33(3) Sydney Law Review 427 (footnotes omitted) … Issues relating to the Admissibility of Expert Opinion A. Importance of Relevance The High Court in Dasreef emphasised the importance of relevance through the plurality’s statement [at [31]]. The fact in issue to which Dr Basden’s evidence was relevant (the protective measures available to Dasreef) was not the same as the use to which the primary judge made of it (as an integer to calculate that Mr Hawchar was exposed to greater than the prescribed maximum level of exposure to respirable silica). Put another way, Dr Basden’s opinion was relevant to proving breach of duty; however the trial judge used it to prove causation. The difference between the relevance for which Mr Hawchar tendered the evidence and the use which was made of the evidence highlighted that Dr Basden’s opinion about the numerical or quantitative exposure was not “based on specialised knowledge Dr Basden had that was based on his training, study or experience”. The form of his opinion did not connect the estimate with his relevant specialised knowledge. B. Criteria Governing s 79 The plurality in Dasreef interprets s 79 as requiring the satisfaction of two criteria:

780 [13.280]

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Admissibility of Expert Evidence cont. The first is that the witness who gives the evidence “has specialised knowledge based on the person’s training, study or experience”; the second is that the opinion expressed in evidence by the witness “is wholly or substantially based on that knowledge”. The first criterion requires a “specialised knowledge” or a field of expertise to exist and that the witness be qualified in the specialised knowledge; and the second criterion requires that the opinion be based on specialised knowledge. In applying s 79, courts have not imposed a criteria of evidentiary reliability to determine the admissibility of expert opinion as was imposed in the United States case, Daubert v Merrell Dow Pharmaceuticals Inc [509 US 579 (1993)]. Australian law has neither followed nor been influenced by the Daubert criteria. While some members of the High Court have interpreted s 79 in such a way as to generally require expert evidence to meet a standard of reliability to determine whether a “specialised knowledge” –​or a field of expertise –​exists. [See Osland v The Queen (1998) 197 CLR 316 (Gaudron and Gummow JJ); HG v The Queen (1999) 197 CLR 414, 431 [58] (Gaudron J with Gummow J agreeing); Velevski v The Queen (2002) 187 ALR 233, 253 [82] (Gaudron J); [154] (Gummow and Callinan JJ). Gaudron J refers in HG v The Queen at 431 [58] to a “reliable body of knowledge or experience”, citing R v Bonython (1984) 38 SASR 45, 46 (King CJ).] However, another view is that to adopt an interpretation of s 79 by importing reliability concepts would be to read words into s 79. [Gleeson CJ made the point that the language of the statute is to be applied: HG v The Queen (1999) 197 CLR 414 at footnote 37.] Consistent with that view, in another case, it was said that the “focus of attention must be on the meaning of the statutory phrase ‘specialised knowledge’, rather than by invoking extraneous ideas such as reliability”. Edmond has commented on these authorities and observed that “the idea of reliability has not been central to common law jurisprudence associated with expert opinion evidence or opinion based on ‘specialised knowledge’ ”. [Gary Edmond, “Specialised Knowledge, the Exclusionary Discretions and Reliability: Reassessing Incriminating Expert Opinion Evidence” (2008) 31 University of New South Wales Law Journal 46. Also see Gary Edmond and Andrew Roberts, “Procedural Fairness, the Criminal Trial and Forensic Science and Medicine” (2011) 33 Sydney Law Review 359.] Requiring disclosure of the reasoning process could potentially cause the court to focus on the reliability of the opinion, but as Heydon J points out the court does not have to be satisfied that the reasoning is correct. Another issue is that the admissibility standards for expert evidence (as opposed to the criteria) appear to be applied more strictly in civil cases. Edmond and Roberts have identified the disparity in the application of admissibility standards between civil and criminal proceedings so that the criteria is applied “more fastidiously” to exclude expert opinion adduced by plaintiffs than to expert evidence adduced by the prosecution. They argue that this implies that admissibility decisions may be not strictly based on the rules but shaped by other factors such as “concerns about crime and impressions of civil justice in crisis”. C. Meaning of “Based on Specialised Knowledge” –​Connection of the Expertise to the Opinion The plurality’s analysis in Dasreef emphasised that admissibility is to be determined in accordance with the Uniform Evidence Legislation rather than by “any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made” [at [37]]. However, their Honours do cite Makita in a limited way: [I]‌t remains useful to record that it is ordinarily the case, as Heydon JA said in Makita, that “the expert’s evidence must explain how the field of ‘specialised knowledge’ in which the witness is expert by reason of ‘training, study or experience’, and on which the opinion is ‘wholly or substantially based’, applies to the facts assumed or observed so as to produce the opinion propounded”. The plurality read the above paragraph with “one basic proposition at the forefront of consideration”; namely that admissibility of opinion is to be determined by application of the requirements of the Uniform Evidence Legislation rather than statements in decided cases. The plurality apply the terms of s 79 rather than using the words of Makita (and Davie) and do not [13.280]  781

Civil Procedure in New South Wales

Admissibility of Expert Evidence cont. specifically require that “scientific criteria for testing the accuracy” of the expert’s conclusions be furnished. The plurality state: The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying “specialised knowledge” based on his or her “training, study or experience”, being an opinion “wholly or substantially based” on that “specialised knowledge”, will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered. The requirement that an opinion is “based wholly or substantially” on specialised knowledge necessitates the expert demonstrating that their expertise is connected to the opinion. This is a matter of “form” and the expert is required to present their opinion in [a]‌way that can explain that the opinion is based on training, study or experience. This will also “ordinarily” require identification of the factual assumptions for the opinion. The demonstration that an opinion is based on specialised knowledge will not require lengthy explicit reasoning where the opinion expressed by the witness is connected with the witness’s specialised knowledge based on training, study or experience. This interpretation means that expert reports will need to identify the factual assumptions upon which the opinion is based and may need to explain how the expert’s conclusion is connected to their specialised knowledge. While Heydon J speaks of the need for the expert to “state the criteria necessary to enable the trier of fact to evaluate that the expert’s conclusions are valid”, the plurality judgment’s focus is on whether the expert gives evidence of their training, study or experience to provide a connection to their opinion. (Dr Basden’s training, study and experience were not connected to the numerical assessment to show that it was based on his specialised knowledge.) The plurality do not say that the purpose of this requirement is to validate the expert’s conclusions.

 [13.290] The admissibility requirements for expert evidence are discussed in detail in Ian

Freckelton and Hugh Selby, Expert Evidence: Law Practice Procedure & Advocacy (6th ed, Thomson Reuters, 2018) and Miiko Kumar, Stephen Odgers and Elisabeth Peden, Uniform Evidence Law: Commentary and Materials (6th ed, Thomson Reuters, 2018) and c­ hapter 9 of Miiko Kumar and Michael Legg (eds), Ten Years of the Civil Procedure Act 2005 (NSW): A Decade of Insights and Guide to Future Litigation (Thomson Reuters, 2015). Case management of expert evidence

Concurrent Expert Evidence [13.300]  The Hon Justice Peter McClellan, Concurrent Expert Evidence, Medicine and Law Conference, Law Institute Victoria, 29 November 2007 Expert evidence in NSW Since December 2006, the Uniform Civil Procedure Rules (“UCPR”) and Practice Directions for the Common Law Division of the Supreme Court of New South Wales have made a number of number changes to the way expert evidence is dealt with in civil litigation. The aim of the changes has been 782 [13.290]

Preparing and Presenting Evidence  Chapter  13

Concurrent Expert Evidence cont. to encourage the integrity and reliability of expert evidence. The “overriding purpose” in the Civil Procedure Act 2005 confirms the necessity for the courts to control, where possible, the litigation so that the “cost to the parties is proportionate to the importance and complexity of the subject-​matter in dispute”. Changes to the expert evidence regime include: (1) single experts appointed by agreement between the parties in addition to the existing option of court-​appointed experts and (2) powers in the courts to control the number of experts and the manner of the giving of their evidence. The changes reflect the conclusion of the NSW Law Reform Commission in 2005 in its report “Expert Witnesses.” Court-​controlled use of expert evidence Although the permission rule (as it is known in the United Kingdom) in complete form was not adopted, the amendments made to the UCPR provide for significantly greater control of expert evidence by the courts. The amended rules allow the courts to confine the number of experts called and to refuse to allow an expert to give evidence on particular issues. Rule 31.17 provides a comprehensive statement of the main purposes of Division 2 of Part 31, which relates to expert evidence. They must be understood in light of the overriding purpose of the Civil Procedure Act 2005 (CPA) and UCPR provided in s 56, being the “just quick and cheap resolution of the real issues in the proceedings.” Rule 31.17 states the main purposes as follows:

(a) to ensure that the court has control over the giving of expert evidence;



(b) to restrict expert evidence in proceedings to that which is reasonably required to resolve the proceedings;



(c) to avoid unnecessary costs associated with parties to proceedings retaining different experts;



(d) if it is practicable to do so without compromising the interests of justice, to enable expert evidence to be given on an issue in proceedings by a single expert engaged by the parties or appointed by the court;



(e) if it is necessary to do so to ensure a fair trial of proceedings, to allow for more than one expert (but no more than are necessary) to give evidence on an issue in the proceedings;



(f) to declare the duty of an expert witness in relation to the court and the parties to proceedings.

The change is immediately apparent in Rule 31.19 which provides that if parties intend to adduce, or if it becomes apparent that they may adduce expert evidence at trial, they must first seek directions from the Court. The rule clearly states that in the absence of directions expert evidence may not be adduced at the trial, unless the court orders otherwise. Rule 31.20 contains a wide-​ranging list of directions, which the court may consider giving. Both rules endow the Court with extensive control over the use of expert evidence at any trial. Examples of the kind of direction for which Rule 31.20 provides include a direction: • that expert evidence may or may not be adduced on a specified issue; • limiting the number of expert witnesses who may be called to give evidence on a specified issue; • providing for the engagement and instruction of a parties’ single expert or a court-​appointed expert in relation to a specified issue; • requiring experts in relation to the same issue to confer, either before or after preparing experts’ reports in relation to a specified issue. Control of litigation by courts is as important as maintaining flexibility. A “regime as to expert evidence that permits maximum possible flexibility” serves to accommodate different requirements and practices in different courts for different kinds of subject matter of varying degrees of complexity and importance. Unlike the UK, NSW courts have “strengthened case management powers enormously” via the CPA and UCPR making a “permission rule” unnecessary. Instead of displacing the adversary [13.300]  783

Civil Procedure in New South Wales

Concurrent Expert Evidence cont. system altogether, case management allows for the courts to take a greater interest in what occurs and discipline “responsibility and prerogative of the parties” to procure the evidence they wish to adduce. A developed framework of case management, within which the giving of expert evidence is controlled allows flexibility and a capacity to fit the desire of the parties to the interests of justice in an individual case.



Uniform Civil Procedure Rules 2005 (NSW) [13.310]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.19, 31.20 31.19 Parties to seek directions before calling expert witnesses (1)

Any  party:



(a)

intending to adduce expert evidence at trial, or



(b)

to whom it becomes apparent that he or she, or any other party, may adduce expert evidence at trial,



must promptly seek directions from the court in that regard.

(2)

Directions under this rule may be sought at any directions hearing or case management conference or, if no such hearing or conference has been fixed or is imminent, by notice of motion or pursuant to liberty to restore.

(3)

Unless the court otherwise orders, expert evidence may not be adduced at trial:



(a)

unless directions have been sought in accordance with this rule, and



(b)

if any such directions have been given by the court, otherwise than in accordance with those directions.

(4)

This rule does not apply to proceedings with respect to a professional negligence claim.

31.20 Court may give directions regarding expert witnesses (1)

Without limiting its other powers to give directions, the court may at any time give such directions as it considers appropriate in relation to the use of expert evidence in proceedings.

(2)

Directions under this rule may include any of the following:



(a)

a direction as to the time for service of experts’ reports,



(b)

a direction that expert evidence may not be adduced on a specified issue,



(c)

a direction that expert evidence may not be adduced on a specified issue except by leave of the court,



(d)

a direction that expert evidence may be adduced on specified issues only,



(e)

a direction limiting the number of expert witnesses who may be called to give evidence on a specified issue,



(f)

a direction providing for the engagement and instruction of a parties’ single expert in relation to a specified issue,



(g)

a direction providing for the appointment and instruction of a court-​appointed expert in relation to a specified issue,



(h)

a direction requiring experts in relation to the same issue to confer, either before or after preparing experts’ reports in relation to a specified issue,

784 [13.310]

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont.

(i)

any other direction that may assist an expert in the exercise of the expert’s functions,



(j)

a direction that an expert who has prepared more than one expert’s report in relation to any proceedings is to prepare a single report that reflects his or her evidence in chief.



Practice Note SC Eq 5 [13.320]  Practice Note SC Eq 5 Supreme Court Equity Division –​Expert Evidence in the Equity Division Commencement 1. This practice note was issued on 23 December 2008 and commences 2 February 2009. Parties to confer regarding experts before commencing proceedings 6. Where the prospective parties have retained legal representatives the legal representatives of those parties must confer in an endeavour to jointly retain: • one expert, or • one expert for each specified issue or matters in issue. 7. Where it is not appropriate or possible to agree on one expert or one expert in each specified issue or matter, the legal representatives should confer as early as possible to minimise the number of expert witnesses. 8. Parties must consider whether the expert witnesses should give evidence together as detailed in UCPR 31.35(c) to (h) inclusive. Generally, the procedure will be that the judge will examine them in chief as witnesses of the Court; cross examination will take place of all witnesses jointly, the order of cross examination being either agreed by counsel or determined by the Judge. Restrictions on the number of experts 9. Generally, and in accordance with UCPR 31.20 (2), only one expert per specified issue will be allowed to: • the plaintiff, and • any one of multiple defendants. Defendants who have the same interest in the expert evidence will be treated as one, and should confer at an early stage to agree on a single expert. 10. More than one expert per specified issue may be allowed if good reason is shown in a particular case. 11. Generally, the experts engaged in relation to a specified issue should confer before the trial and produce a joint report in accordance with UCPR 31.24 to include (where relevant): • a statement as to their agreed conclusions, and • a statement of their differences and of the apparent reasons thereof. Directions regarding experts 12. Under UCPR 31.19, a party considering or intending to adduce expert evidence at trial must promptly seek directions from the court in that regard. A party must seek those directions in accordance with paragraphs 13, 14 and 15 of this Practice Note. 13. The court may make directions concerning expert evidence in the absence of the parties provided: • a request for directions concerning expert evidence is filed in accordance with the form “Request for Expert Evidence Directions” in Annexure A to this Practice Note, and [13.320]  785

Civil Procedure in New South Wales

Practice Note SC Eq 5 cont. • all lawyers have signed the form of Request for Expert Evidence Directions. 14. If the parties do not agree on the proposed Expert Evidence Directions, the issue should be raised at the next directions hearing. The party who drafted the proposed directions should provide the Court with a copy at least three days before the directions hearing. If there is no upcoming directions hearing, the party may seek to have the proceedings listed before the Court on three days’ notice to the Court and the other party/​parties.

 [13.330]  Practice Note No SC CL 5 Supreme Court Common Law Division –​General Case

Management List also contains specific provisions in relation to expert evidence, including “37. All expert evidence will be given concurrently unless there is a single expert appointed or the Court grants leave for expert evidence to be given in an alternate manner”.

Harris v Bellemore [13.340]  Harris v Bellemore [2009] NSWSC 1497 MCCALLUM J [4]‌At a directions hearing on 9 April 2009, Mr Kelly, who appears for the plaintiff, informed the court (at T911.38) that the plaintiff wished to have the following people participate in that concurrent evidence process: (a)

Dr Williams, the plaintiff’s treating psychiatrist;

(b)

Dr Gertler, a medico-​legal psychiatrist;

(c)

Dr Dinnan, also a medico-​legal psychiatrist;

(d)

Dr Tinning, the plaintiff’s general practitioner.

[5]‌Mr Bozic, who appears for Dr Bellemore, submitted that, consistently with Practice Note No SC CL 7, there should not be two medico-​legal psychiatrists permitted to take part on behalf of the plaintiff. He submitted that, apart from the usual consideration that it is repetitious and costly to have more than one expert give evidence on one issue, there is a question as to the utility of having Dr Dinnan involved, who has seen the plaintiff only once and purely for the purposes of producing a medico-​legal report. Mr Bozic contended that, in the case of that kind of report, the history “in effect becomes the diagnosis” (T912.22). [6]‌Clause 34 of the Practice Note recognises that the liability aspects of medical negligence claims often involve complex issues as to breach and causation which may require more than one expert from a party to give evidence on a particular issue or issues. Clause 35 states that, as a guide, the number of expert witnesses giving evidence on behalf of a party shall be limited to one medical expert in any specialty unless there is a substantial issue as to ongoing disability in which case the number shall be limited to two in any relevant specialty concerning that disability. [7]‌Mr Bozic, who appears for Dr Bellemore, accepted that there is a substantial issue as to the plaintiff’s ongoing psychiatric disability in the present case. He contended, however, that Dr Williams (the treating psychiatrist) serves as one expert for that purpose. He submitted that the plaintiff should otherwise be confined to calling either Dr Gertler or Dr Dinnan, but not both. He opposed the inclusion of Dr Tinning, the general practitioner, on the grounds that he is not a psychiatrist and that in any event he has already given evidence in the proceedings. [8]‌I agree that it is not appropriate to have Dr Tinning included in the concurrent process. As I have indicated several times during the hearing, I readily accept that the experience and training of general practitioners extends to psychiatric issues. Nonetheless, the particular expertise in the 786 [13.330]

Preparing and Presenting Evidence  Chapter  13

Harris v Bellemore cont. concurrent process proposed in this case is that of qualified psychiatrists, of whom the defendant contends there are already too many. There is no need to include Dr Tinning as well. I also take into account the fact that Dr Tinning has already given evidence in the proceedings (albeit on the basis that his opinion on certain psychiatric issues was excluded). [9]‌As to whether the plaintiff should be confined to fewer than three psychiatric experts, at the conclusion of argument on this issue I indicated my preliminary view that I should not constrain the plaintiff from calling those witnesses whom he has indicated he wishes to call. I indicated, however, that I wished to reconsider the reports in question before forming a final view. [10] Having given further consideration to the content of the relevant reports, I have come to the conclusion that my preliminary view was wrong. I accept, as submitted by Mr Bozic, that there is a great deal of repetition among the reports. In my view there would be unnecessary costs involved in having all three of the plaintiff’s psychiatric witnesses participate in the concurrent process. I also accept that the greater part of the report of Dr Dinnan consists of his account of the history taken by him from the plaintiff. The inclusion of both medico-​legal reports would, in my view, entail the vice sought to be eliminated by the Practice Note of having a large number of experts whose reports overlap and are of little assistance to the court. I am unable to discern any issue which could not properly be addressed if the plaintiff is confined to two psychiatric experts. [11] As has frequently been observed by Mr Kelly, this has already been a complex and expensive hearing. I see no utility to the plaintiff, other than the strength of numbers, in having all three of the plaintiff’s psychiatric experts participate in the concurrent process. Accordingly, I propose to direct that the plaintiff elect as to which two of his three psychiatrists he would wish to have participate in the concurrent evidence process.

 Conduct of experts [13.350] For expert evidence to be of assistance to the court, it needs to be independent

and free of bias. The NSW Law Reform Commission, Expert Witnesses, Report 109 (2005) considered how bias may be combated.

Expert Witnesses [13.360]  NSW Law Reform Commission, Expert Witnesses, Report 109 (2005) 5.5 The report uses the phrase “adversarial bias” to refer to bias that derives in some way from the use of an expert by a party in litigation. Among the more colourful castigations of experts for bias is the statement made to Lord Woolf’s inquiry, referring to “hired guns … a new breed of litigation hangers-​on, whose main expertise is to craft reports which will conceal anything that might be disadvantageous to their clients”. 5.6 But there are more sophisticated accounts. In the 1870s, Sir George Jessel identified bias in the sense of partisanship: [U]‌ndoubtedly there is a natural bias to do something serviceable for those who employ you and adequately remunerate you. It is very natural, and it is so effectual that we constantly see persons, instead of considering themselves witnesses, rather considering themselves as paid agents of the person who employs them. He also drew attention to a different problem, namely the selection of expert witnesses: [T]‌he mode in which expert evidence is obtained is such as not to give the fair result of scientific opinion to the court. A man may go, and sometimes does, to half-​a-​dozen experts. [13.360]  787

Civil Procedure in New South Wales

Expert Witnesses cont. I have known it in cases of valuation within my experience at the Bar. He takes their honest opinions, he finds three in his favour and three against him; he says to the three in his favour, “Will you be kind enough to give evidence?” And he pays the three against him their fee and leaves them alone; the other side does the same. It may not be three out of six, it may be three out of fifty … therefore I always have the greatest possible distrust of scientific evidence of this kind, not only because it is universally contradictory and the mode of its selection makes it necessarily contradictory, but because I know the way in which it is obtained. I am sorry to say that the result is that the court does not get that assistance from the experts which, if they were unbiased and fairly chosen, it would have a right to expect. Three varieties of adversarial bias 5.7 Drawing on Sir George Jessel’s classic statement, it is helpful to identify three varieties of adversarial bias: deliberate partisanship, unconscious partisanship, and what we will call selection bias. These distinctions are important in identifying appropriate responses to the problem. 5.8 Deliberate partisanship. This type of bias occurs when an expert deliberately tailors evidence to support his or her client. In response to the question: “Is that your conclusion that this man is a malingerer?” Dr Unsworth responded: “I wouldn’t be testifying if I didn’t think so, unless I was on the other side, then it would be a post traumatic condition”. … 5.10 Unconscious partisanship. Unconscious partisanship is a more subtle form of what we are here calling adversarial bias. In this form, the expert does not intentionally mislead the court, but is influenced by the situation to give evidence in a way that supports the client. 5.11 The literature is replete with descriptions of the process. An American expert witness, for example, said that he had: experienced the subtle pressures to join the team –​to shade one’s views, to conceal doubt, to overstate nuance, to downplay weak aspects of the case that one has been hired to bolster. Nobody (he says) likes to disappoint a patron; and beyond this psychological pressure is the financial inducement. Money changes hands upon the rendering of expertise, but the expert can run his meter only so long as his patron litigator likes the tune. Opposing counsel undertakes a similar exercise, hiring and schooling another expert to parrot the contrary position. The result is our familiar battle of opposing experts. The more measured and impartial an expert is, the less likely he is to be used by either side. 5.12 In Australia, Justice Davies has written: Expert witnesses, as much as or perhaps even more than lay witnesses, are subject to adversarial pressure. Many of them make their living primarily from giving reports for and evidence in litigation. Almost all of them derive substantial fees from giving such reports and evidence, in many cases fees which are substantially higher than those which they derive from their other professional work. There is therefore, at the outset, an incentive for them to be chosen by a party to give evidence; and they must know that that party will not choose them unless their evidence supports that party’s cause. The likelihood that an expert’s evidence will be biased in favour of the client is then increased by the pressure which all witnesses feel to join the team. 5.13 “Selection bias”. By “selection bias” we refer to the phenomenon in which litigants choose as their expert witnesses persons whose views are known to support their case. The expert, although selectively chosen, may be giving careful and honest evidence. The problem is not the fault of the individual expert, but that the process of selection is likely to lead to what Justice Davies calls “polarisation”: the only views advanced tend to be the more extreme views favouring each side, and the court may not hear at all from experts whose views are more moderate or mainstream. … 788 [13.360]

Preparing and Presenting Evidence  Chapter  13

Expert Witnesses cont. Measures to reduce adversarial bias 5.17 There are a number of measures that attempt to reduce the problem of adversarial bias in expert witnesses engaged by one party. Their effectiveness is difficult to determine. However it is likely to depend to a considerable extent on the form the adversarial bias takes. 5.18 The problem of selection bias is difficult to address other than by a system under which each party no longer selects its own expert witnesses. It is difficult to imagine rules that would otherwise prevent parties from selecting the expert considered most likely to advance the client’s cause. It is obvious that neither codes of conduct nor sanctions against the experts would deal with this phenomenon. 5.19 As for reducing deliberate partisanship, it is appropriate that the law provide measures specifying the duty of expert witnesses to assist the court honestly and objectively (such as codes of conduct), and sanctions for experts found to have deliberately breached their duties. 5.20 In the case of unconscious partisanship, in general a punitive approach featuring sanctions would be likely to be ineffective and possibly unfair, because experts manifesting unconscious adversarial bias would not have knowingly breached the guidelines. However, emphasising their duties to the court by way of codes of conduct might help to reduce the problem, by requiring experts and those who instruct them to give careful consideration to the problem of unconscious bias and deal with it as best they can. Further, as we see in Chapter 6, there is considerable potential in measures designed to help the court keep control of the manner in which expert evidence is provided, to identify the real issues, and to ensure that expert witnesses are required to present their evidence in proper form, and are subjected to peer review as well as cross-​examination by lawyers.



Uniform Civil Procedure Rules 2005 (NSW) [13.370]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.22, 31.23, 31.27, Sch 7 31.22 Expert witness to provide details of contingency fees or deferred payment schemes (1)

A person who is engaged as an expert witness in relation to any proceedings must include information as to any arrangements under which:



(a)

the charging of fees or costs by the expert witness is contingent on the outcome of the proceedings, or



(b)

the payment of any fees or costs to the expert witness is to be deferred,



in, or in an annexure to, any report that he or she prepares for the purposes of the proceedings.

(2)

If a report referred to in subrule (1) indicates the existence of any such arrangements, the court may direct disclosure of the terms of the engagement (including as to fees and costs).

31.23 Code of conduct (1)

An expert witness must comply with the code of conduct set out in Schedule 7.

(2)

As soon as practicable after an expert witness is engaged or appointed:



(a)

in the case of an expert witness engaged by one or more parties, the engaging parties, or one of them as they may agree, or



(b)

in the case of an expert witness appointed by the court, such of the affected parties as the court may direct,



must provide the expert witness with a copy of the code of conduct. [13.370]  789

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (3)

Unless the court otherwise orders, an expert’s report may not be admitted in evidence unless the report contains an acknowledgment by the expert witness by whom it was prepared that he or she has read the code of conduct and agrees to be bound by it.

(4)

Unless the court otherwise orders, oral evidence may not be received from an expert witness unless the court is satisfied that the expert witness has acknowledged, whether in an expert’s report prepared in relation to the proceedings or otherwise in relation to the proceedings, that he or she has read the code of conduct and agrees to be bound by it.

31.27 Experts’ reports (1)

An expert’s report must (in the body of the report or in an annexure to it) include the following:



(a)

the expert’s qualifications as an expert on the issue the subject of the report,



(b)

the facts, and assumptions of fact, on which the opinions in the report are based (a letter of instructions may be annexed),



(c)

the expert’s reasons for each opinion expressed,



(d)

if applicable, that a particular issue falls outside the expert’s field of expertise,



(e)

any literature or other materials utilised in support of the opinions,



(f)

any examinations, tests or other investigations on which the expert has relied, including details of the qualifications of the person who carried them out,



(g)

in the case of a report that is lengthy or complex, a brief summary of the report (to be located at the beginning of the report).

(2)

If an expert witness who prepares an expert’s report believes that it may be incomplete or inaccurate without some qualification, the qualification must be stated in the report.

(3)

If an expert witness considers that his or her opinion is not a concluded opinion because of insufficient research or insufficient data or for any other reason, this must be stated when the opinion is expressed.

(4)

If an expert witness changes his or her opinion on a material matter after providing an expert’s report to the party engaging him or her (or that party’s legal representative), the expert witness must forthwith provide the engaging party (or that party’s legal representative) with a supplementary report to that effect containing such of the information referred to in subrule (1) as is appropriate.

Schedule 7 Expert witness code of conduct 1

Application of code This code of conduct applies to any expert witness engaged or appointed:

2

(a)

to provide an expert’s report for use as evidence in proceedings or proposed proceedings, or

(b)

to give opinion evidence in proceedings or proposed proceedings.

General duty to the court



(1)

An expert witness has an overriding duty to assist the court impartially on matters relevant to the expert witness’s area of expertise.



(2)

An expert witness’s paramount duty is to the court and not to any party to the proceedings (including the person retaining the expert witness).



(3)

An expert witness is not an advocate for a party.

3

Duty to comply with court’s directions An expert witness must abide by any direction of the court.

790 [13.370]

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont. 4

Duty to work co-​operatively with other expert witnesses An expert witness, when complying with any direction of the court to confer with another expert witness or to prepare a parties’ expert’s report with another expert witness in relation to any issue:



(a)

must exercise his or her independent, professional judgment in relation to that issue, and



(b)

must endeavour to reach agreement with the other expert witness on that issue, and



(c)

must not act on any instruction or request to withhold or avoid agreement with the other expert witness.

5

Experts’ reports (1)

An expert’s report must (in the body of the report or in an annexure to it) include the following:



(a)

the expert’s qualifications as an expert on the issue the subject of the report,



(b)

the facts, and assumptions of fact, on which the opinions in the report are based (a letter of instructions may be annexed),



(c)

the expert’s reasons for each opinion expressed,



(d)

if applicable, that a particular issue falls outside the expert’s field of expertise,



(e)

any literature or other materials utilised in support of the opinions,



(f)

any examinations, tests or other investigations on which the expert has relied, including details of the qualifications of the person who carried them out,



(g)

in the case of a report that is lengthy or complex, a brief summary of the report (to be located at the beginning of the report).



(2)

If an expert witness who prepares an expert’s report believes that it may be incomplete or inaccurate without some qualification, the qualification must be stated in the report.



(3)

If an expert witness considers that his or her opinion is not a concluded opinion because of insufficient research or insufficient data or for any other reason, this must be stated when the opinion is expressed.



(4)

If an expert witness changes his or her opinion on a material matter after providing an expert’s report to the party engaging him or her (or that party’s legal representative), the expert witness must forthwith provide the engaging party (or that party’s legal representative) with a supplementary report to that effect containing such of the information referred to in subclause (1) as is appropriate.

6

Experts’ conference (1)

Without limiting clause 3, an expert witness must abide by any direction of the court:



(a)

to confer with any other expert witness, or



(b)

to endeavour to reach agreement on any matters in issue, or



(c)

to prepare a joint report, specifying matters agreed and matters not agreed and reasons for any disagreement, or



(d)

to base any joint report on specified facts or assumptions of fact.



(2)

An expert witness must exercise his or her independent, professional judgment in relation to such a conference and joint report, and must not act on any instruction or request to withhold or avoid agreement.



[13.370]  791

Civil Procedure in New South Wales

Investmentsource v Knox Street Apartments [13.380]  Investmentsource v Knox Street Apartments [2007] NSWSC 1128 MCDOUGALL J The authorities [23] A significant question related to the absence of any adherence to Sch 7. That question has been considered (in relation to the former Sch K to the Supreme Court Rules) in a number of cases. [24] In Kirch Communications Pty Ltd v Gene Engineering Pty Ltd [2002] NSWSC 485, Campbell J considered the question of admissibility of a report prepared by an expert before the commencement of proceedings, and the expert’s commentary on that report in an affidavit read in the proceedings. The expert had not complied with SCR Pt 36 r 13C; specifically, he had not given an acknowledgment in terms of Sch K. [25] On the rules as they then stood, Campbell J held that the expert was not an “expert witness” as defined in r 13C. That definition referred to an expert engaged for the purpose of providing or giving opinion evidence in the existing or proposed proceedings. His Honour said at [11] that this definition did not “catch the situation … where an officer of a party, not engaged for any particular purpose, has, at a time before court proceedings were contemplating, expressed an expert opinion in a report, and that report is tendered in later proceedings.” [26] Thus, his Honour held at [12], failure to comply with the rule did not require rejection of the report. [27] His Honour observed at [13] that, to be admissible, the report had to comply with relevant provisions of the Evidence Act. That was a case where the expert was available, so s 69 was not relevant (although his Honour concluded at [18] that the report “is a business record of the business of both the plaintiff and the defendant”). [28] In the result, his Honour admitted the report. [29] In Barak v WTH [2002] NSWSC 649, Barrett J considered whether an expert should be permitted to give evidence in circumstance where his report did not state that he had read and agreed to be bound by Sch K. The expert was cross-​examined, and said that he was aware of Sch K and had read it before making his report, that in making his report he had sought to comply with Sch K. He accepted that he agreed to be bound by Sch K. [30] In those circumstances, Barrett J admitted the evidence of the expert. He said at [5]‌that “the intent of the rule of ensuring that only reports by experts who have proceeded in accordance with stated norms of conduct should be relied upon can be seen to be satisfied”. [31] A slightly different factual situation arose in Commonwealth Development Bank of Australia Pty Ltd v Claude George Rene Cassegrain [2002] NSWSC 980. The defendants sought to adduce evidence from an expert. The plaintiffs took the point that the expert had not acknowledged his obligations under Sch K. [32] In oral evidence, the expert said that he adhered to the evidence in his report having regard to the obligations imposed under Sch K. There was no evidence that he had read and considered Sch K before he prepared his evidence. Einstein J relied upon that to distinguish the position considered by him from that considered by Barrett J in Barak. [33] At para [9]‌, Einstein J referred to the importance of compliance with Sch K. His Honour paraphrased what Barrett J had said in Barak in para [5]. He said: To my mind, considerable significance attaches to enforcing strict compliance in the expert witness provisions now found in part 36 rule 13C. Questions of the significance of the opinions of experts have been mooted over a very extended period of time and the schedule K and part 36 rule 13C(1) Expert Witness Code Of Conduct was promulgated with the clear intent that only reports by experts who have proceeded in accordance with the stated norms of conduct, should be relied upon and may be admitted into evidence. The significance 792 [13.380]

Preparing and Presenting Evidence  Chapter  13

Investmentsource v Knox Street Apartments cont. of the Code Of Conduct emerges clearly from the whole of the Code as well as from the “general duty to the court” section of schedule K as well as from the stipulations as to the form of expert’s reports. [34] Einstein J held that the Court should not “otherwise order” under r 13C(2). He said at [11] that the Court should not generally countenance attempts by experts retrospectively to adopt the obligations imposed under Sch K. He said: Mr Cameron has submitted that the evidence given by Mr Fermanis should satisfy the Court that an otherwise order under part 36 rule 13C(2) should be made. In my view no such order should be made. In my view the problems which confront the opposing party when such an otherwise order is sought, clearly include, importantly, the fact that an expert not having committed to the Code Of Conduct at or as soon as practicable after his or her engagement in circumstances such as the present, will have committed to a particular form of opinion. Whilst the party applying for an otherwise order may submit that there is no difficulty in the putative experts adopting schedule K in an ex post facto fashion, it seems to me that this is a course which the Court should strain against in so far as the proper administration of justice is concerned and in terms of fundamental fairness. For those reasons it seems to me that the application for an “otherwise order” should be refused. [35] It follows that his Honour was of opinion that non-​compliance with the rules at the time was sufficient of itself, and notwithstanding the facultative provisions of the Evidence Act, to empower the Court to reject the evidence. [36] His Honour considered in the alternative whether, assuming that the Sch K point could be overcome, the evidence might have been rejected under s 135 of the Evidence Act. His Honour said that there was “likely a high prospect” that this would happen. He pointed at [13] and [14] to the possibility that the report may have been expressed in a different form, or qualified, had the expert been aware of his obligations under Sch K when he prepared it. He said: It does seem to me that if the otherwise order were to have been made, there was likely a high prospect that the court would, relying on s 135(a), have refused to admit the evidence put forward as s 79 evidence, the reasons being that, the expert having been untutored by the provisions of Schedule K, the party against whom the expert’s report is sought to be pressed, in the absence of Schedule K, should not be placed in a position in which a report has come forward which may very well have been in a different form, had the expert at the time of signing the report signed to and been aware of Schedule K. For one thing, the form of the report may well have been quite different. For another thing, the report may have been qualified. In the interests of justice in complex commercial litigation before the Supreme Court of New South Wales, where the provisions of the Part 36 Rule 13C and Schedule K regime have been in place for some time, the court should not, without exceptional cause, permit an otherwise order to be made. [37] In United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2003] NSWSC 870, Campbell J considered the position where an expert had not been given a copy of the “code” (Sch K) before preparing his report, but had been given it when he swore his affidavit and, in that affidavit, said that his report complied with the code and he undertook to be bound by it. [38] Campbell J referred at [10] to the importance of the code. He cited the judgment of Einstein J in Cassegrain at [9]‌. [39] Because the expert’s affidavit contained the relevant acknowledgment, Pt 36 r 13C was satisfied and there was no need to consider whether to “otherwise order”. However, reliance was placed on s 135. [40] Campbell J said at [11] that the policy underlying the rule should be taken into account in the s 135 analysis. His Honour pointed to the risk that an expert might form a view without appreciating [13.380]  793

Civil Procedure in New South Wales

Investmentsource v Knox Street Apartments cont. the full extent of his obligations, but might find it difficult to retreat from or qualify that view upon a full consideration of those obligations. His Honour said: The party against whom the report is tendered says that the report ought not be received under Part 36 rule 13C, because of failure to comply with subrule 2. The party tendering the report points out that while subrule 2 paragraph (a) imposes an obligation on the person engaging the expert to provide the expert with a copy of the Code, the sanction of the report not being admitted into evidence (unless the Court otherwise orders) is one which arises under paragraph (b). The condition for that sanction is triggered by the form of the expert’s report itself. Here, the form of the expert’s report contains the acknowledgment which paragraph (b) requires. It is only paragraph (a) which has not been complied with. [41] Campbell J concluded at [19] that there was no real risk that the Court might be misled, or the opposite party prejudiced, in the particular circumstances of that case. Thus, he held that the report should be admitted. Analysis [42] There is a marked difference between the relevant provisions of the Supreme Court Rules (SCR Pt 36 r 13C) and the relevant provisions of the Uniform Civil Procedure Rules (UCPR r 31.18, 31.23). As is apparent from the decision of Campbell J in Kirch, the former rules did not catch the position where the expert whose evidence was tendered had not been engaged to provide opinion evidence in the proceedings. It is apparent that the definitions in the present r 31.18 have been structured to deal with that problem. As will be seen, they define both an “expert” and “expert witness”. An “expert’s report” is a written statement by an expert (whether or not an expert witness in the proceedings concerned). [43] UCPR r 31.23(1) applies to “[a]‌n expert witness”. However, the exclusionary provisions of r 31.23(3) apply to “an expert’s report”. Thus, and quite deliberately, the Rules have been structured to ensure that expert reports that do not acknowledge Sch 7, whether prepared by an expert engaged for the purpose of giving evidence in the proceedings or otherwise, should not be admitted unless the Court otherwise orders. Subrule (4) defines an equivalent position in relation to oral evidence from an expert. [44] In my view, the clear intention of this change in the regulatory framework is to reinforce the proposition that, as a general rule, expert evidence should not be admitted unless the expert has at the relevant time subscribed to the obligations that are now to be found in Sch 7. … [50] I have come to the conclusion that I should not “otherwise order” so as to admit into evidence so much of the Colliers material as expresses Mr Williams’ opinions. My reasons may be expressed briefly: (1)

Mr Williams did not prepare his report with a conscious appreciation of the obligations imposed by Sch K (which was applicable at the time it was prepared) or Sch 7 (which is applicable now).

(2)

There is a real difference between the role of an expert retained to advise a client and the role of an expert engaged to give evidence. The former owes his or her primary obligation to the client; the latter owes his or her primary obligation to the Court. It cannot be assumed that those obligations are identical, or that in any given case performance of them would lead to the same outcome in terms of opinion.

(3)

For the reasons given by Einstein J in Cassegrain and Campbell J in United Rural Enterprises, there is a real risk that an expert who has not prepared a report under the discipline of the applicable Sch will form an opinion from which, thereafter, he or she would find it difficult to retreat, even if circumstances arise that might raise this as a possibility.

(4)

An expert retained to advise a client is not usually confronted with alternative expert evidence. An expert retained to give evidence usually is. In the latter case, the expert’s obligations under

794 [13.380]

Preparing and Presenting Evidence  Chapter  13

Investmentsource v Knox Street Apartments cont. the applicable schedule require that he or she consider the alternative material, and reconsider his or her position in its light. (5)

Under the usual order for hearing that applies in the Commercial and Technology and Construction Lists, experts are required to confer with a view to defining, refining and where possible limiting the real issues in dispute between them. The ordinary workings of the human mind to which Campbell J pointed in United Rural Enterprises at [15] might make this process more difficult for an expert who did not start out with an appreciation of his or her obligations under the applicable schedule.

(6)

In those circumstances, I think that there is a real risk of significant prejudice to Kimberly if the Colliers material is admitted to prove Mr Williams’ opinions.

(7)

That prejudice is exacerbated because Mr Williams is not available for cross-​examination.

(8)

Further, the agreement between Messrs Hillier and Feilich, which appears to draw a distinction between a valuation report and the exercise undertaken by Mr Williams, and which implicitly suggests that the latter is not to be regarded as a valuation, enhances the risk of prejudice.

[51] Although it is not necessary for me to express a concluded view, I would in the alternative, and if necessary, rely on those reasons to reject the tender, insofar as it deals with Mr Williams’ opinions, under s 135.

 Disclosure of expert reports

Uniform Civil Procedure Rules 2005 (NSW) [13.390]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.28–​31.30, 31.36 31.28 Disclosure of experts’ reports and hospital reports (1)

Each party must serve experts’ reports and hospital reports on each other active party:



(a)

in accordance with any order of the court, or



(b)

if no such order is in force, in accordance with any relevant practice note, or



(c)

if no such order or practice note is in force, not later than 28 days before the date of the hearing at which the report is to be used.

(2)

An application to the court for an order under subrule (1) (other than an order solely for abridgment or extension of time) may be made without serving notice of motion.

(3)

Except by leave of the court, or by consent of the parties:



(a)

an expert’s report or hospital report is not admissible unless it has been served in accordance with this rule, and



(b)

without limiting paragraph (a), an expert’s report or hospital report, when tendered under section 63, 64 or 69 of the Evidence Act 1995, is not admissible unless it has been served in accordance with this rule, and



(c)

the oral expert evidence in chief of any expert is not admissible unless an expert’s report or hospital report served in accordance with this rule contains the substance of the matters sought to be adduced in evidence.

(4)

Leave is not to be given as referred to in subrule (3) unless the court is satisfied:



(a)

that there are exceptional circumstances that warrant the granting of leave, or

[13.390]  795

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

that the report concerned merely updates an earlier version of a report that has been served in accordance with subrule (1).

31.29 Admissibility of expert’s report (1)

If an expert’s report is served in accordance with rule 31.28 or in accordance with an order of the court, the report is admissible:



(a)

as evidence of the expert’s opinion, and



(b)

if the expert’s direct oral evidence of a fact on which the opinion was based would be admissible, as evidence of that fact,



without further evidence, oral or otherwise.

(2)

Unless the court otherwise orders, a party may require the attendance for cross-​examination of the expert by whom the report was prepared by notice served on the party by whom the report was served.

(3)

Unless the court otherwise orders, such a requirement may not be made later than:



(a)

in the case of proceedings for which the court has fixed a date for trial, 35 days before the date so fixed, or



(b)

in any other case, 7 days before the date on which the court fixes a date for trial.

(4)

The parties may not by consent abridge the time fixed by or under subrule (3).

(5)

If the expert’s attendance for cross-​examination is required under subrule (2), the report may not be tendered under section 63, 64 or 69 of the Evidence Act 1995 or otherwise used unless the expert attends or is dead or the court grants leave to use it.

(6)

The party using the report may re-​ examine the expert if the expert attends for cross-​ examination pursuant to a requirement under subrule (2).

(7)

This rule does not apply to proceedings in the District Court or the Local Court or to proceedings on a trial with a jury.

31.30 Admissibility of expert’s report in District Court and Local Court (1)

This rule applies to proceedings in the District Court or the Local Court.

(2)

If an expert’s report is served in accordance with rule 31.28 or in accordance with an order of the court, the report is admissible:



(a)

as evidence of the expert’s opinion, and



(b)

if the expert’s direct oral evidence of a fact on which the opinion was based would be admissible, as evidence of that fact,



without further evidence, oral or otherwise.

(3)

Unless the court orders otherwise:



(a)

it is the responsibility of the party requiring the attendance for cross-​examination of the expert by whom an expert’s report has been prepared to procure that attendance, and



(b)

the party requiring the expert’s attendance must notify the expert at least 28 days before the date on which attendance is required.

(4)

Except for the purpose of determining any liability for conduct money or witness expenses, an expert does not become the witness for the party requiring his or her attendance merely because his or her attendance at court has been procured by that party.

(5)

A party who requires the attendance of a person as referred to in subrule (2):



(a)

796 [13.390]

must inform all other parties to the proceedings that the party has done so at least 28 days before the date fixed for hearing, and

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

must pay to the person whose attendance is required (whether before or after the attendance) an amount sufficient to meet the person’s reasonable expenses (including any standby fees) in complying with the requirement.

(6)

If the attendance of an expert is required under subrule (2), the report may not be tendered under section 63, 64 or 69 of the Evidence Act 1995 or otherwise used unless the expert attends or is dead or the court grants leave to use it.

(7)

The party using an expert’s report may re-​examine an expert who attends for cross-​examination under a requirement under subrule (2).

(8)

This rule does not apply to proceedings on a trial with a jury.

31.36 Service of experts’ reports in professional negligence claims (1)

Unless the court orders otherwise, a person commencing a professional negligence claim (other than a claim against a legal practitioner) must file and serve, with the statement of claim commencing the professional negligence claim, an expert’s report that includes an opinion supporting:



(a)

the breach of duty of care, or contractual obligation, alleged against each person sued for professional negligence, and



(b)

the general nature and extent of damage alleged (including death, injury or other loss or harm and prognosis, as the case may require), and



(c)

the causal relationship alleged between such breach of duty or obligation and the damage alleged.

(2)

In the case of a professional negligence claim against a legal practitioner, the court may order the plaintiff to file and serve an expert’s report or experts’ reports supporting the claim.

(3)

If a party fails to comply with subrule (1) or (2), the court may by order made on the application of a party or of its own motion dismiss the whole or any part of the proceedings, as may be appropriate.

(4)

Without limiting subrule (1) or (2), the court may, on the application of any of the parties, give directions as to the expert evidence to be adduced at trial.

(5)

Directions under subrule (4) may be sought at any directions hearing or case management conference or by notice of motion.

(6)

Unless the court otherwise orders, no party may adduce any expert evidence at trial unless the evidence:



(a)

has been filed and served under subrule (1) or (2), or



(b)

has been served pursuant to directions given under subrule (4).



Salzke v Khoury [13.400]  Salzke v Khoury (2009) 74 NSWLR 580; [2009] NSWCA 195 [The plaintiff Ms Salzke had hip replacement surgery which was performed by the respondent Dr Khoury. She subsequently developed an infection which was treated by Dr Khoury through administering the drug gentamicin. The Greater Southern Area Health Service was the second respondent on the basis that it was vicariously liable for Dr Khoury’s conduct. On 14 December 2006, Ms Salzke commenced proceedings in the District Court. At this time Ms Salzke did not file an expert report as required by UCPR r 31.36 but obtained leave for an assistant registrar to file her statement [13.400]  797

Civil Procedure in New South Wales

Salzke v Khoury cont. of claim. Non-​compliance was linked to the claim being close to the expiration of the limitation period. On 12 January 2007, Ms Salzke’s solicitor served a report by a general surgeon, Dr Peter Conrad, dated 20 December 2006, on the respondents. A number of directions hearings took place at which Ms Salzke was directed to file expert evidence in accordance with various timetables and the respondents sought to strike out the statement of claim. Ms Salzke obtained expert reports from Professor Rawlinson, a virologist and Ms Lyon, an occupational therapist which were served on the respondents, albeit with some delay. On 29 July 2008 the Judicial Registrar of the District Court dismissed Ms Salzke’s action under Pt 31 r 36(3) of the UCPR. By the applications for leave to appeal and appeals, Ms Salzke sought to have the Registrar’s decision set aside. Essentially, Ms Salzke contended that she did not breach UCPR r 31.36, alternatively, if she did, the Registrar erred in the exercise of her discretion.] IPP JA [43] The Registrar dealt with the UCPR 31.36 argument on the basis that Ms Salzke’s medical reports were to be assessed by reference to the amended statement of claim that Ms Salzke had filed without leave. I have noted that on 21 April 2008 the Registrar had granted leave to Ms Salzke to file the amended statement of claim by 20 June 2008, but Ms Salzke had only filed it on 3 July 2008. No leave to file late was given. Nevertheless, the Registrar had regard to the amended statement of claim, not the original statement of claim that was the extant pleading. No party made any point of this. [44] The Registrar noted that, under the amended statement of claim, Ms Salzke’s claim against Dr Khoury was re-​cast to allege only that her treatment with gentamicin was inappropriate and the particulars against the Health Service had been re-​cast to allege two causes of action, firstly “that the hospital caused the infection by premature removal of a drain” and, secondly, “that the plaintiff was treated with gentamicin, in circumstances where it was not clinically indicated and where it was known to cause damage to hearing and balance”. The Registrar noted further that the plaintiff’s medical report before her comprised Dr Conrad’s reports of 20 December 2006 and 3 July 2008, the report of Ms Lyon of 6 June 2008, and Professor Rawlinson’s report of 8 June 2008. [45] The Registrar acknowledged that she had said in her earlier decision that Dr Conrad’s report of 20 December 2006 provided “a basis for a cause of action, especially against the hospital”. She said, however, that that report “was not sufficient to satisfy the rule”. She gave three reasons for this. Firstly, Dr Conrad’s account of Ms Salzke’s injuries was based on assumptions her solicitors had asked him to make. Secondly, she said that Dr Conrad’s reports were “inconsistent” with Professor Rawlinson’s report. Thirdly, she said that Professor Rawlinson should be regarded as having greater expertise in the treatment and diagnosis of infection. [46] The Registrar regarded Ms Lyon’s report as having no value as it was also based on assumptions she was requested to make by Ms Salzke’s solicitors and because of the limitations in her expertise. [47] The Registrar made a number of criticisms of Professor Rawlinson’s report. As regards the claim against Dr Khoury, the most relevant are: (a)

Professor Rawlinson did not examine the plaintiff and his report was based on his consideration of clinical notes.

(b)

Professor Rawlinson did not “provide any criticism of Dr Khoury’s treatment”.

(c)

Professor Rawlinson specifically linked treatment at Holbrook District Hospital (and not Albury Base Hospital) to the development of gentamicin toxicity and it was not pleaded that Dr Khoury was responsible for the treatment at that hospital.

(d)

Professor Rawlinson did not “draw any final conclusion about any injury suffered and therefore [did not support a] causal relationship between the treatment and any injury suffered by Ms Salzke”.

[48] The Registrar concluded that Professor Rawlinson’s report did not satisfy “subparagraphs (b) and (c) of r 31.36(1) in relation to Dr Khoury”. She said it “only tangentially makes comments which could represent an opinion in respect of breach of duty on a temporal basis.” 798 [13.400]

Preparing and Presenting Evidence  Chapter  13

Salzke v Khoury cont. [49] As regards the claim against the Health Service, the most relevant criticisms are: (a)

“Professor Rawlinson does not distinguish in the body of the report between the doctor and the hospital in his comments about gentamicin toxicity.”

(b)

“Importantly in the executive summary, he states that any disabilities arise from prolonged treatment of gentamicin at Holbrook Hospital,” and all references to the hospital treatment in the statement of claim were to Albury Base Hospital.

(c)

“The second defendant may administer Holbrook Hospital but no case against that hospital is pleaded in the statement of claim. Therefore UCPR 31.36(1)(a)(b) and (c) are not satisfied regarding any treatment at Albury Base Hospital for the prescription of gentamicin.”

(d)

In regard to the case on the accidental removal of the drain, the Registrar said: On the aspect of causation, Professor Rawlinson says no more than that the early removal may have contributed to the development of the infection. He does not say how. The report has the same defects with respect to rule 31.36(1)(b) and (c) regarding gentamicin prescription and, as I said, does not implicate any treatment at Albury Hospital.

[50] The Registrar made the following further general criticisms of Professor Rawlinson’s report: (a)

His report did not deal with the general nature and extent of the damage alleged to have been suffered by Ms Salzke as UCPR 31.36(3) required.

(b)

UCPR 31.36(3) requires, in dealing with causation, “an opinion regarding the detailed symptoms that the plaintiff complains of” (and Professor Rawlinson’s report did not express such an opinion).

(c)

The report provided little assistance with respect to causation “because the comments made are not specific to the plaintiff”.

[51] The Registrar concluded: [T]‌he order made on the last occasion was that the plaintiff be given an extension of time to comply with rule 31.36. The evidence served does not satisfy the rule. The plaintiff was given a clear warning regarding the consequences of non-​compliance. She then dismissed Ms Salzke’s claim. … [53] UCPR 31.36 is the procedural basis of the professional negligence list. That list was established in April 1999 and its establishment coincided with the introduction of Pt 14C in the Supreme Court Rules by the Supreme Court Rules (Amendment No 325) 1998. The Explanatory Note to that amendment states: In proceedings in the list, copies of expert reports must be served on all parties by the person making the professional negligence claim at an early stage in the proceedings. This requirement is designed to eliminate delay and expense in assessing the claim. [54] Part 14C contained provisions that were similar, albeit not the same, as UCPR 31.36. Part 14C empowered the court, on application by a party or of its own motion, to order entry into the professional negligence list of proceedings in which a professional negligence claim was instituted. Part 14C r 6(1) was, in turn, similar to UCPR 31.36(1). [55] The relevant rule in the District Court Rules was Pt 28, r 9B which, in substance, was the same as UCPR 31.36. Part 28 r 9B was inserted in the District Court Rules by the District Court Rule (Professional Negligence Claims) 1999. The Explanatory Note to that rule stated: The object of this rule is to amend part 28 of the District Court Rules 1973 to provide for the early service of expert reports on all parties to any proceedings for damages for professional negligence by a person making the professional negligence claim. [13.400]  799

Civil Procedure in New South Wales

Salzke v Khoury cont. [56] In a paper written by Abadee J, prior to the establishment of the professional negligence list, entitled Commentary: the Professional Negligence List in the Common Law Division of the Supreme Court, his Honour stated: The List is aimed at reducing the cost and delay associated with the bringing or prosecuting of certain classes of professional negligence actions involving the medical profession (and allied health professions) and legal professions (both solicitors and barristers) and producing better management of such cases. The special Professional Negligence List judge will take steps to assist in bringing the action to early resolution or by trial. A further aim will be to create an atmosphere conducive to early resolution of disputes by the parties. It is hoped that the new list will weed out hopeless cases, confine parties to real issues and control expense and will assist in resolution of cases by agreement, discussion, negotiation and mediation. Special rules relating to experts, their expected roles have been introduced. The List is designed not only to reduce delay and expense but also to ensure proceedings are fully prepared for hearing. It is intended, and expected that the strengths and weaknesses of the parties’ respective cases will be revealed earlier by the implementation of the Rules and Practice Note. [57] His Honour said further: It was also considered that the service of such reports would assist in the prompt addressing of issues raised in the proceedings, assist in encouraging early resolution of actions whether on liability or damages, assist in raising estimates by the parties and even provide a basis for early mediation. Again it was felt that the rule will facilitate the reduction of delay and in the assessing of a merits claim. Finally, the rule will also address the matter of precipitate commencement of proceedings and the matter of whether proceedings that should have been commenced at all. What should not be overlooked is that service of the report(s) would also provide some prima facie support for an action brought and also assist in showing it is a bona fide one. [58] There is nothing in UCPR 31.36 that suggests that his Honour’s comments that I have quoted are not equally applicable to it. [59] UCPR 31.36 is basically a rule that serves case management purposes and is designed to assist in achieving the overriding purpose of s 56(1) of the Civil Procedure Act 2005, namely, “to facilitate the just, quick and cheap resolution of the real issues in the proceedings” (see also ss 57, 58 and 59). [60] UCPR 31.36(1) requires a plaintiff in a professional negligence action to disclose, when the statement of claim is filed, the expert opinion on which the claim is based. The rule, however, is not inflexible. UCPR 31.36(1) expressly provides that the court may order “otherwise”. UCPR 31.36(4), (5) and (6) contemplate that orders may be made after the claim has been commenced relating to expert evidence not filed and served at the time the claim was commenced. [61] Other aspects of the rule are to be noted. Firstly, the rule cannot be construed to mean that an individual expert’s report must include an opinion supporting all the matters referred to in subr 1(a), (b) and (c). Those matters would usually involve fundamentally different categories of expertise. The rule could not be intended to preclude the case of an expert’s report relevant only to one or two of those matters. Accordingly, the fact that opinions in an expert’s report support only one or even part of one of the matters in paras (a), (b) and (c) does not detract from the use that may be made of that report to support a plaintiff’s claim for the purposes of UCPR 31.36(1). The opinions expressed in an expert’s report as to any one or part of the elements of breach of duty of care, or damages or causation, may assist in providing the support contemplated by the rule. The opinions may only support a single link in the chain that constitutes the plaintiff’s case. Opinions of that kind are nevertheless relevant in determining whether there has been compliance with UCPR 31.36(1). [62] Secondly, the opinions in the expert’s report merely have to “support” one or more of the matters referred to in subr 1(a), (b) or (c). The opinions do not have to “prove” anything. A report, at the stage that it is considered for the purposes of UCPR 31.36, is not evidence. 800 [13.400]

Preparing and Presenting Evidence  Chapter  13

Salzke v Khoury cont. [63] Thirdly, due regard must be had to the fact that UCPR 31 (the rule dealing with expert evidence) contemplates that experts will prepare their own reports (see, for example, UCPR 31.23(3) and cl 5(2) of the Expert Witness Code of Conduct (Sch 7 to the UCPR)). This is consistent with the principle that expert evidence presented to the court should be the independent product of the expert: National Justice Compania Naviera SA v Prudential Assurance Co Ltd (the “Ikarian Reefer”) [1993] 2 Lloyds Rep 68. Thus, the report should be construed benevolently and not as if it were a pleading or an affidavit or even a statement of a witness prepared by a lawyer. [64] Fourthly, the power under UCPR 31.36(3) to dismiss the whole or any part of the proceedings is based on non-​compliance with subr (1). The court, in dealing with an application under UCPR 31.36(3), is not concerned with an application for dismissal of the proceedings for want of prosecution or an application for summary judgment by the defendant. The Registrar’s approach to the motions for dismissal [65] In my view, the Registrar’s reasons reveal a number of errors in principle in dealing with the motions for dismissal. [66] The Registrar frequently referred to the reports as “evidence”. She appears to have adopted the approach that the expert’s reports that are filed with a statement of claim under UCPR 31.36(1) must contain opinions that (were they to be regarded as evidence) would establish a prima facie case against the defendants. [67] Additionally, some of the Registrar’s remarks are capable of being construed as meaning that each report so filed must, independently and on its own, be capable of establishing all of the elements in paras (a), (b) and (c) of subr (1). [68] The Registrar also appears to have accepted that a report is not capable of supporting a plaintiff’s claim if it expresses opinions that are general, or abstract, in nature and which are not expressed in terms that show how those general or abstract opinions apply to the parties. This approach underlies her comments that: (a)

Professor Rawlinson did not provide any criticism of Dr Khoury’s treatment.

(b)

Professor Rawlinson did not draw any final conclusion about any injury suffered and therefore did not support a causal relationship between the treatment and any injury suffered by Ms Salzke.

(c)

The report provided little assistance with respect to causation because the comments made were not specific to the plaintiff.

(d)

Professor Rawlinson did not distinguish between Dr Khoury and “the hospital” in his comments about gentamicin toxicity.

(e)

Professor Rawlinson, on the aspect of causation, said no more than that the early removal may have contributed to the development of the infection.

(f)

Professor Rawlinson’s report did not deal with the general nature and extent of the damage alleged to have been suffered by Ms Salzke as UCPR 31.36(3) required.

(g)

UCPR 31.36(3) requires an opinion regarding the detailed symptoms of which the plaintiff complains.

(h)

Dr Conrad’s first report was of no assistance in “remedying the gaps in the plaintiff’s evidence with respect to UCPR 31.36(1)(b) and (c) against either defendant”.

(i)

Dr Conrad’s report, in effect, should be discounted as it was inconsistent with Professor Rawlinson’s report and Professor Rawlinson had greater expertise.

[69] In my opinion, the approach of the Registrar that I have described in the previous three paragraphs is wrong in principle. I have previously explained that the reports are not evidence and they do not, singly or together, have to establish a prima facie case against the defendants. The rule

[13.400]  801

Civil Procedure in New South Wales

Salzke v Khoury cont. only requires that the experts’ reports include opinions that “support” the matters referred to in subparas (a), (b) and (c) of subr 1. [70] It would be entirely open to a plaintiff to lead other evidence, not of an expert nature, which supplements the material contained in the reports filed under r 31.36(1) in such a way as to prove his or her case. This must be borne in mind when considering compliance with UCPR 31.36(3). Thus, evidence by eyewitnesses may supplement expert opinion to establish breach of duty of care. The plaintiff may adduce circumstantial evidence that may, alone, or in combination with expert evidence, establish causation in a specific case. The fact that experts do not infer causation on a balance of probabilities does not mean that a court may not: Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262 at [143]–​[144] per Spigelman CJ. A plaintiff may rely on his or her own evidence to prove damage or to supplement evidence given by experts. Accordingly, a plaintiff may well comply with r 31.36(1) even though the opinions expressed in the reports filed do not deal with each and every element of the plaintiff’s case. [71] The fact that Professor Rawlinson did not distinguish in his report between Dr Khoury and the Health Service is irrelevant. Part of Professor Rawlinson’s report was directed to relevant standards, conduct that might constitute breaches of those standards, and what consequences might flow from those breaches. To that extent, his report supported Ms Salzke’s case. Other evidence, not of an expert nature, could be adduced to establish if and how Professor Rawlinson’s opinions apply to Dr Khoury and the Health Service. [72] For the same reasons, the fact that Professor Rawlinson’s opinions as to causation are not specific to Ms Salzke is irrelevant. Other evidence, not of an expert nature, may establish how those opinions are relevant to the link between breach of duty and the damages that Ms Salzke suffered. [73] In any event, the opinion expressed by Professor Rawlinson that it is more likely than not that Ms Salzke’s dizziness and trouble balancing resulted from prolonged treatment with gentamicin, provides “support” within the meaning of UCPR 31.36(1) in the sense I have explained. The same applies to Professor Rawlinson’s opinion that “gentamicin may have caused unsteadiness in Ms Salzke”. There are other statements by Professor Rawlinson that are to similar effect. [74] UCPR 31.36(3) does not require an opinion regarding the detailed symptoms of which Ms Salzke complained. [75] With regard to the removal of the drain (and the case against the Health Service on this issue), Dr Conrad, in his first report, said: On the balance of probabilities, in that the early removal of the drain probably substantially contributed to the development of a local haematoma, in my opinion the accidental early removal of the drain would have been a substantial contributing factor to the infection and on the balance of probabilities, increased the chances of infection developing. [76] This opinion provided clear support to the element of causation in Ms Salzke’s case based on the accidental removal of the drain. [77] With regard to the case based on the administration of gentamicin, Dr Conrad explained in his second report that the treating orthopaedic surgeon is always involved and participates in decision making as to what procedure and treatment needs to be implemented for infection control once infection has been diagnosed. Further, Dr Conrad said that an orthopaedic surgeon in 2003 “would certainly be aware of the dangers of gentamicin in relation to hearing and balance”. These opinions tended to establish that Dr Khoury, as treating doctor, would have responsibility for management of Ms Salzke’s infection both at Albury Base Hospital and at Holbrook District Hospital and would have known of the dangers of prescribing gentamicin in the dosage that was prescribed. To this extent these opinions supported Ms Salzke’s case, both in relation to breach of duty against Dr Khoury, and to vicarious liability against the Health Service. 802 [13.400]

Preparing and Presenting Evidence  Chapter  13

Salzke v Khoury cont. [78] The Registrar’s observations that Dr Conrad’s reports did not include opinions supporting the matters referred to in subparas (a), (b) and (c) of UCPR 31.36(1) were based on her opinion that those reports were inconsistent with Professor Rawlinson’s report and Professor Rawlinson should be regarded as having greater expertise than Dr Conrad. Matters of inconsistency between experts and relative expertise, however, are not matters to be taken into account when determining compliance with UCPR 31.36(1). The Registrar was not entitled so to discount Dr Conrad’s opinions. [79] The Registrar considered that Professor Rawlinson’s report did not support Ms Salzke’s case involving inappropriate prescription and administration of gentamicin because the excessive dosages of gentamicin occurred at Holbrook District Hospital, and Ms Salzke did not plead a case based on prescription and administration of gentamicin at that hospital. [80] Ms Salzke’s original statement of claim set out the particulars of negligence against Dr Khoury and the Health Service. Particular (d) of the particulars of negligence alleged against Dr Khoury was his asserted “failure to properly or adequately treat the plaintiff’s hip infection or possibility of hip infection post operatively”. The particulars of negligence against the Health Service alleged that Ms Salzke was relying on “a non-​delegable duty of care and vicarious liability in respect of the following particulars”. Particular (f) was in the same terms as particular (d) alleged against Dr Khoury. These particulars are broad enough to encompass the administration of gentamicin at Holbrook District Hospital. It is not in dispute, as the Registrar, in effect, observed, that Dr Khoury was in charge of the management of Ms Salkze’s infection while she was at Holbrook District Hospital. [81] I accept that, for an opinion in an expert’s report to support a matter referred to in subparas (a), (b) and (c) of UCPR 31.36(1), that opinion must fall within the case made out in the statement of claim. I accept that no mention is made expressly of Holbrook District Hospital in the statement of claim. I also accept that there is vagueness in the statement of claim by reason of the failure of the particulars of negligence to address issues of time and place. Nevertheless, in my opinion, those particulars are broad enough to encompass conduct at any hospital where Dr Khoury administered gentamicin to Ms Salzke. They are also sufficiently broad to encompass any such conduct by Dr Khoury for which the Health Service was vicariously liable. [82] Vagueness in the statement of claim is not a reason to hold that expert reports that are capable of falling within the particulars of negligence pleaded should be held not to comply with UCPR 31.36(1). There are other remedies available to a defendant should it wish to contend that it is embarrassed at the vagueness of the pleading. [83] Thus, in my view, the Registrar was incorrect when she held that the opinions expressed by Professor Rawlinson in relation to conduct at Holbrook District Hospital did not support Ms Salzke’s  case. [84] The same issue arises in the amended statement of claim. As I have explained, the Registrar dealt with the matter on the assumption that the amended statement of claim applied. Paragraph 30.1 of the amended statement of claim contains several allegations of negligence against Dr Khoury dealing with the use of gentamicin. Paragraph 30.2 of the amended statement of claim alleges that the Health Service, “by its servants and/​or agents caused the infection in respects that are pleaded”. One of the respects pleaded concerns the administration of gentamicin. [85] As the Registrar pointed out, the amended statement of claim refers to treatment by Dr Khoury up to July 2004 but not subsequently. It does not follow, however, that the particulars pleaded in para 30 of the amended statement of claim are not broad enough to cover treatment by Dr Khoury administered at Holbrook District Hospital. Again there is an issue of vagueness in the statement of claim, but for the reasons I have already given, that vagueness does not mean that an expert report that is otherwise capable of falling within the particulars of negligence pleaded should be held not to comply with UCPR 31.36(1). [86] I should add that, in any event, Professor Rawlinson expressed opinions in his report that are capable of supporting a case of breach of duty of care in relation to the administration of gentamicin at Albury Base Hospital on the part of Dr Khoury (for which the Health Service would be vicariously liable). [13.400]  803

Civil Procedure in New South Wales

Salzke v Khoury cont. [87] Mr Downing of counsel, who represented the Health Service submitted that the experts’ reports did not include opinions supporting the general nature and extent of damage alleged. This submission was based on the fact that the injuries and disabilities recounted by Dr Conrad and Professor Rawlinson, in their reports, were merely restatements of what these two experts were asked to assume by Ms Salzke’s solicitor. [88] According to the original statement of claim Ms Salzke suffered the following injuries: (a) The development of golden staph infection in the right hip. (b) Side effects from gentamicin treatment, including problems with balance, kidney problems and damage to eyesight. (c)

Shock, anxiety and sequelae.

(d)

Requirement for further surgeries.

[89] Particulars of disabilities pleaded include chronic pain, discomfort and restriction of movement of the right hip, chronic infection of the right hip, dizziness, problems with balance, difficulty walking, blurred vision, anxiety and depression. [90] The amended statement of particulars is more or less the same but adds an injury to Ms Salzke’s right shoulder and the consequential disabilities. [91] In substance, Ms Lyon’s report records the injuries and disabilities pleaded in both the statement of claim and the amended statement of claim, including the shoulder injury. [92] Ms Salzke could testify as to most of these injuries and disabilities herself. In particular, she could give evidence as to the infection from which she suffered, her problems with balance, with her eyesight, her anxiety and depression, her need for further surgery, chronic pain, discomfort and restriction of movement of the right hip, dizziness, problems of balance, difficulty walking, blurred vision, problems with her shoulder and anxiety and depression. [93] Assuming that Mr Downing’s submission is nevertheless correct, I do not regard this aspect of non-​compliance as material. The experts’ reports that were filed made it quite plain what Ms Salzke was alleging in regard to the injuries that she asserted were caused by the respondents’ negligence. The reports fully apprised the respondents of the case Ms Salzke sought to bring against them. Mr Downing suggested that there were issues of pre-​ existing injuries, but those issues would be for the respondents to raise. That is not to say that Ms Salzke’s expert reports should not make a full disclosure of the existing injuries. She might, indeed, suffer a forensic penalty were she not to disclose them. But, strictly speaking, I do not see how a failure to refer to pre-​existing injuries would result in expert reports not complying with the rule. In any event, it appears from the material before the court, that there is no secret about Ms Salzke’s pre-​existing injuries. [94] A principal purpose of UCPR 31.36 is to ensure that the case gets to trial with both parties fairly apprised of the nature of each other’s case at the earliest reasonable opportunity. A practical approach should be taken. I do not intend to convey the impression that the failure by Ms Salzke to provide medical reports dealing with the nature of her injuries was trivial. But, practically speaking, I do not think that the omission to provide those reports at the stage the Registrar was dealing with the matter caused the respondents any prejudice. I would add that, in dismissing Ms Salzke’s action, the Registrar failed to use her powers in a “proportional” way and did not bear in mind that the dismissal of an action is “an extreme measure to be taken as a last resort”: Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [46] per Allsop P and [52] per Young JA. [95] In summary therefore, I consider that the reports before the Registrar supported Ms Salzke’s case as to breach of duty and causation. To the extent that Ms Salzke did not comply with UCPR 31.36(1) in regard to the damages she suffered, I do not think that that non-​compliance was material. In my opinion, the Registrar erred in the respects set out above and in holding to the contrary. 804 [13.400]

Preparing and Presenting Evidence  Chapter  13

Salzke v Khoury cont. BASTEN JA [113] I agree with the orders proposed by Ipp JA, and with his Honour’s reasons. Some further comments are apposite in relation to the underlying purpose of Uniform Civil Procedure Rules (NSW), r 31.36 and hence the considerations which should inform its application. [114] These matters are of importance because, as applied by the Judicial Registrar in the present case, the rule has operated to cause dismissal of a claim which was brought within the limitation period, which was not a hopeless or patently unmeritorious case and which did not warrant dismissal for want of prosecution. [115] A rule which has operation in a specific class of cases must be applied with careful attention to its underlying purpose. It has the potential to operate differentially so as to raise a hurdle in the path of those with legitimate claims against health professionals, thus providing a degree of protection against such claims which other groups in the community do not enjoy. Such differential treatment, which may impede access to the courts for injured persons, should have a clear and rational justification. In Pell v Hodges [2007] NSWCA 234, in discussing the justification for an extension of time for service after the expiration of a limitation period in a professional negligence suit, Handley AJA stated at [45]: Proceedings for professional negligence differ from the general run of personal injury cases as they affect the defendant personally and his or her professional reputation. One may reasonably infer that considerations such as this prompted the reduction in the time for service of the statement of claim for cases in the Professional Negligence List and the warnings in the Practice Direction. [116] Without doubting the accuracy of that inference, its scope must be treated with caution. Rule 31.36 applies only to health professionals, whereas adverse effects of negligence claims on professional reputation are likely to affect any person whose livelihood depends upon the exercise of particular skills and expertise. Nor will the courts readily adapt fundamental principles to protect professional reputations, where such protection would not otherwise be provided to members of the community: see, eg, Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 at 59–​60 (Kirby P), 61 (Samuels JA) and 63 (Priestley JA). In the present case, the rule was applied in relation to a claim against a body responsible for the operation of a public hospital pursuant to the Health Services Act 1997 (NSW). A concern for personal reputation could not apply with respect to such a statutory corporation. [117] The differential treatment of medical negligence claims by r 31.36 is better justified on other bases. The desirability of singling out such claims for differential treatment was explained by Lord Woolf in his final report on the civil justice system in England and Wales, Access to Justice (July 1996), Ch 15. He answered the question as to why such cases were selected for special attention in the following terms at p 170: 2. The answer is that early in the Inquiry it became increasingly obvious that it was in the area of medical negligence that the civil justice system was failing most conspicuously to meet the needs of litigants in a number of respects. (a) The disproportion between costs and damages in medical negligence is particularly excessive, especially in lower value cases. (b)  The delay in resolving claims is more often unacceptable. (c)  Unmeritorious cases are often pursued, and clear-​cut claims defended, for too long. (d)  The success rate is lower than in other personal injury litigation. (e) The suspicion between the parties is more intense and the lack of co-​operation frequently greater than in many other areas of litigation. [118] It seems likely that similar criticisms could be justified in this jurisdiction and underlay the establishment of the Professional Negligence List in early 1999 and Practice Note 104 promulgated on 23 December 1998 in relation to that list. On the day following the practice note, a new Pt 14C

[13.400]  805

Civil Procedure in New South Wales

Salzke v Khoury cont. was inserted in the Supreme Court Rules 1970, which included the precursor to UCPR 31.36, namely r 14C.6. [119] Lord Woolf made the following further comments in relation to expert evidence in medical negligence claims at p 186–​187: 63. Medical negligence differs from other personal injury litigation in the parties’ greater reliance on expert medical evidence for issues of causation and liability as well as quantum. Causation is more difficult to establish than in other personal injury cases. This is because the effects of the allegedly negligent treatment must be distinguished from those of the patient’s underlying condition which gave rise to the need for treatment. Liability is often very difficult to establish … 65. For the resolution of all three issues –​causation, liability and quantum of damages –​the parties and the courts are dependent on medical and other expert evidence. This is not only expensive, especially if experts from several specialities are used by each side, but may also be a source of delay because of the time taken by the experts to produce their reports. Generally speaking, expert witnesses in the medical field have less time to spare for legal work than experts in other fields. 66. All practitioners in this field know the peculiar difficulty of finding the information necessary to determine whether a potential claimant has a case. This is not simply a matter of establishing the facts, although that in itself is often difficult enough, but of finding an expert medical opinion to support the claim. [120] Lord Woolf also noted the problem for potential claimants in obtaining access to medical records and information. He described the effect of such problems as “difficult to exaggerate”: p 188, para 68. In relation to the quantification of medical negligence claims, his Lordship noted at p 191: 79. First, to avoid waste of resources, it is important to ensure that detailed quantification work is done at the most appropriate stage of the case. Defendants want claimants to value cases at an early stage, because it encourages early settlement or at least enables the defendant to estimate his liability. But in complex cases where prognosis and needs are unclear, this is too expensive and leads to repetition. Early quantification can also be wasteful of resources where there is a real dispute on liability; in such cases, consideration should be given to deferring quantum evidence until the issue of liability has been dealt with. [121] The important factor to be derived from Lord Woolf’s Inquiry, at least to the extent that it is mirrored by experience in this State, is that the problems afflicting the resolution of medical negligence cases are multifarious and operate differentially between the parties. It is inappropriate to treat r 31.36 as intending to provide a panacea in relation to each such problem. One important consideration which underlay the introduction of its predecessor (Pt 14C of the Supreme Court Rules) is that it was designed to operate with respect to a specialist list, the very purpose of which was to take such cases out of the general jurisdiction of the Common Law Division. To the extent that such matters are dealt with by the Judicial Registrar in the District Court, the rule has been divorced from its original place within a raft of reforms promoting active specialist case management. [122] While r 31.36 may have multiple purposes, particularly when understood in a broader context, its primary purpose appears to be to discourage the commencement of unmeritorious litigation. In that sense it supplements other rules which have a similar purpose, including the requirement that a civil claim for damages cannot be commenced (or defended) by legal practitioners without certifying 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: Legal Profession Act 2004 (NSW), s 347(2). Rule 31.36, by contrast, is one-​sided: it does not require a health professional to file expert evidence supporting the defence case. [123] This understanding of the rule does not support a view that the filing and serving of expert reports supporting the claims with respect to breach of duty of care, the general nature and extent 806 [13.400]

Preparing and Presenting Evidence  Chapter  13

Salzke v Khoury cont. of damage, and the causal relationship between breach and damage, is a mere formality. However, questions of compliance must take into account, for example, the consideration noted by Lord Woolf that early expenditure on the quantification of damage may well be unjustifiable. Similarly, they should take into account the acknowledged difficulties and delays likely to be faced by a plaintiff seeking to obtain such reports. Accordingly, the relevant opinions should not be scrutinised too finely in an attempt to demonstrate that they do not satisfy the rule. A rule designed to diminish the number of cases being commenced which have no reasonable prospects of success should not be turned into an unreasonable hurdle to be surmounted by plaintiffs with legitimate claims. Nor should such a rule provide a further procedural opportunity for defendants (through their insurers) to delay resolution of legitimate claims on the merits, or increase the costs faced by an indigent plaintiff with a legitimate claim. The courts must be astute to ensure that procedural reforms serve their intended purpose and do not become a vehicle for subversion of a purpose they were designed to promote.

 Joint expert [13.410]  The NSW Law Reform Commission has described the joint expert as follows:4 [T]‌he idea of the joint expert witness is to limit the expert evidence on a question arising in the proceedings to that of one expert witness, selected jointly by the parties affected, or, if they fail to agree, in a manner directed by the court. If a party is dissatisfied with the expert’s evidence, the court has discretion to allow that party to adduce other expert evidence. While the evidence of the joint expert witness is likely to be of great weight, the joint expert witness has no different status from other witnesses and will be available for examination by any party if required.

Uniform Civil Procedure Rules 2005 (NSW) [13.420]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.37–​31.45 31.37 Selection and engagement (1)

If an issue for an expert arises in any proceedings, the court may, at any stage of the proceedings, order that an expert be engaged jointly by the parties affected.

(2)

A parties’ single expert is to be selected by agreement between the parties affected or, failing agreement, by, or in accordance with the directions of, the court.

(3)

A person may not be engaged as a parties’ single expert unless he or she consents to the engagement.

(4)

If any party affected knows that a person is under consideration for engagement as a parties’ single expert:



(a)

the party affected must not, prior to the engagement, communicate with the person for the purpose of eliciting the person’s opinion as to the issue or issues concerned, and



(b)

if the party affected has previously communicated with the person for that purpose, he or she must notify the other parties affected as to the substance of those communications.

4

The NSW Law Reform Commission, Expert Witnesses –​Report 109 (June 2005) at [7.6]. [13.420]  807

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. 31.38 Instructions to parties’ single expert (1)

The parties affected must endeavour to agree on written instructions to be provided to the parties’ single expert concerning the issues arising for the expert’s opinion and concerning the facts, and assumptions of fact, on which the report is to be based.

(2)

If the parties affected cannot so agree, they must seek directions from the court.

31.39 Parties’ single expert may apply to court for directions (1)

The parties’ single expert may apply to the court for directions to assist the expert in the performance of the expert’s functions in any respect.

(2)

Any such application must be made by sending a written request for directions to the court, specifying the matter in relation to which directions are sought.

(3)

A parties’ single expert who makes such an application must send a copy of the request to the parties affected.

31.40 Parties’ single expert’s report to be sent to parties (1)

The parties’ single expert must send a signed copy of his or her report to each of the parties affected.

(2)

Each copy must be sent on the same day and must be endorsed with the date on which it is sent.

31.41 Parties may seek clarification of report (1)

Within 14 days after the parties’ single expert’s report is sent to the parties affected, and before the report is tendered in evidence, a party affected may, by notice in writing sent to the expert, seek clarification of any aspect of the report.

(2)

Unless the court orders otherwise, a party affected may send no more than one such notice.

(3)

Unless the court orders otherwise, the notice must be in the form of questions, no more than 10 in number.

(4)

The party sending the notice must, on the same day as it is sent to the parties’ single expert, send a copy of it to each of the other parties affected.

(5)

Each notice sent under this rule must be endorsed with the date on which it is sent.

(6)

Within 28 days after the notice is sent, the parties’ single expert must send a signed copy of his or her response to the notice to each of the parties affected.

31.42 Tender of reports and of answers to questions (1)

Subject to rule 31.23 (3) and unless the court orders otherwise, the parties’ single expert’s report may be tendered in evidence by any of the parties affected.

(2)

Unless the court orders otherwise, any or all of the parties’ single expert’s answers in response to a request for clarification under rule 31.41 may be tendered in evidence by any of the parties affected.

31.43 Cross-​examination of parties’ single expert Any party affected may cross-​examine a parties’ single expert, and the expert must attend court for examination or cross-​examination if so requested on reasonable notice by a party affected. 31.44 Prohibition of other expert evidence Except by leave of the court, a party to proceedings may not adduce evidence of any other expert on any issue arising in proceedings if a parties’ single expert has been engaged under this Division in relation to that issue.

808 [13.420]

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont. 31.45 Remuneration of parties’ single expert (1)

The remuneration of a parties’ single expert is to be fixed by agreement between the parties affected and the expert or, failing agreement, by, or in accordance with the directions of, the court.

(2)

Subject to subrule (3), the parties affected are jointly and severally liable to a parties’ single expert for his or her remuneration.

(3)

The court may direct when and by whom a parties’ single expert is to be paid.

(4)

Subrules (2) and (3) do not affect the powers of the court as to costs.



Practice Note SC Gen 10 [13.430]  Practice Note SC Gen 10 Supreme Court –​Single Expert Witnesses 2005 Commencement 1. This Practice Note commences on 17 August 2005. … Single Expert Witnesses 6. Unless cause is otherwise shown, a single expert direction will be made in every proceeding and at the earliest practicable time in the course of case management. 7. A “single expert direction”, when made in those terms, means that the following directions are to be taken as having been made, with such variations as may be specified at that time or subsequently: a. Any expert evidence is confined to that of a single expert witness in relation to any one head of damages, including but not limited to the nature, extent and cost of required nursing care or domestic care (including claims under Griffiths v Kerkmeyer and under Sullivan v Gordon), physiotherapy, speech therapy, home modification, motor vehicle or aids and equipment, being evidence of the kind customarily given (by way of example) by rehabilitation consultants, occupational therapists, nursing and domestic care providers, architects, builders, motor vehicle consultants, and by aids and equipment suppliers. (a)

Evidence may be provided by the same single expert in relation to more than one head of damages provided the expert is appropriately qualified. It is contemplated, however, that there may be a number of single expert witnesses retained or appointed in the one proceedings.

(b)

In relation to any head of damages as to which any party wishes expert evidence to be adduced, the parties are to agree on a single expert to be retained and are to obtain the concurrence of the expert within 14 days from a date specified in the order as the commencement date of the direction, otherwise within 14 days from the making of the direction.

(c)

Failing agreement and concurrence within that time, the parties are to notify the court forthwith, and the court will, pursuant to Pt 39, appoint a court expert to be the single expert.

(d)

Within 14 days from the selection or appointment of a single expert witness, the parties are to brief the expert, in such manner as the parties may agree, with materials sufficient to enable the expert to prepare a report. If the parties do not so agree, they are to notify the court forthwith and the court will give directions as to how the single expert witness is to be briefed. [13.430]  809

Civil Procedure in New South Wales

Practice Note SC Gen 10 cont. (e)

If the parties agree or the single expert witness so requests, the plaintiff in the proceedings is to submit to clinical examination by the single expert witness.

(f)

Within 21 days from the date on which a single expert witness is so briefed, the expert is to send his or her report to each of the parties to the proceedings, through their legal representatives.

(g)

A single expert witness may be requested to provide a supplementary report taking into account any new or omitted factual material. The provisions of this practice note apply to such a supplementary report mutatis mutandis.

(h)

Any party may, within 14 days from receipt of the report, put a maximum of 10 written questions to the expert, but for the purpose only of clarifying matters in the report unless the court otherwise grants leave. The expert is to answer the questions within 14 days.

(i)

The report of a single expert witness and any question put to the expert and the expert’s answer thereto may be tendered by any party at the trial subject to all just exceptions.

(j)

A single expert witness may be cross-​examined at the trial by any party.

(k)

A single expert witness’s fee for preparation of the report and any supplementary report and for attending court, if required to do so, is to be paid by the parties equally, subject to other agreement or direction and subject to any later order concerning the costs of the proceedings. A single expert witness’s fee for answering questions put by a party is to be paid by the party, subject to the same qualification.

(l)

A single expert witness may apply to the court for directions.

8. Nothing in this practice note is intended to require the retaining or appointment of a single expert witness in relation to liability, the nature or extent of injury or disability, or the causation of injury or disability.

 [13.440]  The joint expert is advocated on the basis that the concept addresses adversarial bias

and reduces costs.5 The removal of bias is attributed to the expert not owing any obligation to a client but rather being appointed to assist the Court.6 The reduction in costs is based on the number of experts being reduced to one but assumes that the parties do not brief “shadow” experts to inform them on the relevant issues and to assist in evaluating, and possibly cross-​ examining, the joint expert.7 [13.450]  The joint expert is most suitable when the relevant area requires knowledge outside

that of the layperson so that there is a need for specialised knowledge based on some form of training, study or experience but within the confines of that specialised knowledge there is little variation of opinion.8

5 6 7 8

ALRC, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (2000) at [6.102] and The NSW Law Reform Commission, Expert Witnesses –​Report 109 (June 2005) at [5.16]. The Hon Justice Peter McClellan, “Expert Evidence –​Aces Up Your Sleeve?”, Industrial Relations Commission of NSW Annual Conference, 20 October 2006 at 4–​5. See Western Export Services Inc v Jireh International Pty Limited [2008] NSWSC 601 at [41]; Chapman v Chapman [2007] NSWSC 1109 at [6]‌. ALRC, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (2000) at [6.103].

810 [13.440]

Preparing and Presenting Evidence  Chapter  13

Single Experts [13.460]  The Hon Justice Peter McClellan, Concurrent Expert Evidence, Medicine and Law Conference, Law Institute Victoria, 29 November 2007 Single experts … Single joint experts may be desirable where the issue is relatively uncontroversial or the subject matter is not so contentious that it presents conflicting theories or schools of thought. The English Court of Appeal in Casey v Cartwright [2007] 2 All ER 78, which was a case of damages for personal injury in a low velocity road traffic claim, recently discussed the use of a single expert witness. The Court commented on the exercise of discretion to determine whether expert evidence should be allowed by reference to the overriding principle that litigation must be concluded without delay, keeping an appropriate relationship between the cost of the litigation and the amount of damages sought. Dyson LJ (with whom Keene and Hallett LJJ) said: We should say something about single joint experts. They have an invaluable role to play in litigation generally, especially in low value litigation. But we accept … that, at any rate until some test cases have been decided at High Court level, judges should be slow to direct that expert evidence on the causation issue be given by a single joint expert. This is because the causation issue is controversial.

 [13.470]  Where a single expert is appointed there may still be circumstances where there is

a need for an alternative perspective to be placed before the court, such as when there is a genuine divergence of opinions, so that parties seek leave to call their own experts.

Da Hui Wu v Statewide Developments [13.480]  Da Hui Wu v Statewide Developments Pty Ltd [2009] NSWSC 587 BRERETON J [10] By their present application, the plaintiffs seek an order pursuant to UCPR, r 31.44, granting them leave to rely upon evidence of an expert valuer in addition to that of the parties’ single expert. [11] The approach to be adopted to applications under this rule has been considered in England and in this court. In Daniels v Walker [2000] 1 WLR 1382, Lord Woolf MR, with whom Latham J agreed, said (at 1387): Where a party sensibly agrees to a joint report and the report is obtained as a result of joint instructions in the manner which I have indicated, the fact that a party has agreed to adopt that course does not prevent that party being allowed facilities to obtain a report from another expert or, if appropriate, to rely on the evidence of another expert. In a substantial case such as this, the correct approach is to regard the instruction of an expert jointly by the parties as the first step in obtaining expert evidence on a particular issue. It is to be hoped that in the majority of cases it will not only be the first step but the last step. If, having obtained a joint expert’s report, a party, for reasons which are not fanciful, wishes to obtain further information before making a decision as to whether or not there is a particular part (or indeed the whole) of the expert’s report which he or she may wish to challenge, then they should, subject to the discretion of the court, be permitted to obtain that evidence. In the majority of cases, the sensible approach will not be to ask the court straight away to allow the dissatisfied party to call a second expert. In many cases it would be wrong to make a decision until one is in a position to consider the situation in the round. You cannot make [13.480]  811

Civil Procedure in New South Wales

Da Hui Wu v Statewide Developments cont. generalisations, but in a case where there is a modest sum involved a court may take a more rigorous approach. It may be said in a case where there is a modest amount involved that it would be disproportionate to obtain a second report in any circumstances. At most what should be allowed is merely to put a question to the expert who has already prepared a report. … In a case where there is a substantial sum involved, one starts, as I have indicated, from the position that, wherever possible, a joint report is obtained. If there is disagreement on that report, then there would be an issue as to whether to ask questions or whether to get your own expert’s report. If questions do not resolve the matter and a party, or both parties, obtain their own expert’s reports, then that will result in a decision having to be reached as to what evidence should be called. That decision should not be taken until there has been a meeting between the experts involved. It may be that agreement could then be reached; it may be that agreement is reached as a result of asking the appropriate questions. It is only as a last resort that you accept that it is necessary for oral evidence to be given by the experts before the court. The cross-​examination of expert witnesses at the hearing, even in a substantial case, can be very expensive. The great advantage of adopting the course of instructing a joint expert at the outset is that in the majority of cases it will have the effect of narrowing the issues. The fact that additional experts may have to be involved is regrettable, but in the majority of cases the expert issues will already have been reduced. Even if you have the unfortunate result that there are three different views as to the right outcome on a particular issue, the expense which will be incurred as a result of that is justified by the prospect of it being avoided in the majority of cases. [12] In Cosgrove v Pattison [2001] CP Rep 68; [2000] All ER (D) 2007, Neuberger J in the Chancery Division referred to the passages that I have set out above in Daniels v Walker, and continued: In my judgment although it would be wrong to pretend that this is an exhaustive list, the factors to be taken into account when considering an application to permit a further expert to be called are these. First, the nature of the issue or issues; secondly, the number of issues between the parties; thirdly, the reason the new expert is wanted; fourthly, the amount at stake and, if it is not purely money, the nature of the issues at stake and their importance; fifthly, the effect of permitting one party to call further expert evidence on the conduct of the trial; sixthly, the delay, if any, in making the application; seventhly, any delay that the instructing and calling of the new expert will cause; eighthly, any other special features of the case; and, finally, and in a sense all embracing, the overall justice to the parties in the context to the litigation. [13] His Honour then proceeded to examine various of those factors in the interest of the case. So far as the reasons for wanting a new expert were concerned, his Honour rejected as insufficient the proposition that the expert was biased or that the applicant had any good reason to suspect bias as “wholly insufficient of themselves to persuade me the learned judge was wrong”. But his Honour continued: The more substantial reason, to my mind, is that the appellants have got a report from the new expert which calls into question some of the conclusions reached by Mr Courtnage. As Miss Caroline Hutton, who appears on behalf of the respondents argues, it cannot be enough for a person who wants to call a new expert, simply to say: “I have a report from another expert and it is inconsistent with the agreed expert’s conclusion”. Otherwise, anyone who had the money and the inclination to instruct another expert would always have the right to call him. Having said that, it does seem to me that if a new expert can be found who has a contrary view to the joint expert that is a reason for permitting the new expert to be called. It is certainly not a sufficient reason in every case, but if there are grounds for thinking that the joint expert may be wrong, because another expert takes a different view, that is certainly a factor which is to be borne in mind … 812 [13.480]

Preparing and Presenting Evidence  Chapter  13

Da Hui Wu v Statewide Developments cont. [14] His Honour then considered other relevant factors, ultimately returning to the appellant’s concerns about bias and adding: As I have said, I consider those factors to be wholly insufficient to justify the appellants being entitled to call an expert. As additional factors, they provide a little assistance to the appellants, but it would have to be a pretty knife edge case indeed before they were decisive. [15] Finally, his Honour said: Standing back and looking at the justice between the parties, I ask myself two questions, do not represent a decisive test but they may be of some help. First, if the appellants are not entitled to call Mr McIntosh and they lose the case, will they have an understandable sense of grievance judged objectively? To my mind they would an understandable if not an overwhelming, feeling. Secondly, if the appellants are entitled to call Mr McIntosh and won, would the respondents have an understandable sense of grievance, Judged objectively? I think it is inevitable that they would have a sense of grievance, because that is in the nature of litigation. But I do not think that to most people it would be a particularly understandable sense of grievance. In all the circumstances, it seems to me that this is an appeal which should be allowed, but allowed only on terms. [16] In Tomko v Tomko [2007] NSWSC 1486 I said, at [9]‌: The court should be relatively ready to grant leave to adduce evidence from a separate expert, lest trial by single expert otherwise become substituted for trial by judge. Where some arguable basis is shown for challenging the report of a single expert, the court should be disposed to grant such leave. [17] These cases establish, at least as guidelines, the following: • An order for a single expert is a first step, not necessarily the last word on the topic. While the magnitude of the case will influence the court’s willingness to permit further reports, having regard to considerations of proportionality, the process was not intended to substitute trial by expert for trial by court. • It will be a significant factor in favour of permitting further expert evidence if the existence of a competing respective expert opinion can be shown. • It will be a significant factor in favour of permitting further expert evidence if otherwise the party affected would have a legitimate sense of grievance that it had not [been] permitted to advance its case at trial.

 [13.490]  If the court too readily grants leave allowing new expert evidence when there is a

parties’ single expert then the adoption of single experts may be undermined.9 Court-​appointed  expert [13.500]  A court-​appointed expert is, as the name suggests, an expert appointed by the court

to assist the court. This might occur when the parties do not intend to call expert evidence at all on the matter in question, or where the court believes that the expert evidence the parties have called or intend to call has been or will be unsatisfactory.

9

See Campbelltown-​Minto Merchants Association Inc v Campbelltown City Council [2009] NSWLEC 70 at [16]. [13.500]  813

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) [13.510]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.46–​31.54 31.46 Selection and appointment (1)

If an issue for an expert arises in any proceedings the court may, at any stage of the proceedings:



(a)

appoint an expert to inquire into and report on the issue, and



(b)

authorise the expert to inquire into and report on any facts relevant to the inquiry, and



(c)

direct the expert to make a further or supplemental report or inquiry and report, and



(d)

give such instructions (including instructions concerning any examination, inspection, experiment or test) as the court thinks fit relating to any inquiry or report of the expert or give directions concerning the giving of such instructions.

(2)

The court may appoint as a court-​appointed expert a person selected by the parties affected, a person selected by the court or a person selected in a manner directed by the court.

(3)

A person must not be appointed as a court-​appointed expert unless he or she consents to the appointment.

(4)

If any party affected knows that a person is under consideration for appointment as a court-​ appointed expert:



(a)

the party affected must not, prior to the appointment, communicate with the person for the purpose of eliciting the person’s opinion as to the issue or issues concerned, and



(b)

if the party affected has previously communicated with the person for that purpose, he or she must notify the court as to the substance of those communications.

31.47 Instructions to court-​appointed expert The court may give directions as to: (a)

the issues to be dealt with in a report by a court-​appointed expert, and

(b)

the facts, and assumptions of fact, on which the report is to be based,

including a direction that the parties affected must endeavour to agree on the instructions to be provided to the expert. 31.48 Court-​appointed expert may apply to court for directions (1)

A court-​appointed expert may apply to the court for directions to assist the expert in the performance of the expert’s functions in any respect.

(2)

Any such application must be made by sending a written request for directions to the court, specifying the matter in relation to which directions are sought.

(3)

A court-​appointed expert who makes such an application must send a copy of the request to the parties affected.

31.49 Court-​appointed expert’s report to be sent to registrar (1)

The court-​appointed expert must send his or her report to the registrar, and a copy of the report to each party affected.

(2)

Subject to rule 31.23(3) and unless the court orders otherwise, a report that has been received by the registrar is taken to be in evidence in any hearing concerning a matter to which it relates.

(3)

A court-​appointed expert who, after sending a report to the registrar, changes his or her opinion on a material matter must forthwith provide the registrar with a supplementary report to that effect.

31.50 Parties may seek clarification of court-​appointed expert’s report Any party affected may apply to the court for leave to seek clarification of any aspect of the court-​ appointed expert’s report. 814 [13.510]

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont. 31.51 Cross-​examination of court-​appointed expert Any party affected may cross-​examine a court-​appointed expert, and the expert must attend court for examination or cross-​examination if so requested on reasonable notice by a party affected. 31.52 Prohibition of other expert evidence Except by leave of the court, a party to proceedings may not adduce evidence of any expert on any issue arising in proceedings if a court-​appointed expert has been appointed under this Division in relation to that issue. 31.53 Remuneration of court-​appointed expert (1)

The remuneration of a court-​appointed expert is to be fixed by agreement between the parties affected and the expert or, failing agreement, by, or in accordance with the directions of, the court.

(2)

Subject to subrule (3), the parties affected are jointly and severally liable to a court-​appointed witness for his or her remuneration.

(3)

The court may direct when and by whom a court-​appointed expert is to be paid.

(4)

Subrules (2) and (3) do not affect the powers of the court as to costs.

31.54 Assistance to court by other persons (1)

In any proceedings, the court may obtain the assistance of any person specially qualified to advise on any matter arising in the proceedings and may act on the adviser’s opinion.

(2)

Rule 31.53 applies to and in respect of a person referred to in subrule (1) in the same way as it applies to and in respect of a court-​appointed witness.

(3)

This rule does not apply to proceedings in the Admiralty List of the Supreme Court or to proceedings that are tried before a jury.

 Joint conferences of expert witnesses prior to trial [13.520]  A joint conference is an informal, private but structured meeting between the experts

retained by the parties in which they seek to identify areas of agreement and disagreement. The areas of agreement and disagreement, including reasons, are then placed in a report. These are also referred to as conclave reports.

Uniform Civil Procedure Rules 2005 (NSW) [13.530]  Uniform Civil Procedure Rules 2005 (NSW) rr 31.24–​31.26 31.24 Conference between expert witnesses (1)

The court may direct expert witnesses:



(a)

to confer, either generally or in relation to specified matters, and



(b)

to endeavour to reach agreement on any matters in issue, and



(c)

to prepare a joint report, specifying matters agreed and matters not agreed and reasons for any disagreement, and



(d)

to base any joint report on specified facts or assumptions of fact,



and may do so at any time, whether before or after the expert witnesses have furnished their experts’ reports. [13.530]  815

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

The court may direct that a conference be held:



(a)

with or without the attendance of the parties affected or their legal representatives, or



(b)

with or without the attendance of the parties affected or their legal representatives, at the option of the parties, or



(c)

with or without the attendance of a facilitator (that is, a person who is independent of the parties and who may or may not be an expert in relation to the matters in issue).

(3)

An expert witness so directed may apply to the court for further directions to assist the expert witness in the performance of his or her functions in any respect.

(4)

Any such application must be made by sending a written request for directions to the court, specifying the matter in relation to which directions are sought.

(5)

An expert witness who makes such an application must send a copy of the request to the other expert witnesses and to the parties affected.

(6)

Unless the parties affected agree, the content of the conference between the expert witnesses must not be referred to at any hearing.

31.25 Instructions to expert witnesses where conference ordered before report furnished If a direction to confer is given under rule 31.24(1)(a) before the expert witnesses have furnished their reports, the court may give directions as to: (a)

the issues to be dealt with in a joint report by the expert witnesses, and

(b)

the facts, and assumptions of fact, on which the report is to be based,

including a direction that the parties affected must endeavour to agree on the instructions to be provided to the expert witnesses. 31.26 Joint report arising from conference between expert witnesses (1)

This rule applies if expert witnesses prepare a joint report as referred to in rule 31.24(1)(c).

(2)

The joint report must specify matters agreed and matters not agreed and the reasons for any disagreement.

(3)

The joint report may be tendered at the trial as evidence of any matters agreed.

(4)

In relation to any matters not agreed, the joint report may be used or tendered at the trial only in accordance with the rules of evidence and the practices of the court.

(5)

Except by leave of the court, a party affected may not adduce evidence from any other expert witness on the issues dealt with in the joint report.



Practice Note SC Gen 11 [13.540]  Practice Note SC Gen 11 Supreme Court –​Joint Conferences of Expert Witnesses Commencement 1. This Practice Note commences 17 August 2005. … Convening a conference …

816 [13.540]

Preparing and Presenting Evidence  Chapter  13

Practice Note SC Gen 11 cont. 13. The conference should take the form of a personal meeting. Alternatively the participants may choose to hold the conference by teleconference, videolink or similar means if a personal meeting is not practicable. 14. The experts should be given a reasonable opportunity to prepare for the conference by ensuring that before the conference the experts have: • an opportunity to seek clarification from the instructing lawyers or the Court concerning any question put to them, and • access to any additional materials which the parties are able to provide and which the experts consider to be relevant. 15. In order to enable the experts to have a reasonable opportunity to prepare for the occasion, the conference should not take place until the expiration of at least 14 days following the provision of the materials referred to in paragraph 11. The role of experts at a conference 16. The experts should provide their respective opinions in response to the questions asked based on the witness statements or assumptions provided. Where alternative assumptions are provided the experts should provide their respective opinions on the alternative assumptions. 17. The experts may specify in their report other questions which they believe it would be useful for them to consider. 18. Pursuant to paragraph 4(2) of the Code, an expert witness must exercise his or her independent, professional judgment in relation to such a conference and joint report, and must not act on any instruction or request to withhold or avoid agreement. An expert should not assume the role of advocate for any party during the course of discussions at the joint conference. If, for whatever reason, an expert is unable to reach agreement with the other experts on any matter, that expert should be free to express his or her disagreement with the other experts on that matter. 19. The experts should accept as fact the matters stated in witness statements or assumptions submitted to them. It is not their role to decide any disputed question of fact or the credibility of any witness. Where there are competing assumptions to be made in the alternative, alternative answers may have to be provided to a question or questions, specifying which of the assumptions are adopted for each answer. Conduct of the conference 20. The conference should be conducted in a manner which is flexible, free from undue complexity (so far as is practicable) and fair to all parties. 21. The participating experts may appoint one of their number as a chairperson. If one of them so requests and the parties agree or the court orders, some other person may be appointed to act as chairperson. 22. Secretarial or administrative assistance should be provided by the parties if so requested by the experts. 23. If the participating experts agree, one of them or a secretarial assistant may be appointed to make a note at the conference of matters agreed, matters not agreed and reasons for disagreement. 24. The conference may be adjourned and reconvened as may be thought necessary by those participating. Joint report 25. Pursuant to UCPR Rule 31.25 and paragraph 4 of the Code, the report should specify matters agreed and matters not agreed and the reasons for non agreement.

[13.540]  817

Civil Procedure in New South Wales

Practice Note SC Gen 11 cont. 26. The joint report should, if possible, be signed by all participating experts immediately at the conclusion of the conference and, otherwise, as soon as practicable thereafter. 27. Prior to signing of a joint report, the participating experts should not seek advice or guidance from the parties or their legal representatives except as provided for in this Practice Note. Thereafter, the experts may provide a copy of the report to a party or his or her legal representative and may communicate what transpired at the meeting in detail if they wish. 28. The report of the joint conference should be composed by the experts and not the representatives of the parties. The report should be set out in numbered paragraphs and should be divided into the following sections: • statement of agreed opinion in respect of each matter calling for report; • statement of matters not agreed between experts with short reasons why agreement has not been reached; • statement in respect of which no opinions could be given eg issues involving credibility of testimony; • any suggestion by the participating experts as to any other matter which they believe could usefully be submitted to them for their opinion; and • disclosure of any circumstances by reason of which an expert may be unable to give impartial consideration to the matter. 29. The joint report, when signed by all participating experts, should be forwarded to the Court. Role of legal representatives 30. Legal representatives who attend a conference pursuant to an order of the Court or who are approached for advice or guidance by a participating expert should respond jointly and not individually, unless authorised to do so by the legal representatives for all other parties with an interest in the conference. 31. Such advice or guidance may be provided by: • responding to any questions in relation to the legal process applicable to the case; • identifying relevant documents; • providing further materials on request; and • correcting any misapprehensions of fact or any misunderstanding concerning the conference process. 32. The legal representatives of the parties should perform any other role the Court may direct. Provision of information 33. The legal representatives of the parties should inform the associate of the judge who directed the conference of the date of a conference when arranged, the names of the participating experts and the questions submitted. 34. It is not intended that the joint report provided to the Court or that information provided to the Court concerning a conference will be evidence in the proceedings unless admitted into evidence in the ordinary way (that is, by consent or by tender subject to the SCR and the rules of evidence). Further directions 35. Pursuant to UCPR Rule 31.25(2), an expert directed to confer may apply to the Court for further directions. That may be done, at the expert’s election, by arrangement with the associate of the judge who directed the conference. A party may also apply for further directions in relation to a directed conference.

 818 [13.540]

Preparing and Presenting Evidence  Chapter  13

[13.550] The main perceived benefit of requiring consultation is that it allows experts to

determine the areas of agreement/​disagreement, and by eliminating agreed matters from trial can save cost and time. If the experts prepare a joint summary or report of the issues that they agree upon, then these issues do not then need to be further examined through processes such as cross-​examination. Equally, identification of areas of disagreement can then guide further court processes such as the structure of concurrent evidence sessions.10

Tabet v Mansour [13.560]  Tabet v Mansour [2005] NSWSC 908 HALL J [41] In considering this matter it is instructive to refer to the principles that are applicable on an application for a joint conference and the approach which this Court has taken to that question. The principles have been enunciated in a line of cases decided by Studdert J. I refer to his Honour’s judgments in Boardman v South Eastern Sydney Area Health Service [2001] NSWSC 930, in Booth v Francesco [2002] NSWSC 154 and in Spasovic v Sydney Adventist Hospital [2002] NSWSC 164. A judge considering such an application must be satisfied of the existence of a reasonable expectation that the appointment of the conference sought by a party could achieve one or more of the objectives expressed in para 2 of Practice Note No 121. [The objectives referred to by Hall J were: (a) the just, quick and cost effective disposal of the proceedings; (b) the identification and narrowing of issues in the proceedings during preparation for such a conference and by discussion between the experts at the conference; (c) the consequential shortening of the trial and enhanced prospects of settlement; (d) apprising the Court of the issues for determination; (e) binding experts to their position on issues, thereby enhancing certainty as to how the expert evidence will come out at the trial; (f) avoiding or reducing the need for experts to attend court to give evidence. The objectives are now set out in Practice Note SC Gen 11, Joint Conferences of Expert Witnesses, 17 August 2005 at [5]‌.] (See Booth (above) at [24] and Habelrih v Szirt [2004] NSWSC 54 per Studdert J at [12].) [42] In determining applications for the appointment of conferences between experts, this Court has applied what has been termed the possible utility test. It was first applied by Studdert J in Booth. In that case, Studdert J stated that there existed a clear, firm and considered divergence of opinion between the experts as to whether a hysterectomy was an appropriate procedure for the plaintiff. That, his Honour held, was the most central and critical medical issue in the case: –​ [M]‌oreover, it is to state the obvious that if a conference was ordered, it would not address the critical factual issues between the plaintiff and the defendant as to what advice and warning the plaintiff was given and the plaintiff’s response to such. [43] It was accordingly held that the possible utility test had not been satisfied in the circumstances of that case. [44] In Spasovic, Studdert J considered an application made by the second defendant and supported by the first defendant, but opposed by the plaintiffs, for an order pursuant to Pt 36 r 13CA of the Supreme Court Rules for a conference of medical experts in a case involving complex medical issues on causation. Following a detailed examination of the issues and the opinions, noting a marked division of opinion between the experts, his Honour stated (at [32]): –​ A complicating feature in this case is that the first plaintiff’s presentation, symptoms and complaints in hospital may well bear upon the determination of the questions suggested for consideration by Ms Murphy, or at least several of them. There is, it would seem, a very real issue as to the nature and extent of the first plaintiff’s symptoms and complaints and

10

The NSW Law Reform Commission, Expert Witnesses –​Report 109 (June 2005) at [6.36] and Hudson v Howes [2010] NSWSC 1503 at [2]‌. [13.560]  819

Civil Procedure in New South Wales

Tabet v Mansour cont. the relevant period in hospital. On one view which may ultimately be accepted by the court, the symptoms and complaints of headache were relatively mild and had passed some time prior to the first plaintiff’s discharge from hospital. On the other hand, there is evidence, apparently, that the complaints of headaches were significant and that they persisted and, as is asserted in the pleadings, the first plaintiff suffered from dizziness and was in a state of confusion. Whether the symptoms were mild and had passed on the one hand, or whether they were more severe and persistent on the other, present an issue which can only be determined at trial … So it is that the doctors at any conference would have to be presented with alternative assumptions of fact and could only state their opinions accordingly. It seems to me unlikely that opinions expressed on two different assumed histories will assist in early resolution of this case or the various questions suggested for consideration. There are, in addition, significant underlying differences in medical opinion between the experts … I am not satisfied that the possible utility test, as I expressed that test in Booth, is met on this application …



Gillett v Robinson [13.570]  Gillett v Robinson [2011] NSWSC 863 [The plaintiff was born in October 1985. Her mother’s attending obstetrician was Professor Robinson. She sustained an injury to her right shoulder during the delivery, known as Erb’s palsy, which was caused by shoulder dystocia. The plaintiff alleges that her injury, and consequent disabilities, resulted from Professor Robinson’s negligence or breach of duty. The plaintiff commenced proceedings in 2006. The negligence claim was originally concerned with what Professor Robinson should have done to safely deliver the plaintiff. Professor Robinson briefed two experts, Dr Lyneham and Dr Childs. The plaintiff briefed Professor Chapman. A joint conference of experts took place, the details of which are set out below. The plaintiff then sought to amend her statement of claim to instead allege negligent advice as to the respective risks and benefits of caesarean section versus vaginal delivery and to rely upon an additional medical expert, Dr Molloy.] HARRISON J [7]‌On 9 November 2010 Registrar Bradford listed the matter for hearing commencing 1 August 2011 with an estimate of 5 days. He made a final order in accordance with the Practice Note and made an order to enable the expert evidence to be given concurrently. He directed the experts in their respective areas of expertise to confer by 30 March 2011 and to provide a joint report on such matters where they agreed and where they disagreed. He directed that lay statements of evidence be served by 28 February 2011 and that reports from the experts should issue by 22 April 2011. [8]‌A directions hearing took place before the Registrar on 15 February 2011. Orders were made at that time that Professor Robinson forward a list of questions for the experts to the plaintiff for consideration by 22 February 2011 and that the plaintiff advise him of her attitude to the proposed questions by 29 February 2011. A joint conference of experts was ordered to take place on 29 April 2011 and the joint experts’ report was to be provided to the court by 20 May 2011. The matter was listed for further directions on 24 May 2011. [9]‌Professor Robinson’s solicitors prepared and forwarded a list of proposed questions to the plaintiff’s solicitors, together with a proposed index of documents to be provided to them on 820 [13.570]

Preparing and Presenting Evidence  Chapter  13

Gillett v Robinson cont. 17 February 2011. The accompanying email contained a request that they be informed whether or not the plaintiff was happy with the questions and the list of documents. [10] The questions posed for consideration by the joint conference of experts were as follows: 1.

Did Professor Robinson depart from what was widely accepted in Australia by peer professional opinion as competent professional practice in 1985, by failing to appropriately consider the plaintiff’s mother’s prior pregnancy and birthing concerns, namely:



(a)

the birth of the plaintiff’s mother’s first child, who was delivered by caesarean section following failure to progress as a result of occipito posterior position; and



(b)

the plaintiff’s mother’s third child, who was stillborn?

2.

3.

4.

Taking into account the plaintiff’s mother’s prior pregnancy and birthing concerns, did Professor Robinson depart from what was widely accepted in Australia by peer professional opinion as competent practice in 1985, in proceeding to deliver the plaintiff vaginally rather than by caesarean section? Assuming the plaintiff’s mother had requested, at the final outpatient antenatal attendance, that a caesarean section be performed, did Professor Robinson depart from what was widely accepted in Australia by peer professional opinion as competent practice in 1985, in proceeding to deliver the plaintiff vaginally rather than by caesarean section? Did Professor Robinson depart from what was widely accepted in Australia by peer professional opinion as competent professional practice in 1985, in proceeding to deliver the plaintiff vaginally rather than by caesarean section, assuming that, one or two weeks prior to the plaintiff’s birth the following conversation took place:

Plaintiff’s mother: “Can I have a Caesar?” Professor Robinson: “Is this baby bigger than the others?” Plaintiff’s mother: “I don’t know.” [11] It would seem that, despite considerable further correspondence and telephone calls following up the 17 February 2011 request, no satisfactory or meaningful response to it was ever received by Professor Robinson’s solicitors. … [12] The joint conference of experts took place on 20 July 2011. Professor Chapman, Dr Lyneham and Dr Childs attended. They answered the questions originally proposed by Professor Robinson’s solicitors. All questions were unanimously answered in the negative. [13] The following day Professor Robinson’s solicitors wrote to the plaintiff’s solicitors inquiring whether, in the light of the answers of the joint experts, the plaintiff intended to proceed with the action. That letter provoked a response dated 25 July 2011 that included advice that the plaintiff’s solicitors were “in the process of obtaining a report from Dr William Molloy” which they understood would be available the next day. The letter also inquired whether Professor Robinson “proposes to object to the report being relied upon by [the plaintiff] for her claim generally and at the hearing on 1 August 2011.” Dr Molloy’s report was served on Professor Robinson’s solicitors on Wednesday 27 July 2011, or two clear working days before the hearing was due to commence. … Plaintiff’s submissions [16] The plaintiff contended that in all of these circumstances she should be permitted to amend her statement of claim and to rely upon the evidence of Dr Molloy for the following reasons. First, that Professor Robinson failed to provide relevant information and advice. It was contended that what he should have appreciated from the obstetric records of the plaintiff’s mother was that there was an increased risk of an obstructed delivery due to the size of the plaintiff and a history of obstructed delivery with a an earlier pregnancy. It was submitted on behalf of the plaintiff that her mother should have been provided with information and advice about the options that were available for the delivery of her baby having regard to the risks of another obstructed delivery with particular regard to the weight of the plaintiff compared to the weight of a previous foetus. [13.570]  821

Civil Procedure in New South Wales

Gillett v Robinson cont. [17] Secondly, the proposed additional particular of negligence was not substantially removed from a case based upon the currently identified particulars of negligence. This is a submission directed to the question of Professor Robinson’s ability to meet the amendment and any questions of prejudice that may attend his doing so. [18] Thirdly, both in relation to the proposed amendment and the use of Dr Molloy’s report, the plaintiff argued that it would not be in the interests of justice to deny her the opportunity to propound the new case based upon what was in effect a failure to advise her mother of the relevant options if the failure to plead it originally was not something for which she was directly responsible. Counsel for the plaintiff frankly conceded that the case had neither been properly pleaded nor prepared. [19] I was in terms taken to portions of the decision of the High Court in Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479, in particular at 489 as follows: The duty of a medical practitioner to exercise reasonable care and skill in the provision of professional advice and treatment is a single comprehensive duty. However, the factors according to which a court determines whether a medical practitioner is in breach of the requisite standard of care will vary according to whether it is a case involving diagnosis, treatment or the provision of information or advice; the different cases raise varying difficulties which require consideration of different factors. Examination of the nature of a doctor-​patient relationship compels this conclusion. There is a fundamental difference between, on the one hand, diagnosis and treatment and, on the other hand, the provision of advice or information to a patient. In diagnosis and treatment, the patient’s contribution is limited to the narration of symptoms and relevant history; the medical practitioner provides diagnosis and treatment according to his or her level of skill. However, except in cases of emergency or necessity, all medical treatment is preceded by the patient’s choice to undergo it. In legal terms, the patient’s consent to the treatment may be valid once he or she is informed in broad terms of the nature of the procedure which is intended. But the choice is, in reality, meaningless unless it is made on the basis of relevant information and advice. Because the choice to be made calls for a decision by the patient on information known to the medical practitioner but not to the patient, it would be illogical to hold that the amount of information to be provided by the medical practitioner can be determined from the perspective of the practitioner alone or, for that matter, of the medical profession. Whether a medical practitioner carries out a particular form of treatment in accordance with the appropriate standard of care is a question in the resolution of which responsible professional opinion will have an influential, often a decisive, role to play; whether the patient has been given all the relevant information to choose between undergoing and not undergoing the treatment is a question of a different order. Generally speaking, it is not a question the answer to which depends upon medical standards or practices. Except in those cases where there is a particular danger that the provision of all relevant information will harm an unusually nervous, disturbed or volatile patient, no special medical skill is involved in disclosing the information, including the risks attending the proposed treatment. Rather, the skill is in communicating the relevant information to the patient in terms which are reasonably adequate for that purpose having regard to the patient’s apprehended capacity to understand that information. (Citations omitted) [20] The plaintiff’s new case at its most basic would therefore appear to be that her mother was not advised, particularly in the light of her obstetric history, of the comparative risks and benefits of caesarean delivery and vaginal birth or given the opportunity to choose between them with the benefit of that advice, but that she should have been. It is therefore different to the currently pleaded case that seems to be directed at what Professor Robinson should have done safely to deliver the plaintiff, quite apart from any duty that he may have had to inform or to advise the plaintiff’s mother about the comparative risks of what he intended to do to deliver the plaintiff or to seek her views about it before committing himself, and hence the plaintiff’s mother, to a particular course. 822 [13.570]

Preparing and Presenting Evidence  Chapter  13

Gillett v Robinson cont. Professor Robinson’s submissions [21] In opposition to the plaintiff’s applications Professor Robinson submitted generally that the plaintiff should not be permitted to introduce or rely upon Dr Molloy’s report and that without it there was no evidence to support the application to amend, which for that reason alone would be futile and should also therefore be rejected. These general submissions were supported by a series of particular contentions as follows. [22] First, allowing either or both the amendment application or the introduction of Dr Molloy’s report would have a tendency to undermine the joint expert process in general and in this case in particular. As appears above, the three experts conferred and produced a joint report following compliance with the court’s directions about it and, with the exception of the material referred to in the plaintiff’s solicitor’s email dated 13 July 2011 (referred to in more detail later in these reasons), the plaintiff took no step to complain about the process or the proposed questions until the answers in the joint report appeared to raise difficulties for the plaintiff’s case. The plaintiff was attempting impermissibly to construct a new and different case within days of the final hearing because the joint experts’ report was unfavourable. Professor Robinson relied upon the high thresholds set by UCPR 31.26 and 31.28 as follows: [See in particular 31.26(5) Except by leave of the court, a party affected may not adduce evidence from any other expert witness on the issues dealt with in the joint report, and UCPR 31.28(3) Except by leave of the court, or by consent of the parties: (a) an expert’s report or hospital report is not admissible unless it has been served in accordance with this rule.] [23] Professor Robinson submitted that the plaintiff had not demonstrated compliance with these rules and that any leave contemplated by them should be refused. [24] Secondly, the plaintiff has failed properly or adequately either to explain or justify the delay in making the present application. The proceedings have been on foot for almost five years. She has retained counsel at various times and for various purposes. None has apparently detected the case that the plaintiff now wishes to advance prior to production of the joint experts’ report. This is so notwithstanding the fact that her own expert, Professor Chapman, had indicated as long ago as his report dated 12 December 2007 that the choice of a vaginal delivery was reasonable and that there was a distinction to be made between a request for a caesarean and a demand for one. The plaintiff therefore had more than three and a half years to realise and to come to terms with the fact that the case as pleaded had no reasonable prospects of success. All of this would appear also to have been clearly and emphatically explained by senior counsel in July 2010 and twice in February 2011. There was ample opportunity to amend the case but no timely attempt to do so materialised. [25] Thirdly, the parties have known that the case has been listed for hearing since 9 November 2010. The application to change the plaintiff’s case did not emerge in any form, and was not notified to Professor Robinson, until the week preceding the commencement of the hearing. [26] Fourthly, the plaintiff’s application would defeat the principles of case management in a way emphasised by the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [111]–​[114] as follows: [111] An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in J L Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases [176]. On the contrary, the statements are not consonant with this Court’s earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future. [13.570]  823

Civil Procedure in New South Wales

Gillett v Robinson cont. [112] A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate. [113] 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. The allocation of power, between litigants and the courts arises from tradition and from principle and policy [177]. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings. [114] Rule 21 of the Court Procedures Rules recognises the purposes of case management by the courts. It recognises that delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants. The Rule’s objectives, as to the timely disposal of cases and the limitation of cost, were to be applied in considering ANU’s application for amendment. It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases. What was a “just resolution” of ANU’s claim required serious consideration of these matters, and not merely whether it had an arguable claim to put forward. A just resolution of its claim necessarily had to have regard to the position of Aon in defending it. An assumption that costs will always be a sufficient compensation for the prejudice caused by amendment is not reflected in r 21. Critically, the matters relevant to a just resolution of ANU’s claim required ANU to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon. None was provided. [27] Paragraph [133] should also not be overlooked: [133] In relation to Queensland v J L Holdings Pty Ltd, it is sufficient to hold that, at least in jurisdictions having rules similar to rr 21 and 502, that case has ceased to be of authority. It is necessary to apply the Rules without any preconceptions derived from what was said in that case. There is a common opinion –​it is far from universal, but it is common –​within the judiciary and the legal profession that Queensland v J L Holdings Pty Ltd, whether it has been correctly understood or not, has had a damaging influence on the conduct of litigation. One judge who held that opinion was Bryson J. In a passage which merits preservation from the oblivion of unreported judgments, he pointed out one undesirable consequence of the way Queensland v J L Holdings Pty Ltd has been understood: In view of the state of the law governing allowance of amendments, amendment applications brought forward before the trial began were treated with uncomplaining supine liberality, notwithstanding that they sometimes showed that problems had been addressed years after they should have been. I do not think that the law requires the discretion to allow amendments to be exercised in entire innocence of understanding the obvious impact of forbearance and liberality on the behaviour of litigants, who have diminished incentive to do their thinking in due time and to tell the court and their opponents their full and true positions. When forbearance and liberality are extended to a delinquent the burden of inconvenience and lost opportunities for preparation tends to fall heavily and without adequate repair on parties who have not been delinquent. A relative disadvantage is imposed on those who proceed methodically and in due time; their interest in procedural justice should claim at least as much consideration as the interests of the applicant for a late amendment who does not have to look far for the creator of his difficulty. It is even conceivable that a litigant might deliberately pursue a course which will impose disadvantage on an opponent who has to reconsider his ground and change course in the midst of a contest. 824 [13.570]

Preparing and Presenting Evidence  Chapter  13

Gillett v Robinson cont. [28] Fifthly, the application causes prejudice to Professor Robinson. Professor Robinson did not deal with the new issue in his statement of evidence prepared for the proceedings. The experts in joint conference and the joint report did not deal with it. A reconvening of that conference would be necessary to deal with it. The events that give rise to the proceedings are now over 26 years old. Dr Robinson has little memory for the particular events and ought not to be confronted with the need once again in a different context to attempt to revisit them so long after they occurred. [29] Sixthly, the provisions of the Civil Procedure Act 2005 and Uniform Civil Procedure Rules 2005 impose obligations upon and specify procedural and other requirements to be met by parties to litigation which the plaintiff in this case has neither complied with nor met. I was referred to Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104 at [36] as a summary of the factors touching the exercise of a discretion of the type I am presently asked to exercise as follows: [36] Sections 56, 57, 58 and 59 require a judge, exercising a discretion under UCPR r 1.12, to have regard to whether a party, seeking the exercise of the discretion in its favour, has:

(a) diligently pursued the object of disposing of the proceedings in a timely way;

(b) used, or could reasonably have used, available opportunities under the rules or otherwise, to avoid delay; and

(c) reasonably implemented the practice and procedure of the court with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination.

[30] Professor Robinson contended that the plaintiff failed in her obligations in all of these respects. [31] Finally, Professor Robinson contended that the applications were futile because the plaintiff, through her solicitor, had acknowledged and conceded that she would call no further evidence. That was a matter of particular significance, according to Professor Robinson, because there is no material from the plaintiff’s mother suggesting that she would have taken any different course, as for example by insisting upon or choosing to have a caesarean section to deliver the plaintiff, if the duty for which she seeks to contend had been complied with. According to Professor Robinson, the amendment could therefore not advance the plaintiff’s case, as the critical issue of causation could not be established. Consideration … [38] I consider that the application to amend and to rely upon Dr Molloy’s report is futile. Even if it were not, it comes so late in the day that it is difficult to discern any redeeming basis upon which it could possibly be favourably considered. It is patently an attempt to save a case that has taken a body blow in the form of the joint experts’ report. The only exceptional circumstances attending the application are that it comes on the first day of the hearing with no more than a week’s notice to the other side. The latest that such an application might reasonably have been expected would be in the days and weeks immediately following the emphatic advice given by Mr Harben SC on 29 July 2010 [that the factual evidence of the mother did not support the claim as originally pleaded]. Almost precisely twelve months elapsed with nothing emerging. There is no satisfactory explanation of why, if it was genuinely supported by the plaintiff’s original instructions, the new case did not either form part of her case from the start or become the subject of an application to amend much earlier. The only apparently available answers to that question do not shed any favourable light on the plaintiff’s side of the record.



[13.570]  825

Civil Procedure in New South Wales

Concurrent expert evidence [13.580]  Concurrent expert evidence involves the relevant experts in a particular area being

sworn in at one time and remaining together in court. The giving of evidence becomes a discussion between judge and expert, counsel and expert and among the experts themselves, rather than a series of exchanges between a lawyer and a witness. Questions may be asked not only by the lawyers and the judge, but also by one expert of another. Frequently, concurrent expert evidence will be preceded by a joint conference.11

Concurrent Expert Evidence [13.590]  The Hon Justice Peter McClellan, Concurrent Expert Evidence, Medicine and Law Conference, Law Institute Victoria, 29 November 2007 Concurrent evidence How does it work? Although variations may be made to meet the needs of a particular case concurrent evidence requires the experts retained by the parties to prepare a written report in the conventional fashion. The reports are exchanged and, as is now commonly the case in many courts, the experts are required to meet to discuss those reports. This may be done in person or by telephone. Concurrent evidence requires the experts to prepare a short point document which incorporates a summary of the matters upon which they are agreed but more significantly matters upon which they disagree. The experts are sworn together and using the summary of matters upon which they disagree the judge settles an agenda with counsel for a directed discussion, chaired by the judge, of the issues the subject of disagreement. The process provides an opportunity for each expert to place their view before the court on a particular issue or sub-​issue. The experts are encouraged to ask and answer questions of each other. Counsel may also ask questions during the course of the discussion to ensure that an expert’s opinion is fully articulated and tested against a contrary opinion. At the end of the process the judge will ask a general question to ensure that all of the experts have had the opportunity of fully explaining their position. I have utilised the process of concurrent evidence on many occasions, both when I was in the Land and Environment Court, and in the Supreme Court (recent examples include Halverson v Dobler [2006] NSWSC 1307; Attorney-​General v Winters [2007] NSWSC 1071). Experience shows that provided everyone understands the process at the outset, in particular that it is to be a structured discussion designed to inform the judge and not an argument between the experts and the advocates, there is no difficulty in managing the hearing. Although I do not encourage it, very often the experts, who will be sitting next to each other, end up using first names. Within a short time of the discussion commencing, you can feel the release of the tension, which infects the conventional evidence gathering process. Those who might normally be shy or diffident are able to relax and contribute fully to the discussion. I have had the opportunity of speaking with many witnesses who have been involved in the concurrent process and with counsel who have appeared in cases where it has been utilised. Although, generally because of inexperience, counsel may be hesitant before being involved I have heard little criticism once they have experienced it. The change in procedure has met with overwhelming support from the experts and their professional organisations. They find that they are better able to communicate their opinions and, because they are not confined to answering the questions of the advocates, are able to more effectively convey their own views and respond to the views of the other expert or experts. They believe that there is less risk that their evidence will be distorted by the

11

The Hon Peter Heerey, “Recent Australian Developments” (2004) 23 Civil Justice Quarterly 386 at 390–​391; Edmond G, “Secrets of the Hot Tub: Expert Witnesses, Concurrent Evidence and Judge-​led Law Reform in Australia” (2008) 27(1) Civil Justice Quarterly 51 at 55; and Judicial Commission of New South Wales and the Australian Institute of Judicial Administration, Concurrent Evidence –​New Methods With Experts (DVD 2005).

826 [13.580]

Preparing and Presenting Evidence  Chapter  13

Concurrent Expert Evidence cont. advocate’s skill. It is also significantly more efficient. Evidence which may have required a number of days of examination in chief and cross-​examination can now be taken in half or as little as 20% of the time which would have been necessary. I have had cases where eight witnesses gave evidence at the one time. There have been many cases where four experts have given evidence together. As far as the decision-​maker is concerned, my experience is that because of the opportunity to observe the experts in conversation with each other about the matter, together with the ability to ask and answer each others questions, the capacity of the judge to decide which expert to accept is greatly enhanced. Rather than have a person’s expertise translated or coloured by the skill of the advocate, and as we know the impact of the advocate is sometimes significant, you have the expert’s views expressed in his or her own words. There are also benefits when it comes to writing a judgment. The judge has a transcript where each witness answers exactly the same question at the same point in the proceedings. Does concurrent evidence favour the more loquacious and disadvantage the less articulate witness? In my experience, the opposite is true. Since each expert must answer to their professional colleagues in their presence, the opportunity for diversion of attention from the intellectual content of the response is diminished. Being relieved of the necessity to respond to an advocate, which many experts see as a contest from which they must emerge victorious, rather than a forum within which to put forward their reasoned views, the less experienced, or perhaps shy, person becomes a far more competent witness in the concurrent evidence process. In my experience, the shy witness is much more likely to be overborne by the skilful advocate in the conventional evidence gathering procedure than by a professional colleague with whom, under the scrutiny of the courtroom, they must maintain the debate at an appropriate intellectual level. Although I have only rarely found it necessary, the opportunity is, of course, available for the judge to intervene and ensure each witness has a proper opportunity to express his or her opinion. Conclusion … Concurrent evidence is essentially a discussion chaired by the judge in which the various experts, the parties, advocates and the judge engage in an endeavour to identify the issues and arrive where possible at a common resolution of them. In relation to the issues where agreement is not possible a structured discussion, with the judge as chairperson, allows the experts to give their opinions without constraint by the advocates in a forum which enables them to respond directly to each other. The judge is not confined to the opinion of one advisor but has the benefit of multiple advisors who are rigorously examined in a public forum.

 [13.600] For concurrent expert evidence to work well, the discussion must be focussed,

highly structured and controlled by the judge. The NSWLRC observed:12 An important factor is the structuring and control of the discussion by the judge. This requires considerable skill, and often a significant amount of preparation, so that the issues are identified and arranged in a way that lends itself to a fruitful discussion. The conduct of the discussion needs to encourage some freedom of exchanges, but nevertheless ensure that all points of view are aired, and that counsel have an adequate opportunity to test opposing experts. The overall success of the technique must also depend on the skills, preparedness and co-​operation of the lawyers and experts involved. Various technical issues need to be addressed (for example, ensuring that each speaker is identified for the purpose of the transcript; and arranging for multiple experts to be available at the same time for the court hearing) …

12

The NSW Law Reform Commission, Expert Witnesses –​Report 109 (June 2005) at [6.57]. [13.600]  827

Civil Procedure in New South Wales

Concurrent Expert Evidence [13.610]  The Hon Justice Peter McClellan, Concurrent Expert Evidence, Medicine and Law Conference, Law Institute Victoria, 29 November 2007 The NSWLRC endorsed the procedure and identified a number of benefits: • Where there are more than two relevant experts, the process can save time, minimising time on preliminaries and allowing the key points to be quickly identified and discussed. • The process moves somewhat away from lawyers interrogating experts towards a structured professional discussion between peers in the relevant field. • Experts typically make more concessions, and state matters more frankly and reasonably, than they might have done under the traditional type of cross-​examination. • The questions may tend to be more constructive and helpful than the sort of questions sometimes encountered in traditional cross-​examination. • The taking of expert evidence concurrently will no doubt be more successful in some situations than in others; in the case of some judges and some types of cases, concurrent taking of evidence is very successful. • Concurrent evidence has considerable potential to increase the likelihood of the court achieving a just decision.



NOTICE TO ADMIT [13.620]  Notices to admit facts or documents are a way in which to narrow the issues in

dispute in a proceeding and can therefore save time and cost. The UCPR promotes the search for admissions by requiring a party to dispute the facts or authenticity of a document in a notice to admit within 14 days, otherwise the facts or authenticity of a document are admitted. See Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406 at [153].

Uniform Civil Procedure Rules 2005 (NSW) [13.630]  Uniform Civil Procedure Rules 2005 (NSW) rr 17.1–​17.4 17.1 Definitions In this Part, other than rule 17.5: • “the admitting party” means a party who is admitting, or being asked to admit, any matter. • “the requesting party” means a party in whose favour another party is admitting, or being asked to admit, any matter. 17.2 Voluntary admissions of fact (1)

The admitting party may, by a notice served on the requesting party, admit, in favour of the requesting party only and for the purposes of the proceedings only, the facts specified in the notice.

(2)

The admitting party may, with the leave of the court, withdraw any such admission.

17.3 Notice to admit facts (1)

The requesting party may, by a notice served on the admitting party (the requesting party’s notice), require the admitting party to admit, for the purposes of the proceedings only, the facts specified in the notice.

828 [13.610]

Preparing and Presenting Evidence  Chapter  13

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

If, as to any fact specified in the requesting party’s notice, the admitting party does not, within 14 days after service on the admitting party of the requesting party’s notice, serve on the requesting party a notice disputing that fact, that fact is, for the purposes of the proceedings only, taken to have been admitted by the admitting party in favour of the requesting party only.

(3)

The admitting party may, with the leave of the court, withdraw any such admission.

17.4 Notice to admit documents (1)

The requesting party may, by a notice served on the admitting party (the requesting party’s notice), require the admitting party to admit the authenticity of the documents specified in the notice.

(2)

If, as to any document specified in the requesting party’s notice, the admitting party does not, within 14 days after service on the admitting party of the requesting party’s notice, serve on the requesting party a notice disputing the authenticity of that document, the authenticity of that document is, for the purposes of the proceedings only, taken to have been admitted by the admitting party in favour of the requesting party only.

(3)

The admitting party may, with the leave of the court, withdraw any such admission.

 [13.640]  A party who has failed to admit a fact so that a party is unnecessarily put to proof of

that fact where a notice to admit has been served may be required to pay the costs of proving that fact on an indemnity basis. See Buzzle Operations Pty Ltd (In Liq) v Apple Computer Australia Pty Ltd (No 2) [2010] NSWSC 490.

Uniform Civil Procedure Rules 2005 (NSW) [13.650]  Uniform Civil Procedure Rules 2005 (NSW) r 42.8 42.8 Dispute of fact subsequently proved or admitted (1)

In this rule: “disputing party” means the party who serves a notice disputing a fact under rule 17.3(2). “fact in dispute” means the fact that is the subject of a notice served under rule 17.3(2). “requesting party” means the party who is served with a notice disputing a fact under rule 17.3(2).

(2)

Unless the court orders otherwise, the disputing party must, after the conclusion of proceedings in which a fact in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party’s costs, assessed on an indemnity basis, being costs incurred by the requesting party:



(a)

in proving the fact, or



(b)

if the fact has not been proved –​in preparation for the purpose of proving the fact.

(3)

An entitlement to costs under this rule is not affected by any order as to costs unless that order makes particular reference in that regard.

 [13.660]  A similar rule as to costs in relation to a notice to admit documents exists at UCPR

r 42.9. [13.660]  829

Civil Procedure in New South Wales

MEDICAL EXAMINATIONS [13.670]  Where a person’s physical or mental condition is relevant to a matter in question,

another party may require the person to undergo a medical examination to furnish evidence for the proceedings.

Uniform Civil Procedure Rules 2005 (NSW) [13.680]  Uniform Civil Procedure Rules 2005 (NSW) rr 23.1–​23.5 23.1 Application and definitions (1)

This Division applies to proceedings in which:



(a)



(b) either:

a person’s physical or mental condition is relevant to a matter in question, and



(i)

that person is a party, or



(ii)

that person is a person for whose benefit a party is claiming relief under the Compensation to Relatives Act 1897.

(2)

In this Division:

“first party” means the party referred to in subrule (1)(b). “medical examination” includes any examination by a medical expert but does not include tests referred to in Division 2. “medical expert” includes dentist, medical practitioner, occupational therapist, optometrist, physiotherapist and psychologist. “notice for medical examination” means a notice referred to in rule 23.2(1). “person concerned” means the person referred to in subrule (1)(a) (whether or not the first party) whose physical or mental condition is relevant to a matter in question. 23.2 Notice for medical examination (1)

Any party other than the first party may serve on the first party a notice for the medical examination of the person concerned.

(2)

A notice for medical examination is to be in the form of a request that the person concerned submit to examination by a specified medical expert at a specified time and place.

23.3 Expenses A party who serves a notice for medical examination must, on request by the first party, pay to the first party a reasonable sum to meet the travelling and other expenses of the person concerned of and incidental to the medical examination, including the expenses of having a medical expert chosen by the person attend the examination. 23.4 Order for examination (1)

The court may make orders for medical examination, including an order that the person concerned submit to examination by a specified medical expert at a specified time and place.

(2)

If the court orders that the person concerned submit to examination by a medical expert, the person must do all things reasonably requested, and answer all questions reasonably asked, by the medical expert for the purposes of the examination.

23.5 Medical expert for person concerned The person concerned may have a medical expert of his or her choice attend a medical examination under this Division.

 830 [13.670]

Preparing and Presenting Evidence  Chapter  13

Rowlands v NSW [13.690]  Rowlands v State of NSW [2009] NSWCA 136 [Rowlands brought proceedings against NSW (the State) for personal injury due to negligence. An important question in the case was the extent to which Rowland’s cognitive abilities had been affected by the relevant accident. The State claimed that an assessment of Rowland’s present cognitive abilities would be affected by his drug-​ taking in days preceding that assessment. Consequently, the respondents obtained orders that Rowland submit to a medical examination by a clinical neuropsychologist and submit to collection of urine, blood and hair samples by a medical practitioner for the purposes of drug screening prior to the examination. Rowland sought leave to appeal from the orders.] HODGSON JA [26] Ms Norton SC for the applicant submitted that the power in r 23.4(1) extended only to making orders for submission to medical examination, and did not extend to making orders requiring the applicant to submit to tests, particularly tests that were invasive and infringed the [applicant’s] right to privacy and privilege against self-​incrimination. Ms Norton pointed out that r 23.4(1) does not refer to testing, and that testing is dealt with separately in Div 2 of Pt 23; and Ms Norton submitted that that Division would be superfluous if medical examination included testing. … [30] In my opinion, as submitted by Ms Heath for the respondents, the rules in question should be construed in the light of the generally understood circumstance that medical examinations now often involve the co-​operation of a number of different experts; and often include examination by medical experts, who are pathologists, of samples that are routinely taken, not by medical practitioners, but by employees. [31] Under r 23.1, medical examination is defined as including any examination by a medical expert; and in my opinion that would include examination by an expert pathologist of samples taken from a party, even though the pathologist does not directly examine the party. What is authorised by r 23.4 is “orders for medical examination”; and in my opinion that extends to orders directed to and appropriate for the bringing about of medical examination, including the kind of medical examination routinely carried out by pathologists. Such orders could extend at least to routine procedures for obtaining samples that are necessary for that kind of medical examination. [32] In my opinion, that interpretation does not make Div 2 of Pt 23 superfluous: that Division explicitly authorises testing during a specified period at a specified place, which might possibly be considered outside Div 1 (cf Herbert v O’Neill (Supreme Court of New South Wales, Sharpe J, 30 November 1979, unreported)). The express exclusion of a specific category of tests from the definition of “medical examination” in r 23.1 suggests, if anything, that otherwise tests may be included in “medical examination”. … [35] There was also discussion in submissions of a possible distinction between tests that went directly to the medical condition of a party, and tests that merely went to the reliability of other tests. In my opinion, there is no sound basis for including the former type of tests and excluding the latter so long as the overriding purpose of the test is a medical examination, or bringing about a medical examination, when a person’s physical or mental condition is relevant to a matter in question. [36] … [I]‌n my opinion the orders were within power.



[13.690]  831

Civil Procedure in New South Wales

INSPECTION AND TESTING OF PROPERTY Uniform Civil Procedure Rules 2005 (NSW) [13.700]  Uniform Civil Procedure Rules 2005 (NSW) r 23.8 23.8 Inspection of property (1)

For the purpose of enabling the proper determination of any matter in question in any proceedings, the court may make orders for any of the following:



(a)

the inspection of any property,



(b)

the taking of samples of any property,



(c)

the making of any observation of any property,



(d)

the trying of any experiment on or with any property,



(e)

the observation of any process.

(2)

An order under subrule (1) may authorise any person to enter any land, or to do any other thing, for the purpose of getting access to the property.

(3)

A party applying for an order under this rule must, so far as practicable, serve notice of motion on each person who would be affected by the order if made.

(4)

The court is not to make an order under this rule unless it is satisfied that sufficient relief is not available under section 169 of the Evidence Act 1995.

(5)

This rule extends to proceedings on an application for an order under Part 5 (Preliminary discovery and inspection).

(6)

In this rule, “property” includes any land and any document or other chattel, whether in the ownership or possession of a party or not.



Cadence Australia v Chew [13.710]  Cadence Australia Pty Ltd v Chew [2008] NSWSC 1076 HAMILTON J [1]‌This is essentially an application under r 23.8 of the Uniform Civil Procedure Rules 2005 for the examination by an independent expert on a confidential basis of the contents of the defendant’s laptop computer. The defendant is prepared to concede that such an examination may be made and, indeed, has nominated an independent expert carry out the examination to do it to see whether, despite the defendant’s denials, there is in the computer material that evidences communication or contact between the defendant or Icon Project Management Pty Ltd, a company with which he is associated, and John Boyd Properties, which was a client of the plaintiff. [2]‌It is conceded that, as well as the organisation John Boyd Properties, it would be appropriate to name two of its representatives, Ian Paver and John Boyd. The plaintiff, however, also asks for a right to have search made for contact with 12 other entities that are named in proposed short minutes that it has put before me. … [6]‌ … The opening words of r 23.8 are that the relevant sort of order may be made for “the purpose of enabling the proper determination of any matter in question in the proceedings”. … [8]‌Mr Dubler has urged upon me the importance of limiting the use of this intrusive power. …

832 [13.700]

Preparing and Presenting Evidence  Chapter  13

Cadence Australia v Chew cont. [9]‌ … [T]he situation stipulated in the opening words of the rule appear to me quite clear. It also appears to me on the material that I have referred to that questions do arise in the proceedings concerning John Boyd Properties, but it cannot be said that questions arise in the proceedings in relation to the other persons named by the plaintiff. [10] On the one hand, it is most desirable that the Court have power to assist it in the just, cheap and quick determination of proceedings, in the words of s 56(1) of the Civil Procedure Act 2005. On the other hand, there must be a proper limit, as Lloyd J observed in the Azzopardi [v Gosford City Council [2001] NSWLEC 49] case, on the ambit of provisions that are intrusive into privacy. [11] The correct balance will be maintained in this case if I allow examination of the computer for the purpose of investigating contact with John Boyd Properties, to which, as I have said, the defendant does not now object, but refusing to allow examination in relation to other persons as to whom questions are not shown to arise on the material available.



[13.710]  833

CHAPTER 14

Privilege [14.10] INTRODUCTION......................................................................................................... 836 [14.30] Context for privilege claims......................................................................... 837 [14.40] Applicable law and procedure for privilege claim........................................ 838 [14.50] Evidence Act 1995 (NSW) ss 131A, 132, 133......................................... 840 [14.60] Uniform Civil Procedure Rules 2005 (NSW) rr 1.8, 1.9, and Dictionary......... 841 [14.70] New South Wales v Public Transport Ticketing Corporation........................ 842 [14.80] Waugh Asset Management v Merrill Lynch............................................. 846 [14.85] Singtel Optus Pty Limited v Weston....................................................... 847 [14.90] CLIENT LEGAL PRIVILEGE............................................................................................. 848 [14.100] Rationale for client legal privilege................................................................ 848 [14.110] Australian Federal Police v Propend Finance............................................ 849 [14.120] Dominant purpose test to determine client legal privilege........................... 850 [14.130] Evidence Act 1995 (NSW) ss 117–​120.................................................. 852 [14.140] Esso v Commissioner of Taxation.......................................................... 854 [14.160] In the matter of Southland Coal........................................................... 856 [14.165] Proof of client legal privilege....................................................................... 859 [14.170] Loss of client legal privilege......................................................................... 860 [14.180] Evidence Act 1995 (NSW) ss 121–​126.................................................. 861 [14.190] Mann v Carnell................................................................................ 863 [14.200] Fenwick v Wambo Coal...................................................................... 865 [14.210] Waugh v Merrill Lynch....................................................................... 870 [14.215] Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing............................................................... 872 [14.218] Glencore International AG v Commissioner of Taxation............................. 876 [14.220] Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015...................................................................................... 879 [14.230] High Court of Australia Employs Case Management and “Overriding Purpose” to Resolve Dispute over Mistaken Provision of Privileged Documents in Discovery..................................................................... 880

[14.240] PROFESSIONAL CONFIDENTIAL RELATIONSHIP PRIVILEGE.......................................... 881 [14.250] Evidence Act 1995 (NSW) ss 126A–​126E............................................... 882 [14.260] Director-​General, Dept of Community Services v D................................... 883 [14.270] JOURNALIST PRIVILEGE................................................................................................ 885 [14.275] Evidence Act 1995 (NSW) ss 126J, 126K............................................... 886 [14.280] PUBLIC INTEREST IMMUNITY...................................................................................... 887 [14.290] Standing and procedure for PII claims......................................................... 887 [14.300] Application of s 130 of the Evidence Act 1995 (NSW)................................. 888 [14.310] Evidence Act 1995 (NSW) ss 129, 130.................................................. 891 [14.320] New South Wales v Public Transport Ticketing Corporation........................ 892 [14.330] Confidential source of information.............................................................. 899 [14.330] ACCC v Prysmian Cavi E Sistemi Energia SRL........................................... 899 [14.335] Public interest immunity and secret evidence?............................................ 906 [14.335] HT v The Queen............................................................................... 906 [14.340] Appointment of special counsel................................................................... 910 [14.340] New South Wales v Public Transport Ticketing Corporation (No 3)............... 910 [14.370] SETTLEMENT NEGOTIATIONS PRIVILEGE..................................................................... 914 [14.380] Evidence Act 1995 (NSW) s 131.......................................................... 915 [14.390] Civil Procedure Act 2005 (NSW) ss 25, 29–​31......................................... 916 [14.400] Field v Commissioner for Railways......................................................... 918 [14.410] Azzi v Volvo Car Australia................................................................... 921  

835

Civil Procedure in New South Wales

INTRODUCTION [14.10] A claim of privilege can be made to object to the production of, or access to,

documents in response to a subpoena to produce, notice to produce or discovery. In addition, privilege can be claimed to object to answering interrogatories. Privilege can also be raised to resist the production of documents due to other forms of compulsion, for example, it can be raised to prevent the seizure of documents under a search warrant. Each of the privileges discussed in this chapter prevents the disclosure of, or access to, information (or privilege can be raised at the trial to object to the admissibility of evidence at the stage when evidence is being adduced). This chapter is limited to looking at five privileges: client legal privilege, professional confidential relationship privilege, journalist privilege, public interest immunity and settlement negotiations privilege. Other privileges also exist; such as the privilege against self-​incrimination,1 religious confession privilege,2 and sexual assault counselling privilege.3 [14.20]  The information that is the subject of the privilege claim could either be in oral form

or in writing. The privileges apply in civil and criminal proceedings. Each privilege exists to protect different interests and/​or relationships: • Client legal privilege protects confidential communications made, and confidential documents prepared, for the dominant purpose of a lawyer providing legal advice or a lawyer providing legal services relating to litigation. • Professional confidential relationship privilege protects communications to preserve the confidential nature of certain relationships which could be undermined by disclosure. • Journalist privilege protects the identity of informants. • Public interest immunity protects information or a document when it is in the public interest for there to be no disclosure. • Settlement negotiations privilege protects communications or documents created in connection with an attempt to settle a dispute. The policy basis for each of the privileges also differs: • Client legal privilege exists to ensure proper legal advice because it ensures that clients are frank and open with their lawyer. This means that the lawyer is able to provide fully informed legal advice. • Professional confidential relationship privilege exists to prevent harm to certain relationships. • Journalist privilege protects sources of information to promote freedom of the press. • Public interest immunity exists to protect government information in the public interest. • Settlement negotiations privilege promotes settlement of disputes. The test to determine whether the privilege or immunity attaches is different in each privilege. Each of the privileges (except for professional confidential relationship privilege) derives from the common law of evidence (but is now contained in the Evidence Act 1995 (NSW)). 1 2 3

See Evidence Act 1995 (NSW) ss 128, 128A, 187 and Civil Procedure Act 2005 (NSW) s 87. See Evidence Act 1995 (NSW) s 127. See Evidence Act 1995 (NSW) ss 126G–​126I, for application of this privilege in civil proceedings. Division 1B in the New South Wales Act only provides that evidence found to be privileged in a criminal proceeding under Pt 5, Div 2 of the Criminal Procedure Act 1986 (NSW) may not be adduced in a civil proceeding in which substantially the same acts are in issue: s 126H. Chapter 6, Pt 5 of the Criminal Procedure Act 1986 (NSW) creates a privilege in relation to certain protected confidences in sexual assault prosecutions.

836 [14.10]

Privilege  Chapter  14

The uniform evidence legislation was the result of the Australian Law Reform Commission’s (ALRC) inquiry into the law of evidence.4 The Commonwealth of Australia was the first to enact the uniform legislation in 1995, followed by New South Wales, Tasmania, Norfolk Island, Victoria, the Australian Capital Territory and the Northern Territory.5 The uniform evidence legislation was the subject of a second ALRC inquiry which examined its performance and recommended amendment.6 The uniform evidence legislation was amended to effect the recommendations of the ALRC.7 It should be noted that if the uniform evidence legislation is not applicable then the tests for privilege in the common law apply. For example, in British American Tobacco Australia Limited v Secretary, Department of Health and Ageing [2011] FCAFC 107, the common law on privilege continues to apply in a claim for legal professional privilege in respect of documents which are the subject of a request under the Freedom of Information Act 1982 (Cth). Such a request being a request for documents from a government department (as opposed to a requirement to produce documents in answer to a subpoena or a notice to produce or discovery). The right to claim privilege and thus prevent access to information belongs to the person vested with the interest or relationship protected by the privilege (the privilege holder). The privilege holder may or may not be a party to the case. In addition, some privileges can be raised by the court on its own, for example, public interest immunity. Context for privilege claims [14.30]  A claim of privilege can be asserted in the following situations:

1.

in response to a subpoena seeking production of documents; a privilege claim can be raised to avoid the production of documents to the court by seeking an order that documents need not be produced (an objection to production); or a privilege claim can be raised to prevent the party who issued the subpoena from accessing the documents that have been produced (an objection to inspection).

2.

in response to an order for discovery under Pt 21 of the Uniform Civil Procedure Rules 2005 (UCPR) by listing a document as a “privileged document” (see UCPR r  21.3). A list of documents giving discovery must identify any document that is claimed to be a privileged document and specify the circumstances under which the privilege is claimed to arise (see UCPR r  21.3(2)(d)). If the party seeking discovery wishes to challenge a claim for privilege then that party needs to file and serve a notice of motion seeking an order that the relevant document be produced for inspection.

3.

to object to answering an interrogatory (see UCPR r  22.2(c)). The party seeking the answer to the interrogatory could file a notice of motion for an order for a further answer to the interrogatory.

4

The ALRC received terms of reference in 1979 and produced an interim and final report that contained draft legislation: Australian Law Reform Commission, Evidence, Interim Report No 26 (1985) (ALRC 26); Australian Law Reform Commission, Evidence, Report No 38 (1987) (ALRC 38). Evidence Act 1995 (Cth); Evidence Act 1995 (NSW); Evidence Act 2001 (Tas); Evidence Act 2004 (NI); Evidence Act 2008 (Vic); Evidence Act 2011 (ACT); Evidence (National Uniform Legislation) Act 2011 (NT). Australian Law Reform Commission, New South Wales Law Reform Commission and Victorian Law Reform Commission, Uniform Evidence Law, Report No 102 (2005) (ALRC 102). Evidence Amendment Act 2008 (Cth); Evidence Amendment Act 2007 (NSW). The amendments commenced on 1 January 2009. The Evidence Act 2008 (Vic) included the amendments.

5 6 7

[14.30]  837

Civil Procedure in New South Wales

4.

in response to a notice to produce (to either resist production or access/​inspection of the documents).

5.

to object to an order to produce or inspect documents made by the court pursuant to s 68 of the Civil Procedure Act 2005 (NSW) (CPA).8

6. to resist other forms of compulsory acquisition of documents, for example, search warrants and search orders under the UCPR. 7.

as the basis for an objection to the tender of a document during a hearing (this is at a time when evidence is “adduced”).

8.

as the basis for an objection to the oral examination of a witness during a hearing (this is at a time when evidence is “adduced”).

Therefore, from the above it is clear that a claim of privilege can be made pre-​trial and/​or during the trial. This distinction is important because the uniform evidence legislation refers to the “adducing” of evidence. Early in the uniform evidence legislation’s life (before the 2009 amendments that enacted Evidence Act 1995 (NSW) s 131A), a litigated question was whether the privilege provisions in the uniform evidence legislation applied to pre-​trial applications, such as those described in (1)–​(6). This was an issue that received early attention and resulted in the High Court reformulating the common law test for legal professional privilege or client legal privilege.9 ALRC 102 raised the option of inserting a provision that made it clear that the privileges in the uniform evidence legislation apply to pre-​trial proceedings.10 Section 131A of the Evidence Act 1995 (NSW) enacts that recommendation.11 Applicable law and procedure for privilege claim [14.40]  The privileges in the Evidence Act 1995 (NSW) (such as ss 118, 119, 129, 130 and

131) apply when evidence is being “adduced”. The effect of s 131A is that the Evidence Act 1995 (NSW) (commonly known as the “uniform evidence legislation”) applies to pre-​trial proceedings. Section  131A(1) provides that the Court must apply the rules set out in the Evidence Act 1995 (NSW) for determining the “disclosure requirement” for documents in all preliminary proceedings: s 131A(1). The relevant disclosures include subpoenas, pre-​trial discovery, non-​party discovery, interrogatories and notices to produce (s 131A(2)). There are three points regarding the limitations of s 131A of the Evidence Act 1995 (NSW): 1.

Section  131A defines “disclosure requirement” as a process or order of a court that requires the disclosure of information or a document. This means that s 131A does not appear to apply to investigatory or non-​curial processes.

2.

Section 131A has been held to have limited application in State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60. In this case, the NSW Court

8

Section 68 of the Civil Procedure Act 2005 (NSW) provides that: Subject to rules of court, the court may, by subpoena or otherwise, order any person to do either or both of the following: (1) to attend court to be examined as a witness and (2) to produce any document or thing to the court. Esso Australia Resources Ltd v Federal Commissioner of Taxation (Cth) (1999) 201 CLR 49. Australian Law Reform Commission, New South Wales Law Reform Commission and Victorian Law Reform Commission, Uniform Evidence Law, Report No 102 (2005) (ALRC 102) at pp 464–​465 [14.39]–​[14.41]. Section 131A of the Evidence Act 1995 (NSW) was inserted pursuant to the Evidence Amendment Act 2007 (NSW). Assented to on 1 November 2007. Date of commencement, 1 January 2009.

9 10 11

838 [14.40]

Privilege  Chapter  14

of Appeal held that, taking into account s 7 of the Evidence Act 2005 (NSW)12 and s 21 of the Interpretation Act 1987 (NSW),13 the State of New South Wales is a “person” for the purposes of s 131A of the Evidence Act 1995 (NSW). However, s 131A was not engaged in a public interest immunity claim made by the State in respect of documents caught by an order for discovery against a statutory body who was the “person” subject to the “disclosure requirement” in relation to various documents but that “person” did not object to providing those documents (see [32] at [14.70]). Therefore, the claim was to be determined under the common law, and not by the application of s 130. This means that s 131A applies when the “person” required by a disclosure requirement to give information or to produce a document, is the “person” who also objects (by making a privilege claim) to giving that information or providing that document. 3.

Section 131A has also been held to apply only at the stage of objection to production (not in an application for access to documents):  Waugh Asset Management v Merrill Lynch [2010] NSWSC 197 (see [14.80]).14 However, in Singtel Optus Pty Limited v Weston [2011] NSWSC 1083, the approach in Waugh was held to be incorrect (see [14.85]). Waugh has been followed in Environment Protection Authority v Queanbeyan City Council [2011] NSWLEC 159 at [6]‌–​[58] and in Alderman v Zurich Australian Insurance Ltd [2011] NSWSC 754 at [12].

The provisions of the UCPR relevant to determining privilege claims are rr 1.8 and 1.9 of the UCPR (see [14.60]). The traditional view for the raising of a privilege claim was that privilege was raised after the document was brought and produced to court, so that the question for privilege was determined on the question of whether the party seeking the document could access (or inspect) the document. This traditional view is explained in the three steps set out by Moffitt P in Waind v Hill & National Employers Mutual General Association Ltd [1978] 1 NSWLR 372 (see [12.380]). However, r 1.9(3) and (4) of the UCPR permits objection to be made to production; which means that the addressee of the subpoena, notice to produce or order for production can claim privilege and not produce the documents to the court. But note r 1.9(5)(c) of the UCPR which permits the court to insist upon production of the document so that the court can rule upon the privilege objection. The judge determining the privilege claim can look at the documents that are the subject of a claim to resolve the privilege claim. Rule  1.9 of the UCPR permits a person to assert a privilege (to which Pt 3.10 of the Evidence Act 1995 (NSW) applies) as a basis for objection to an order for the production of documents. This is because of the definitions of “privileged document” and “privileged information” in the UCPR Dictionary (see [14.60]). Rule 1.9 of the UCPR has been held to only apply to an objection to production.15 Therefore, the law applicable to an order granting

12 13 14 15

Section 7 of the Evidence Act 1995 (NSW) provides: This Act binds the Crown in right of New South Wales and also, so far as the legislative power of Parliament permits, in all its other capacities. Section 21 of the Interpretation Act 1987 (NSW) provides that, in any Act or instrument, the meaning of the term “person” includes “an individual, a corporation and a body corporate or politic”. This narrow interpretation has been criticised: Odgers S, Uniform Evidence Law (11th ed, Thomson Reuters, 2014) pp 818–​819. Carbotech-​Australia Pty Ltd v Yates [2008] NSWSC 1151 at [6]‌–​[13] per Brereton J; Cassanti v Paragalli (2006) 229 ALR 416 at [18] per Barrett J. [14.40]  839

Civil Procedure in New South Wales

access or inspection (under the three-​step procedure in Waind v Hill & National Employers Mutual General Association Ltd [1978] 1 NSWLR 372) would be the common law. A privilege claim is usually supported by affidavit evidence that proves the facts necessary to establish the claim for privilege. Cross-​examination is usually permitted on any affidavit used.16 Section  132 of the Evidence Act 1995 (NSW) provides that the court is to inform a witness or a party of the rights to make applications and objections of privilege. In addition, s  133 states that the court may inspect a document to determine a question of privilege.

Evidence Act 1995 (NSW) [14.50]  Evidence Act 1995 (NSW) ss 131A, 132, 133 131A Application of Part to preliminary proceedings of courts (1)

If:



(a)

a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A, 1C or 3, and



(b)

the person objects to giving that information or providing that document,

the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence. (2)

In this section, disclosure requirement means a process or order of a court that requires the disclosure of information or a document and includes the following:



(a)

a summons or subpoena to produce documents or give evidence,



(b)

pre-​trial discovery,



(c)

non-​party discovery,



(d) interrogatories,



(e)

a notice to produce,



(f)

a request to produce a document under Division 1 of Part 4.6.

132 Court to inform of rights to make applications and objections If it appears to the court that a witness or a party may have grounds for making an application or objection under a provision of this Part, the court must satisfy itself (if there is a jury, in the absence of the jury) that the witness or party is aware of the effect of that provision. 133 Court may inspect etc documents If a question arises under this Part relating to a document, the court may order that the document be produced to it and may inspect the document for the purpose of determining the question.



16

UCPR r 1.9(5)(b). See also Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 at [52] per Gleeson CJ, Gaudron and Gummow JJ, at [65] per McHugh J. But note that in public interest immunity claims, there is no right to cross-​examine a deponent providing evidence in support of a public interest immunity claim and leave to cross-​examine is required. An application for leave to cross-​examine should be refused, or alternatively should only be allowed in very rare or exceptional circumstances: Attorney General for NSW v Stuart (1994) 34 NSWLR 667 at 681; Young v Quin (1985) 4 FCR 483 at 489; R v Hawi (No 2) [2011] NSWSC 1648 at [71].

840 [14.50]

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Uniform Civil Procedure Rules 2005 [14.60]  Uniform Civil Procedure Rules 2005 (NSW) rr 1.8, 1.9, and Dictionary 1.8 Determination of questions arising under these rules (cf SCR Part 23, rule 4(b) and (d)) The court may determine any question arising under these rules (including any question of privilege) and, for that purpose: (a)

may inspect any document in relation to which such a question arises, and

(b)

if the document is not before the court, may order that the document be produced to the court for inspection.

1.9 Objections to production of documents and answering of questions founded on privilege (cf SCR Part 36, rule 13; DCR Part 28, rule 16) (1)

This rule applies in the following circumstances:



(a)

if the court orders a person, by subpoena or otherwise, to produce a document to the court or to an authorised officer,



(b)

if a party requires another party, by notice under rule 34.1, to produce a document to the court or to an authorised officer,



(c)

if a question is put to a person in the course of an examination before the court or an authorised officer.

(2)

In subrule (1), authorised officer means:



(a)

any officer of the court, or



(b)

any examiner, referee, arbitrator or other person who is authorised by law to receive evidence.

(3)

A person may object to producing a document on the ground that the document is a privileged document or to answering a question on the ground that the answer would disclose privileged information.

(4)

A person objecting under subrule (3) may not be compelled to produce the document, or to answer the question, unless and until the objection is overruled.

(5)

For the purpose of ruling on the objection:



(a)

evidence in relation to the claim of privilege may be received from any person, by affidavit or otherwise, and



(b)

cross-​examination may be permitted on any affidavit used, and



(c)

in the case of an objection to the production of a document, the person objecting may be compelled to produce the document.

(6)

This rule does not affect any law that authorises or requires a person to withhold a document, or to refuse to answer a question, on the ground that producing the document, or answering the question, would be injurious to the public interest.

Uniform Civil Procedure Rules 2005 Dictionary “privileged document” means a document that contains privileged information. “privileged information” means any of the following information: (a)

information of which evidence could not, by virtue of the operation of Division 1 of Part 3.10 of the Evidence Act 1995, be adduced in the proceedings over the objection of any person,

(b)

information that discloses a protected confidence, the contents of a document recording a protected confidence or protected identity information (within the meaning of section 126B of the Evidence Act 1995) where: [14.60]  841

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 cont.

(i)

consent by the protected confider (within the meaning of section 126C of that Act) has not been given to disclosure of the confidence, contents or information, and



(ii)

section 126D of that Act would not operate to stop Division 1A of Part 3.10 of that Act from preventing the adducing of evidence in respect of the confidence, contents or information,

(c)

information of which evidence could not be adduced in the proceedings by virtue of the operation of section 126H of the Evidence Act 1995,

(d)

information that tends to prove that a party by whom a document is required to be made available, or by whom an interrogatory is to be answered, under section 128 of the Evidence Act 1995 or section 87 of the Civil Procedure Act 2005:



(i)

has committed an offence against or arising under an Australian law or a law of a foreign country, or



(ii)

is liable to pay a civil penalty,

(e)

information the admission or use of which in a proceeding would be contrary to section 129 of the Evidence Act 1995,

(f)

information that relates to matters of state within the meaning of section 130 of the Evidence Act 1995,

(g)

information to which section 131 of the Evidence Act 1995 applies,

(h)

information:



(i)

the disclosure of the contents of which, or



(ii)

the production of which, or



(iii)

the admission or use of which,

in the proceedings would be contrary to any Act (other than the Evidence Act 1995) or any Commonwealth Act (other than the Evidence Act 1995 of the Commonwealth), but does not include information that the court declares not to be privileged information for the purposes of those proceedings.



New South Wales v Public Transport Ticketing Corporation [14.70]  State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 [The Public Transport Ticketing Corporation (the PTTC) was a statutory body set up under the Transport Administration Act 1988 (NSW) (TA Act), it was constituted as a corporation “representing the Crown” and had “the status, privileges and immunities of the Crown” (s 35R of the TA Act –​which was amended in 2010). The PTTC sued Integrated Transit Solutions Limited and ERG Limited (ERG) for losses said to have been suffered consequent upon the PTTC’s termination of a contract for the designing, building and installation of an integrated ticketing and fare payment system for public transport in Sydney. Such termination was said by the PTTC to have been justified by the alleged serious breaches of contract and delay in performance by ERG. Discovery was ordered in respect of documents held by the PTTC. The State of New South Wales (the State) sought orders in respect of documents discovered by the PTTC, that is that the PTTC be excused from making available for inspection by ERG (or their lawyers) documents that had been discovered as relevant by the PTTC on the ground that the documents were subject to a legitimate claim for public interest immunity. The State was not a party to the litigation but intervened in the litigation to make public interest immunity claims. The State’s initial submission was that s 131A did not apply and therefore the Evidence Act 1995 (NSW) did not apply to the public interest immunity claim.] 842 [14.70]

Privilege  Chapter  14

New South Wales v Public Transport Ticketing Corporation cont. ALLSOP P (HODGSON JA and SACKVILLE AJA agreeing) [26] The State submitted that the terms of s 131A(1) were not engaged. That was so, it was submitted, because the State, which had the carriage of the upholding of the immunity was not a person subject to a disclosure requirement who objects to giving that information or document. The PTTC is the person subject to the disclosure requirement; all the documents are discovered by it and are within its custody, power and control. The State is seeking to rely upon the immunity, not the PTTC, and the State is not subject to the disclosure requirements. [27] The PTTC withheld from inspection documents which it apprehended may be the subject of a claim for public interest immunity. The State filed a motion in the proceedings (without objection by ERG) for the purpose of making the claims for public interest immunity. The PTTC submitted (in a carefully worded submission) that it had a “general preference that all relevant, non-​privileged material be made available to the parties for use in the proceedings, while recognising that the forensic interests of the parties must yield to the principles of public interest immunity. [It] defers to the State and does not wish to be heard [on the immunity issues].” (Outline of submissions dated 11 October 2010.) The State, not the PTTC, had carriage of the motion propounding the immunity. [28] The State submitted first, that the PTTC was not the State, although it was a statutory body representing and having the status of the Crown: TA Act, s 35R(2) and now “a NSW Government agency”: cl 2(3) of Sch 9 introduced by the 2010 Act, Sch 5; and secondly, that the State (or the Crown) cannot be described as “a person” as a matter of statutory interpretation. [29] ERG submitted that at the time the PTTC was required to disclose the documents it was a statutory body representing the Crown and so the State and the PTTC were the same person. The position since 1 July 2010 is, it was submitted, even clearer. So, it was submitted, the State was claiming the immunity and it (through the PTTC) was required to produce the documents. [30] That the PTTC has the status of the Crown does not deny its character as a corporation constituted by the TA Act, s 35R. One aspect of that character is its separateness as a corporate personality. As a corporation constituted by s 35R, the PTTC was continued by the 2010 Act, cl 2(1) of Sch 9, introduced into the TA Act by the 2010 Act, Sch 5. For the purposes of the Australian Constitution, s 75(iv) or s 114 or of the Judiciary Act 1903 (Cth), s 38, the PTTC may well be the State: State Bank of New South Wales v Commonwealth Savings Bank of Australia [1986] HCA 62; 161 CLR 639; Deputy Commissioner of Taxation v State Bank of New South Wales [1992] HCA 6; 174 CLR 219; Inglis v Commonwealth Trading Bank of Australia [1969] HCA 44; 119 CLR 334. Such provisions are not to be defeated or avoided by the precise corporate form in which the State conducts its affairs. That, however, does not mean that the PTTC does not have a separate personality as a corporation, distinct from the polity of the State of New South Wales: Commonwealth v Silverton Ltd (1997) 130 ACTR I at 13–​18; Ex parte Workers’ Compensation Board of Queensland [1983] 1 Qd R 450. In the last two cases, such separateness of the entity permitted agencies of the one polity to sue each other. [31] It is unnecessary to discuss the manner in which the dictum that the Crown is “one and indivisible” has been necessarily varied by the political exigencies of Empire and Federation: see P W Hogg, Liability of the Crown (LawBook Co, 2nd ed, 1989) at pp 10–​12 and H E Renfree, The Executive Power of the Commonwealth of Australia (Legal Books, 1984) at pp 51–​57. It is sufficient to note that the different emanations of the Crown in the right of different polities are different bodies politic: cf R v Sutton [1908] HCA 26; 5 CLR 789; Amalgamated Society of Engineers v Adelaide Steamship Co Ltd [1920] HCA 54; 28 CLR 129; Commonwealth v Cigamatic Pty Ltd (In Liquidation) [1962] HCA 40; 108 CLR 372. [32] The issue here is one of the separateness of juristic person between the body politic of New South Wales and a corporation the creature of statute. The TA Act says the PTTC is a corporation; hence it is a distinct entity. The 2010 Act continued it as such. The PTTC (albeit a corporation) is “a [14.70]  843

Civil Procedure in New South Wales

New South Wales v Public Transport Ticketing Corporation cont. person … required by a disclosure requirement [as defined in s 131A(2)] … to produce a document”. However, it does not “object to … providing that document”. Its carefully drafted position does not amount to such objection. The State objects. Assuming for the moment that the State (being the body politic of New South Wales) is “a person” for the purposes of s 131A(1)(a) (which, for the reasons set out below, it is), it is not a person who is required, by pre-​trial discovery as the relevant disclosure requirement for s 131A(2), to produce the documents. It is for this purpose a separate entity from the PTTC, although the PTTC represents the Crown and for the purposes of the Judiciary Act and Constitution may well be the State. That does not make the corporation created by s 35R and the body politic the same “person”. On this basis, the Evidence Act, ss 130 and 131A are not engaged. [33] Having regard to this conclusion, it is not strictly necessary to consider whether the State is “a person” within the meaning of s 131A(1)(a) of the Evidence Act. Nonetheless, as the question was debated in argument, it is appropriate to express a view. [34] The question of whether the State is “a person” for the purpose, and within the meaning, of s 131A(1)(a) is a matter of statutory interpretation. This process commences with the presumption that the general words of a statute do not bind the Crown or its instrumentalities or agents: Bropho v Western Australia [1990] HCA 24; 171 CLR 1 at 22. The earlier position that the Crown would only be bound if the statute contained express words to that effect or if the intention to bind the Crown was manifest from the very terms of the statute is now viewed as outdated: Bropho at 19 and cf Province of Bombay v Municipal Corporation of Bombay [1947] AC 58 at 61; Bradken Consolidated Ltd v Broken Hill Pty Co Ltd [1979] HCA 15; 145 CLR 107. In Bropho, six justices of the High Court said (at 23): In the case of legislative provisions enacted subsequent to this decision [which the Evidence Act was], the strength of the presumption that the Crown is not bound by the general words of statutory provisions will depend upon the circumstances, including the content and purpose of the particular provision and the identity of the entity in respect of which the question of the applicability of the provision arises. If, for example, the question in issue is whether the general words of a statute should be construed in a way which would make the Sovereign herself or himself in the right of the Commonwealth or of a State liable to prosecution and conviction for a criminal offence, the presumption against a legislative intent to that effect would be extraordinarily strong. [35] To assess the meaning of the phrase “a person” for the purposes of s 131A(1)(a), it is important to consider the relevant provisions of the Interpretation Act and the provisions of the Evidence Act itself. Section 21 of the Interpretation Act provides that, in any Act or instrument, the meaning of the term “person” includes “an individual, a corporation and a body corporate or politic”. No contrary definition of “person” is contained in the Evidence Act. Section 7 of the Evidence Act provides as follows: This Act binds the Crown in right of New South Wales and also, so far as the legislative power of Parliament permits, in all its other capacities. [36] In Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334, the High Court considered whether reference to a “person” (as including a person not being a corporation) in ss 6(3) and 75B(1) of the Trade Practices Act 1974 (Cth), extended the application of some aspects of the legislation to the State of New South Wales. It did so against the backdrop of the Acts Interpretation Act 1901 (Cth), s 22(1), which provides, in similar terms to the Interpretation Act, that expressions used to denote persons generally include a body politic. The majority of the Court held that at the time of the acts complained of the relevant provisions of the Trade Practices Act did not apply to the State of New South Wales (at 349). Section 2A of the Trade Practices Act provided, relevantly: “this Act binds the Crown in right of the Commonwealth in so far as the Crown in right of the Commonwealth carries on a business, either directly or by an authority of the Commonwealth” and that the Act would apply to the Commonwealth (and each authority of the Commonwealth) in so far as it carried on a business as if it were a corporation. The inclusion of s 2A was held by the majority of the Court to raise the rule of 844 [14.70]

Privilege  Chapter  14

New South Wales v Public Transport Ticketing Corporation cont. statutory construction embodied in the Latin maxim expressio unius est exclusio alterius such that s 2A represented a “complete and exhaustive statement” of the Act’s application to the Commonwealth (at 348–​349). Although not an express exclusion of the application of the Act to the States, it was held to tell strongly against the Act so extending. Thus, the majority of the Court found that the Trade Practices Act evinced an intention that a State was not a person for the purposes of the relevant sections, contrary to the Acts Interpretation Act 1901 (Cth), s 22(1). [37] In Commonwealth v Wood [2006] FCA 60; 148 FCR 276, Heerey J held that the Commonwealth was a “person” for the purposes of the application of the Anti-​Discrimination Act 1998 (Tas), s 16. His Honour held that s 4, which stated (similarly to s 7 of the Evidence Act) that the Act bound the Crown in right of the State (Tasmania) and, so far as was permissible, in all other capacities, extended to bind the Crown in right of the Commonwealth. In so finding, Heerey J gave weight to the fact that the Anti-​Discrimination Act was beneficial legislation, which ought to be construed liberally and that “since s 4 provides expressly that the Crown in the right of Tasmania is bound, the Crown, at least in that capacity, must be a ‘person’ for the purpose of s 16” (at 283). Heerey J’s decision was not followed in Commonwealth v Anti-​Discrimination Tribunal (Tasmania) [2008] FCAFC 104; 169 FCR 85, per Weinberg J and Kenny J, Goldberg J dissenting. Weinberg J held that, reading the Anti-​Discrimination Act 1998 (Tas) as a whole, the construction supported by s 4 that the Commonwealth was a “person”, was outweighed by indications elsewhere in the Act which tended against that being the case (at 118). Kenny J also found that the Anti-​ Discrimination Act 1998 (Tas), viewed as a whole, did not apply to the Commonwealth as a person. Her Honour noted that the Acts Interpretation Act 1931 (Tas), s 41(1) (unlike the Commonwealth and New South Wales Acts) stated that the expression “person” “shall include any body of persons, corporate or unincorporated, other than the Crown” (at 123). Kenny J also noted that the definition of a “person” in the Anti-​Discrimination Act 1998 (Tas), s 3, included an “organisation” and “organisation” was defined to include “a council, a Government department … or a State authority”. Her Honour held that the specific reference to State authorities and State departments and local government, which would come within that term in the absence of reference to other bodies politic weighed against the term “organisation”, and, therefore, “person” as including the Commonwealth (at 125–​126). [38] As mentioned earlier, the Interpretation Act, s 21 adopts the wider definition of the term person as including a body politic. The Evidence Act, ss 130 and 131A do not seek to impose upon the State obligations of a nature which would require express language that the Crown be “a person” for the purposes of those sections. Taken together with s 7 of the Evidence Act, which states the Crown to be bound unreservedly, the construction favoured in the Interpretation Act would not appear to be displaced. [39] Further, the phrase “a person” finds its place in Div 4 of Pt 3.10 dealing with privileges which include in s 130 in Div 3 of Pt 3.10 the question of matters of State. One of the circumstances to which ss 130 and 131A can be seen to be naturally directed is the State (and not merely instrumentalities or corporate agents of the State) being required by a “disclosure requirement” to produce a document and objecting to that course. If there were litigation to which the polity of the State of New South Wales was a party or in which a subpoena was directed to it, the plain intent of ss 130 and 131A is that the Evidence Act would regulate production. In that context, the word “person” would be wide enough to encompass the State, displacing any presumption to the contrary. [40] Nevertheless, for the reasons I have earlier given, the Evidence Act, s 131A, is not engaged here. [Therefore, the privilege claims were governed by the common law.]

 [14.70]  845

Civil Procedure in New South Wales

Waugh Asset Management v Merrill Lynch [14.80]  Waugh Asset Management v Merrill Lynch [2010] NSWSC 197 [Waugh were interested in buying a number of hotels from various vendors. Waugh required finance from Merrill Lynch. Waugh claimed Merrill Lynch breached agreements for finance and that Waugh suffered damage. Merrill Lynch filed a written statement by a Mr A J Stutchbury as part of its evidence. Mr Stutchbury’s statement referred to Merrill Lynch receiving independent legal advice from Back Schwartz Vaughan “to assist with its due diligence on title relating to the relevant gaming permits”. Waugh caused a subpoena to be issued and served on Back Schwartz Vaughan requiring the production of that firm’s relevant files. The documents were produced, but a claim of privilege was made. By notice of motion, Waugh sought access to the documents produced by Back Schwartz Vaughan. Merrill Lynch opposed that access. Waugh submitted that s 122 of the Evidence Act 1995 (NSW) (waiver) was applicable through the mechanism of s 131A and r 1.9 of the UCPR. Merrill Lynch submitted neither s 122 nor the common law established waiver of privilege.] MCDOUGALL J [7]‌I return to the fact that we are concerned with the question of access to documents produced on subpoena by a third party. Brereton J was confronted with such a situation in Carbotech-​Australia Pty Ltd v Yates [2008] NSWSC 1151. As his Honour pointed out at [10], the process of complying with the subpoena involves three steps. The first is production to the Court in answer to the subpoena. The second is interim use –​for example, access for inspection or copying. The third (which may never arise) is the tender of the document. That process was identified by the Court of Appeal in National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372. There is no doubt that it continues to apply, subject to such modifications as may have been effected by r 1.9, today. [8]‌Further, Brereton J said, it was only the first of those three steps that was governed by r 1.9. His Honour said at [11] that “neither the [Evidence] Act nor the Rules apply to the second stage, and it follows that the common law continues to apply to the second stage”. [9]‌Section 131A of the Evidence Act applies where a party to litigation is required by a “disclosure requirement” to give information or produce documents. Where the person objects to giving information or providing documents, for example on the grounds of privilege, the objection is to be determined by applying the relevant provisions of Division 1A of Chapter 3 of the Evidence Act “with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence”. [10] Further, by sub-​s (2) a “disclosure requirement” is defined to mean a court process or order that requires the disclosure of information or a document, and includes a subpoena to produce documents. [11] Accordingly, I agree with Brereton J that the focus of r 1.9 (which is the rule that deals with objections to production of documents) and s 131A applies at the stage of production. It does not, as it seems to me, apply at the stage of subsequent use. Of course, it is not at the first stage (production), but at the second (interim use, such as access or photocopying), where questions of privilege are raised. [12] I therefore think that the better view is that the question ought to be dealt with in accordance with the relevant principles of the common law. But that does not seem to me to matter because, as I shall indicate, the same answer is to be given whether the situation is dealt with under the common law, or pursuant to the Evidence Act.



846 [14.80]

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Singtel Optus Pty Limited v Weston [14.85]  Singtel Optus Pty Limited v Weston [2011] NSWSC 1083 WHITE J [23] All the documents for which privilege is claimed have been produced for my inspection. … [T]‌here is a question as to whether privilege was waived by disclosure to persons between whom there was not a relationship of lawyer and client. … [24] There is an initial question whether the present application for inspection is to be dealt with in accordance with the Evidence Act 1995 or the common law. In Carbotech-​Australia Pty Ltd v Yates Brereton J held that whilst r 1.9 of the Uniform Civil Procedure Rules 2005 had the result that the Evidence Act 1995 applied to the initial stage of production of documents to the court under subpoena, neither the Evidence Act 1995 nor the Uniform Civil Procedure Rules applied at the subsequent stage of inspection of documents. Hence rules of common law applied to questions of the availability of privilege and the waiver of privilege at the stage of inspection. Subsequently, the Evidence Act 1995 was amended to include s 131A. It provides: [s 131A extracted] [25] In Waugh Asset Management v Merrill Lynch [2010] NSWSC 197 McDougall J held that s 131A also applied at the stage of production and did not apply at the second stage where inspection is sought of documents produced to the court, so that the relevant principles to be applied were those of the common law (at [9]‌-​[12]). I followed his Honour’s decision in d’Apice v Gutkovich (No 1) [2010] NSWSC 1336 at [10], as did Adams J in Alderman v Zurich [2011] NSWSC 754 at [12]. [26] However, in TransGrid v Members Lloyd’s Syndicate 3210 [2011] NSWSC 301, Ball J, without deciding the question, raised doubts as to whether this was the better construction of s 131A (at [10]). On further consideration I consider that those doubts are well founded. Relevantly subs 131A(1) applies where a person is required by a “disclosure requirement” to “produce” a document. Prima facie, as McDougall J held, the section applies at the stage of production. However, the definition of “disclosure requirement” as meaning a process or an order that requires the “disclosure” of a document, including by way of production of a document on subpoena or a notice to produce, indicates that the draftsman intended the section to apply to the entire process by which the production of a document on subpoena or by notice to produce (or by the other means referred to in subs 131A(2)) would result in the disclosure of the document. [27] The doubt as to the scope of s 131A having been raised in TransGrid v Members of Lloyd’s Syndicate 3210, I think that I am justified in not following the earlier line of decisions (including my own), all of which were delivered ex tempore. In my view, where the objection to inspection is taken by the person required to produce the document on subpoena or notice to produce, the Evidence Act 1995, and not the common law, applies. [28] However, as Allsop P held in State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 at [32] and as the terms of s 131A clearly provide, the section only applies where the person objecting to disclosure on the ground of privilege is the same person who was required to produce the document. The section does not apply when a claim for privilege is made by persons other than the person required to produce the documents. In such cases the common law applies. [29] In the circumstances of this case there is no different outcome, either as to availability of privilege, or as to whether privilege has been waived, depending on whether it is the common law or the Evidence Act 1995 that applies. This will not always be so.



[14.85]  847

Civil Procedure in New South Wales

CLIENT LEGAL PRIVILEGE [14.90]  Client legal privilege is both a rule of substantive law and an important common law

immunity.17 Client legal privilege attaches to communications (either oral or in writing). The communications can be between a lawyer and a client (eg a letter to a client), or it can be a communication between a lawyer and a third party (eg a lawyer’s letter to an expert witness), or the privilege can attach to a third-​party communication (eg an expert report). The important question is to investigate the dominant purpose for the communication (see [14.120]). The communication or document will be privileged if it was created for the dominant purpose of legal advice (Evidence Act 1995 (NSW) s 118) or for use in litigation (Evidence Act 1995 (NSW) s 119). The privilege is the client’s and the client is the person that can waive it18 (for a discussion of waiver, see [14.170]). The legal practitioner has a duty of protecting and upholding the privilege. The legal practitioner has ostensible authority to waive privilege on behalf of their client. This is so irrespective of whether the legal adviser is acting contrary to the express instructions of their client.19 Client legal privilege can be claimed in pre-​trial and trial procedures. It also can be raised in non-​judicial inquiries and extends to all forms of compulsory disclosure, such as search warrants (see Baker v Campbell (1983) 153 CLR 52). This is because it is a rule of substantive law and not a mere rule of evidence.20 However, client legal privilege can be abrogated by statute, for example client legal privilege is abrogated for obtaining documents in relation to serious terrorism offences.21 Rationale for client legal privilege [14.100]  In an adversarial system of litigation, proper legal advice is necessary. Client legal

privilege protects the confidences of the client which facilitates proper legal advice by promoting open communication between lawyer and client. The rationale has been described as: [I]‌t is now established that its justification is to be found in the fact that the proper functioning of our legal system depends upon a freedom of communication between legal advisers and their clients which would not exist if either could be compelled to disclose what passed between them for the purpose of giving or receiving advice. …The restriction of the privilege to the legal profession serves to emphasize that the relationship between a client and his legal adviser has a special significance because it is part of the functioning of the law itself. Communications which establish and arise out of that relationship are of their very nature of legal significance, something which would be coincidental in the case of other confidential relationships. It has been found necessary that professional guidance in the complex processes of the law should be uninhibited by the possibility that what is said to enable advice to be sought or given might later be used against the person seeking the advice.22

17 18 19 20 21 22

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 552–​553 per Gleeson CJ, Gaudron, Gummow and Hayne JJ. Mann v Carnell (1999) 201 CLR 1 at [28]. See [14.190]. Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529 at 539–​540 per Templeman LJ, cited in Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 at [79] per McHugh J. AFP Commissioner v Propend (1997) 188 CLR 501 at 505 per Brennan CJ, at 540 per Gaudron J; Goldberg v Ng (1995) 185 CLR 83 at 93–​94 per Deane, Dawson and Gaudron JJ. See Crimes Act 1914 (Cth) s 3ZQR. Baker v Campbell (1983) 153 CLR 52 at [21] per Dawson J.

848 [14.90]

Privilege  Chapter  14

The rationale for client legal privilege was also examined by McHugh J in AFP Commissioner v Propend (1997) 188 CLR 501.

Australian Federal Police v Propend Finance [14.110]  Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 MCHUGH J (pages 551–​552) This Court has stated the rationale for legal professional privilege [For the historical development of the privilege see, Wigmore on Evidence, (1961) par 2290; Cross on Evidence, 5th Aust ed (1996) par 25215; McNicol, The Law of Privilege, (1992) at 46–​51; ALRC Report No 26, Evidence, (1985), vol 1 at 494–​495; Law Reform Commission of Western Australia, Project No 90 (1993), Report on Professional Privilege for Confidential Communications at 29–​30; Lai, “History and Judicial Theories of Legal Professional Privilege”, Singapore Journal of Legal Studies, (1995) at 558; Williams, “Discovery of Civil Litigation Trial Preparation in Canada”, (1980) 58 Canadian Bar Review 1 at 45–​46; R v Derby Magistrates’ Court, ex parte B [1995] UKHL 18; [1995] 3 WLR 681 at 692–​696; [1995] UKHL 18; [1995] 4 All ER 526 at 538–​540 per Lord Taylor CJ.] in the following terms [Grant [1976] HCA 63; (1976) 135 CLR 674 at 685. More recently see, Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52 at 79, 93–​94; Maurice [1986] HCA 80; (1986) 161 CLR 475 at 487 per Mason and Brennan JJ; Carter (1995) 183 CLR 121 at 126–​128, 132–​133, 144–​147, 160–​161]: The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision. Three important points emerge from this statement. First, the statement properly identifies the inherent tension in the doctrine of legal professional privilege: on the one hand, there is the need to protect the confidences of the client and, on the other, there is the public interest in parties to litigation having access to all relevant evidence [See dicta to this effect in Waterford [1987] HCA 25; (1987) 163 CLR 54 at 64–65]. Second, the statement correctly identifies the subject matter of the privilege –​communications. This point, however trite it may seem, is fundamental to the determination of the present appeal. Much of the confusion present in the case law arises from a failure to apply it. Legal professional privilege is concerned with communications, either oral, written or recorded, and not with documents per se. Third, the statement emphasises the paramountcy of the principle of legal professional privilege in our legal system. In this country, legal professional privilege is more than a mere rule of evidence; it “is a substantive general principle which plays an important role in the effective and efficient administration of justice by the courts” [Goldberg v NG [1995] HCA 39; (1995) 185 CLR 83 at 93–​94. See also, Carter (1995) 183 CLR 121 at 161; R v Derby Magistrates’ Court, ex parte B [1995] UKHL 18; [1995] 3 WLR 681 at 695; [1995] UKHL 18; [1995] 4 All ER 526 at 540–​541 per Lord Taylor CJ.], the best explanation of which is that it is a “practical guarantee of fundamental, constitutional or human rights” [Carter (1995) 183 CLR 121 at 161]. In Carter [(1995) 183 CLR 121 at 161. See also Maurice [1986] HCA 80; (1986) 161 CLR 475 at 490 per Deane J, where his Honour described the privilege as “a bulwark against tyranny and oppression”. A similar sentiment was expressed by McEachern CJBC in the leading Canadian authority on point, Hodgkinson v Simms (1988) 55 DLR (4th) 577 at 581.], I pointed out that: [14.110]  849

Civil Procedure in New South Wales

Australian Federal Police v Propend Finance cont. By protecting the confidentiality of communications between lawyer and client, the doctrine protects the rights and privacy of persons including corporations by ensuring unreserved freedom of communication with professional lawyers who can advise them of their rights under the law and, where necessary, take action on their behalf to defend or enforce those rights. The doctrine is a natural, if not necessary, corollary of the rule of law and a potent force for ensuring that the equal protection of the law is a reality.

 Dominant purpose test to determine client legal privilege [14.120]  The elements of client legal privilege are:

1.

a professional relationship between lawyer and client (note s 120 of the Evidence Act 1995 (NSW) for unrepresented litigants);

2.

confidential communications (either oral communications or documents); and

3.

created for the dominant purpose of legal advice or litigation.

Client legal privilege is found in ss  118 and 119 of the Evidence Act 1995 (NSW) (see [14.130]). Client legal privilege applies to “confidential communications” made, and “confidential documents” prepared, for the “dominant purpose” of a lawyer providing legal advice (s 118) or providing legal services relating to litigation (s 119). Section 117 provides important definitions and s  120 extends the privilege to unrepresented parties. The test is based on purpose. The purpose of the communication defines whether the privilege applies, namely whether the communication was made for the dominant purpose of legal advice or for use in existing or anticipated litigation. The purpose in existence at the time of the making of the confidential communication or preparation of the confidential document is determinative.23 Proof of a dominant purpose will not be satisfied by a person stating that they prepared the document for a dominant purpose. Evidence needs to establish the circumstances for the creation of the document/​communication. Hamilton  J, writing extra-​judicially, has summarised the matters that require proof in a claim for privilege as: The evidence that is needed to sustain a claim of privilege is evidence that will make out each element of the particular privilege that is being claimed. Examples of the elements which are frequently in contention are:

(1) whether or not the person claiming the privilege is a client bearing in mind the definition in s 117 of the EA;



(2) whether or not a communication or a document is confidential, again bearing in mind the statutory definitions;



(3) whether or not a communication was made or a document was prepared for the dominant purpose of providing legal advice to the client;



(4) whether or not a communication was made or a document was prepared for the dominant purpose of the client being provided with professional legal services relating to a relevant proceeding; and

23

Barnes v Commissioner of Taxation (2007) 242 ALR 601; [2007] FCAFC 88 at [5]‌.

850 [14.120]

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(5) whether or not a proceeding is anticipated in which the client may be a party.24

The common law test for privilege is also the dominant purpose test: Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49 (see [14.140]). This case overruled the previous common law test which was the sole purpose test. In Mitsubishi Electric Australia Pty Ltd v Victorian Workcover Authority (2002) 4 VR 332 at [10], the dominant test was expressed as “clear paramountcy should be the touchstone”. Spigelman CJ applied this definition in Sydney Airports Corporation Ltd v Singapore Airlines Ltd & Qantas Airways Ltd [2005] NSWCA 47: [6]‌It was common ground on the appeal that the test of what is a “dominant purpose” was an objective test, but that the subjective intention of the person responsible for the document coming into existence was entitled to weight. The Claimant relied on the observations of Callinan J in Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67; (1999) 201 CLR 49, at 107 [172]: Whether a purpose is a dominant purpose is, in my view, a matter to be objectively determined but the subjective purpose will always be relevant and often decisive. [7]‌The test of “dominant purpose” has been expressed in terms of “clear paramountcy” (see Waugh v British Railways Board [1979] UKHL 2; [1980] AC 521, at 543; Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59; (2002) 4 VR 332, at 336–​337[10]). As the High Court said in a different context: In its ordinary meaning, dominant indicates the purpose which was the ruling, prevailing, or most influential purpose. Federal Commissioner of Taxation v Spotless Services Ltd [1996] HCA 34; (1996) 186 CLR 404, at 416 (Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ).

[In Federal Commissioner of Taxation v Spotless (1996) 186 CLR 404, the High Court considered whether taxpayers entered into the scheme for the dominant purpose of enabling the taxpayers to obtain a tax benefit as opposed to legal advice.] Copies of non-​privileged documents can be privileged if the copy is made for the dominant purpose of legal advice or for the use in litigation. Brennan CJ in Commissioner Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 508 considered whether privilege applied to a copy document where the original was not privileged (note that the relevant test at that time was a sole purpose test as set out in Grant v Downs (1976) 135 CLR 674): The test is anchored to the purpose for which the document was brought into existence; the use to which a document is put after it is brought into existence is immaterial. So, on a strictly logical application of the test, if a copy is made solely for the purpose of providing it to a legal adviser in order to obtain legal advice or for use in connection with apprehended litigation, the copy would be privileged. A test which focuses on the purpose for which a document is brought into existence, rather than on the information given by or contained in the document, creates practical problems in ascertaining the intention of the maker of the document.

In Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 173, Robb J considered the determination of a privilege claim over a chain of emails that were initially not made for the purpose of legal advice or litigation. Robb J stated at [178]:

24

John Hamilton, The 2008 Judges Series, Lawyer-​Client Privilege in Litigation College of Law, Continuing Professional Education Department http://​www.supremecourt.justice.nsw.gov.au/​Documents/​Publications/​ Speeches/​Pre-​2015%20Speeches/​Assorted%20-​%20A%20to%20K/​hamilton_​speeches.pdf. [14.120]  851

Civil Procedure in New South Wales

In my view truly difficult questions may arise where the Court is required to determine whether a chain of emails is protected by client legal privilege. The position may be much more difficult than the case where a photocopy of a document is made. A shopping list may not be privileged, but if a party wishes to obtain legal advice about the shopping list, or to provide it to a lawyer for the dominant purpose of the party being provided with professional legal services related to an anticipated, pending or subsisting proceeding, the fact will be that the photocopy of the shopping list will be produced by the conscious act of the client in photocopying it for the particular purpose. That will not necessarily be the case for chains of emails, which may often include emails that have little to do with the purpose of sending the whole chain to the final recipient, but may in part be created because of lazy decisions along the chain to click on “Reply” or “Reply All”, rather than to take the trouble to create a new email for the relevant protected purpose, containing only the earlier emails or other information necessary to achieve the protected purpose.

Evidence Act 1995 (NSW) [14.130]  Evidence Act 1995 (NSW) ss 117–​120 Division 1 –​Client legal privilege 117 Definitions (1)

In this Division: “client” includes the following:



(a)

a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service),



(b)

an employee or agent of a client,



(c)

an employer of a lawyer if the employer is:



(i)

the Commonwealth or a State or Territory, or

(ii)

a body established by a law of the Commonwealth or a State or Territory,



(d)

if, under a law of a State or Territory relating to persons of unsound mind, a manager, committee or person (however described) is for the time being acting in respect of the person, estate or property of a client–​a manager, committee or person so acting,



(e)

if a client has died–​a personal representative of the client,



(f)

a successor to the rights and obligations of a client, being rights and obligations in respect of which a confidential communication was made.

“confidential communication” means a communication made in such circumstances that, when it was made:

(a)

the person who made it, or



(b)

the person to whom it was made,

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. “confidential document” means a document prepared in such circumstances that, when it was prepared:

(a)

the person who prepared it, or



(b)

the person for whom it was prepared,

was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. 852 [14.130]

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Evidence Act 1995 (NSW) cont. “lawyer” means:

(a)

an Australian lawyer, and



(b)

an Australian-​registered foreign lawyer, and



(c)

an overseas-​registered foreign lawyer or a natural person who, under the law of a foreign country, is permitted to engage in legal practice in that country, and



(d)

an employee or agent of a lawyer referred to in paragraph (a), (b) or (c).

“party” includes the following:

(a)

an employee or agent of a party,



(b)

if, under a law of a State or Territory relating to persons of unsound mind, a manager, committee or person (however described) is for the time being acting in respect of the person, estate or property of a party–​a manager, committee or person so acting,



(c)

if a party has died–​a personal representative of the party,



(d)

a successor to the rights and obligations of a party, being rights and obligations in respect of which a confidential communication was made.

(2)

A reference in this Division to the commission of an act includes a reference to a failure to act.

118 Legal advice Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a)

a confidential communication made between the client and a lawyer, or

(b)

a confidential communication made between 2 or more lawyers acting for the client, or

(c)

the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a)

a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or

(b)

the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party.

120 Unrepresented parties (1)

Evidence is not to be adduced if, on objection by a party who is not represented in the proceeding by a lawyer, the court finds that adducing the evidence would result in disclosure of:



(a)

a confidential communication between the party and another person, or



(b)

the contents of a confidential document (whether delivered or not) that was prepared, either by or at the direction or request of, the party, for the dominant purpose of preparing for or conducting the proceeding.

(2)

(Repealed)

 [14.130]  853

Civil Procedure in New South Wales

Esso v Commissioner of Taxation [14.140]  Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49; 168 ALR 123; [1999] HCA 67 [Esso claimed legal professional privilege in the context of discovery. The High Court considered whether the correct test for claiming legal professional privilege in relation to the production of discovered documents was the sole purpose test as formulated by the High Court in Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 or the dominant purpose test. Note that this case occurred before the enactment of s 131A, which meant that the common law applied to the pre-​trial discovery procedure as the terms of ss 118 and 119 only apply when evidence is “adduced”.] GLEESON CJ, GAUDRON and GUMMOW JJ [1]‌The central issue in this appeal concerns the test for determining whether what is usually called legal professional privilege, (an expression which might suggest erroneously that the privilege is that of the lawyer), or what is called in the Evidence Act 1995 (Cth) client legal privilege, applies in relation to discovery and inspection of confidential written communications between lawyer and client. [2]‌The test in the Evidence Act is whether the communication was made, or the document was prepared, for the dominant purpose of the lawyer providing legal advice or legal services. The dominant purpose test accords with the common law test now adopted in England, New Zealand, Ireland, and most Canadian Provinces. It was favoured by Barwick CJ in the leading Australian case on the subject, Grant v Downs. However, a majority in that case (Stephen, Mason and Murphy JJ) preferred a sole purpose test. Hence, since 1976, courts in Australia have applied the common law of legal professional privilege on the basis that privilege will only attach to a confidential communication, oral or in writing, made for the sole purpose of obtaining or giving legal advice or assistance or of use in legal proceedings. [3]‌The difference between the Evidence Act test and what has, since Grant v Downs, been accepted in Australia as the common law test, has given rise to a number of problems. The Evidence Act only applies in proceedings in a federal court or an Australian Capital Territory court. New South Wales has enacted legislation in the same terms for that State, but no other jurisdiction has done so. Moreover, even in a jurisdiction where the Evidence Act applies, the relevant provisions relate only to the adducing of evidence. The reason for this was explained in the report of the Australian Law Reform Commission which proposed the legislation, and which said: “The Terms of Reference limit the Commission to considering the application of the privilege in the courtroom where evidence is sought to be given.” [4]‌As was pointed out in Mann v Carnell, the circumstances in which legal professional privilege may apply are not limited to the adducing of evidence. As in the present case, the privilege may be invoked in other circumstances, such as discovery and inspection of documents. Documents may be discoverable, or the subject of a demand for inspection, even though they are not admissible in evidence. They may be significant, for example, because they open up a line of inquiry. Furthermore, in this country, the application of the privilege is not confined to judicial or quasi-​judicial proceedings. On any view, the ambit of the common law doctrine of legal professional privilege in Australia exceeds that of the relevant provisions of the Evidence Act. Given the specific and limited heads of legislative power in s 51 of the Constitution, there also may be questions as to the extent of the legislative power of the Parliament to deal with the privilege, apart from its operation in relation to judicial proceedings under Ch III. [5]‌The Australian Law Reform Commission was aware of the problem, and adverted to it in its report. After referring to the limitation in its terms of reference, the Commission said: Situations may arise where a party obtains access to documents outside the courtroom which are protected in the courtroom by the proposed privilege. Under the proposal, the privilege will still apply in the courtroom unless the client voluntarily disclosed the document. Having wider access on discovery or under a search warrant is usual. Access is not determined by

854 [14.140]

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Esso v Commissioner of Taxation cont. the rules of admissibility such as relevance and hearsay. It is not unreasonable to have wider access in the investigative stage. … The common law of legal professional privilege [35] Legal professional privilege (or client legal privilege) protects the confidentiality of certain communications made in connection with giving or obtaining legal advice or the provision of legal services, including representation in proceedings in a court. In the ordinary course of events, citizens engage in many confidential communications, including communications with professional advisers, which are not protected from compulsory disclosure. The rationale of the privilege has been explained in a number of cases, including Baker v Campbell [[1983] HCA 39; (1983) 153 CLR 52], and Grant v Downs itself. The privilege exists to serve the public interest in the administration of justice by encouraging full and frank disclosure by clients to their lawyers. In Waterford v The Commonwealth [[1987] HCA 25; (1987) 163 CLR 54 at 64–​65. See also Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 128 per Brennan J, 134 per Deane J, 147 per Toohey J, 163 per McHugh J. 44], Mason and Wilson JJ explained that legal professional privilege is itself the product of a balancing exercise between competing public interests and that, given the application of the privilege, no further balancing exercise is required. As Deane J expressed it in Baker v Campbell [at 114], a person should be entitled to seek and obtain legal advice in the conduct of his or her affairs, and legal assistance in and for the purposes of the conduct of actual or anticipated litigation, without the apprehension of being prejudiced by subsequent disclosure of the communication. The obvious tension between this policy and the desirability, in the interests of justice, of obtaining the fullest possible access to the facts relevant to the issues in a case lies at the heart of the problem of the scope of the privilege. Where the privilege applies, it inhibits or prevents access to potentially relevant information. The party denied access might be an opposing litigant, a prosecutor, an accused in a criminal trial, or an investigating authority. For the law, in the interests of the administration of justice, to deny access to relevant information, involves a balancing of competing considerations. This Court is now asked to reconsider the balance that was struck in Grant v Downs. … [57] The search is for a test which strikes an appropriate balance between two competing considerations: the public policy reflected in the privilege itself, and the public policy that, in the administration of justice and investigative procedures, there should be unfettered access to relevant information. Additionally, whatever test is adopted must be capable of being applied in practice with reasonable certainty and without undue delay and expense in resolving disputed claims. [58] At first sight, sole purpose appears to be a bright-​line test, easily understood and capable of ready application. Many disputes as to its application could be resolved simply by examining the documents in question. However, there is reason to believe that the position is not quite as it appears. The main objection to the test is what was described in the Court of Appeal in New Zealand as its extraordinary narrowness. If it is to be taken literally, one other purpose in addition to the legal purpose, regardless of how relatively unimportant it may be, and even though, without the legal purpose, the document would never have come into existence, will defeat the privilege. This has led some judges to apply the Grant v Downs test in a manner which might suggest that it is not to be taken literally. For example, in Waterford v The Commonwealth [[1987] HCA 25; (1987) 163 CLR 54 at 85], Deane J said the test of whether a document is to be protected is whether “the cause of its existence, in the sense of both causans and sine qua non, must be the seeking or provision of professional legal advice”. That may be closer to dominant purpose than sole purpose. At the least, it seems to involve a reformulation aimed at avoiding the use of “purpose” and also at avoiding the conclusion that the existence of any purpose in addition to the legal purpose, albeit minor and subsidiary, will mean that no privilege attaches. In argument in the present case, counsel for the respondent endeavoured to explain the meaning of the sole purpose test in a manner that equated it with the test expounded by Jacobs J in Grant v Downs. Whilst seeking to uphold a sole purpose test, they submitted that “if a document is created for the purpose of seeking legal advice, but the maker [14.140]  855

Civil Procedure in New South Wales

Esso v Commissioner of Taxation cont. has in mind to use it also for a subsidiary purpose which would not, by itself, have been sufficient to give rise to the creation of the document, the existence of that subsidiary purpose will not result in the loss of privilege”. That appears close to a dominant purpose test. If the only way to avoid the apparently extreme consequences of the sole purpose test is to say that it should not be taken literally, then it loses its supposed virtue of clarity. [59] One of the considerations prompting rejection of the pre-​existing test was that it was unduly protective of written communications within corporations and bureaucracies. The sole purpose test goes to the other extreme. Such organisations necessarily conduct a large proportion of their internal communications in writing. If the circumstance that a document primarily directed to lawyers is incidentally directed to someone else as well means that privilege does not attach, the result seems to alter the balance too far the other way. This may be the kind of result Deane J was intending to avoid in his reformulation of the privilege, but it seems to follow unless one puts a gloss upon the sole purpose test. [60] A dominant purpose test was sufficient to defeat the claims for privilege in Grant v Downs, and Waugh. The reason why Barwick CJ, the House of Lords, and the New Zealand Court of Appeal preferred that test was that they were unable to accept, as either necessary or desirable, the apparent absoluteness and rigidity of a sole purpose test. If the only way to avoid that absoluteness and rigidity is to water down the sole purpose test so that, in its practical application, it becomes more like the dominant purpose test, then it should be abandoned. Either the test is too strict, or it lacks the clarity which the respondent claims for it. [61] It would be possible to seek to formulate a new test, such as that adopted by Jacobs J in Grant v Downs, or Deane J in Waterford, in a further attempt to adjust the necessary balance of competing policies. To do so, however, would produce only confusion. As a practical matter, the choice presently confronting this Court is between sole purpose and dominant purpose. The dominant purpose test should be preferred. It strikes a just balance, it suffices to rule out claims of the kind considered in Grant v Downs and Waugh, and it brings the common law of Australia into conformity with other common law jurisdictions. Conclusion [62] … The questions of law raised for decision by Foster J should be answered: The correct test is the dominant purpose test, which is the common law test for claiming legal professional privilege.



In the matter of Southland Coal [14.160]  Southland Coal Pty Ltd (recs and mgrs apptd) (in liq), Re (2006) 203 FLR 1 [A useful summary of relevant legal principles is provided in the extract below, which involved a request for production of documents. One argument against production was that the documents were privileged.] AUSTIN J [14] A formulation of the uncontested principles about client legal privilege which the parties drew to my attention, adequate for present purposes, is set out in paras (a)–​(j) below. (a)

Rule of substantive law –​“Legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice and the provision of legal services,

856 [14.160]

Privilege  Chapter  14

In the matter of Southland Coal cont. including representation in legal proceedings” (Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543, at [9]‌ per Gleeson CJ, Gaudron, Gummow and Hayne JJ). The “rule of substantive law” is, of course, affected by the terms of the Evidence Act where the Act applies. (b)

Two-​stage process –​Assessing a claim for privilege under s 118 or s 119 is a two-​stage process. The first step is for the court to be satisfied that the communication or contents, disclosure of which is sought to be prevented, satisfies the requirements set out in s 118 or s 119 or both sections. The second step is for the court to be satisfied that the production of the document or the unredacted part of it would result in the disclosure of a confidential communication or the confidential contents of a document.

(c)

Onus –​The party claiming privilege bears the onus of establishing the basis of the claim and the party seeking production does not bear the onus of excluding privilege (Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority [2002] VSCA 59; (2002) 4 VR 332 at 337; ASIC v Rich [2004] NSWSC 1089 at [2]‌; In the matter of Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 543 at [24]). The party claiming privilege must establish the facts from which the court can determine that the privilege is capable of being asserted (National Crime Authority v S (1991) 100 ALR 151 at 159). The facts are to be proved on the balance of probabilities (Evidence Act, s 142).

(d)

Legal advice –​Section 118 protects certain confidential communications and the contents of confidential documents made or prepared for the dominant purpose of a lawyer providing legal advice to a client. In this context, “legal advice” is understood in a pragmatic sense. In General Manager, WorkCover Authority of NSW v Law Society of NSW [2006] NSWCA 84, at [77] to [78], McColl JA quoted, evidently with approval, the observation of Taylor LJ in Balabel v Air India [1988] Ch 317, at 330, that “legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context”. This assumes, of course, that the advice is professional advice given by a lawyer in his or her capacity as such. Taylor LJ’s dictum was applied in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48; [2005] 1 AC 610, at 648 per Lord Scott of Foscote, 657 per Lord Rodger of Earlsferry, and 678 per Lord Carswell. There the House of Lords held that the Bank was entitled to claim legal professional privilege in respect of communications with its solicitors not only concerning its legal rights and obligations, but also concerning the presentation of its evidence to an inquiry so as to minimise criticism. See also DSE (Holdings) Pty Ltd v InterTAN Inc [2003] FCA 1191; (2003) 135 FCR 151; AWB Ltd v Cole [2006] FCA 571.

(e)

Whether disclosure would result from adducing the evidence –​Under both s 118 and s 119 the evidence is not to be adduced if adducing evidence would result in disclosure of certain confidential communications or the contents of certain confidential documents. The question is whether what is disclosed by adducing the evidence explicitly reveals the confidential communication or the contents of the confidential document, or supports an inference of fact as to the content of the confidential communication or document, which has a definite and reasonable foundation. Disclosure does not occur if what is adduced in evidence merely causes the reader to “wonder or speculate whether legal advice has been obtained and what was the substance of that advice” (AWB Ltd v Cole at [133], per Young J).

(f)

Communications between third party and client –​Communications by a third party with a client, not directed to the client’s lawyers, may be protected by legal advice privilege, if the function of the communications is to enable the client to obtain legal advice and the third party is so implicated in communications made by the client to its legal adviser as to bring the third party’s work product within the rationale of the privilege (Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122; (2004) 136 FCR 357, at [41] per Finn J and [105] per Stone J).

[14.160]  857

Civil Procedure in New South Wales

In the matter of Southland Coal cont. (g)

Purpose is a question of fact –​The purpose for which a communication is made or a document is created is a question of fact (Esso Australia Resources Ltd v Commission of Taxation (Cth) (1999) 201 CLR 49; [1999] HCA 67; Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54; Bauhaus at [24]). Purpose and intended use must be determined objectively, having regard to all of the evidence (AWB Ltd v Cole at [122]). Purpose cannot be proved by mere assertion by a third party. Normally (but not always) the relevant purpose is that of the maker of the communication for which privilege is sought.

(h)

Dominant purpose –​The dominant purpose of the communication must be determined objectively, having regard to all the circumstances in which the communication was made and its nature (Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at 689, per Stephen, Mason and Murphy JJ; Commissioner of Taxation (Cth) v Pratt Holdings Pty Ltd [2005] FCA 1247; (2006) 225 ALR 266, at [30] per Kenny J; AWB Ltd v Cole [2006] FCA 571 at [110], per Young J). What is required is an objective view of all of the evidence, taking into account the evidence not only of the author of the communication but of the person or authority under whose direction the document was prepared. If the document would have been prepared irrespective of the intention to obtain professional legal services, it will not satisfy the test (Grant v Downs, at 688, per Stephen, Mason and Murphy JJ). The existence of an ancillary purpose is not fatal to a claim for privilege, but if there are two purposes of equal weight, it is unlikely that one would dominate the other –​Stephen Odgers, Uniform Evidence Law, 6th ed at [1.3.10500] to [1.3.10520].

(i)

A claim for privilege will not succeed if all that emerges is that the document is a commercial document or has been brought into existence in the ordinary course of business –​In these circumstances, unless the court is satisfied that the dominant purpose is that identified in ss 118 or 119, no privilege applies. It is necessary to distinguish between documents brought into existence to communicate legal advice, and documents brought into existence to allow the party seeking to maintain privilege to invite comment on commercial alternatives available to it or to allow it to make a decision in the ordinary course of its insurance business as to whether or not to grant indemnity. The former may be privileged, but the latter is not, as it does not satisfy the dominant purpose test (see Seven Network Ltd v News Ltd [2005] FCA 1342 at [27]). The nature or character of the documents may illuminate the purpose (Seven Network at [38]). Passages from Sutton’s Insurance Law in Australia (3rd ed, LBC, 1999 at [15.98]) were cited with approval in Re Southland Coal Pty Ltd [2005] NSWSC 259 at [70] and [71], per Young CJ in Eq, as follows: “Documents created so that the insurer can be informed generally and can in the ordinary course of business investigate any claim that might be made before deciding what to do … are not privileged in contrast to the situation where the reports are prepared at a time when litigation is either likely or anticipated.” (See also Vardas v South British Insurance Company Ltd [1984] 2 NSWLR 652, 656.)

(j)

Failure to call relevant witnesses –​If the party asserting privilege over a communication has the capacity to call direct evidence on the issue of purpose, but does not do so, the tribunal of fact is entitled to infer that this evidence would not have assisted the person’s case (Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 at 576; Hawksford v Hawksford [2005] NSWSC 796 at [19], per Campbell J).

(k)

Inspection by the court –​The court has the power to inspect the document itself to determine a claim for privilege, especially where differing kinds of claim about the basis of privilege are made (Grant v Downs (976) 135 CLR 679 at 689; Hawksford v Hawksford [2005] NSWSC 796 at [21], per Campbell J). It should not be hesitant to exercise that power (Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1999) 201 CLR 49; [1999] HCA 67 at 70, per Gleeson CJ, Gaudron and Gummow JJ). That is especially the case where the judge hearing the application relating to privilege is not the trial judge.

 858 [14.160]

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Proof of client legal privilege [14.165]  The “client” who is making a privilege claim has the burden of proving the claim.

In Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305, the applicants were a group of companies in liquidation who commenced proceedings against the current and former partners of Deloitte Touch Tomatsu in relation to previous audits. The respondents sought production of an expert report prepared and provided to a prospective litigation funder. The expert report was sought by an engagement letter that was accepted by the parties as privileged. The letter was described in an affidavit claiming privilege as: … the letter is a confidential communication between the Liquidators [sic] solicitors and Mr Westworth who is providing advisory services in connection with the audited accounts and accounting practices of the Hastie Group companies and such advisory services are connected to the anticipated public examinations and anticipated proceedings arising out of those examinations, being these Proceedings.

Beazley P and MacFarlan JA (with Leeming JA dissenting but deciding the matters set out below): …

[12] There are many statements in the authorities that a party who claims privilege for a communication or document bears the onus of proving that it was prepared for the dominant purpose of the provision of professional legal services relating to Australian or overseas proceedings or anticipated proceedings in which the client is or may be a party. Thus, in AWB Ltd v Cole (No 5) (2006) 155 FCR 30; [2006] FCA 1234 Young J, at [44], stated: “(1) The party claiming privilege carries the onus of proving that the communication was undertaken, or the document was brought into existence, for the dominant purpose of giving or obtaining legal advice. The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of the documents, supported by argument or submissions …” (emphasis added) [13] Young J, in support of the proposition emphasised in the above passage, cited the statement of the plurality in Grant v Downs (1976) 135 CLR 674; [1976] HCA 63 at 689. The plurality stated there: “It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual.” … [34] We are also of the opinion that the Court is not confined to the express statements made in support of the claim for privilege. The Court is entitled to draw inferences from other proved facts. That is of particular relevance in the present case. [35] As indicated, the respondents accept that the engagement letter is confidential and privileged pursuant to the Evidence Act, ss 117 and 119 respectively. It follows that it is a found fact in this application that the engagement letter is a confidential letter that was prepared for the dominant purpose of Hastie Group being provided with professional legal services relating to these proceedings. …

… [38] In circumstances where the engagement letter has been found to be privileged, we are of the opinion that, having regard to the fact that the evidence establishes the nature of

[14.165]  859

Civil Procedure in New South Wales

the Report and the circumstances in which it was prepared, the proper inference is that the Report is also privileged. Indeed, to come to any other conclusion would be likely to result in an inconsistency in circumstances where the engagement letter has been held to be privileged. … [39] In conclusion on the question of privilege, we reject the respondents’ submission that, if privilege existed, it was the privilege of the liquidators and not of Hastie Group which claimed it. Whilst in undertaking some tasks liquidators undoubtedly act on their own behalf (for example when they are preparing proceedings which can only be brought in their own names), in connection with the present proceedings in which the Hastie Group companies were the plaintiffs, they were acting as agents for the companies, with the result that the privilege that was generated was that of the companies. …

Loss of client legal privilege [14.170]  The uniform evidence legislation sets out when client legal privilege may be lost: see

Evidence Act 1995 (NSW) ss 121–​126. Privilege may be lost where: • it would prevent enforcing a court order (s 121(2)). For example, where the communication disclosed the location of a child taken in breach of a court order and maintaining the privilege would prevent the enforcement of the order.25 • there has been waiver (s 122); either by consent (s 122(1)), or when a client has “acted in a way that is inconsistent” with the maintenance of the privilege (s 122(2)), or when a client has “knowingly and voluntarily disclosed the substance of the evidence” (s 122(3) (a), (4), (5)), or when the substance of the evidence has been disclosed with the express or implied consent of the client (s 122(3)(b), (5)). See examples of waiver in Fenwick v Wambo Coal Pty Ltd (No 2) (see [14.200]). Waiver was not established in Mann v Carnell (see [14.190]). • there are joint civil clients which satisfy s 124. • a communication or document was made in “furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty” (s 125(1)(a)), or a communication or document that the “client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power” (s 125(1)(b)); or • another communication or document “is reasonably necessary to enable a proper understanding of the communication or document” that has lost privilege due to the operation of s 121, 122, 123, 124 or 125 (s 126). Section 122 was amended in 2009 to adopt the common law test of waiver as stated by the High Court in Mann v Carnell (1999) 201 CLR 1, where Gleeson CJ, Gaudron, Gummow and Callinan JJ said: [29] …What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.

25

State Central Authority & Blyth [2010] FamCA 90 at [35] per Murphy J. The position is the same at common law; R v Bell; Ex parte Lees (1980) 140 CLR 141.

860 [14.170]

Privilege  Chapter  14

Evidence Act 1995 (NSW) [14.180]  Evidence Act 1995 (NSW) ss 121–​126 Division 1 –​Client legal privilege 121 Loss of client legal privilege: generally (1)

This Division does not prevent the adducing of evidence relevant to a question concerning the intentions, or competence in law, of a client or party who has died.

(2)

This Division does not prevent the adducing of evidence if, were the evidence not adduced, the court would be prevented, or it could reasonably be expected that the court would be prevented, from enforcing an order of an Australian court.

(3)

This Division does not prevent the adducing of evidence of a communication or document that affects a right of a person.

122 Loss of client legal privilege: consent and related matters (1)

This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.

(2)

Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.

(3)

Without limiting subsection (2), a client or party is taken to have so acted if:



(a)

the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or



(b)

the substance of the evidence has been disclosed with the express or implied consent of the client or party.

(4)

The reference in subsection (3)(a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure.

(5)

A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because:



(a)



the substance of the evidence has been disclosed: (i)

in the course of making a confidential communication or preparing a confidential document, or



(ii)

as a result of duress or deception, or



(iii)

under compulsion of law, or



(iv)

if the client or party is a body established by, or a person holding an office under, an Australian law –​to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or



(b)

of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or



(c)

of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court.

(6)

This Division does not prevent the adducing of evidence of a document that a witness has used to try to revive the witness’s memory about a fact or opinion or has used as [14.180]  861

Civil Procedure in New South Wales

Evidence Act 1995 (NSW) cont. mentioned in section 32 (Attempts to revive memory in court) or 33 (Evidence given by police officers). 123 Loss of client legal privilege: defendants In a criminal proceeding, this Division does not prevent a defendant from adducing evidence unless it is evidence of: (a)

a confidential communication made between an associated defendant and a lawyer acting for that person in connection with the prosecution of that person, or

(b)

the contents of a confidential document prepared by an associated defendant or by a lawyer acting for that person in connection with the prosecution of that person.

“Associated defendant” is defined in the Dictionary. 124 Loss of client legal privilege: joint clients (1)

This section only applies to a civil proceeding in connection with which 2 or more parties have, before the commencement of the proceeding, jointly retained a lawyer in relation to the same matter.

(2)

This Division does not prevent one of those parties from adducing evidence of:



(a)



(b)

a communication made by any one of them to the lawyer, or

the contents of a confidential document prepared by or at the direction or request of any one of them, in connection with that matter.

125 Loss of client legal privilege: misconduct (1)

This Division does not prevent the adducing of evidence of:



(a)

a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or



(b)

a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power.

(2)

For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that:



(a)

the fraud, offence or act, or the abuse of power, was committed, and



(b)

a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power,

the court may find that the communication was so made or the document so prepared. (3)

In this section: power means a power conferred by or under an Australian law.

126 Loss of client legal privilege: related communications and documents If, because of the application of section 121, 122, 123, 124 or 125, this Division does not prevent the adducing of evidence of a communication or the contents of a document, those sections do not prevent the adducing of evidence of another communication or document if it is reasonably necessary to enable a proper understanding of the communication or document. Note. Example: A lawyer advises his client to understate her income for the previous year to evade taxation because of her potential tax liability “as set out in my previous letter to you dated 11 August 862 [14.180]

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Evidence Act 1995 (NSW) cont. 1994”. In proceedings against the taxpayer for tax evasion, evidence of the contents of the letter dated 11 August 1994 may be admissible (even if that letter would otherwise be privileged) to enable a proper understanding of the second letter.



Mann v Carnell [14.190]  Mann v Carnell (1999) 201 CLR 1 [Mann was a surgeon who commenced legal proceedings for breach of contract and defamation against the ACT Board of Health. These settled for $400,000. Following settlement Mann wrote to his local member (an independent member of the Legislative Assembly of the ACT), describing the litigation as “a monumental waste of public funds”. The independent member wrote to Carnell in her capacity as Chief Minister for the Territory seeking her response to this letter. Carnell, in answer, included a copy of legal advices from barristers engaged to represent the Territory in the matter. There was evidence that this was established practice when such inquiries were made by members. The independent member was told that the advices were the subject of confidentiality and thus returned the material without copying it. Mann became aware of this correspondence and applied for preliminary discovery of the legal advices on the basis that he believed they contained or repeated defamatory imputations and that he had a cause of action against Carnell for publishing them to the independent member. Carnell claimed privilege over these advices. A single judge in the ACT Supreme Court ruled that legal professional privilege did not apply. On appeal by Carnell, the Full Court held that privilege applied and was not lost by the disclosure to the independent member. Mann was granted leave to appeal to the High Court. The Full Court had also held that the Evidence Act 1995 (NSW) applied derivatively to discovery, another issue the High Court was asked to deal with.] GLEESON CJ, GAUDRON, GUMMOW and CALLINAN JJ [1]‌The principal question in this appeal is whether legal professional privilege which attached to certain communications was lost by a subsequent disclosure of those communications … [28] At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that “waiver” is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client’s version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer’s evidence as to advice given to the client will be received. [29] Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is “imputed by operation of law”. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister’s version of those instructions. She did not [14.190]  863

Civil Procedure in New South Wales

Mann v Carnell cont. subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. [30] In Goldberg v Ng this Court considered a case in which there was disclosure of a privileged communication to a third party, for a limited and specific purpose, and upon terms that the third party would treat the information disclosed as confidential. The Court was divided upon whether, in the circumstances of the case, privilege was waived. However, the reasoning of all members of the Court was inconsistent with the proposition that any voluntary disclosure to a third party necessarily waives privilege. No application was made on the present appeal to re-​open Goldberg or any of the earlier authorities on the subject. In Goldberg, reference was made to the statement of Jordan CJ in Thomason v The Council of The Municipality of Campbelltown: The mere fact that a person on some one occasion chooses to impart to another or others advice which he has received from his solicitor indicates no intention on his part to waive his right to refuse on other occasions to disclose in evidence what that advice was, and supplies no sufficient reason for depriving him of a form of protection which the law has deemed it specially necessary to throw around communications between solicitor and client. [31] His Honour’s reference to intention must be read subject to what has been said above. [32] Reference was also made to British Coal Corporation v Dennis Rye Ltd (No 2) and Goldman v Hesper, in which the English Court of Appeal held that, in the circumstances of those cases, disclosure to a third party for a limited and specific purpose did not lead to a loss of the privilege as against a person opposed in litigation. To like effect is the recent decision in Gotha City v Sotheby’s. [33] It does less than justice to the respondent’s position to describe what occurred in the present case as disclosure to a third party. The privilege was that of the body politic, the Australian Capital Territory. The head of the Territory’s Executive, the Chief Minister, in response to a question raised by a member of the Territory’s Legislative Assembly as to the reasonableness of the conduct of the Territory in relation to certain litigation, gave the member, confidentially, access to legal advice that had been given to the Territory, and on the basis of which it had acted. Although “disclosure to a third party” may be a convenient rubric under which to discuss many problems of this nature, it represents, at the least, an over-​simplification of the circumstances of the present case. [34] The purpose of the privilege was to enable the Australian Capital Territory to seek and obtain legal advice, in relation to the litigation which Dr Mann had instituted, without the apprehension of being prejudiced by subsequent disclosure of that advice. That included, and perhaps included above all, subsequent disclosure to Dr Mann. If Mr Moore had been given copies of the legal report and advice given to the Territory in relation to the proceedings brought by the appellant upon the basis that he was at liberty to show them to the appellant, (even if to nobody else), that would have waived the privilege, because it would have been inconsistent with the confidentiality protected by the privilege. It is not difficult to imagine other circumstances in which the basis on which the communications were made available to Mr Moore, even though limited, would have been inconsistent with the purpose of the privilege and thus would have resulted in waiver. Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client’s actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. Depending upon the circumstances of the case, considerations of fairness may be relevant to a determination of whether there is such inconsistency. The reasoning of the majority in Goldberg illustrates this. [35] The purpose of the privilege being to protect the Territory from subsequent disclosure of the legal advice it received concerning the litigation instituted by the appellant, there was nothing inconsistent with that purpose in the Chief Minister conveying the terms of that advice, on a 864 [14.190]

Privilege  Chapter  14

Mann v Carnell cont. confidential basis, to a member of the Legislative Assembly who wished to consider the reasonableness of the conduct of the Territory in relation to the litigation. [36] The conclusion of the Full Court of the Federal Court, that privilege was not lost, was correct. [footnotes omitted]



Fenwick v Wambo Coal [14.200]  Fenwick v Wambo Coal Pty Ltd (No 2) [2011] NSWSC 353 [The plaintiff called for the production of documents referred to in the defendant’s affidavit (an affidavit sworn by Mr Meades). The defendant described all but one of the documents in question as confidential legal advice provided to the defendant by one or other of two firms of solicitors. The remaining document was a surveyor’s report procured at the request of one of the solicitors for the dominant purpose of that solicitor providing legal advice. The plaintiff did not dispute that the documents were the subject of client legal privilege under s 118 of the Evidence Act 1995 (NSW) when they were created, however, the plaintiff contended that privilege had been waived under s 122(2). The plaintiff contended that there was a waiver because the defendant gave discovery of a draft of a letter dated 11 July 2008 addressed to the plaintiff, and by the inclusion of that document in a court bundle the parties prepared for the purposes of tender. The letter dated 11 July 2008 (“the document”) which was discovered (but not sent) was as follows: Re: Claim to right of way across Wambo Coal Pty Ltd (“Wambo Coal”) land Wambo Coal acknowledges receipt of your email dated 14 March 2008 regarding the right of way you are claiming over Wambo Coal land. Wambo Coal referred your email and previous correspondence to its lawyers for legal advice on this issue. The legal advice Wambo Coal received is as follows:

(a)

There is a registered right of way across Lot 1 in DP 110084 and Lot 2 on DP 110084. This is depicted as the “Existing ROW” on the attached plan. This is the right of way you use to access and egress your land, and Wambo Coal will continue to observe to this right of way.

(b)

In relation to the right of way you have claimed to cross Lot 83 on DP 548749, depicted as the “ROW in Question” on the plan, Wambo Coal has been advised that Lot 83 is not encumbered with the right of way you are claiming. A copy of the relevant title is attached. The only right of way registered over Lot 83 is in relation to Lot 82, which is also owned by Wambo Coal.

Wambo Coal has also considered the following: You have free and unrestricted access to and from your land using the “Existing ROW”; Lot 83 forms part of the Wambo Coal mining operations; Wambo Coal has strict obligations to ensure the safety of all employees and other persons it permits to enter onto its mining land; Under the relevant safety laws and company policy, Wambo Coal must control access to its mining operations for safety reasons; and It would appear that you do not have a legal right of way across Lot 83. Therefore Wambo Coal cannot allow you to enter Lot 83 and you must not do so. In the circumstances, Wambo Coal does not intend to repair the crossing of South Wambo Creek situated in Lot 83. If you believe there are other matters which Wambo Coal should take into consideration then you should provide these in writing to Wambo Coal. All future communications you may wish to make in relation to this matter should be made in writing and addressed as follows: [14.200]  865

Civil Procedure in New South Wales

Fenwick v Wambo Coal cont. The Corporate Solicitor Wambo Coal Pty Ltd GPO Box 164 BRISBANE QLD 4001 Please do not direct any further communications to our Wambo Administration Office as it is no longer handling your claim. We trust this provides you with the information you require.] WHITE J [6]‌ … [T]he plaintiff relies on two grounds for contending that there has been a waiver of privilege: namely, that the document was produced on discovery and no claim for privilege was made and, secondly, that the defendant included the document in the court bundle the parties prepared for the purposes of tender. [7]‌The second ground does not amount to a waiver of privilege. The inclusion of the document in the tender bundle was inadvertent. Nor was the inclusion of the document in the bundle inconsistent with the defendant’s objecting to the tender of the legal advices for which privilege is claimed. Indeed, before the court bundle was tendered the defendant’s counsel said that the defendant would not be tendering the document. Counsel has successfully objected to its tender. The inclusion of the document in the court bundle involved no further disclosure of the substance of the legal advices referred to in the letter. For these reasons the second ground for asserting a waiver of privilege fails. [8]‌The first ground has more substance. The defendant does not say that the production of the document for inspection without a claim for privilege was inadvertent, unintentional or mistaken. The defendant through its legal representatives takes the view that the document in question is not privileged. It says that the disclosure of the conclusions of the legal advice it received is not inconsistent with its maintaining privilege over those advices. [9]‌But for subs (3) of s 122, it would be clear that production of the draft letter on discovery without a claim for privilege being made would not be inconsistent with the defendant’s objecting to the adducing of the evidence as to its legal advice. Giving discovery is not inconsistent with maintaining objection to the adducing of evidence, either the evidence in the documents discovered or communications to which the discovered documents refer. But by para 122(3)(a) the defendant is taken to have acted inconsistently with its objecting to the adducing of evidence of the privileged communications if by discovering the document and producing it for inspection, that is without claiming privilege on the document, the defendant: (a)

acted knowingly and voluntarily; and

(b)

disclosed the substance of the privileged communication to the plaintiff.

[10] The amendments made to s 122 of the Evidence Act in 2007 (commencing in 2009) by the introduction of subs (2) more closely aligned s 122 to the common law principles of waiver enunciated in Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1. But the Australian Law Reform Commission did not seek to make the principles identical. In its report leading to the amendment (Australian Law Reform Commission, Uniform Evidence Law, Report 102 (2006)) it reaffirmed that client legal privilege should be lost wherever there is voluntary production (see paras [14.146] and [14.147]). Section 122(3) is not merely a guideline for the application of s 122(2), but a prescription that subs (2) is taken to be satisfied if the requirements of subs (3) are met. [11] In the present case the defendant made disclosure of the draft letter of 11 July 2008 knowingly. A deliberate view was taken that the draft letter was not privileged. The disclosure was also voluntary unless it was done under compulsion of law. I will return to that question later. [12] The question then is whether the draft letter disclosed the substance of the legal advices. It is difficult to reconcile the various cases, most of them on the previous s 122(2), as to what will constitute disclosure of the substance of a privileged communication. The balance of authority is that 866 [14.200]

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Fenwick v Wambo Coal cont. at least an express or implied summary of legal advice received amounts to disclosure of the substance of the advice. [13] In many cases disclosure of the conclusion of legal advice has been treated as disclosure of its substance, even though the reasoning is not disclosed. In Ampolex Limited v Perpetual Trustee Company Limited (Canberra) (1996) 40 NSWLR 12, Rolfe J rejected a submission that the substance of legal advice was something different from or greater than its effect (at 18). His Honour said that the word “substance” was not used in the then s 122(2) in contradistinction to “effect”. His Honour said: One may say, conformably with ordinary English, that “the substance of the advice is you will win” or “the effect of the advice is you will win”. Each word will accommodate an expansive or restricted version of what the advice says and, significantly for present purposes, “substance” is not used in s 122(2) of the Evidence Act 1995 in contradistinction to “effect”. Accordingly, depending on the way in which the advice is structured, the “effect” of the advice may also be its “substance”. [14] In that case his Honour found that the public disclosure by Ampolex that “There is a dispute about the conversion ratio. Ampolex maintains that the correct ratio is 1:1 and has legal advice supporting this position”, amounted to a waiver of privilege in that advice because the statement disclosed its substance (at 15 and 18). [15] In Adelaide Steamship Company Ltd v Spalvins [1998] FCA 144; (1998) 81 FCR 360 the Full Court of the Federal Court said the test of whether there had been disclosure of the substance of the evidence was a “quantitative” one which asked whether there had been sufficient disclosure to warrant the loss of the privilege (at 371). It concluded that there was disclosure of the substance of counsel’s advice where, in that case, a deponent swore that counsel had made “certain recommendations” as to whether a particular issue should be pleaded in reply or whether it should be pleaded in the statement of claim, and had discussed the possibility of pleading the issue in the statement of claim with the deponent. The deponent said that following receipt of counsel’s advice the decision was made to plead the matter in the statement of claim rather than in reply. This was held to be disclosure of the substance of the advice, although counsel’s reasoning was not disclosed. [16] In BT Australasia Pty Ltd v State of New South Wales (No 7) [1998] FCA 294; (1998) 153 ALR 722 Sackville J held that there was a waiver by disclosure that the party had obtained an advice to the effect that the proceedings were soundly based in legal principle, had considerable strengths and had obtained a written advice that there were substantial difficulties with the State’s cross-​claim and good prospects of BT effectively resisting the cross-​claim. This was disclosure of the conclusion of the advice, but nonetheless was found to be a disclosure of its substance. [17] Similarly, in NRMA Ltd v Morgan (No 2) [1999] NSWSC 694, Giles J (as his Honour then was) held that privilege was waived by a statement that counsel had advised that a pleading might not, in certain circumstances, permit the second defendant to claim contribution, and that for more abundant caution, leave should be sought to file a further cross-​claim (at [3]‌, [6] and [16]). His Honour concluded that the deponent had disclosed, albeit in summary form, the substance of what counsel had advised. [18] By contrast, in Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (a firm) [1998] FCA 963; (1998) 84 FCR 472 Drummond J held that privilege was not waived by a liquidator’s report that stated “My solicitors have advised me that the Company has potential claims against Apogee and certain members of its management pursuant to Section 205 of the Corporations Law, and in relation to the sum of US$500,000 which was paid to Apogee and its management.” That statement did not identify further the nature of those claims. His Honour disagreed with the reasoning of Rolfe J in Ampolex that there was no difference in s 122(2) between disclosure of the substance of legal advice and disclosure of its effect. [19] In NRMA Ltd v Morgan (No 2) Giles J (as his Honour then was) noted that in Southern Cross Airlines Holdings Ltd (in liq) v Arthur Andersen & Co (a firm) Drummond J had said (at 479) that there [14.200]  867

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Fenwick v Wambo Coal cont. was no doubt about the correctness of the decision in Ampolex. Giles J observed that as Drummond J said that the decision in Ampolex was undoubtedly correct, his Honour could not have intended that much be disclosed by way of critical steps in reasoning. It may be that when Drummond J is reported as having said that there was “no doubt about the correctness of the conclusion in Ampolex” there was a misprint or mistake, as the rest of the passage suggests his Honour did have doubts about the correctness of the conclusion. [20] In SVI Systems Pty Ltd v Best & Less Pty Ltd [2000] FCA 1507 Einfeld J said (at [6]‌) that when s 122(2) referred to the substance of advice, it was not talking about the “bottom line” of the advice but to “what its content was and possibly even the reasoning which led to it”. His Honour, however, made limited reference to authority on this question. [21] In Singapore Airlines v Sydney Airports Corporation [2004] NSWSC 380 McDougall J held that for the substance of an expert’s report for which privilege was claimed, to be disclosed within the meaning of the then s 122(2), the disclosure must be not only of the conclusions of the expert, but the relevant factual bases of the report and the reasoning process from which the expert proceeded from those factual bases to the conclusions reached (at [72]). That view was obiter and in any event expressly confined to disclosure of experts’ reports. [22] Counsel for the defendant said that the governing authority was the decision of the High Court in Osland v Secretary to the Department of Justice [2008] HCA 37; (2008) 234 CLR 275. However, that case concerned a different question. It was concerned with principles of waiver at common law, not with s 122(3). It was there held that the public disclosure by the Government of the Government’s lawyers’ conclusions was not inconsistent with the Government’s maintaining confidentiality in the legal opinion. The High Court did not consider s 122 and did not consider whether the press release would amount to a waiver under s 122(3). It may be inferred that had the question arisen it would have been held that s 122(2) was not satisfied if subs (3) was left out of account, but it cannot be inferred what conclusion would have been reached as to the effect of subs (3). [23] Counsel also referred to Bailey v Director General, Dept of Land and Water Conservation [2009] NSWCA 100; (2009) 74 NSWLR 333. However, that case concerned a different question, relevantly whether the production of part of a document waived privilege in the balance of the document for which privilege was claimed. It is not relevant to the present issue. [24] Whether disclosure amounts to disclosure of the substance of a privileged communication involves questions of degree. In the present case the draft letter of 11 July 2008 disclosed not only what is said to be the conclusions of the legal advice received by the defendant, but the reasoning. In para (b) of the letter quoted above, it is said that the legal advice the defendant received is that lot 83 is not encumbered with the right-​of-​way the plaintiff claims and that the only right-​of-​way registered over that lot is in relation to lot 82 also owned by the defendant. That appears to be the reasoning leading to the conclusion of the advice. [25] The draft letter expressly stated that this was the legal advice the defendant received. The letter did not state that those were the defendant’s own views informed by legal advice it had received (compare Ampolex at [14]). The disclosure was not analogous to the reference made to legal advice in Assistant Treasurer and Minister for Competition Policy and Consumer Affairs v Cathay Pacific Airways Ltd [2009] FCAFC 105; (2009) 179 FCR 323 to which the defendant referred. That decision also was concerned with waiver of privilege at common law. [26] In my view the disclosure was of the substance of the legal advice referred to. [27] No issue was raised concerning subs (4) of s 122. The listing of the document in schedule 1 of part 1 of the defendant’s list of documents, that is, without a claim for privilege, was an act of the defendant. In any event the defendant’s lawyers had implied authority to produce the document for inspection.

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Fenwick v Wambo Coal cont. [28] I infer that the draft letter was itself a confidential document within the meaning of s 117. However, the disclosure of the substance of the legal advice was not made by the preparation of the document, but by producing it for inspection on discovery. The communication of the contents of the discovered document to the plaintiff and his lawyers was not a confidential communication. Therefore s 122(5)(a)(i) does not apply. [29] The question therefore is whether disclosure was under compulsion of law (s 122(5)(a)(iii)). There is no doubt that the giving of the discovery of the document was under compulsion of law. However, the defendant was entitled to withhold the document from inspection if it was a privileged document (Uniform Civil Procedure Rules 2005, r 21.5 (2)). The document was a privileged document if it contained information of which evidence could not, by virtue of the operation of Div 1 of Pt 3.10 of the Evidence Act, be adduced in the proceedings over objection. At common law records made either by the lawyer or by the client of the advice sought or given are privileged, even though those records do not themselves constitute the communication of the request for advice or of the advice given (AWB Limited v Cole [2006] FCA 571; (2006) 232 ALR 743 at [127]–​[133]). [30] The position is the same under s 118 of the Evidence Act. It is not only the primary record of the advice that is privileged if made for the requisite dominant purpose. Secondary material is also privileged if that material discloses the privileged confidential communication. [31] In Green v AMP Life Ltd [2005] NSWSC 95 Campbell J (as his Honour then was) upheld a claim to privilege in respect of drafts of transactional documents on the ground that production of those documents would result in some information becoming available to the person who carried out the inspection about the topics upon which the firm of solicitors had been consulted and would thus result in disclosure of the confidential communication made between the client and lawyer (at [18]). [32] In Southland Coal Pty Ltd (recs and mgrs apptd) (in liq), Re [2006] NSWSC 899 Austin J said (at [14](e)) that s 118 would protect against disclosure evidence that revealed a confidential communication, or the contents of a confidential document, or would support an inference of fact as to the content of the confidential communication or document which had a definite and reasonable foundation. [33] Adducing the evidence of the letter of 18 July 2008 would result in the disclosure of the confidential privileged communications between the defendant’s lawyers and the defendant. [34] It is irrelevant to the present question of waiver under s 122 that I have rejected the tender of the draft letter. Nor was it suggested in argument that the position was otherwise. [35] In my view, the defendant was not under compulsion of law to disclose the substance of its legal advice. That is to say, it could have claimed privilege on the draft letter of 11 July 2008. The fact that the defendant took what I consider to be a mistaken view that it could not claim privilege on the draft letter does not affect the fact that the disclosure of the letter and therefore the substance of its legal advice, was both knowing and voluntary. [36] No distinction was drawn in the course of submissions between the different documents for which privilege is claimed. These are referred to in Mr Meades’ affidavit. He deposes that all of them formed the basis of the conclusions set out in the draft letter of 11 July 2008. [37] For these reasons I uphold the plaintiff’s contention that client legal privilege in the documents referred to in para 5(b), (c), (d), (f), (g) and (h) of Mr Meades’ affidavit was waived by the production on discovery of the letter of 11 July 2008 without a claim for privilege being made in respect of that letter, and by the making of that letter available to the plaintiff for inspection. [38] I order that those documents referred to in Mr Meades’ affidavit be produced to the plaintiff for inspection.

 [14.200]  869

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Waugh v Merrill Lynch [14.210]  Waugh Asset Management v Merrill Lynch [2010] NSWSC 197 [See facts at [14.80]. This case considered whether there was waiver of legal advice by the filing of a witness statement by Mr Stutchbury that referred to Merrill Lynch receiving legal advice from Back Schwartz Vaughan.] [13] If the position is to be dealt with at common law, the relevant framework for analysis is (insofar as the question of waiver is relevant) that Mr Stutchbury’s statement was produced pursuant to a requirement of the Court, or produced under compulsion. It is also necessary to bear in mind that the documents to which access are sought are not the pages of the statement itself, or documents explicitly referred to in it, but underlying documents that are said to inform a state of mind that is said to appear from the relevant paragraphs of the statement. [14] The position at common law was examined by Powell JA in Sevic v Roarty [1998] NSWSC 462; (1998) 44 NSWLR 287. In that case, pursuant to the direction given by the Court, the defendant filed its expert reports with the Court. One of those reports was given by a Dr Robert Tinning. His report started by acknowledging receipt of a letter of instructions “and the documents concerning this claim in a well indexed folder”. The plaintiff sought an order that the defendant produce the letter of instructions and supporting documents. [15] The majority of the Court (Sheller JA, with whom Fitzgerald AJA agreed) concluded that the matter should be dealt with under the Evidence Act, and that the relevant material was privileged. Powell JA agreed that the material was privileged, but got to that point by application of what his Honour saw as the relevant principles of the common law. His Honour’s view is, I think, sufficiently summarised at 301, where he said that, the documents being in the normal course subject to legal professional privilege and there being no question of express waiver, the question was whether waiver should be implied from the reference in Dr Tinning’s report to the “well indexed folder”. His Honour said that the current position: would seem now to be that waiver is not to be implied or imputed where the document the delivery of which is relied upon to found the implication, or to support the imputation, of waiver was delivered whether to the other party to the litigation or to a third party –​ pursuant to an order of a court or otherwise under compulsion of law unless the documents be later tendered in evidence on the hearing of the proceedings…or otherwise used in such a way on the hearing of those proceedings as would make it unfair to the other party not to treat the privilege as having been waived. [16] Powell JA then reviewed the authorities in some detail, and reaffirmed at 308 the conclusion that I have just set out. His Honour said that it was clear that the report had not yet been, and might never be, tendered, nor used in any other way that could engender unfairness. Thus, he concluded, privilege attached, and had not been waived. [17] Accordingly, if the question is one of waiver and is to be dealt with at common law, the answer must be that there can be no implied or imputed waiver of privilege in such legal advice as Merrill Lynch may have received from Back Schwartz Vaughan simply because Mr Stutchbury gave evidence of a state of mind which might have been informed by a perusal of that advice. That is so because Mr Stutchbury’s statement was produced –​ie filed and served –​under compulsion of law –​ this Court’s directions. There is no other suggested basis of relevant unfairness or (for the purposes of s 122) inconsistency. [18] As I have said, it seems to me that the same result must follow if one goes through the process to which s 122 directs attention. That is because, as I have said, to the extent that s 122(2) applies by analogy, it directs attention to inconsistent conduct; but s 122(5) makes it clear that there is no inconsistent conduct simply because the party seeking to maintain privilege acted as it did under compulsion of law. That proposition is supported by the decision of the Court of Appeal in Akins v Abigroup Ltd (1998) 43 NSWLR 539. It is not necessary to go to the facts of that case in any 870 [14.210]

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Waugh v Merrill Lynch cont. detail. It related to an attempt by a litigant in proceedings in this Court to maintain privilege in witness statements that had been served in compliance with the Court’s orders. Mason P (with whom Priestley JA and Rolfe AJA agreed) concluded that the relevant compulsion was made out in that case, because the documents in question were served pursuant to the Court’s direction. His Honour’s reasoning was applied by Campbell JA (sitting as a judge of first instance) in Ingot Capital v Macquarie Equity [2008] NSWSC 25 at [32]. His Honour there said that the evidence in question was provided in obedience to the Court’s directions, and accordingly provided under compulsion of law for the purposes of s 122. He applied, among other cases, the decision of the Court of Appeal in Akins. [19] Thus, if the question is one of waiver, then whether it is approached from the standpoint of the common law or the standpoint of s 122, the answer must be that there has been no waiver (or, returning to the language of s 122, inconsistency) simply by the service of the witness statement in obedience of the Court’s directions. [20] However, in oral submissions, Mr Scotting [counsel for Waugh] appeared to move to a different argument. He referred to the judgment of White J in Buzzle Operations v Apple Computer Australia [2009] NSWSC 225. In that case, affidavits and witness statements had been prepared for the purpose of a proceeding brought by one of the plaintiffs in the Federal Court of Australia, not against the defendant, but against other parties. Those proceedings were settled before the affidavits were read, or the witness statements tendered. The defendant in the proceedings before White J sought access to those documents. His Honour concluded that the documents were not privileged, because confidentiality had been lost when (in the Federal Court proceedings) they were served on the opposing party. He relied on the decision of the Full Court of the Federal Court of Australia in Australian Competition and Consumer Commission v Cadbury Schweppes Pty Limited [2009] FCAFC 32; (2009) 174 FCR 547. His Honour said that, this being the last word of an intermediate appellate court and there being no authority (at least cited to him) that compelled him to disregard it, he should follow it. In Cadbury Schweppes, the Full Court said at [37] that, confidentiality being of the essence of litigation privilege, it was destroyed once the document in respect of which confidentiality was claimed was disclosed to the opposing party in litigation. Their Honours said that: [i]‌t is impossible for litigation privilege to attach to the finalised proofs of evidence, when the finalised proofs of evidence were created for the purpose of serving them on the ACCC’s opponent and when they were in fact served on that opponent. [21] White J at [12] said that Akins did not compel a different conclusion (although it could be said that there is some degree of inconsistency between the outcome in that case and the outcome in the case before the Full Federal Court). That is because there was no argument in that case as to whether or not the statements in question were privileged. As his Honour said later, although it might have been assumed that the documents were privileged, cases are authority for what they decide, not for what they assume. (See White J at [32], citing Markisic v Commonwealth of Australia [2007] NSWCA 92; (2007) 69 NSWLR 737 at [56].) [22] Mr Scotting submitted that in this case there was no relevant question of waiver (I repeat, a different point to that taken by him in his written outline), because privilege did not exist once Mr Stutchbury’s statement had been served. I am prepared to accept that privilege in Mr Stutchbury’s statement was lost once it was served on Waugh. But this application does not concern privilege in Mr Stutchbury’s statement. It concerns privilege in documents that are said, in effect, to inform, or to be relevant to, an aspect of what Mr Stutchbury says in that statement, but which are not specifically identified or referred to in it. The issue that was raised originally seems to me to be the correct one: namely, that the question is whether the evidence that Mr Stutchbury gave (or, more accurately, if called will give) is relevantly inconsistent with (for the purposes of s 122) or constitutes a waiver of (for the purposes of the common law) privilege in those antecedent documents. It does not seem to me to be in any way relevant to a resolution of that question that the document said to effect the inconsistency, or the waiver, (at least, through its service) is not itself privileged. [14.210]  871

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Waugh v Merrill Lynch cont. [23] Accordingly, in my view, the objection taken by Merrill Lynch at the preliminary level is well founded. Of course, if Mr Stutchbury’s statement is given into evidence, then a different analysis would be required. It would then be necessary to go to the merits of the application and to see whether, in the light of the issues in that case and the use in a forensic sense, sought to be made of the relevant part of Mr Stutchbury’s evidence, there is either inconsistency or waiver. But we are not yet at that stage, and may never get there.



Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing [14.215]  Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 [Armstrong commenced proceedings against Expense Reduction for damages for loss as a result of Expense Reduction’s conduct, performance and termination of agreements. Armstrong was represented by Marque Lawyers, and Expense Reduction was represented by Norton Rose. Expense Reduction was ordered to provide discovery of documents to Armstrong, which involved discovery of 60,000 documents. The documents were provided on disks. During the discovery process, Norton Rose inadvertently disclosed 13 documents on the disks which they claimed were privileged. The appeal to the High Court was about the inadvertent disclosure of documents subject to client legal privilege.] FRENCH CJ, KIEFEL, BELL, GAGELER and KEANE JJ [4]‌After Norton Rose served its clients’ verified Lists of Documents and disks on Marque Lawyers, some correspondence was exchanged between the two firms. The upshot of this correspondence was a claim by Norton Rose that a number of documents, the subject of client legal privilege, had inadvertently been disclosed contrary to its clients’ instructions. Marque Lawyers declined to return the documents and to give the undertaking which Norton Rose sought, not because it disputed the assertion of inadvertence, but because of its view that any privilege attaching to the documents had been waived. [5]‌The matter came before Bergin CJ in Eq on a motion by the ERA parties for injunctive and other relief. By the time of her Honour’s decision, 13 documents remained in dispute. Her Honour found that nine of the documents were disclosed inadvertently. The effect of certain of the orders made by her Honour was that the disks were to be returned by Marque Lawyers and replaced by Norton Rose, after removal of those nine documents from the disks. The Court of Appeal allowed the Armstrong parties’ appeal on the basis that the mistakes in disclosure of the documents in the discovery process would not have been obvious to a reasonable solicitor and dismissed the ERA parties’ cross-​summons seeking leave to cross-​appeal with costs. [6]‌The proceedings concerning the 13 documents were substantial. The hearing before the primary judge extended over some three days, during which evidence was given by the solicitors involved and those at Norton Rose responsible for discovery. The appeal resulted in lengthy reasons for judgment by the Court of Appeal. [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”

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Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. [Civil Procedure Act 2005 (NSW), s 56(1)]. Those powers should have been exercised in relation to each of the 13 privileged documents for the reasons which follow. … [11] Marque Lawyers received the disks which contained the privileged documents in question on 19 October 2011. It did not immediately inspect them, but forwarded them to the third respondent, Mr Armstrong, the following day. On 25 November 2011, Ms Hannah Marshall, a Senior Associate of Marque Lawyers, commenced the process of inspection of the documents. From looking at annotations made by Mr Armstrong, she was able to observe that a number of the documents appeared to relate to communications between the corporate ERA parties and lawyers. Ms Marshall, after consulting with the responsible partner of Marque Lawyers, Mr Michael Bradley, wrote to Norton Rose pointing to an apparent inconsistency, whereby client legal privilege had been claimed with respect to some but not all communications of this kind. She gave as examples seven documents where it appeared that the ERA parties were obtaining legal advice but in respect of which no claim of privilege was made. [12] The partner in charge of the litigation at Norton Rose, Mr Stephen Klotz, responded on 6 December 2011. He thanked Marque Lawyers “for bringing to our attention the mistaken production of privileged documents”. He explained that they had inadvertently not been marked as privileged by the reviewers, when clearly they ought to have been. He said that the clients maintained their claim of privilege. He sought return of all copies of the documents and an undertaking that they would not be relied on in the proceedings or otherwise. [13] On 12 December 2011, Ms Marshall wrote to Norton Rose stating that, in Marque Lawyers’ view, its clients had no obligation to return the documents and any privilege attaching to them had been waived. [14] After completing a full search for other documents which may have been inadvertently disclosed, on 23 December 2011 Norton Rose filed the notice of motion which set in train these proceedings. … [43] It is important to bear in mind that the disks containing the privileged documents only came into the possession of the Armstrong parties as a result of the process of court-​ordered discovery. They would not have known, and had no entitlement to know, of the ERA parties’ documents but for the provisions of the UCPR and the order for discovery made pursuant to them. When an order for discovery is made under the UCPR, the party ordered to make discovery is obliged to comply with the order by serving a list of documents. [44] As Lord Diplock observed in Harman v Secretary of State for the Home Department [[1983] 1 AC 280 at 299], discovery is a practice peculiar to common law systems, whereby parties to litigation can be compelled to produce to one another, for inspection and copying, all the documents in their possession or control which contain information that may assist another party to advance its own case or to damage the case of the disclosing party. As his Lordship also observed [Harman v Secretary of State for the Home Department [1983] 1 AC 280 at 300], “[t]‌he use of discovery involves an inroad, in the interests of achieving justice, upon the right of the individual to keep his own documents to himself”. [45] Although discovery is an inherently intrusive process, it is not intended that it be allowed to affect a person’s entitlement to maintain the confidentiality of documents where the law allows. It follows that where a privileged document is inadvertently disclosed, the court should ordinarily permit the correction of that mistake and order the return of the document, if the party receiving the documents refuses to do so. [46] It must be acknowledged that the UCPR require a party giving discovery to be accurate in listing the documents which are available for production and inspection. Of necessity, discovery must [14.215]  873

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Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. be a process upon which other parties can reasonably rely. A party should make every reasonable effort to ensure the accuracy of the verified Lists of Documents which are to form the basis for inspection. It was not suggested that this obligation was not met by the steps taken by Norton Rose with respect to its clients’ discovery, yet mistakes still occurred. [47] This is not the occasion on which to express views about the manner and extent of the discovery process today with its resultant costs, or whether it should be subjected to substantial reform. That the process of discovery has assumed large proportions in some cases and become increasingly burdensome is well known. In its report Managing Discovery: Discovery of Documents in Federal Courts, the Australian Law Reform Commission referred to the challenges which discovery presents to the due administration of civil justice. [48] For present purposes, it is sufficient to observe that, in large commercial cases, mistakes are now more likely to occur. In ISTIL Group Inc v Zahoor [[2003] 2 All ER 252 at 269 [72]], Lawrence Collins J observed that “[t]‌he combination of the increase in heavy litigation conducted by large teams of lawyers of varying experience and the indiscriminate use of photocopying has increased the risk of privileged documents being disclosed by mistake”. [49] The courts will normally only permit an error to be corrected if a party acts promptly. If the party to whom the documents have been disclosed has been placed in a position, as a result of the disclosure, where it would be unfair to order the return of the privileged documents, relief may be refused. However, in taking such considerations (analogous to equitable considerations) into account, no narrow view is likely to be taken of the ability of a party, or the party’s lawyers, to put any knowledge gained to one side. That must be so in the conduct of complex litigation unless the documents assume particular importance. [50] It goes without saying that the courts will not need to be concerned with the correction of error unless there is a dispute. In the case of inadvertent disclosure, this should not often arise. The approach required by the CPA [51] In Aon Risk Services Australia Ltd v Australian National University [[2009] HCA 27; (2009) 239 CLR 175 at 211 [92]-​[93], 213 [98]; [2009] HCA 27], 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 overriding purpose of the CPA and the rules of court provided for by the UCPR, as stated in s 56(1) of the CPA, is “to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings.” In order to achieve that purpose, s 56(2) provides that 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. A duty is also imposed upon a party to civil proceedings. Section 56(3) provides that: 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. 874 [14.215]

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Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. Section 56(4) requires that lawyers representing a party to civil proceedings (or any person with a relevant interest in the proceedings) must not, by their conduct, put a party in breach of this duty. [53] Section 57 relevantly provides, with respect to case management by the court, that: [Section 57(1) extracted] [54] Section 58 provides in relevant part: [Section 58(1) extracted] Sub-​section (2) of s 58 goes on to provide that for the purposes of determining what the dictates of justice are in a particular case, the court must have regard to the provisions of ss 56 and 57 and may have regard to a number of other matters, to the extent it considers them to be relevant. Amongst these matters is the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction made in the process of case management. [55] Section 59 provides: [Section 59 extracted.] 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 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. … [58] … 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. [14.215]  875

Civil Procedure in New South Wales

Expense Reduction Analysts Group v Armstrong Strategic Management and Marketing cont. [60] What the Court was faced with was a mistake which had occurred in the course of discovery. It was necessary that the mistake be corrected and the parties continue with their preparation for trial. [61] This was not a case where the fact of mistake was disputed. There was no conduct on the part of Norton Rose and its clients which would have weighed against the grant of that relief. There was no delay of any significance in the mistakes being notified or confirmed. The primary judge was not persuaded that the Armstrong parties would be prejudiced by requiring the disks to be returned. [62] It is difficult to see what benefit the Armstrong parties could have believed would be obtained by them by attempting to retain the documents. The possibility that they might support a further claim in the nature of a conspiracy between the ERA parties was canvassed. A similar claim had previously been struck out. It was not apparent to Sackville AJA in the Court of Appeal that the additional claims would add anything of substance. It is not immediately obvious how an attempt to replead such a claim could be said to advance the overriding purposes of the CPA. [63] Further, in reality, there was no question of waiver sufficient to be agitated before the Court. The documents disclosed during the discovery process were privileged, and Norton Rose’s claim that disclosure occurred by mistake was not disputed. Any allegation of waiver was going to turn on a legal, technical argument tangential to the main proceedings, and should not have been made. [Appeal allowed.]



Glencore International AG v Commissioner of Taxation [14.218]  Glencore International AG v Commissioner of Taxation [2019] HCA 26 [The plaintiffs sought an injunction restraining the defendants from making any use of documents described as the “Glencore documents” on the basis that the documents were subject to legal professional privilege. The plaintiffs contended that the Glencore documents were created for the sole or dominant purpose of the provision by Appleby (Bermuda) Limited (an incorporated law practice in Bermuda) of legal advice to the plaintiffs. The Glencore documents were among documents known as the “Paradise Papers” which were stolen from Appleby’s electronic file system and provided to the International Consortium of Investigative Journalists and further disseminated. The plaintiffs became aware that the Glencore documents were in the possession of the defendants so they brought proceedings in the original jurisdiction of the High Court seeking an injunction restraining the defendants’ use of the Glencore documents and orders requiring delivery up (return) of the documents. The plaintiffs claimed that legal professional privilege was itself a sufficient basis for the grant of the injunction (they did not rely on the equitable doctrine of a breach of confidence or to expand any other area of the law). The defendants objected on the ground that no cause of action was disclosed to entitle the plaintiffs to that relied. KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE, GORDON and EDELMAN JJ (Some footnotes omitted.) … [12] The plaintiffs’ argument cannot be accepted. Fundamentally it rests upon an incorrect premise, namely that legal professional privilege is a legal right which is capable of being enforced, which is to say that it may found a cause of action. The privilege is only an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications, as Daniels Corporation holds. [13] It is not sufficient to warrant a new remedy to say that the public interest which supports the privilege is furthered because communications between client and lawyer will be perceived to be even more secure. The development of the law can only proceed from settled principles and be 876 [14.218]

Privilege  Chapter  14

Glencore International AG v Commissioner of Taxation cont. conformable with them. The plaintiffs’ case seeks to do more than that. It seeks to transform the nature of the privilege from an immunity into an ill-​defined cause of action which may be brought against anyone with respect to documents which may be in the public domain. … An immunity [21] Legal professional privilege has been described as a right which is fundamental to persons and to our legal system. It has also been described as “a practical guarantee of fundamental, constitutional or human rights”. Such descriptions point up the importance of the privilege. They serve to show that it is not merely an aspect of curial procedure or a mere rule of evidence but a substantive right founded upon a matter of public interest. The same distinction has been drawn in New Zealand and the United Kingdom. [22] What cannot be discerned from these cases is that the “right” spoken of in connection with the privilege is an actionable right. If one asks what this “right” gives to a person, the answer could be stated as “a right to resist the compulsory disclosure of information” or “the right to decline to disclose or to allow to be disclosed the confidential communication or document in question”, as the Privy Council [B v Auckland District Law Society [2003] 2 AC 736 at 761 [67]] and the House of Lords [Three Rivers District Council v Governor and Company of the Bank of England [No 6] [2005] 1 AC 610 at 646 [26] per Lord Scott of Foscote] respectively have held. So understood it is a freedom from the exercise of legal power or control, which is to say an immunity, and that is what Daniels Corporation held its true character to be. [23] In Daniels Corporation [(2002) 213 CLR 543 at 552-​ 553 [9]‌ -[​11]] Gleeson CJ, Gaudron, Gummow and Hayne JJ, having observed that it is now settled that legal professional privilege is a rule of substantive law and not merely a rule of evidence, made the statement referred to earlier in these reasons that: “It is an important common law right or, perhaps more accurately, an important common law immunity.” [24] McHugh J [at [44]] likewise described it as “a person’s immunity from compulsion to produce documents that evidence confidential communications about legal matters” between lawyers and clients. [25] Contrary to the plaintiffs’ submissions, there is nothing tentative in their Honours’ characterisation of the privilege as an immunity provided by the common law. In the manner stated it is a considered correction of a possible misunderstanding arising from the description of it as a common law right. There can be little doubt that the joint judgment was drawing a clear distinction, for the context of the statement was the application of the principle of legality to the construction of statutes which may have the effect of abrogating “important common law rights, privileges and immunities” [at [11]]. Their Honours’ characterisation of the privilege as an immunity is consistent with its history. [26] The statements in Daniels Corporation accord with what Gummow J had said in Propend [Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 565, 566]. His Honour described legal professional privilege as “a bar to compulsory process for the obtaining of evidence”. In his Honour’s view, the privilege is “not to be characterised as a rule of law conferring individual rights, breach of which gives rise to an action on the case for damages, or an apprehended or continued breach of which may be restrained by injunction”. And they accord with the view expressed by Brennan J in Carter [Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 127], that the justification for the privilege is not to be found in the enforcement of some private right, but rather in the public interest. The policy of the privilege –​the public interest [27] The rationale for the rule was stated in Grant v Downs. It is that the rule promotes the public interest because it “assists and enhances the administration of justice by facilitating the representation [14.218]  877

Civil Procedure in New South Wales

Glencore International AG v Commissioner of Taxation cont. of clients by legal advisers”. By keeping secret their communications, the client is encouraged to retain a lawyer and to make full and frank disclosure of all relevant circumstances to the lawyer. This would appear to accord with the explanation given by Blackstone [Blackstone, Commentaries on the Laws of England (1768), bk 3 at 370] and, later, in the nineteenth century [See R v Derby Magistrates’ Court; Ex parte B [1996] AC 487 at 505 per Lord Taylor of Gosforth]. A similar rationale for the privilege has been accepted by the Privy Council [B v Auckland District Law Society [2003] 2 AC 736 at 754 [37]] and the House of Lords [Three Rivers District Council v Governor and Company of the Bank of England [No 6] [2005] 1 AC 610 at 649-​650 [34] per Lord Scott of Foscote] where the descriptor “the rule of law rationale” was accepted. … [29] It was recognised in Grant v Downs that there was another, more general, public interest which legal professional privilege did not promote. That public interest lies in the fair conduct of litigation, which requires that all relevant documentary evidence be available. But the public interest which supports the privilege is paramount to the more general public interest [at 685]. In the provision of the privilege the law has struck the balance between two competing public interests [Waterford v The Commonwealth (1987) 163 CLR 54 at 64-​65 per Mason and Wilson JJ; [1987] HCA 25; Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 126-​127 per Brennan J, 161 per McHugh J; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 563564 per Gummow J; see also R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563 at 615 [43] per Lord Hobhouse of Woodborough; ISTIL Group Inc v Zahoor [2003] 2 All ER 252 at 273 [93] per Lawrence Collins J; Three Rivers District Council v Governor and Company of the Bank of England [No 6] [2005] 1 AC 610 at 646 [25] per Lord Scott of Foscote; Wee Shuo Woon v HT SRL [2017] 2 SLR 94 at 114 [62]]. Consequently, once the privilege is found to exist, no more is required for effect to be given to it. In that sense it may be described as absolute [Goddard v Nationwide Building Society [1987] QB 670 at 685 per Nourse LJ]. [30] The paramountcy afforded to the public interest which the privilege supports can have serious consequences. By way of example, an accused person can be denied access to documents which might assist his or her defence [Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121]. Because of the significance of the effect of the privilege on the conduct of litigation, and the other considerations identified in Grant v Downs [at 685], it was there said that the privilege “should be confined within strict limits”. That note of caution was to be repeated in subsequent cases [Attorney-​General (NT) v Maurice (1986) 161 CLR 475 at 487 per Mason and Brennan JJ; Carter v Northmore Hale Davy & Leake (1995) 183 CLR 121 at 127 per Brennan J, 145, 157 per Toohey J]. Other relief? [31] In striking the balance between the two competing public interests, the law was not concerned to further a client’s personal interest in preventing the use which might be made by others of the client’s communications if they obtained them. In providing an immunity, the law’s purpose was to enhance the administration of justice. And in settling the conditions which must be present for the privilege to operate, it defined the boundaries of the privilege. [32] It is the policy of the law that the public interest in the administration of justice is sufficiently secured by the grant of an immunity from disclosure. That has been the policy of the law for a very long time. Grant v Downs [at 685-​686] gave examples of difficulties which would arise in litigation if the balance struck by the privilege was not maintained as such. What was said in Grant v Downs and in later cases strongly implies that there is unlikely to be a warrant for providing anything more than an immunity from disclosure. … [34] On the present state of the law, once privileged communications have been disclosed, resort must be had to equity for protection respecting the use of that material. Although the policy upon which legal professional privilege is founded is not irrelevant to the exercise of that jurisdiction, the 878 [14.218]

Privilege  Chapter  14

Glencore International AG v Commissioner of Taxation cont. juridical basis for relief in equity is confidentiality [B v Auckland District Law Society [2003] 2 AC 736 at 762 [71]]. … [35] The plaintiffs seek to draw from the decision of this Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [(2013) 250 CLR 303; [2013] HCA 46] a general approach with respect to privileged documents, one which does not necessitate recourse to equity for an injunction based on breach of confidence. In that case documents were mistakenly provided to the other parties’ solicitors in the course of discovery and the solicitors refused to return them. The Court held that it was not necessary for the holder of the privilege to seek an injunction because the court’s case management powers were sufficient to make the necessary orders. Contrary to what the plaintiffs contend, the case does not stand for any broader proposition which would allow the privilege to be asserted in order for relief in the nature of an injunction to be granted. … [40] The plaintiffs’ case for the grant of relief on a basis other than confidentiality is simply this: that any furtherance of the public interest which supports the privilege is sufficient to warrant the creation of a new, actionable right respecting privileged documents. This is not how the common law develops. The law develops by applying settled principles to new circumstances, by reasoning from settled principles to new conclusions, or determining that a category is not closed [PGA v The Queen (2012) 245 CLR 355 at 373 [29] per French CJ, Gummow, Hayne, Crennan and Kiefel JJ; [2012] HCA 21, referring to Dixon, “Concerning Judicial Method” (1956) 29 Australian Law Journal 468 at 472]. Even then the law as developed must cohere with the body of law to which it relates. [41] Policy considerations may influence the development of the law but only where that development is available having regard to the state of settled principles. Policy considerations cannot justify an abrupt change which abrogates principle in favour of a result seen to be desirable in a particular case [Breen v Williams (1996) 186 CLR 71 at 99 per Dawson and Toohey JJ]. [42] In the absence of further facts it is not possible to say whether the plaintiffs are without any possibility of a remedy. But if there is a gap in the law, legal professional privilege is not the area which might be developed in order to provide the remedy sought. [Proceedings dismissed.]



Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 [14.220]  New South Wales Professional Conduct and Practice Rules 2013 (Solicitors’ Rules) r 31 31 Inadvertent disclosure 31.1 Unless otherwise permitted or compelled by law, a solicitor to whom material known or reasonably suspected to be confidential is disclosed by another solicitor, or by some other person and who is aware that the disclosure was inadvertent must not use the material and must: 31.1.1 return, destroy or delete the material (as appropriate) immediately upon becoming aware that disclosure was inadvertent; and 31.1.2 notify the other solicitor or the other person of the disclosure and the steps taken to prevent inappropriate misuse of the material. 31.2 A solicitor who reads part or all of the confidential material before becoming aware of its confidential status must: [14.220]  879

Civil Procedure in New South Wales

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 cont. 31.2.1 notify the opposing solicitor or the other person immediately; and 31.2.2 not read any more of the material. 31.3 If a solicitor is instructed by a client to read confidential material received in error, the solicitor must refuse to do so.



High Court of Australia Employs Case Management and “Overriding Purpose” to Resolve Dispute over Mistaken Provision of Privileged Documents in Discovery [14.230] Michael Legg, “High Court of Australia Employs Case Management and “Overriding Purpose” to Resolve Dispute over Mistaken Provision of Privileged Documents in Discovery” (2014) 33 Civil Justice Quarterly 115–​123 The decision in Expense Reduction26 demonstrates the extensive reach of the overriding purpose and case management as the High Court used them to resolve what might have been considered a dispute over the substantive law in relation to the waiver of client legal privilege. The High Court has previously stated that legal professional privilege is not just a procedural step or a rule of evidence, but a rule of substantive law that extends beyond court proceedings, and a common law right or immunity.27 The privilege has been described as “a bulwark against tyranny and oppression”.28 However, here the High Court chose to focus on the procedural aspect of the dispute resulting from it being part of discovery. This was in marked contrast to the courts below. Regulating discovery is an area that is clearly within the Court’s control29 and has been argued to be in need of greater judicial oversight.30 It is a classic example of practice and procedure. The High Court’s approach does not demean the significance of privilege but rather seeks to obviate the need to resort to the complex issues of waiver and equitable relief by defusing the dispute.31 The High Court took the view that the Supreme Court should have exercised its powers so as to prevent the parties from being distracted from taking steps toward a final hearing, incurring considerable expense and squandering the resources of the Court.32 The High Court also expects legal representatives to resolve interlocutory disputes without needing to involve the Court. This is consistent with the ethical rules that govern most of Australia’s solicitors. If a privileged or confidential document is mistakenly provided then it should be immediately returned and no further use made

26 27 28 29

30

31 32

Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46; see [14.215]. Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49 at [9]‌–​[11]. Attorney-​General (NT) v Maurice (1986) 161 CLR 475 at 490. Burmah Oil Co Ltd v Governor and Co of the Bank of England [1980] AC 1090 at 1141; Kyocera Mita Australia Pty Ltd v Mitronics Corp Pty Ltd [2005] FCA 242 at [5]‌–​[9]; Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 at [101]. Finkelstein R, Discovery Reform: Options and Implementation (2008) Federal Court of Australia/​Law Council of Australia; Australian Law Reform Commission, Managing Discovery: Discovery of Documents in Federal Courts, Report No 115 (2011). Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [58]. Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [57], [59].

880 [14.230]

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High Court of Australia Employs Case Management and “Overriding Purpose” to Resolve Dispute over Mistaken Provision of Privileged Documents in Discovery cont. of that document. The High Court is seeking to discourage technical and tangential arguments that side-​track the parties and the court. While the High Court has clearly signalled how it wishes civil litigation to be conducted in Australia it must be remembered that in the current case the High Court found there was no dispute over the fact that a mistake occurred and no issue of delay. However the Court of Appeal found that there had been a lapse of time and the mistake was not obvious.33 Delay and the existence of a mistake may not be clear cut as shown by judicial minds differing in the current case. Where delay occurs and the matter is brought before the Courts then the application of the overriding purpose in those circumstances may see a different outcome to the current case. Further, there may be an issue as to whether a document is in fact privileged at all, or whether earlier conduct prior to the instant litigation (citation in media releases or voluntary provision to government bodies) resulted in waiver, which may impact the obviousness of the mistake. Documents labelled privileged or confidential, or on law firm or barrister letterhead, tend to speak for themselves.34 However, documents from third parties,35 or even inhouse counsel who may perform various duties36 may be more difficult to detect as subject to privilege.



PROFESSIONAL CONFIDENTIAL RELATIONSHIP PRIVILEGE [14.240]  Section 126B of the Evidence Act 1995 (NSW) provides that a court can direct

that a “protected confidence”, or the contents of a document recording a protected confidence, or “protected identity information” not be produced or adduced as evidence in a proceeding (see s  126A for definitions). The court may give such a direction after it has conducted a balancing exercise in accordance with s  126B(3), namely, the likely harm that “would or might be caused (whether directly or indirectly) to a protected confider if the evidence is adduced” is weighed against the “desirability of the evidence being given”. This weighing is conducted by the court by taking into account the matters listed in s 136B(4). This weighing was considered in Director-​General, Dept of Community Services v D [2006] NSWSC 827 (see [14.260]). The privilege can be raised by the court or on application by the “protected confider” or confidant: s 126B(2). Examples of the types of relationships that could give rise to a communication that is a “protected confidence” could include:  doctor/​patient; psychologist/​patient; counsellor/​patient; accountant/​client; and social worker/​client.

33

34 35 36

Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [27]. See also Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2012] NSWCA 430 at [179]–​[180]. Of course the content must be for the dominant purpose of legal advice or the provision of professional legal services in relation to legal proceedings: Evidence Act 1995 (NSW) ss 118 and 119. Sections 118(c) and 119 of the Evidence Act 1995 (NSW) extend client legal privilege to third parties in certain circumstances. See, for example, Sydney Airports Corporation Ltd v Singapore Airlines Ltd & Qantas Airways Ltd [2005] NSWCA 47 at [24]; Rich v Harrington (2007) 245 ALR 106 at [59]–​[60] (general counsel was also a partner in accounting firm giving rise to a lack of independence and consequently no client legal privilege in respect of advice). [14.240]  881

Civil Procedure in New South Wales

Evidence Act 1995 (NSW) [14.250]  Evidence Act 1995 (NSW) ss 126A–​126E Division 1A –​Professional confidential relationship privilege 126A Definitions (1)

In this Division: “harm” includes actual physical bodily harm, financial loss, stress or shock, damage to reputation or emotional or psychological harm (such as shame, humiliation and fear). “protected confidence” means a communication made by a person in confidence to another person (in this Division called the confidant):



(a)

in the course of a relationship in which the confidant was acting in a professional capacity, and



(b)

when the confidant was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law or can be inferred from the nature of the relationship between the person and the confidant.

“protected confider” means a person who made a protected confidence. “protected identity information” means information about, or enabling a person to ascertain, the identity of the person who made a protected confidence. (2)

For the purposes of this Division, a communication may be made in confidence even if it is made in the presence of a third party if the third party’s presence is necessary to facilitate communication.

126B Exclusion of evidence of protected confidences (1)

The court may direct that evidence not be adduced in a proceeding if the court finds that adducing it would disclose:



(a)

a protected confidence, or



(b)

the contents of a document recording a protected confidence, or



(c)

protected identity information.

(2)

The court may give such a direction:



(a)

on its own initiative, or



(b)

on the application of the protected confider or confidant concerned (whether or not either is a party).

(3)

The court must give such a direction if it is satisfied that:



(a)

it is likely that harm would or might be caused (whether directly or indirectly) to a protected confider if the evidence is adduced, and



(b)

the nature and extent of the harm outweighs the desirability of the evidence being given.

(4)

Without limiting the matters that the court may take into account for the purposes of this section, it is to take into account the following matters:



(a)

the probative value of the evidence in the proceeding,



(b)

the importance of the evidence in the proceeding,



(c)

the nature and gravity of the relevant offence, cause of action or defence and the nature of the subject matter of the proceeding,



(d)

the availability of any other evidence concerning the matters to which the protected confidence or protected identity information relates,

882 [14.250]

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Evidence Act 1995 (NSW) cont.

(e)

the likely effect of adducing evidence of the protected confidence or protected identity information, including the likelihood of harm, and the nature and extent of harm that would be caused to the protected confider,



(f)

the means (including any ancillary orders that may be made under section 126E) available to the court to limit the harm or extent of the harm that is likely to be caused if evidence of the protected confidence or the protected identity information is disclosed,



(g)

if the proceeding is a criminal proceeding–​ whether the party seeking to adduce evidence of the protected confidence or protected identity information is a defendant or the prosecutor,



(h)

whether the substance of the protected confidence or the protected identity information has already been disclosed by the protected confider or any other person,



(i)

the public interest in preserving the confidentiality of protected confidences,



(j)

the public interest in preserving the confidentiality of protected identity information.

(5)

The court must state its reasons for giving or refusing to give a direction under this section.

126C Loss of professional confidential relationship privilege: consent This Division does not prevent the adducing of evidence given with the consent of the protected confider concerned. 126D Loss of professional confidential relationship privilege: misconduct (1)

This Division does not prevent the adducing of evidence of a communication made or the contents of a document prepared in the furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty.

(2)

For the purposes of this section, if the commission of the fraud, offence or act is a fact in issue and there are reasonable grounds for finding that:



(a)

the fraud, offence or act was committed, and



(b)

a communication was made or document prepared in furtherance of the commission of the fraud, offence or act,

the court may find that the communication was so made or document so prepared. 126E Ancillary orders Without limiting any action the court may take to limit the possible harm, or extent of the harm, likely to be caused by the disclosure of evidence of a protected confidence or protected identity information, the court may: (a)

order that all or part of the evidence be heard in camera, and

(b)

make such orders relating to the suppression of publication of all or part of the evidence given before the court as, in its opinion, are necessary to protect the safety and welfare of the protected confider.



Director-​General, Dept of Community Services v D [14.260]  Director-​General, Dept of Community Services v D (2006) 66 NSWLR 582; [2006] NSWSC 827 [This was a contested adoption proceeding. The birth mother “D” maintained a claim for privilege in respect of documents produced to the court in response to a subpoena issued at the request of [14.260]  883

Civil Procedure in New South Wales

Director-General, Dept of Community Services v D cont. the Director-​General to a Community Health Centre, to which the Director-​General sought access. D opposed access being given to the notes produced by the Community Health Centre on the grounds that they recorded communications made by D in confidence to a confidant acting in a professional capacity where there was either an express or an implied obligation not to disclose the contents of those communications, so as to attract “protected confidence privilege” under s 126B of the Evidence Act 1995 (NSW).] BRERETON J [17] At the outset, it is to be observed that s 126B is concerned with the adducing of evidence in a proceeding, and not with the granting of access to documents produced on subpoena. However, as it would defeat the purpose of s 126B to grant access to documents which record a protected confidence, I accept that the provisions of s 126B are relevant to the exercise of the court’s discretion whether or not to grant access to documents produced on subpoena. It would generally be inappropriate to grant access to the documents in question, if the court were likely to make a s 126B direction at the hearing. [18] In an affidavit read in support of the claim for protected confidence privilege, D’s solicitor deposes: The whole of the notes produced by … Community Health Centre record communications made by client in confidence to a confidant acting in a professional capacity where there was either an express or an implied obligation not to disclose the contents of those communications. The first defendant has provided reports from the treating psychiatrists and has submitted to examination by a single expert appointed by the court. It is submitted that the likelihood of harm being caused by the disclosure of the protected confidences of my client would outweigh the desirability of the evidence in the proceedings. It is submitted that there is available better evidence of my client’s state of mental health than her confidences with her Community Health Centre contact. [19] The parties accepted that for the purpose of ruling on this issue I was entitled to examine the documents produced, and I have done so. They record, in part, statements made by D. They also include records of the observations of medical practitioners, observations made by social workers, reports of Dr Harris of 19 April 2005, 23 August 2005 and 12 April 2006, and instructions to Dr Harris in connection with his reports. I am prepared to accept that communications made by D to medical practitioners, social workers and other health professionals at the Community Health Centre were “protected confidences”, within the definition of that term in s 126A. However, notwithstanding D’s solicitor’s affidavit, such protected confidences comprise only a part, and not the whole, of the material produced by the Community Health Centre. [20] On behalf of D, there has been served and filed in the proceedings an affidavit, which it is proposed to read at the hearing, of Dr Harris, who saw her at the Community Health Centre, and who expresses an opinion as to her condition. His affidavit annexes his report of 12 April 2006, in which Dr Harris wrote (emphasis added): In response to your letter of 3rd April 2005 for a further report regarding [D]‌I have made the following report. In making this report I have had access to her notes detailing her care at the … community health centre by myself and her case managers. [21] The reference to “a further report” directs attention to his report of 23 August 2005, in which Dr Harris states (emphasis added): I am making this report in regards to [D]‌on the basis of my clinical knowledge of her as her treating psychiatrist since December 2004, discussions with hospital social workers and staff active in her care prior to that time, the medical records from … community health centre and notes therein of [D’s] case manager, … and myself. 884 [14.260]

Privilege  Chapter  14

Director-General, Dept of Community Services v D cont. [22] One of the issues in the proceedings involves D’s mental health [see issue 4, first bullet point, in [5]‌above]. The material produced by the Community Health Centre has prima facie relevance to that issue. D has deployed the material contained in the notes forensically, albeit indirectly, through tendering the evidence of Dr Harris, which at least in part relies on the contents of the notes. At stake in these proceedings is the welfare of a child, and the importance of the court having relevant evidence bearing on that matter outweighs the interest of a party in a protected confidence. While there is other evidence available as to D’s mental health, it is secondary evidence, at least some of which uses the subject notes as a source. In those circumstances it would be unsatisfactory and unjust if the notes themselves were not to be available, so that opinions based on them could be scrutinised. There is no evidence that adducing evidence of the protected confidence would cause any harm. As such evidence of D’s condition is to be adduced indirectly through Dr Harris in any event, I am unpersuaded that adducing evidence of such protected confidences as are contained in the notes would have any relevant consequence, beyond those that would be occasioned by the adducing of Dr Harris’s evidence. As Mr Moore has pointed out, it is unnecessary to resort to s 126E for ancillary orders to limit the harm or extent of harm likely to be caused if evidence of the protected confidence is disclosed, since the hearing is required to be in camera [Adoption Act, s 119], access to court records is limited [s 143], and the publication of the name of any party or child or any matter reasonably likely to enable them to be identified is a punishable offence [Adoption Act, s 180]. [23] Before s 126B, the confidentiality of a document, in the absence of legal professional privilege, was no objection to its production or admissibility. Section 126B does not create a “privilege”, properly so called, but confers on the court a discretion by which it may direct that evidence of a confidential communication not be adduced, which is to be exercised having regard to the various relevant factors, including those listed in s 126B(4). The mere fact of confidentiality gives rise to the discretion, but it is clear from the factors listed in s 126B that the mere fact of confidentiality does not create an entitlement to a favourable exercise of that discretion. [24] In this case, the only matter that weighs in favour of prohibiting adducing evidence of the protected confidences is the mere fact that they were confidential. There is nothing in the evidence so far available that would weigh against permitting evidence of them to be adduced notwithstanding their confidentiality, and significant factors that favour permitting their disclosure, of which the most significant are that, through the evidence of Dr Harris, D is herself making indirect forensic use of them; that proper scrutiny of Dr Harris’ evidence requires that the source material on which he relied be available; that there is no evidence that any harm will be occasioned by their disclosure; that the confidential nature of the proceedings will in any event minimise their dissemination; and, above all, that these proceedings concern the welfare of a child. [25] On the material presently available I would therefore refuse to make a direction under s 126B, and for the same reasons I would not withhold access to the Community Health Centre records insofar as they contain protected confidences.



JOURNALIST PRIVILEGE [14.270] The Evidence Act 1995 (NSW) was amended in 2011 to include Div 1C which

specifically protects the identity of sources of information to journalists. The terms “journalist”, “informant” and “news medium” are defined in s 126J. Section 126K provides that a journalist (and the journalist’s employer) cannot be compelled by a court to disclose an informant’s identity if the journalist “promised” the informant “not to disclose the informant’s identity”. The privilege to resist being compelled to disclose the identity of an informant is owned by the journalist and their employer. The privilege can be claimed to resist the production of any [14.270]  885

Civil Procedure in New South Wales

document or answering any question “that would disclose the identity of the informant or enable that identity to be ascertained”. Section 126K applies to the adducing of oral evidence from witnesses (from the journalist or the journalist’s employer), to the answering of questions pre-​trial (eg in response to interrogatories) and to the production of a document either pre-​ trial or during a trial. The privilege in s 126K(1) may not apply if a court rules that it is in the public interest for there to be disclosure of the identity of the source: s 126K(2). The court could make an order for disclosure if the following requirements are satisfied: 1.

an application is made by a party for an order for disclosure;

2.

there is a public interest in the disclosure of evidence of the identity of the informant; and

3.

“having regard to the issues to be determined in that proceeding”, that public interest “outweighs” the matters referred to in ss 126K(2)(a) and 126K(2)(b).

An order for disclosure means that the court orders that s  126K(1) is not to apply and the consequence of such an order is that the journalist or the journalist’s employer can be compelled to answer any question or produce any document that would disclose the identity of the informant or enable that identity to be ascertained.

Evidence Act 1995 (NSW) [14.275]  Evidence Act 1995 (NSW) ss 126J, 126K Division 1C –​Journalist privilege 126J Definitions In this Division: “informant” means a person who gives information to a journalist in the normal course of the journalist’s work in the expectation that the information may be published in a news medium. “journalist” means a person engaged in the profession or occupation of journalism in connection with the publication of information in a news medium. “news medium” means a medium for the dissemination to the public or a section of the public of news and observations on news. 126K Journalist privilege relating to identity of informant (1)

If a journalist has promised an informant not to disclose the informant’s identity, neither the journalist nor his or her employer is compellable to give evidence that would disclose the identity of the informant or enable that identity to be ascertained.

(2)

The court may, on the application of a party, order that subsection (1) is not to apply if it is satisfied that, having regard to the issues to be determined in the proceeding, the public interest in the disclosure of the identity of the informant outweighs:



(a)

any likely adverse effect of the disclosure on the informant or any other person, and



(b)

the public interest in the communication of facts and opinion to the public by the news media and, accordingly also, in the ability of the news media to access sources of facts.

(3)

An order under subsection (2) may be made subject to such terms and conditions (if any) as the court thinks fit.

 886 [14.275]

Privilege  Chapter  14

PUBLIC INTEREST IMMUNITY [14.280] Public interest immunity (PII) is a doctrine of substantive law and not merely a

rule of evidence.37 Claims of PII are most commonly made by the government, for example in relation to cabinet deliberations, communications affecting national security, documents about law enforcement methods and documents revealing the identity of informers. PII is a body of substantive and procedural rules, which recognises that the court has a power and a duty to prevent disclosure of information where it would be injurious to the public interest. The application of the doctrine is not limited to resisting production. The doctrine can also be raised to object to the admissibility of oral as well as to documentary evidence.38 It can be used to resist the seizure of documents under a search warrant.39 PII protects disclosure of information when it is in the public interest for the information not to be disclosed (ie, it would be injurious to the public interest to disclose the information). The court conducts a balancing test to determine whether information should be disclosed: • The public interest in disclosure is based on the need for the litigant to have the document (or communication) for the administration of justice. This public interest is weighed against the public interest in non-​disclosure. • The public interest in non-​disclosure is the reason for the secrecy. The court needs to know the precise harm that would be occasioned if disclosure of the information were made. Standing and procedure for PII claims [14.290]  A claim of public interest immunity (PII) may be made by any person, including a

person who is not party to the proceedings. In Attorney General for NSW v Stuart (1994) 34 NSWLR 667 at 690, Smart J said: The court, the parties to proceedings, recipients of subpoenas or witness summonses, the Crown and those having a particular interest, such as the Gaming Board, can raise questions of public interest immunity. This is not an exhaustive list. There always remains the question of the weight of the considerations advanced in support of the claim.

Unlike client legal privilege, PII cannot be waived, however disclosure or publication of the information can be a factor that the court takes into account in conducting the balancing exercise in s 130(1) of the Evidence Act 1995 (NSW): see s 130(5)(e). Usually a PII claim is made by a part of the State, who intervenes in the proceedings. For example, in a civil motor vehicle accident claim, litigated by the injured plaintiff against the defendant driver, the defendant might subpoena police records about the plaintiff. This subpoena would require the NSW Commissioner of Police to produce documents. If records caught by the subpoena disclose an ongoing murder investigation in which the plaintiff is the main suspect, then the NSW Commissioner of Police may intervene in the proceedings to make a PII claim to argue against production (of course, this is in addition to the ability to set aside the subpoena as an abuse of process, eg if it does not have a legitimate forensic purpose see Chapter 12). The Court is required to balance the public interest in the defendant accessing the documents for use in its litigation against the public interest in non-​disclosure

37 38 39

Jacobsen v Rogers (1995) 182 CLR 572 at 589. Sankey v Whitlam (1978) 142 CLR 1 at 38; Evidence Act 1995 (NSW) s 130. Jacobsen v Rogers (1995) 182 CLR 572 at 589. [14.290]  887

Civil Procedure in New South Wales

which is the proper conduct of law enforcement and the prosecution of a serious criminal offence. The PII claim is usually supported by an affidavit. Such an affidavit may contain information which, if disclosed, would itself be injurious to the public interest. Therefore, it is permissible for the court to use confidential affidavits in support of a PII claim: R v Meissner (1994) 76 A Crim R 84 at 84–​85; R v Yooyen, Tait & Poompiriyapinte (1991) 57 A Crim R 226 at 233. In National Crime Authority v Gould (1989) 90 ALR 489, Foster J (at 497) explained the reasoning for using confidential evidence: [That the affidavit supporting the immunity claim had] not been made available to the defence. In my view this would not be an available reason for refusing to consider the affidavit. The affidavit may, itself, contain material, which if disclosed could adversely affect public interest. The very reasons advanced in the affidavit for the non-​disclosure of the materials sought in the subpoena may themselves indicate facts the disclosure of which in a public forum might well be inimical to the proper and efficient conduct of the operations of the NCA. Of course they may not; in which case, the court may well think it appropriate to make the contents available to the defence for the argument of the question of immunity. Such considerations cannot, of course, arise unless the court has regard to the contents of the affidavit in the first place.

This means that only the party (and its lawyers) who make the PII claim, and the judge, can read the confidential affidavit. There is no right to cross-​examine a deponent of an affidavit who provides evidence in support of a PII claim. Hunt CJ at CL stated in Attorney General for NSW v Stuart (1994) 34 NSWLR 667 at 681: There is, of course, no right to cross-​examine such a deponent upon his affidavit, and leave to permit such a cross-​examination is granted only very rarely; more usually, the party claiming immunity will be requested by the judge instead to produce further evidence which overcomes any defect in the claim which may be apparent on the face of evidence already produced: Young v Quin (at 486; 228; 489; 231; 495; 237); Beneficial Finance Corporation Ltd v Commissioner of Australian Federal C Police (at 553; 197–​198; 31).

It would be “a very rare case indeed where the court would permit cross examination of a deponent or would allow countervailing evidence”: Young v Quin (1985) 4 FCR 483 at 485. The parties, especially the party who issued the subpoena, are arguably put at a disadvantage by not being able to view the confidential evidence in a proceeding to determine whether PII attaches to the communication or document. A procedure to address such unfairness is the appointment of special counsel. Special counsel can be appointed in PII cases to look at the documents that are the subject of the claim. The appointment of special counsel, in the context of s 56 of the CPA, was considered by the Court of Appeal in State of New South Wales v Public Transport Ticketing Corporation (see [14.320] at [33], [34]). Application of s 130 of the Evidence Act 1995 (NSW) [14.300] Public interest immunity (PII) is governed by s  130 of the Evidence Act 1995

(NSW). Section  130 imposes an onus on the party seeking to have the Court exercise its discretion to prevent disclosure of document/​s,40 to demonstrate that the document/​s relates to a “matter of state” (see s  130(4)) and that the balancing test favours non-​production.

40

Or the adduction of evidence.

888 [14.300]

Privilege  Chapter  14

A claim of PII requires a court to conduct a balancing exercise to determine whether, in all the circumstances of the case, the public interest in protecting the confidentiality of information outweighs the countervailing public interest in the public availability of that information for the administration of justice: s 130(1). This balancing exercise reflects the common law as set out in Sankey v Whitlam (1978) 142 CLR 1. As explained by Gibbs ACJ in Sankey v Whitlam (1978) 142 CLR 1 at 38–​39: The general rule is that the court will not order the production of a document, although relevant and otherwise admissible, if it would be injurious to the public interest to disclose it. However the public interest has two interests which may conflict. These were described by Lord Reid in Conway v Rimmer [[1986] AC at 940], as follows: There is the public interest that harm shall not be done to the nation or the public service by disclosure of certain documents, and there is the public interest that the administration of justice shall not be frustrated by the withholding of documents which must be produced if justice is to be done. It is in all cases the duty of the court, and not the privilege of the executive government, to decide whether a document will be produced or may be withheld. The court must decide which aspect of the public interest predominates, or in other words whether the public interest which requires that the document should not be produced outweighs the public interest that a court of justice in performing its functions should not be denied access to relevant evidence. In some cases, therefore, the court must weigh the one competing aspect of the public interest against the other, and decide where the balance lies. In other cases, however, as Lord Reid said in Conway v Rimmer [[1986] AC at 940], “the nature of the injury which would or might be done to the nation or the public service is of so grave a character that no other interest, public or private, can be allowed to prevail over it”. In such cases once the court has decided that “to order production of the document in evidence would put the interest of the state in jeopardy”, it must decline to order production.

Spigelman CJ explained the balancing exercise in Egan v Chadwick (1999) 46 NSWLR 563 at 573 [52]: In the determination of a claim of public interest immunity, a trial judge is called upon to weigh essentially incommensurable factors: the significance of the information to the issues in the trial, against the public harm from disclosure. Where this occurs in the course of the administration of justice, judicial officers have relevant experience for the conduct of the balancing exercise. Specifically, they not only understand, but have a duty to consider and assess, the significance of the information to the particular legal proceedings. Where the public interest to be balanced involves the legislative or accountability functions of a House of Parliament, the courts should be very reluctant to undertake any such balancing. This does not involve a constitutional function appropriate to be undertaken by judicial officers. This is not only because judges do not have relevant experience, a proposition which may be equally true of other public interests which they are called upon to weigh. It is because the Court should respect the role of a House of Parliament in determining for itself what it requires and the significance or weight to be given to particular information. As the Supreme Court of the United States has said, there are issues which a court should not determine because of “the impossibility of a court’s undertaking independent resolution without expressing lack of respect due coordinate branches of government”: Baker v Carr [1962] USSC 48; 369 US 186 (1962) at 217.

The public interest (and the threat that disclosure poses to that interest) must be balanced against the competing public interest of whether the administration of justice would be frustrated if such documents were withheld. This requires consideration of s 130(5). A court can apply s 130 on its own motion and can inform itself of anything it thinks fit.

[14.300]  889

Civil Procedure in New South Wales

Examples of types of information where a PII claim could be made are: • Information where its disclosure could prejudice the functioning of government, for example, cabinet documents.41 See State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 6 (see [14.320]). • Documents that reveal the identity of police informers because if the identity of an informer were liable to be disclosed in a court of law, sources of information would dry up and the police would be hindered in their duty of preventing and detecting crime.42 See Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL [2011] FCA 938 (see [14.330]) for application of PII in civil proceedings where an informer is used by a regulatory agency. • Documents which contain confidential police methodology where disclosure could harm the proper conduct of law enforcement activities.43 • Information that could harm national security, for example documents held by ASIO.44 This type of information is now covered by the National Security Information (Criminal and Civil Proceedings) Act 2004 (Cth) (see [14.360]). The Court has the power to make non-​publication orders to protect the public interest.45 Protective orders could be non-​publication orders, closed court orders and/​or pseudonym orders. Section 130(5)(d) of the Evidence Act 1995 (NSW) refers to the court taking into account the effect of disclosure of the information and “the means available to limit its publication”. The means to limit publication are based on the power of the court to order non-​publication of the evidence. Disclosure of the information must be against the public interest and, “the test of necessity requires at least that there be identified some substantial detriment or risk of detriment to the administration of justice that would, in a significant way, be alleviated by suppression of the information”.46 In Commissioner of Police New South Wales v Nationwide News Pty Ltd, the Court of Appeal made non-​publication orders relating to the trial transcript that made reference to confidential police methodology in undercover work. The orders were to prevent the disclosure of information that would be harmful to the public interest.47

41 42

43

44 45

46

47

Sankey v Whitlam (1978) 142 CLR 1; The Commonwealth of Australia v Northern Land Council (1993) 176 CLR 604. D v National Society for the Prevention of Cruelty to Children [1978] AC 171 at 218, 232, 241; Sankey v Whitlam (1978) 142 CLR 1 at 65–​66; Cain v Glass (No 2) (1985) 3 NSWLR 230 at 232–​233, 247; Attorney General for NSW v Stuart (1994) 34 NSWLR 667; Director of Public Prosecutions v Smith (1996) 86 A Crim R 308; Gardiner v The Queen (2006) 162 A Crim R 233. Young v Quin (1985) 4 FCR 483 at 494 per Beaumont J; S v State of New South Wales (No 3) [2009] NSWCA 248 at [7]‌; Commissioner of Police New South Wales v Nationwide News Pty Ltd (2007) 70 NSWLR 643 at 648 [35]. Alister v The Queen (1984) 154 CLR 404; but note the application of National Security Information (Criminal and Civil Proceedings) Act 2004 (Cth). Chapman v Luminis Pty Ltd (No 2) (2000) 100 FCR 229; [2000] FCA 1010; Director of Public Prosecutions v Smith (1996) 86 A Crim R 308; New South Wales Commissioner of Police v Nationwide News Pty Ltd (2007) 70 NSWLR 643; S v State of New South Wales (No 3) [2009] NSWCA 248. Attorney-​General for NSW v Nationwide News Pty Ltd (2007) 73 NSWLR 635; [2007] NSWCCA 307 at [39] per Hodgson JA (Hislop and Latham JJ agreeing). The power to make non-​publication and suppression orders is governed by the Court Suppression and Non-​publication Orders Act 2010 (NSW) which is dealt with in Chapter 1 of this book. New South Wales Commissioner of Police v Nationwide News Pty Ltd (2007) 70 NSWLR 643. Such orders would now be made pursuant to the Court Suppression and Non-​publication Orders Act 2010 (NSW) which is dealt with in Chapter 1 of this book.

890 [14.300]

Privilege  Chapter  14

Note that evidence of reasons for a decision made by a judge or arbitrator or deliberations by a jury must not be given. This prohibition exists because it is in the public interest: see Evidence Act 1995 (NSW) s 129 and its exceptions in s 129(5).48

Evidence Act 1995 (NSW) [14.310]  Evidence Act 1995 (NSW) ss 129, 130 Division 3 –​Evidence excluded in the public interest 129 Exclusion of evidence of reasons for judicial etc decisions (1)

Evidence of the reasons for a decision made by a person who is:



(a)

a judge in an Australian or overseas proceeding, or



(b)

an arbitrator in respect of a dispute that has been submitted to the person, or to the person and one or more other persons, for arbitration,

or the deliberations of a person so acting in relation to such a decision, must not be given by the person, or a person who was, in relation to the proceeding or arbitration, under the direction or control of that person. (2)

Such evidence must not be given by tendering as evidence a document prepared by such a person.

(3)

This section does not prevent the admission or use, in a proceeding, of published reasons for a decision.

(4)

In a proceeding, evidence of the reasons for a decision made by a member of a jury in another Australian or overseas proceeding, or of the deliberations of a member of a jury in relation to such a decision, must not be given by any of the members of that jury.

(5)

This section does not apply in a proceeding that is:



(a)



a prosecution for one or more of the following offences: (i)

an offence against or arising under section 319, 321, 322 or 333 of the Crimes Act 1900,



(ii)

an offence against or arising under section 67 of the Jury Act 1977,



(iii)

an offence connected with an offence mentioned in subparagraph (i) or (ii), including an offence of conspiring to commit such an offence, or



(b)

in respect of a contempt of a court, or



(c)

by way of appeal from, or judicial review of, a judgment, decree, order or sentence of a court, or



(d)

by way of review of an arbitral award, or



(e)

a civil proceeding in respect of an act of a judicial officer or arbitrator that was, and that was known at the time by the judicial officer or arbitrator to be, outside the scope of the matters in relation to which the judicial officer or arbitrator had authority to act.

Note: Subsection (5)(a) differs from section 129(5)(a) of the Commonwealth Act. 130 Exclusion of evidence of matters of state (1)

48

If the public interest in admitting into evidence information or a document that relates to matters of state is outweighed by the public interest in preserving secrecy or confidentiality in relation to the information or document, the court may direct that the information or document not be adduced as evidence.

See also Ryan v Watkins [2005] NSWCA 426. [14.310]  891

Civil Procedure in New South Wales

Evidence Act 1995 (NSW) cont. (2)

The court may give such a direction either on its own initiative or on the application of any person (whether or not the person is a party).

(3)

In deciding whether to give such a direction, the court may inform itself in any way it thinks fit.

(4)

Without limiting the circumstances in which information or a document may be taken for the purposes of subsection (1) to relate to matters of state, the information or document is taken for the purposes of that subsection to relate to matters of state if adducing it as evidence would:



(a)

prejudice the security, defence or international relations of Australia, or



(b)

damage relations between the Commonwealth and a State or between 2 or more States, or



(c)

prejudice the prevention, investigation or prosecution of an offence, or



(d)

prejudice the prevention or investigation of, or the conduct of proceedings for recovery of civil penalties brought with respect to, other contraventions of the law, or



(e)

disclose, or enable a person to ascertain, the existence or identity of a confidential source of information relating to the enforcement or administration of a law of the Commonwealth or a State, or



(f)

prejudice the proper functioning of the government of the Commonwealth or a State.

(5)

Without limiting the matters that the court may take into account for the purposes of subsection (1), it is to take into account the following matters:



(a)

the importance of the information or the document in the proceeding,



(b)

if the proceeding is a criminal proceeding–​ whether the party seeking to adduce evidence of the information or document is a defendant or the prosecutor,



(c)

the nature of the offence, cause of action or defence to which the information or document relates, and the nature of the subject matter of the proceeding,



(d)

the likely effect of adducing evidence of the information or document, and the means available to limit its publication,



(e)

whether the substance of the information or document has already been published,



(f)

if the proceeding is a criminal proceeding and the party seeking to adduce evidence of the information or document is a defendant-​-​whether the direction is to be made subject to the condition that the prosecution be stayed.

(6)

A reference in this section to a State includes a reference to a Territory.



New South Wales v Public Transport Ticketing Corporation [14.320]  State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 [See facts at [14.70]. In a pre-​trial interlocutory procedure, the State sought orders that the PTTC be excused from making available for inspection by ERG certain documents. The State tendered three affidavits to prove its PII claim. The deponents of the affidavits were Paul Miller (Acting Deputy Director-​ General (General Counsel) of the New South Wales Department of Premier and Cabinet), Andrew Nicholls (Acting Deputy Director-​General of the New South Wales Department of Transport and Infrastructure) and Joanna Quilty (Deputy Director-​General of the New South Wales Department of Transport and Infrastructure). The affidavits were confidential exhibits. This meant that only the 892 [14.320]

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New South Wales v Public Transport Ticketing Corporation cont. State (and its lawyers) and the judge could read the documents. Further, the three deponents were not cross-​examined. The documents that were subject to the claim for PII were in the following categories: • category A: draft speaking notes prepared for Ministers to use in Cabinet; • category D: decisions of the Budget Cabinet Committee; • category E: draft minutes of the Budget Cabinet Committee and related correspondence; • category G: documents that disclose the deliberations of the Budget Cabinet Committee; • category N: other forms of Cabinet advice. Categories D and G were held by the primary judge to be in the “first tier” of documents most strongly and evidently attracting the immunity, and categories A, E and N were said to be the “second tier” of documents next most strongly and evidently attracting the immunity. The primary judge held that he would allow the PII claim only if the document had stamped on it “Cabinet in Confidence” and not allow it if it did not. Both the State and ERG complained about the primary judge’s approach.] ALLSOP P (HODGSON JA and SACKVILLE AJA agreeing) [42] Both the common law and s 130 require two broad stages of analysis: first the assessment of the character of the information or document (as state papers or as relating to a matter of state) and secondly a weighing or balancing exercise to assess the public interest on whether disclosure would prejudice the proper functioning of the government. [43] The reasons of the majority (Mason CJ, Brennan J, Deane J, Dawson J, Gaudron J and McHugh J) in Commonwealth v Northern Land Council [1993] HCA 24; 176 CLR 604 (“NLC”) at 614–​619 lay out the principles to be applied in the operation of the common law of public interest immunity. It has been accepted that those principles assist in informing of the content and operation of the Evidence Act, s 130: Eastman v The Queen (1997) 76 FCR 9 at 63 (per curiam); Chapman v Luminis Pty Ltd (No 2) [2000] FCA 1010; 100 FCR 229 at 246 (von Doussa J). None of the parties in the present case suggested otherwise. It is therefore unnecessary to consider the extent to which, if at all, s 130 of the Evidence Act departs from common law principles. [44] It is not appropriate to take one line or one idea from the discussion by their Honours in NLC. The essence, however, of the underpinning ideas expressed in the reasons is the prevention of prejudice to the subject to which the Evidence Act, s 130(4)(f) is directed: the proper functioning of government of the polities of the Federation. [45] A number of propositions can be taken from their Honours’ reasons to guide consideration of this issue. It is in the public interest that deliberations of Cabinet, including the decisions made by Cabinet, should remain confidential in support of the collective responsibility of Cabinet government: NLC at 615. It is the position of the body as responsible for the creation of state policy at the highest level that engenders the need for protection: NLC at 615. Thus, an important consideration is the protection of deliberations leading to the formulation of state policy, though this proposition should not be taken as meaning that only formulation of policy is to be protected. The threat of disclosure may impede or mute free and vigorous exchange in Cabinet: NLC at 615. Decision-​making and policy development by Cabinet is to be uninhibited: NLC at 616. The division of claims into “class” and “contents” claims is rough, but acceptable, to differentiate types of documents the disclosure of which would injure the public interest, irrespective of contents, and those which ought not to be disclosed because of their contents: NLC at 616. Documents revealing Cabinet deliberations and decisions fall within the former class. But their immunity is not absolute: NLC at 616. The immunity must be weighed against the public interest in the administration of justice: NLC at 616. [46] The nature of this weighing or balancing process is what lies at the heart of any contested application such as this. The majority in NLC at 616–​617 approved a passage from the judgment of Gibbs ACJ in Sankey v Whitlam [1978] HCA 43; 142 CLR 1 at 43 which is worthy of repetition here: [14.320]  893

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New South Wales v Public Transport Ticketing Corporation cont. The fundamental and governing principle is that documents in the class may be withheld from production only when this is necessary in the public interest. In a particular case the court must balance the general desirability that documents of that kind should not be disclosed against the need to produce them in the interests of justice. The court will of course examine the question with especial care, giving full weight to the reasons for preserving the secrecy of documents of this class, but it will not treat all such documents as entitled to the same measure of protection –​the extent of protection required will depend to some extent on the general subject matter with which the documents are concerned. If a strong case has been made out for the production of the documents, and the court concludes that their “disclosure would not really be detrimental to the public interest”, an order for production will be made. [47] The majority in NLC at 617 elaborated upon the last sentence in this passage from Gibbs ACJ’s reasons in Sankey v Whitlam saying: In a case where a document fell into a class of document the disclosure of which would be injurious to the public interest regardless of the contents, a court could conclude that ‘disclosure would not really be detrimental to the public interest’ only in circumstances where there was a competing public interest, such as the public interest in the advancement of justice, which outweighed the public interest in the preservation of confidentiality. [48] Their Honours then went on to say at 617 that the currency or controversiality of the subject matter is relevant to the balancing process. The character of the subject matter is, implicitly, also important. Their Honours had already spoken of policy and its formulation through the deliberations of Cabinet. Their Honours then emphasised that immunity of documents of Cabinet deliberations and Cabinet documents (ordinarily attracted irrespective of contents) is not absolute: NLC at 617–​ 618. A court will initially lean against disclosure: NLC at 618. Whether circumstances are sufficient to displace the immunity depends in part on the nature of the class. As to this the majority said at 618: In the case of documents recording the actual deliberations of Cabinet, only considerations which are indeed exceptional would be sufficient to overcome the public interest in their immunity from disclosure, they being documents with a pre-​eminent claim to confidentiality. The process of determining whether an order for disclosure of documents in that class should be made remains one of weighing the public interest in the maintenance of confidentiality against the public interest in the due administration of justice, but the degree of protection against disclosure which is called for by the nature of that class will dictate the paramountcy of the claim for immunity in all but quite exceptional situations. Indeed, for our part we doubt whether the disclosure of the records of Cabinet deliberations upon matters which remain current or controversial would ever be warranted in civil proceedings. The public interest in avoiding serious damage to the proper working of government at the highest level must prevail over the interests of a litigant seeking to vindicate private rights. In criminal proceedings the position may be different. (Emphasis added.) [49] The authoritative statements of principle and approach in NLC both expound the common law of Australia and assist in the understanding of the content of the phrase “prejudice [to] the proper functioning of government” for the purposes of s 130(4)(f). [50] Cabinet documents in the form of documents recording the matters put to Cabinet for discussion (such as minutes for the consideration of Cabinet) have been held to be in the same position as records of the deliberations or decisions of Cabinet: Commonwealth v Construction, Forestry, Mining and Energy Union [2000] FCA 453; 98 FCR 31 at 42–​43 [42]–​[45]; Egan v Chadwick [1999] NSWCA 176; 46 NSWLR 563 at 573 [69] and J D Heydon, Cross on Evidence (LexisNexis Butterworths, 8th Australian ed, 2010) at p 961 [27065]. Thus, broadly, records of Cabinet deliberations and decisions 894 [14.320]

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New South Wales v Public Transport Ticketing Corporation cont. and documents revealing the deliberations of Cabinet will be regarded as attracting the protection conferred by public interest immunity or by that afforded to matters of state, subject to the balancing of the competing interests. The public interest in preserving the secrecy of such documents will ordinarily be given considerable weight in the balancing process. [51] The author of Cross on Evidence (8th ed), after discussing the broad equivalence of documents recording the deliberations or decisions of Cabinet and those which reveal those deliberations says at p 961: Having regard to the strength of the claim for immunity, a judge ought not to order disclosure unless satisfied that the materials are crucial for the proper determination of the proceedings. [52] Conformably with the weighing or balancing process discussed in NLC and inhering within s 130, relevant considerations to take into account are whether the documents concern policy, the currency and contemporaneous controversiality of the subject matter, the character of the subject matter otherwise, for instance whether national security or high policy and the forensic relevance of the documents: see the Full Court in Commonwealth v Northern Land Council (1991) 30 FCR 1 at 38; North Australian Aboriginal Legal Aid Service Inc v Bradley [2001] FCA 1080 at [16] (Wilcox J); Betfair Pty Ltd v Racing New South Wales (No 7) [2009] FCA 1140; 181 FCR 66 at [34] (Jagot J); and RP Data v Western Australian Land Information Authority [2010] FCA 922; 188 FCR 378 at [23] (Barker J). [53] The word “policy” should be recognised as a broad concept. It is notoriously difficult to differentiate between “policy” and “operation” in some contexts. I would understand the word to be used (and I use it below) in the sense of the consideration of approaches and conduct for the present and the future assessed by reference to the general interests of society. What I exclude from policy is the consideration, here, of a particular body of facts in a particular legal and contractual context and any discussion about that specific contractual matter. [54] This concept does not necessarily exclude consideration of what might be described as commercial ventures undertaken by governments or in which governments participate one way or another. The history of Australia reveals that governments have often participated in undertakings of a kind that involve large expenditure of money and large social and economic investments. To say this is to recognise that policy, economic and commercial considerations play a part in such undertakings. [55] However, the cases have recognised that the commercial or contractual responsibilities of government, once entered, may well be able to be treated differently to questions of policy. To the extent that the executive branch of government participates in contractual arrangements and commercial undertakings (in the advancement of the public interest), there is much to be said for the proposition (present elsewhere in the legal system eg the Judiciary Act 1903 (Cth), s 64) that it should be treated like any other litigant in a commercial dispute in which it finds itself: cf Robinson v South Australia (No 2) [1931] AC 704 at 715; Harbours Corporation of Queensland v Vessey Chemicals Pty Ltd (1986) 12 FCR 60 at 63–​64; Hooker Corporation Ltd v Darling Harbour Authority (1987) 14 ALD 110; Carey v Ontario [1986] 2 SCR 637 at [82]–​[84]; Adelaide Brighton Cement Ltd v South Australia [1999] SASC 379; 75 SASR 209; Sportsbet Pty Ltd v New South Wales (No 3) [2009] FCA 1283; 262 ALR 27 at 38 [39]. These cases reveal that whilst not a hard and fast consideration, the commercial character of a contract as the subject matter of a document is an important consideration in the balancing exercise. In particular, consideration of a specific contractual dispute or of particular facts relevant to that dispute may require a different approach than consideration of whether a government should become involved in a proposed project. In this respect, an important consideration in the due administration of justice is the denial of any possible perception that the government is in a privileged position in how it litigates its commercial rights and entitlements against citizens, in the absence of demonstration of a proper basis of interest of a character that attracts the immunity. There are many circumstances where policy has got nothing to do with a decision by government as to a step in a commercial arrangement or dispute. There are other circumstances where commercial decision-​ making and policy can intersect. [14.320]  895

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New South Wales v Public Transport Ticketing Corporation cont. [56] The likelihood that candour by public officials will be discouraged should disclosure of their communications be possible has been at times doubted: Air Canada v Secretary of State for Trade (No 2) [1983] 1 All ER 161 at 168; and see NLC at 615. Whatever may be the legitimacy of that consideration in regard to non-​commercial questions or in questions of policy, it should usually have little weight in the reporting on and discussing of the factual and legal aspects of a commercial dispute involving the State. The candour of those reporting to Ministers and Cabinet about the factual and legal state of a contractual or commercial dispute and the available courses of action is hardly likely to be undermined if, in due course, when the dispute becomes litigious, the advice is disclosed in litigation about the contract or commercial transaction. [57] These kinds of considerations must be brought to bear on the individual documents with which we are asked to deal. Broad generalisations are to be avoided. … Category D: “Decisions of the Budget Cabinet Committee” [60] Before dealing with these documents, Mr Miller’s affidavit described the Cabinet and Cabinet processes (at paras 11–​26). In that explanation the Budget Cabinet Committee was described as a committee charged with the responsibility of overseeing the financial management of the State, the Budget process and ongoing expenditure across government. The Committee is part of Cabinet. [61] The six documents in category D were described as follows: • D1: Cabinet Standing Committee on the Budget –​Decision Paper, 24 September 2007. • D2: Cabinet Standing Committee on the Budget –​Decision Paper, 5 November 2007. • D3(a): Cabinet Standing Committee on the Budget –​Decision Paper (note of Ministers in Attendance), 5 November 2007. • D3(b): Cabinet Standing Committee on the Budget –​Decision Paper, 5 November 2007. • D4: Cabinet Standing Committee on the Budget –​Decision Paper, 5 November 2007. • D5: Cabinet Standing Committee on the Budget –​Decision Paper, 23 January 2008. • D6: Cabinet Standing Committee on the Budget –​Decision Paper, 23 January 2008. [62] In relation to them, reliance was placed on paras 32–​35 of the affidavit of Mr Miller, which were as follows: [32] The documents at Tabs D1 to D6 of Volume 1 of Confidential Exhibit CE1 are decisions of the Budget Cabinet Committee. It is vital to the good government of New South Wales that Budget Cabinet Committee decisions be recorded accurately, precisely and as succinctly as the subject matter permits. Budget Cabinet Committee decisions are so recorded. They are recorded in a manner that is not designed for publication. [33] In many cases the disclosure of a Budget Cabinet Committee decision would disclose, implicitly or explicitly, the deliberations of the Committee. Budget Cabinet Committee decisions may disclose dissenting views or disclose positions of particular Ministers which positions were rejected by the Committee. As such, disclosure of Cabinet Decisions would undermine the principle of collective responsibility upon which the Budget Cabinet Committee operates. [34] If the records of Budget Cabinet Committee decisions were liable to being disclosed pursuant to the discovery process it would tend to inhibit the phrasing and recording of those decisions. In some cases decisions would be phrased and recorded in a manner calculated to be suitable for disclosure to the public. On some occasions there would be a tendency to phrase and record decisions in more circumspect and inhibited language, perhaps with statements of reason and qualification incorporated. There would arise a tendency towards the phrasing and recording of decisions in less precise terms. It would be against the public interest for Budget Cabinet Committee decisions to be recorded imprecisely or verbosely. 896 [14.320]

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New South Wales v Public Transport Ticketing Corporation cont. Therefore, it would be against the public interest to expose any record of a Budget Cabinet Committee decision. [35] I am informed by Barbara Wise and believe that whilst aspects of some of the substance of some of the particular decisions of the Budget Cabinet Committee have since been made public, the public statements are not worded using the same language used in the decisions. Further, I am informed by Ms Wise and believe that not all parts of those decisions have been made public and that several parts of the decision reflect what the Budget Cabinet Committee took into account when reaching its decision and are not matters that have been publicly disclosed. Disclosure of the decisions will therefore disclose the deliberations of the Budget Cabinet Committee that have not been made public. [63] None of these documents was stamped “Cabinet in Confidence”. [64] The evidence at para 32 was sufficient to have these documents categorised as relating to matters of state for the purposes of s 130(4) or as part of the well-​recognised class of documents that prima facie attracts immunity as “State papers”: Sankey v Whitlam at 39–​42 (Gibbs ACJ) or as records of the decisions of a Cabinet Committee: NLC at 614–​618. [65] It was submitted on behalf of the State that the clear status of these documents should lead (and should have led) to their protection from production under the immunity without the need to examine the documents. I do not agree. Whether or not Cabinet documents are immune from disclosure is based on the public interest which can be affected by the question of the currency or continuing relevance of the subject matter of the documents and their relevance to the proceedings: Sankey v Whitlam at 41–​43; NLC at 616–​618; New South Wales Commissioner of Police v Nationwide News Pty Ltd [2007] NSWCA 366; 70 NSWLR 643 at 649 [42]. To the extent that the Evidence Act, s 130 is relevant, the assessment of any prejudice to the proper functioning of the government of the State under s 130(4)(f) necessarily involves a similar weighing process. [66] The State relied on Ms Quilty’s affidavit of 26 May 2010 in relation to the on-​going currency of documents. In that affidavit, Ms Quilty explains the continuing political debate and live policy issue regarding fare reform: see in particular paras 24–​26 of her affidavit at Blue Vol 1 p 41. She does not deal with documents in categories D or G, but she does deal with documents in category E. She says the following in paras 24–​26: [24] Fare reform in respect of public transport in New South Wales is an important and sensitive issue because of the impact it has on the daily lives of commuters living in metropolitan regions of New South Wales; the cost of running public transport services; the Government’s long term metropolitan infrastructure and development plans as targeted in the State Plan given that the effect that [sic] the structure and price of public transport fares have on consumer demand. [25] There is a diverse range of strongly held opinions about what fare structure should apply to public transport services. Government has to balance a wide range of competing priorities including (but not limited to) the cost to taxpayers of subsidies, the impacts of pricing signals on the economically efficient operation of the network, and social equity considerations. It is important that Government make these decisions in an environment that is not impacted by ill-​informed criticisms. [26] I therefore maintain the view expressed in the affidavits sworn by Andrew Nicholls in these proceedings that the disclosure of documents of the kind contained in Confidential Exhibit AN1, including the reports contained in Volume 2 of that Confidential Exhibit, would significantly inhibit the ability of persons developing government policy and preparing relevant Cabinet Minutes from obtaining advice and views of others with expertise within and outside of government on issues being considered by Cabinet which in turn will significantly reduce the quality of any advice that is then able to be provided to Cabinet. [67] Ms Quilty’s view as to the current relevance of policy at that level of generality is of assistance, to a point. It makes clear the continuing currency of a subject matter. It does not help very much [14.320]  897

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New South Wales v Public Transport Ticketing Corporation cont. in translating that to the examination of any particular document. Certainly, if the subject of the document related to the development and content of fare policy one could see the relationship with current policy and contemporaneous controversy. It does not follow at all, however, that documents dealing with a particular commercial contractual dispute, that arose out of the execution of that policy, where that dispute is now being litigated, remain in any way current or controversial. [68] All the documents with which we are concerned (categories D, G, A, E and N) are documents created and deployed for use at the highest levels of government: Cabinet and Ministerial level. That said, care must be taken to recognise that parts of them deal solely with a particular commercial contract (of some magnitude) entered by the PTTC. To the extent that these documents simply discuss the particular contract and the conduct of the parties to that contract, no questions of government policy will arise. I say this not as a matter of logic but by reference to the documents that I have examined and that I discuss below. Significant parts of these documents simply discuss a contract that has been entered, and, in latter years, that appears not to have produced the expected results. These matters were referred to and deliberated upon by Cabinet because of the monetary size and scale of the contract and, one can infer, because of the importance of public transport to the public and to the Government in a political sense. [69] That importance does not mean that any historical discussion of a transport related contract that may have gone wrong necessarily engages any question of policy. It may do so. The contract may epitomise an error in policy that is discussed and that policy may be of current relevance (for instance, in the general way discussed by Ms Quilty). The consequences of a breach of contract and how they are to be dealt with may give rise to policy questions. Or, the discussion may simply be a factual and legal one as to the contents and nature of a dispute and how to deal with it. Simply to label the topic as a commercial dispute will not answer the question as to application of the immunity or as to the intrusion of government policy. Nevertheless, if the Cabinet Minute deals with the circumstances of a (large) commercial dispute involving the State and raises no question of policy and is of no particular currency, these will be important considerations in assessing the public interest or the prejudice to government that would be caused by disclosure of the documents. [70] Taking all of the above into account, the disclosure of documents recording the actual deliberations of Cabinet itself (or of one of its committees, such as the Budget Cabinet Committee) must be governed by what was said in NLC. In respect of such documents “only considerations which are indeed exceptional would be sufficient to overcome the public interest in their immunity from disclosure”. [71] As to D1, decision of 24 September 2007 in relation to T card and other issues (Confidential Blue Vol 1 pp–​38–​42), aspects of the minute do not concern the T card: see items 1, 2, 3, 5 and 6. The immunity plainly attaches to these. Item 4 it contains resolutions of the Budget Cabinet Committee, many of which relate to this contract and the dispute concerning it, though some are broader: for ­example 4.4, 4.5, 4.7, 4.9 and 4.10 (to a limited extent). Paragraphs 4.1, 4.2, 4.3, 4.6 and 4.8 relate solely to this contract. Parts of this document are directly relevant to the proceedings. They record decisions about this contract. If the balancing were to be assessed solely by reference to the subject matter of the contents, I would have no hesitation in ordering disclosure. But these are the records of decisions of government in Cabinet. I cannot conclude that the circumstances are so exceptional as to warrant the disturbance of the maintenance of confidentiality for the decisions of the highest level of government. In particular, in circumstances where the PTTC, and not the State (as a polity) was a party to this contract and had to take the steps necessary to terminate or enforce rights under the contract, I do not see the decisions of Cabinet as of substantial significance to the disposition of the case. I would maintain this view notwithstanding the conclusion that I have come to concerning the draft Cabinet Minutes and like documents in category E. [72] As to D2 –​D4, decisions of 5 November 2007 in relation to T card and other issues (Confidential Blue Vol 1 pp–​43–​53), aspects of the minutes do not concern the T card: item–​6 (p 44), item–​1 (pp–​47–​48), item–​2 (pp–​48–​49), item–​3 (p 49), item–​4 (p 49), item–​6 (p 50) and items–​7 and 8 898 [14.320]

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New South Wales v Public Transport Ticketing Corporation cont. (p 51). Item–​5 (5.1–​5.3) (pp–​44, 50 and 52–​53) concerns the T card contract and steps in relation to the dispute. Notwithstanding these considerations, as for D1, no exceptional circumstances have been shown to warrant disclosure. Item–​5.4 has a slightly broader policy content. The immunity attaches to it. [73] As to D5 –​D6, decisions of 23 January 2008 in relation to T card and other issues (Confidential Blue Vol–​1 pp–​54–​67), aspects of the minutes do not concern the T card: item–​4 (pp–​ 57–​59 and 64–​66), item–​5 (pp 59 and 66) and item–​6 (pp 60 and 67). Item–​3 concerns the T card. Items–​3.1–​3.7 concern the contract, its termination and the likely dispute. Notwithstanding these considerations, as for D1, no exceptional circumstances have been shown to warrant disclosure. Items–​3.8–​3.13 concern the future policy and planning assuming the end of the contract with ERG. To the extent that the decisions and minutes in category D record views and steps taken in relation to this particular contract and this particular dispute, it could be said that there is little or no remaining currency or contemporaneity, other than the dispute itself in the courts (which was rightly eschewed by senior counsel as relevant). Thus, those parts of the Cabinet decisions appear to have little or no currency. Nevertheless, for the Court to order disclosure of the records of the actual deliberations and decisions of Cabinet more is required –​there must be exceptional circumstances, which I do not see here. [Allsop P considered each of the 40 documents that fell within each of the categories to determine whether the immunity attached to the specific document.]

 Confidential source of information

ACCC v Prysmian Cavi E Sistemi Energia SRL [14.330]  Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi Energia SRL [2011] FCA 938 [The Australian Consumer and Competition Commission (the ACCC) is an independent statutory authority whose primary responsibility is to ensure compliance with the Commonwealth’s competition, fair trading and consumer protection laws. The ACCC is a law enforcement agency that has the responsibility of achieving the primary objective of the Trade Practices Act 1974 (Cth) (the TPA). Each of the three respondents (Prysmian, Nexans and Viscas), who were foreign corporations, carried on the business of supplying submarine electrical cables and accessories. The ACCC claimed that the respondents engaged in price-​fixing, market sharing and other anti-​competitive conduct in contravention of the TPA (commonly referred to as cartel conduct). JPS (a foreign company) provided information to the ACCC in relation to the alleged cartel conduct and was granted conditional immunity from prosecution. Mr A, not an Australian resident but an employee of JPS, was granted derivative conditional immunity from prosecution. The ACCC obtained leave from the Federal Court to serve the originating process on Prysmian and Nexans overseas pursuant to Order 8 r 3(2) of the Federal Court Rules 2011 (now r 10.43 of the Federal Court Rules 2011). Two of the respondents (Prysmian and Nexans) then filed an application to have service of the proceedings set aside. Viscas, the third respondent, submitted to the jurisdiction. One of the respondents also issued a notice to produce seeking documents to identify a “Mr A” (who was an informer to the ACCC) and was referred to in an affidavit filed by the ACCC (referred to in the judgment as the “Fourth Jacquier Affidavit”). The ACCC brought an interlocutory application to have the identity of a person described as “Mr A” kept confidential. The respondents contended that Mr A’s identity could be readily identified by proceedings for cartel conduct in Brazil.] [14.330]  899

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ACCC v Prysmian Cavi E Sistemi Energia SRL cont. LANDER J [180] The ACCC carries the onus of establishing the claim for public interest immunity. It is a heavy burden that requires the ACCC to “establish a ‘real’ rather than merely ‘some’ or ‘any’ detriment to the public interest from disclosure” of the documents or information: Somerville v Australian Securities Commission (1995) 60 FCR 319 at 354 per Lindgren J; Cadbury Schweppes Pty Ltd v Amcor Ltd at [26] per Gordon J. [181] One of the instances where public interest immunity has arisen is in relation to the identity of and information provided by police informers. In D v National Society for the Prevention of Cruelty to Children Lord Diplock explained the reasons why police informers enjoy having their identity protected by the immunity. The main reason is that the disclosure of the informer’s identity to the accused person would discourage informers coming forward, which would inhibit the flow of information to the police and hinder their ability to prevent or detect crime. His Lordship said at 218: The rationale of the rule as it applies to police informers is plain. If their identity were liable to be disclosed in a court of law, these sources of information would dry up and the police would be hindered in their duty of preventing and detecting crime. Lord Simon of Glaisdale made a similar point at 232. See also Cain v Glass (No 2) at 233–​234 per Kirby P and at 247 per McHugh JA. [182] The Full Court of this Court has recognised that this type of public interest immunity can apply to civil proceedings, and that the public interest in encouraging informers is “as important to a regulatory agency such as ASIC as it is to police in their traditional role”: ASIC v P Dawson Nominees Pty Ltd at [32] and [48]. The same can be said for the ACCC. Without informers, cartel conduct would be difficult to detect, and so there is without question public interest in encouraging informers to come forward. [183] Lord Diplock went on to note in D v National Society for the Prevention of Cruelty to Children at 218 that: the public interest in preserving the anonymity of police informers had to be weighed against the public interest that information which might assist a judicial tribunal to ascertain facts relevant to an issue upon which it is required to adjudicate should be withheld from that tribunal. By the uniform practice of the judges which by the time of Marks v Beyfus, 25 QBD 494 had already hardened into a rule of law, the balance has fallen upon the side of non-​ disclosure except where upon the trial of a defendant for a criminal offence disclosure of the identity of the informer could help to show that the defendant was innocent of the offence. In that case, and in that case only, the balance falls upon the side of disclosure. [184] The test that applies in Australia is not as strict as put by Lord Diplock. It is not the case that the identity of an informer will not be disclosed unless it can be demonstrated that the identity of the informer “could help to show that the defendant was innocent of the offence.” Rather, as the Full Court of this Court made clear in ASIC v P Dawson Pty Ltd, the Court is required to undertake a balancing exercise: at [28]. [185] The public interest in preventing disclosure in order to protect informers, and thereby encourage that informer and other informers to come forward in the future, must be weighed against the public interest in ensuring that the Court has access to all relevant evidence, and the public interest in ensuring that defendants, at least in criminal proceedings, receive a fair trial. It is neither helpful nor appropriate to introduce presumptions into the exercise. Each case will be different. [186] The issue in this case is not whether the Court or the respondents should ever have access to Mr A’s identity. The ACCC accepted that Mr A’s identity and the documents would need to be disclosed to the respondents at some point prior to the trial in order to ensure that the respondents receive a fair trial. Rather, the issue here is whether the respondents are entitled to Mr A’s identity and the documents at this stage in the proceeding. 900 [14.330]

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ACCC v Prysmian Cavi E Sistemi Energia SRL cont. [187] Accordingly, the public interest in protecting Mr A’s anonymity at this stage in the proceeding must be balanced against the public interest in ensuring that the respondents are able to prepare their case adequately. In particular, consideration needs to be given to whether Prysmian and Nexans require the documents and Mr A’s identity in order to prepare for the application to have service of the proceedings set aside, bearing in mind that the ACCC is willing to disclose the documents and information to those Australian lawyers of the respondents who have signed confidentiality undertakings. [188] Before turning to consider this question it is important to appreciate that Mr A is in a somewhat different position to that of a police informer. The harm that non-​disclosure seeks to prevent to a police informer is harm from the accused person who has been informed on. If the identity of the informer is disclosed, the accused person may take retaliatory action against the informer. This might have the effect of intimidating potential future informers. Accordingly, there is a public interest in protecting the informer to prevent this harm. [189] However, the harm Mr A says he will suffer as a result of the disclosure of the documents is that the documents might come to the attention of prosecuting authorities in other jurisdictions, and that he might then be subject to investigation and civil or criminal proceedings in those jurisdictions. Put another way, the harm Mr A complains of is that he may be prosecuted in other jurisdictions for his conduct. [190] It is not the role of this Court, or indeed the informer rule in the context of public interest immunity, to protect Mr A from lawful prosecution in other jurisdictions. The adverse consequences that he might suffer in other jurisdictions for conduct that may be unlawful in those jurisdictions are not matters of public interest in this jurisdiction. [191] Accordingly, I do not think that the risk of prosecution in other jurisdictions is a matter to which I should have regard in determining whether Mr A’s identity should be released without conditions, or whether the documents should be given to the respondents without conditions. For the same reason the fact that Mr A may decide not to give evidence in this proceeding is also not relevant. The ACCC recognises that the respondents must know Mr A’s identity before the trial to enable the respondents to enjoy their right to a fair trial. Mr A knows that his identity is to be disclosed at some time, and before he is due to give evidence. He will make his decision as to whether he will cooperate with the ACCC to retain his derivative immunity by giving evidence knowing that the respondents are aware of his identity. [192] That is not to say that there is no harm to which the ACCC, JPS and Mr A can point to that is relevant to the balancing exercise. In ASIC v P Dawson Nominees Pty Ltd at [51]–​[52] that: [51] … Rightly or wrongly, informers are often regarded with disfavour. Their motives are often questioned –​sometimes justifiably, although the public interest is not confined to protection of those informers who act from pure altruism. Persons contemplating whistleblowing would realise that disclosure of their identity may cause them harm in ways they never find out –​ employment or promotions not offered, friendships undermined. [52] That such adverse consequences may ensue is not to be dismissed as speculative. … Those matters are relevant on this application, although the extent of such harm is mitigated to some degree in this case by O 46 r 6(3) of the Federal Court Rules. [193] Order 46 rule 6(1) permits a person to inspect a document of the kind mentioned in subrule (2) in a proceeding. An affidavit is not such a document. An affidavit may only be inspected by a person not a party with leave of the Court: O 46 r 3. In those circumstances, a person not a party would only be entitled to inspect the Jacquier affidavits with leave of the Court. [194] However, the effect that allowing disclosure would have on future possible informers is a matter to be taken into account. The TPA recognises that the promotion of competition and fair trading will enhance the welfare of Australians: s 2. It is in the public interest to ensure that proscribed anti-​competitive behaviour by corporations is detected in order that persons who engage in that conduct might be brought before the courts. [14.330]  901

Civil Procedure in New South Wales

ACCC v Prysmian Cavi E Sistemi Energia SRL cont. [195] Therefore, it is in the public interest to encourage future informers to cooperate with the ACCC, and it must be accepted that disclosure of Mr A’s identity in these circumstances could have the effect of deterring future informers from coming forward and giving information about cartel conduct. To paraphrase what the Full Court said in ASIC v P Dawson Nominees Pty Ltd, there may be potential future informers who decide that informing the ACCC of cartel conduct “is just not worth it”: at [52]. This may prejudice the ACCC’s investigations in this and other cases. It may also limit the assistance that JPS can provide to the ACCC, since it may discourage other employees who may have relevant information from coming forward. [196] However, against this must be weighed the public interest in ensuring that the respondents receive a fair trial. [197] The respondents are not required to point to some identifiable miscarriage of justice that they would suffer if Mr A’s identity was withheld from them. Rather, the question is whether there is good reason to think that disclosure of Mr A’s identity might substantially assist the respondents prepare for the application to have service of the proceedings set aside. [198] When an application is made under O 9 r 7 to have service of a proceeding set aside, the applicant must establish for a second time that it has a prima facie case; the applicant having previously established the existence of such a prima facie case on the application for leave to serve an originating process outside of Australia under O 8 r 3 of the Federal Court Rules. The applicant will do so where it can show by credible evidence that inferences are open which translate into findings of fact that support the relief claimed: ACCC v April International Marketing Services Australia Pty Ltd (No 6) (2010) 270 ALR 504 at [8]‌per Bennett J. [199] An application under O 9 r 7 is not intended to give rise to a substantial inquiry, “since the purpose is to determine by way of a mini rather than a mega trial whether the applicant has a prima facie case”: WSGAL Pty Ltd v Trade Practices Commission (1992) 111 ALR 126 at 130 per Beaumont J. The threshold is not high. In Armacel Pty Ltd v Smurfit Stone Container Corporation (2008) 248 ALR 573 at [46], Jacobson J said “[t]‌he Court is not required to trawl through the material to determine the strength of the case.” However, this does not diminish the importance of the respondents’ right to know whether the evidence that has been adduced is sufficiently reliable or indeed capable of supporting the inferences for which the ACCC contends. [200] In an application to set aside service, the Court conducts a review, by way of rehearing, of the original decision to grant leave. The review hearing enables the respondent to put facts, arguments or materials before the Court that might suggest that leave should not have been granted. [201] Importantly, it will be open to Prysmian and Nexans to argue on the application to have service set aside that the ACCC’s claim has insufficient prospects of success to warrant putting them to the time, expense and trouble of defending the claim: Agar v Hyde (2000) 201 CLR 552 at [55] per Gaudron, McHugh, Gummow and Hayne JJ. [202] Information provided by Mr A was used in the preparation of the First Jacquier Affidavit, which was relied on by the ACCC in support of its application for leave to have the proceedings served on Prysmian and Nexans. Information emanating from Mr A was used to support the ACCC’s submission that it had a prima facie case. [203] In particular, it would seem that information from Mr A was used to support the allegation that there is an A/​R Cartel Agreement, as well as the allegations as to the terms of that agreement. Mr A also provided information to support the allegations made by the ACCC in relation to the Snowy Hydro Project. It would seem he or JPS provided the ACCC with an email that was sent by JPS pursuant to the A/​R Cartel Agreement to the respondents, and that in response JPS received “price guidance” from the respondents. [204] The information provided by Mr A enabled the ACCC to make the serious allegations that it has. I do not intend by that to express any view on the strength of the allegations made by the ACCC. For present purposes, it is sufficient to say that information provided by Mr A appears to form the 902 [14.330]

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ACCC v Prysmian Cavi E Sistemi Energia SRL cont. basis of many of the allegations made by the ACCC, allegations that the ACCC needs to make out in order to prove its case. [205] Mr A has, through his lawyers, asserted that he has not engaged in any illegal conduct, at least in other jurisdictions. Accordingly, it may be that Mr A’s credibility is in issue on any application by the respondents to have service of the proceeding set aside, as it may be at trial. [206] I agree with Prysmian and Nexans’ submissions that whilst the respondents may be able to deduct or make an educated guess as to the identity of Mr A, it is difficult for the respondents to search their records and make inquiries of their staff about the allegations made by Mr A without being sure of his identity. It would also make it more difficult for Prysmian and Nexans to determine what (if any) evidence they should lead on any application to have service of the proceedings set aside. [207] Furthermore, it would be difficult for the respondents to test the assertions made on behalf of Mr A that he has not engaged in any illegal conduct. The respondents are entitled to test these assertions against the allegations he has made as to the existence of the A/​R Cartel Agreement, and the participation of JPS and the respondents in that agreement. It is critical at this stage that the respondents have the opportunity to explore this possibility. It follows that I agree with the observation made by Brooking J in Jarvie v The Magistrates’ Court of Victoria at Brunswick at 91 that: [t]‌here is no reason why, in a strong enough case, the necessary substantial prejudice [to the defendant] could not consist in the inability to gather and use material bearing on the credibility of a witness for the prosecution of some importance where the credibility of that witness was really in question. See also Haydon v Magistrates Court at [30] per Doyle CJ. [208] It may be the case that once Mr A’s identity is revealed it becomes apparent to Prysmian and Nexans that there is a proper controversy existing between them and the ACCC, and that accordingly it is not worthwhile pressing their application to have service of the proceeding set aside. The fact is, without the documents and knowledge of Mr A’s identity, Prysmian and Nexans would find it difficult to assess the strength of the ACCC’s claim. [209] The ACCC’s principal argument, which was supported by JPS, was that Prysmian and Nexans have not submitted to the jurisdiction, and are therefore neither bound by the “implied undertaking” as to confidentiality nor liable to punishment for contempt in the event that any document was used for a collateral purpose. JPS argued that there is a real risk that if disclosed Mr A’s identity would be used for a collateral purpose by Prysmian and Nexans, especially if their applications to set aside service were successful. [210] I do not accept this argument. It is clear from the judgment of Hayne, Heydon and Crennan JJ in Hearne v Street that in addition to binding the litigant, “[t]‌he implied undertaking also binds others to whom documents and information are given”: at [109]. [211] In Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316 Anderson J, with Pidgeon and Ipp JJ agreeing, said at 334–​335: The implied undertaking is binding upon anyone into whose hands the discovered documents come, if he knows that they were obtained by way of discovery. [212] As Hayne, Heydon and Crennan JJ went on to note in Hearne v Street at [111]–​[112]: If this principle did not exist, the “implied undertaking” or obligation on the litigant would be of little value because it could be evaded easily. That is why Lord Denning MR said in Riddick v Thames Board Mills Ltd: “The courts should … not allow the other party –​or anyone else –​to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice”. And in the same case Stephenson LJ also said: “[I]‌t is important to the public and in the public interest that the protection should be enforced [14.330]  903

Civil Procedure in New South Wales

ACCC v Prysmian Cavi E Sistemi Energia SRL cont. against anybody who makes improper use of it.” Use with knowledge of the circumstances would be improper use. There is no support in the authorities for the idea that knowledge of anything more than the origins of the material in legal proceedings need be established. In particular, there is no support for the idea that knowledge of the “implied undertaking” and its consequences should be proved, for that would be to require proof of knowledge of the law, and generally ignorance of the law does not prevent liability arising. (Footnotes omitted) [213] Prysmian and Nexans would be subject to the “implied undertaking” not to use the documents or information for any purpose other than that for which it was given, namely to help them to prepare for an application to set aside service and, if that application is withdrawn or unsuccessful, their defence to this proceeding. They conceded as much. If they breach this “implied undertaking” they could be liable to be punished in this Court. [214] It may be that if service of the proceedings on Prysmian and Nexans is set aside and Prysmian and Nexans are never called upon to submit to the Court’s jurisdiction, the Court would find it more difficult to punish those parties if the parties breached the implied undertaking. However, they are represented by Australian lawyers who are officers of the Court and who are also within the Court’s reach. [215] In any event, the ACCC’s argument, even if it could succeed against Prysmian and Nexans, could not succeed against Viscas. Viscas has submitted to the jurisdiction. Given that the ACCC has conceded that the respondents will be entitled to the documents and Mr A’s identity at some stage in the proceeding, and that its main argument in relation to Prysmian and Nexans presently having access is that they have not submitted to the jurisdiction, there can be no reason why Viscas should not be entitled to the documents and information now. It is entitled to this information to help it prepare its defence to the proceeding. [216] Three final points need to be made. [217] First, while the terms of paragraph 1 of the ACCC’s Amended Notice of Motion would permit limited disclosure of the documents and Mr A’s identity to the Australian solicitors acting for the respondents, that is no reason why disclosure should not be made to the respondents. As is evident from these reasons, in order to prepare their case properly the respondents may need to conduct internal searches and make inquiries of their staff. Furthermore, the respondents are foreign companies with foreign lawyers advising them. They are entitled to seek advice in relation to these proceedings from those foreign lawyers. Subject to rule 20.03 of the Federal Court Rules 2011, Prysmian and Nexans, and their foreign lawyers, would not be able to use the documents or the information contained in the documents or Mr A’s identity in relation to other proceedings or potential proceedings in this jurisdiction or any other without leave of the Court. [218] Secondly, it was submitted that the respondents had not provided any evidence of the prejudice they would suffer if the information was not disclosed. In my view it was not necessary for them to do so. The respondents asserted that they would be unable to test Mr A’s assertions without knowing his identity. The prejudice is obvious. In any event, it is for the ACCC to establish the existence of the privilege. It cannot say that the privilege exists because there is no prejudice to the respondents if they do not have access to the material. [219] Thirdly, Mr A submitted that by allowing Prysmian and Nexans to have access to the documents they would gain access not only to his identity as an informer but also the type of information he had provided to the ACCC. It is difficult to see how this submission has any substance. While disclosure of the name of an informer is one thing, and accessing the detail of that information is another, the ACCC has [shown] where it has relied on information provided by Mr A. Indeed it was obliged to do so. The application for leave to serve out of Australia and the application to set aside service are both interlocutory hearings. In both applications the ACCC has relied upon hearsay evidence provided in part by JPS and Mr A. 904 [14.330]

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ACCC v Prysmian Cavi E Sistemi Energia SRL cont. … [221] In a broad way, the respondents are already aware of the nature of the information provided by Mr A. The documents might contain other information. However, it is difficult to see how the public interest would be harmed by the respondents having access to this additional information, which the ACCC says it relies upon. This is not a case where a police informer might be put at greater risk by allowing access to the content of the information sought to be relied upon in addition to the identity of the informer. [222] It appears that the information provided by Mr A is an important part of the ACCC’s case. As such, disclosure of his identity at this stage may be in the words of Brooking J “… of substantial assistance to the [respondents] in combating the case for the [applicant]”: Jarvie v The Magistrates’ Court of Victoria at Brunswick at 90; Haydon v Magistrates Court at [30] per Doyle CJ. In my view, requiring the disclosure of Mr A’s identity does not undermine or undervalue the importance of the public interest disclosure. This is not a case where the disclosure only has the potential to be of some assistance to the respondents: see Haydon v Magistrates Court at [30] per Doyle CJ. [223] For these reasons, the ACCC’s claim that it is in the public interest for the documents and Mr A’s identity to remain confidential must fail. It bears the onus of establishing that it is in the public interest for the information to remain confidential, and while the respondents have not pointed to any specific prejudice that they might suffer if they do not have access to Mr A’s identity and the documents, I have reached the view that the information will enable the respondents to test the allegations made by the ACCC that it has a prima facie case. [224] As I am satisfied that it is in the public interest for the documents and Mr A’s identity to be disclosed, it is not strictly necessary to deal with the other submissions put by the respondents. However, I should say that if I am wrong, and that the public interest in maintaining Mr A’s identity outweighs the public interest in ensuring that the defendants receive a fair trial, the fact that Mr A’s identity may have been disclosed in Brazil in connection with alleged cartel conduct would not mean that the public interest immunity is lost in this proceeding. [225] This Court is concerned both with protecting the anonymity of informers and encouraging potential future informers in this jurisdiction. In my view, it would undermine one of the main purposes of the immunity if disclosure in other countries of information the subject of public interest immunity in Australia could cause the informer to lose the protection of the immunity. In this respect it is important to appreciate that public interest immunity is not, strictly speaking, a privilege that can be waived. Rather, as Lord Reid said in R v Lewes Justices, Ex parte Secretary of State for the Home Department [1973] AC 388 at 400: There is no question of any privilege in the ordinary sense of the word. The real question is whether the public interest requires that the letter shall not be produced and whether that public interest is so strong as to override the ordinary right and interest of a litigant that he shall be able to lay before a court of justice all relevant evidence. See also Air Canada v Secretary of State for Trade [1983] 2 AC 394 at 436 per Lord Fraser of Tullybelton. [226] However, I add that the Brazilian proceedings tend to demonstrate the futility of the ACCC’s application to keep Mr A’s identity confidential. The respondents must know who Mr A is. Although they cannot use that information in these proceedings it cannot be expected that they can put that knowledge out of their corporate minds. But more importantly the ACCC must know that Prysmian and Nexans are likely to know who Mr A is. It is difficult to see why it would continue to seek to keep his identity confidential. Lastly, if the release of Mr A’s identity might put him at risk in relation to civil and criminal proceedings in other jurisdictions, that has already occurred. Those other jurisdictions would probably know or be able to know his identity.

 [14.330]  905

Civil Procedure in New South Wales

Public interest immunity and secret evidence?

HT v The Queen [14.335]  HT v The Queen [2019] HCA 40 [HT provided information to assist law enforcement authorities, put another way, HT was a registered police informer. HT was sentenced for a number of criminal offences at which time the sentencing judge was provided with a confidential affidavit by a police officer which set out the assistance given by HT. The affidavit contained information which was described as criminal intelligence of a highly sensitive nature. The judge and the Crown Prosecutor read the affidavit but neither HT nor HT’s lawyers read the affidavit. The Crown appealed to the Court of Criminal Appeal (CCA) on the ground that HT’s sentence was manifestly inadequate. HT sought access to the confidential affidavit. The CCA found error in the sentence and allowed the Crown’s appeal. At the appeal, the CCA and upheld the Commissioner of Police’s objection to HT having access to the confidential affidavit on the ground of public interest immunity. HT appealed to the High Court on the basis that she was denied access to evidence (namely, the confidential affidavit) that was admitted in her sentence proceedings. The High Court allowed the appeal. The judgments of Kiefel CJ, Bell and Keane JJ; Nettle and Edelman JJ; and Gordon J all found that HT was denied procedural fairness in not being able to access the confidential affidavit. The High Court judgment is relevant to civil proceedings as secret evidence in civil proceedings, namely evidence which is viewed by the court and some or none of the parties could depending on the circumstances, also be a denial of procedural fairness.] GORDON J [67] The denial of procedural fairness arose because three different principles or sets of principles, each applicable at different stages of litigation, intended to achieve different objectives, with different sources of power, were not kept separate: what material was immune from production in litigation (public interest immunity); how confidential material might be produced to an opposing party before trial, irrespective of its subsequent admission or receipt into evidence (confidentiality orders); and how confidential evidence might be adduced at trial but not otherwise disclosed (suppression or non-​ publication orders). [68] It is necessary to address each of these in turn. Public interest immunity [69] Public interest immunity is a basis for objecting to production by the executive of relevant and otherwise admissible evidence in the course of litigation [Sankey v Whitlam (1978) 142 CLR 1 at 38]. It provides an immunity from production of such evidence where it would be against the public interest to disclose the contents of a document, or where the document “belongs to a class of documents which in the public interest ought not to be produced, whether or not it would be harmful to disclose the contents of the particular document” [Sankey (1978) 142 CLR 1 at 39; The Commonwealth v Northern Land Council (1993) 176 CLR 604 at 616]. [70] It is “the duty of the court, and not the privilege of the executive government”, to decide whether the public interest which requires that evidence should not be produced outweighs the competing public interest that a court should not be denied access to relevant and otherwise admissible evidence [Sankey (1978) 142 CLR 1 at 39; The Commonwealth v Northern Land Council (1993) 176 CLR 604 at 616]. The objection to production of relevant evidence on the grounds of public interest immunity is an objection taken by an arm of the executive. And, as occurred in this matter, that arm of the executive is often not a party to the litigation. The role of the executive is limited to objecting to production; the executive does not undertake the balancing exercise or decide whether the evidence will be produced or withheld. Thus, it is for the court to consider the evidence and undertake the exercise of balancing the public interest in the evidence not being 906 [14.335]

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HT v The Queen cont. produced and the public interest in the administration of justice [Sankey (1978) 142 CLR 1 at 38-39]. [71] If an objection to production on the grounds of public interest immunity is upheld by a court, then that evidence is immune from production and, in the case of documentary evidence, immune from inspection. It is not disclosed to any of the parties and it is not adduced in evidence in the litigation [Sankey (1978) 142 CLR 1 at 43; Northern Land Council (1993) 176 CLR 604 at 616; Gypsy Jokers (2008) 234 CLR 532 at 556 [24]; Condon (2013) 252 CLR 38 at 97 [148]]. In a criminal proceeding, a successful claim of public interest immunity can have the consequence of a prosecuting authority not being able to prefer a particular charge or the case not proceeding on the charge that had been preferred [Al Rawi v Security Service [2012] 1 AC 531 at 595 [107]. See also Gypsy Jokers (2008) 234 CLR 532 at 556 [24]; Strickland v Director of Public Prosecutions (Cth) (2018) 93 ALJR 1 at 32 [146]-​[147]; 361 ALR 23 at 60-61]. [72] There is no basis in principle for public interest immunity to be used to permit evidence to be tendered in litigation but withheld from one party to that litigation [Al Rawi [2012] 1 AC 531 at 580 [41], 586 [71], 592 [92], 595 [107]]. If an objection on the grounds of public interest immunity is upheld, the evidence is immune from production in the litigation and may not be used by any party [Sankey (1978) 142 CLR 1 at 43; Northern Land Council (1993) 176 CLR 604 at 616; Gypsy Jokers (2008) 234 CLR 532 at 556 [24]; Condon (2013) 252 CLR 38 at 97 [148]]. If an objection is not upheld, the evidence is produced and disclosed to the parties and then, if relevant and admissible, adduced in evidence to the court. And a court, in deciding a claim for public interest immunity, may consider the evidence over which public interest immunity is claimed only to determine whether the public interest lies in the evidence being produced or withheld [Sankey (1978) 142 CLR 1 at 46; Condon (2013) 252 CLR 38 at 97 [148]]. It cannot be used by the court for any other purpose. [73] The second respondent, the New South Wales Commissioner of Police, contended that public interest immunity could be invoked in exceptional circumstances to justify the admission into evidence of information that had not been seen by a party or their legal advisers. That contention should be rejected. The cases cited by the Commissioner of Police [Chu v Minister for Immigration and Ethnic Affairs (1997) 78 FCR 314; R v Ngo (2003) 57 NSWLR 55; Nicopoulos v Commissioner for Corrective Services (2004) 148 A Crim R 74; Hussain v Minister for Foreign Affairs (2008) 169 FCR 241; Eastman v Director of Public Prosecutions (ACT) [No 2] (2014) 9 ACTLR 178; Ibrahimi v The Commonwealth [No 8] [2016] NSWSC 1539] are, in that respect, either distinguishable or wrongly decided. [74] Public interest immunity is an exclusionary principle [Condon (2013) 252 CLR 38 at 97 [148]; Al Rawi [2012] 1 AC 531 at 610 [154]] and, as the reasons of Kiefel CJ, Bell and Keane JJ explain, neither s 130 of the Evidence Act 1995 (NSW) nor the Court Suppression and Non-​publication Orders Act 2010 (NSW) (“the Suppression Act”) permits the admission of evidence excluded on the grounds of public interest immunity [see reasons of Kiefel CJ, Bell and Keane JJ at [35]-[38]]. Confidential material [75] Nothing that has been said so far detracts from the proposition that production and disclosure of confidential material might, in appropriate circumstances and on appropriate terms, be restricted. In this matter, those issues were required to be addressed at two distinct times in the litigation: production and disclosure of the confidential material prior to the hearing, and then suppression or non-​publication of what transpired at the hearing. The circumstances are distinct but the orders that may be made often overlap. Confidentiality orders [76] If a case for production is made, then a party should have as full a degree of appropriate disclosure as is consistent with adequate protection of any confidential information [Warner-​Lambert Co v Glaxo Laboratories Ltd [1975] RPC 354 at 358; Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 40; Mackay Sugar Co-​operative Association Ltd v CSR Ltd (1996) 63 FCR 408 at 414-​415; Conor Medsystems Inc v The University of British Columbia [No 4] [2007] FCA 324 at [7]‌, [9]; Cargill Australia Ltd v Viterra Malt Pty Ltd [2018] VSCA 260 at [122], [126]]. A court must [14.335]  907

Civil Procedure in New South Wales

HT v The Queen cont. therefore balance these competing interests in a fashion that, to the extent possible, meets each of them [Warner-​Lambert [1975] RPC 354 at 358; Church of Scientology of California v Department of Health and Social Security [1979] 1 WLR 723 at 746; [1979] 3 All ER 97 at 115-​116; Roussel Uclaf v Imperial Chemical Industries Plc [1990] FSR 25 at 2930; Portal Software v Bodsworth [2005] NSWSC 1115 at [41]-​[45]; Lenark Pty Ltd v TheChairmen1 Pty Ltd [No 2] [2012] NSWSC 415 at [11]-[13]]. [77] The appropriate balance is case specific. It may be achieved by regulating the taking and safeguarding of copies of documents containing confidential information, or by limiting the circulation of copies and restricting disclosure of not only the contents of the documents but, in appropriate cases, the nature or even the existence of the documents [See Dal Pont, Law of Confidentiality (2015) at 358 [17.31]]. A court could restrict inspection of confidential information to a specified person or persons –​for example, a nominated member or members of a party’s legal team –​on an express restriction on the further communication and use of the information obtained [See, eg, Swain v Edlin-​Sinclair Tyre Co [1903] RPC 435; British Xylonite Co Ltd v Fibrenyle Ltd [1959] RPC 252; Warner-​ Lambert [1975] RPC 354 at 361-​362; Ex parte Fielder Gillespie Ltd [1984] 2 Qd R 339 at 341; Mackay Sugar (1996) 63 FCR 408; Mobil Oil [1996] 2 VR 34 at 40]. Such a restriction could, in an appropriate case, be achieved through a direction or order that the material be disclosed only to one or more of a party’s legal representatives and not to the party. In exceptional circumstances, in addition to the implied undertaking that documents produced will not be used for a purpose other than the conduct of the legal proceeding on foot [Hearne v Street (2008) 235 CLR 125 at 130 [1]], an express undertaking might be necessary to “bring explicitly home to the minds of those giving it how important it is that the documents [and the information] only be used for the purpose of [the] proceedings” [Hearne (2008) 235 CLR 125 at 162 [116]], or to reinforce that the disclosure or use of the particular confidential information is restrained even for the purposes of the litigation itself [See Dal Pont, Law of Confidentiality (2015) at 359 [17.32]]. [78] Whether information is relevant depends on the nature of the proceeding [For example, prosecutors have a common law obligation to disclose all relevant evidence to an accused: see Grey v The Queen (2001) 75 ALJR 1708; 184 ALR 593; Mallard v The Queen (2005) 224 CLR 125 at 133 [17]. Similar obligations are contained in prosecutorial guidelines: see, eg, New South Wales, Office of the Director of Public Prosecutions, Prosecution Guidelines (2007), guideline 18] and the issues. As it is for the court to provide each party before it an opportunity to be heard, and to tender evidence and advance arguments relating to its own case and to answer the case put against it [International Finance Trust (2009) 240 CLR 319 at 354 [54], 363-​364 [88], quoting Gypsy Jokers (2008) 234 CLR 532 at 594 [175], in turn quoting Bass (1999) 198 CLR 334 at 359 [56]], it is for the court to ensure that each party has, so far as is practicable, access to information on which the court is asked to act. [79] There are limits [See, eg, National Security Information (Criminal and Civil Proceedings) Act 2004 (Cth).]. As Lord Dyson JSC said in Al Rawi v Security Service [[2012] 1 AC 531 at 575 [22]]: “[T]‌he court’s power to regulate its own procedures is subject to certain limitations. The basic rule is that (subject to certain established and limited exceptions) the court cannot exercise its power to regulate its own procedures in such a way as will deny parties their fundamental common law right to participate in the proceedings in accordance with the common law principles of natural justice and open justice.” [80] But, within the confines of those limits and the particular circumstances of the case, the court’s task of ensuring that each party has, so far as is practicable, access to information on which the court is asked to act remains essentially practical. Suppression or non-​publication orders [81] The position at trial is different. Material that is admitted into evidence is part of the court record [P v Australian Crime Commission (2008) 250 ALR 66 at 70 [18]-[19]]. The principle of open justice requires that this evidence ordinarily be open and available to the public [See Scott v Scott [1913] AC 417 at 441, 445; Russell v Russell (1976) 134 CLR 495 at 520; Alcan (NT) Alumina Pty 908 [14.335]

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HT v The Queen cont. Ltd v Commissioner of Taxes (2007) 67 ATR 82 at 85 [10]]. It says nothing about material not in fact admitted into evidence [Alcan (NT) Alumina (2007) 67 ATR 82 at 85 [10]; P (2008) 250 ALR 66 at 70 [19]]. [82] Superior courts have an inherent power to suppress the publication or dissemination of material that is on the court record [John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476-​477; John Fairfax Publications Pty Ltd v District Court of New South Wales (2004) 61 NSWLR 344 at 356 [39]-​[40]; Hogan v Hinch (2011) 243 CLR 506 at 531 [21]]. Any exercise of the discretion to make a suppression or nonpublication order starts from the premise of open justice [See Scott [1913] AC 417 at 435, 441, 445; Russell (1976) 134 CLR 495 at 520; Attorney-​General v Leveller Magazine Ltd [1979] AC 440 at 449-450]. The court’s discretion is not unbounded. As Lord Diplock said in Attorney-​General v Leveller Magazine Ltd [[1979] AC 440 at 450. See also Ex parte The Queensland Law Society Incorporated [1984] 1 Qd R 166 at 170; John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476-​477; Nine Network Australia Pty Ltd v McGregor SM (2004) 14 NTLR 24 at 30-​31 [19]; Hogan (2011) 243 CLR 506 at 534 [26]; Rinehart v Welker (2011) 93 NSWLR 311 at 320-​321 [27]-​[31]; Deputy Commissioner of Taxation v Karas (2011) 83 ATR 879 at 881 [4]], “[a]part from statutory exceptions … where a court in the exercise of its inherent power to control the conduct of proceedings before it departs in any way from the general rule [of open justice], the departure is justified to the extent and to no more than the extent that the court reasonably believes it to be necessary in order to serve the ends of justice”. Thus, except for doing what is reasonably necessary for the purposes of securing the administration of justice, there is no inherent power to prohibit a person from publishing or otherwise disclosing the evidence in a proceeding. Any such prohibition must do no more than is reasonably necessary to achieve the due administration of justice, based on the material before the court. [83] Every court, including a court with limited jurisdiction, has power arising from the implication that a grant of power carries with it everything necessary for its exercise [Grassby v The Queen (1989) 168 CLR 1 at 16]. Thus, both the Court of Criminal Appeal [R v JS [No 2] (2007) 179 A Crim R 10 at 12 [3]‌. There is also a view that the Court of Criminal Appeal has inherent jurisdiction. See Burrell v The Queen (2008) 238 CLR 218 at 243-​244 [103]; Criminal Appeal Act 1912 (NSW), ss 3(1), 12(1). It is not necessary to decide whether this view is correct for the purposes of this appeal.] and the District Court have implied powers in the exercise of their jurisdiction to limit the application of the open justice principle where doing so is necessary to secure the proper administration of justice [John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476-​477; John Fairfax Publications Pty Ltd v District Court of New South Wales (2004) 61 NSWLR 344 at 356 [39]-​[40]; Hogan (2011) 243 CLR 506 at 531 [21]]. The limitations identified by Lord Dyson JSC in Al Rawi [See [79] above.] apply with equal force here. [84] The orders that a court might make must specify precisely how information should be treated and who is bound by the orders. The particular content of each order will depend on the facts of each case. [85] What is described as an “in camera order”, or a closed court order, which excludes the public from proceedings, is a different kind of order. By itself, it does not restrain the publication or disclosure of evidence in the proceedings by persons permitted to attend the hearing. A suppression or non-​publication order may stand without an in camera order. The distinction between the two types of order is important. Unlike an in camera order, a suppression or nonpublication order binds persons in the courtroom and, depending on its terms, third parties, who may be found to be in contempt if they intentionally interfere with the proper administration of justice by deliberately frustrating the effect of the order [John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 477]. [86] In New South Wales, the common law position has been modified by the Suppression Act. A court may make a suppression order [Section 3 of the Suppression Act defines a “suppression order” as “an order that prohibits or restricts the disclosure of information (by publication or otherwise)”] [14.335]  909

Civil Procedure in New South Wales

HT v The Queen cont. or a non-​publication order [Section 3 of the Suppression Act defines a “non-​publication order” as “an order that prohibits or restricts the publication of information (but that does not otherwise prohibit or restrict the disclosure of information)”] on certain grounds to prohibit or restrict the publication or other disclosure of, among other matters, “information that comprises evidence, or information about evidence, given in proceedings before the court” [Suppression Act, s 7(b)]. The grounds on which a court may make a suppression or non-​publication order are specified and include, among others, that “the order is necessary to prevent prejudice to the proper administration of justice” [Suppression Act, s 8(1)(a)] or that “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” [Suppression Act, s 8(1)(e)]. A suppression or non-​publication order may be made on more than one ground [Suppression Act, s 8(1)].

 Appointment of special counsel

New South Wales v Public Transport Ticketing Corporation (No 3) [14.340]  State of New South Wales v Public Transport Ticketing Corporation (No 3) [2011] NSWCA 200 [Integrated Transit Solutions Limited and ERG Limited (ERG) sought documents that were the subject of public interest immunity (PII) claims by the State of New South Wales. The Court made orders dealing with some of the public interest immunity claims (see [14.320]). ERG sought orders that special counsel be appointed to assist the Court in advancing argument to the Court in respect of the balance of the documents, in effect, as an independent contradictor to the State.] ALLSOP P (HODGSON JA and SACKVILLE AJA agreeing) [8]‌ERG requests that the Court appoint a “special counsel”, chosen and paid for by it, but independent of it in relevant respects, to assist in the resolution of the remaining claims for public interest immunity by the State. The counsel would be under an obligation of confidence not to say or do anything that might tend to disclose to ERG the contents of the documents and parts thereof over which a public interest immunity claim is made. [9]‌The precise focus of the relevant question might be seen to be an order to the State to disclose documents to a third party in circumstances where there is an unresolved claim for public interest immunity. This aspect of the matter need not be separately dealt with given the State’s attitude to the first condition referred to in the next paragraph. [10] There is no express statutory foundation for the exercise of such power. However, the State did not contest that the Court has an inherent power to make orders for the appointment of special counsel in civil proceedings to assist the Court in the resolution of a claim for public interest immunity should two conditions be satisfied. The first condition is that such disclosure for the said limited purpose not be injurious to the public interest. The second condition is that there exist exceptional circumstances requiring some departure from the usual approach to the resolution of public interest immunity claims. [11] The State accepts “for the purposes of this application”, that the first condition is satisfied; but submits that the second is not. … [17] A central concern in the administration of justice is fairness. It is part of the essence of the judicial function and informs the necessary character of courts –​how they act and what must 910 [14.340]

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New South Wales v Public Transport Ticketing Corporation (No 3) cont. exist for them to be properly so described as courts: International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49; 240 CLR 319. Related to, and bound up with, fairness are the procedural benefits of the convenient and expeditious conduct of legal proceedings. Fairness, justice, expedition, efficiency and access to justice at a reasonable cost are, or should be, inter-​ related, but distinct, features of dispute resolution in civil society. Parliament has recognised this inter-​relationship in the Civil Procedure Act 2005 (NSW), ss 56–​61, and in particular the overriding purpose provided for in s 56(1): the facilitation of the “just, quick and cheap resolution of the real issues in dispute or proceedings”, which the Court has an obligation to seek to give effect to: Civil Procedure Act, s 56(2). [18] Thus, the formulation of techniques and procedures that will enhance speed, or efficiency, or fairness in the resolution of civil disputes must clearly be within the power of the Court; and, indeed, are necessary for the Court to consider in compliance with s 56(2). Novelty is no bar to such power or duty. The trammelling of fundamental common law rights or statutory rights is. [19] There are a number of circumstances in which the courts have been faced with a handicap or a difficulty in efficiently or justly resolving an aspect of a dispute where one party cannot see the material upon, or in respect of which, the court must adjudicate. Fairness may be compromised because the nature of the right or privilege asserted or claimed is one that excludes the other party from an examination of relevant material, but to disclose it to the other party for the purpose of resolving the claim of right would destroy that very right (if legitimately claimed). Further, fairness may be compromised by the court examining the material without a contradictor. This is, in part, alleviated by the recognition that the hearing without the substantive participation of the other party will have features of an ex parte application, thereby requiring appropriate disclosure from the party claiming the right. Nevertheless, it is easily seen how the other party may feel less than fully satisfied with the decision of the court, the foundation of which it cannot know or understand. Further, efficiency, to a degree, is impeded. A court, without a contradictor, must seek to understand the litigious context of the claim of right and assess it with only one side assisting. Here, the time of three judges on appeal was taken examining material without the assistance of a contradictor. [20] The promotion of fairness and expedition in the resolution of proceedings may be seen to justify the court, in a proper case and without the destruction or affectation of the right concerned, making a properly fashioned order for the employment of a special counsel to make submissions in relation to documents or information to which the other party is not privy. The circumstances of what is a proper case and the fashioning of the order to avoid any deleterious affectation of the claimed right will be particular to each case. It will be important, in the fashioning of such orders, to retain a focus upon substance, not form or labels. Thus, what I have said by way of general approach could extend to the appointment of an amicus curiae or assessor who could be seen as acting on behalf of, and assisting, the court in a manner that would support the conclusion that the right to non-​ publication beyond the court’s necessary examination of the documents had not been affected or breached. (See generally Levy v Victoria [1997] HCA 31; 189 CLR 579 at 604; United States Tobacco Co v Minister for Consumer Affairs (1988) 20 FCR 520 at 535; Wurridjal v The Commonwealth [2009] HCA 2; 237 CLR 309 at 312; and Commissioner of Police v Sleiman & AVS Group of Companies [2011] NSWCA 21 at [183]–​[185].) [21] The above suggested broad approach is to be evaluated by reference to existing authority:  Secretary of State for the Home Department v Rehman [2003] 1 AC 153; M v Secretary of State for the Home Department [2004] EWCA Civ 324; [2004] 2 All ER 863; R v H; R v C [2004] UKHL 3; [2004] 2 AC 134; R (Roberts) v Parole Board [2005] UKHL 45; [2005] 2 AC 738; R (Malik) v Manchester Crown Court [2008] EWHC 1362 (Admin); [2008] 4 All ER 403; Murungaru v Secretary of State for the Home Department [2008] EWCA Civ 1015; A v HM Treasury [2008] EWCA Civ 1187; [2009] 3 WLR 25; R (AHK) v Secretary of State for the Home Department [2009] EWCA Civ 287; [2009] 1 WLR 2049; R v Lodhi [2006] NSWSC 586; 163 A Crim R 475; and Commissioner of Police v Sleiman & AVS Group of Companies [2011] NSWCA 21. [14.340]  911

Civil Procedure in New South Wales

New South Wales v Public Transport Ticketing Corporation (No 3) cont. [22] Secretary of State for the Home Department v Rehman [2003] 1 AC 153 was an immigration case in which Mr Rehman sought to remain in the United Kingdom. The use of special counsel concerned information said to relate to the Secretary of State’s concern that Mr Rehman had links with terrorist organisations in Pakistan. Submissions were made to the Court of Appeal in the absence of Mr Rehman by a special counsel appointed by the Court without express statutory foundation. Lord Woolf MR on behalf of the Court (his Lordship, Laws LJ and Harrison J) said the following at 164–​165 [31] about the proceeding: The 1997 Act makes no provision for a special advocate on an appeal. However, it seemed to us that, if it was necessary for the court in order to dispose justly of the appeal to hear submissions in the absence of Mr Rehman and his counsel, under the inherent jurisdiction of the court, counsel instructed by the Treasury Solicitor, with the agreement of the Attorney General, would be able to perform a similar role to a special advocate without the advantage of statutory backing for this being done. A court will only hear submissions on a substantive appeal in the absence of a party in the most extreme circumstances. However, considerations of national security can create situations where this is necessary. If this happens, the court should use its inherent power to reduce the risk of prejudice to the absent party so far as possible… What was exceptional was the exclusion of the party from the hearing of submissions. No doubt the utility of the submissions effectively required that to be done. It will not always be the case. What moved the Court, however, was an evaluation of the need for the assistance in order to dispose of the appeal justly, or at least to reduce the risk of prejudice. [23] M v Secretary of State for the Home Department [2004] EWCA Civ 324; [2004] 2 All ER 863 was also an immigration case involving a suspicion that the applicant was a terrorist. Section 6(1) of the Special Immigration Appeals Commission Act 1997 (UK) provided for the appointment by a law officer of someone to represent the interests of an appellant in proceedings before the Special Immigration Appeals Commission from which the appellant and his or her advisers were excluded. On appeal to the Court of Appeal once again two special advocates were appointed (senior and junior counsel). This course was taken for the reasons set out at 868 [13] –​to avoid, or at least minimise, unfairness. [24] R v H; R v C [2004] UKHL 3; [2004] 2 AC 134 was a criminal case involving public interest immunity. The defendants were charged with conspiracy to supply drugs. At a preliminary hearing, the Crown sought a ruling as to its entitlement to withhold material from the accused on the ground of public interest immunity. The House of Lords agreed with the Court of Appeal that the primary judge’s ruling to appoint a special advocate had been premature. Lord Bingham of Cornhill, in delivering the opinion of the Appeal Committee (his Lordship, Lord Woolf CJ, Lord Hope of Craighead, Lord Walker of Gestingthorpe and Lord Carswell), discussed the requirement for, and contents of, fairness in the criminal trial process. Within that context, Lord Bingham discussed the special advocate procedure that had grown up in immigration cases involving aspects of national security. His Lordship at 150–​ 151 [22] and 155 [36] identified the problems of such a procedure, but recognised that if the need were shown the course should be adopted as a last resort: [22] … [N]‌ovelty is not of itself an objection, and cases will arise in which the appointment of an approved advocate as special counsel is necessary, in the interests of justice, to secure protection of a criminal defendant’s right to a fair trial. Such an appointment does however raise ethical problems, since a lawyer who cannot take full instructions from his client, nor report to his client, who is not responsible to his client and whose relationship with the client lacks the quality of confidence inherent in any ordinary lawyer-​client relationship, is acting in a way hitherto unknown to the legal profession. While not insuperable, these problems should not be ignored, since neither the defendant nor the public will be fully aware of what is being done. The appointment is also likely to cause practical problems: of delay, while the special counsel familiarises himself with the detail of what is likely to be a complex case; of expense, since the introduction of an additional, high-​quality advocate must add significantly 912 [14.340]

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New South Wales v Public Transport Ticketing Corporation (No 3) cont. to the cost of the case; and of continuing review, since it will not be easy for a special counsel to assist the court in its continuing duty to review disclosure, unless the special counsel is present throughout or is instructed from time to time when need arises. Defendants facing serious charges frequently have little inclination to co-​operate in a process likely to culminate in their conviction, and any new procedure can offer opportunities capable of exploitation to obstruct and delay. None of these problems should deter the court from appointing special counsel where the interests of justice are shown to require it. But the need must be shown. Such an appointment will always be exceptional, never automatic; a course of last and never first resort. It should not be ordered unless and until the trial judge is satisfied that no other course will adequately meet the overriding requirement of fairness to the defendant. … [36] … In appropriate cases the appointment of special counsel may be a necessary step to ensure that the contentions of the prosecution are tested and the interests of the defendant protected (see paragraph 22 above). In cases of exceptional difficulty the court may require the appointment of special counsel… [25] The significant caution and the use of the procedure as a last resort can be seen to rest on the clear dangers expressed by Lord Bingham concerning the criminal trial process. … [30] In Australia, Whealy J (as his Honour then was) looked at the question in R v Lodhi [2006] NSWSC 586; 163 A Crim R 475. In the context of a criminal trial of terrorism offences, Whealy J concluded that the Court had power to appoint a special counsel to assist the Court in dealing with material concerning national security to which public interest immunity attached; but his Honour said the Court should do so only if it were satisfied that no other course would adequately meet the overriding requirement of fairness to the accused: see especially at 486 [45]. … [32] None of the above cases fell to be decided in the context of the Civil Procedure Act. The framework and content of the Civil Procedure Act and, in particular for present purposes, s 56(2), require the Court to adjust its procedures to facilitate not only fairness and justice but also efficiency and speed. Ultimately, the question is one of balance and judgment. Has a need been demonstrated in the interests of fairness or justice or efficiency or economy in the conduct of litigation for the fashioning of an order for the appointment of counsel, as a detached special counsel pursuing or taking into account the interests of the party or as an amicus curiae to assist the Court to ensure all points are put to the Court or to ensure the Court obtains all necessary assistance of a contradictor? No doubt criminal cases and cases involving questions of national security throw up particular difficulties, not the least of which are ethical questions. [33] Nevertheless, none of the above cases persuades me that the broad and general approach in furtherance of the overriding purpose of the Civil Procedure Act should not be adopted. Indeed the approach of Sir Anthony Clarke MR and Jacob LJ and Kay LJ in R (AHK) supports such a general approach. Caution is, of course, necessary –​in particular in not trammelling upon substantive rights, in not unnecessarily increasing costs and in not avoiding the necessary duty of adjudication placed on the Court. That said, the resolution of claims for immunities and privileges –​especially in complex commercial cases can often throw a significant burden of time on the Court that could be alleviated or ameliorated by assistance from a contradictor, fashioned by an appropriate order. [34] With the above approach in mind, I would make an order for the appointment of a special counsel here. The circumstances that make this appropriate are as follows. First, given the large number of documents remaining to be dealt with, the active participation of a counsel made familiar with the issues in the commercial cause and who can, with the interests of ERG in mind, responsibly put submissions to this Court on any application will almost certainly reduce the time to be taken by this Court in dealing with the matter. Secondly, this process will tend to enhance the fairness and apparent fairness of the procedure to ERG. Thirdly, it is not put that there is any risk to the public interest, and [14.340]  913

Civil Procedure in New South Wales

New South Wales v Public Transport Ticketing Corporation (No 3) cont. thus to the value of the immunity, in following this course. Fourthly, the costs are agreed to be borne by ERG, at least in the first instance. Fifthly, whilst the Court has now dealt with the application of principle to some of the documents, that factor weighs in favour of, not against, use of the procedure, as the reasons of this Court in the first judgment will assist counsel in applying the principles to the remaining documents. Armed with a knowledge of the principles as they apply in this case and with a familiarity of the commercial cause, there is likely to be significant efficiency brought about by appointing counsel, in reducing, though perhaps not eliminating, arguments before the Court. [35] Given the very sensible acceptance by the State that the public interest would not be injured or prejudiced by revelation of the documents to a special counsel, the orders need not be fashioned with an eye to ensuring that counsel is no more than an amicus curiae. The State suggests that the Attorney-​General (acting not as a Minister but as an independent, non-​partisan guardian of the public interest in the administration of justice) choose the counsel. ERG submitted that this was not appropriate in circumstances where it will be paying the counsel. In my view, the State’s claim for public interest immunity gives it legitimate cause to participate in the choice of counsel. If the parties cannot agree on counsel chosen by the Attorney-​General (bearing in mind questions of suitability and availability), the Court can resolve any such question of choice. Given the interest of the State, and given the ability of the Court to resolve any lack of agreement in the choice of counsel, there is perhaps no need to require, in the selection of counsel, that the Attorney-​General act as an independent, non-​ partisan guardian of the public interest, as was suggested. … [40] Thus, I would make the following orders in this case: (a)

The Court, through the Registrar of the Court of Appeal, request the Attorney-​General to nominate counsel considered appropriate to act as special counsel in the proceedings in order that the issue of public interest immunity be resolved as expeditiously as possible.

(b)

If the Attorney-​General fails to nominate such a counsel or if the State and ERG cannot agree on the person so nominated, the appointment will be made, after hearing the parties, by the President of the Court of Appeal.

(c)

The special counsel receive instructions from ERG prior to inspecting the confidential documents. Once the confidential material has been provided to and inspected by special counsel, he or she receive no further instructions from ERG, without the prior agreement of the solicitors for the State of New South Wales.

(d)

The special counsel not disclose to ERG or its legal representatives or to any person other than the Court and the State and its legal representatives the contents of the confidential documents.

(e)

The special counsel make submissions to the Court in respect of the claim for public interest immunity, in accordance with the directions of the Court and in the absence of ERG or in a manner and form as maintain the confidentiality of the documents.

(f)

Following the determination of the State’s public interest immunity claim, the special counsel take no further part in the proceedings.

(g)

The fees for the special counsel be paid, in the first instance, by ERG and such costs be reserved to the bench hearing the public interest immunity claim.



SETTLEMENT NEGOTIATIONS PRIVILEGE [14.370]  Settlement negotiations privilege protects communications which are brought into

existence to settle a dispute. Section 131 of the Evidence Act 1995 (NSW) is an exclusionary 914 [14.370]

Privilege  Chapter  14

rule with exceptions, for example, negotiations privilege does not apply if a litigant consents to it not applying to a communication or document made in connection with an attempt to settle a dispute (s 131(2)(a)). There is no judicial discretion to determine whether the privilege attaches to communications. Section  30 of the CPA protects against the admissibility in court proceedings of “anything said or of any admission made in a mediation session” and “a document prepared for the purposes of, or in the course of, or as a result of, a mediation session”. Section 30 is subject to s 29(2).

Evidence Act 1995 (NSW) [14.380]  Evidence Act 1995 (NSW) s 131 Division 3 –​Evidence excluded in the public interest 131 Exclusion of evidence of settlement negotiations (1)

Evidence is not to be adduced of:



(a)

a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or



(b)

a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

(2)

Subsection (1) does not apply if:



(a)

the persons in dispute consent to the evidence being adduced in the proceeding concerned or, if any of those persons has tendered the communication or document in evidence in another Australian or overseas proceeding, all the other persons so consent, or



(b)

the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute, or



(c)

the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced, or



(d)

the communication or document included a statement to the effect that it was not to be treated as confidential, or



(e)

the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute, or



(f)

the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue, or



(g)

evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence, or



(h)

the communication or document is relevant to determining liability for costs, or



(i)

making the communication, or preparing the document, affects a right of a person, or



(j)

the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or



(k)

one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power. [14.380]  915

Civil Procedure in New South Wales

Evidence Act 1995 (NSW) cont. (3)

( 4)

( 5)



(6)

For the purposes of subsection (2)(j), if commission of the fraud, offence or act is a fact in issue and there are reasonable grounds for finding that: (a) the fraud, offence or act was committed, and (b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act, the court may find that the communication was so made or the document so prepared. For the purposes of subsection (2)(k), if: (a) the abuse of power is a fact in issue, and (b) there are reasonable grounds for finding that a communication was made or document prepared in furtherance of the abuse of power, the court may find that the communication was so made or the document was so prepared. In this section: (a) a reference to a dispute is a reference to a dispute of a kind in respect of which relief may be given in an Australian or overseas proceeding, and (b) a reference to an attempt to negotiate the settlement of a dispute does not include a reference to an attempt to negotiate the settlement of a criminal proceeding or an anticipated criminal proceeding, and (c) a reference to a communication made by a person in dispute includes a reference to a communication made by an employee or agent of such a person, and (d) a reference to the consent of a person in dispute includes a reference to the consent of an employee or agent of such a person, being an employee or agent who is authorised so to consent, and (e) a reference to commission of an act includes a reference to a failure to act. In this section: power means a power conferred by or under an Australian law.



Civil Procedure Act 2005 (NSW) [14.390]  Civil Procedure Act 2005 (NSW) ss 25, 29–​31 25 Definitions (cf Act No 52 1970, sections 110I and 110J; Act No 9 1973, sections 163 and 164; Act No 11 1970, sections 21J and 21K) In this Part: mediation means 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. mediation session means a meeting arranged for the mediation of a matter. mediator means a person to whom the court has referred a matter for mediation. 29 Agreements and arrangements arising from mediation sessions (cf Act No 52 1970, section 110N; Act No 9 1973, section 164D; Act No 11 1970, section 21O) (1)

The court may make orders to give effect to any agreement or arrangement arising out of a mediation session.

(2)

On any application for an order under this section, any party may call evidence, including evidence from the mediator and any other person engaged in the mediation, as to the fact

916 [14.390]

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Civil Procedure Act 2005 (NSW) cont. that an agreement or arrangement has been reached and as to the substance of the agreement or arrangement. (3)

This Part does not affect the enforceability of any other agreement or arrangement that may be made, whether or not arising out of a mediation session, in relation to the matters the subject of a mediation session.

30 Privilege (cf Act No 52 1970, section 110P; Act No 9 1973, section 164F; Act No 11 1970, section 21Q) (1)

In this section, mediation session includes any steps taken in the course of making arrangements for the session or in the course of the follow-​up of a session.

(2)

The same privilege with respect to defamation as exists with respect to judicial proceedings and a document produced in judicial proceedings exists with respect to:



(a)

a mediation session, or



(b)

a document or other material sent to or produced to a mediator, or sent to or produced at the court or the registry of the court, for the purpose of enabling a mediation session to be arranged.

(3)

The privilege conferred by subsection (2) extends only to a publication made:



(a)

at a mediation session, or



(b)

in a document or other material sent to or produced to a mediator, or sent to or produced at the court or the registry of the court, for the purpose of enabling a mediation session to be arranged, or



(c)

in circumstances referred to in section 31.

(4)

Subject to section 29(2):



(a)

evidence of anything said or of any admission made in a mediation session is not admissible in any proceedings before any court or other body, and



(b)

a document prepared for the purposes of, or in the course of, or as a result of, a mediation session, or any copy of such a document, is not admissible in evidence in any proceedings before any court or other body.

(5)

Subsection (4) does not apply with respect to any evidence or document:



(a)

if the persons in attendance at, or identified during, the mediation session and, in the case of a document, all persons specified in the document, consent to the admission of the evidence or document, or



(b)

in proceedings commenced with respect to any act or omission in connection with which a disclosure has been made as referred to in section 31(c).

31 Confidentiality (cf Act No 52 1970, section 110Q; Act No 9 1973, section 164G; Act No 11 1970, section 21R) A mediator may disclose information obtained in connection with the administration or execution of this Part only in one or more of the following circumstances: (a)

with the consent of the person from whom the information was obtained,

(b)

in connection with the administration or execution of this Part, including section 29(2),

(c)

if there are reasonable grounds to believe that the disclosure is necessary to prevent or minimise the danger of injury to any person or damage to any property,

(d)

if the disclosure is reasonably required for the purpose of referring any party or parties to a mediation session to any person, agency, organisation or other body and the disclosure is made with the consent of the parties to the mediation session for the purpose of aiding in the resolution of a dispute between those parties or assisting the parties in any other manner, [14.390]  917

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

in accordance with a requirement imposed by or under a law of the State (other than a requirement imposed by a subpoena or other compulsory process) or the Commonwealth.



Field v Commissioner for Railways [14.400]  Field v Commissioner for Railways (1957) 99 CLR 285 DIXON CJ, WEBB, KITTO and TAYLOR JJ [2]‌The accident occurred on Sunday 4th January 1953. At that time the plaintiff was a man of fifty-​three years of age. He lived at a small township called Daroobalgie, situated some fifteen miles from Parkes on the railway line to Forbes. There is an unattended railway station at Daroobalgie. The plaintiff left Sydney on Saturday, 3rd January, by train. As the train did not always stop at this siding on a Sunday morning, the plaintiff informed the guard at Parkes that he wished to alight there. The guard however said that in any case it would stop. The train consisted of four vehicles and the plaintiff rode in the last before the guard’s van. According to the plaintiff’s story, when the train arrived at Daroobalgie it pulled up with the carriage in which he was riding not opposite the platform. Two intending passengers got into the carriage next the engine. The train then moved on and the last carriage, that in which the plaintiff had ridden, stopped opposite the platform. A passenger intending to alight then got out of the carriage and the plaintiff followed him. The plaintiff said that he had his leg off the step, that is, one leg in the air, his bag in his right hand, and that just as he was about to leave the train, the train started. He said that he fell on the platform and rolled down the incline, namely, the ramp at the end of the platform. (at p 288) [3]‌The case for the defendant Railway Commissioner was that the plaintiff got out before the train stopped on the second occasion. The guard gave evidence that the train first pulled up with the last carriage and the brake van short of the platform. The platform was on the left-​hand side but the line curved so that you could see the engine only from the right-​hand side of the brake van. When the train first stopped he saw the plaintiff standing in the middle door of the carriage next the brake van. After the two passengers had got into the leading carriage, the guard crossed to the other side of the brake van and signalled the engine to go forward slightly. The fireman on the right-​hand side took the signal and repeated it to the engine-​driver, and the guard then by signals stopped the train so that the leading carriage was opposite the platform. He then walked to the opposite side of the brake van and from that point saw the plaintiff lying on the ground. He went up to the plaintiff and asked him why he did not wait till the train stopped. The plaintiff gave an offensive answer which was open to the construction that he had admitted not having done so. The engine driver confirmed the evidence of the guard as to the movements of the train. Until he stopped the train on the second occasion he was looking at the fireman on the opposite side of the engine but as soon as he stopped the train he looked out of his window and saw the plaintiff lying on the ground. (at p 289) [4]‌In his charge to the jury Brereton J. put the whole case as depending upon the question whether the train started while the plaintiff was in the act of getting off. His Honour said: “The result of this case depends on one single question; one question which can be stated quite shortly although it cannot be answered quite so easily, and that question is this: did that train start while the plaintiff was in the act of getting off it? If it did then it is virtually conceded by the defendant that the plaintiff ought to have a verdict”. In concluding his summing up his Honour said: “I repeat: the question is did that train start while the plaintiff was in the act of stepping off? If you think the balance of evidence is in favour of the view that it did, you will find for the plaintiff … If you cannot make up your minds one way or the other you find for the defendant. If you think it did not, you again find for the defendant”. (at p 289) 918 [14.400]

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Field v Commissioner for Railways cont. [5]‌Three points were made in support of the plaintiff’s contention that the jury’s verdict should be set aside. The first point was that a piece of evidence given by a medical witness who had been appointed by the defendant to examine the plaintiff had been admitted wrongly. The evidence contained an admission attributed to the plaintiff that he was getting off the train while it was in motion. The contention for the plaintiff is that the conversation with the doctor who gave the evidence was the subject of privilege because it formed a part of or an incident in an attempt to settle litigation by negotiations without prejudice. The second point made was that a misdirection had occurred in a passage in the charge to the jury in which the learned judge had invited the jury to consider the inherent probability of the plaintiff falling if his story were true not as he did down the ramp but in the opposite direction. The third ground on which the validity of the verdict was attacked also rested upon a direction in the charge to the jury. In the course of his summing up the learned judge had informed the jury that as the defendant’s case was that the plaintiff’s story was a recent fabrication, evidence was admissible on behalf of the plaintiff that he had told other persons how the accident had happened before he had made the alleged admission to the defendant’s doctor. This direction was challenged as lacking a sufficient foundation and as liable to lead the jury astray. (at p 289) [6]‌It is convenient to deal with the three complaints in the foregoing order. The plaintiff’s writ was issued on 13th April 1953 and his declaration filed on 23rd September of the same year. The critical allegation in the declaration was that whilst he was lawfully alighting from the train he was thrown on to the station and the permanent way and was thereby seriously injured. By a letter dated 8th October 1953 and marked “without prejudice”, the solicitors for the defendant Railway Commissioner informed the plaintiff’s solicitors that without admitting any liability the commissioner in order to avoid litigation was prepared to negotiate a settlement of the action on a compromise basis. The letter drew attention to the plaintiff’s allegation of injury and asked whether his solicitors would please indicate whether the plaintiff was prepared to submit to a medical examination in Sydney by a specialist appointed by the Department’s Director of Medical Services. The letter proceeded to deal with certain other questions of special damage and ended by stating that it was assumed that the plaintiff’s solicitors would be agreeable that the time for filing pleas should not run pending a reply and the outcome of any negotiations. This was followed by other correspondence marked “without prejudice” which it is unnecessary to recapitulate. The outcome was an arrangement for suspending the proceedings whilst the plaintiff submitted to a medical examination by a specialist nominated on behalf of the defendant. The arrangements included terms as to the defendant’s paying the expenses of the plaintiff’s journey to Sydney for the purpose. The result was that on 17th November 1953 the plaintiff attended the consulting rooms of Dr L G Teece, an orthopaedic surgeon practising in Sydney. At the trial Dr Teece was called to give evidence of amongst other things the opinion he had formed of the plaintiff’s condition. But during the cross-​examination of the plaintiff the plaintiff had been asked without objection a series of questions concerning what he had said to Dr Teece as to the manner in which he had met with his injury. He was asked specifically whether he had told Dr Teece that on 4th January 1953 he had stepped out of a slowly moving train when it overran the platform at which he desired to alight. The plaintiff’s answer was “No”. When Dr Teece gave evidence he was asked, “Did you get a history from the plaintiff?” He answered, “Yes”. “Will you tell us what the history was that you got from him?” To this question an objection was raised on the ground that the interview with Dr Teece was privileged as being “without prejudice”. The objection was overruled. Dr Teece then said: “He told me that on 4th January 1953 he stepped out of a slowly moving train as it had overrun the platform at which he desired to alight. He fell down on the track and states that he sustained a fracture of the spine”. Dr Teece then proceeded to deal with the nature of the plaintiff’s injury, and what he had said about it. In cross-​examination the notes taken by Dr Teece were obtained by the plaintiff’s counsel and put in evidence. The notes ran: “4.1.53. Stepped out of moving train as it had overrun platform; fractured spine”. The notes then proceeded to deal with the injuries sustained. (at p 291) [7]‌No doubt the plaintiff’s legal advisers hardly expected that the consequence of submitting their client to medical examination would be that the specialist by whom he was examined would give [14.400]  919

Civil Procedure in New South Wales

Field v Commissioner for Railways cont. evidence of a crucial admission going to the cause of action. Had this been anticipated doubtless they would have been reluctant to allow their client to go unattended. On the other hand it seems equally clear that the purpose of the medical examination was to enable the defendant commissioner to see for himself what the plaintiff’s injuries were and what was his present condition as the result of the accident. It can hardly be doubted that both parties understood that, if, as in the event happened, the negotiations for settlement should break down, then Dr Teece might give the evidence of his actual observations of the plaintiff’s bodily condition and the opinion he formed of his injuries. In this sense the examination had a double aspect. Primarily it was to enable the defendant to obtain a medical report in order to form an estimate of his injuries for the purpose of making an offer of settlement. Failing settlement, the purpose was to enable the defendant’s medical expert to give evidence of what he saw. The law relating to communications without prejudice is of course familiar. As a matter of policy the law has long excluded from evidence admissions by words or conduct made by parties in the course of negotiations to settle litigation. The purpose is to enable parties engaged in an attempt to compromise litigation to communicate with one another freely and without the embarrassment which the liability of their communications to be put in evidence subsequently might impose upon them. The law relieves them of this embarrassment so that their negotiations to avoid litigation or to settle it may go on unhampered. This form of privilege, however, is directed against the admission in evidence of express or implied admissions. It covers admissions by words or conduct. For example, neither party can use the readiness of the other to negotiate as an implied admission. It is not concerned with objective facts which may be ascertained during the course of negotiations. These may be proved by direct evidence. But it is concerned with the use of the negotiations or what is said in the course of them as evidence by way of admission. For some centuries almost it has been recognised that parties may properly give definition to the occasions when they are communicating in this manner by the use of the words “without prejudice” and to some extent the area of protection may be enlarged by the tacit acceptance by one side of the use by the other side of these words: see Thomas v Austen (1823) 1 LJ (OS) KB 99; Kurtz & Co v Spence & Sons (1888) 58 LT 438, at p 441; Paddock v Forrester [1842] EngR 146; [1842] EngR 146; (1842) 3 Man & G 903, at p 919 [1842] EngR 146; (133 ER 1404, at p 1411); Hoghton v Hoghton [1852] EngR 446; (1852) 15 Beav 278, at pp 314, 315 [1852] EngR 446; (51 ER 545, at p 559); In re River Steamer Co; Mitchell’s Claim (1871) LR 6 Ch App 822, at pp 831, 832; Walker v Wilsher (1889) 23 QBD 335, at pp 337 338. Needless to say, the privilege is a matter to be raised by objection to the admissibility of the evidence. For the purpose of deciding such an objection the judge may take evidence on the voir dire. The problem in the present case is whether what according to Dr Teece the plaintiff said to him as to the manner in which the accident occurred is within the protection of the privilege. Looked at antecedently the question may be stated as being whether what he might unexpectedly say to Dr Teece should be regarded as within the area of protection. In the first place as a matter of ordinary knowledge it must have been within the contemplation of the parties that some statement would be made by the plaintiff to Dr Teece concerning the nature of his injuries. It could hardly be expected that an orthopaedic surgeon would not ask questions about symptoms, pain, capacity to move and so forth, and such matters must have formed part of the material upon which Dr Teece would form his opinion. Clearly enough, these were not matters which were considered by the parties to fall within the protection of without prejudice negotiations. For it is plain that Dr Teece was expected to give evidence of the opinion he formed should the negotiations for settlement break down. The question, however, does not depend altogether upon the expectations of the parties. It depends upon what formed part of the negotiations for the settlement of the action and what was reasonably incidental thereto. On the one hand it is contended that it was reasonably incidental to the negotiations to place the plaintiff without reserve in the hands of Dr Teece and allow him to talk freely. On the other hand it is pointed out that Dr Teece’s function was wholly medical, that no one anticipated the plaintiff discussing the cause of action with him, that he had no function to perform in relation to the settlement except to report his medical judgment of the plaintiff’s condition, past, present and future, and that he was not a general agent of the defendant but was appointed only ad hoc to make a medical examination. Further, for purposes of the medical examination it was not necessary or reasonable that the plaintiff should state anything touching his cause of action. (at p293) 920 [14.400]

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Field v Commissioner for Railways cont. [8]‌The question really is whether it was fairly incidental to the purposes of the negotiations to which the medical examination was subsidiary or ancillary that the plaintiff should communicate to the surgeon appointed by the Railway Commissioner the manner in which the accident was caused. To answer this question in the affirmative stretches the notion of incidental protection very far. The defendant’s contention that it was outside the scope of the purpose of the plaintiff’s visit to the doctor to enter upon such a question seems clearly right. On the whole the conclusion of the Supreme Court that the plaintiff’s admission fell outside the area of protection must command assent as correct. It was not reasonably incidental to the negotiations that such an admission should be protected. It was made without any proper connexion with any purpose connected with the settlement of the action. In these circumstances it appears that the evidence of Dr Teece on this subject was admissible. (at p293) [9]‌The objection made to the learned judge’s inviting the jury to consider the inherent probabilities of the manner in which the plaintiff fell is of an altogether different order. It involves no question of law. It depends entirely on a matter of fact. The objection can be best dealt with by setting out the material passage in the charge. What his Honour said was this: “One of the ways in which you can test stories is by looking at the inherent probabilities. It is only a guide; it is only some help; because it often happens that what actually occurred is less probable than what you think might well have occurred, but it is always of assistance to look at the inherent probabilities … You must look at the inherent probabilities. The plaintiff says this: he was standing in the doorway. He had his suitcase in his right hand. He had his left foot in the air. The locomotive is up there and the guard’s van down there and the platform there, and the end of the ramp is there. The train suddenly starts. Now you may or you may not have been standing passengers from time to time in electric trains. You will ask yourselves which way does a man tend to fall when the train starts, forward towards the driving end or back towards the brake van. Then recall that the plaintiff here fell on his suitcase. He says he fell on his suitcase and the suitcase is in his right hand, and he therefore fell to his right and was precipitated down the incline forward towards the locomotive.” It is hardly necessary to do more than cite this passage to show that his Honour was putting to the jury a matter of fact depending upon conditions arising out of ordinary experience obtained by observation. The appeal was not to science but to common knowledge and ordinary observation. Whether his Honour was right or not was for the jury to judge and it is not a matter on which the plaintiff can successfully complain as a ground for setting aside the verdict. (at p 294)



Azzi v Volvo Car Australia [14.410]  Azzi v Volvo Car Australia Pty Ltd (2007) 71 NSWLR 140 BRERETON J [1]‌ HIS HONOUR: On 5 April 2007 I delivered judgment in these proceedings, consequent on which, in the Commercial Proceedings, I gave judgment for the Defendant with costs, and in the Industrial proceedings, I ordered that the proceedings be dismissed with costs. I granted liberty to the parties to apply by arrangement with my Associate within seven days to set aside or vary the costs orders and for other costs orders in their place. Volvo having indicated that it wished to make such an application, I made directions for the lodgement by the parties of written submissions and any supporting evidence on the question of costs. Volvo lodged a written submission on 11 April, by which it sought an order that the costs payable to it by the Plaintiffs be assessed on the indemnity basis from 23 September 2003 (which was the date of a conciliation conference under (NSW) Industrial Relations Act 1996, s 109) and alternatively, from 11 May 2005 (the date of a mediation before the Hon T R Morling QC, pursuant to an order of Bergin J referring the matter for mediation under (NSW) Civil Procedure Act 2005, s 26. Volvo also sought an order in each proceeding that the Plaintiffs be jointly and severally liable in respect of the costs orders against them, but as this is the effect of the order [14.410]  921

Civil Procedure in New South Wales

Azzi v Volvo Car Australia cont. made in any event, no specific order is required. The Plaintiffs oppose the application for indemnity costs, their primary position being to support the existing provisional costs order, that they pay the Defendant’s costs in each proceeding, on the ordinary party-​party basis. At the hearing Mr Moses, who appeared for Volvo, did not press the application for costs from 23 September 2003, and pursued the application only from the date of the mediation on 11 May 2005. [2]‌In support of its application, Volvo tendered the affidavit evidence of its solicitor, Ms Allen, deposing to offers that had been made at the conciliation conference on 23 September 2003, and at the mediation on 11 May 2005. Mr Trew QC, who, with Mr O’Sullivan, appeared for the Plaintiffs, objected to the admissibility of that evidence on various grounds. The formal objections were overcome by an admission made by Mr Trew on the voir dire as follows: The Plaintiffs admit, for the purposes of the voir dire and without prejudice to their objection to its admissibility on the application, that at the mediation on 11 May 2005, the Defendant made an offer of $250,000 inclusive of costs, the Plaintiffs made a counter offer of $6 million inclusive of costs, and the Defendant then made a counter offer of $500,000 inclusive of costs. [3]‌Mr Moses accepted that that admission accurately reflected the position, and that nothing turned on any other aspect of the context in which the offers were made, so that it is unnecessary to consider the formal objections to Ms Allen’s affidavit, and I rely only on the contents of the admission I have recorded. However, as the qualifications on that admission make clear, the question remains whether any evidence of what transpired at the mediation is admissible. Is evidence of the offers made at mediation admissible? [4]‌ (NSW) Evidence Act 1995, s 131(1), provides that evidence is not to be adduced of a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute. However, sub-​section (2), on which Mr Moses principally relies, provides that sub-​section (1) does not apply if, inter alia: (h)

the communication or document is relevant to determining liability for costs, …

[5]‌ Civil Procedure Act, s 30(4), provides that subject to s 29(2) –​which is not presently relevant: (a)

Evidence of anything said or of any admission made in a mediation session is not admissible in any proceedings before any court or other body, and

(b)

A document prepared for the purposes of, or in the course of, or as a result of, a mediation session, or any copy of such a document, is not admissible in evidence in any proceedings before any court or other body.

[6]‌“Mediation session” is defined by s 25 to mean a meeting arranged for the mediation of a matter, and “mediation” is defined to mean a structured negotiation process in which the mediator assists the parties to achieve their own resolution of the dispute. [7]‌Had Volvo pressed reliance on the conciliation conference under Industrial Relations Act, s 109, it would have been necessary to consider more thoroughly whether the “mediation session” referred to in s 30 is limited to one convened pursuant to Civil Procedure Act, Pt 4, or extends to mediations otherwise than under Pt 4. I am inclined to the view that the operation of s 30 is limited to a mediation under Pt 4. This view is supported by: • the reference in s 27 to “proceedings that have been referred for mediation”, which contemplates only proceedings referred under s 26; • s 28, which is plainly directed to a mediation pursuant to a court referral under s 26; • s 33, which relates only to a mediator to whom the Court refers proceedings, and • s 34, which acknowledges there may be mediations which take place otherwise than under Pt 4. [8]‌However, as Volvo does not press reliance on the s 109 conciliation conference, and concedes, plainly correctly, that the mediation before the Hon Mr Morling was plainly one pursuant to 922 [14.410]

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Azzi v Volvo Car Australia cont. Pt 4 –​Bergin J having made an order referring the proceedings for mediation –​the application of s 30 to the subject mediation is plainly established. [9]‌Although I have referred to Civil Procedure Act, Pt 4, and in particular to s 30, it is appropriate to note that at the time of the referral to Mr Morling and of the mediation before him, the Civil Procedure Act had not commenced, and the position was governed by the Supreme Court Act 1970, s 110I(1) –​ which defined “mediation” in identical terms as appear in the Civil Procedure Act –​and s 110P(4), which provided that evidence of anything said or of any admission made in a mediation session is not admissible in any proceedings before any court, tribunal or body. The Civil Procedure Act came into operation on 15 August 2005, after both the s 109 conciliation and the mediation. It is common ground that the effect of the transitional proceeding contained in Civil Procedure Act Sch 6 cl 5(1) is that the Civil Procedure Act applies to proceedings instituted before the Act commenced in the same way as to proceedings instituted after its commencement, and thus that the Civil Procedure Act, rather than the relevant provisions of the Supreme Court Act, are those which govern the application today. However, nothing turns on this, as there is no material difference in the provisions. [10] It is plain that the offers that were made at the mediation could be relevant on the question of liability for costs. Mr Moses submits that as the Court has “jurisdiction”, under Civil Procedure Act, s 98(1)(c), to order that costs be awarded on an indemnity basis, and as Civil Procedure Act s 5 provides that nothing in the Act limits the jurisdiction of the Court, the offers made at the mediation are admissible under Evidence Act, s 131(2)(h). He submits that the Civil Procedure Act, and in particular s 30, was not intended to exclude or oust the jurisdiction of the Court to make an indemnity costs order by reference to offers that were made at a mediation. [11] In my opinion, this misconceives the operation of s 131(2), and confuses provisions ousting jurisdiction with rules of evidence. [12] As to the first of these matters, Evidence Act, s 131(2)(h), does not make every offer of settlement that may be relevant to a question of costs admissible; rather, it removes, in the case of such offers, the bar to admissibility otherwise imposed by s 131(1). It is only that bar, and not any other bar, that it removes. In particular, it does not remove the bar imposed by Civil Procedure Act, s 30(4). [13] As to the second aspect, s 30(4) is a rule of evidence, and not a provision affecting the jurisdiction of the Court. It in no way limits the jurisdiction or power of the Court to make a costs order or an indemnity costs order. It simply excludes from admissibility (not only on the question of costs, but at all) evidence of what transpires at a mediation session. That it extends to proceedings in respect of costs is plain enough on its face: the provision says that such evidence is not admissible in any proceedings, any court or other body. [14] Similar provisions have been given wide operation. Previously, (CTH) Family Law Rules 1984, O 24 r 1(8), provided that, subject to subrule (9), evidence of anything said or any admission made in the course of a conference held pursuant to this Rule is not admissible in a court (whether or not exercising Federal jurisdiction) or before a person authorised to hear evidence by consent of parties by or under the Act, the Regulations or these Rules. Subrule (9) provided exceptions for a trial of a person for an offence committed at the conference or a contempt application in relation to anything done at such a conference or on the hearing of an application for costs arising out of the conference [See also (former) (CTH) Family Law Regulations 1975, reg 96(5) and (6)]. [15] In Johnston v Johnston (1986) 10 Fam LR 700; FLC 91-​710, the Full Court of the Supreme Court of Western Australia held, by majority, that despite O 24 r 1(8), evidence could be given establishing the terms of an agreement reached at a conciliation conference, but that evidence of anything said at the conference and in the course of it which leads to or precedes the making of an agreement was inadmissible and could not be received. Thus an undertaking, allegedly given at the conference by the husband, was something said in the course of the conference which led to the agreement made but was not a term of the agreement, and evidence of it was not admissible. In Borninkhof v Borninkhof (1986) 11 Fam LR 151; FLC 91-​752, Kay J held that evidence of an agreement reached at a conciliation conference but intended to be embodied in a formal maintenance agreement was not admissible. His [14.410]  923

Civil Procedure in New South Wales

Azzi v Volvo Car Australia cont. Honour declined to follow Johnston and held that there was no room for suggesting that a conference concluded the moment agreement was reached so as to make evidence of the agreement admissible; the reaching of the agreement itself was part of the conference. His Honour held that the specific exceptions in O 24 r 1(9) were intended to cover the field of exceptions to inadmissibility. In Gray v Gray (1986) 11 FLR 548; FLC 91-​771, Lambert J followed the majority of the Western Australian Full Court in Johnston, holding that where the parties had executed a concluded agreement upon all essential terms at the conclusion of a conciliation conference and it was not a term of the agreement that its terms be incorporated in a formal maintenance agreement, then evidence could be given establishing the terms of the agreement. But in the absence of a memorandum of the alleged agreement, the wife was unable to establish its terms, nature and effect without adducing evidence of things said in the course of the conference, which was prohibited and inadmissible by reason of O 24 r 1(8). These cases establish, at least, that a provision similar to Civil Procedure Act s 30(4) –​but which contains some specific exceptions that do not appear in Civil Procedure Act s 30(4) –​excludes evidence of what happens at a conciliation conference, even for the purposes of an application to enforce an agreement allegedly made at that conference. [16] In Harrington v Lowe (1996) 190 CLR 311; FLC 92-​668, the High Court held that O 24 r 1(8) of the Family Law Rules was beyond the rule-​making power of the Court, which was limited to making provision for or in relation to practice and procedure and matters incidental or convenient thereto, and did not authorise regulations which varied or departed from and were inconsistent with provisions of the Act, or which went beyond the field of operation marked out by the Act. O 24 r 1(8) and (9) did so, in particular because they denied admissibility in any Court, not merely courts exercising jurisdiction under the (CTH) Family Law Act 1975; and even in relation to the Family Court they stultified the operation of, for example, s 79A(1) –​which authorised the setting aside of orders for financial adjustment on grounds of a miscarriage of justice by reason of fraud, duress and other circumstances. In a joint judgment, Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ said: It will be apparent that sub rules (8) and (9) do more than encompass the general law as to the evidentiary privilege in respect of “without prejudice” communications. Whilst the person enjoying the benefit of the privilege may waive it, these subrules deny in absolute terms, subject to subrule (9) the admission into evidence of anything said or any admission made in the course of the conference. This denial of admissibility extends beyond the exercise of jurisdiction in matters arising under the Act and to proceedings in any Court. [17] Kirby J agreed that the rules exceeded the Family Court’s rule making power. His Honour rejected an argument that O 24 r 1(8) should be read in a way which did not exclude evidence of matters relevant to the exercise of jurisdiction under s 79A –​such as that a party was under a misapprehension or mistake. His Honour said: These arguments must be rejected. They fail to accord proper weight to the plain language and purpose of the subrule, read in its context. That context includes not only the specificity of the exceptions provided to the application of subr (8) by the terms of O 24 r 1(9). It also includes the long history of the attempts, by regulation as well as rules of Court, to enforce a strict and wide-​reaching prohibition on the use of anything said, or admissions made, in the course of a conference. The provision is an attempted reflection of widely worded prohibitions in the Act itself protecting the confidentiality of conferences with marriage counsellors, and with court counsellors or welfare officers. Where the Parliament has enacted the prohibition on the admissibility of evidence, different considerations arise. But in respect of O 24 r 1(8) it is impossible to read down the very wide language used by the rule maker so as to permit exceptions beyond those expressly listed in subr (9) or elsewhere provided for by the Act itself. [18] Mr Moses sought to emphasise the reference in the joint judgment to the circumstance that a provision forbidding the admission of evidence to establish the central facts in issue in an application 924 [14.410]

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Azzi v Volvo Car Australia cont. under s 79A was not one to facilitate the practice and procedures of the Court, but rather to vary or depart from the protective provisions of the Act and to impose an inconsistent regime. Where, as was the case with O 24, the provision was contained in delegated legislation made under the authority of an Act, such a result would necessarily invalidate the Rule. However, no such issue arises where, as here, the provision is contained in an Act of Parliament, and a fortiori where that Act (the Civil Procedure Act) is later in point of time than the Evidence Act. Another way of looking at it is that, while the Evidence Act contains a general provision excluding evidence of settlement negotiations, with an exception to that general exclusion where the negotiations are relevant to costs, Civil Procedure Act s 30(4) is a more specific provision directed specifically to negotiations in a mediation session, excluding evidence of such negotiations, without any corresponding exception. When it applies, the later and more specific provision prevails over the more general one. [19] The view that I take of the relationship between Evidence Act, s 131(2)(h), and Civil Procedure Act, s 30(4), is substantially the same as that expressed by Palmer J in Rajski v Tectran Corporation Pty Limited [2003] NSWSC 476. His Honour identified (at [11]) that the purpose of such provisions included avoiding the circumstance that a mediation, rather than affording a haven for litigation in which parties negotiate frankly and informally towards settlement of their dispute, instead become another area of conflict, generating further proceedings in Court. Then his Honour said, (at [16])]: It seems to me that s 131(1) and (2) of the Evidence Act are concerned with the exclusion from and admission into evidence generally of matter which may otherwise attract the principles of the common law relating to “without prejudice” communications between parties made for the purposes of negotiating settlement; they are not intended to apply to the special process of settlement negotiation provided by a mediation ordered by the Court under the provisions of Pt 7B of the Supreme Court Act. Part 7B contains its own Rules as the evidentiary use which may be made of what is said and done in and for the purpose of settlement negotiations in a mediation under that Part and, in my view, those Rules override the general provisions of s 131 of the Evidence Act. [20] The suggestion that Civil Procedure Act, s 30(4), is somehow an ouster of jurisdiction is also answered by the judgment of the Court of Appeal in Gain v Commonwealth Bank of Australia (1997) 42 NSWLR 252. Under the (NSW) Farm Debt Mediation Act 1994, a creditor could not take enforcement action in respect of a farm mortgage unless and until the Rural Assistance Authority had given a Certificate that satisfactory mediation had taken place, or the farmer had declined to mediate, or three months had elapsed from service of an Enforcement Notice. Section 15(1) provided: Evidence of anything said or admitted during a mediation session and a document prepared for the purposes of, in the course of or pursuant to, a mediation session are not admissible in any proceedings in a court or before a person or body authorised to hear and receive evidence. [21] The Authority issued a Certificate; Simpson J refused judicial review; the farmer appealed. The Court of Appeal accepted, overruling Simpson J in this respect, that a decision of the Authority to issue a Certificate was amenable to judicial review, but held that any such review was subject to the evidentiary restrictions imposed by s 15, the consequence of which was to impose very considerable restraints on the scope of any review that could take place. No one thought or suggested that this was an ouster of the jurisdiction of the Court to grant prerogative relief; rather it was a restriction on the evidence which could be adduced on that (or any other) application. As Gleeson CJ pointed out, the policy of the legislation was that parties should be encouraged to discuss their differences without the risk that things they say might later be used against them in Court if the mediation did not result in settlement. [22] The provisions of Family Law Rules O 24 r 1, Farm Debt Mediation Act s 15, and Civil Procedure Act s 30(4) are in absolute terms, and prohibit admissibility of evidence of the conciliation conference or mediation being given at all. They do not recognise any exception for proceedings relating to costs. [14.410]  925

Civil Procedure in New South Wales

Azzi v Volvo Car Australia cont. The policy of facilitating an environment for negotiation and compromise is seen as being advanced by permitting the negotiating parties to say things comfortable in the knowledge that they cannot be used against them in Court in any circumstances, and those circumstances include on an application in respect of costs. [23] Mr Moses invoked the judgment of Mansfield J in The Silver Fox Co Pty Limited v Lenard’s Pty Limited (No 3) [2004] FCA 1570, in which his Honour held that, despite considerations of public policy enshrining the need to encourage parties to endeavour to settle disputes without disclosure of communications to that end, and despite the need to preserve the integrity of the parties’ mediation agreement which clearly prohibited adducing evidence of the course of the mediation and offers made during it, nonetheless if the terms of those offers were relevant to determining liability for costs, they were admissible pursuant to Evidence Act s 131(2)(h), particularly where the probative value of the content of the negotiations no longer warranted protection. [24] I am inclined respectfully to agree with his Honour that the admissibility of offers is a question of legal principle and not a matter of interparty agreement, and that in the context of a mediation which took place unprotected by any statutory prohibition on admissibility of evidence of its offers made at it are not inadmissible by operation of s 131(1), because of s 131(2)(h), although I think it is a mistake to regard such offers as being admissible pursuant to s 131(2)(h): that provision, as I have said, does not make evidence of negotiations admissible, but simply removes one bar to their admissibility, namely that otherwise imposed by s 131(1). [25] Another decision invoked by Volvo is explicable on the same basis: Burgess v Mount Thorley Operations Pty Limited [2003] NSWIRComm 22, in which Schmidt J held that an offer made at a conciliation conference under Industrial Relations Act, s 109, was admissible under s 131(2)(h). Neither in The Silver Fox nor in Mount Thorley Operations was there any applicable equivalent of Civil Procedure Act, s 30(4). In those circumstances, it may well be that evidence of offers made at the mediation or conciliation conference can be admitted. [26] But that is not this case, in which s 30(4) applies. The evidence that Volvo seeks to adduce of the offers made at the mediation is evidence of something said in a mediation session. The present costs application is a proceeding before a Court. By reason of Civil Procedure Act s 30(4)(a), that evidence is not admissible, and I reject it. [27] As I have concluded that evidence of what transpired at the mediation is not admissible, it is unnecessary for me to consider the Plaintiffs’ alternative argument that it should be rejected as a matter of discretion as unduly prejudicial under Evidence Act s 135, save to record that there is much force in that argument, given that the Plaintiffs embarked on the mediation in the belief, encouraged by the mediation agreement to which all parties subscribed, that evidence could not subsequently be given of anything said or done at the mediation. This argument does not appear to have been considered in The Silver Fox or in Mount Thorley Operations. [28] It follows that, as the only matter on which Volvo ultimately relied in support of its indemnity costs order was the offers made at the mediation, there is no material before the Court to support Volvo’s application. However, lest I be wrong on the question of admissibility, I will consider whether an indemnity costs order should have been made if evidence of the offers made at the mediation were admissible. Would the offers at mediation have other justified indemnity costs? [29] First, there was no formal offer of compromise made under the Rules and, accordingly, no presumption in favour of any departure from the ordinary costs position arises; it is necessary to consider all the circumstances to determine whether the Plaintiffs’ non-​acceptance of the offer was so unreasonable as to justify an indemnity costs order [Jones v Bradley (No 2) [2003] NSWCA 258; Leichhardt Municipal Council v Green [2004] NSWCA 341; Gretton v Commonwealth of Australia [2007] NSWSC 149 [10-​17]; Crump v Equine Nutrition Systems Pty Ltd trading as Horsepower (No 2) [2007] NSWSC 25, [35-​44]]. In Leichhardt Municipal Council v Green, Santow JA, with the concurrence of the other members of the Court, said [at [57]] that indemnity costs orders should be reserved for the most 926 [14.410]

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Azzi v Volvo Car Australia cont. unreasonable actions by unsuccessful Plaintiffs. Even where there has been a Calderbank offer, the Court considers whether the rejection of the offer was reasonable in the circumstances, the time frame that the offeree had to consider the offer, and whether the offer expressly stated that it was made in Calderbank terms [SMEC Testing Services Pty Limited v Campbelltown City Council [2000] NSWCA 323, [37]). Although the fact that an offer is not in the precise form suggested in Calderbank v Calderbank [1975] 3 All ER 333 does not render it inadmissible or ineffective, some indication that the offer is to be relied on in connection with costs is required, although it can sometimes be inferred [see Crump v Equine Nutrition, [67]]. [30] In this case there is no evidence from which I can infer that the offers made by Volvo at the mediation were intended to operate as Calderbank offers. I am not prepared to draw any such inference because it is, so far as I am aware, exceptional if not unknown for offers made during a mediation to be intended to operate in that way. Conventionally, if a mediation fails, one party will often send to the other a Calderbank letter following completion of the mediation, in which it will restate its last offer at the mediation, and that it will remain open for a certain period of time, and that it will be relied on in connection with costs. That did not happen here. [31] Moreover, given the context of a mediation, the offer was not realistically open for a lengthy period of time. The time constraints under which mediations are conducted are yet another reason why, as a matter of policy, different considerations apply to offers made at them than to Calderbank offers or formal offers of compromise under the Rules. This occasions no hardship to the offeror, who can protect its position by a Calderbank letter following the mediation if it wishes to do so. [32] It is also of some relevance that at the time of the mediation the Plaintiffs’ evidence, including expert evidence, which at first sight supported the quantum of the Plaintiffs’ offer, had been served and the Defendant’s evidence had not been served. [33] Other relevant considerations, though less significant, include that Volvo amended its pleadings very late –​at the outset of the trial –​to raise for the first time an allegation there was not a binding contract for a replacement five year term (an amendment which was permitted, in order to raise a defence which was arguable, but which ultimately failed), and also to raise for the first time a jurisdictional objection to the claim under Industrial Relations Act, s 106. Although, in the light of the decision of the High Court of Australia in Fish v Solution 6 Holdings Ltd (2006) 225 CLR 180, the issues of jurisdiction and power in relation to the Plaintiffs’ s 106 claim now appear clear, that decision was delivered after the trial of these proceedings had been completed and judgment reserved. [34] Volvo also filed and served extensive affidavit material –​which the Plaintiffs were required to read and consider and prepare to cross-​examine –​but which it ultimately did not rely on at the hearing. I do not consider that this should result in any adverse costs order, since parties should not be discouraged from responsible judgments in the course of the conduct of a trial –​especially decisions which have the ultimate effect of saving time and money –​but when it comes to resisting an indemnity costs application it is not without relevance. [35] Accordingly, I do not think that this is a case in which the Plaintiffs’ failure to accept the offer made at the mediation, in a context in which it was not apparent that it could or would be relied on in connection with costs, was so unreasonable as to justify an indemnity costs order. Conclusion [36] The evidence that Volvo seeks to adduce of the offers made at the mediation is evidence of something said in a mediation session, and the present costs application is a proceeding before a Court. By reason of Civil Procedure Act s 30(4)(a), that evidence is not admissible, and I reject it. In those circumstances it is unnecessary for me to consider the Plaintiffs’ alternative argument that it should be rejected as a matter of discretion as unduly prejudicial under Evidence Act s 135, save to record that there is much force in that argument. Furthermore, I do not think that this is a case in which the Plaintiffs’ failure to accept the offer made at the mediation, in a context in which it was [14.410]  927

Civil Procedure in New South Wales

Azzi v Volvo Car Australia cont. not apparent that it could or would be relied on in connection with costs, was so unreasonable as to justify an indemnity costs order. [37] I therefore decline to vary the costs order made on 5 April 2007, and the costs that the Plaintiffs must pay the Defendant in each proceeding will be assessable on the ordinary party-​party basis. I order that the Defendant pay the Plaintiffs’ costs of and incidental to the costs application heard on 17 April 2007.



928 [14.410]

CHAPTER 15

Concluding Proceedings [15.10] INTRODUCTION......................................................................................................... 930 [15.20] SUMMARY DISPOSAL.................................................................................................. 930 [15.30] Default judgment........................................................................................ 931 [15.40] [15.60]

Uniform Civil Procedure Rules 2005 (NSW) rr 16.1–​16.3, 16.6–​16.8, 36.15, 36.16................................................................... 932 Cronau v Vavakis (No 3).................................................................... 935

[15.70]

Summary judgment.................................................................................... 938 [15.80] Uniform Civil Procedure Rules 2005 (NSW) r 13.1.................................... 938 [15.90] Cosmos E-​C Commerce v Bidwell.......................................................... 939 [15.100] Summary dismissal...................................................................................... 942 [15.110] Uniform Civil Procedure Rules 2005 (NSW) r 13.4.................................... 943 [15.120] Van Der Lee v NSW........................................................................... 943 [15.130] Fawcett v Cannon............................................................................. 944 [15.140] No reasonable prospects of success............................................................. 948 [15.150] Want of prosecution.................................................................................... 948 [15.150] Uniform Civil Procedure Rules 2005 (NSW) r 12.7.................................... 948 [15.170] Building Insurers’ Guarantee Corporation v Touma................................... 949 [15.190] Civil Procedure Act 2005 (NSW) s 91.................................................... 950 [15.210] INCENTIVES TO SETTLE............................................................................................... 951 [15.220] Civil Procedure Act 2005 (NSW) s 73.................................................... 951 [15.230] Offers of compromise under the UCPR........................................................ 952 [15.240] Uniform Civil Procedure Rules 2005 (NSW) rr 20.25–​20.30, 42.13, 42.13A–​42.15A, 42.16, 42.17.................................................. 953 [15.250] Leach v The Nominal Defendant.......................................................... 958 [15.255] Hart Security Australia v Boucousis (No 2).............................................. 962

[15.260] Calderbank letters....................................................................................... 964 [15.260] Calderbank Offers............................................................................. 964 [15.265] Whitney v Dream Developments.......................................................... 970 [15.268] Singapore Airlines Cargo v Principle International (No 2)........................... 971 [15.270] DISCONTINUANCE..................................................................................................... 975 [15.280] Uniform Civil Procedure Rules 2005 (NSW) rr 12.1, 12.3, 12.4, 42.19......... 976 [15.285] APPEAL........................................................................................................................ 977 [15.290] Types of appeal........................................................................................... 978 [15.300] NSW Court of Appeal.................................................................................. 978 [15.310] Supreme Court Act 1970 (NSW) s 101.................................................. 979 [15.320] Fox v Percy...................................................................................... 980 [15.330] Appeal as of right........................................................................................ 983 [15.340] Leave to appeal........................................................................................... 983 [15.350] Interlocutory judgments or orders............................................................... 984 [15.370] Hall v Nominal Defendant.................................................................. 984 [15.375] Discretionary decisions................................................................................ 985 [15.380] Procedure................................................................................................... 986 [15.390] Appeals to Courts other than Court of Appeal............................................. 986 [15.400] Local Court Act 2007 (NSW) ss 39–​41.................................................. 986 [15.410] ENFORCEMENT AND EXECUTION OF JUDGMENT...................................................... 987 [15.420] Civil Procedure Act 2005 (NSW) ss 133, 134.......................................... 987 [15.430] Uniform Civil Procedure Rules 2005 (NSW) rr 36.4, 36.11......................... 988 [15.440] Judgments for payment of money............................................................... 989 [15.450] Civil Procedure Act 2005 (NSW) s 106.................................................. 989  

929

Civil Procedure in New South Wales

[15.460] Writs of execution....................................................................................... 990 [15.470] Uniform Civil Procedure Rules 2005 (NSW) r 39.1.................................... 990 [15.480] Writ for the levy of property........................................................................ 991 [15.485] Debt Recovery in the Local Court.......................................................... 991 [15.490] Uniform Civil Procedure Rules 2005 (NSW) rr 39.2–​39.20......................... 992 [15.500] Garnishee orders......................................................................................... 997 [15.505] Debt Recovery in the Local Court.......................................................... 997 [15.510] Civil Procedure Act 2005 (NSW) ss 117–​125.......................................... 998 [15.520] Uniform Civil Procedure Rules 2005 (NSW) rr 39.34–​39.43..................... 1000 [15.560] Applications to pay by instalments............................................................ 1002 [15.570] Civil Procedure Act 2005 (NSW) s 107................................................ 1003 [15.580] Uniform Civil Procedure Rules 2005 (NSW) rr 37.1A–​37.7....................... 1003 [15.590] Examination of the judgment debtor........................................................ 1005 [15.595] Debt Recovery in the Local Court........................................................ 1006 [15.600] Civil Procedure Act 2005 (NSW) s 108................................................ 1006 [15.620] Uniform Civil Procedure Rules 2005 (NSW) rr 38.1–​38.7......................... 1007

INTRODUCTION [15.10]  This chapter looks at ways in which proceedings may be concluded prior to trial and

the important steps of appeal and enforcement. Most proceedings do not go to trial. Some are concluded by summary disposal procedures. Such procedures might be undertaken by the plaintiff, for example, applying for and obtaining a default judgment because the defendant has not filed an appearance or a defence. The defendant might apply for summary dismissal because, for example, the plaintiff has failed to prosecute the proceeding or because the plaintiff’s pleadings do not reveal a reasonable cause of action. All such summary disposal procedures truncate or conclude the proceedings prior to trial. Many proceedings are settled prior to trial. The Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides a procedure involving cost incentives to settle. It is called an offer of compromise. There is also an informal arrangement at common law that encourages settlement called Calderbank letters. Proceedings, whether as a result of a settlement or because a plaintiff no longer wishes to litigate, may be discontinued. The UCPR regulates how a discontinuance may occur. When proceedings are concluded through a trial or there is an interlocutory decision, those outcomes may be subject to appeal. Proceedings may not conclude until the avenues of appeal are exhausted. Once proceedings are concluded, whether summarily or by trial (with or without appeal) it may be necessary to take steps to enforce the judgment rendered by the Court. This chapter discusses summary disposal procedures, incentives to encourage settlement, discontinuance, appeal and enforcement.

SUMMARY DISPOSAL [15.20]  Summary disposal is a label used to describe applications to the court that can result

in proceedings being concluded before a trial. Applications of this kind are usually provided for in the UCPR. Summary disposal may be the result of applications to strike out any pleading if it does not disclose a reasonable cause of action or a defence, if it has a tendency to cause prejudice, embarrassment or delay in the proceedings, or is otherwise an abuse of the court’s process: see 930 [15.10]

Concluding Proceedings  Chapter  15

UCPR r  14.28. These applications were discussed in Chapter 9. Other summary disposal processes discussed in this chapter are: • default judgments; • summary judgments; • summary dismissal; • want of prosecution. Default judgment [15.30] A default judgment applies to proceedings commenced by statement of claim (see

UCPR r 16.1) and is a judgment entered by virtue of court rules rather than one ordered by the court. A default judgment can be entered if the defendant is in “default”: see r 16.2. Complying with time periods prescribed by the court rules is an important obligation of the parties. Default judgments provide an incentive for defendants to file an appearance or a defence within the prescribed period of time (28 days: see UCPR r 14.3). Filing an appearance or a defence is an indication that the claim is to be defended. Rule 16.2 of the UCPR provides for obtaining a default judgment when the defendant has failed to file a defence within time; or if the defendant has failed to file any affidavit verifying the defence when the rules so require; or if the defendant has filed a defence which has been struck out. There are a significant number of occasions where the rules prevent entry of a default judgment,1 for example if proceedings have been commenced in the business name of the defendants and the statement of claim has not been amended pursuant to r 7.22 of the UCPR to enable the proceedings to be continued against the defendants in his or her own name. The procedure concerning a default judgment will depend upon whether the plaintiff’s claim is liquidated or unliquidated. A liquidated claim is one where the amount claimed is known or can be determined by a formula or scale without recourse to assessment or opinion.2 An unliquidated claim includes a claim for damages and requires an assessment by the court. Unliquidated claims are usually case managed and directions made pursuant to s 57 of the Civil Procedure Act 2005 (NSW) (CPA) which is of course subject to s 56. The complexity of the matter will be a consideration taken into account to determine the time that is reasonable for filing a defence. If a defendant is in default r 16.3 of the UCPR is available, though when the matter is being case managed entry of a default judgment is not appropriate without leave of the court.3 If a default judgment is entered, quantum of damages must be assessed. The defendant is entitled to make submissions on the assessment hearing as long as a notice of appearance has been filed. If the claim is liquidated, application for a default judgment is made pursuant to r 16.6 of the UCPR which requires an affidavit in support. In addition to the affidavit in support, an affidavit of service of the originating process must accompany an application for a default judgment:4 see UCPR r  16.3. Entry of a default judgment will normally occur after the

1 2 3 4

See Hamilton J and Lindsay G (eds), NSW Civil Practice & Procedure (Lawbook Co, Subscription Service) at r 16.2.60. See Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138. Altarama Ltd v Forsyth [1981] 1 NSWLR 188. Unless service is effected by a Local Court under UCPR r 10.1(2), see UCPR r 16.3(3). [15.30]  931

Civil Procedure in New South Wales

plaintiff files a special form of notice of motion accompanied by the relevant affidavits and it is recorded on the court registry’s computer system or the registrar signs and seals a form of the judgment. A signed and dated copy of the judgment will be sent to the plaintiff or the registrar will send a notice to the plaintiff that confirms the default judgment has been entered. The effect of a default judgment is the same as a judgment given after a trial. Enforcement processes may need to be invoked. No appeal would lie but an application for the default judgment to be set aside may be made by the defendant.

Uniform Civil Procedure Rules 2005 (NSW) [15.40]  Uniform Civil Procedure Rules 2005 (NSW) rr 16.1–​16.3, 16.6–​16.8, 36.15, 36.16 16.1 Application of Part This Part applies to proceedings commenced by statement of claim. 16.2 Definition of “in default” (1)

A defendant is in default for the purposes of this Part:



(a)

if the defendant fails to file a defence within the time limited by rule 14.3(1) or within such further time as the court allows, or



(b)

if the defendant fails to file any affidavit verifying his or her defence in accordance with any requirement of these rules, or



(c)

if, the defendant having duly filed a defence, the court orders the defence to be struck out.

(2)

Despite subrule (1), a defendant is not in default if the defendant:



(a)

has made a payment towards a liquidated claim under rule 6.17, or



(b)

has filed an acknowledgment of claim under rule 20.34, or



(c)

has filed a defence after the time limited by these rules or allowed by the court, but before a default judgment is given against the defendant.

16.3 Procedure where defendant in default (1)

If a defendant is in default, the plaintiff:



(a)

may apply for judgment to be given under this Part, according to the nature of his or her claim for relief, against the defendant in default, and



(b)

may carry on the proceedings against any other party to the proceedings.

(1A)

Unless the court otherwise orders, an application under this rule:



(a)

may be dealt with in the absence of the parties, and



(b)

need not be served on the defendant.

(2)

Unless the court orders otherwise, an application for judgment to be given under this Part must be accompanied by:



(a)

an affidavit of service of the statement of claim (the affidavit of service), and



(b)

an affidavit in support of the application (the affidavit in support).

(3)

An affidavit of service is unnecessary in relation to a statement of claim whose service has been effected by the Local Court under rule 10.1(2).

(4)

Unless the court orders otherwise, an affidavit in support is valid for the purposes of an application only if it has been sworn within 14 days before the date on which the application is filed.

932 [15.40]

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Uniform Civil Procedure Rules 2005 (NSW) cont. 16.6 Default judgment on debt or liquidated claim (1)

If the plaintiff’s claim against a defendant in default is for a debt or liquidated claim or for a claim for unliquidated damages of the kind referred to in rule 14.13(2), judgment may be given for the plaintiff against the defendant for:



(a)

a sum not exceeding the sum claimed, and interest up to judgment, and



(b)



(c) costs.

(2)

The relevant affidavit in support:



(a)

must state the amount due to the plaintiff, in respect of the cause of action for which the proceedings were commenced, as at the time the originating process was filed, and



(b)

must give particulars of any reduction of that amount, and costs, as a consequence of any payments made, or credits accrued, since the time the originating process was filed, and



(c)

must state the source of the deponent’s knowledge of the matters stated in the affidavit concerning the debt or debts, and



(d)

must state the amount claimed by way of interest, and



(e)

must state whether costs are claimed and, if so, how much is claimed for costs, indicating:



(i)

how much is claimed on account of professional costs (not exceeding the amount fixed by the regulations made for the purposes of section 59 of the Legal Profession Uniform Law Application Act 2014), and



(ii)

how much is claimed on account of filing fees, and



(iii)

how much is claimed on account of the costs of serving the originating process, and



(f)

must state when and how the originating process was served on the defendant.

16.7 Default judgment on claim for unliquidated damages (1)

If the plaintiff’s claim against a defendant in default is for unliquidated damages only, judgment may be given for the plaintiff against the defendant for damages to be assessed and for costs. Note: See Part 30 for provisions as to assessment of damages.

(2)

The relevant affidavit in support:



(a)

must state that the matter has not been settled with the defendant, and



(b)

must state the source of the deponent’s knowledge of the matters stated in the affidavit concerning the claim, and



(c)

must state whether costs are claimed and, if so, how much is claimed for costs, indicating:



(i)

how much is claimed on account of professional costs (not exceeding the amount fixed by the regulations made for the purposes of section 59 of the Legal Profession Uniform Law Application Act 2014), and



(ii)

how much is claimed on account of filing fees, and



(iii)

how much is claimed on account of the costs of serving the originating process, and



(d)

must state when and how the originating process was served on the defendant.

16.8 Default judgment on mixed claims (1)

If the plaintiff’s claim against a defendant in default includes any 2 or more of the claims referred to in this Part, and no other claim, judgment may be given for the plaintiff against the [15.40]  933

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Uniform Civil Procedure Rules 2005 (NSW) cont. defendant on any of those claims as if it were the plaintiff’s only claim for relief against that defendant. (2)

In the case of two or more such claims, the relevant affidavit in support must comply with the requirements of this Part in relation to each of those claims.

… 36.15 General power to set aside judgment or order (1)

A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith.

(2)

A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent.

36.16 Further power to set aside or vary judgment or order (1)

The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.

(2)

The court may set aside or vary a judgment or order after it has been entered if:



(a)

it is a default judgment (other than a default judgment given in open court), or



(b)

it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or



(c)

in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.

(3)

In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:



(a)

determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or



(b)

dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.

(3A)

If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.

(3B)

Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered.

(3C)

Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B).

(4)

Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.

 Setting aside a default judgment [15.50]  Rule  36.16(2)(a) and (b)  of the UCPR provides the court with power to set aside

default judgments. Upon an application to set aside a default judgment, the defendant must explain the delay in filing a defence and show that there is a defence to the claim that has merit. 934 [15.50]

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Cronau v Vavakis (No 3) [15.60]  Cronau v Vavakis (No 3) [2018] NSWSC 1973 MCCALLUM J [1]‌HER HONOUR: These are proceedings for defamation commenced by statement of claim filed 1 June 2018. The plaintiff was unable to serve the originating process on the defendant in person. On 17 August 2018, an order for substituted service was obtained: Cronau v Vavakis [2018] NSWSC 1642. [2]‌On 19 October 2018, no appearance or defence having been filed, default judgment was entered for the plaintiff and the proceedings were stood over to 23 November 2018 for the assessment of damages: Cronau v Vavakis (No 2) [2018] NSWSC 1644. [3]‌On 16 November 2018, the defendant filed a notice of appearance and a notice of motion seeking to vacate the hearing date for the assessment of damages and to have the default judgment set aside. This judgment determines that application. For the following reasons, I have determined that the relief sought by the defendant should be granted. [4]‌The application invokes the Court’s authority under r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW). There was no dispute between the parties as to the proper approach to the exercise of that power. The defendant’s submissions relied on the decision of McColl JA in Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43] to [46] where her Honour summarised the relevant principles as follows: 43 The Court’s jurisdiction to set aside the default judgement is found in the bald terms of Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) 36.16(2)(a), providing the “court may set aside or vary a judgment or order after it has been entered if … (a) it is a default judgment (other than a default judgment given in open court)”. The fundamental (but not the only) principles guiding a court asked to exercise the unfettered discretion UCPR 36.16(2) (a) confers, are whether the applicant has a bona fide ground of defence, an adequate explanation for the failure to defend and the length of any delay: Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503 (at 506) per Hope JA (Glass JA agreeing). In the final analysis, it is necessary to consider whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits: Reinehr Industrial Lease & Finance Pty Ltd v Jordan (New South Wales Court of Appeal, 4 June 1974, unreported) cited with approval by Sackville AJA (Barrett and Leeming JJA agreeing) in Dai v Zhu [2013] NSWCA 412 (at [83]). 44 In Dai v Zhu Sackville AJA also explained (at [89]) that the rationale for the requirement that the applicant for relief demonstrate a bona fide ground of defence is that “in the exercise of its ‘unfettered, though judicial, discretion’ the Court will consider … (a) whether any useful purpose would be served by setting aside the judgment, and (b) how it came about that the applicant found himself bound by a judgment regularly obtained”. His Honour also explained (at [92]) that in “determining whether the defendant has a bona fide defence on the merits, the court does not embark on a hearing of the full merits of the case … [a]‌ll that is necessary is for the defendant to show that the defence is asserted bona fide and that there is an arguable or triable issue [and] [t]he nature of the evidence required in a particular case may depend on the circumstances, including the cogency of the defendant’s explanation for the delay or failure to comply with the orders of the court”. 45 In elaboration of the last proposition it is necessary to explain that the court considering the application to set aside a default judgment is not trying the issues of fact arising upon the defence advanced, but must be satisfied that the defence is “fairly arguable in law or fact” and that the applicant is bona fide in seeking to rely upon that defence: Reinehr Industrial Lease & Finance Pty Ltd v Jordan per Street ACJ (Glass JA agreeing). 46 Finally, it should be observed that the application of these principles is subject to the provisions of the Civil Procedure Act 2005 (NSW): Dai v Zhu (at [93]); Richards v Cornford (No 3) [2010] NSWCA 134 (at [98]ff) per Allsop P (McColl JA agreeing). [15.60]  935

Civil Procedure in New South Wales

Cronau v Vavakis (No 3) cont. [5]‌I would only add that, in my view, in determining whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits, it is appropriate for the Court to consider the relative weight of each of the individual considerations of the strength of any defence, the adequacy of the explanation for the failure to defend the proceedings and the length of any delay. So that, for example, although the Court does not embark upon a hearing of the full merits of the case, the existence of what would appear to be a strong defence would warrant a more indulgent approach regarding the adequacy of the explanation for the failure to defend. That consideration is important in the present case, for reasons I will explain. [6]‌The relevant chronology of events in the commencement of the proceedings may be summarised as follows. [7]‌On 18 January 2018, the plaintiff sent a concerns notice which was delivered to the address of the defendant’s parents in Western Australia. It is clear that that notice came to the attention of the defendant because, in due course, solicitors retained by him responded to the notice (on 1 February 2018) and negotiations between the parties ensued. [8]‌On 11 April 2018, a new firm of solicitors, Moray & Agnew Lawyers, began to act for the defendant and further negotiations were conducted. [9]‌On 1 June 2018, being concerned about the approaching expiration of the limitation period, the plaintiff filed a statement of claim. [10] Between 27 June and 6 July 2018, attempts were made to effect personal service of the originating process at the address to which the concerns notice had been sent (and successfully brought to the attention of the defendant). [11] On 12 July 2018, those attempts at personal service having been unsuccessful, the plaintiff’s solicitor asked the second firm that had acted for the defendant, Moray & Agnew Lawyers, whether they had instructions to accept service. They did not. [12] Further attempts were made to communicate with the defendant via Facebook Messenger and a business website apparently operated by him. Those attempts were relied upon as the basis for the substituted service application granted by me on 17 August 2018. [13] On 3 October 2018, a solicitor from Moray & Agnew, who no longer acted for the defendant, made an enquiry as to the progress of the proceedings as a result of which, on 7 October 2018, they contacted the defendant and made him aware of the fact that an application was to be made for default judgment. [14] The plaintiff has put on evidence on the present application (in an affidavit sworn by his solicitor on information and belief) that that was the first date on which he became aware of the fact that an order for substituted service had been made and of the existence of the proceedings. [15] It is accepted on behalf of the defendant that he should have taken prompt steps at that stage to enter an appearance and defend the proceedings before default judgment was entered. He did not and, as already stated, the default judgment application proceeded on 12 October 2018 and was determined by me on 19 October 2018. [16] The plaintiff relies on a number of curious features of the evidence regarding that history to support a submission that the Court should infer that the defendant was actively and consciously avoiding service of the originating process. In particular, it was noted that there is no direct evidence from the defendant, no specific evidence as to when he ceased accessing his Facebook Messenger account and ceased using his business website (to which information was also sent); no specific information as to when he was last able to access those sites and a curiosity in the fact that, whereas an earlier message to the Facebook Messenger account had received no reply, later messages sent via that platform received a reply to say that the person in question was unable to be contacted via that method. [17] The plaintiff submitted, and there is some force in the submission, that there was no proper explanation of those matters. I accept that some features of the defendant’s explanation are such as to 936 [15.60]

Concluding Proceedings  Chapter  15

Cronau v Vavakis (No 3) cont. give rise to a suspicion that he was avoiding contact from the plaintiff. However, I would not go so far as to find, on the balance of probabilities, that he did so in circumstances where he had an awareness that proceedings had in fact been commenced. I do not think I can conclude that he was actively and consciously avoiding service of the originating process or that he was aware of the existence of the proceedings any earlier than 7 October 2018. [18] On that basis, in my view, the explanation for the failure to defend the proceedings, although wanting in some respects, is adequate in the circumstances. [19] It is particularly important in my determination of this application to consider the apparent strength of any defences. Mr Potter, who appears for the defendant, addressed the topic of defences in his written submissions and expanded upon those submissions in oral argument this morning. Perhaps the most acute consideration is the issue of publication concerning the first matter complained of. The publication as pleaded in the statement of claim is a newspaper article that appeared in The Daily Mail headed “Students and dieticians PROTEST a controversial nutritionist advocating “high-​fat, low-​carb diet” speaking at a university” (emphasis in original). [20] The article reported that students and dieticians were protesting the plaintiff’s appearance as a guest speaker hosting a seminar at a Perth university. It included a quote attributed to the defendant in the following terms: “The crux of my concern is that a ketogenic diet (very low carbohydrate) or a low carbohydrate/​high fat diet is promoted by Christine Cronau as a one-​size fits all curative solution to any health solution her followers may have,” Mr Vavakis said. One of the most reckless recent cases involved her providing medical advice to a member of her Facebook page who was undergoing treatment for breast cancer. She claimed in the Post that a ketogenic diet in combination with something she describes as pH balancing (a debunked concept) had the potential to cure cancer. Ms Cronau is no better than Belle Gibson as she is recklessly promoting a false cancer cure that could kill. [21] As submitted by Mr Potter, in circumstances where there is no suggestion that the defendant, Mr Vavakis, had any editorial control in respect of the publication of that material in The Daily Mail, there may be a real issue as to whether he is liable for publication of the whole of the article on the strength of principles considered by me in Dank v Whittaker (No 1) [2013] NSWSC 1062 at [26]; applied in Dank v Cronulla-​Sutherland District Rugby League Football Club (No 3) [2013] NSWSC 1850 at [17]-​[22]; upheld by the Court of Appeal in Dank v Cronulla Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 at [137]. [22] Other potential defences are also adverted to in the submissions. It is clear enough that, in some instances, there is a real contest as to whether the imputations pleaded are capable of being carried in the natural and ordinary meaning of the matter complained of. The plaintiff has pleaded a number of imputations by reference to the fact that the articles compare her with Belle Gibson. For example, the imputation pleaded in respect of the first matter complained of is that she engages in serious and substantial fraudulent conduct comparable to that of the renowned and proven fraudster Belle Gibson. [23] As noted by Mr Potter, Belle Gibson is renowned for a wide range of conduct and it is by no means clear that the matter complained of would convey to the ordinary reasonable reader who did not know a particular fact about Ms Gibson the kind of conduct attributed to her. Further, there is a potential issue about the imputation as to whether it is adequately specific. The article itself is more specific than the imputation, specifying that the comparison with Belle Gibson is based on a contention that she recklessly promoted a false cancer cure that could kill. [24] Mr Vavakis also raises the prospect of an honest opinion defence in respect of that particular imputation which could well have merit. [15.60]  937

Civil Procedure in New South Wales

Cronau v Vavakis (No 3) cont. [25] In my assessment, there is the potential in these proceedings for great injustice to be done to the defendant if the default judgment is not set aside because it is clear enough that there are real issues that might appropriately be the subject of a contested hearing. [26] I have also had regard to the fact that the period of delay is short. As already noted, it is accepted that the defendant ought to have reacted when he became aware of the existence of the proceedings and the impending default judgment application on 7 October 2018 but the period of delay between then and the entry of default judgment was short and he acted promptly after that; filing his notice of appearance and the present application on 16 November 2018. [27] For those reasons, I am persuaded that it is appropriate to make the order sought that pursuant to r 36.16 of the Uniform Civil Procedure Rules, the default judgment entered against the defendant on 19 October 2018 be set aside.

 Summary judgment [15.70] Rule  13.1 of the UCPR allows a plaintiff to seek summary judgment against a

defendant who has filed a defence that does not reveal a valid defence to the plaintiff’s claim or whose only defence is in regard to the amount of the damages claimed. An order for summary judgment deprives a party of its hearing on the merits. Proceedings may not be summarily dismissed unless a claim or defence can properly be described as “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” or “so manifestly faulty that it does not admit of argument”: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 at 129. An application under r 13.1 of the UCPR can be made for the whole or part of the judgment claimed by the plaintiff. It must be supported by an affidavit from the plaintiff and/​or other persons able to make affidavits (see UCPR r 35.3) verifying the facts on which the application is based. Such affidavits are regarded as evidence in chief of witnesses in interlocutory hearings unless the court otherwise orders:  see UCPR r  31.2. The plaintiff or other relevant person must also depose to a belief that the defendant does not have a valid defence and evidence of an opinion rather than a belief does not comply with the rules. A judgment pursuant to r 13.1 of the UCPR may be set aside under r 36.15 or 36.16 of the UCPR.

Uniform Civil Procedure Rules 2005 (NSW) [15.80]  Uniform Civil Procedure Rules 2005 (NSW) r 13.1 13.1 Summary judgment (1)

If, on application by the plaintiff in relation to the plaintiff’s claim for relief or any part of the plaintiff’s claim for relief:



(a)

there is evidence of the facts on which the claim or part of the claim is based, and



(b)

there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed,



the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires.

938 [15.70]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed.

(3)

In this rule, a reference to “damages” includes a reference to the value of goods.



Cosmos E-​C Commerce v Bidwell [15.90]  Cosmos E-​C Commerce Pty Ltd v Bidwell & Associates Pty Ltd [2005] NSWCA 81 PEARLMAN AJA (HODGSON and IPP JJA agreeing) [Bidwell & Associates entered into an agreement with Cosmos E-​C Commerce Pty Ltd for the provision of consulting services by Barry Bidwell. Bidwell claimed $221,700 for unpaid consultancy services. Cosmos denied each of the allegations in the statement of claim. It then continued with a statement to the effect that it had no knowledge of the plaintiff’s allegations and assertions. Cosmos filed an affidavit in which one of its directors, Mr Noble explained that there was a proposal to capitalise all debts owed to consultants and to issue 282,000 fully paid shares in Cosmos in exchange for Bidwell’s forgiveness of the debt. Mr Bidwell stated in an affidavit that that he had no knowledge of any proposal for the conversion of the plaintiff’s debt into shares in the capital of the defendant. However, he stated that the Bidwell Family Superannuation Fund became the registered owner of 282,000 shares in the capital of the defendant. In the District Court, it was found that Mr Noble’s affidavit did not reveal a triable issue and that the transfer of the 282,000 shares took place 12 months before the proposal outlined by Mr Noble. The primary judge entered summary judgment in favour of Bidwell pursuant to Pt 11A r 2 of the District Court Rules 1973, now r 13.1 of the UCPR. Cosmos sought to appeal from the interlocutory judgment in the District Court.] The general issue ground … [27] … I accept that the significant grounds in this appeal are whether or not the proceedings disclosed a triable issue, and whether the discretion conferred on the court below by Pt 11A r 2 was properly exercised. I note only that the grounds of defence were not well pleaded. They simply denied allegations in the statement of claim, whereas, by a statement not strictly part of the pleadings, the claimant endeavoured to show its intention to plead that it did not know and could not admit the allegations pleaded by the opponent. … [29] Mr Graham QC, appearing for the claimant, submitted that this rule [Pt 11A r 2 –​now UCPR r 13.1] has three requirements. First, there must be evidence of the facts on which the claim is based. Secondly, there must be evidence of the belief that the defendant has no defence to the claim. Thirdly, if those two requirements are established, then the court has a discretion as to whether or not to exercise the power conferred by the rule. In the claimant’s submission, the primary judge erred in the application of the rule. It asserts that triable issues were disclosed by the statement of claim and the grounds of defence, and having regard to those triable issues, the primary judge failed to apply the correct principle in dealing with the application to order summary judgment, and that, accordingly, his discretion miscarried. [30] It is convenient, I think, to deal with the claimant’s submissions by dealing separately with the question of a triable issue and the exercise of the discretion conferred upon the primary judge by Pt 11A r 2, and then by dealing with the submission that the requirement for evidence of belief was not met in this case. [15.90]  939

Civil Procedure in New South Wales

Cosmos E-C Commerce v Bidwell cont. A triable issue? [31] The claimant asserts that the statement of claim and the grounds of defence disclosed a number of triable issues, amongst which were at least the following: 1.

Who were the parties to the alleged agreement between the opponent and the claimant?

2.

Was there an intention between the parties to create an agreement, and, if so, what were the precise terms and conditions of the alleged agreement?

3.

What consultancy services were alleged to have been performed?

4.

Was consideration given for the alleged consultancy services to be provided by the opponent to the claimant?

5.

Was there past consideration in relation to consultancy services apparently rendered by the opponent to the claimant before the alleged agreement came into existence?

6.

Was the consideration offered illusory?

7.

Was there conduct on the part of the opponent that entitled it to demand a debt due from the claimant?

8.

Was the agreement, if there was one, void for uncertainty?

[32] The claimant pointed to a number of matters in the evidence before the primary judge that it claims support a finding that triable issues were disclosed. First, it pointed to the uncertainty of the range of dates disclosed in cl 2 of the particulars set out in the statement of claim that asserted the making of an agreement “… between August and 21 December 1999 …” Secondly, it pointed to the assertion, in cl 3(a) of the statement of claim, that consultancy services were to be provided by Mr Bidwell, raising uncertainty as to whether he was a party to the alleged agreement in his own capacity and whether the opponent in fact was the proper plaintiff in the proceedings. This uncertainty is reflected in the first affidavit of Mr Bidwell, where he deposed to his conversation with Mr Jim Gilchrist and to his conversation with Mr Adam Gilchrist, which both appear to have involved him in his personal capacity. Thirdly, it points to the retrospective nature of the alleged written agreement, that is, that it was alleged to have been made on 18 May 2000 in respect of consultancy services alleged to have commenced on 12 March 1999. Fourthly, it points to the variations between the alleged oral agreement and the alleged written agreement –​for example, the latter provided for a daily fee “… for a minimum of three days per week …” and it also provided for payment within 21 days of invoice date, neither of these matters having been pleaded as terms of the alleged oral agreement. Fifthly, it points to the uncertainty as to who was to be the recipient of the alleged consultancy services –​both the oral and written agreements, as pleaded, suggests the consultancy services were to be provided to the defendant or any other company in the Cosmos group, but cl 6 of the particulars in the statement of claim refers to consultancy services being provided to the defendant. [33] Having regard to these matters, the claimant contends that triable issues were disclosed that required determination on their merits at a final hearing. [34] In response, the opponent submits that the primary judge was correct in finding that no triable issue had been disclosed. That follows, in its submission, from the evidence of Mr Noble. He was a director of the claimant at all relevant times, and in a position to know what matters were considered at any board meeting of the claimant. His affidavit disclosed that one of those matters was the material contained in the explanatory notes. The explanatory notes contained, in the opponent’s submission, a clear admission that the sum of $211,000 was due and owing by the claimant to the opponent. They also acknowledged that the claimant was providing services through Mr Bidwell, they disclosed the nature of those services, and they disclosed that the services so provided were being monitored on a daily basis. [35] The opponent submits that, in addition, there was evidence of invoices being submitted from time to time by the opponent to the claimant, and there were e-​mails being exchanged between 940 [15.90]

Concluding Proceedings  Chapter  15

Cosmos E-C Commerce v Bidwell cont. Mr Bidwell and Mr Jim Gilchrist (or persons on the latter’s behalf) as to arrangements for the payment of the amounts claimed in the various invoices. [36] Accordingly, so the opponent submits, no triable issue was disclosed. The amount claimed was acknowledged in the evidence as a debt due from the claimant to the opponent arising out of the performance of a contract for the provision of consultancy services for a fee. [37] The basis for the exercise of a court’s jurisdiction to order summary judgment is not in doubt. In Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, Dixon J said, at p 91 that “… a case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury”. In General Steel Industries Inc v Commissioner for Railways (NSW) and Ors [1964] HCA 69; (1964) 112 CLR 125 at 129. Barwick CJ stated that the jurisdiction to terminate an action “… is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion.” Both those authorities dealt with the exercise of a power of summary dismissal of a plaintiff’s claim, but, in Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507, which dealt, amongst other things, with the giving of summary judgment, Barwick CJ at 514 said: Perhaps the summary intervention to prevent the continuance of a plaintiff’s action ought to be much rarer than the giving of summary judgment but there is sufficient correspondence in the two situations to make apposite to this case much of what I said in General Steel Industries v Commissioner for Railways (NSW) … [38] Webster and Anor v Lampard [1993] HCA 57; (1993) 177 CLR 598 was also a case involving the exercise of a power to give summary judgment. At pp 602-​603 in a joint judgment, Mason CJ and Deane and Dawson JJ cited both Dey v Victorian Railways Commissioners and General Steel Industries v Commissioner for Railways for the proposition that the power must be exercised with exceptional caution, and stated that “[n]‌owhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact.” [39] In my opinion, the requisite standard outlined by those authorities has not been met in this case. I think that it was far from certain that no triable issues were disclosed. I say that for the following reasons. First, the opponent’s claim was founded on an alleged agreement and on an allegation that the claimant was in breach of that agreement, entitling the opponent to the amount it claimed. But the claimant has shown that there were a myriad of uncertainties about that agreement. The evidence raised a number of questions about whether there was in fact an agreement, and, if there was, who were the parties to it and what were its terms. In addition, there were questions as to whether there was a breach of the agreement, and, if so, what constituted that breach. It seems to me that all these questions needed to be determined on their merits at a trial. [40] Secondly, I do not think that it is clear that the explanatory notes amounted to an unequivocal admission that a debt in the amount claimed was owed by the claimant to the opponent, so that, as the opponent claims, there is no triable issue between the parties. The explanatory notes were also uncertain. They were an internal document, labelled as a “draft”, and there is a conflict in the evidence as to their effect. Mr Noble claimed that they disclosed an arrangement for the issue of shares in satisfaction of debts due to consultants, but Mr Bidwell claimed that he had no knowledge of any such arrangement … Furthermore, they are expressed to have been written by the managing director but the reference to “Note to JG” casts some doubt upon who wrote them, since “JG” may have referred to Mr Jim Gilchrist, who may himself have been the managing director. Furthermore, they appear to be no more than the writer’s opinion as to a particular state of affairs. [41] Having regard to these matters, I consider that the material before the court below was not so clear and definite as to justify summary intervention, and that, accordingly, the primary judge erred in applying the proper test and his discretion miscarried upon this basis. … [15.90]  941

Civil Procedure in New South Wales

Cosmos E-C Commerce v Bidwell cont. The evidence of belief [44] The claimant submits that the primary judge erred in concluding that the belief of the opponent, required to be evidenced pursuant to Pt 11A 2 r 2(1)(b), could be inferred. It asserts that direct evidence of the belief is required for compliance with the rule. [45] As authority for this proposition, the claimant cited the decision of Blackburn CJ in the ACT Supreme Court in Harry Smith Care Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1979) 29 ACTR 21. In that case, a director of the plaintiff had sworn an affidavit containing the words “… in my opinion the defendant has no defence to this action.” His Honour held that this was not in compliance with a rule similar to Pt 11A r 2(1)(b) because it was a statement of opinion rather than belief. His Honour said at p 23: The rule requires a form of words which unequivocally implies an actual belief by the deponent in the truth of every fact required to establish the plaintiff’s claim, and in the absence of any fact which could ground a defence in fact or in law. Such a form of words affords a proper basis for cross-​examination. A statement of opinion, on the other hand, is neither unequivocal nor, strictly speaking, relevant. [46] However, in my opinion, this case is merely authority for the proposition that evidence of an opinion does not constitute sufficient compliance –​it does not support the proposition that the belief cannot be inferred from the evidence furnished by the plaintiff or other responsible person. [47] Part 11A r 2(1)(b) simply requires that there be evidence given of the belief. I would not hold that the rule precludes inferring the requisite belief from the evidence furnished by the plaintiff or other responsible person. The precise form of the evidence is not the critical point of the rule. What is required is the requisite belief, and in my opinion that can be established by an inference properly drawn from evidence furnished by the plaintiff or other responsible person. [48] For these reasons, I consider that the primary judge did not fall into error in relation to the application of the requirement in Pt 11A r 2(1)(b). The disposal of the appeal [49] For the reasons that I have set out, I would grant leave to appeal and I would allow the appeal ….

 Summary dismissal [15.100] We have seen that r  13.1 of the UCPR provides an avenue for the plaintiff to

apply for summary judgment. Rule  13.4 of the UCPR provides the corresponding right to the defendant to seek an order that the proceedings be dismissed on the basis that they are frivolous or vexatious; or there is no reasonable cause of action disclosed; or the proceedings are an abuse of process. The test applied for summary dismissal based on the plaintiff’s pleading disclosing no reasonable cause of action is similar to that applying for summary judgment. A proceeding that is frivolous is one that is not worth serious attention. A vexatious proceeding is a proceeding that is undertaken for the purpose of harassment or is one that cannot succeed or that is initiated to waste time or cause delay. Categories of abuse of process are not closed. However, examples of an abuse of process include:5 5

Jeffery & Katauskas Pty Limited v SST Consulting Pty Ltd [2009] HCA 43 at [27]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 at [9]‌–​[15].

942 [15.100]

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1.

proceedings which involve a deception on the court, or are fictitious or constitute a mere sham;

2.

proceedings where the process of the court is not being fairly or honestly used but is employed for some ulterior or improper purpose or in an improper way;

3.

proceedings which are manifestly groundless or without foundation or which serve no useful purpose;

4.

multiple or successive proceedings which cause or are likely to cause improper vexation or oppression;

5. proceedings where it is impossible for the defendant to obtain a fair trial in the circumstances of the case, for example due to plaintiff’s delay in bringing proceedings. Alternative procedures that attack the plaintiff’s or defendant’s pleading rather than their case, for example r 14.28 of the UCPR, are discussed in Chapter 9.

Uniform Civil Procedure Rules 2005 (NSW) [15.110]  Uniform Civil Procedure Rules 2005 (NSW) r 13.4 13.4 Frivolous and vexatious proceedings (1)

If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:



(a)

the proceedings are frivolous or vexatious, or



(b)

no reasonable cause of action is disclosed, or



(c)

the proceedings are an abuse of the process of the court,



the court may order that the proceedings be dismissed generally or in relation to that claim.

(2)

The court may receive evidence on the hearing of an application for an order under subrule (1).



Van Der Lee v NSW [15.120]  Van Der Lee v State of NSW [2002] NSWCA 286 [The State of New South Wales (the State) was the defendant in eight proceedings relating to the landslide at Thredbo in 1997. The State cross-​claimed against Lend Lease Corporation Ltd, Lend Lease Residential Pty Ltd and the claimants who were former officers and employees of a company, Kosciusko Thredbo Pty Ltd which ultimately was owned by Lend Lease Corporation but was deregistered in 1993. The cross-​claim sought damages, contribution and/​or indemnity. The claimants filed notices of motion seeking orders that the cross-​claims be stayed or dismissed as an abuse of process. It was submitted that evidence showed that the predominant purpose of the proceedings against the claimants was not to recover damages, contribution or indemnity, but to compel Lend Lease Corporation to make a contribution to the settlement of the claims.] HODGSON JA [64] … I would not be satisfied that the predominant purpose of the State interests in bringing the proceedings against the claimants was to pressure LLC into doing something which it was under no legal liability to do. [65] Furthermore, even if this were the predominant purpose, this would not necessarily make the proceedings an abuse of process. In my opinion, if one has reasonable grounds to sue X, who has [15.120]  943

Civil Procedure in New South Wales

Van Der Lee v NSW cont. few assets, and believes that Y, who has extensive assets, may feel obliged to satisfy the judgment obtained against X, and if one then sues X with the predominant purpose of recovering from Y, I do not think this is necessarily an abuse of process. The question in such a case would be whether this is for the purpose of gaining a “collateral advantage” rather than for a purpose for which the proceedings were designed and exist, or alternatively to obtain a benefit not “reasonably related” to an order that could be obtained in the proceedings. There is no hard and fast line here: it is very much a matter of judgment. Where a holding company has had the benefit of a subsidiary’s enterprise, and has then caused it to be liquidated and de-​registered, it may be reasonable for a litigant to sue employees of the subsidiary who have caused damage to the litigant in the course of their employment by the subsidiary, in the hope that the holding company will feel obliged as a matter of commercial morality to stand behind them. This is not inconsistent with the holding company having no legal obligation to do so, or even with it reasonably considering for its part that it has no moral obligation to do so. [66] In this case, the onus was squarely on the claimants to show that for the State interests to act in this way would be for the predominant purpose of gaining a collateral advantage, or a benefit not reasonably related to such judgment as might be obtained against the employees; and I am not satisfied that they have discharged that onus.



Fawcett v Cannon [15.130]  Fawcett v Cannon [2007] NSWSC 1267 ROTHMAN J [1]‌Geoffrey Cannon placed a very large firework inside a mortar tube and lit it, expecting it to launch into the sky and explode. The firework did not launch, but exploded on the ground causing serious injuries to Justin Fawcett. [2]‌Mr Fawcett sues Mr Cannon, the occupiers of the land (Mr and Mrs Wilton), the retailer of the fireworks (“the Fireworks King”), and the wholesale supplier of the fireworks to the Fireworks King. It is alleged that the wholesaler was one or more of the companies referred to in the pleadings as the Schofield companies and listed as the fifth, sixth, seventh and eighth defendants. The eleventh defendant is the principal of the Schofield companies, Scott Anthony Schofield. There is a possible alternate wholesaler, namely, the ninth defendant, Fireworks Australia (Importers) Pty Ltd. (The tenth defendant is the principal of the company t/​as the Fireworks King.) [3]‌The Schofield companies (except the fifth defendant) move to dismiss the proceedings against them. The Schofield companies submit that their case is made out by para 7 of the Statement of Claim. It is in the following terms: [7]‌The Plaintiff being in doubt as to which of the Schofield Companies owned and conducted a business of importing and supplying fireworks sues the Schofield Companies to the intent that the question of which of them is liable to the Plaintiff for his injury and damage hereinafter alleged may be determined. [4]‌Further the Schofield companies rely on an affidavit of Mr Schofield that attests to the following: that the sixth defendant has never traded, and never filed a tax return or Business Activity Statement; that the seventh defendant has never imported fireworks; and, that the eighth defendant is a building developer and has “never traded in fireworks import or sale”. [5]‌The Schofield companies submit that the proceedings are an abuse of process and seek dismissal under UCP r 13.4 of the proceedings against each of them except the fifth defendant. 944 [15.130]

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Fawcett v Cannon cont. [6]‌Further and in the alternative, all of the Schofield companies and Mr Schofield (together referred to as the Schofield interests) move to strike out aspects of the Statement of Claim. Principles on Summary Dismissal of Proceedings [7]‌The principles usually employed for the striking out of proceedings are well known: General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125. Further this Court has an inherent power or jurisdiction to strike out a proceeding because it is so weak and/​or because it depends upon facts, which, on the plaintiff’s case, cannot be proven and/​or is an abuse of process. [8]‌I have been referred to the judgment of the High Court in Batistatos v RTA of NSW (2006) 226 CLR 256 in which the majority cited in the context of a personal injury claim comments of the Court in two criminal cases. They said: [14] In Ridgeway v R, Gaudron J explained: The powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose, as well as proceedings that are “frivolous, vexatious or oppressive”. This notwithstanding, there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process. Indeed, the courts have resisted, and even warned against, laying down hard and fast definitions in that regard. That is necessarily so. Abuse of process cannot be restricted to “defined and closed categories” because notions of justice and injustice, as well as other considerations that bear on public confidence in the administration of justice, must reflect contemporary values and, as well, take account of the circumstances of the case. That is not to say that the concept of “abuse of process” is at large or, indeed, without meaning. As already indicated, it extends to proceedings that are instituted for an improper purpose and it is clear that it extends to proceedings that are “seriously and unfairly burdensome, prejudicial or damaging” or “productive of serious and unjustified trouble and harassment”. [15] Earlier, in Rogers v R, McHugh J observed: Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute. His Honour added: Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court’s process. To that it should be added that the power to deal with procedural abuse extends to the exclusion of particular issues which are frivolous and vexatious. Further, the failure to take, as well as the taking of, procedural steps and other delay in the conduct of proceedings are capable of constituting an abuse of the process of the court (Per Gleeson CJ, Gummow, Hayne and Gummow JJ). [9]‌The exercise of jurisdiction to dismiss on a similar basis to that here agitated was discussed by me in Shalhoub Holdings Pty Ltd & Ors v CBA [2006] NSWSC 607. There I said: [28] Rule 13.4 of the Uniform Civil Procedure Rules (UCP Rules) empowers the Court, in its discretion, to order that proceedings be dismissed where the proceedings are frivolous or vexatious; or no reasonable cause of action is disclosed; or the proceedings are an abuse of the process of the Court. The usual application, which seeks to rely on this Rule, depends upon an examination of the pleadings. [29] The usual course is for such an application to be made in circumstances where the pleadings do not disclose a cause of action and there is no possibility of the facts pleaded giving rise to a good cause of action: Dey v Victorian Railway Commissioners (1949) 78 CLR 62. This application is not a usual application. It depends upon the inherent jurisdiction, [15.130]  945

Civil Procedure in New South Wales

Fawcett v Cannon cont. described in the Rule, to strike out the plaintiffs’ case because it is so weak and/​or because it depends upon facts, which, on the plaintiffs’ case, cannot be proven. It is a most unusual course, upon which the Court would embark only in exceptional circumstances and only where it came to the view that to proceed further would be futile. [30] Notwithstanding that the course impressed upon the Court is unusual, it is a course which has been discussed by this Court, and others, over a long period of time. Often, the Court discusses the principles associated with the exercise of discretion agitated in the course of refusing to exercise that discretion. [31] The High Court, in Burton v The President of the Shire of Bairnsdale (1908) 7 CLR 76, referred to the discretion in the following way: The rule is that every plaintiff is entitled to have his action tried unless it can be shown obviously that the action is frivolous or vexatious, or otherwise an abuse of the process of the Court. A litigant is entitled to use, not to abuse, the process of the Court … So, there is power to strike out a pleading on the ground that it discloses no reasonable cause of action or of defence; and in any such case, or in the case of the action being shown by pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgment to be entered. This rule applies to a wider area of cases than the general power; and yet it has been held not to apply except in plain or obvious cases; and if there is a point of law that requires any serious discussion, it should be set down for argument: Hubbuck v Wilkinson. The pleading must be “obviously frivolous or vexatious, or obviously unsustainable,” if it is to be struck out (per Lindley LJ in Attorney General of the Duchy of Lancaster v London and North Western Railway Co). The pleading must be “so clearly frivolous that to put it forward would be an abuse of the process of the Court”: Young v Holloway. (Per Higgins J at 98, 99, 100) [32] In Cox v Journeaux (1935) 52 CLR 713, the principles relating to a strike out of this kind were once more discussed. That case concerned an allegation of conspiracy by the defendants, as co-​directors of the plaintiff, to injure the plaintiff by false representation. There are significant similarities between the allegations made in Cox v Journeaux and the present proceedings. Sir Owen Dixon, who dealt with the notice of motion then before the Court, said: The inherent jurisdiction of the Court to stay an action as vexatious can be exercised only when the action is clearly without foundation and when to allow it to proceed would impose a hardship upon the defendants which may be avoided without risk of injustice to the plaintiff. The principle, in general paramount, that a claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed, must be observed. A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender. It is only when to permit it to proceed would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party that it should be stopped. But the Court is not concluded by the manner in which the litigant formulates his case in his pleadings. It may consider the undisputed facts. Further, it is not limited to cases where there is no dispute of fact … In the present case I am satisfied that the Court should exercise its power to stop the action summarily. The plaintiff’s case is clearly hopeless. It is true that some examination of the facts is necessary before this appears. (Per Dixon J at 720) [33] The Court of Appeal in England has expressed the view that in order for the inherent jurisdiction to be invoked successfully it must be “impossible for the party concerned to succeed on his claim”: Charles Forte Investments Ltd v Amanda [1964] 1 Ch 240 at 250–​251. [34] This Court has dealt with the principles and application of them on a number of occasions, the three best known examples of which are: Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937; Peter Kent Development Propriety Ltd v ANZ Banking Group Ltd

946 [15.130]

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Fawcett v Cannon cont. (unreported, NSWSC, Hunt J, 6 May 1980); Pountney v Dang (unreported, NSWSC, Barr J, 22 August 1997). [35] In Brimson, Cross J dealt with both a claim that the pleadings did not, themselves, disclose a cause of action and a claim that the plaintiff’s case was so weak as to warrant summary dismissal. The latter claim was, with respect rightly, dealt with under both the inherent power of the Court and under the Supreme Court Rules, then applicable, which reflected the inherent power. The UCP Rules also reflect the inherent power. Justice Cross referred to: Bayne v Baillieu (1908) 6 CLR 382 at 387; Dey v Commissioner of Railways; and General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125. His Honour said: Where the court is asked to reject the plaintiff’s case, either under its statutory rules or its inherent jurisdiction, the fundamental principle is that prima facie a plaintiff is entitled to have his case come to trial; and applications to deprive him of that right will succeed only in the clearest of cases. True, the court will not look merely at the suggested weakness of the plaintiff’s case … but … at the suggested strength of the defendant’s case; and, true, forensic argument and subsequent judicial reflection are not necessarily inconsistent with a firm conclusion that the cause of action should not be allowed to proceed. But fatal defects in the plaintiff’s case must be very clear before the court will intervene in this fashion. (at 944) [36] The principle is that the defendant must show that there is no possibility that there could be a good cause of action consistent with the pleadings and the facts. These same principles and this same approach were adopted in the other two judgments; Hunt J in Peter Kent Development, supra, described the power here discussed as “much wider” than the power to strike out pleadings. His Honour went on to say: Both Rules reflect the inherent jurisdiction of the Court to deal with the abuse of its process … Under that inherent jurisdiction –​although now more properly under Part 13 Rule 5 [now UCP Rules Rule 13.4] –​there is power to stay an action which, although properly pleaded, is bound to fail. Such an action may be called either vexatious or an abuse of process. One such case would be where the legislature has provided an absolute defence … Another such case would be where a second action was brought seeking to litigate an identical issue to that already decided against the plaintiff … Such cases are very rare; the genus of which they are but species is aptly named an abuse of the Court’s process, for relief will not be given in such cases unless the claim or defence being dismissed or struck out under such power amounts to an improper use of the machinery of the Court. [10] I adhere to the view earlier expressed. Batistatos is not inconsistent with that approach. [11] Applying those principles, I do not form the view that, in relation to any one of the Schofield companies, giving the plaintiff his day in court would be an improper use of the machinery of the Court or “would clearly inflict unnecessary injustice upon the opposite party.” (Sir Owen Dixon in Cox v Joumeaux, supra.) Conclusion on Summary Dismissal [12] The facts upon which the Schofield companies rely are not accepted. An issue of fact is sufficient to warrant the proceedings continuing. Further, the facts do not go far enough. It would be possible, for example, for the fifth defendant to have provided the fireworks, and imported it. But it is also possible, even on the version of Mr Schofield, for the seventh defendant (who, he says, has never imported) to have supplied after another has imported. It is possible for the sixth defendant to have acted relevantly on fireworks without trading in them. On the facts that are accepted, it cannot be said of any one of the Schofield companies that it is not possible for the plaintiff to succeed or that

[15.130]  947

Civil Procedure in New South Wales

Fawcett v Cannon cont. further proceedings are unjustifiable or an abuse. The proceedings have not been commenced for an improper purpose. I dismiss the motion. [13] None of the above is in any way critical of Mr Schofield. It is likely that his evidence will, ultimately, be accepted by the plaintiff and/​or by the trial judge. But that is not the test. His affidavit does not bind the fifth defendant, nor is there any admission by any one of the Schofield companies.

 No reasonable prospects of success [15.140] The standard for summary judgment or summary dismissal has been lessened

in some courts such as the Federal Court of Australia. Section  31A of the Federal Court of Australia Act 1976 (Cth) provides that judgment may be entered where a party has no reasonable prospect of successfully prosecuting or defending the proceedings: see Spencer v The Commonwealth (2010) 124 CLR 118; [2010] HCA 28. However, the lower standard has not been adopted in New South Wales: see Collier v Lancer (No 2) [2013] NSWCA 186 at [9]‌–​[11] (Ward and Leeming JJA); New South Wales v Williams [2014] NSWCA 177 at [71] (Emmett JA with whom Macfarlan JA and Simpson J agreed); Commonwealth Bank of Australia v ZYX Learning Centres Ltd [2014] NSWSC 1676 at [47]–​[71]. Want of prosecution

Uniform Civil Procedure Rules 2005 (NSW) [15.150]  Uniform Civil Procedure Rules 2005 (NSW) r 12.7 12.7 Dismissal of proceedings etc for want of due despatch (1)

If a plaintiff does not prosecute the proceedings with due despatch, the court may order that the proceedings be dismissed or make such other order as the court thinks fit.

(2)

If the defendant does not conduct the defence with due despatch, the court may strike out the defence, either in whole or in part, or make such other order as the court thinks fit.

Note: See rule 42.20 as to the effect of dismissal with respect to costs.

 [15.160]  Rule 12.7 of the UCPR provides discretion in the court to dismiss proceedings, strike

out the defence or make such other order as the court thinks fit. Unsurprisingly the overriding purpose principles in ss 56–​60 of the CPA will be relevant to the court’s decision as it is for all other procedural decisions: see Bi v Mourad [2010] NSWCA 17 at [31] per Young JA (“It must also be remembered these days that ss 56–​60 of the CPA set up a regime that requires the courts to turn away reluctant gladiators and to ensure that they either prosecute their claims in due time or get sent away from the court.”); Dank v Cronulla Sutherland District League Football Club Ltd [2014] NSWCA 288 at [98]–​[104]; Beavan v Industrial Relations Secretary (No 1) [2016] NSWIC 1 at [71]–​[113]. 948 [15.140]

Concluding Proceedings  Chapter  15

Building Insurers’ Guarantee Corporation v Touma [15.170]  Building Insurers’ Guarantee Corporation v Touma [2010] NSWSC 4 HARRISON J [In 1997, Mr Touma was a builder. In association with the second defendant he contracted, to construct 26 villas on land in Tangarra St, Croydon Park. The second defendant owned the property and the villas that were constructed upon it. On approximately 11 August 1999, the Owners Corporation of Strata Plan 60805 became the owner of the common property. The plaintiff alleges that Mr Touma and the second defendant constructed the villas in a defective way that gave rise to a claim by the Owners Corporation against them for the costs of rectifying the defective work. The proceedings were transferred from the Consumer, Trader and Tenancy Tribunal to the Supreme Court on 10 July 2007. Mr Touma failed to conduct various steps in the proceedings that were ordered such as discovery. Mr Touma sought numerous adjournments due to being overseas, unwell and as a result of change of solicitor. The plaintiff filed a motion to strike out Mr Touma’s defence pursuant to r 12.7(2) of the UCPR.] [29] The cases are principally concerned with the dismissal of proceedings in circumstances where a plaintiff does not prosecute them with due despatch. Delay is said to be the threshold circumstance that enlivens the power, although the significance of delay is to be considered in the particular circumstances of the case involved. Some English authorities dealing with the power to dismiss an action for want of prosecution have suggested that the power should be exercised only where a plaintiff’s default has been intentional and contumelious or where there has been inordinate or inexcusable delay giving rise either to a substantial risk that a fair trial would not be possible or to a risk of serious prejudice to the defendant. In New South Wales this prescription has been rejected as unduly restricting the true scope of the power to strike out for want of prosecution:  Stollznow v Calvert [1980] 2 NSWLR 749; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274. [30] The latter case was one of multiple failures to comply with directions. It held that the English authorities relating to the exercise of a discretion to dismiss proceedings for default do not form part of the law of New South Wales so far as they restrict the exercise of the discretion. [31] The plaintiff’s present application is informed by the Civil Procedure Act 2005 and in particular the following sections [ss 56, 59 and 61]. [32] The issue distils to what is just in all of the circumstances. That requires in this case that a balance be struck between the competing interests of the plaintiff and the first defendant. The issue also needs now to be considered in the light of the recent decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. At [137] Heydon J commented as follows: Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees, and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce. [33] The commercial transaction that gave rise to these proceedings is now rather old. There is, for example, no party teetering precariously on the brink of financial collapse or mercantile oblivion if the proceedings are not brought to a conclusion very soon. On the other hand, the issues are clear and well defined, even if considerable controversy may attend the production of a final answer. For example, it seems tolerably clear that the Owners Corporation had significant concerns about the

[15.170]  949

Civil Procedure in New South Wales

Building Insurers’ Guarantee Corporation v Touma cont. standard of workmanship that was involved in the building that it acquired. Even though minds may differ about the concerns that have been raised, the theoretical issues in the case are not particularly novel or complicated. If Mr Touma wished to contend that the building was constructed without defects, or without defects for which he was responsible or liable, these proceedings provide a perfect venue or vehicle in the context of which his contentions can be considered. [34] However, it is not appropriate to approach a dispute about who is or may be at fault for the alleged defects by attempting, or by remaining content, to frustrate the plaintiff’s efforts to have the issues identified, isolated and finally determined. The plaintiff has made it clear in the course of these proceedings, as a stranger to the building contract between the Owners Corporation and Mr Touma, that it is dependent upon the production of a large amount of documents by the defendants, including Mr Touma, in order to attempt to understand and to make good its claim that the works for which it indemnified the Owners Corporation were defective and worthy of compensation. Mr Touma has managed so far, by a process of almost studied nonchalance, to avoid engaging in the litigious process in a proper way. He cannot be permitted to do so without some consequence. From the plaintiff’s point of view that consequence should be the striking out of his defence. What follows thereafter remains to be seen. In my opinion, there are good grounds, in the interests of justice, for the granting of the relief that the plaintiff seeks. [35] This is a proper case where Mr Touma’s defence should be struck out. He has not attended to his side of the litigation in a timely way and has disregarded his obligation to conform to directions that have been made. He cannot continue to change solicitors, or to seek adjournments on spurious grounds, in the hope that the inconvenience and disruption to his defence of the proceedings that is claimed to follow as a result becomes instead the problem of a plaintiff that is otherwise faultless and largely unarmed with any power to control what occurs.

 [15.180]  An order for summary dismissal (under any of rr 13.4, 12.7 and 12.9 of the UCPR

or the court’s inherent/​implied jurisdiction), where there has not been a hearing on the merits of the claim (eg where the proceedings have been dismissed because the plaintiff has failed to prosecute the claim or has not complied with the rules) does not ordinarily prevent the plaintiff from issuing fresh proceedings or claiming the same relief in fresh proceedings. However, the defendant in the fresh proceedings may raise the defence of res judicata or issue estoppel: see Chapter 7. An important concern for the plaintiff will be to ensure that any statute of limitation has not expired since commencing the original proceedings. An alternative to issuing fresh proceedings (or not issuing fresh proceedings due to the expiration of the limitation period) is for the unsuccessful party to appeal the order for summary dismissal.

Civil Procedure Act 2005 (NSW) [15.190]  Civil Procedure Act 2005 (NSW) s 91 91 Effect of dismissal of proceedings (cf SCR Pt 40, r 8) (1)

Dismissal  of:



(a)

any proceedings, either generally or in relation to any cause of action, or



(b)

the whole or any part of a claim for relief in any proceedings,

does not, subject to the terms on which any order for dismissal was made, prevent the plaintiff from bringing fresh proceedings or claiming the same relief in fresh proceedings.

950 [15.180]

Concluding Proceedings  Chapter  15

Civil Procedure Act 2005 (NSW) cont. (2)

Despite subsection (1), if, following a determination on the merits in any proceedings, the court dismisses the proceedings, or any claim for relief in the proceedings, the plaintiff is not entitled to claim any relief in respect of the same cause of action in any subsequent proceedings commenced in that or any other court.

 [15.200]  There has been no attempt to make a comprehensive list and discuss all summary

disposal procedures that are available under the UCPR. The summary disposal procedures that have been discussed are the main avenues that are used to truncate proceedings and save the time and expense of a trial. General principles have been repeated and are common to most summary disposal matters: the plaintiff should not be prevented from litigating his or her action without very good reason, the defendant has obligations to respond but should be allowed to defend if an arguable case exists, and the ever present, and perennially important, overriding purpose principles provide a framework for all decisions.

INCENTIVES TO SETTLE [15.210] The UCPR offer of compromise procedure and the common law in the form of

Calderbank letters are designed to encourage a reasoned approach to settlement by both plaintiffs and defendants. The offer to settle must be genuine and if the offer is unreasonably rejected cost consequences can follow. Calderbank letters are offers of compromise in letters marked “without prejudice save as to costs”. They are a form of procedural alternative to the UCPR formal system of offers. The costs consequences of unreasonably rejecting an offer contained in a Calderbank letter is in the general discretion of the court rather than the UCPR rules that governs offers of compromise. Calderbank letters lack the certainty and explicit consequences of the UCPR formal system of offers of compromise. Section  73 of the CPA allows the court to determine in the particular proceedings any dispute as to whether there has in fact been a compromise or settlement: see Thai Airways International Public Co Ltd v FaragMenzies Aviation Group (Ground Services) Australia Pty Ltd [2011] NSWCA 172. Prior to this provision being enacted, there was uncertainty as to whether separate proceedings needed to be commenced to resolve such disputes.

Civil Procedure Act 2005 (NSW) [15.220]  Civil Procedure Act 2005 (NSW) s 73 73 Power of court to determine questions about compromises and settlements (1)

In any proceedings, the court:



(a)



(b)

has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and may make such orders as it considers appropriate to give effect to any such determination.

[15.220]  951

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. (2)

This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question.

 Offers of compromise under the UCPR [15.230]  Offers of compromise provide a mechanism by which either plaintiff or defendant

can offer to resolve the substantive claims in litigation. Resolution is facilitated by coupling costs consequences to the rejection of an offer where a party fails to achieve a better result at trial. By facilitating the timely resolution of disputes, the procedure supports the overriding purpose and principles of case management in Pt 6 of the CPA. The NSW Court of Appeal has explained that offers of compromise are designed to: • encourage the proper compromise of litigation, in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation; • instill a heightened sense of realism in the negotiation between parties; • oblige the offeree to give serious thought to the risk involved in non-​acceptance, including that they are at risk as to costs. See Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 724–​726; Hillier v Sheather (1995) 36 NSWLR 414 at 420–​421; Morgan v Johnson (1998) 44 NSWLR 578 at 581–​582. The current rules governing offers of compromise are the result of amendments by the Uniform Civil Procedure Rules (Amendment No 59) 2013 which took effect on 7 June 2013. Offers of compromise made before 7 June 2013 are subject to the previous versions of the rule: UCPR Pt 1 Sch 12. Any party by notice in writing may make an offer to any other party to compromise on any claim in the proceedings. It need not relate to all claims in the proceedings and more than one offer in relation to the same claim can be made. The offer is taken to have been made without prejudice unless the notice indicates otherwise. The circumstances in which the court at the time of the trial may become aware of the offer of compromise if it is not accepted are restricted: see UCPR r 20.30. The offer must not be expressed to be inclusive of costs. The offer must not include an amount for costs, unless the offer proposes a judgment in favour of a defendant: r 20.26(2) (c), (3)(a). Further a valid offer cannot exclude, modify or restrict the operation of r 42.14 or 42.15 dealing with the cost consequences of an offer not being accepted:  r  20.26(12). However, offers may include a reference to the payment of costs by the offeror “as agreed or assessed”: r 20.26(3)(b). The detailed focus on how costs should be dealt with in an offer was aimed at addressing problems that had arisen under the pre-​ 7  June 2013 rules which required offers to be “exclusive of costs”. A practice developed where offers were expressed to be “plus costs as agreed or assessed”. The Court of Appeal ultimately held that such a term in an offer was not “exclusive of costs” and did not comply with the pre-​7 June 2013 version of r 20.26(2): Old v McInnes [2011] NSWCA 410; Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 at [24]–​[25]. 952 [15.230]

Concluding Proceedings  Chapter  15

A plaintiff may not make an offer unless the defendant has been given sufficient necessary documentation to enable the defendant to fully consider the offer. However, no order may be made in favour of the defendant on the ground that the plaintiff has not supplied sufficient documentation unless the defendant informs the plaintiff in writing within 14 days of receiving the offer of that issue or the court orders otherwise: see UCPR r 20.26(4). There are formal requirements for the notice of making an offer:  see UCPR r  20.26(2). For example, it must bear a statement to the effect that “the offer is made in accordance with these rules”. The offer can be limited to being open for a period of time: see UCPR r 20.26(5). However, if it is made two months or more before the matter is set down for trial, the offer must be open for not less than 28 days from the date of the offer. If the offer is made less than two months before the date that the matter is set down for trial, the offer must be left open for such time as is reasonable in the circumstances. The offer cannot be withdrawn during the period that the offer is open: UCPR r 20.26(11). The offer can be accepted by serving a written notice of acceptance at any time during the period that the offer is open for acceptance: UCPR r 20.27. Unless otherwise stated on the offer, the contents of the offer must be forthcoming within 28 days of the acceptance of the offer. If the contents of the offer are not forthcoming within that time or if the court grants the party leave the party who accepted the offer can withdraw the acceptance by serving written notice. Although not expressly stated in the rules, an offer of compromise must be a genuine offer of compromise: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [16], [25]; Leach v The Nominal Defendant [2014] NSWCA 391 at [41]; Brighten v Traino (No 2) [2019] NSWCA 203 at [13]–​[15]. Part 42 Div 3 of the UCPR provides the costs consequences for offers of compromise. It is to be noted that the cost consequences regarding offers of compromise affect the usual cost order (costs follow the event; or the loser pays the winner’s costs) and costs may be payable on an indemnity basis rather than on the ordinary basis. Further, the costs consequences that follow from unaccepted offers of compromise in rr  42.14, 42.15 and 42.15A in Pt  42 Div 3 are all prefaced by “[u]‌nless the court orders otherwise” which maintains the court’s discretion in relation to costs that is provided for in s 98 of the CPA. Consequently, even when an offer of compromise complies with the rules and Pt 42 Div 3 is engaged, the court may exercise its discretion to make orders different from those under Pt 42 Div 3.

Uniform Civil Procedure Rules 2005 (NSW) [15.240]  Uniform Civil Procedure Rules 2005 (NSW) rr 20.25–​ 20.30, 42.13, 42.13A–​ 42.15A, 42.16, 42.17 20.25 Definitions In this Division: • judgment in favour of the defendant includes a dismissal of a summons or a statement of claim. • offer means an offer of compromise referred to in rule 20.26. • period of acceptance for an offer means the period of time during which the offer is open for acceptance.

[15.240]  953

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. 20.26 Making of offer (1)

In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.

(2)

An offer under this rule:



(a)

must identify:



(i)

the claim or part of the claim to which it relates, and



(ii)

the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and



(b)

if the offer relates only to part of a claim in the proceedings, must include a statement:



(i)

in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or



(ii)

in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and



(c)

must not include an amount for costs and must not be expressed to be inclusive of costs, and



(d)

must bear a statement to the effect that the offer is made in accordance with these rules, and



(e)

if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and



(f)

must specify the period of time within which the offer is open for acceptance.

(3)

An offer under this rule may propose:



(a)

a judgment in favour of the defendant:



(i)

with no order as to costs, or



(ii)

despite subrule (2)(c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff’s costs, or



(b)

that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or



(c)

that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer.

(4)

If the offeror makes an offer before the offeree has been given such particulars of the offeror’s claim, and copies or originals of such documents available to the offeror, as are necessary to enable the offeree to fully consider the offer, the offeree may, within 14 days of receiving the offer, give notice to the offeror that:



(a)

the offeree is unable to assess the reasonableness of the offer because of the lack of particulars or documents, and



(b)

in the event that rule 42.14 applies to the proceedings, the offeree will seek an order of the court under rule 42.14(2).

(5)

The closing date for acceptance of an offer:



(a)

in the case of an offer made two months or more before the date set down for commencement of the trial –​is to be no less than 28 days after the date on which the offer is made, and



(b)

in any other case –​is to be such date as is reasonable in the circumstances.

(6), (7) (Repealed) 954 [15.240]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont. (8)

Unless the notice of offer otherwise provides, an offer providing for the payment of money, or the doing of any other act, is taken to provide for the payment of that money, or the doing of that act, within 28 days after acceptance of the offer.

(9)

An offer is taken to have been made without prejudice, unless the notice of offer otherwise provides.

(10)

A party may make more than one offer in relation to the same claim.

(11) Unless the court orders otherwise, an offer may not be withdrawn during the period of acceptance for the offer. (12)

A notice of offer that purports to exclude, modify or restrict the operation of rule 42.14 or 42.15 is of no effect for the purposes of this Division.

20.27 Acceptance of offer (1)

A party may accept an offer by serving written notice of acceptance on the offeror at any time during the period of acceptance for the offer.

(2)

An offer may be accepted even if a further offer is made during the period of acceptance for the first offer.

(3)

If an offer is accepted in accordance with this rule, any party to the compromise may apply for judgment to be entered accordingly.

20.28 Withdrawal of acceptance (1)

A party who accepts an offer may withdraw the acceptance in any of the following circumstances by serving written notice of withdrawal on the offeror:



(a)

if the offer provides for payment of money, or the doing of any other act, and the sum is not paid to the offeree or into court, or the act is not done, within 28 days after acceptance of the offer or within such other time as the offer provides, or



(b)

if the court grants the party leave to withdraw the acceptance.

(2)

If acceptance of an offer is withdrawn:



(a)

except as provided by paragraph (b), all steps in the proceedings that have been taken as a consequence of the offer having been accepted cease to have effect, and



(b)

the court may give directions:



(i)

to restore the parties as nearly as may be to their positions at the time of the acceptance, and



(ii)

to give effect to any steps in the proceedings that have been taken as a consequence of the offer having been accepted, and

(iii)

to provide for the further conduct of the proceedings,



and may do so either after the offer is withdrawn or when granting leave to withdraw the offer.

20.29 Failure to comply with accepted offer (1)

If the plaintiff, being a party to an accepted offer, fails to comply with the terms of the offer, the defendant is entitled:



(a)

to such judgment or order as is appropriate to give effect to the terms of the accepted offer, or



(b)

to an order that the proceedings be dismissed, and to judgment accordingly,



as the defendant elects, unless the court orders otherwise.

(2)

If the defendant, being a party to an accepted offer, fails to comply with the terms of the offer, the plaintiff is entitled: [15.240]  955

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

to such judgment or order as is appropriate to give effect to the terms of the accepted offer, or



(b)

to an order that the defence be struck out, and to judgment accordingly,



as the plaintiff elects, unless the court orders otherwise.

(3)

If a party to an accepted offer fails to comply with the terms of the offer, and a defendant in the proceedings has made a statement of cross-​claim or cross-​summons that is not the subject of the accepted offer, the court:



(a)

may make such order or give such judgment under this rule, and



(b)

may make such order as to the further conduct of proceedings on the statement of cross-​claim or cross-​summons,



as it thinks fit.

20.30 Disclosure of offer to court or arbitrator (1)

No statement of the fact that an offer has been made may be contained in any pleading or affidavit.

(2)

If an offer is not accepted, no communication with respect to the offer may be made to the court at the trial or, as the case may require, to the arbitrator.

(3)

Despite subrule (2), an offer may be disclosed to the court or, as the case may require, to the arbitrator:



(a)

if a notice of offer provides that the offer is not made without prejudice, or



(b)

to the extent necessary to enable the offer to be taken into account for the purpose of determining an amount of interest up to judgment, or



(c)

after all questions of liability and relief have been determined, to the extent necessary to determine questions as to costs, or



(d)

to the extent necessary to enable the offer to be taken into account for the purposes of section 73(4) of the Motor Accidents Act 1988, section 137(4) of the Motor Accidents Compensation Act 1999 or section 151M of the Workers Compensation Act 1987.

Part 42 Costs Division 3 Offers of Compromise 42.13 Application This Division applies to proceedings in respect of which an offer of compromise (the offer) is made under rule 20.26 with respect to a plaintiff’s claim (the claim). 42.13A Where offer accepted and no provision for costs (1)

This rule applies if the offer:



(a)

is accepted by the offeree, and



(b)

does not make provision for costs in respect of the claim.

(2)

If the offer proposed a judgment in favour of the plaintiff in respect of the claim, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim, assessed on the ordinary basis up to the time when the offer was made.

(3)

If the offer proposed a judgment in favour of the defendant in respect of the claim (including a dismissal of a summons or a statement of claim), the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, assessed on the ordinary basis up to the time when the offer was made.

956 [15.240]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont. 42.14 Where offer not accepted and judgment no less favourable to plaintiff (1)

This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer.

(2)

Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim:



(a)

assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and



(b)

assessed on an indemnity basis:



(i)

if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and



(ii)

if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

42.15 Where offer not accepted and judgment no more favourable to plaintiff (1)

This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim no more favourable to the plaintiff than the terms of the offer.

(2)

Unless the court orders otherwise:



(a)

the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and



(b)

the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, assessed on an indemnity basis:



(i)

if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and



(ii)

if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

42.15A Where offer not accepted and judgment no less favourable to defendant (1)

This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer.

(2)

Unless the court orders otherwise:



(a)

the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and



(b)

the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, assessed on an indemnity basis:



(i)

if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and



(ii)

if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

42.16 Costs with respect to interest (1)

If a plaintiff obtains an order or judgment for the payment of a debt or damages and: [15.240]  957

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

the amount payable under the order or for which judgment is given includes interest or damages in the nature of interest, or



(b)

the court, by a separate order, awards the plaintiff interest or damages in the nature of interest in respect of the amount,

then, for the purpose of determining the consequences as to costs referred to in rule 42.14, 42.15 or 42.15A, the court must disregard so much of the interest, or damages in the nature of interest, as relates to the period after the day on which the offer was made. (2)

For the purpose only of this rule, the court may be informed of the fact that the offer was made, and of the date on which it was made, but must not be informed of its terms.

42.17 Miscellaneous (1)

Before the court makes any order under rule 42.14 or 42.15, the party to whom the offer is made may request the party making the offer to satisfy the court that the party making the offer was at all material times willing and able to carry out the offer.

(2)

If the court is satisfied that the party making the offer was at all material times willing and able to carry out the offer, then, unless the court orders otherwise, the party making the request must pay such of the costs of the party to whom the request is made as have been occasioned by the request.

(3)

If the court is not satisfied that the party making the offer was at all material times willing and able to carry out the offer, then, unless the court orders otherwise:



(a)

rules 42.14 and 42.15 do not apply, and



(b)

the party to whom the request is made must pay the costs of the party making the request occasioned by the request.

(4)

Unless the court orders otherwise, any application for an order for costs under rule 42.14 or 42.15 must be made forthwith after the order or judgment giving rise to the entitlement to the order for costs is made or given.



Leach v The Nominal Defendant [15.250]  Leach v The Nominal Defendant [2014] NSWCA 391 MCCOLL JA (GLEESON JA and SACKVILLE AJA agreeing) [Mr Leach (the appellant) was the passenger in a Mitsubishi Magna sedan. A white Holden Commodore struck the Mitsubishi. Gunshots were then fired from the Holden into the Mitsubishi. Mr Leach was shot and suffered serious injuries. The Commodore drove away. It was later discovered burnt out. It had been stolen. It was also uninsured. The driver was never identified. Mr Leach brought proceedings against the respondent, the Nominal Defendant, pursuant to s 33 of the Motor Accidents Compensation Act 1999 (NSW) (the MAC Act) alleging that his injuries were caused by the fault of the driver of the Commodore in the use or operation of the vehicle during either the driving of the Commodore or during a collision with the Commodore within the meaning of s 3A of the MAC Act. Mr Leach was unsuccessful in the District Court and on appeal to the Court of Appeal. The Nominal Defendant sought indemnity costs based on an offer of compromise was made pursuant to r 20.26 of the UCPR.] [30] It is apparent from the form of the Offer, that its drafter was unaware of the 2013 UCPR amendments. The Offer’s terms reflect the former UCPR 20.26(2) … 958 [15.250]

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Leach v The Nominal Defendant cont. [31] Secondly, the Offer proposed that “[e]‌ach party … pay their own costs” in respect of the trial and the appeal, reflecting the former UCPR 20.26(2), rather than proposing “no order as to costs” as now permitted by UCPR 20.26(3)(a)(i). The appellant contended the form of words used invalidates the Offer. That submission should be rejected. [32] The effect of a “no order as to costs” order is that each party must pay his own costs: Re Hodgkinson [1895] 2 Ch 190 (at 194) per Lindley LJ; see also (at 194) per Lopes LJ to like effect. That meaning of a “no order as to costs” order has remained unchanged for over a century: Donnelly v Maxwell-​Smith [2010] FCAFC 154 (at [23]) per Bennett, Rares and McKerracher JJ); see also Vertzayias v King [2011] NSWCA 215 (at [111]–​[114]) per Giles JA (with Macfarlan and Whealy JJA’s agreement). [33] Accordingly, in my view, although the Offer uses a different form of words to those found in UCPR 20.26(3)(a)(i), the effect of the words used is that intended by the current rule. [34] Another indication the drafter was looking at the former UCPR 20.26 can be seen in the fact that the time during which the Offer could be accepted was set out in the covering letter rather than in the Offer itself. That indicates an intention to comply with the former UCPR 20.26 which did not, on its face, compel inclusion of any time condition within the offer of compromise. UCPR 20.26(2)(f) now mandates that an offer “specify the period of time within which [it was] open for acceptance”:. Does that omission, as the appellant submits, invalidate the Offer? [35] As the present case illustrates, there could be many breaches of the requirements of the contents of an offer of compromise. However UCPR 20.26 only deals with non-​compliance in one respect. Pursuant to UCPR 20.26(12), a “notice of offer that purports to exclude, modify or restrict the operation of r 42.14 or 42.15 is of no effect for the purposes of this Division”. (Curiously, the rule does not refer to UCPR 42.15A, most probably because it was inserted into the rules in December 2006: Uniform Civil Procedure Rules (Amendment No 11) 2006 (NSW); New South Wales Government Gazette, Number 175, 8 December 2006, at 10465–​10466; for the apparent genesis of its insertion, see Seven Network Ltd v News Ltd [2007] FCA 1489; (2007) 244 ALR 374 (at [35]) per Sackville J.) [36] UCPR 42.14 and UCPR 42.15 deal with the costs consequences of an offer not being accepted. It was the inconsistency between an offer of compromise containing terms concerning costs (other than those permitted by the rules to which I have referred) and the court’s power under those rules to make a contrary order, which invalidated such offers: Whitney v Dream Developments Pty Ltd [2013] NSWCA 188; (2013) 84 NSWLR 311 (at [25] ff) per Bathurst CJ (Beazley P, McColl and Emmett JJA agreeing). [37] Whether non-​compliance with the requirements of UCPR 20.26 as to the form of an offer invalidates the offer turns on whether “it was a purpose of the legislation that an act done in breach of the provision should be invalid … [i]‌n determining the question of purpose, regard must be had to the language of the relevant provision and the scope and object of the whole statute”: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 (at [91]–​[93]) per McHugh, Gummow, Kirby and Hayne JJ. [38] No such inconsistency as that discussed in Whitney v Dream Developments Pty Ltd arises where the time an offer is open for acceptance is contained in the covering letter. Further, the fact that UCPR 20.26 does not sanction non-​compliance with the otherwise apparently obligatory requirements for the form of the offer suggests the legislature did not intend to render inefficacious an offer which otherwise complied with its requirements: see Lardil, Kaiadilt, Yangkaal and Gangalidda Peoples v State of Queensland [2001] FCA 414; (2001) 108 FCR 453 (at [117]–​[118]) per Dowsett J (Merkel J agreeing). [39] Accordingly, in my view, the fact that the time the Offer was open for acceptance appeared in the covering letter rather than in the body of its text, does not render the Offer inefficacious. [40] The consequence is that a prima facie entitlement arose in favour of the respondent to have costs awarded in accordance with UCPR 42.15A: New South Wales Insurance Ministerial Corporation

[15.250]  959

Civil Procedure in New South Wales

Leach v The Nominal Defendant cont. v Reeve (1993) 42 NSWLR 100 (at 102) per Gleeson CJ (Clarke and Cripps JJA agreeing); Leichhardt Municipal Council v Green [2004] NSWCA 341 (at [19]) per Santow JA (Stein JA agreeing). This is because, from “the time of non-​acceptance ‘notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise’ ”: Morgan v Johnson (1998) 44 NSWLR 578 (at 581–​582) per Mason P (Sheller JA agreeing). [41] However, in order for an offer of compromise made under the UCPR to attract an indemnity costs order, it must involve a “genuine offer of compromise” and not merely be made so as to trigger the costs consequences under the rules: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 (at [16]) (Spigelman CJ; Beazley and McColl JJA). [42] Whether there was a real element of compromise is determined objectively according to the circumstances of the particular case at the time the Offer was made rather than with the benefit of hindsight: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 (at [17]); Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 (“Miwa”) (at [11]). It is also determined by reference to the rule pursuant to which the offer was made: Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 (at [22]) per Basten JA (Campbell JA agreeing). [43] In my view in the circumstances of this case, the Offer did constitute a genuine offer of compromise. The opportunity to offer any compromise for the respondent was limited. The substantive issue on appeal was an all or nothing determination on the liability issue. There was no range of verdicts as in the case of a challenge to an award of damages or to an assessment of contributory negligence or contribution between tortfeasors: cf Leichhardt Municipal v Green (at [22]–​[26]); Regency Media Pty Ltd v AAV Australia Pty Ltd (at [29]). Thus the only room for compromise was in relation to costs, in which respect the respondent was prepared to forego the costs order it had been awarded by the primary judge and any costs order it might ordinarily obtain in this Court by the operation of UCPR 42.1. That constituted a “real concession”: Clark v Commissioner of Taxation [2010] FCA 415 (at [90]–​[92]) per Greenwood J. [44] It can be inferred that foregoing the costs of the one day trial would have involved a significant sum. It is not as apparent that foregoing the costs of the appeal at the stage the Offer was made involved a great compromise. As at 12 November 2013, the appellant had filed the notice of appeal, but not his written submissions such that it seems improbable that the respondent had incurred any real costs. Its written submissions were filed on 13 February 2014 following the filing of the appellant’s submissions dated 27 November 2013. Foregoing the costs of the trial, however, is sufficient to conclude the necessary element of compromise was present: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 (“Baulderstone Hornibrook Engineering”) (at [19]) per Allsop P (Beazley and Campbell JJA agreeing). [45] Accordingly, the question is whether, as the appellant submits, the Court should “order otherwise”: UCPR 42.15A(2). The onus is on the appellant to demonstrate why the Court should depart from the consequence of his rejection of the Offer: Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109 (at [35]) per McColl JA (Mason P and McClellan CJ at CL agreeing); Miwa (at [16]). [46] There is a conflict in decisions of this court as to whether exceptional circumstances are required before the court may exercise the discretion to “order otherwise” in relation to an unaccepted offer of compromise or whether that discretion has to be exercised having regard to all the circumstances of the case: Commissioner of Taxation v Moodie [2014] NSWCA 59; (2014) 282 FLR 453 (at [64]) per McColl JA. [47] An “exceptional circumstances” test could be seen as a gloss on the language of the relevant rules their text does not admit. That suggestion was discounted by Hely J in relation to the like power to “otherwise order[s]‌” in O 23, r 11(4) of the Federal Court Rules 1979 (Cth) (as then in force):  Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281 (at [17]). Rather, his Honour was of the view that such language merely “convey[s] that the 960 [15.250]

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Leach v The Nominal Defendant cont. prima facie position should only be departed from for proper reasons which, in general, only arise in an exceptional case”. In my view his Honour’s observation sufficiently encapsulates the approach to be adopted in the present case. [48] It is impossible exhaustively to state the circumstances in which the court’s discretion to “order otherwise” might be exercised: New South Wales Insurance Ministerial Corporation v Reeve (at 102). The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule: Morgan v Johnson (at 582). However that does not mean that reasonableness of the rejection is an irrelevant consideration: see Seven Network Ltd v News Ltd (at [64]–​[67]); Uniting Church in Australia Property Trust (NSW) t/​as Northaven Retirement Village v Takacs (No 2) [2008] NSWCA 172 (at [15]) per Hodgson JA (McColl JA agreeing); cf Basten JA (at [32]–​[33]). [49] The essence of the appellant’s opposition to the costs orders the respondent sought was that even if the Offer constituted a genuine offer of compromise, it was reasonable for him not to accept it as it was a “walk-​away” offer which merely invited his capitulation. [50] A walk-​away offer is one “where the offeror expresses its willingness to settle on the ground that each party bears its own costs” (G E Dal Pont, Law of Costs (3rd ed 2013, LexisNexis at [13.9]). As will be apparent, both UCPR 20.26(3)(a)(i), and former rule UCPR 20.26(2), enable a walk-​away offer to be made in an offer of compromise: Schepis v Commonwealth of Australia [2013] NSWCA 354 (at [33]) per Leeming JA (Beazley P agreeing); see also Taheri v Vitek (No 2) [2014] NSWCA 344 (at [8]‌) where the court (Bathurst CJ, Emmett and Leeming JJA) observed that “it has long been open for a defendant (or respondent to appeal) to engage the rules by an offer that there be a verdict in its favour with no order as to costs.” [51] A walk-​away offer can successfully trigger the indemnity costs mechanisms under the rules, however “the claim or defence would have to approach something of the character of being frivolous or vexatious for that to be the case”: Regency Media Pty Ltd v AAV Australia Pty Ltd (at [31]) per Spigelman CJ; Beazley and McColl JJA. [52] In Taheri v Vitek (No 2) the court held that three offers of compromise made by the respondent expressed in terms that “the appeal (or the appeals) be dismissed, with each party paying their own costs” complied with the rules relating to offers of compromise in UCPR 20.26, as made applicable to appeals by UCPR 51.47, albeit that all were made after the 2013 UCPR amendments. However the court declined to award indemnity costs in relation to two of those offers because they “in large measure invited capitulation”, there was no significant measure of compromise and, finally, because enabling a defendant or respondent to an appeal to engage the rule early in the litigation by making a “walk-​away” offer of compromise would not serve the public policy of encouraging settlement: Taheri v Vitek (No 2) (at [9]‌–​[10]). The position differed in relation to the third offer which “involved a significant element of compromise [which] it was unreasonable for the appellant not to accept”: Taheri v Vitek (No 2) (at [13]). [53] In my view, the liability case cannot be said to have been frivolous or vexatious so as to trigger the indemnity costs mechanisms. It was difficult and, to a certain extent, novel, as is apparent from the discussion in Leach (No 1) and the different outcome in Nominal Defendant v Hawkins upon which the appellant relied heavily. Thus, at the time the offer was made, notwithstanding the primary judge’s conclusion (and as his Honour recognised in his costs judgment –​see [23]–​[24] above), the outcome on liability was “far from a foregone conclusion”: cf Baulderstone Hornibrook Engineering (at [21]); Council of the City of Liverpool v Turano [No 2] [2009] NSWCA 176 (at [58]). [54] Further, it is apparent the appellant suffered serious injuries in the incident, another factor the primary judge took into consideration in declining to award indemnity costs of the trial. Their severity can be seen from the discharge summary from Westmead Hospital from which it is apparent that the appellant spent 54 days in intensive care following the shooting and suffered, at least, a brain injury. Accordingly the case involved a substantial claim for damages.

[15.250]  961

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Leach v The Nominal Defendant cont. [55] Finally, the case was all or nothing for the appellant. The Offer did involve an element of compromise, but only on costs. It offered the appellant nothing by way of damages on account of his injuries. It did not serve the public policy of encouraging settlement. [56] In my view, accordingly, it was not unreasonable for the appellant not to accept the Offer.



Hart Security Australia v Boucousis (No 2) [15.255]  Hart Security Australia Pty Ltd v Boucousis (No 2) [2014] NSWSC 1815 DARKE J [Hart Security Australia Pty Ltd (HSA) sought equitable and statutory compensation from the first defendant, Mr Christian Boucousis, for breach of director’s duties due to the loss of a commercial opportunity, namely, a contract to provide security services at the Darwin and Alice Springs airports. HSA further alleged that the second to 63rd defendants, who were the partners of a law firm known as HWL Ebsworth Lawyers (HWL) were also liable as they knowingly assisted Mr Boucousis’ breaches of fiduciary duty (the so-​called second limb of Barnes v Addy) and that they were persons involved in Mr Boucousis’ contraventions of his statutory duties. The plaintiff was unsuccessful.] [2]‌On 28 November 2014, [HWL] applied for orders that the plaintiff pay its costs of the proceedings (save for the costs of HWL’s unsuccessful application under Uniform Civil Procedure Rules r 29.10 [judgment for want of evidence]) on an ordinary basis up to 7 June 2013 and thereafter on an indemnity basis, or alternatively on an ordinary basis up to 6 June 2014 and thereafter on an indemnity basis. … [5]‌HWL’s application for indemnity costs rests upon offers of compromise it made under UCPR r 20.26 on 7 June 2013 and 6 June 2014. Neither offer was accepted by the plaintiff. HWL relied upon the affidavit sworn by Alexander Haslam on 27 November 2014 in support of its application. In accordance with the directions made by the Court, the parties made submissions in writing. [6]‌The first offer (7 June 2013) was to compromise the plaintiff’s claims on terms that there be a verdict for HWL, with the plaintiff and HWL to bear their own costs of the proceedings. Mr Haslam estimates that at the time the offer was made, HWL had incurred approximately $15,000 in legal costs. The offer was made shortly prior to the filing by HWL of its defence. The offer was accompanied by a letter from HWL’s solicitors setting out reasons why the plaintiff’s claim “is without merit and doomed to fail”. [7]‌The second offer (6 June 2014) was to compromise the plaintiff’s claims on terms that HWL pay $30,000 to the plaintiff, and pay the plaintiff’s costs, as agreed or as assessed, up to the date of the offer. Mr Haslam states that at the time the offer was made, very substantial legal costs had been incurred in defence of the proceedings. The offer was made about six weeks before the hearing was due to commence. [8]‌The judgment ultimately obtained by HWL was no less favourable to it than the terms of the first offer (7 June 2013). HWL is therefore entitled to indemnity costs after 7 June 2013 unless the Court “orders otherwise” under UCPR r 42.15A. HWL pointed out that the plaintiff bears the onus of persuading the Court that it should do so. [9]‌HWL submitted that there was no basis to “order otherwise” as the offer was a reasonable compromise involving an offer to give up significant legal costs, and it was made at an early stage of the proceedings. HWL further submitted that the plaintiff’s case against HWL was a difficult one, and the plaintiff had sufficient information to assess the offer, including the contents of the letter that

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Hart Security Australia v Boucousis (No 2) cont. accompanied the offer. Finally, it was submitted that to “order otherwise” would be contrary to the public interest in the encouragement of settlement of litigation, and inconsistent with the overriding purpose identified in s 56 of the Civil Procedure Act 2005 (NSW). [10] The plaintiff submitted that whilst a walk-​away offer can be regarded as a genuine offer of compromise so as to trigger the indemnity costs mechanisms under the rules, for that to be so, the claim or defence would have to approach something of the character of being frivolous or vexatious (see Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [31], cited recently by McColl JA, with whom Gleeson JA and Sackville AJA agreed, in Leach v The Nominal Defendant (No.2) [2014] NSWCA 391 at [51]). It was submitted that the plaintiff’s case could hardly be put into that category, and this was demonstrated by the failure of HWL’s application for judgment under UCPR r 29.10. The plaintiff further submitted that the offer could not properly be regarded as an offer of compromise of a kind which was likely to encourage early settlement. [11] In my opinion, insofar as the offer of 7 June 2013 is concerned, this is an appropriate case for the Court to “order otherwise” under UCPR r 42.15A. The submissions made by the plaintiff on this aspect are generally accepted. The offer involved only a very minor element of compromise. In my view it provided for a settlement that was tantamount to a surrender on the part of the plaintiff, in circumstances where the plaintiff was advancing a case that was difficult but by no means hopeless, frivolous or vexatious. I agree that it was not an offer of a kind likely to encourage early settlement. The Court therefore declines to make an order that the plaintiff pay HWL’s costs after 7 June 2013 on an indemnity basis. [12] As the judgment ultimately obtained by HWL was no less favourable to it than the terms of the second offer (6 June 2014), HWL is entitled to indemnity costs after 6 June 2014 unless the Court “orders otherwise” under UCPR r 42.15A. The plaintiff submitted that the Court should “order otherwise” in relation to the second offer essentially because, in the context of the plaintiff’s loss (assessed by the Court at $2 million), an offer to pay only $30,000 was not a significant compromise. It was further submitted that it was not unreasonable of the plaintiff to fail to accept the offer. It was put that this was demonstrated by the Court’s conclusion on the eighth day of the hearing that, taking the evidence as it then existed at its highest for the plaintiff, a jury could, without error, have found that HWL was liable to pay equitable compensation to the plaintiff. [13] HWL submitted that there was no basis to “order otherwise” as the offer was a reasonable compromise that would have given three benefits to the plaintiff, namely: (1)

$30,000;

(2)

payment of its very significant costs incurred up to 6 June 2014; and

(3)

relief from potential liability to pay HWL’s very significant costs.

[14] I am not persuaded that, insofar as the offer of 6 June 2014 is concerned, it is appropriate for the Court to “order otherwise” under UCPR r 42.15A. In my opinion, the offer involved a significant element of compromise. Undoubtedly, the plaintiff’s costs up to 6 June 2014 attributable to the case it was bringing against HWL would have been considerable. Moreover, the offer was made at a time when the plaintiff was in a position to properly assess it against its prospects of success. It is true that the Court later concluded that, taking certain evidence at its highest for the plaintiff, a jury could, without error, find that HWL was liable. However, this in itself does not demonstrate that it was not unreasonable to fail to accept the offer. It cannot be ignored that, having heard all of the evidence, the Court ultimately rejected the plaintiff’s primary claims against the first defendant, and hence the plaintiff’s claims against HWL. In my view, it was unreasonable in the circumstances for the plaintiff to reject the offer of 6 June 2014.



[15.255]  963

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Calderbank letters

Calderbank Offers [15.260]  The Hon Justice M J Beazley, Calderbank Offers (Paper presented to the Australian Lawyers Alliance Hunter Valley Conference 14–​15 March 2008) [Some footnotes have been integrated into the text and some have been omitted.] Introduction [3]‌The genesis of Calderbank offers is the English decision of Calderbank v Calderbank [[1975] 3 All ER 333; [1975] 3 WLR 586]. The issue in Calderbank v Calderbank was whether a party could in a “without prejudice” communication in which an offer of settlement had been made, reserve that party’s right to waive the confidential (that is, the “without prejudice”) nature of the offer in order to rely upon it for the purposes of making an application for indemnity costs. Cairns LJ held that that was permissible. [4]‌In the years following the decision in Calderbank there remained a question whether the procedure was available in jurisdictions other than matrimonial causes. This was finally resolved in Computer Machinery Co Ltd v Drescher [[1983] 3 All ER 153; [1983] 1 WLR 1379]. Sir Robert Megarry VC examined the history of “without prejudice” offers of compromise, noting that it had been settled law that if such letters did not result in a settlement, they could not be considered by the court on the question of costs unless the parties consented: see Walker v Wilsher (1889) 23 QBD 335; Stotesbury v Turner [1943] KB 370. This of course provided no incentive to a party to settle. The position could be overcome if a money claim was involved by the payment into court of the proposed settlement sum. [5]‌However, if relief other than a money sum was sought, for example relief by way of a declaration, there was no means by which a party seeking to resolve a matter could do so in circumstances that would entitle that party to a costs benefit. Megarry VC commented that some such procedure was needed and endorsed the approach taken by Cairns LJ in Calderbank as providing an appropriate means of doing so. Megarry VC also considered that notwithstanding the authorities to the contrary, the procedure was one of general application and was not confined to matrimonial cases. [6]‌That part of the Calderbank jurisprudence is now undisputed and does not need to be revisited. Such offers are commonplace and there is never an argument about whether the “without prejudice” nature of the offer precludes reliance upon it for the purposes of costs. [7]‌There are now numerous cases in the Court of Appeal in which the jurisprudence surrounding Calderbank offers has been developed. I propose to deal with those authorities, not in chronological order, but in a sequence that I consider appropriately brings to the forefront the matters that you should have in mind when advising a client in respect of making an offer of compromise by this method. [8]‌Each of the principles that are discussed in this paper is based on the premise that, in the case of a plaintiff, the result of the court’s adjudication is as favourable or more favourable to the offeror than the offer of compromise, or in the case of a defendant, the court’s adjudication is less favourable to the plaintiff than the offer. Basic rule as to costs [9]‌The starting point in respect of the costs of proceedings is that costs follow the event: see UCPR r 42.1. That general rule is subject to the court determining that some other order should be made as to the whole or in any part of the costs: UCPR r 42.1. Costs ordered to be paid are assessed on the ordinary basis (replacing the language of “party/​party” costs) unless the court otherwise orders: UCPR r 42.2. The making of a Calderbank offer is one circumstance in which the court might exercise its discretion under r 42.1. (cf r 42.14, r 42.15) Public policy and purpose underlying Calderbank offers [10] There is both a public policy and a private interest in encouraging offers of compromise so as to settle legal proceedings (see Computer Machinery Co Ltd v Drescher [[1983] 3 All ER 153; [1983] 1 WLR 1379]; Cutts v Head [[1984] 1 All ER 597; [1984] 2 WLR 349; [1984] Ch 290 at 311]; South 964 [15.260]

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Calderbank Offers cont. Eastern Sydney Area Health Service v King [[2006] NSWCA 2]). In South Eastern Sydney Area Health Service v King (a case dealing with an offer of compromise under the rules of court), Hunt AJA (Mason P and McColl JA agreeing) stated the purpose of the rules of court as being: [83] … encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation. [11] See also Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [[2007] NSWCA 339 per Beazley JA at [15] (Mason P and Basten JA agreeing)]. The same policy and purpose underlie offers of compromise made in the form of Calderbank offers: see Leichhardt Municipal Council v Green [[2004] NSWCA 341]; Elite Protective Personnel Pty Ltd v Salmon [[2007] NSWCA 322]. In Leichhardt Municipal Council v Green, Santow JA said: [14] … the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants. [12] The nature of the private interest (which itself underpins the public policy) was articulated by Fox LJ in Cutts v Head in these terms: If a party is exposed to a risk as to costs if a reasonable offer is refused, he is more rather than less likely to accept the terms and put an end to the litigation. On the other hand, if he can refuse reasonable offers with no additional risk as to costs, it is more rather than less likely to encourage mere stubborn resistance. [13] The public policy in encouraging settlement also finds statutory encouragement: first, in the Evidence Act 1995, s 131 and now in the Civil Procedure Act 2005, s 56. 131 Exclusion of evidence of settlement negotiations (1)  Evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. (2)  Subsection (1) does not apply if: … (h) the communication or document is relevant to determining liability for costs (Emphasis added) … [15] Underlying the continuing acceptability of a Calderbank offer as a means of settling claims, is their flexibility. … Calderbank offers and orders for indemnity costs [18] A Calderbank offer does not automatically result in the court making an order for indemnity costs:  SMEC Testing Services Pty Ltd v Campbelltown City Council [[2000] NSWCA 323]. Rather, the question that the court has to determine in deciding whether to award indemnity costs is [37] … whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure … SMEC was upheld by the Court of Appeal in Jones v Bradley (No 2) [[2003] NSWCA 258 at [8]‌-​[9]]. [15.260]  965

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Calderbank Offers cont. [19] SMEC v Campbelltown City Council and Jones v Bradley (No 2) displaced an earlier line of authority to the effect that, prima facie, a successful Calderbank offer should result in an order for costs on an indemnity basis in favour of the offeror. [20] It is not necessary to lead evidence explaining why the procedure provided for under the rules for the making of an offer of compromise was not availed of: see Jones v Bradley at [12]. Fundamental principles governing Calderbank offers [Calderbank offers require consideration of two fundamental principles: first, the Calderbank offer must be “a genuine offer of compromise”; Secondly, the offeree must be provided with an appropriate opportunity to consider and deal with the offer.] [25] The offeror bears the persuasive burden of satisfying the court to exercise the costs directions in the offeror’s favour. In Evans Shire Council v Richardson [[2006] NSWCA 61 per Giles, Ipp and Tobias JJA at [26]], the Court used the language of onus, stating that there was an onus on the claimant to establish it was unreasonable for the offeree to refuse the offer. In this case, the opponent had not put on any submissions to the contrary. Nonetheless, the offeror still bore the “onus” of establishing that it was unreasonable for the offeree not to accept the offer. … • genuine compromise [27] An offer of compromise must be a “genuine offer of compromise”. The Court has held that a relatively small disproportion between the offer and the award may represent a “genuine offer of compromise”. Two principal factors inform the question whether the rejection is unreasonable. First, whether the amount and/​or other terms contained in the offer is seen as a genuine offer of compromise; Secondly, whether the time during which the offer is open is reasonable in all of the circumstances. [28] Whether a particular offer is a genuine offer of compromise involves an evaluative judgement. Put in other words it’s a matter upon which judicial minds might differ. The Court has held that a relatively small disproportion between the offer and the award may represent a genuine offer of compromise. [29] In Maitland Hospital v Fisher (No 2) [(1992) 27 NSWLR 721], the Court of Appeal held that a differential of 2.5 per cent between the appellant’s offer and the judgment sum (a judgment of $206,090 compared to an offer of $200,000) was a real, not a trivial or contemptuous offer. In coming to that decision, the Court considered it relevant that the appellant was a kitchen maid, to whom the sum of $6,090 would have been a significant amount. [30] In Forbes Services Memorial Club Ltd v Hodge [(Unreported, NSWCA, Kirby P, Priestly and Cole JJA, 8 March 1995)] a differential of $129.24 (judgment of $30,129.24 compared to an offer of $30,000) was held to constitute a genuine offer of compromise. [31] In Manly Council v Byrne (No 2) [[2004] NSWCA 227], the respondent made an offer of compromise on the appeal in which she sought payment of the damages award she had received at trial, but waived interest on that sum. The waiver of interest meant forgoing interest for 79 days at 9 per cent, which amounted to approximately $8,000. This was held to be a genuine offer of compromise. In that case, the Court reaffirmed that the means of the plaintiff was a relevant matter to take into account in deciding whether the compromise was a real one. Likewise, the prospect of success on the appeal was also a relevant consideration. [32] There are cases which have held that a “walk-​away” offer, for example, that the party withdraw from the appeal and each party pay their own costs, did not constitute a genuine compromise: Townsend v Townsend (No 2) [[2001] NSWCA 145]; Herning v GWS Machinery Pty Ltd (No 2) [[2005] NSWCA 375]. [33] However, it all depends upon the circumstances. Leichhardt Municipal Council v Green [[2004] NSWCA 341 at [36]], concluded that no error of legal principle exists in holding that a “walk-​away” 966 [15.260]

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Calderbank Offers cont. offer can, in a particular case, be a “genuine offer of compromise”. It is the task of the court to consider “whether the particular offer in the circumstances represented a genuine attempt to reach a negotiated settlement, rather than merely to trigger any costs sanctions” at [39] per Santow J. • rejection of offer must be unreasonable [34] Factors that are relevant to the question whether a rejection is unreasonable include: • Whether there was sufficient time to consider the offer; • Whether the offeree had adequate information to enable it to consider the offer; and • Whether any conditions are attached and if so, whether those conditions are reasonable. [35] The question whether the rejection of an offer was unreasonable is usually determined without adducing further evidence. Indeed, in Elite v Salmon [[2007] NSWCA 322], Basten JA stated at [147] that the question must be determined on a summary basis. His Honour said: Greater sympathy may be accorded a defendant who receives an offer early in proceedings where there has been no reasonable opportunity for it to assess its questions of liability or its likely exposure in damages. Such matters must be assessed on a case by case basis. Usually litigation will not be the first that the defendant hears of the claim. However, a defendant which receives an offer of settlement in circumstances where it reasonably requires more time to consider its position would no doubt be advised to respond to that effect and, if necessary, make a counter-​offer in due course. [36] His Honour’s comments need to be understood in context. Take the example where the offer of compromise is made in circumstances where the party making the offer has not obtained or has obtained but not served all of the party’s expert evidence, medical or otherwise. If such evidence contains material that would have been relevant to the assessment of the offer and it is not served until after the offer expires, the offeree may be able to establish that it was not unreasonable not to have accepted the offer. In that case, some material will have to be before the court to establish those circumstances. That is usually done by the tender of the documents, with the covering letter that establishes the date of service. It may be done by an agreed statement from the Bar table. [37] Such a situation arose in South Eastern Sydney Area Health Service v King [[2006] NSWCA 2]. In that case, Hunt AJA (Mason P and McColl JA agreeing), stated: [85] … However, the fact that the plaintiff’s case had changed significantly between the date of the plaintiff’s offer and the trial in which the judgment obtained is higher than the amount of the offer does provide a sufficient basis for an order denying the plaintiff’s entitlement to indemnity costs: Maitland Hospital v Fisher [No 2] (at 725). The very nature of the situation itself demonstrates that it would be unfair to a defendant to make an order for indemnity costs when the evidence at the trial is different from that known to the defendant at the time of the offer. Whether or not this is an “exceptional” situation does not matter. [38] In Vale v Eggins (No 2) [[2007] NSWCA 12], I said, in relation to a rules offer: [22] … the respondent, at the time that he made the offer of compromise, had not served all the medical reports which he already had in his possession. In those circumstances, when the respondent already had material in his possession which he did not serve, and which was relevant to an assessment of the offer made, he ought not to be entitled to the favourable costs provisions under the Rules. It is not an answer, as submitted by the respondent, that the appellant could have himself made an offer of compromise once all the evidence was in his possession. [39] If there are developments in a case after the offer is made, the rejection of an offer may be found to be reasonable: see also Rolls Royce Industrial Power (Pacific) Ltd v James Hardie and Co Pty [15.260]  967

Civil Procedure in New South Wales

Calderbank Offers cont. Ltd [[2001] NSWCA 461; (2001) 53 NSWLR 626 at [95]-​[99]. Here, a cross claim was made after the relevant offer. Stein JA (with whom Davies A-​JA agreed), stated at [95], “The cross-​claim produced a change of circumstance which, if in existence as at [time that the relevant offer was made], would have been likely to have produced a different complexion to the litigation so far as [the offeree] was concerned.”]. [40] In Blagojevch v Australian Industrial Relations Commission [(2000) 98 FCR 45], the Court found that rejection of a settlement offer, after the offeree had been warned of a challenge to the truthfulness of his evidence (and the evidence was subsequently found to be false), may be held to be unreasonable. [41] These cases demonstrate that the “prospects of success” is a relevant consideration to the costs determination. [42] Where the offer is subject to a non-​monetary condition, such as requirements for an apology or release, proper exercise of the discretion will involve the court considering the reasonableness of the condition, and whether or not the judgment result was, in substance, more favourable than the offer: Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd [FCA, Full Court, WAG66/​94, 29 August 1995, unreported, BC9506519]; Timms v Clift [[1998] 2 Qd R 100]; Assaf v Skalkos [[2000] NSWSC 935 at [82]]; and Skalkos v Assaf (No 2) [[2002] NSWCA 236]. The rejection of an offer that is conditional upon the release of unrelated proceedings may be considered reasonable: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [[2006] NSWSC 583 at [73]-​[74]]. … Usual form of a Calderbank offer [48] The usual form of a Calderbank offer derives directly from Calderbank v Calderbank itself: namely, a “without prejudice” offer in a money sum plus costs, with an exception that the offer may be used in relation to costs. However, the use of a particular form of words is not necessary. A Calderbank offer does not have to be in any particular form or use any particular formula. As I said In Elite v Salmon, the Court should consider such a Calderbank offer: [7]‌ … according to its terms and to determine whether, in all the circumstances, the Court should exercise its discretion to award indemnity costs. Types of offers that may be made • offers inclusive of costs: Elite v Salmon [49] The question whether an offer made inclusive of costs could be properly considered as a Calderbank offer was decided recently in Elite v Salmon. By majority, it was decided that such an offer was a Calderbank offer and could be taken into account in determining the appropriate costs order. However, as I said at [7]‌, “there may be difficulties in the path of a party who seeks indemnity costs when the application is based upon an offer inclusive of costs”. [50] Basten JA also held that an offer inclusive of costs could constitute a Calderbank offer. His Honour also recognised that there may be difficulties in a party making such an offer. I refer to his Honour’s analysis of these problems below. Support for the majority view is to be found in Trustee for the Salvation Army v Becker (No 2) [[2007] NSWCA 194]. [51] McColl JA, in a strongly-​argued dissent on this point, disagreed that an offer inclusive of costs is a “valid” Calderbank offer. [52] There are two underlying principles which support the principle that an offer inclusive of costs may be receivable as a Calderbank offer. The first principle recognises the degree of flexibility which the Court of Appeal has said attaches to Calderbank offers. Secondly, as I stated in Elite v Salmon, an award of indemnity costs based on a Calderbank offer involves the exercise of a discretion. A general or overarching “rule” or “principle” that only offers exclusive of costs could ground a favourable exercise 968 [15.260]

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Calderbank Offers cont. of the court’s discretion would operate as a fetter on that discretion and would introduce a rigidity to the making of so called Calderbank offers which has no basis in principle. [53] The danger in making an offer inclusive of costs is that the court may not be able to determine whether or not it was unreasonable for the offeree to accept the offer. More particularly, it may be difficult for the court to assess whether the offer was equal to or better than the result received on the verdict. [54] If a plaintiff made an offer inclusive of costs and subsequently received an award of damages in excess of that amount then, on any view, the plaintiff had bettered the offer and should have that taken into account in relation to the question of costs. The matter is not quite so straightforward when the award of damages is less than the offer. In that case, it may not be an easy matter to determine, without an assessment of those costs, whether the award for the plaintiff is at least as favourable or more favourable than the offer. [55] The real disadvantage of a costs-​inclusive offer occurs when a defendant makes such an offer, but the matter proceeds to judgment. Basten JA explained this in Elite v Salmon: [144] Where the judgment is equal to or above the inclusive figure, the defendant will have failed to better its own offer. However, if the judgment is below the offer there may be uncertainty because the offer included an unquantified element for costs incurred up to the time when it lapsed or was rejected. No doubt the figure for costs incurred to that time by the plaintiff could be resolved by some form of assessment, but if the calculation of the damages component is not clearly seen to provide a figure above the judgment, then the interests of justice will usually not be served by incurring further expense in assessing the costs element of an offer and the plaintiff would be entitled to his or her costs. … • offer of compromise limited to liability [58] An offer may be made limited to liability: Vale v Eggins (No 2) [[2007] NSWCA 12]. • offers may be made in the alternative [59] In Vale v Eggins (No 2), the plaintiff in fact made two offers. One was in the terms just stated. The other was of a money sum plus costs. … • offer foregoing interest [64] An offer of compromise which involves a waiver of interest that would otherwise be payable on the judgment sum may constitute an appropriate offer and result in an order for indemnity costs: Manly Council v Byrne (No 2) [2004] NSWCA 227. … Calderbank offers v rules offers [70] When and why would you advise your client to make a Calderbank offer rather than an offer under the rules? Let me deal with the “why” part of the question first. To answer that question, it is necessary to have regard to the provisions of the rules. In the first place, it should be recognised that offers that may be made under the rules have become increasingly flexible. Thus: a)

an offer may be made relating to the whole or part of a claim: Pt 20 r 20.26(1);

b)

an offer need not be restricted to a money sum: Pt 20 r 20.26(8);

c)

more than one offer may be made under the rules in relation to the same claim: Pt 20, r 20.26(10);

d)

offers made under the rules may be made at any time, including during the course of the trial: Pt 42 rr 42.14 and 42.15. [15.260]  969

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Calderbank Offers cont. [71] However there are restrictions: a)

b) c) d)

[an offer must not include an amount for costs and must not be expressed to be inclusive of costs, unless the offer is for a judgment in favour of the defendant with a term that the defendant will pay a specified sum in respect of the plaintiff’s costs: Pt 20 rr 26.2(c), 26.3(a)]; an offer may not be withdrawn during the period of acceptance, without the leave of the court: Pt 20 r 26.11; the offer must state that it is an offer made in accordance with the rules: Pt 20 [r 26.2(d)]; an offer that purports to modify or restrict the operation of the rules is not an offer for the purposes of Pt 20: Pt 20 r 26.12.

[72] Notwithstanding these restrictions, there is a singular advantage in making an offer under the rules as opposed to the making of a Calderbank offer. If a successful offer is made under the rules, the consequences which follow are virtually automatic. A successful offer made by a plaintiff (a successful offer being one that where the judgment on the claim is no less favourable to the plaintiff than the terms of the offer) results in an order that the plaintiff is to have costs assessed on an ordinary basis from the day after the date on which the offer was made and thereafter on an indemnity basis: Pt 42 r 42.14. [73] The rule is subject to the court making a different order. A different order will only be made in “exceptional circumstances”. The effect of Pt 42 r 42.14 is to place an onus on the offeree to establish exceptional circumstances. [74] This is to be contrasted with the position under a Calderbank offer. A Calderbank offer constitutes no more than a discretionary consideration for the court in determining the appropriate costs order. It is often a powerful consideration. However, the fact that the offeror bears a persuasive burden of having the court exercise the costs discretion in the offeror’s favour is an important matter of which both legal representatives and clients ought to be aware. [75] The second question is “when” would you make a Calderbank offer rather than a rules offer? Having regard to the flexibility now encompassed in rules offers, there may not be many circumstances when a Calderbank offer will provide you with flexibility that you would not otherwise obtain under a rules offer. Making an offer inclusive of costs is the obvious circumstance. There may be others, but they do not readily come to mind. That then leads me to my final question. [76] Why would you not make a rules offer? That question has effectively been answered in what I have already said. In summary: • an offer made under the rules will generally have the same flexibility as is available under a Calderbank offer; • it will have virtually automatic, favourable costs consequences for your client; • your client will have no persuasive burden (or onus) in having the court make a favourable costs order; • the burden is on the offeree to establish “exceptional circumstances”; and • finally there is less likelihood of a second “mini hearing” and therefore less likelihood of incurring the additional costs that inevitably are involved in a second hearing, regardless of whether that “mini hearing” is in court or by way of oral submissions.



Whitney v Dream Developments [15.265]  Whitney v Dream Developments Pty Ltd [2013] NSWCA 188 BARRETT JA [55] … Of course, a party is quite free to make a settlement offer that seeks to deal not only with the substantive claim but also with costs. The significant point, for present purposes, is that such an 970 [15.265]

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Whitney v Dream Developments cont. offer can only be made outside the scheme based on r 20.26. If such a non-​complying offer is not accepted, the fact that it was made and not accepted may be relevant to the exercise of the court’s jurisdiction with respect to costs. Whether it is so relevant will depend in part on whether it has the characteristics associated with Calderbank v Calderbank [1975] 3 WLR 586. [56] This leads to the question raised by the notice of contention, that is, whether the purported r 20.26 offers made by the plaintiff should have been regarded as Calderbank offers. In my opinion, the answer is “no”. [57] An offer is of the Calderbank type only if the maker of it is shown to intend that the fact of its non-​acceptance may be deployed as a basis for seeking a special costs order in the event of that party’s ultimate success in the action. Everything therefore depends on the message conveyed by the offer itself and any covering letter or other attendant circumstance. [58] The possibility that an ineffective or deficient offer purportedly made in accordance with the rules might take effect as a Calderbank offer has been recognised in several cases. It is sufficient to refer to Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 in which Ipp JA (with the concurrence of Mason P and McColl JA) said (at [27]): Calderbank offers are simply offers that do not comply with the relevant rules of court relating to the making of offers of compromise: Jones v Bradley (No 2) [[2003] NSWCA 58] (at [5]‌). Whether an offer, intended to be an offer under the Uniform Civil Procedure Rules but which is ineffective because it does not comply with those Rules, operates as a Calderbank offer, depends upon the intention of the offeror as revealed by the terms of the offer. The offer may disclose an intention that it should take effect only if it complies with the Uniform Civil Procedure Rules. On the other hand, it may disclose a general intent to make an offer, irrespective of whether it takes effect under the Uniform Civil Procedure Rules or not. (emphasis added) [59] As this passage makes clear, the crucial matter is the manifested intention of the offeror. In the present case, the message conveyed by the making of each offer in the context in which it was made was that the plaintiff intended to have resort to the r 20.26 regime. In the absence of any intimation (for, example, in a covering letter) that the plaintiff intended its offer expressly founded on r 20.26 to have some secondary or alternative significance, the fact that the plaintiff’s attempt to act under r 20.26 miscarried neither required nor justified any assumption of intended secondary or alternative significance. Faced with an offer that purported to have significance under r 20.26 (and not otherwise) but which, on its face, exhibited a feature inconsistent with that rule, the correct course for the defendant to adopt was to regard the purported offer as having no force at all. The defendant was not required to speculate about some alternative intention on the part of the plaintiff; nor was the defendant justified in doing so. [60] The plaintiff did not indicate, either expressly or by implication, that, if the offer did not take effect under the rules, the plaintiff still reserved the right to rely on it on the question of costs. An essential ingredient of a Calderbank offer was therefore absent: see Calderbank v Calderbank (above) at 596.



Singapore Airlines Cargo v Principle International (No 2) [15.268]  Singapore Airlines Cargo Pte Limited v Principle International Pty Ltd (No 2) [2017] NSWCA 340 [Singapore Airlines Cargo (SIA Cargo) sought a special costs order as a result of proceedings that had been concluded in the District Court, the result of which had been a judgment in favour of Principle for $43,296, subsequently reduced on appeal to $14,432 (due to an adjustment to the proportion of contributory negligence assigned to Principle). One basis on which SIA Cargo sought [15.268]  971

Civil Procedure in New South Wales

Singapore Airlines Cargo v Principle International (No 2) cont. the special costs orders were offers made to Principle that SIA Cargo argued were Calderbank offers. The Court of Appeal determined the costs questions, finding that course preferable to remitting the proceedings to the District Court for determination.] BEAZLEY P, MEAGHER JA and PAYNE JA The Calderbank offers [21] SIA Cargo made four offers of settlement in relation to the proceedings, the terms of which are set out below. Principle disputed that the first three offers were Calderbank offers at all. It accepted that the fourth offer was a Calderbank offer and a genuine offer of compromise. It submitted, however, that as the offer was inclusive of costs, it did not better the ultimate result that it achieved in the Court of Appeal. Terms of the offers of settlement [22] The first offer was made in writing prior to the commencement of proceedings by letter dated 7 October 2014 from SIA Cargo’s solicitor to Principle’s solicitor and was headed “Without prejudice save as to costs”. In the letter, SIA Cargo’s solicitor contended that it would only be liable […] where there was evidence of “gross negligence or wilful misconduct in accordance with the terms of the contract between the parties”. The letter continued that, nonetheless, in order to resolve the matter “swiftly and amicably”: “… our client would be willing to offer your client AUD 33,146.15, representing 50% of its claim amount, in full and final satisfaction of its claim against our client.” The offer was subject to Principle signing a full and final release, and was made “on a strictly without prejudice and without admission of liability basis”. [23] The second offer was made shortly after the commencement of proceedings by letter dated 16 January 2015 from SIA Cargo’s solicitor to Principle’s solicitor, which was headed “Without prejudice”. The letter reiterated the offer made on 7 October 2014. Again, the offer was subject to the execution of a satisfactory release and indemnity and was made “without prejudice and without admission of liability”. [24] It is convenient at this point to refer to Principle’s response by letter dated 6 February 2015 from its solicitor to SIA Cargo’s solicitor’s letter of 16 January 2015. Principle’s solicitor contended that there was no basis for SIA Cargo to deny liability and pointed out that Principle at that time had incurred legal costs in the sum of $8,679.82 and that interest on the claim was $8,481.85. Principle made a counter offer in the sum of $72,160. [25] The third offer was made in a telephone call between the solicitors on 19 February 2015, in which SIA Cargo’s solicitor offered in full settlement of the claim the sum of $57,250 inclusive of costs. [26] The fourth offer was made by letter dated 30 June 2016 and headed “Without Prejudice save as to costs” and was relevantly in the following terms: Our client offers to pay your client the amount of $20,000 inclusive of costs in full and final settlement of your claim. This offer to settle … is on the basis and in accordance with the principles of Calderbank v Calderbank … and remains open for 7 days. Our client reserves its right to tender this offer on an application for costs if the offer is rejected and will seek payment of its costs from your client on an indemnity basis from the date of this offer … Were the first three offers Calderbank offers? [27] Principle submitted that in order to constitute an offer in respect of which the court might, in the exercise of its discretion, make an adverse order for costs against a party otherwise entitled to costs, it was necessary that the offer state that it would be relied upon as a Calderbank offer, or otherwise made

972 [15.268]

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Singapore Airlines Cargo v Principle International (No 2) cont. apparent that non-​acceptance of the offer would be relied upon as a basis for seeking a special costs order: see Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188 at [42], [57]; Treloar Constructions Pty Ltd v McMillan (No 2) [2017] NSWCA 146 at [8]‌, [10]. [28] SIA Cargo submitted that the approach for which Principle contended introduced a degree of formalism that was inconsistent with the values that Calderbank offers seek to promote. It also submitted that Principle had misunderstood what had been said in Treloar Constructions v McMillan (No 2). Consideration [29] Whitney v Dream Developments was concerned with the question whether an offer purportedly made pursuant to UCPR, r 20.26 was compliant with that rule. The respondents in that case had contended, by way of notice of contention, that notwithstanding the non-​compliance of the offer with UCPR, r 20.26, it could nonetheless operate as a Calderbank offer. The portion of Whitney v Dream Developments at [42] upon which Principle relied in support of its argument, whilst set out correctly, must be read in the context of the contention that was being advanced, namely, that the non-​compliant rules offer could be considered on the basis that it was also advanced by way of a Calderbank offer. In that context, Bathurst CJ stated: 42 In the present case all that there was, were the offers of compromise, the second seeking a greater amount by way of settlement than the former. There was nothing in either of the offers to indicate that they were intended to have effect other than as offers under r 20.26. Further, there was nothing in the correspondence with which the offers were enclosed or in the surrounding circumstance to indicate they would be relied on in relation to the question of costs should a verdict more favourable than the offer be achieved. Such an indication, in my opinion, is the essence of a Calderbank offer. 43 That is not to say that the conduct of the parties during litigation, including the making of open offers, may not in certain circumstances be relevant to the appropriate manner in which a court’s discretion as to costs should be exercised. However, an offer made expressly pursuant to r 20.26 will not of itself take effect as a Calderbank offer unless there is something in it or in the surrounding circumstances to indicate that it is proposed to be relied upon on the question of costs, irrespective of its effectiveness as an offer under r 20.26. 44 In the present case neither the correspondence nor the surrounding circumstances provide any such indication. It follows that the offer cannot take effect as a Calderbank offer. [30] Calderbank offers are a well-​established means of parties seeking to compromise proceedings in circumstances where, provided that the offer is a genuine offer of compromise and the opposing party unreasonably rejects the offer, the court may, in the exercise of its discretion, make a special costs order in favour of the offeror. This was explained in Treloar Constructions v McMillan (No 2) at [6]‌-​[10], as follows: 6 Subject to the rules and to any other Act, costs are in the discretion of the Court: Civil Procedure Act 2005 (NSW) (CPA), s 98. Pursuant to the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.2: “Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis.” 7 The Court may, in its discretion, order that costs be assessed on the indemnity basis: CPA, s 98(1)(c); UCPR, r 42.5. Although not confined to established categories of case, the discretion to order costs on the indemnity basis is to be exercised judicially and in accordance with principle: see, for example, Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 per McHugh J at [65]; Botany Bay City Council v Minister for Local Government (No 2) [2016] NSWCA 127 at [5]‌; Mohareb v Palmer [2016] NSWCA 378 at [53]. 8 The making, and rejection, of a Calderbank offer is one factor which may, but will not necessarily, cause the Court in its discretion to order costs on the indemnity basis. Barrett JA [15.268]  973

Civil Procedure in New South Wales

Singapore Airlines Cargo v Principle International (No 2) cont. explained in Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188, at [57], that an offer will qualify as a Calderbank offer: “… only if the maker of it is shown to intend that the fact of its non-​acceptance may be deployed as a basis for seeking a special costs order in the event of that party’s ultimate success in the action. Everything therefore depends on the message conveyed by the offer itself and any covering letter or other attendant circumstance.” 9 The rejection of an offer of that type may cause the Court to make an order that costs be assessed on the indemnity basis if the Court is satisfied that (1) the offer was a genuine offer of compromise and (2) the rejection of the offer was unreasonable: see, for example, Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8]‌. 10 Although no fixed form of words is required for an offer to constitute a Calderbank offer, an indication that the offer will be relied on in relation to the question of costs should a verdict more favourable than the offer be achieved ‘is the essence of a Calderbank offer’: per Bathurst CJ in Whitney v Dream Developments Pty Ltd at [42]. The 7 November 2014 letter does not embody an offer of the type contemplated for the reason that it fails this essential requirement.” [31] Thus, the party making the offer ultimately seeks to obtain a costs advantage if the offer is not accepted: see Jones v Bradley (No 2) [2003] NSWCA 258 at [5]‌; Old v McInness and Hodgkinson [2011] NSWCA 410 at [22]. Further, from the Court’s perspective, as was explained in Leichardt Municipal Council v Green [2004] NSWCA 341 at [14] the rationale underlying Calderbank offers is to: “… facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore … it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants.” [32] In the Court’s opinion, the first, second and third offers were not Calderbank offers, nor were they offers such that this Court would exercise its discretion to make a special costs order in favour of SIA Cargo. Our reasons may be stated briefly. [33] The first offer was made prior to the commencement of proceedings and did not give any indication that if proceedings were to be commenced the offer would be relied upon in relation to costs. The letter of offer also stated that pursuant to the contract between the parties, for liability to be established against it, gross negligence or wilful misconduct had to be established. That was not correct. The matter was governed by the terms of the Montreal Convention, as was explained in the principal judgment. [34] The second offer was made shortly after the commencement of proceedings. It was expressed to be “in the interests of achieving a commercial resolution to this matter” and was a reiteration of the first offer. It was thus made on the basis that its liability was to be determined in accordance with the contract between the parties. [35] The third offer was oral. No reference was made to it being in terms of a Calderbank offer, or otherwise, to be relied upon in support of a costs order if not accepted. [36] In our opinion, regardless of any classification of the offers as Calderbank offers, none of the offers conveyed the message, to adopt the language of Barrett JA in Whitney v Dream Developments, that the offers were to be used as a basis to claim a special costs order. [37] That does not mean that the court may not make a special costs order in the exercise of its discretion. In Old v McInnes Beazley JA considered, at [32], that although a Calderbank offer provided a readily recognisable basis for the court to exercise its costs discretion, the discretion is not confined to offers that are strictly characterised as or stated to be Calderbank offers. In that case, the respondent had made a non-​compliant rules offer. However, there was other correspondence in which the client had made an offer of settlement and a subsequent letter from the solicitor which enclosed that offer and stated that it was made in accordance with the principles in Calderbank v Calderbank. 974 [15.268]

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Singapore Airlines Cargo v Principle International (No 2) cont. [38] Although Beazley JA dissented in that case, the availability of that approach to costs in an appropriate case was not disavowed in Whitney v Dream Developments. Rather, whether the court will exercise its discretion in a given case depends upon the relevant factual circumstances, including the terms in which offers are made and the message that is conveyed. We do not consider that the relevant message was conveyed in this case. Nor do we consider the first and second offers were made in terms or in circumstances such as to compel the exercise of a costs discretion in favour of SIA Cargo. This is particularly so given that SIA Cargo was resisting liability on a basis that was not available to it. [39] Different considerations arise in relation to the third offer, in that it was in an increased amount, and seems to reflect an offer of damages of between $40,000 and $45,000. We say this because Principle had advised two weeks earlier that its costs were $8,647.82 and that interest on its claim (which was in the sum of $72,160) was $8,481.85. This offer was thus very close to the result achieved in the District Court, which as explained below, we consider to be the correct comparator, not the ultimate result in the Court of Appeal. [40] However, it was an offer made by telephone, without the formalities of what might be expected of an offer the intention in respect of which was to provide a basis for seeking an advantageous costs order. In saying that, we do not intend to indicate that a Calderbank offer or an offer which is intended to provide a basis for a special costs order must be in a particular form. Rather, as already stated, it is the message that is conveyed by the terms of the offer that is the relevant consideration. [41] That leaves the fourth offer. In our opinion, this offer did not better the result in the proceedings. That is clearly so if we are correct in considering that the correct comparator is with the damages awarded at first instance. The reason for our view in that regard is that the offer was made in respect of those proceedings and is the reverse contention to the view taken in this Court that if a party wishes to rely on an offer of compromise for the purposes of proceedings on appeal, it is usually not sufficient to rely upon an offer made in relation to the proceedings at first instance. [42] But in any event, as the offer was made inclusive of costs, it was not better than the result that was achieved on the basis that it is necessary to substitute for the damages awarded by the primary judge the amount of $14,432 awarded by this Court. Pre-​judgment interest was payable on that amount and, as we have rejected SIA Cargo’s application under UCPR, r 42.35, Principle was also entitled to its costs at first instance. As at 6 February 2015, Principle advised that its costs at that stage were $8,679.82. The fourth offer was made over 12 months later. It may be inferred that significantly more costs had been incurred by that time. [43] In our view, even if the correct approach is to substitute the damages awarded by this Court in determining whether SIA Cargo was entitled to a special costs order in its favour, the fourth offer of $20,000 inclusive of costs did not better the ultimate result achieved by Principle in the proceedings at first instance. [44] It follows that SIA Cargo has not established a basis for an order for costs of the proceedings in the District Court. Accordingly, the notice of motion is dismissed with costs.



DISCONTINUANCE [15.270] Discontinuance is a procedure that allows a plaintiff to terminate proceedings

against a defendant because they no longer wish to continue the litigation. The plaintiff may want to discontinue because of a lack of resources, acceptance that the claim will fail or because the matter has been resolved as a result of some form of alternative dispute resolution, Calderbank letter or offer of compromise. A party who discontinues must ordinarily pay the [15.270]  975

Civil Procedure in New South Wales

other party’s costs of the discontinued claim, unless the court otherwise orders, or the notice of discontinuance makes some other provision. Where proceedings have been resolved by way of negotiation, then costs may also be negotiated resulting in a notice that specifies who is to pay costs, or as commonly happens, each party is to bear their own costs. Discontinuance does not bar subsequent proceedings, unless the discontinuance was on terms that no new proceedings would be brought. If subsequent proceedings are initiated, they may be stayed to secure the costs of discontinued proceedings. Rule 12.1 of the UCPR allows the plaintiff to file a notice of discontinuance (Form 33) with the consent of each other party or with leave of the court. A plaintiff will not normally be forced to continue to litigate as long as there will be no injustice caused to the defendant. Under such circumstances, the court will usually grant leave to discontinue. In determining whether to grant leave the court will review all relevant circumstances and consider whether “the defendant is not deprived of some advantage which he has already gained in the litigation and should be ready to grant him adequate protection to ensure that any advantage he has gained is preserved”.6 Such advantage might be preserved by appropriate orders granting discontinuance on terms and or the plaintiff is to pay the defendant’s costs.

Uniform Civil Procedure Rules 2005 (NSW) [15.280]  Uniform Civil Procedure Rules 2005 (NSW) rr 12.1, 12.3, 12.4, 42.19 12.1 Discontinuance of proceedings (1)

The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant:



(a)

with the consent of each other active party in the proceedings, or



(b)

with the leave of the court.

(2)

A notice of discontinuance:



(a)

must bear a certificate by the plaintiff, or by his or her solicitor, to the effect that the plaintiff does not represent any other person, and



(b)

except where it is filed with the leave of the court, must be accompanied by a notice from each party whose consent is required by subrule (1) to the effect that the party consents to the proceedings being discontinued in accordance with the notice of discontinuance.

(3)

If any such consent is given on terms, those terms are to be incorporated in the notice of consent.

(4)

If any party has not been served with the originating process, the plaintiff must file an affidavit to that effect.

(5)

For the purposes of this rule, proceedings on a cross-​claim are taken to be different proceedings to the proceedings on the originating process and to proceedings on any other cross-​claim.

12.3 Effect of discontinuance (1)

A discontinuance of proceedings with respect to a plaintiff’s claim for relief does not prevent the plaintiff from claiming the same relief in fresh proceedings.

(2)

Subrule (1) is subject to the terms of any consent to the discontinuance or of any leave to discontinue.

6

Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876 at 879.

976 [15.280]

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Uniform Civil Procedure Rules 2005 (NSW) cont. 12.4 Stay of further proceedings to secure costs of discontinued proceedings If: (a)

as a consequence of the discontinuance of proceedings, a plaintiff is liable to pay the costs of another party in relation to those proceedings, and

(b)

before payment of the costs, the plaintiff commences further proceedings against that other party on the same or substantially the same cause of action as that on which the former proceedings were commenced,

the court may stay the further proceedings until those costs are paid and may make such consequential orders as it thinks fit. 42.19 Proceedings discontinued (1)

This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1.

(2)

Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant’s costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.

(3)

Despite subrule (2), the defendant’s costs in an appeal to the District Court under section 91 of the Children and Young Persons (Care and Protection) Act 1998 are not payable by the plaintiff unless the court finds there are special circumstances to justify an order for their payment by the plaintiff.



APPEAL [15.285] Appeal is “the formal proceeding by which an unsuccessful party seeks to have

the formal order of a court set aside or varied in his favour by an appellate court”:  see Commonwealth of Australia v Bank of New South Wales (1949) 79 CLR 497 at 625 and Jeray v Blue Mountains City Council [2010] NSWCA 281. The appellant is the party who brings the appeal and the respondent is a party who opposes the appeal. The reasons for creating avenues of appeal are to allow for the correction of errors of law or facts or the miscarriage of a discretion so that the likelihood of achieving a correct result is greater. Appeals also allow for the law to develop where previously unresolved issues of law are determined by a court of appeal. However, if appeals are allowed too readily this can reduce certainty and create additional cost and delay as the original decision is subject to challenge and the additional appeal procedures need to be complied with. The right of appeal is derived from legislation. The scope of the appeal depends upon the statutory provision that creates the right of appeal. No right to appeal exists at common law: see Lacey v Attorney-​ General of Queensland (2011) 242 CLR 573; [2011] HCA 10 at [8]‌. The main aspects of appeal in New South Wales are set out below. For more detailed discussion, see Blank G and Selby H (eds), Appellate Practice (Federation Press, 2008) and Hamilton J and Lindsay G (eds), NSW Civil Practice & Procedure (Lawbook Co, Subscription Service). [15.285]  977

Civil Procedure in New South Wales

Types of appeal [15.290]  There are generally speaking three types of appeal:

• Strict appeal (an appeal stricto sensu) –​which is when the court is required to confine its consideration to whether the judgment appealed from was correct when it was given. This type of appeal considers the law and facts as at the time when the judgment was given. Appeals to the High Court are in the nature of strict appeals. • De novo appeal  –​this is effectively a retrial where the evidence is given again and the appellate court forms its own view of the facts and law. • Rehearing  –​this type of appeal determines the position of the parties as at the date of the rehearing on the record of the evidence before the trial judge. The rehearing is a new determination of the case but based upon the evidence before the trial judge, with a limited exception to admit new evidence. However, the law is applied as at the date of the rehearing. See Fox v Percy (2003) 214 CLR 118 at [20], [32] and Turnbull v New South Wales Medical Board [1976] 2 NSWLR 281 at 297–​298. However, there is “no definitive classification of appeals, merely descriptive phrases by which an appeal to one body may sometimes be conveniently distinguished from an appeal to another”: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [11]; see also Minister for Immigration and Border Protection v SZVFW [2018] HCA 30 at [29]. NSW Court of Appeal [15.300]  The NSW Court of Appeal is created by the Supreme Court Act 1970 (NSW).7 It is

composed of the Chief Justice, the President of the Court of Appeal and Judges of Appeal. The Supreme Court’s website will list the Judges of Appeal as at any particular time. Most appeals are heard by three Judges of Appeal but some are heard by two and for special cases by more than three. The presiding member will be either the Chief Justice, or if not sitting the President of the Court of Appeal, or if not sitting the Senior Judge of Appeal present. The Court of Appeal’s jurisdiction is set out in s 44 as follows: The Court of Appeal may, in proceedings before it, exercise every power, jurisdiction or authority of the Court, whether at law or in equity or under any Act, Imperial Act or Commonwealth Act.

The NSW Court of Appeal conducts a rehearing where the decision or other matter under appeal has been given after a hearing: see s 75A(5). An appeal by way of rehearing requires that the appellant demonstrate “that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error”: see Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [27]; Allesch v Maunz (2000) 203 CLR 172 at 180. The Court of Appeal may receive further evidence, but where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds. Special grounds do not need to be shown in relation to evidence concerning matters occurring after the trial or hearing: see s 75A.

7

New South Wales also has a Court of Criminal Appeal. A person who has been convicted or who has pleaded guilty and has been sentenced by a Supreme Court or District Court Judge may appeal to the Court of Criminal Appeal.

978 [15.290]

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Decisions of the Court of Appeal are by majority of the Judges of Appeal present. Provision is made for some appeals to be heard by only two Judges of Appeal. This is usually the case in relation to appeals dealing solely with the amount of damages, applications for leave to appeal or applications involving a question of practice and procedure: see ss 46A and 46B. Section 101 specifies the matters that may be appealed to the Court of Appeal, whether by right or by leave, in non-​jury proceedings in the Supreme Court. Section  102 confers an equivalent right in proceedings involving a jury trial. In addition, rights of appeal from decisions of other courts or tribunals are conferred by a range of other statutory provisions: for example, District Court Act 1973 (NSW) ss 127, 142N; Land and Environment Court Act 1979 (NSW) ss 57, 58; Supreme Court Act 1970 (NSW) s 48. To appeal to the High Court of Australia from a decision of the Court of Appeal, special leave to appeal must be granted by the High Court.

Supreme Court Act 1970 (NSW) [15.310]  Supreme Court Act 1970 (NSW) s 101 101 Appeal in proceedings before the Court (1)

Subject to this and any other Act and subject to the rules, an appeal shall lie to the Court of Appeal from:



(a)

any judgment or order of the Court in a Division, and



(b)

without limiting the generality of paragraph (a):



(i)

any opinion, decision, direction or determination of the Court in a Division on a stated case,



(ii)

any exercise of a power to which section 24 applies, and



(iii)

any determination of the Court in a Division in proceedings remitted under subsection (4) of section 51.

(2)

An appeal shall not lie to the Court of Appeal, except by leave of the Court of Appeal, from:



(a)



(b) (Repealed)



(c)



(d) (Repealed)



(e)

an interlocutory judgment or order in proceedings in the Court,



(f)

a judgment or order in proceedings in the Court on an interpleader issue decided in a summary way pursuant to the rules,



(g) (Repealed)



(h)

an order of the Court in a Division on an appeal under Part 5 of the Crimes (Appeal and Review) Act 2001,



(i)

a judgment, order or determination in proceedings in the Court under the Commercial Arbitration Act 2010,



(j), (k) (Repealed)



(l)

an order in proceedings in the Court directing an amendment of a judgment or order correcting a clerical mistake in the judgment or order or an error arising from an accidental slip or omission, a judgment given or order made in proceedings in the Court with the consent of the parties or as to costs only which are in the discretion of the Court,

a judgment or order of the Court in a Division on an application for summary judgment under the rules, [15.310]  979

Civil Procedure in New South Wales

Supreme Court Act 1970 (NSW) cont.

(m)

a judgment or order of the Court on an application under section 74K, 74MA or 74O of the Real Property Act 1900,



(n)

a judgment or order of the Court in a Division for the winding up of a corporation,



(o)

a judgment or order of the Court in a Division restraining or refusing to restrain the presentation or advertisement of an application for the winding up of a corporation,



(p)

a judgment or order of the court on an application under section 459G of the Corporations Law or section 459G of the Corporations Act 2001 of the Commonwealth,



(q)

a judgment or order in proceedings of the Court with respect to the taxation or assessment of costs, or



(r)

a final judgment or order in proceedings of the Court, other than an appeal:



(i)

that involves a matter at issue amounting to or of the value of $100,000 or more, or



(ii)

that involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more.

(3)

Subsection (2) does not apply to a judgment given or order made on an application for a writ of habeas corpus ad subjiciendum or to an order for the committal or arrest of any person.

(4)

Where the Court in a Division exercises any power to which section 24 applies and exercise of the power is expressed by any provision of an Act or Imperial Act in force immediately before the commencement of this Act to be final or without appeal, an appeal shall lie to the Court of Appeal notwithstanding that provision, but only by leave of the Court of Appeal.

(5)

An appeal lies to the Court of Appeal from any judgment or order of the Court in a Division in any proceedings that relate to contempt (whether civil or criminal) of the Court or of any other court.

(6)

Subsection (5) does not confer on any person a right to appeal from a judgment or order of the Court in a Division in any proceedings that relate to criminal contempt, being a judgment or order by which the person charged with contempt is found not to have committed contempt.



Fox v Percy [15.320]  Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 GLEESON CJ, GUMMOW and KIRBY J [20] Appeal is not, as such, a common law procedure. It is a creature of statute. In Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd, [(1976) 135 CLR 616 at 619-​622] Mason J distinguished between (i) an appeal stricto sensu, where the issue is whether the judgment below was right on the material before the trial court; (ii) an appeal by rehearing on the evidence before the trial court; (iii) an appeal by way of rehearing on that evidence supplemented by such further evidence as the appellate court admits under a statutory power to do so; and (iv) an appeal by way of a hearing de novo. There are different meanings to be attached to the word “rehearing”. The distinction between an appeal by way of rehearing and a hearing de novo was further considered in Allesch v Maunz [(2000) 203 CLR 172 at 180-​181, 187]. Which of the meanings is that borne by the term “appeal”, or whether there is some other meaning, is, in the absence of an express statement in the particular provision, a matter of statutory construction in each case. 980 [15.320]

Concluding Proceedings  Chapter  15

Fox v Percy cont. [21] In New South Wales a right of appeal from a judgment of the District Court lies to the Supreme Court pursuant to the District Court Act 1973 (NSW), s 127(1). In the present case such appeal lay as of right. Within the Supreme Court such an appeal is assigned to the Court of Appeal. [Supreme Court Act 1970 (NSW), s 48(1)(a)(iv) and (2)(f)]. The character and features of the appeal are governed by the Supreme Court Act 1970 (NSW). Section 75A of that Act provides, relevantly:

(5) Where the decision or other matter under appeal has been given after a hearing, the appeal shall be by way of rehearing.



(6) The Court shall have the powers and duties of the court … from whom the appeal is brought, including powers and duties concerning: (a)  … (b)  the drawing of inferences and the making of findings of fact, and (c)  the assessment of damages and other money sums.



(7) The Court may receive further evidence.



(8) Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds.

(9) …

(10) The Court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires.

[22] The nature of the “rehearing” provided in these and like provisions has been described in many cases. To some extent, its character is indicated by the provisions of the subsections quoted. The “rehearing” does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. No such fresh evidence was admitted in the present appeal. [23] The foregoing procedure shapes the requirements, and limitations, of such an appeal. On the one hand, the appellate court is obliged to “give the judgment which in its opinion ought to have been given in the first instance”. On the other, it must, of necessity, observe the “natural limitations” that exist in the case of any appellate court proceeding wholly or substantially on the record. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses’ credibility and of the “feeling” of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole. [24] Nevertheless, mistakes, including serious mistakes, can occur at trial in the comprehension, recollection and evaluation of evidence. In part, it was to prevent and cure the miscarriages of justice that can arise from such mistakes that, in the 19th century, the general facility of appeal was introduced in England, and later in its colonies. Some time after this development came the gradual reduction in the number, and even the elimination, of civil trials by jury and the increase in trials by judge alone at the end of which the judge, who is subject to appeal, is obliged to give reasons for the decision. Such reasons are, at once, necessitated by the right of appeal and enhance its utility. Care must be exercised in applying to appellate review of the reasoned decisions of judges, sitting without juries, all of the judicial remarks made concerning the proper approach of appellate courts to appeals against judgments giving effect to jury verdicts. A jury gives no reasons and this necessitates assumptions that are not appropriate to, and need modification for, appellate review of a judge’s detailed reasons. [25] Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before [15.320]  981

Civil Procedure in New South Wales

Fox v Percy cont. a judge sitting alone, of that judge’s reasons. Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect”. In Warren v Coombes [(1979) 142 CLR 531 at 551], the majority of this Court reiterated the rule that: [I]‌n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it. As this Court there said, that approach was “not only sound in law, but beneficial in … operation”. [26] After Warren v Coombes, a series of cases was decided in which this Court reiterated its earlier statements concerning the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not. Three important decisions in this regard were Jones v Hyde [(1989) 63 ALJR 349 at 351-​352], Abalos v Australian Postal Commission [(1990) 171 CLR 167 at 179] and Devries v Australian National Railways Commission [(1993) 177 CLR 472 at 479, 482-​ 483]. This trilogy of cases did not constitute a departure from established doctrine. The decisions were simply a reminder of the limits under which appellate judges typically operate when compared with trial judges. [27] The continuing application of the corrective expressed in the trilogy of cases was not questioned in this appeal. The cases mentioned remain the instruction of this Court to appellate decision-​making throughout Australia. However, that instruction did not, and could not, derogate from the obligation of courts of appeal, in accordance with legislation such as the Supreme Court Act applicable in this case, to perform the appellate function as established by Parliament. Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute. [28] Over more than a century, this Court, and courts like it, have given instruction on how to resolve the dichotomy between the foregoing appellate obligations and appellate restraint. From time to time, by reference to considerations particular to each case, different emphasis appears in such reasons. However, the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge’s conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings. [29] That this is so is demonstrated in several recent decisions of this Court. In some, quite rare, cases, although the facts fall short of being “incontrovertible”, an appellate conclusion may be reached that the decision at trial is “glaringly improbable” or “contrary to compelling inferences” in the case. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must “not shrink from giving effect to” its own conclusion. Finality in litigation is highly desirable. Litigation beyond a trial is costly and usually upsetting. But in every appeal by way of rehearing, a judgment of the appellate court is required both on the facts and the law. It is not forbidden (nor in the face of the statutory requirement could it be) by ritual incantation about witness credibility, nor by judicial reference to the desirability of finality in litigation or reminders of the general advantages of the trial over the appellate process.

982 [15.320]

Concluding Proceedings  Chapter  15

Fox v Percy cont. [30] It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Société d’Avances Commerciales (Société Anonyme Egyptienne) v Merchants’ Marine Insurance Co (The “Palitana”) [(1924) 20 Ll L Rep 140 at 152]: “… I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.” [31] Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical. [footnotes omitted]

 Appeal as of right [15.330]  An appeal shall lie to the NSW Court of Appeal from any judgment or order of the

Supreme Court in a Division, although some error of law, fact or discretion must be shown: see Supreme Court Act 1970 (NSW) s  101(1). The NSW Supreme Court has a Common Law Division and an Equity Division: see s 38. An appeal as of right also lies from District Court actions in respect of an amount of $100,000 or more: see District Court Act 1973 (NSW) s 127(2). Those appeals requiring leave are set out in s 101(2) of the Supreme Court Act 1970 (NSW) and include interlocutory orders. Appeals from the District Court requiring leave are set out in s 127(2) of the District Court Act 1973 (NSW). Leave to appeal [15.340]  The requirement of leave to appeal is designed to restrict the appeal procedure to

appropriate matters and thereby promote the efficiency of the court’s appeal procedures. In Coulter v The Queen (1988) 164 CLR 350 at 359, Deane and Gaudron JJ observed: The requirement that leave or special leave be obtained before an appeal will lie is a necessary control device in certain areas of the administration of justice (eg appeals to a second appellate court) in this country. As a filter of the work which comes before some appellate courts, it promotes the availability, the speed and the efficiency of justice in those appeals which are, in all the circumstances, appropriate to proceed to a full hearing before the particular court. It also represents a constraint upon the overall cost of litigation by protecting parties, particularly respondents, from the costs of a full hearing of appeals which should not properly be entertained by the relevant court either because they are hopeless or, in the case of a civil appeal to a second appellate court, because they do not possess special features which outweigh the prima facie validity of the ordinary perception that the availability of cumulative appellate processes can, of itself, constitute a source of injustice.

[15.340]  983

Civil Procedure in New South Wales

Failure to obtain the required leave results in a purported appeal being incompetent. In some cases, it will be appropriate for leave to appeal and the appeal proper to be heard together. Interlocutory judgments or orders [15.350]  The test in New South Wales to distinguish between final orders and those which

are interlocutory looks at the nature of the application and its strict legal effect. Specifically, it looks at whether the order finally disposes of the rights of the parties:  Hall v Nominal Defendant (1966) 117 CLR 423; Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246; Macatangay v New South Wales (No 2) [2009] NSWCA 272 at [11]; Debis v Allied Bellambi Collieries [2000] NSWCA 274 at [31]–​[32], [54]. Although a direct appeal from an interlocutory judgment or order requires leave, an appellant who has a right of appeal may challenge an interlocutory order on an appeal from the final order if the interlocutory order affected the final result: Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478.

Hall v Nominal Defendant [15.370]  Hall v Nominal Defendant (1966) 117 CLR 423 WINDEYER J … the distinction between final and interlocutory orders has in England caused much difficulty. … In most cases the test that seems to be most satisfactory, and the one that accords most nearly with what has been said on the subject in this Court, is it seems to me to look at the consequences of the order itself and to ask does it finally determine the rights of the parties in a principal cause pending between them. It is never enough to ask simply does the order finally determine the actual application or matter out of which it arises; because, subject to the possibility of an appeal, every order does that, unless it be an order that is expressly declared to be subject to variation. In Standard Discount Co v La Grange (1877) 3 CPD 67 Bramwell LJ recognized this when he said: “There cannot be an order which is neither final nor interlocutory; and therefore if the order before us is not final, it must be interlocutory. Is it a final order? It is like every other order in one sense final, so long as it is not appealed against, but it is not the final order of the Court in the cause” (1877) 3 CPD, at pp 69, 70. In the same case, Brett LJ said: “I cannot help thinking that no order in an action will be found to be final unless a decision upon the application out of which it arises, but given in favour of the other party to the action, would have determined the matter in dispute” (1877) 3 CPD, at p 72. And later his Lordship, then Lord Esher MR, adhered to this as “the best rule for determining these questions; the rule which will be most easily understood and involves the fewest difficulties”; and Lopes LJ agreed: Salaman v Warner (1891) 1 QB 734. But it is not a view that has had general acceptance: see Isaacs & Sons v Salbstein (1916) 2 KB 139. … These cases are all illustrative of the general proposition that a final order is one which finally disposes (subject only to appeal) of an action or an existing dispute between parties. This Court has said that “it must not be forgotten that it is the interlocutory nature of the order, not the nature of the motion or other proceedings in which the court made the order, that determines whether leave is required”: Ex parte Bucknell (1936) 56 CLR 221, at p 225. TAYLOR J An order made in the course of an action or suit which does not conclude the rights of the parties inter se, though it may, of course, conclude the fate of the particular application in which it is made, is interlocutory only. On this basis an order staying proceedings against one of several defendants on the ground that they are scandalous, vexatious and an abuse of the process of the court has been treated as interlocutory: Hind v Marquis of Hartington (1890) 6 TLR 267. The same view was taken of an order striking out a plaintiff’s statement of claim on the ground that it disclosed no reasonable 984 [15.350]

Concluding Proceedings  Chapter  15

Hall v Nominal Defendant cont. cause of action: Jones v Insole (1891) 64 LT 703, and of an order dismissing an action as frivolous and vexatious in Re Page [1910] 1 Ch 489. [footnotes omitted]

 Discretionary decisions [15.375]  Discretionary decisions by a primary judge are approached with constraint by an

appeals court. The relevant test is that laid down in House v The King (1936) 55 CLR 499 where Dixon, Evatt and McTiernan JJ said at 504–​505: The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

The application of House v The King was considered by Dyson JA (as he then was) in Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 dealing with an appeal from a District Court judge’s decision to dismiss a matter due to want of prosecution after repeated failures by the plaintiff to provide updated particulars. Dyson JA stated: As a result, Garling  DCJ had to make a discretionary decision on a matter of practice and procedure  –​an extremely important one, having potentially serious consequences for the plaintiff, but a discretionary decision on a matter of practice and procedure nonetheless. Any attack on decisions of that character must fail unless it can be demonstrated that the decision-​maker:

(a) made an error of legal principle,



(b) made a material error of fact,



(c) took into account some irrelevant matter,



(d) failed to take into account, or gave insufficient weight to, some relevant matter, or

(e) arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning. Even though this Court might conclude that it would have exercised the discretion differently if the discretion had been conferred on it in the first instance –​might have adjourned the matter so as to permit the defendants to consider the late-​supplied particulars, or might have held the plaintiff to the old particulars, or might have fixed one more “final” date for outstanding matters to be completed by  –​any such conclusion would be immaterial. The law committed the exercise of the discretion to Garling  DCJ. The law permits interference with his exercise of the discretion in only the limited circumstances just described. See House v R (1936) 55 CLR 499 at 504-​505; Lovell v Lovell (1950) 81 CLR 513 at 518-​519 and [15.375]  985

Civil Procedure in New South Wales

532-​533; Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627.

A further example of a Court of Appeals review of a primary judge’s exercise of discretion is Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 discussed in Chapter 2 at [2.220]. Procedure [15.380]  The procedure for instituting an appeal or seeking leave to appeal is dealt with in

Pt 51 of the UCPR and Supreme Court of NSW, Practice Note SC CA 1 –​Court of Appeal, 13 December 2017. Appeals to Courts other than Court of Appeal [15.390]  Some appeals are to the Supreme Court or District Court rather than the Court of

Appeal. For example ss 39 and 40 of the Local Court Act 2007 (NSW) deals with appeals from its General Division to the Supreme Court and from its Small Claims Division to the District Court. Appeals from the NSW Civil and Administrative Tribunal are to the Supreme Court or District Court: see Civil and Administrative Tribunal Act 2013 (NSW) ss 82–​84.

Local Court Act 2007 (NSW) [15.400]  Local Court Act 2007 (NSW) ss 39–​41 39 Appeals as of right (1)

A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

(2)

A party to proceedings before the Court sitting in its Small Claims Division who is dissatisfied with a judgment or order of the Court may appeal to the District Court, but only on the ground of lack of jurisdiction or denial of procedural fairness.

40 Appeals requiring leave (1)

A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

(2)

A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court:



(a)

an interlocutory judgment or order,



(b)

a judgment or order made with the consent of the parties,



(c)

an order as to costs.

41 Determination of appeals (1)

The Supreme Court may determine an appeal made under section 39(1) or 40:



(a)

by varying the terms of the judgment or order, or



(b)

by setting aside the judgment or order, or



(c)

by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or



(d)

by dismissing the appeal.

986 [15.380]

Concluding Proceedings  Chapter  15

Local Court Act 2007 (NSW) cont. (2)

The District Court may determine an appeal made under section 39(2):



(a)

by varying the terms of the judgment or order, or



(b)

by setting aside the judgment or order, or



(c)

by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the District Court’s directions, or



(d)

by dismissing the appeal.



ENFORCEMENT AND EXECUTION OF JUDGMENT [15.410]  Enforcement is the process by which compliance with a determination or order of

a court is compelled. Execution or a writ of execution is one method by which enforcement is achieved. This chapter will focus on enforcement of a judgment debt, that is an order to pay money, through (1)  a writ for the levy of property and (2)  a garnishee order. However, before a judgment can be enforced it must be entered. Judgment and orders will be entered by the court registry shortly after they are pronounced in court, or in the case of default judgment, after being approved. In Goater v Commonwealth Bank of Australia [2014] NSWCA 382 at [18], Basten JA stated: Entry of a judgment or order of the court is a critical step in the resolution of a claim. A judgment or order “may not be enforced until it has been entered in accordance with the uniform rules”:  Civil Procedure Act, s  133(1). The rules provide that a judgment or order “is taken to be entered when it is recorded in the court’s computerised court record system”: UCPR, r 36.11(2).

Once judgment is entered in favour of a plaintiff, the plaintiff is referred to as “the judgment creditor” and the defendant is known as “the judgment debtor”. A judgment can only be enforced for 12 years: Limitation Act 1969 (NSW) s 17. However, s 134 of the CPA allows the judgment creditor to seek leave to enforce a stale judgment.

Civil Procedure Act 2005 (NSW) [15.420]  Civil Procedure Act 2005 (NSW) ss 133, 134 133 Judgments and orders unenforceable until entered (1)

A judgment or order of the court may not be enforced until it has been entered in accordance with the uniform rules.

(2)

This section extends to:



(a)

any judgment, order, determination or decree of a court, and



(b)

any adjudication or award of a person having authority to make an adjudication or award,

that may be filed or registered in the court, or of which a certificate may be filed or registered in the court, under any other Act or law. [15.420]  987

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont. (3)

In subsection (2), law includes:



(a)

a law of the Commonwealth, and



(b)

a law of another State or Territory, and



(c)

in relation to the Supreme Court, a law of a foreign country.

134 Stale judgments and orders enforceable only by leave (1)

An application by a judgment creditor for:



(a)

a writ of execution, or



(b)

a garnishee order, or



(c)

a charging order, or



(d)

an order for examination,

may not be made, except by leave of the court, if the prescribed period has elapsed since the judgment was given or (in the case of a judgment, order or decree referred to in section 133(2)) was registered as referred to in section 133(2). (2)

In this section, prescribed period means 12 years or, if the uniform rules prescribe a different period, the period so prescribed



Uniform Civil Procedure Rules 2005 (NSW) [15.430]  Uniform Civil Procedure Rules 2005 (NSW) rr 36.4, 36.11 36.4 Date of effect of judgments and orders (1)

A judgment or order takes effect:



(a)

as of the date on which it is given or made, or



(b)

if the court orders that it not take effect until it is entered, as of the date on which it is entered.

(2)

Despite subrule (1), if an order of the court directs the payment of costs, and the costs are to be assessed, the order takes effect as of the date when the relevant cost assessor’s certificate is filed.

(3)

Despite subrules (1) and (2), the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those subrules.

36.11 Entry of judgments and orders (1)

Any judgment or order of the court is to be entered.

(2)

Unless the court orders otherwise, a judgment or order is taken to be entered when it is recorded in the court’s computerised court record system.

(2A)

If the court directs that a judgment or order be entered forthwith, the judgment or order is taken to be entered:



(a)

when a document embodying the judgment or order is signed and sealed by a registrar, or



(b)

when the judgment or order is recorded as referred to in subrule (2),

988 [15.430]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont. whichever first occurs. (3)

In this rule, a reference to a judgment or order of the court includes a reference to any judgment, order, determination, decree, adjudication or award that has been filed or registered in the court, or of which a certificate has been filed or registered in the court, as referred to in section 133(2) of the Civil Procedure Act 2005.

(4)

This rule does not limit the operation of rule 36.10.

 Judgments for payment of money [15.440] The CPA makes provision for the enforcement of judgments for the payment of

money through (1) a writ for the levy of property, (2) a garnishee order or (3) in the case of a judgment of the Supreme Court or the District Court, a charging order (CPA s 106). Part 40 Div 1 of the UCPR also allows for the appointment of a receiver of the income of the property of the person bound by the judgment, and sequestration of the property of the person bound by the judgment. The CPA also provides for enforcement of judgments for possession of land in the Supreme Court and District Court by a writ of possession (s 104) and enforcement of judgments for delivery of goods by a writ of delivery (s 105).

Civil Procedure Act 2005 (NSW) [15.450]  Civil Procedure Act 2005 (NSW) s 106 106 Judgments for payment of money (1)

A judgment debt may be enforced by means of any one or more of the following:



(a)

a writ for the levy of property,



(b)

a garnishee order,



(c)

in the case of a judgment of the Supreme Court or the District Court, a charging order.

(2)

Subject to the uniform rules, a writ for the levy of property is sufficient authority for the Sheriff:



(a)

to seize and to sell goods of or to which the judgment debtor is or may be possessed or entitled or which the judgment debtor may, at law or in equity, assign or dispose of, and



(b)

to seize money belonging to the judgment debtor, and



(c)

to seize and to realise cheques, bills of exchange, promissory notes, bonds, specialties or other securities for money belonging to the judgment debtor, and



(d)

to enter into possession of, and to sell, land of or to which the judgment debtor is seized or entitled, or which the judgment debtor may, at law or in equity, assign or dispose of, and



(e)

to take and to sell choses in action or equitable interests in goods or land held by the judgment debtor.

(3)

The power conferred on the Sheriff by subsection (2) (a) may not be exercised in relation to any property referred to in section 116 (2) of the Bankruptcy Act 1966 of the Commonwealth. For that purpose, a reference in section 116 (2) of that Act to the property of the bankrupt is taken to be a reference to the goods of the judgment debtor. [15.450]  989

Civil Procedure in New South Wales

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

For the purposes of subsection (2)(d), the Sheriff is taken to have entered into possession of land when notice of the proposed sale of the land is published in accordance with the uniform rules.

(4A) The power conferred on the Sheriff by subsection (2) (a) may not be exercised if, in the opinion of the Sheriff, the cost of the seizure, storage or sale of the goods would likely exceed the sale price of the goods. (5)

The power conferred on the Sheriff by subsection (2)(d) may not be exercised in relation to land if the amount outstanding under the judgment is less than the jurisdictional limit of the Local Court when sitting in its Small Claims Division.

(6)

A garnishee order or charging order addressed to the Crown binds the Crown as garnishee or chargee, as the case requires.

Note: Divisions 2, 3 and 4, respectively, apply to the enforcement of writs for the levy of property, garnishee orders and charging orders.

 Writs of execution [15.460]  Section 102 of the CPA defines writ of execution to mean a writ of delivery, writ for

the levy of property or writ of possession. Writ of possession means a writ referred to in s 104. Writ of delivery means a writ referred to in s 105 and writ for the levy of property means a writ referred to in s 106(1)(a). The focus here will be on the writ for the levy of property as it is available to enforce a judgment debt. Writs of execution may not be issued in certain circumstance without leave of the court.

Uniform Civil Procedure Rules 2005 (NSW) [15.470]  Uniform Civil Procedure Rules 2005 (NSW) r 39.1 39.1 Circumstances in which issue of writ requires leave (1)

A writ of execution may not be issued in the following circumstances except by leave of the court:



(a)

if there has been any change in the persons entitled or liable to execution under the judgment, whether by assignment, death or otherwise,



(b)

if the judgment is against the assets of a deceased person coming to the hands of an executor or administrator after the judgment took effect, and the writ is against those assets or any of them,



(c)

if a person’s entitlement under the judgment is subject to fulfilment of a condition,



(d)

if the writ is a writ for the possession of land,



(e)

if the writ is against property in the hands of a receiver appointed by the court,



(f)

if the writ is against property in the hands of a sequestrator,



(g)

if the writ is in aid of another writ of execution.

Note: See also section 134 of the Civil Procedure Act 2005 with respect to stale judgments. (2)

If leave is required, it may be applied for in the notice of motion for the issue of the writ of execution.

990 [15.460]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont. (3)

The motion for leave must be supported by the following evidence:



(a)

evidence that the applicant is entitled to proceed to execution on the judgment,



(b)

evidence that the person against whom execution is sought to be issued is liable to execution on the judgment,



(c)

if the judgment is for the payment of money, evidence as to the amount due on the date of the motion,



(d)

if subrule (1)(a) applies, evidence as to the change which has taken place,



(e)

if subrule (1)(b) or (c) applies, evidence that a demand to satisfy the judgment has been made on the person liable to satisfy it and that the person has not satisfied it.

(4)

Subrule (1) does not limit the operation of any other Act or law that requires leave for the issue of a writ of execution.

 Writ for the levy of property [15.480] The writ for the levy of property is used to allow the sheriff to take physical

possession of property in order to sell it to satisfy the judgment debt. The authority given to the sheriff is set out in s 106(2) of the CPA. The procedure for applying for the writ is set out in Pt 39 of the UCPR which requires the use of a notice of motion (Form 65) accompanied by an affidavit. Part 39 of the UCPR also sets out the procedures the sheriff is required to use to realise the value of the goods seized including the use of auctions and how the proceeds of the sale are to be applied.

Debt Recovery in the Local Court [15.485]  Mark Vine and David Simons, Debt Recovery in the Local Court [Extract from UNSW CLE, 25 February 2015] The most common form of judgment enforcement is by way of a writ for levy of property (UCPR Form 65). It causes the Sheriff to attend the property of the debtor and take possession of their goods to be sold at public auction. Sounds simple really. Must work all the time. If only …. After you file the form the court sends a Writ for the Levy of Property to the Sheriff’s Office closest to the place where you have directed them to attend. Because of the ridiculously low filing fee and their ridiculously high workrate (which led to writs now being alive for twelve months instead of the previous six months) the Sheriff will try to demand payment without actually visiting the property. They may send a letter or they may even phone the debtor. If all that fails they will visit the property. A real problem is that Sheriffs work 8am to 6pm Monday to Friday. Most debtors are employed. They will not be home at that time. It’s probable that nobody will be home at that time. So the Sheriff leaves a card saying they called and asking the debtor to call them. That may have worked in the 1930’s but today’s modern debtor is proficient at the avoidance of debts and will not call. The Sheriff then sends you a “Notice of Non-​Levy” and asks for another fee to make another attempt. And on and on it goes …. When the Sheriff does actually catch someone at home they are not allowed to force entry. So if the debtor or their family won’t let the Sheriff in they can’t seize anything. However, they can force [15.485]  991

Civil Procedure in New South Wales

Debt Recovery in the Local Court cont. their way into outbuildings and can also seize anything they can see inside the house. If a window is open they can even climb in (though we don’t recall one that has). Assume that the Sheriff has made their way into the home. The Sheriff identifies the goods seized in a “Notice to Custodian” and hands that notice to the person in custody of the goods. The notice means that the person is now the custodian of the goods and cannot deal with them. The Sheriff then hands over a form for the debtor to make an application to pay by instalments and leaves after saying they will be back in fourteen days to remove the goods if the judgment debt is not paid or stayed. Most debtors will then leap into action and file an application to pay by instalments, which we suppose is not the worst result if the instalments proposed are reasonable. After that, the Sheriff writes to you and asks you to pay fees for the removal of the goods and the conduct of the auction of those goods. The amount payable is usually around $70.00 (though more may be payable if, for example, a car has to be towed). If the judgment debt has not been paid or stayed the Sheriff returns and takes the goods to be sold at public auction. The sale proceeds are given to the creditor up to the judgment debt amount with any balance being returned to the judgment debtor. There is no limit on the number of writs that can be issued (but you can only do one at a time). Some other things to note: • Tools of trade can only be seized if the aggregate value is greater than $2,000 (UCPR 39.46). • Some old case law says Sheriffs can’t take bedroom or kitchen furniture and Sheriffs have evolved over time to leave household basics (though this doesn’t get a mention in any legislation). • A victory for creditors was the insertion of section 135(2)(a) into the Act, which allows them to seek an order allowing the Sheriff to force entry. • If someone else claims to own the goods, they can file a Notice of Motion seeking interpleader relief –​which means that if the creditor wants to persist the person will have to prove the goods belong to them.



Uniform Civil Procedure Rules 2005 (NSW) [15.490]  Uniform Civil Procedure Rules 2005 (NSW) rr 39.2–​39.20 39.2 Application for writ of execution (1)

An application for a writ of execution in respect of a judgment is to be made by way of notice of motion.

(2)

Unless the court orders otherwise, a notice of motion under this rule:



(a)

may be dealt with in the absence of the parties, and



(b)

need not be served on the judgment debtor.

(3)

The application must indicate the extent (if any) to which the judgment debt has been satisfied under any writ of execution, garnishee order or charging order issued by the court.

39.3 Affidavit in support of application for writ of execution (1)

Unless the court orders otherwise, an applicant for a writ of execution must file an affidavit in support of the application, being an affidavit sworn not more than 14 days before the date of filing. …

(4)

In the case of a writ for the levy of property, the affidavit in support:

992 [15.490]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

must state the amount payable under the judgment, together with any costs and interest payable in relation to the judgment, as at the date of swearing of the affidavit, and



(b)

must state the address or addresses at which property belonging to the judgment debtor may be located, and



(c)

if the judgment was entered as a result of the filing of a cost assessor’s certificate, must include a statement to that effect, together with a statement to the effect that the determination set out in the certificate:



(i)

is not subject to any suspension under section 86 of the Legal Profession Uniform Law Application Act 2014 that has not been ended under that section, and



(ii)

is not subject to any suspension under section 90 of the Legal Profession Uniform Law Application Act 2014 that has not been ended under that section.

(5)

Any application by the judgment creditor for a writ of execution in relation to a judgment debt that has been the subject of an instalment order that has ceased to have effect may not be granted unless the judgment creditor has filed an affidavit as to the judgment debtor’s failure to comply with the order.

39.4 Order in which writs for the levy of property to be dealt with Writs for the levy of property against the same judgment debtor are to be enforced by the Sheriff in the order in which they are received by the Sheriff, regardless of the order in which they were issued. 39.5 Property to be sold promptly Subject to this Division, any property to be sold under a writ for the levy of property must be put up for sale as soon as practicable, having due regard to the interests of each of the parties and to the need to avoid of the sacrifice of the reasonable value of the property. 39.6 Order in which property to be sold (1)

If it appears to the Sheriff that the value of the property affected by a writ for the levy of property is greater than the amount outstanding under the judgment debt, the Sheriff may not cause to be sold any more of the property than is sufficient to satisfy the judgment.

(2)

Subject to subrule (3), property is to be sold:



(a)

in such order as seems to the Sheriff best for the speedy satisfaction of the judgment without undue expense, and



(b)

subject to paragraph (a), in such order as the judgment debtor may direct, and



(c)

subject to paragraphs (a) and (b), in such order as seems to the Sheriff best for minimising hardship to the judgment debtor or any other person.

(3)

Land must not be sold before any other property unless:



(a)

the judgment debtor so requests, or



(b)

the Sheriff is satisfied that the land should be sold before the other property in order to minimise hardship to the judgment debtor or some other person.

39.7 Sale to be by public auction (1)

Subject to rule 39.13, property sold under a writ for the levy of property must be sold by public auction, by the Sheriff or by an auctioneer appointed under rule 39.8, to the highest bidder.

(2)

Property must not be sold by public auction for a price substantially below its approximate market value, as fixed by the Sheriff under rule 39.10. [15.490]  993

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. 39.8 Auctioneer (1)

If the nature and apparent value of property to be sold under a writ for the levy of property is such that it appears to the Sheriff that it is reasonable to sell the property, the Sheriff may appoint a duly qualified auctioneer to sell the property.

(2)

An auctioneer appointed to sell any property under a writ for the levy of property must, as soon as practicable after the Sheriff advises that the auctioneer’s services will not be required in respect of the writ, or otherwise requests an account of the auctioneer’s charges, advise the Sheriff of the amount of those charges to date.

(2A)

If, after the appointment of the auctioneer, it appears to the Sheriff that it is not reasonable to proceed with the sale, the Sheriff may direct that the property be withdrawn from sale.

(3)

An auctioneer appointed by the Sheriff to sell property under a writ for the levy of property must as soon as practicable after receiving any money under the writ pay the money to the Sheriff, less the amount of any charges payable to the auctioneer in respect of the writ.

39.9 Sale to be arranged so as to obtain highest prices For the purpose of obtaining the highest prices for the property, the Sheriff: (a)

must ascertain what appears to the Sheriff to be the best place for the sale to be held, and

(b)

must cause the sale to be held at the place so ascertained.

39.10 Approximate market value (1)

Before selling property under a writ for the levy of property, the Sheriff must fix the approximate market value of the property, having regard to all the circumstances of the case, but need not disclose that value to any other person before the sale.

(2)

For the purpose of fixing such a value, the Sheriff:



(a)

may require the judgment creditor to furnish the Sheriff with any information known to, or reasonably capable of ascertainment by, the judgment creditor in respect of the property, and



(b)

may engage a suitably qualified and experienced valuer to provide the Sheriff with an opinion as to the value of the property if the nature and apparent value of the property so warrant.

(3)

If the judgment creditor unreasonably fails to furnish any information referred to in subrule (2) (a), the Sheriff must report the failure to the court, and may refuse to proceed further towards the sale of the property.

39.11 Postponement (1)

The Sheriff may from time to time postpone the sale of property under a writ for the levy of property, or require any auctioneer appointed to sell the property to postpone any such sale, if the Sheriff thinks it proper to postpone the sale:



(a)

to avoid a sacrifice of the reasonable value of the property, or



(b)

to comply with a request by the judgment creditor for the postponement.

(2)

If the date to which the sale of property is postponed under subrule (1) falls after the date on which the writ would otherwise expire, the date of expiry of the writ is postponed to the date of the postponed sale.

39.12 Suspension of execution by judgment creditor (1)

If, at any time before property is seized under a writ for the levy of property, the judgment creditor:



(a)

994 [15.490]

requires the Sheriff, by notice in writing, to suspend execution of the writ, or

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont.

(b)

requires the Sheriff, by a subsequent notice in writing, to resume execution of the writ,

the Sheriff must comply with the requirement. (2)

If, at any time after property is seized under a writ for the levy of property, the judgment creditor (having entered into an arrangement with the judgment debtor with respect to the Sheriff’s withdrawal and re-​entry into possession of the property and notified the Sheriff of the arrangement):



(a)

requires the Sheriff, by notice in writing, to withdraw from possession of the property and suspend execution of the writ, or



(b)

requires the Sheriff to re-​enter into possession of the property and resume execution of the writ,

the Sheriff must comply with the requirement. (3)

If, at any time after property is seized under a writ for the levy of property, the judgment creditor (not having notified the Sheriff of an arrangement referred to in subrule (2)) requires the Sheriff, by notice in writing, to withdraw from possession of the property and suspend execution of the writ, the judgment creditor is taken to have abandoned the execution, and the Sheriff must withdraw from possession of the property.

(4)

For the purposes of subrule (3), a request to postpone the sale of property under a writ for the levy of property is not a request to withdraw from possession of the property or to suspend execution of the writ.

(5)

The Sheriff’s duty under this rule to resume execution of a writ for the levy of property (the original writ) is subject to the Sheriff’s duties under this Part with respect to any other writ for the levy of property that had been issued against the same judgment debtor when execution of the original writ was suspended and, for that purpose, any other such writ is to be executed, and the proceeds of sale dealt with, as if that other writ had been received by the Sheriff before the original writ.

39.13 Sale by private treaty (1)

If, at a public auction, the highest bid of property to be sold under a writ for the levy of property is substantially below their approximate market value, as fixed by the Sheriff, the Sheriff or (if the Sheriff so approves) the auctioneer may sell the property by private treaty.

(2)

The Sheriff must not approve a sale of property by private treaty at a price substantially below a fair value determined by the Sheriff.

(3)

In determining a fair value for the property for the purposes of subrule (2), the Sheriff:



(a)



must take into account all the relevant circumstances, including but not limited to: (i)

the approximate market value of the property fixed by the Sheriff, and



(ii)

the amount of the highest bid for the property at the public auction, and



(iii)

the likelihood or otherwise of there being a higher bid if the property were again put up for sale by public auction, and



(b)

must not determine a fair value that is substantially below the amount of the highest bid for the property at the public auction.

39.14 Conditions of sale (1)

The Sheriff may sell property under a writ for the levy of property, or require any auctioneer appointed to sell such property:



(a)



on terms as to payment that the purchaser must pay: (i)

an amount equal to at least 10% of the purchase price by way of deposit forthwith on the sale, and [15.490]  995

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(ii)

the balance of the purchase price within such period, not exceeding 2 days after the sale (in the case of goods) and 6 weeks after the sale (in the case of land), as the Sheriff may determine prior to the sale, or



(b)

on terms as to payment that the purchaser must pay the whole of the purchase price forthwith on the sale.

(2)

If a sale of property is partly of goods and partly of land, the goods may be sold on the same terms as to payment as the land.

(3)

The Sheriff may require payment to be in cash, by bank draft or, if the Sheriff so approves, by credit card.

(4)

If payment is made by credit card, any charge made to the Sheriff or auctioneer in respect of the payment is to form part of the costs of the execution.

39.15 How proceeds of enforcement to be applied (1)

The proceeds of enforcement of a writ for the levy of property are to be applied as follows:



(a)

firstly, to the Sheriff to cover the Sheriff’s fees and expenses in executing the writ,



(b)

secondly, to the judgment creditor to satisfy the judgment debt,



(c)

thirdly, to the judgment debtor as to any amount remaining.

(2)

If the Sheriff receives writs for the levy of property (whether from the same or from different courts) in relation to more than one judgment creditor, the judgment creditors are to be paid from the proceeds of enforcement of the writs in the order in which the writs were received by the Sheriff.

39.16 Account On the request of the judgment creditor, or of any person who claims that his or her property has been sold by the Sheriff under a writ for the levy of property, the Sheriff must give that judgment creditor or person: (a)

a report of any sale under the writ, and

(b)

an account of:



(i)

the proceeds of the sale and any other money received under the writ, and



(ii)

the Sheriff’s fees and expenses in relation to the writ, and



(iii)

the manner of disposal of the proceeds or other money.

39.17 Sheriff may require security for costs of execution (1)

At any time after receiving a writ of execution, the Sheriff may require the judgment creditor:



(a)

to lodge such security for payment of the Sheriff’s costs in relation to the execution of the writ, or



(b)

to give such undertaking as to payment of the Sheriff’s costs in relation to the execution of the writ,

as the Sheriff considers appropriate. (2)

If the judgment creditor fails to comply with such a requirement, the Sheriff:



(a)

may refuse to execute the writ, and



(b)

may withdraw from any possession into which the Sheriff may have entered under the writ.

39.18 Sheriff to serve copy of writ when executing or attempting to execute writ On executing a writ of execution, the Sheriff must cause a copy of the writ to be served on the judgment debtor or left in a conspicuous position at the place where the writ was executed. 996 [15.490]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont. 39.19 When writ may not be executed (1)

A writ of execution may not be executed on Christmas Day or Good Friday.

(2)

The Sheriff is not required to execute a writ of execution on any day on which court registries need not be open.

39.20 Expiry and renewal of writ of execution A writ of execution has effect for 12 months but may, subject to these rules, be renewed by the court.

 Garnishee orders [15.500]  A garnishee order is directed to a third party who holds funds on behalf of the

judgment debtor or owes the judgment debtor funds and is directed to pay the funds, or a proportion of the funds, to the judgment creditor. The most common third parties to receive garnishee orders are employers of a judgment debtor and banks holding accounts for a judgment debtor. The procedure for applying for the order is set out in r 39.34 of the UCPR which requires the use of a notice of motion (Form 70 or 71) accompanied by an affidavit.

Debt Recovery in the Local Court [15.505]  Mark Vine and David Simons, Debt Recovery in the Local Court [Extract from UNSW CLE, 25 February 2015] (i)

Garnishee Orders for Debts



If a person (or organisation) owes money to the debtor it is possible for the creditor to issue a garnishee order under UCPR 39.34 forcing that person to pay the creditor instead.



If it is a debt owing to the debtor then the correct form to use is UCPR Form 69. The most usual one is to the debtor’s bank but it is available for service upon anyone that owes the debtor money.



The garnishee order is served on the person who owes the money. If they owe money to the debtor at the time of service they have to pay it to the creditor instead within fourteen days.



If it is not due and payable at the time then they don’t have to pay it. If the debt owed to the debtor is also owed to someone else (such as a joint bank account) then they don’t have to pay it.

(ii)

Garnishee Orders for Wages



Another common form of garnishee is for wages or salary. The correct form to use for that one is UCPR Form 71. Under the old legislation these expired after four weeks but now they sit there until the judgment debt has been satisfied. The debtor is left with a prescribed amount (which is less than $500 per week).



Whilst we may complain at the slow growth of scale legal costs, how about that for an amount the debtor is supposed to live on? You could barely live in the 1980’s on that amount –​ let alone now, when it would not even pay the rent.



The usual effect is to cause the debtor to make an application to pay by instalments and, if it is granted and they serve a copy on their employer, the garnishee order will operate for the instalment amount to be drawn instead. [15.505]  997

Civil Procedure in New South Wales

Debt Recovery in the Local Court cont. (iii)

Garnishee Summons



If the person served with a garnishee order does not comply with it (and they should have) it is possible for the creditor to seek an order under section 124 of the Act for a judgment against them for the judgment debt or the wages and salary. … Caution should really be exercised in taking these proceedings because you may have a problem with evidence if the other side disputes the amount is owing. You could find yourself trying to justify a debt that is owed to your debtor without their assistance to avoid a costs order.



Civil Procedure Act 2005 (NSW) [15.510]  Civil Procedure Act 2005 (NSW) ss 117–​125 117 Operation of garnishee order in relation to debts (1)

Subject to the uniform rules, a garnishee order operates to attach, to the extent of the amount outstanding under the judgment, all debts that are due or accruing from the garnishee to the judgment debtor at the time of service of the order.

(2)

For the purposes of this Division, any amount standing to the credit of the judgment debtor in a financial institution is taken to be a debt owed to the judgment debtor by that institution.

118 Time within which payment to be made Payment of an amount with respect to a debt attached by a garnishee order must be made: (a)

within 14 days after the date on which the order is served on the garnishee, or

(b)

if the order attaches a debt that falls due after that date, within 14 days after the date on which the debt falls due.

Subdivision 2 Enforcement against wages or salary 119 Operation of garnishee order in relation to income (1)

Subject to sections 121 and 122 and the uniform rules, a garnishee order operates to attach, to the extent of the amount outstanding under the judgment:



(a)

any wage or salary that, while the order is in force, is payable to the judgment debtor by the garnishee, or



(b)

if the judgment debt becomes the subject of an instalment order, such amounts from the wage or salary payable to the judgment debtor by the garnishee as are equivalent to the instalments payable under the instalment order.

(2)

An instalment order with respect to a judgment debt the subject of a garnishee order takes effect in relation to the amounts payable under the garnishee order as from the time the instalment order is served on the garnishee.

(3)

A garnishee order ceases to have effect, in relation to the wage or salary payable to a judgment debtor, when the judgment debt is satisfied.

(4)

An order under this section addressed to the Crown as garnishee binds the Crown.

120 Time within which payment to be made Payment of an amount with respect to a wage or salary attached by a garnishee order must be made within 14 days after the date on which the wage or salary falls due. 998 [15.510]

Concluding Proceedings  Chapter  15

Civil Procedure Act 2005 (NSW) cont. 121 Maximum payment under one of several concurrent garnishee orders (1)

This section applies in circumstances in which a wage or salary is attached by one or more garnishee orders of which one or more (but not all) are limited garnishee orders.

(2)

Unless the court orders otherwise, the amount payable by a garnishee under a garnishee order that is not a limited garnishee order must not, in respect of any wage or salary attached by the garnishee order, exceed the greatest amount payable by the garnishee under any limited garnishee order that attaches the same wage or salary.

(3)

In this section, limited garnishee order means a garnishee order in respect of a judgment debt that is the subject of an instalment order.

122 Maximum total payment under all garnishee orders (1)

The amounts attached under one or more garnishee orders must not, in total, reduce the net weekly amount of any wage or salary received by the judgment debtor from the garnishee to less than $477.70 as adjusted under Division 6 of Part 3 of the Workers Compensation Act 1987.

(1A)

The amount of $477.70 referred to in subsection (1) is an adjustable amount for the purposes of Division 6 of Part 3 of the Workers Compensation Act 1987.

(2)

In this section:

“net weekly amount” in relation to any wage or salary payable to a judgment debtor, means the amount payable each week to the judgment debtor after deducting any taxes or other sums that, pursuant to any Act (including any Commonwealth Act), are required to be deducted from any such money. 123 Payments by garnishee (1)

A payment under a garnishee order must be made in accordance with, and to the judgment creditor specified in, the order.

(2)

The garnishee may, after the payment of each amount attached under the garnishee order, retain up to the amount prescribed by the uniform rules to cover the garnishee’s expenses in complying with the garnishee order. The amount retained by the garnishee is in addition to the amount attached under the order.

(3)

A payment to the judgment creditor must be accompanied by a statement showing:



(a)

the amount attached under the garnishee order, and



(b)

how much of that amount has been retained by the garnishee, and



(c)

how much of that amount has been paid to the judgment creditor.

(4)

As between the garnishee and the judgment debtor, the amount attached under the garnishee order is taken, subject to any order of the court, to have been paid by the garnishee to the judgment debtor.

Note: Such an order may be made, for example, if the garnishee has failed to comply with the requirements of subsection (3). (5)

As between the judgment creditor and the judgment debtor, the amount of the payment to the judgment creditor is taken to have been paid by the judgment debtor to the judgment creditor in satisfaction, to the extent of that amount, of the judgment.

124 Procedure where garnishee order not complied with (1)

On the application of a judgment creditor who considers that a garnishee order has not been complied with, the court:



(a)

may hear and determine any question as to the liability of the garnishee to pay the debt, wage or salary sought to be attached by the garnishee order, and [15.510]  999

Civil Procedure in New South Wales

Civil Procedure Act 2005 (NSW) cont.

(b)

if satisfied that the garnishee is so liable, may give judgment in favour of the judgment creditor against the garnishee:



(i)

for the amount of that debt, wage or salary, or



(ii)

for the unpaid amount of the judgment debt,

whichever is the lesser. (2)

The court may refuse to give such a judgment if it is of the opinion that such a judgment should not be given.

(3)

Without limiting subsection (2), the reasons that may lead the court to form such an opinion may include:



(a)

the smallness of the amount outstanding under the judgment, and



(b)

the smallness of the debt, wage or salary to be attached.

(4)

As between the garnishee and the judgment debtor, an amount paid to the judgment creditor by the garnishee under a judgment given under this section is taken to have been paid to the judgment debtor.

125 Repayment of excess amounts (1)

If a judgment creditor receives an amount paid under a garnishee order in excess of the amount required to satisfy the judgment, the judgment creditor:



(a)

must forthwith notify the judgment debtor and the garnishee of that fact, and



(b)

on demand made by the judgment debtor, must repay the excess to the judgment debtor.

(2)

The amount of the excess is recoverable from the judgment creditor, by the judgment debtor or by the garnishee, as a debt in any court of competent jurisdiction.



Uniform Civil Procedure Rules 2005 (NSW) [15.520]  Uniform Civil Procedure Rules 2005 (NSW) rr 39.34–​39.43 39.34 Application for garnishee order (1)

An application for a garnishee order in respect of a judgment is to be made by way of notice of motion.

(2)

Unless the court orders otherwise, a notice of motion under this rule:



(a)

may be dealt with in the absence of the parties, and



(b)

need not be served on the judgment debtor or the proposed garnishee.

(3)

The application must indicate the extent (if any) to which the judgment debt has been satisfied under any writ of execution, garnishee order or charging order issued by the court.

39.35 Affidavit in support of application for garnishee order (1)

Unless the court orders otherwise, an applicant for a garnishee order must file an affidavit in support of the application, being an affidavit sworn not more than 14 days before the date of filing.

(2)

The affidavit in support:



(a)

1000 [15.520]

must identify the garnishee, and any debts that appear to be owed by the garnishee to the judgment debtor, and

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a1)



(b)



(c)

must state the grounds relied on in support of identifying a debt for the purposes of paragraph (a), and must state the amount payable under the judgment, together with any costs and interest payable in relation to the judgment, as at the date of swearing of the affidavit, and if the judgment was entered as a result of the filing of a cost assessor’s certificate, must include a statement to that effect, together with a statement to the effect that the determination set out in the certificate:



(i)

is not subject to any suspension under section 86 of the Legal Profession Uniform Law Application Act 2014 that has not been ended under that section, and



(ii)

is not subject to any suspension under section 90 of the Legal Profession Uniform Law Application Act 2014 that has not been ended under that section.

(3)

Any application by the judgment creditor for a garnishee order in relation to a judgment debt that has been the subject of an instalment order that has ceased to have effect may not be granted unless the judgment creditor has filed an affidavit as to the judgment debtor’s failure to comply with the order.

39.36 Form of garnishee order for debts (1)

A garnishee order for debts must direct the garnishee to pay to the judgment creditor, to the extent of the amount outstanding under the judgment, all money:



(a)

held by the garnishee for or on behalf of the judgment debtor, or



(b)

owed by the garnishee to the judgment debtor.

(2)

The amount outstanding under the judgment must be specified in the order.

39.37 Form of garnishee order for wage or salary (1)

A garnishee order for wage or salary must direct the garnishee to pay to the judgment creditor:



(a)

during the period for which the order is in force, and



(b)

to the extent of the amount outstanding under the judgment,

such amounts, from the wages or salary payable by the garnishee to the judgment debtor, as are specified in the order. (2)

The amount outstanding under the judgment must be specified in the order.

39.38 Court may refuse to make garnishee order (1)

The court may refuse to make a garnishee order if of the opinion that such an order is inappropriate.

(2)

Without limiting subrule (1), the reasons that may lead the court into forming such an opinion may include:



(a)

the smallness of the amount recoverable under the judgment debt, and



(b)

the smallness of the debt, wage or salary to be attached.

39.39 When garnishee order takes effect A garnishee order takes effect when it is served on the garnishee. 39.39A When garnishee not obligated to pay amount to judgment creditor (1)

A garnishee order does not operate to attach to a debt if the debt is an amount of less than the prescribed minimum account balance, plus $20, standing to the credit of the judgment debtor in a financial institution.

(2)

In this rule, the “prescribed minimum account balance” means the amount referred to in section 118A (1) of the Civil Procedure Act 2005, as adjusted from time to time under section 118A (2) of that Act. [15.520]  1001

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. 39.40 Affidavit that no debt due or accruing (1)

A garnishee who believes that:



(a)

no debt from the garnishee to the judgment debtor was due or accruing when the garnishee order was served on the garnishee, or



(b)

no wage or salary will become payable by the garnishee to the judgment debtor during the period for which the order will be in force,

may serve on the judgment creditor a statement to that effect, verified by affidavit, being a statement that contains a summary of the grounds on which the garnishee’s belief is based. (2)

A disclosure of any information in an affidavit under subrule (1) does not, if the disclosure was reasonable in the circumstances, subject the garnishee to any action, liability, claim or demand.

39.41 Lien or claim of third person (1)

This rule applies in circumstances in which the garnishee claims that some person, other than the judgment debtor, is or may be entitled to:



(a)

any money paid under a garnishee order, or



(b)

any debt, wage or salary attached by a garnishee order, or



(c)

any charge or lien on, or other interest in, any such money, debt, wage or salary.

(2)

In these circumstances, the court may hear and determine the garnishee’s claim and give such judgment or make such order in respect of the claim (including an order barring the claim and an order for the payment into court by a judgment creditor of money received under the garnishee order) as the nature of the case requires.

39.42 Amounts garnishee may retain For the purposes of section 123(2)(a) of the Civil Procedure Act 2005, the prescribed amount that may be retained by the garnishee out of money deducted under a garnishee order is as specified in item 4 of Schedule 3. 39.43 Notice required for certain attached debts yet to accrue (1)

If a garnishee order attaches a debt that is due for payment to the judgment debtor more than 28 days after service of the order on the garnishee, the garnishee must, within that period of 28 days, cause notice of that fact to be served on the judgment creditor.

(2)

The notice must specify:



(a)

the date on which the debt is, or is likely to be, due for payment to the judgment debtor, and



(b)

if the amount of the debt is less than the unpaid amount of the judgment debt specified in the garnishee order, the amount of the debt.

 Applications to pay by instalments [15.560]  A judgment debtor who has sufficient assets or future cashflow to pay a judgment

debt but requires time to make the payment may seek to negotiate an instalment agreement with the judgment creditor (UCPR r 37.1A) or apply to the Court for instalment orders.

1002 [15.560]

Concluding Proceedings  Chapter  15

Civil Procedure Act 2005 (NSW) [15.570]  Civil Procedure Act 2005 (NSW) s 107 107 Deferred payment and payment by instalments (1)

A court in which judgment has been entered may, subject to and in accordance with the uniform rules, make an order allowing for:



(a)

payment of the judgment debt within such time as is specified in the order, or



(b)

payment of the judgment debt by instalments, payable in such amounts and at such times as are specified in the order.

Note: Such an order may be varied or rescinded pursuant to section 43(2) of the Interpretation Act 1987. The circumstances in which such an order may be varied or rescinded, and the procedure for varying or rescinding such an order, may be dealt with by the uniform rules. (2)

Subject to section 119, execution of a judgment for the payment of money is stayed while the judgment is the subject of an order in force under this section.



Uniform Civil Procedure Rules 2005 (NSW) [15.580]  Uniform Civil Procedure Rules 2005 (NSW) rr 37.1A–​37.7 37.1A Instalment order made pursuant to agreement between judgment creditor and judgment debtor (1)

A judgment creditor and judgment debtor may enter into an agreement (an “instalment agreement”):



(a)

specifying the amount agreed by them to be owing under the judgment debt, and



(b)

specifying by what instalments, payable at what times, that amount is to be paid.

(2)

An instalment agreement may be entered into whether or not an instalment order is already in force in respect of the judgment debt.

(3)

An instalment agreement may be entered into on behalf of a judgment creditor or judgment debtor by his or her solicitor or barrister.

(4)

An instalment agreement has no effect for the purposes of this rule unless the signature of each person executing it (other than a solicitor or barrister) is witnessed by a registrar or other officer of the court or by a solicitor or barrister.

(5)

As soon as practicable after an instalment agreement is filed, the court must make an instalment order that gives effect to the agreement.

37.2 Application for instalment order by judgment debtor (1)

A judgment debtor may apply to the court for an instalment order with respect to the amount owing under the judgment debt.

(2)

Such an application:



(a)

may be made whether or not some other instalment order is in force in relation to the judgment debt, and



(b)

must be supported by an affidavit as to the judgment debtor’s financial circumstances, and



(c)

must be dealt with as soon as practicable after it is made.

[15.580]  1003

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont. (3)

An application under this rule:



(a)

except as provided by paragraph (b), is to be dealt with by the registrar under rule 37.3, or



(b)

if it is made during a hearing before the court, is to be dealt with by the court under rule 37.4.

(4)

Notice of motion of an application under this rule does not have to be filed or served if the application is made during the hearing at which the judgment debtor is being examined pursuant to an order for examination.

37.3 Instalment order made by registrar (1)

The registrar may deal with an application for an instalment order:



(a)

by making an instalment order in relation to the amount owing under the judgment debt, or



(b)

by making an order refusing the application.

(2)

As soon as practicable after making an instalment order under this rule, the registrar:



(a)

must give notice of the order to the judgment creditor and the judgment debtor, and



(b)

must also give to the judgment creditor a copy of the affidavit referred to in rule 37.2(2)(b).

(3)

Either party may file an objection to an order made under subrule (1)(a) or (b) at any time within 14 days after the order is made.

37.4 Instalment order made by court (1)

This rule applies if the court is dealing with:



(a)

an application for an instalment order pursuant to rule 37.2(3)(b), or



(b)

an objection against an order made under rule 37.3(1)(a) or (b).

(2)

On receiving the application or objection, the court:



(a)

must set the matter down for hearing, and



(b)

must give notice of the time, date and place of the hearing to the judgment creditor and the judgment debtor, and



(c)

if it has not already been done, must also give to the judgment creditor a copy of the affidavit referred to in rule 37.2(2)(b).

(3)

The court may determine an application for an instalment order, or an objection against an order refusing such an application:



(a)

by making an instalment order in relation to the amount owing under the judgment debt, or



(b)

by dismissing the application.

(4)

The court may determine an objection against the making of an instalment order:



(a)

by varying or rescinding the instalment order, or



(b)

by dismissing the objection.

(5)

As soon as practicable after making its determination, the court must give notice of the determination, and (if it makes or varies an instalment order) of the terms of the order or the order as varied, to the judgment creditor and the judgment debtor.

37.4A Payment of instalments under instalment order (1)

Unless the court for special reasons orders otherwise, the judgment debtor must pay the amounts under an instalment order to the judgment creditor.

1004 [15.580]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont. (2)

This rule does not apply to money recovered on behalf of a person under legal incapacity.

Note: The payment of money recovered on behalf of a person under legal incapacity is regulated by section 77 of the Civil Procedure Act 2005. 37.5 Stay of execution pending determination of application for instalment order (1)

Execution of the judgment to which an application for an instalment order relates is stayed:



(a)

from the time the application is made until the time the application is determined, and



(b)

if the application is refused by an order under rule 37.3(1)(b) and an objection against the order is filed under rule 37.3(3), from the time the objection is filed until the time the objection is determined.

(2)

Subrule (1) does not apply if the applicant has previously made an application under this rule with respect to the same judgment debt.

Note: See also section 107(2) of the Civil Procedure Act 2005 which provides for stay of execution of the judgment while an instalment order is in force. 37.6 Variation or rescission of instalment order on proof of improvement in judgment debtor’s financial circumstances (1)

A judgment creditor may apply to the court for the variation or rescission of an instalment  order.

(2)

Such an application must be supported by an affidavit as to the judgment debtor’s financial circumstances, indicating the extent to which they appear to have improved since the instalment order was made.

(3)

On receiving the application, the registrar:



(a)

must set the matter down for hearing, and



(b)

must give notice of the time, date and place of the hearing to the judgment creditor and the judgment debtor.

(4)

The court may determine the application:



(a)

by varying or rescinding the instalment order to which it relates, or



(b)

by dismissing the application.

(5)

As soon as practicable after making its determination, the court must give notice of the determination and, if it varies the instalment order, of the terms of the order as varied:



(a)

to the judgment creditor and the judgment debtor, and



(b)

if the determination relates to an instalment order to which a garnishee order is subject, to the garnishee.

37.7 Effect of instalment order on judgment debt Subject to any agreement referred to in rule 37.1A, an instalment order ceases to have effect if the judgment debtor fails to comply with the order.

 Examination of the judgment debtor [15.590]  For a judgment creditor to be able to determine which forms of enforcement to use,

or if there are insufficient assets to warrant taking an enforcement step, the judgment creditor may serve an examination notice on the judgment debtor seeking answers to specific questions and the production of documents (UCPR r 38.1). If the judgment debtor fails to comply with [15.590]  1005

Civil Procedure in New South Wales

the examination notice, then an order for an oral examination before the Court may be sought (UCPR r 38.2).

Debt Recovery in the Local Court [15.595]  Mark Vine and David Simons, Debt Recovery in the Local Court [Extract from UNSW CLE, 25 February 2015] The process is commenced by the service of an Examination Notice (UCPR Form 51 for individuals and UCPR Form 52 for companies). It does not have to be served personally. It is in the form of a questionnaire and allows them 28 days to provide the information requested. It is almost always ignored. If your debtor ignores the Examination Notice or doesn’t provide sufficient information the creditor can then issue an Examination Order. The correct form for the Notice of Motion is UCPR Form 53. The Examination Order itself is UCPR Form 54. The creditor has to file sufficient copies of the Examination Order to receive copies back for service. The Examination Order has to be served personally (though substituted service is available if you are having difficulties) at least fourteen days before the hearing date. The creditor has to provide an affidavit of service. The Examination Order requires the debtor to attend the court of issue (unless they live more than 30km away, in which case they go to their nearest court) with their financial information and be examined about their financial situation. Whilst there is supposed to be an examination under oath, what really happens on the day is that a bunch of creditors turn up and some debtors turn up too (many debtors don’t). You are told to sit with your debtor and you can ask them questions about their financial position so you can consider further enforcement. Sometimes debtors will make an offer to pay by instalments and if you accept an instalment order can be made there and then. If the debtor is being uncooperative you can ask that they be put in the witness box for examination –​though this happens extremely rarely. If the debtor fails to attend the Court will write to them allowing fourteen days for them to present themselves for examination. If they do surrender themselves then the Registrar will examine them and send you a report. If they don’t surrender themselves the creditor can file a motion seeking their arrest (UCPR Form 57). The Court will then issue a warrant for their arrest and the Sheriff tries to arrest the debtor to bring them in for examination. These warrants suffer the same fate as writs with respect to success rates because of the times that the Sheriff can attend. Though sometimes the threat of arrest can make a debtor come to their senses.



Civil Procedure Act 2005 (NSW) [15.600]  Civil Procedure Act 2005 (NSW) s 108 108 Order for examination (1)

The court may, subject to and in accordance with the uniform rules, make an order requiring a person bound by a judgment or order:



(a)

to attend the court to be orally examined as to any material question, or



(b)

to produce any document or thing that is in his or her possession and that relates to a material question.

(2)

An order under this section with respect to a person that is a corporation:



(a)

1006 [15.595]

may be addressed to any officer or former officer of the corporation, and

Concluding Proceedings  Chapter  15

Civil Procedure Act 2005 (NSW) cont.

(b)

binds any such officer or former officer as if he or she were the person bound by the judgment or order.

(3)

Without limiting subsection (1), the uniform rules may require the judgment creditor under a judgment debt to have attempted to obtain information as to the judgment debtor’s financial circumstances (whether by means of a notice requiring the judgment debtor to supply such information or otherwise) before the judgment creditor may apply for an order under this section.

(4)

(Repealed)

(5)

For the purposes of this section, the “material questions” in relation to a judgment or order are:



(a)

to the extent to which it requires the person bound by it to pay money:



(i)

questions as to whether any and, if so, what debts are owing to that person, and



(ii)

questions as to whether that person has any and, if so, what other property or other means of satisfying the judgment or order, and



(b)

to the extent to which it does not require the person bound by it to pay money, such questions concerning or in aid of the enforcement or satisfaction of the judgment or order as may be specified in the order under this section.



Uniform Civil Procedure Rules 2005 (NSW) [15.620]  Uniform Civil Procedure Rules 2005 (NSW) rr 38.1–​38.7 38.1 Examination notice (1)

The person in whose favour a judgment or order has been given or made may, by notice in writing served on the person bound by the judgment or order (an “examination notice”), require that person to do either or both of the following:



(a)

to provide answers to specified material questions,



(b)

to produce for inspection by the judgment creditor specified documents in relation to material questions.

(2)

An examination notice must specify the period (being not less than 28 days) within which its requirements must be complied with.

38.2 Application for order for examination (1)

An application for an order for examination with respect to the enforcement of a judgment or order must be supported by an affidavit as to the following matters:



(a)

that the judgment or order remains unsatisfied,



(b)

that the applicant has served an examination notice on the person bound by the judgment or order but that person has failed, within the time limited by the notice:



(i)

to provide any or sufficient answers to the questions specified in the notice, or



(ii)

to produce any or sufficient documents for inspection by the applicant,

as to any material questions,

(c)

that the person bound by the judgment or order has not, within the previous 3 months, provided any or sufficient answers, or produced any or sufficient documents, in response to any previous examination notice, [15.620]  1007

Civil Procedure in New South Wales

Uniform Civil Procedure Rules 2005 (NSW) cont.

(d)

in the case of a judgment or order for the payment of money, whether or not an instalment order has previously been made in relation to the amount payable under the judgment or order and, if such an order has been made, that the person bound by the judgment or order has failed to comply with the instalment order.

(2)

The provisions of subrule (1)(b) and (c) do not apply in relation to a judgment or order of the Supreme Court.

(3)

Unless the court otherwise orders, an application under this rule:



(a)

may be dealt with in the absence of the parties, and



(b)

need not be served on the person bound by the judgment or order.

38.3 Orders for examination (1)

In the case of a judgment or order of any court other than the Supreme Court, the court may not make an order for examination against the person bound by the judgment or order unless it is satisfied that the person:



(a)

has been served with an examination notice in accordance with rule 38.1, and



(b)

has failed, within the time limited by the notice:



(i)

to provide any or sufficient answers to the questions specified in the notice, or



(ii)

to produce any or sufficient documents for inspection by the judgment creditor,

as to any material questions. (2)

An order for examination must specify the time, date and place at which the person bound by the judgment or order is required to attend for examination.

(3)

An order for examination must be served on the person bound by the judgment or order at least 14 days before the day on which he or she is required to attend for examination.

(4)

A court that has made an order for examination may not, within 3 months after the order is made, make a further order for examination of the same person, on the application of the same person and in relation to the same judgment or order.

(5)

A person may refuse to produce a document or thing in response to an order for examination if the person could lawfully refuse to produce that document or thing on a subpoena for production.

38.4 Venue of examination (1)

Subject to this rule, the examination of a person in respect of a judgment or order is to be conducted at the same venue as that where the judgment or order was entered.

(2)

If, in the case of proceedings before the District Court, the Court is satisfied that the person neither resides nor carries on business within 30 kilometres of the proclaimed place where the judgment or order was entered, then the examination is to be conducted at the proclaimed place nearest to where the person resides or carries on business, as the Court may determine.

(3)

If, in the case of proceedings before the Local Court, the Court is satisfied that the person neither resides nor carries on business within 30 kilometres of the venue where the judgment or order was entered, then the examination is to be conducted at the premises of the Court nearest to where the person resides or carries on business, as the Court may determine.

38.5 Examination under an order for examination under rule 38.3 (1)

Unless the court orders otherwise, examination of a person under an order for examination is to be conducted by the person on whose application the order was made.

(2)

Examination of a person under an order for examination may be conducted by the court if:

1008 [15.620]

Concluding Proceedings  Chapter  15

Uniform Civil Procedure Rules 2005 (NSW) cont.

(a)

the person attends for examination following his or her arrest pursuant to a warrant issued under section 97 of the Civil Procedure Act 2005 as a consequence of the person’s failure to comply with an order for examination, or



(b)

the person attends for examination otherwise than at the time specified in the order, or



(c)

the court is satisfied for any other reason that the circumstances so warrant.

(3)

If the examination of a person under an order for examination is conducted by the court:



(a)

the person may be required to answer questions on oath, and



(b)

the examination may be conducted in open court or in the absence of the public, as the court directs, and



(c)

the court must notify the person on whose application the order was made of the person’s answers to the questions asked at the examination.

(4)

An examination under this rule may be adjourned from time to time, as occasion requires.

(5)

In this rule:

“order for examination” means an order for examination referred to in rule 38.3. 38.6 Arrest warrant where person fails to comply with order for examination under rule 38.3 A warrant issued under section 97 of the Civil Procedure Act 2005 as a consequence of a person’s failure to comply with an order for examination referred to in rule 38.3: (a)

may be issued or revoked by the court of its own motion or on the application of the person in whose favour a judgment or order has been given or made, and

(b)

must be expressed to expire no later than 3 months after the date on which it is issued, and

(c)

may not be issued in relation to a person’s failure to comply with an order for examination earlier than 14 days, nor later than 3 months, after the court has served notice on the person to whom the order for examination is addressed that failure to attend for examination may result in the person’s arrest.

38.7 Application of Part to persons that are corporations (1)

In the case of a person that is a corporation:



(a)

any examination notice under this Part may be addressed to an officer or former officer of the corporation, and



(b)

any order for examination under this Part may be made against an officer or former officer of the corporation,

and any such officer or former officer is bound by the requirements of this Part in respect of that notice or order as if he or she were the corporation. (2)

If an examination notice is addressed to an officer or former officer of a corporation in relation to a judgment or order, any subsequent order for examination in respect of the same judgment or order must, unless the court orders otherwise, be made against the same officer or former officer.



[15.620]  1009

CHAPTER 16

Civil Procedure in Context [16.10] INTRODUCTION....................................................................................................... 1011 [16.20] Statement of Sam Fernando...................................................................... 1012 [16.30] Summons.................................................................................................. 1013 [16.40] Statement of Claim................................................................................... 1015 [16.50] Statement of Particulars –​Personal Injury Pleadings................................... 1018 [16.60] Affidavit of Service..................................................................................... 1021 [16.70] Extract from Expert Report of Mr Len Whistle, Engineer............................ 1023 [16.80] Appearance............................................................................................... 1024 [16.90] Defence.................................................................................................... 1025 [16.95] Mediation Position Paper.......................................................................... 1027 [16.100] Notice of Motion...................................................................................... 1029 [16.110] List of Documents..................................................................................... 1031 [16.120] Subpoena to Produce................................................................................ 1035 [16.130] Subpoena to Attend to Give Evidence....................................................... 1041 [16.140] Notice to Produce for Inspection............................................................... 1044 [16.150] Notice to Admit Facts................................................................................ 1046 [16.160] Notice Disputing Facts.............................................................................. 1048 [16.170] Interrogatories.......................................................................................... 1049 [16.180] Statement in Answer to Interrogatories..................................................... 1050 [16.190] Privilege Exercise....................................................................................... 1052

INTRODUCTION [16.10] This chapter explores the court documents used in a hypothetical civil dispute. In

this claim, the plaintiff sues the defendant for damages caused as a result of the defendant’s negligence. There is a likelihood that the plaintiff’s damages will exceed $750,000 and therefore proceedings are commenced in the Supreme Court of New South Wales, which has an unlimited jurisdiction. A statement from the plaintiff at [16.20] outlines the facts. The plaintiff issues a Summons at [16.30], seeking preliminary discovery of a person who appears to have possession of documents that relate to a question in the proceedings pursuant to r 5.4 of the Uniform Civil Procedure Rules 2005 (NSW) (the affidavit and affidavit of service have not been included in this chapter). The following documents are also provided in this case example: • Statement of claim at [16.40]; • Statement of particulars at [16.50]; • Affidavit of service at [16.60]; • Extract from expert’s report at [16.70]; • Appearance from the defendant at [16.80];

[16.10]  1011

Civil Procedure in New South Wales

• Defence at [16.90]; • Mediation Position Paper at [16.95]; • Notice of motion requesting an order for discovery at [16.100]; • List of documents in response to the order for discovery at [16.110]; • Subpoena to produce documents at [16.120]; • Subpoena to attend to give evidence at [16.130]; • Notice to produce for inspection at [16.140]; • Notice to admit facts at [16.150]; • Notice disputing facts at [16.160]; • Form for interrogatories at [16.170]; and • Form for answering interrogatories at [16.180] (it was unnecessary to seek an order for interrogatories in the case example; however, the forms have been included for information purposes). • A number of issues arose in respect of privilege as detailed in the observations to the plaintiff’s counsel in Brief to advise and appear to Counsel at [16.190]. Statement of Sam Fernando [16.20] 

Statement of Sam Fernando My name is Sam Fernando and I was born on 2 January 1993. On 7 June 2018, I went to Newcastle station to catch the train home I was about to board the train when the train moved forward and made me fall over. I did not hear any warning that the train would move. My left foot was stuck between the train and the platform. My left arm was also stuck. My left foot was crushed and required amputation. My left shoulder was dislocated. The pain was excruciating. I was hospitalised for quite a long time. I require ongoing physiotherapy, rehabilitation, specialist consultation, sessions with a psychologist and a prosthetic foot. I have been really upset about my injuries. I loved to surf and competed in surfing competitions. I was pretty good and won a Regional Title. I received a sponsorship with a major surfing brand who promised to pay me to surf the Pipeline in Hawaii later in 2018. I cannot surf anymore. This makes me very sad. I have not been able to work. I was employed in a timber factory as a process worker. My job required me to lift timber pieces onto a conveyer belt for sorting. I would earn $1000 per week. Sometimes I did overtime. My job involved very physically demanding work. I was constantly on my feet. I am not sure what other work I could do as I have only ever performed physical work. I live at home. Since I sustained my injuries my mother and father help me perform my daily tasks, such as bathing, dressing, housework and cooking.

1012 [16.20]

Civil Procedure in Context  Chapter  16

Summons [16.30]

[16.30]  1013

Civil Procedure in New South Wales

1014 [16.30]

Civil Procedure in Context  Chapter  16

Statement of Claim [16.40] 

[16.40]  1015

Civil Procedure in New South Wales

1016 [16.40]

Civil Procedure in Context  Chapter  16

[16.40]  1017

Civil Procedure in New South Wales

Statement of Particulars –​Personal Injury Pleadings [16.50] 

1018 [16.50]

Civil Procedure in Context  Chapter  16

[16.50]  1019

Civil Procedure in New South Wales

1020 [16.50]

Civil Procedure in Context  Chapter  16

Affidavit of Service [16.60] 

[16.60]  1021

Civil Procedure in New South Wales

1022 [16.60]

Civil Procedure in Context  Chapter  16

Extract from Expert Report of Mr Len Whistle, Engineer [16.70] 

“I attended the scene of the accident and have inspected the train. I have also looked closely at the procedures of Rail Corporation NSW in respect of movement of trains and closure of doors I have read Mr Fernando’s statement. I have also met Mr Fernando in person after I viewed the accident site. Based on my inspections and observations I am of the view that employees of RailCorp: 1. allowed the train to move while the series XRFE 24536 model 34570-​23245 automatic doors were left open; and 2. allowed the train to be driven in a jerking manner.”

[16.70]  1023

Civil Procedure in New South Wales

Appearance [16.80] 

1024 [16.80]

Civil Procedure in Context  Chapter  16

Defence [16.90] 

[16.90]  1025

Civil Procedure in New South Wales

1026 [16.90]

Civil Procedure in Context  Chapter  16

Mediation Position Paper [16.95] 

Confidential and Without Prejudice. For Mediation Purposes Only Position Paper for Mr Sam Fernando, Plaintiff Date and Time of Mediation: 9 am on 20 January 2020. Location of Mediation: Brown Lawyers, 1100 Phillip Street, Sydney Mediator: Barbara Rush Attendees for Plaintiff: Mr Sam Fernando and Mr Jim Brown, solicitor for the plaintiff Facts On 7 June 2018, Mr Fernando was at Newcastle train station waiting to catch a train to his home. At about 5 pm the train arrived and the doors opened. Mr Fernando began to board the train when the train suddenly moved forward causing Mr Fernando to fall and his left foot to become trapped between the train and platform. There was no warning indicating the train would move. Mr Fernando was seriously injured, in particular, his left foot was crushed and required amputation, and his left shoulder was dislocated. Mr Fernando was hospitalised and he requires ongoing physiotherapy, rehabilitation, and consultation with a psychologist. He also requires domestic assistance. Mr Fernando has been unable to work since the accident. He is unable to participate in the sport of surfing and surf competitions as he had done prior to the accident. The plaintiff has filed a statement of claim that pleads negligence against RailCorp as occupier and/​or on the basis of the negligent acts of its employee/​s. RailCorp denies negligence and alleges contributory negligence. Key Issues in Dispute There are two key issues in dispute between Mr Fernando and RailCorp: • The cause of the harm to Mr Fernando; and • The losses and harm suffered by Mr Fernando. Plaintiff’s Position on Key Issues The harm to Mr Fernando was caused by the negligence of RailCorp through its employees: • failing to warn Mr Fernando that the train was about to move; • opening the automatic doors so as to invite entry onto the train but then allowing the train to move unexpectedly; and; • driving the train so that it lurched forward at the station in an unsafe manner. Mr Fernando did not contribute to his own harm or loss in any way. Mr Fernando claims $4 million including legal costs. Plaintiff’s Interests and Objectives Mr Fernando has suffered severe physical and psychological harm. He is unable to work, He is dependent on his parents or a care-​giver to assist him in day-​to-​day activities. [16.95]  1027

Civil Procedure in New South Wales

He can no longer participate in the sport of surfing which was both his great passion but also something for which he was very gifted. His life has been irrevocably altered. His future is unclear. Mr Fernando asks that RailCorp take responsibility for the harm that its employees have caused. Mr Fernando is angry that his claim has been denied, and even worse that it is said that he is the cause of his own injuries. Mr Fernando seeks to have the litigation resolved quickly but with the payment of compensation due to him so that he can cease being a burden on his parents. Mr Fernando wishes to try and rebuild his life. To do this with the life-​long disabilities that he now has requires financial assistance.

1028 [16.95]

Civil Procedure in Context  Chapter  16

Notice of Motion [16.100] 

[16.100]  1029

Civil Procedure in New South Wales

1030 [16.100]

Civil Procedure in Context  Chapter  16

List of Documents [16.110] 

[16.110]  1031

Civil Procedure in New South Wales

1032 [16.110]

Civil Procedure in Context  Chapter  16

[16.110]  1033

Civil Procedure in New South Wales

1034 [16.110]

Civil Procedure in Context  Chapter  16

Subpoena to Produce [16.120] 

[16.120]  1035

Civil Procedure in New South Wales

1036 [16.120]

Civil Procedure in Context  Chapter  16

[16.120]  1037

Civil Procedure in New South Wales

1038 [16.120]

Civil Procedure in Context  Chapter  16

[16.120]  1039

Civil Procedure in New South Wales

1040 [16.120]

Civil Procedure in Context  Chapter  16

Subpoena to Attend to Give Evidence [16.130] 

[16.130]  1041

Civil Procedure in New South Wales

1042 [16.130]

Civil Procedure in Context  Chapter  16

[16.130]  1043

Civil Procedure in New South Wales

Notice to Produce for Inspection [16.140] 

1044 [16.140]

Civil Procedure in Context  Chapter  16

[16.140]  1045

Civil Procedure in New South Wales

Notice to Admit Facts [16.150] 

1046 [16.150]

Civil Procedure in Context  Chapter  16

[16.150]  1047

Civil Procedure in New South Wales

Notice Disputing Facts [16.160] 

1048 [16.160]

Civil Procedure in Context  Chapter  16

Interrogatories [16.170] 

[16.170]  1049

Civil Procedure in New South Wales

Statement in Answer to Interrogatories [16.180] 

1050 [16.180]

Civil Procedure in Context  Chapter  16

[16.180]  1051

Civil Procedure in New South Wales

Privilege Exercise [16.190] 

Brief to advise and appear to Counsel Observations to Counsel Counsel is briefed to advise and appear in this matter. Mr Sam Fernando (our client), was injured on 7 June 2018 while boarding a train at Newcastle train station. Our client instructs that on 7 June 2018 he was at Newcastle station and was about to board a train when the train moved forward and he fell. He says that there was no warning indicating the train would move. Our client was seriously injured, namely, his left foot was crushed and required amputation, and his left shoulder was dislocated. The plaintiff has filed a statement of claim that pleads negligence against the Rail Corporation New South Wales (RailCorp) as occupier and/​ or on the basis of the negligent acts of its employee/​s. The defence denies negligence and alleges contributory negligence. Counsel is briefed with a copy of all pleadings. Counsel is also briefed with an expert report from Mr Whistle who supports the plaintiff’s case that the defendant: • Failed to warn the plaintiff of the train’s departure; • Allowed the train to move while the doors were open; and • Drove the train in a jerking manner. 1. Subpoena on our firm to produce documents A subpoena has been served upon our firm calling for the production of “all files, documents and records in respect of Sam Fernando (DOB 2/​1/​93)”. It is our preliminary view that our entire file is privileged. We seek Counsel’s advice on whether the following documents are privileged: (a) An advice on whether the plaintiff’s claim has reasonable prospects of success prepared by a law student who was on work experience at Brown Lawyers. (b) A letter from Brown Lawyers to the plaintiff in relation to the outcome of criminal proceedings which took place on or about February 2015 when we acted for our client when he was convicted of an assault in a pub fight. (c) A draft expert report by Mr Whistle. (d) Draft witness statements from bystanders at the station who witnessed the accident. (e) Senior Counsel’s memorandum of advice on quantum claim. We briefed Senior Counsel, on behalf of the plaintiff, to advise on the value on the claim. The work experience law student accidentally faxed this advice to Tran Lawyers. (f) A photocopy of the plaintiff’s ATAR (Australian Tertiary Admission Rank).

2. Subpoena on RailCorp to produce documents We have caused a subpoena to be issued (on behalf of the plaintiff) on RailCorp calling for the production of certain documents in accordance with the schedule to the subpoena. That schedule is in the following terms: a) All documents in relation to the surveillance procedures adopted during 2018 at Newcastle Station to ensure security. b) All surveillance videos on 7 June 2018 at Newcastle Station.

1052 [16.190]

Civil Procedure in Context  Chapter  16

RailCorp has advised that they will resist production of the documents in relation to the surveillance procedures adopted during 2018 at Newcastle Station to ensure security. They also advise that they will resist production of the surveillance videos on 7 June 2018 at Newcastle Station. We seek Counsel’s advice as to the basis and merit of such a claim. 3. Subpoena on Commissioner of Police to produce documents We have also caused a subpoena to be issued (on behalf of the plaintiff) on the Commissioner of Police for New South Wales calling for the production of certain documents in accordance with the schedule to the subpoena. That schedule is in the following terms: a) All documents in relation to an accident involving Sam Fernando on 7 June 2018. b) All documents regarding all security measures undertaken by RailCorp and implemented by the NSW Commissioner of Police

The solicitor for the Commissioner has advised that the Commissioner will resist production on the basis of public interest immunity. We seek Counsel’s advice as to the merit of such a claim. 4. Defendant’s expert report The defendant’s solicitors (Tran Lawyers), on behalf of RailCorp, have written to our client in the following terms: We act for the defendant, RailCorp and we have advised our client that it is not liable in negligence. We retained an expert who advised that the automatic doors of our client’s trains are not defective. We are prepared to settle this case on the basis of a verdict for the defendant and each party to bear its own costs.

We request Counsel’s advice as to whether it is possible to seek RailCorp’s expert report (which they have not served). 5. Mediation We advise that the parties participated in a mediation conference. Both parties were represented by their respective solicitors. During the mediation conference, our client told the defendant’s solicitor (Maria Tran), “I think that I may have been pushed by a passenger on the platform and that this could have caused the accident”. The parties drafted position papers for the mediation and exchanged them. As you know a position paper outlines the case for each of the parties. We request Counsel’s advise on whether our client’s representation at the mediation conference and the position paper are privileged. We are concerned that the defendant will try to adduce evidence of what our client said at the mediation, and also the position paper, at the final hearing. 6. Use of “found” evidence The plaintiff’s brother, Jack Fernando attended the offices of RailCorp and looked through their recycling bins which were located outside the building. Jack Fernando discovered a statement from the driver of the train. In this statement the driver admits that he had been drinking before the train accident that injured the plaintiff. The plaintiff’s brother also found an internal RailCorp memorandum which included investigative findings on the cause of the accident. The investigation was conducted by an insurance investigator and engineer employed by RailCorp. We seek Counsel’s advice as to whether RailCorp can claim privilege to resist admissibility at the hearing. Jim Brown Brown Lawyers Solicitor for the plaintiff Dated 30 January 2020 [16.190]  1053

Civil Procedure in New South Wales

Notes The advice could consider: 1(a). Application of s 131A of the Evidence Act 1995 (NSW). Does s 118 and/​or 119 apply to the claim? 1(b). s 131A. This is clearly privileged under s 118 –​the fact that it involves unrelated proceedings is irrelevant. 1(c) and (d). s 131A, apply s 119. 1(e). ss 131A, 118, 119. Consider whether there has been waiver, s 122. 2 and 3. ss 131A and 119, note that a copy can be privileged. 4. Apply s 131A, then s 130 by first determining a ‘matter of state’ pursuant to s 130(4) and then considering the balancing exercise in s 130(1) by application of the factors on s 130(5). 5. The question is whether the evidence can be adduced at trial. Apply s 131. The plaintiff’s representation does not appear to be privileged as it was not in furtherance of settlement. Position paper would appear to be privileged under s 131(1). Does s 30 of the CPA apply? 6. If objection raised to evidence at trial regarding (a) the statement –​apply s 119 and determine whether there has been waiver of privilege. (b) the memo –​look at the purpose for the creation of the memo –​apply dominant purpose test.

1054 [16.190]

INDEX A Adjournment of proceedings approach of court, [10.220] interests of justice, [10.250] legislative framework, [10.230] power to grant, [10.230] refusal to grant, [10.250] rules of court, [10.230] “specified day”, [10.240] Adversarial system of litigation Australian system, origins, [1.100] benefits of litigation, [4.100] justice rather than peace, [4.110] “cards on the table” approach, and, [1.130] clarity, precision and openness, [1.140] commencement of proceedings — see Commencement of proceedings features, [1.90] inquisitorial, dichotomy, [1.100] originating process — see Originating process play to win, [4.50] pleadings — see Pleadings reform, [1.110] review of, [1.100], [4.40] vs settlement,, [4.110]–​[4.150] statutory duty to assist court, [1.140] uncertainty, [4.80] zero-​sum game, [4.50] Affidavits affirming, [13.60]–​[13.70] alterations, [13.100] annexures and exhibits, [13.100] authority to take and receive, [13.110] drafting, [13.160]–​[13.180] false swearing, [13.190] Federal Court, in, [13.210]–​[13.220] Federal Court, in admissible evidence, [13.150] hearsay, [13.150] relevance, [13.150] format, [13.100] heading, [13.100] identification of deponent, [13.100]–​[13.130] illiterate persons, [13.100] irregularity, [13.140] Law Enforcement (Powers and Responsibilities) Act 2002, [13.130] legal requirements, [13.60]–​[13.90] name of legal practitioner or commissioner for affidavits, requirement, [13.100] Oaths Act 1900 (NSW), [13.110] person who may make, [13.100] Solicitors Rules, [13.200] swearing, [13.60]–​[13.70] untrue documents, [13.190] witnesses, [13.50]

Alternative dispute resolution (ADR) Aboriginal groups, [4.20] agreements to use, enforceability, [4.340]–​[4.350] appropriate dispute resolution, [4.20] arbitration — see Arbitration benefits and disadvantages, [4.70] Civil justice Review, Report 14, [4.70] consensual resolution, [4.20] corporate and institutional clients, [4.90] court-​annexed, [4.135] definition, [4.20] enforceability of agreements to use, [4.340]–​[4.350] and future trends, [4.155] growth, [4.30] factors contributing, [4.60] litigation, uncertainty, [4.80] mediation — see Mediation negotiation — see Negotiation overview, [4.10] rights-​based advocacy, [4.50] settlement vs adjudication, [4.110]–​[4.150] terminology, [4.180] types of processes, [4.160] advisory, [4.170] combined or hybrid, [4.170] determinative, [4.170] facilitative, [4.170] Amendments adding or removing parties, [10.30] adding or substituting cause of action, effect, [10.90]–​[10.100], [10.130] cost, delay and injustice, [10.80] court’s powers to, [10.10], [10.180] discretion of court, [10.70] documents, to, [10.40] effective date, [10.110] expedition, [10.70] irregularities, [10.180] just, quick and cheap resolution of the real issues, [10.50] legislative framework, [10.30] limitation period, effect, [10.120] mistakes, rectification, [10.10] nullities, [10.180] originating process, to, [10.130]–​[10.140] overriding purpose rule, [10.60] pleadings, [9.70], [10.10] relation back principle, and, [10.140]–​[10.150] Weldon v Neal, rule, [10.130], [10.140] practice and procedure, directions, [10.50] refusal of application for, [10.70] statement of claim, [10.20], [10.30] statute-​barred cause of action, [10.130] Anshun estoppel, and, [7.80]–​[7.90] abuse of process, [7.95], [7.130] appellant’s arguments, [7.165] assertion of a claim or of an issue of law, [7.165]  

1055

Civil Procedure in New South Wales

Anshun estoppel, and, — cont claims so relevant to subject matter of the first action, [7.120] group members as privies, [7.165] judgment conflicts with earlier judgment, [7.140], [7.160] orders, [7.165] privity principle, [7.95] reasonableness, test, [7.130] relevance and reasonableness, [7.165] unreasonable in not raising a matter in earlier proceedings, [7.95], [7.100], [7.140], [7.150] unreasonable to not rely upon in the first proceeding, [7.120], [7.140] Anton Piller orders application, [6.230] affidavit in support, [6.240] costs, [6.230] courts, jurisdiction, [6.230] grant, requirements, [6.230] independent solicitors, [6.230] Practice Note SC Gen 13, [6.240] purpose, [6.220] requirements for grant, [6.230] self-​incrimination, privilege against, [6.260] Appeal as of right, [15.330] discretionary decisions, [15.375] District Court, to, [15.390]–​[15.400] interlocutory judgments or orders, [15.350]–​[15.370] leave to, [6.250], [15.340] nature of, [15.285] New South Wales Court of Appeal, [15.300]–​[15.310] procedure, [15.380] scope, [15.285], [15.320] Supreme Court, to, [15.390]–​[15.400] types, [15.290] de novo, [15.290] rehearing, [15.290] strict, [15.290] Arbitration arbitration agreement, requirement for valid and binding, [5.70]–​[5.80] binding nature of, [5.10] commercial — see Commercial arbitration compulsory, [5.30] quasi-​judicial process, [5.20] Attorney-​General grant of fiat by, [7.30] Australian Law Reform Commission Review of the Adversarial System in Litigation; Rethinking the Federal Civil Litigation System, [4.40] Award appeals against, [5.140] breach of natural justice, challenge for, [5.130] form and content, [5.110] 1056 

grounds for refusing enforcement, [5.170] judicial review, [5.130] recognition and enforcement, [5.160]–​[5.170] setting aside, application, [5.140]–​[5.150]

C Calderbank letters fundamental principles, [15.260] indemnity costs, [15.260] offers, [15.260] public policy and purpose, [15.260] requirements for, [15.265]–​[15.266] rule as to costs, [15.260] types, [15.260] unreasonable rejection, [15.260] usual form, [15.260] Case management Act and Rules, [2.100], [2.220]–​[2.265] backlog reduction, [2.50] business in the absence of the public, [2.310] Civil Procedure Act, application, [2.220]–​[2.265] approach required by, [2.255] class actions, [8.394] Practice Note SC Gen 17, [8.396] costs, [2.60] complexities of, [2.80] minimisation and principle of a fair trial, [2.265] proportionality, [2.140] security for costs –​see Security for costs court follows dictates of justice, [2.140] directions and orders, [2.180], [2.240], [3.460] conduct of hearing, [2.190] date of hearing, [2.200] interlocutory proceedings, [2.260] just, quick and cheap proposal of proceedings, [2.200], [2.250], [2.255], [2.260] practice and procedure, [2.190] procedural irregularities, [2.190] directions hearing by telephone conference call, [2.290] duty to the court, paramount, [2.270] electronic, [2.300]–​[2.310] matters, definition, [2.310] online court, [2.310] elimination of delay, [2.140] ethical requirements, [2.270] independence, duty to act with, [2.270] justice delayed is justice denied, [2.20]–​[2.30] legislative framework, [2.130] overriding purpose, [2.140], [2.170] managerial judging, [2.110] New South Wales, practice, [2.100] objects of, [2.140] overview, [2.10] Practice Note SC CL 7, [2.290] practice notes, [2.280] pre-​action protocols, [2.150]–​[2.160] security for costs, [3.460] solicitors’ responsibilities, [2.255]–​[2.260] techniques, [2.100] Uniform Civil Procedure Rules, application, [2.220]–​[2.265]

Index

Causes of action amendment, powers, [7.420] statute barred matters, [7.420] Anshun estoppel, and, [7.80]–​[7.90] abuse of process, [7.95], [7.130] appellant’s arguments, [7.165] assertion of a claim or of an issue of law, [7.165] claims so relevant to subject matter of the first action, [7.120] judgment conflicts with earlier judgment, [7.140], [7.160] orders, [7.165] reasonableness, test, [7.130] relevance and reasonableness, [7.165] unreasonable in not raising a matter in earlier proceedings, [7.95], [7.100], [7.140], [7.160] unreasonable to rely upon it in the first proceeding, [7.120], [7.140] changing parties, [7.320] court may join party if joinder proper or necessary, [7.330] date of commencement in relation to parties joined, [7.330] removal of party by order, [7.330]–​[7.340] consolidation of proceedings, [7.430]–​[7.440], [7.460] courts, powers, [7.450] cross-​claims, [7.280] defendants, right, [7.290] improperly constituted, [7.370] nature of, [7.310] set-​off, distinction, [7.280] time limit, [7.310] decisions in rem, [7.80] estoppel, [7.80] issue estoppel, [7.80] joinder of cause of action, [7.200] discretion to grant leave, [7.270] efficiency and cost, [7.415] leave, by, [7.260] requirements, [7.400]–​[7.410] joining parties in proceedings, [7.60], [7.370]–​[7.380] application by, [7.390] common questions of law or fact, [7.200], [7.270] consent, requirement, [7.180] courts, discretion, [7.220] defendants, [7.190] embarrassment, inconvenience or delay, [7.230] mistake in the name of a party, and, [10.160]–​[10.175] plaintiffs, [7.170] same transaction or series of transactions, scope, [7.200], [7.240]–​[7.250] transaction, meaning, [7.210], [7.240]–​[7.250] legal incapacities, [7.50] merger in judgement, [7.80] parties, identification, [7.10] Res judicata, [7.80] extended principle, [7.80], [7.95] separation of questions, [7.470] set-​offs, [7.280] application, [7.300]

cross-​claim, distinction, [7.280] defendants, right, [7.290] standing, [7.20] relator actions, [7.30] variation of rights, [7.40] Changing parties causes of action, [7.320] court may join party if joinder proper or necessary, [7.330] date of commencement in relation to parties joined, [7.330] removal of party by order, [7.330]–​[7.340] Charter of Human Rights and Responsibilities Act 2006 (Vic) fair trial, right, [1.430] rights consistent interpretation of legislation, [1.430]–​[1.440] Civil Justice Review, Report 14 benefits and disadvantages of ADR, [4.70] compulsory mediation, [4.260] discovery, expense, scale and delay, [12.200] fair trial, [1.450] human rights considerations, [1.450] procedural reform, tension, [1.450] resource allocation and distribution of civil and criminal cases, [1.120] Victorian Law Reform Commission, [1.120] Civil justice system funding issues, [1.120] “judging”, [1.25] open justice — see Open justice Civil law legal family, features, [1.100] Civil Procedure Act 2005 application, [2.220]–​[2.265] costs, proportionality of, [2.150] delay, elimination of, [2.140] dictates of justice, courts to follow, [2.140] interlocutory matters, [2.140] overriding purpose of, [2.140], [2.160]–​[2.170] pre-​action protocols, [2.150] synchronisation of rules in all jurisdictions, [2.130] Class actions advantages, [8.40] case management, [8.394], [8.430] Practice Note SC Gen 17, [8.396] claims against the same person, [8.300] interpretation, [8.320]–​[8.340] closed class, [8.630]–​[8.700] example of, [8.630] funding agreement prevents opting out, issue, [8.640] NSW, availability, [8.660] opting in, [8.640] permissibility, [8.650] commencement, requirements, [8.220]  

1057

Civil Procedure in New South Wales

Class actions — cont costs, [8.930]–​[8.940] no-​win fee arrangements, [8.960] Courts and Crimes Legislation Further Amendment Act 2010 (NSW), [8.170]–​[8.180] courts, powers, [8.840]–​[8.860] judgment of matter, [8.840], [8.870] justice is done, [8.900]–​[8.920] defined class model, [8.580] disadvantages, [8.40] discontinuance, [8.400] court order, [8.410] effect, [8.410] excessive distribution costs, [8.410], [8.420] fewer than 7 group members, [8.410] representation, adequacy, [8.470]–​[8.480] effectiveness, [8.60] group, definition, [8.390] amendment to narrow, [8.890] group proceedings, [8.30] Victoria, in, [8.120] inclusive group remedy, [8.10] judgment, effect, [8.870], [8.873] jurisdiction, [8.190]–​[8.200] limitation period, suspension, [8.880] litigation funding, [8.1010], [8.1030] abuse of process, and, [8.1040] agreement, [8.440] disclosure of funder, [8.1050] public policy, and, [8.1040] risk, calculation, [8.1020] mediation and, [8.396], [8.715] notices, [8.790]–​[8.800] clarity and simplicity, [8.820] court approval of, [8.830] opt out notice, [8.810] Practice Note No SC Gen 17, [8.814] NSW, history, [8.80], [8.130], [8.150] objective, [8.40] Ontario Law Reform Commission Report, [8.10] opt-​in model, [8.580] opt-​out, right, [8.590] date, fixture, [8.600] litigation funding, reconciling, [8.620] merits of, [8.610] notice, [8.710] opt-​out model, [8.580] opt out notice, [8.810] opting in, [8.640] originating process, [8.270] overview, [8.570] pleadings, [8.380] sufficiency of, [8.392] Practice Note SC Gen 17, [8.396] representative party, [8.285] court control over, [8.285] standing, [8.240] representative proceedings efficiency or appropriateness, [8.440] Federal Court, in, [8.110] inappropriateness, determination, [8.440]–​[8.450] same, similar or related circumstances, [8.350] security for costs, [8.1000] settlements, [8.720]–​[8.730] court approval, requirements, [8.750]–​[8.760] Creighton proceeding, [8.782] 1058 

funds, distribution of, [8.784] group proceeding, [8.780] notice, requirements, [8.770] seven or more persons, [8.285]–​[8.290] shareholder, [8.70] standing [8.240]–​[8.250] sufficient interest, [8.240] sub groups and individual issues, [8.530]–​[8.570] substantial common issue of law or fact, [8.370], [8.420], [8.430] Supreme Court, in, [8.280] Practice Note No SC Gen 17, [8.280] Client-​legal privilege definition, [14.130] dominant purpose of legal advice communications, [14.90] documents, [14.90] question of fact, [14.160] test, [14.120], [14.140] Evidence Act 1995 (NSW), [14.130] loss of, [14.170]–​[14.190] joint clients, [14.180] misconduct, [14.180] related communications and documents, [14.180] waiver, [14.190], [14.200] onus, [14.160] public policies, [14.140] rationale, [14.100]–​[14.110] sole purpose test, [14.140] two-​stage process, assessment, [14.160] waived, [14.190], [14.200] filing of witness statement, by, [14.210] Closed court — see Closed proceedings Closed proceedings business in the absence of the public, [1.250]–​[1.260] “close” justice orders, [1.160] confidential information, [1.230] informer, protection, [1.200] institutional integrity, [1.180] national security, matters, [1.200] non-​publication orders — see Non-​publication order powers, [1.170] public interest, [1.180], [1.260] security or defence, [1.180] statutory powers, [1.240], [1.280] suppression orders — see Suppression orders trade secrets, [1.230] victims of blackmail, protection, [1.200] Commencement of proceedings amendments — see Amendments appearance or defence filing, [9.60], [9.70] leave to withdraw, [9.60] case management, [10.50] court may dispense with rules, [10.50] irregularities and nullities, [10.180] consequences of nullity, [10.210] court’s power to cure, [10.200]–​[10.210] deceased defendants, [10.210]

Index

Commencement of proceedings — cont differences, [10.180] non-​existent person or company, [10.210] procedural irregularities, directions, [10.190] just, quick and cheap resolution of the real issues, [10.50] legal practitioners, obligations, [9.30] reasonable prospects of success, [9.30] mistake in the name of a party, and, [10.160]–​[10.175] originating process, [9.20] contents and appearance, [9.20] date of effect, [9.20] service on each defendant, [9.55], [11.90] Supreme Court, in, [9.50] overview, [9.10] pleadings — see Pleadings practice and procedure, directions, [10.50] service of documents — see Service statement of claim filing, [11.90] when required, [9.20] summons filing, [11.90] when required, [9.20] validity for service, time period, [9.50] Commercial arbitration arbitral tribunal adequate reasons, [5.120] jurisdiction, ruling, [5.90]–​[5.100] award appeals against, [5.140] breach of natural justice, challenge for, [5.130] form and content, [5.110] grounds for refusing enforcement, [5.170] judicial review, [5.130] recognition and enforcement, [5.160]–​[5.170] setting aside, application, [5.140]–​[5.150] Commercial Arbitration List, [5.180] Practice Note SC Eq 9, [5.200] conduct of, prerequisites to, [5.90] costs, [5.110] default of parties, [5.110] equal treatment of parties, [5.110] hearing and written proceedings, [5.110] inquiry and report, [5.220] judicial support, [5.50] legislative framework, [5.40], [5.60] order for referral, [5.220] parties, duties, [5.110] pre-​requisites, [5.90] proceedings report, on, [5.220] termination, [5.110] proceedings under reference application for, [5.230] conduct of, [5.220], [5.250] interlocutory directions, [5.220] orders for, [5.240] parties, conduct, [5.270] remuneration, [5.220] two or more referees, [5.220] usual order for, [5.240] referee appointment, [5.220]

compulsory referral, [5.210] courts discretion to adopt, vary or reject report, [5.260] report, [5.220], [5.260] representation, [5.110] rules of procedure, determination, [5.110] statement of claim and defence, [5.110] substance of dispute, applicable rules, [5.110] Uniform Civil Procedure Rules 2005 appeal, leave to, [5.180] Commercial Arbitration List, [5.180] definitions, [5.180] enforcement, [5.180] evidence, [5.190] subpoenas, [5.180] time for applications and appeals, [5.180] valid and binding arbitration agreement, requirement, [5.70]–​[5.80] Common law fair and accurate report of proceedings, [1.180] legal family, features, [1.100] open justice, departure, [1.170] informer, protection, [1.200] national security, matters, [1.200] superior court of inherent jurisdiction, [1.180] suppression orders, [1.180] victims of black mail, [1.200] Concluding of proceedings appeal — see Appeal; Calderbank letters defence, striking out of, [15.170] discontinuance, [15.280] enforcement and execution of judgment — see Enforcement and execution of judgment incentives to settle, [15.210] courts, powers, [15.220] offers of compromise, [15.230]–​[15.255] overview, [15.10] summary disposal — see Summary disposal Control orders declared organisation, [1.310] eligible judge, [1.310] interim, [1.310] reasons for decisions, [1.310] Cost orders costs in any event, [3.300] costs in the cause, [3.310] costs of the day, [3.290] court, discretion, [3.140]–​[3.160] joining parties and costs, [3.320] Bullock orders, [3.320], [3.340] Sanderson orders, [3.320]–​[3.330] no order as to costs, [3.280] non-​parties, against, [3.390]–​[3.400] legislation, [3.400] re-​exercise, costs discretion, [3.400] self-​represented litigants, [3.350] Costs awards, reforming the structure, [3.520]–​[3.530]  

1059

Civil Procedure in New South Wales

Costs — cont fixed, event-​based scales, [3.530] proportionate to amount in dispute, [3.530] scales, [3.530] case management and, [3.130]–​[3.140] minimisation of, and principle of a fair trial, [2.265] containment of costs, [3.510] England, in, [3.510] expert evidence, limit, [3.510] global costs power, [3.510] global sum orders, [3.510] interlocutory costs unnecessarily incurred, [3.510] Local Court Practice Note No 2 of 2007, [3.510] party/​party costs, cap, [3.510] solicitor/​client costs, cap, [3.510] stopwatch trials, [3.510] cost orders — see Cost orders costs follow the event, [3.200]–​[3.210] apportionment, [3.210] indemnity costs, [3.210] interest, [3.210] multiple parties, [3.210] prolonging a trial, [3.210] discovery, order, [3.140] indemnity, [3.210] interlocutory matters, [3.140] lawyers, against, [3.220] indemnify any party, [3.260]–​[3.270] neglect, incompetence or impropriety, [3.250] unnecessary costs, [3.260] “without reasonable prospect of success”, [3.230]–​[3.240] litigants, duties, [3.120]–​[3.130] non-​parties, against, [3.390]–​[3.400] ordered costs, [3.190] overview, [3.10] parties, and, [3.170] proportionality, [3.20]–​[3.30] “importance and complexity”, dispute, [3.50] meaning, [3.40] procedural requirements, imposition, [3.60]–​[3.70] purpose, [3.100]–​[3.130] security for costs — see Security for costs statutory duty to assist the court, [3.120] uniform law costs, [3.180] Costs discretion re-​exercise of, [3.400] Court appointed expert, [13.490] clarification, [13.510] cross-​examination, [13.510] directions, application, [13.510] instructions, [13.510] purpose, [13.490] remuneration, [13.510] selection and appointment, [13.510] Court forms affidavit of service, [16.60] appearance from defendant, [16.80] 1060 

defence, [16.90] interrogatories, form, [16.170] statement in answer to, [16.180] list of documents, [16.110] notice disputing facts, [16.160] notice of motion requesting order for discovery, [16.100] notice to admit facts, [16.150] notice to produce for inspection, [16.140] statement from plaintiff, [16.20] statement of claim, [16.40] statement of particulars, [16.50] subpoena attend to give evidence, [16.130] produce documents, [16.120] summons seeking preliminary discovery, [16.30] Court system, NSW District Court New South Wales, [1.500] Dust Diseases Tribunal, [1.560] Guardianship Tribunal, [1.530] Independent Commission Against Corruption, [1.550] Land and Environment Court New South Wales, [1.490] Local Court of New South Wales, [1.510] Mental Health Review Tribunal, [1.570] NSW Civil and Administrative Tribunal (NCAT), [1.530] overview, [1.460] Supreme Court of New South Wales, [1.470] Workers Compensation Commission, [1.520] Crown model litigant, as, [1.380] NSW Litigant Policy for Civil Litigation, [1.390]

D Defence striking out, [15.170] Directions case management by the court, [2.180] conduct of hearing, as to, [2.180] courts, power to give, [2.180] date for hearing, [2.180] interlocutory matters, as to, [2.190] procedural irregularities, as to, [2.180], [11.80] Discovery abuse, [12.200] document destruction, [12.200] costs of order, [3.140] destruction of documents/​evidence, [12.200], [12.220] discretion, [12.90], [12.100] documents, [12.120] affidavit and certificate in support, [12.250] delay and cost, [12.160]–​[12.170], [12.200] EDRM, [12.354]

Index

Discovery — cont electronic exchange, [12.352] excluded, [12.250] list, [12.250] not to be disclosed, [12.250] Peruvian Guano test, [12.180] relevant to a fact in issue, [12.250] subsequently found documents, [12.250] TAR, [12.356] TAR 2.0, [12.358] Equity Division, in, [12.240], [12.260], [12.270] Federal Court, management, [12.210] information age, and, [12.353] list of documents, [16.110] notice to produce –​see Notice to produce objects of, [12.150] order for, [12.250] overview, [12.10], [12.150] Practice Note SC Eq 1, [12.260] pre-​discovery conference, [12.355] electronic information, and, [12.355] scope, [12.355] preliminary, [12.20] application, [12.80]–​[12.100] commencement of proceedings, determination, [12.40] costs, [12.80] courts, discretion, [12.90], [12.100] identity or whereabouts, [12.30], [12.70]–​[12.80] legislative framework, [12.60] pre-​publication injunction, [12.100] procedure, [12.50] reasonable cause to believe right of action, [12.80] privilege — see Privilege problems caused by, [12.160] process, [12.150], [12.230], [12.280] case study, [12.330]–​[12.350] Equity Division, in, [12.240], [12.260], [12.270] reasonable inquiries, [12.80], [12.90], [12.100] special reasons test, [12.340] supplementary, [12.480] technology, [12.351] Practice Note SC Gen 7, [12.352] trolley load litigation, [12.210] Dispute resolution terms adjudication, [4.180] arbitration, [4.180] case appraisal, [4.180] case presentation, [4.180] conciliation, [4.180] dispute resolution, [4.180] dispute resolution practitioner, [4.180] early neutral evaluation, [4.180] expert appraisal, [4.180] expert determination, [4.180] facilitated negotiation, [4.180] facilitation, [4.180] indigenous dispute resolution, [4.180] judicial dispute resolution, [4.180] mediation, [4.180] mini-​trial, [4.180]

ombudsman, [4.180] private judging, [4.180] District Court New South Wales appeals to, [15.390]–​[15.400] electronic case management, [2.300] jurisdiction, [1.500] overview of, [1.500] Documents  –​ see Discovery; Privilege

E Effectiveness relativity assisted review, [12.359] Electronically stored information (ESI), [12.10] Electronic case management District Court, [2.310] legislative foundation, [2.300] Local Court, [2.310] matters, definition, [2.310] online court, [2.310] Supreme Court, [2.310] Uniform Civil Procedure Rules, [2.310] Electronic discovery reference model (EDRM), [12.354] pre-​discovery conference, [12.355] Enforcement and execution of judgment date of effect, [15.430] legislative framework, [15.410]–​[15.420] payment of money, [15.440]–​[15.450] Evidence affidavits — see Affidavits expert — see Expert witness expert’s report — see Expert’s report medical examinations — see Medical examinations notice to admit — see Notice to admit oral, [13.230]–​[13.240] property, inspection and testing — see Property witnesses — see Witnesses written, [13.230]–​[13.240] Examination, judgment debtor — see Judgment debtor, examination Expert determination advantages and disadvantages of, [5.300] arbitration compared, [5.340] binding nature of, [5.10] challenging decision, [5.310] definition, [5.280] legal principles, [5.330] overview, [4.180], [5.10] parties, duties of, [5.290]  

1061

Civil Procedure in New South Wales

Expert determination — cont reasons for decision, [5.320] role of expert, [5.290] rules governing, example of, [5.290] Expert witness admissibility of evidence, [13.270], [13.390] adversarial bias, [13.360] case management in NSW, and, [13.300] code of conduct, [13.370] concurrent expert evidence, [13.330]–​[13.340] advantages, [13.610] conduct, [13.600] purpose, [13.580]–​[13.590] conduct, [13.350], [13.370] contingency fees, disclosure, [13.370] court appointed — see Court appointed expert definition, [13.250], [13.380] expert’s report — see Expert’s report importance of relevance, [13.270] joint, [13.410], [13.440]–​[13.450] joint conference, [13.520]–​[13.530] amendment of statement of claim by plaintiff, and, [13.580] application, [13.560] benefits of, [13.550] joint report, preparation, [13.540] Practice Note SC Gen 11, [13.540] number of experts, restrictions, [13.320] parties to confer before commencing proceedings, [13.320] parties to seek directions, [13.310] Practice Note SC Eq 5, [13.320] remuneration of single, [13.420] scope, [13.260] selection and engagement, [13.320] single expert, [13.460]–​[13.490] directions, [13.430] Practice Note SC Gen 10, [13.480] specialised knowledge meaning, [13.270]–​[13.280] opinion is based on, [13.280] Expert’s report admissibility, [13.390]–​[13.400] affected parties, copy, [13.420] clarification, [13.420] content, requirements, [13.370]–​[13.380] disclosure, [13.390] extracts, [16.70] service in professional negligence claims, [13.390]–​[13.400] tender of, [13.420]

F Fair trial Civil Justice Review, Report 14, [1.450] constitutional protection, [1.310] costs minimisation and, [2.265] failure to provide, [1.360] human rights legislation — see Human rights legislation

1062 

inherent power of court, [1.330] miscarriage of justice, [1.340]–​[1.360] natural justice, denial, [1.350] principle, [1.320], [2.265] proper, genuine and realistic consideration of evidence, [1.370] retrial, requirements, [1.370] scope, [1.310] setting aside judgement, [1.370] trial procedure, [1.310] Family Court of Australia jurisdiction, [1.630] Federal Circuit Court of Australia jurisdiction, [1.640] Federal Court structure Family Court of Australia, [1.630] Federal Circuit Court of Australia, [1.640] Federal Court of Australia, [1.620] High Court of Australia, [1.610] other tribunals or commissions, [1.650] Federal Court of Australia jurisdiction, [1.620] Freezing orders — see Mareva injunctions Future trends and ADR, [4.155]

G Garnishee orders application, [15.520] affidavit in support, [15.520] debts, and, [15.510] income, against, [15.510] nature of, [15.500]–​[15.505] purpose, [15.500]

H Hague Convention, [11.410], [11.460] High Court of Australia jurisdiction, [1.610] Human Rights Act 2004 (ACT) fair trial, right, [1.420] rights consistent interpretation of legislation, [1.430]–​[1.440] Human rights legislation Charter of Human Rights and Responsibilities Act 2006 (Vic), [1.430] fair trial, right, [1.400]

Index

Human rights legislation — cont Human Rights Act 2004 (ACT), [1.420] International Covenant on Civil and Political Rights, [1.410] interpretation, [1.440]

implied undertaking, [12.490]–​[12.510] extent of, [12.500] obligation in substantive law, [12.500] third parties, [12.500] insufficient answer, [12.470] legislative framework, [12.470] objections, [12.470] overview, [12.10], [12.460] statement in answer to, [16.180]

I Implied jurisdiction inherent jurisdiction, distinction, [1.50] scope, [1.60] termination of proceedings, and, [1.70]

J

Inherent jurisdiction fair trial — see Fair trial implied jurisdiction, distinction, [1.50]–​[1.60] superior courts of record, [1.40]

Joinder of cause of action, [7.200] efficiency and cost, [7.415] leave, by, [7.260] discretion, [7.270] requirements, [7.400]–​[7.410]

Inquisitorial system adversarial system, dichotomy, [1.100]

Joining parties causes of action, [7.60], [7.370]–​[7.380] application by, [7.390] common questions of law or fact, [7.200], [7.270] consent, requirement, [7.180] courts, discretion, [7.220] defendants, [7.190] embarrassment, inconvenience or delay, [7.230] plaintiffs, [7.170] same transaction or series of transactions, scope, [7.200], [7.240]–​[7.250] mistake in the name of a party, and, [10.160]–​[10.170] effect of joinder on limitation period, [10.60] transaction, meaning, [7.210], [7.240]–​[7.250]

Instalment agreements applications, [15.560] deferred payments, [15.570] instalment order, [15.570]–​[15.580] application, [15.580] Interim injunction Supreme Court, powers, [6.163]–​[6.166] Interim preservation orders Anton Piller orders — see Anton Piller orders freezing orders — see Mareva injunctions interim distribution, [6.160] interim income, [6.160] interim injunction — see Interim injunction legislative framework, [6.160] Mareva injunctions — see Mareva injunctions orders in urgent case before commencement of proceedings, [6.160] overview, [6.150] payment before ascertainment of all persons interested, [6.160] personal property, disposal, [6.160] property, [6.160] “usual undertaking as to damages”, meaning, [6.160] International Covenant on Civil and Political Rights fair trial, [1.410] Interrogatories answers, [12.470] evidence, [12.470], [12.480] court form, [16.170] statement in answer to, [16.180] court, order, [12.470] default, [12.470] disputed, [12.480]

Journalist privilege identity of sources of information, [14.270] informant definition, [14.275] identity, [14.275] journalist, definition, [14.275] legislative framework, [14.270] news medium, definition, [14.275] Judgment debtor, examination examination notice, [15.590]–​[15.595], [15.620] order for examination, [15.600] application, [15.620] process, [15.595] purpose, [15.590]

L Land and Environment Court New South Wales jurisdiction, [1.490] overview of, [1.490]

 

1063

Civil Procedure in New South Wales

Lawyers case management, responsibilities as to, [2.255]–​[2.260] costs order against, [3.220] indemnify any party, [3.260]–​[3.270] neglect, incompetence or impropriety, [3.250], [3.270] personal liability, [3.220] public interests, competing, [3.220] “without reasonable prospect of success”, [3.230]–​[3.240], [3.270] duty to the court, [2.270] ethical duties and case management, [2.270] independence, duty to act with, [2.270] mediation, role in, [4.240] adversarial/​non-​adversarial skills, [4.244] spectrum of, [4.240] service, acceptance of, [11.170]–​[11.180] unnecessary costs, liability, [3.260] Legal families common law, [1.100] dominant, [1.100] Limitation periods causes of action, [6.80], [6.93]–​[6.96] founded on a deed, [6.80], [6.96] confirmation, [6.145] contract and tort, [6.80], [6.93]–​[6.96] date cause of action discoverable, [6.120], [6.135] knowledge, [6.120] onus of proof, [6.120] “ought to know”, [6.120]–​[6.130], [6.138] relevant “facts”, [6.120] defamation, [6.80], [6.96] disability, confirmation, fraud and mistake, [6.140]–​[6.145] extension, [10.160] mistake in the name of a party, [10.160]–​[10.175] fraud and deceit, [6.140]–​[6.145] mistake, [6.145] nature of, [6.60] personal injury, [6.80], [6.100]–​[6.110] extension, [6.110] postponement, [6.140] rationale for, [6.60]–​[6.70] specific, [6.80] substantive law, as, [6.85]–​[6.90] Limited jurisdiction inferior courts, [1.50] Local Court of New South Wales electronic case management, [2.300] jurisdiction, [1.510] overview of, [1.510]

M Mareva injunctions alienating, encumbering or further encumbering, [6.186] 1064 

ancillary order, and, [6.200] assets, preservation, [6.180], [6.190] scope, [6.180] costs, [6.200] courts, power, [6.170] inherent, [6.180] jurisdiction, [6.200] discretionary remedy, [6.190] judgment debtor or prospective judgment debtor, against, [6.200] legislative framework, [6.200] nature of, [6.170] Practice Note SC Gen 14, [6.210] risk of dissipation, [6.183] security to a plaintiff, [6.183] self-​incrimination, privilege against, [6.260] service outside Australia, [6.200] third party to proceedings, against, [6.190] Mediation advantages, [4.230] agreements to use, enforceability, [4.340]–​[4.350] class actions and, [8.396], [8.715] complex commercial disputes prior to litigation, [4.330] compulsory, [4.250]–​[4.260] application, [4.290]–​[4.300] Civil Justice Review, Report 14, [4.260] court, discretion, [4.290] timing of order, [4.320] confidentiality, [4.280] costs, [4.280] court referral, [4.270]–​[4.280] duty of parties to participate, [4.280] definition, [4.280] ethical guidelines for, [4.304] evaluative, [4.220] facilitative, [4.220] good faith, obligation of, [4.304] “interests and needs”, consideration, [4.300] lawyers, role in, [4.240] adversarial/​non-​adversarial skills, [4.244] spectrum of, [4.240] mediation position paper, [16.95] mediation session definition, [4.280] privilege, [4.280] mediator appointment, [4.220] directions by, [4.280] Nadja Alexander’s Mediation Metamodel, [4.220] opposition to, [4.310] position statements, [4.248] process, [4.220] reasons for choosing/​not choosing, [4.230] ripeness of dispute, [4.320]–​[4.330] Settlement negotiation privilege — see Settlement negotiation privilege settlement rates, [4.330] Mediator appointment, [4.220] directions by, [4.280] ethical guidelines for, [4.304] facilitative, [4.220]–​[4.230] liability, protection, [4.280]

Index

Medical examinations legislative framework, [13.680] matter in question, relevance, [13.670] notice for, [13.680] order for examination, [13.690]

dispute of fact subsequently proved or admitted, [13.650] documents, [13.630] facts, [13.630] court forms, [16.150] failure to admit and costs, [13.640] purpose, [13.620] voluntary admission of facts, [13.630]

Miscarriage of justice, [1.340]–​[1.350] retrial, order, [1.370] Model litigant Crown, [1.380] “purely technical point of pleading”, and, [1.380] NSW Litigant Policy for Civil Litigation, [1.390]

N Nadja Alexander’s Mediation Metamodel, [4.220] Natural justice bias rule, [5.130] hearing rule, [5.130] Negotiation advantages, [4.190] co-​operation, [4.190] disadvantages, [4.190] distinguishing features, [4.190] interest-​based, [4.190] comparison with positional, [4.200] law, role, [4.210] positional, [4.190] interest-​based, comparison, [4.200] New South Wales Civil and Administrative Tribunal (NCAT) jurisdiction, [1.530] Non-​parties order for costs against, [3.390]–​[3.400] Non-​publication  order adverse effect on open justice, whether, [1.290] application of, [1.280] contravention, [1.280] definition, [1.280] duration, [1.280] grounds, [1.280] risk of self-​harm, [1.295] victim of sexual assault, [1.298] information, definition, [1.280] interim orders, [1.280] legislative framework, [1.280] news media organisation, definition, [1.280] party to proceedings, definition, [1.280] power to make, [1.160], [1.270] proceedings, definition, [1.280] publish, definition, [1.280] Notice to admit admitting party, [13.630] court forms, [16.150]

Notice to produce costs, compliance, [12.120] court forms, [16.140] hearing, at, [12.140] inspection by parties, [12.120] legislation, [12.140] overview, [12.110] personal injury claims, [12.110], [12.120] privilege — see Privilege scope, [12.120]

O Oaths appointee of foreign authority, [13.110] declaration, alternative, [13.110] false swearing, [13.190] identification of deponent, [13.120] legislative framework, [13.110] Oaths Regulation 2011, [13.120] Offers of compromise, [15.230]–​[15.255] genuine, requirement, [15.230] relevant principles, [15.230] unreasonable refusal, [15.230] Open justice exceptions closed proceedings, — see Closed proceedings non-​publication orders — see Non-​publication  order suppression orders — see Suppression orders fair and accurate report of proceedings, [1.180] independence and impartiality, [1.180] principle, [1.150] reasons for decisions, provision, [1.300] Originating process amendment, [10.10] contents and appearance, [9.20] date of effect, [9.20] failure to serve within time limited by rules, [11.90] irregularities and nullities, [10.180] consequences of nullity, [10.210] court’s power to cure, [10.200]–​[10.210] deceased defendants, [10.210] differences, [10.180] non-​existent person or company, [10.210] procedural irregularities, directions, [10.190], [12.80]  

1065

Civil Procedure in New South Wales

Originating process — cont mistake in the name of a party, and, [10.160]–​[10.175] personal service — see Personal service service — see Service statement of claim, [9.20] summons, [9.20] Supreme Court, in, [9.50] service and execution of process regulations, [11.320] validity for service, time period, [9.50]

P Particulars adducing further evidence, and, [9.340], [9.350]–​[9.360] claim, defence or other matter, [9.270] court form, [16.50] evidence and, [9.330] express requirements, [9.370] function, [9.280]–​[9.290] further, supply of, [9.310] issues, definition, [9.320] material facts, [9.260] inadequacy in pleading, [9.300] requirement, [8.300] order for, [9.270] purpose, [9.270], [9.330] request for, [9.370] surprise, guard against, [9.330] Personal service corporation, on, [11.140] defendant operating under legal incapacity, [11.140] partner in limited partnership, [11.140] registered business name, [11.140] unregistered business name, [11.140] forms, [11.130] method of effecting, [11.110]–​[11.120] notice of motion, [11.l00] person who “keeps house”, on, [11.140] process, [11.100] residency, and, [11.120] subpoena, [11.100] validity, [11.120] when required, [11.110] Pleadings affidavit, verified, [9.240] amendment — see Amendments contradictory claims in, [9.115] defective, [9.310] defence, [9.70]–​[9.80], [9.250] definition, [9.70] departure from pleaded cause, [9.360] effect in law of facts pleaded, [9.190] evidence, [9.160] failure to respond, [9.70] form, [9.117], [9.120] function, [9.110] insufficient, [9.150] material facts, [9.140] 1066 

material, meaning, [9.180] no conclusions of law as material facts, [9.170]–​[9.180] not disclosing reasonable cause of action, [9.420] high degree of certainty of the outcome, [9.430], [9.440] objectives, [9.130] prejudice, embarrassment or delay, causing, [9.410] relevant principles, [9.110] reply, [9.115] statement of claim, [9.70], [9.90] denial of allegation, and, [9.70], [9.100] striking out, [9.380]–​[9.400] substance over form, [9.320] surprise, and, [9.200]–​[9.210] ambush, [9.230] technical pleading rules, [9.320] trial by ambush, to avoid, [9.117] Privilege access to documents produced on subpoena by third party, [14.80] answering of questions, [14.50] client-​legal — see Client-​legal privilege context for claims, [14.30] determination, [14.40] exercise, [16.190] function, [14.10] inadvertent disclosure, [14.215]–​[14.230] NSW Professional Conduct and Practice Rules 2013, [14.220] information, types, [14.300] journalist — see Journalist privilege law and procedure, [14.40] national security information — see National security information objections to production of documents, [14.60] oral or written form, [14.20] policy basis, [14.20] preliminary proceedings of court, [14.50] disclosure requirements, [14.50] privileged information, meaning, [14.60] professional confidential relationship — see Professional confidential relationship privilege protected confidences, [14.60] public interest immunity — see Public interest immunity settlement negotiation — see Settlement negotiation privilege test for, [14.20] types, [14.20] waiver, [14.80], [14.85] Procedural law “adjectival” law, as, [1.20] context, in, [16.10] costs, proportionate, [1.80] delay, elimination, [1.80] fair trial — see Fair trial just, quick and cheap resolution of the real issues, [1.80] legitimacy of decision-​making, [1.25] management of proceedings, [1.80] meaning, [1.20]

Index

Procedural law — cont purpose, [1.20] significance, [1.20] sources inherent and implied jurisdiction, [1.40]–​[1.50] statutory powers, [1.30] substantive, distinction, [1.20] Productivity Commission Access to Justice Arrangements Report costs awards, reforms, [3.530] fixed, event-​based scales, [3.530] proportionate to amount in dispute, [3.530] scales, [3.530] Professional confidential relationship privilege ancillary orders, [14.250] court, directions, [14.240] loss of consent, [14.250] misconduct, [14.250] protected confidence definition, [14.250], [14.260] exclusion of evidence, [14.250] protected confider, [14.240], [14.260] definition, [14.250] protected identity information, [14.240] definition, [14.250] types, [14.240] Property inspection and testing, [13.700] computers, [13.710] personal property, disposal,, [6.160] Writ for levy of — see Writ for levy of property Prospective plaintiffs civil action, and, [6.10] cross-​vesting legislation, [6.30] transfer of proceedings, [6.40] interim preservation orders — see Interim preservation orders jurisdiction, issues, [6.20] limitation periods, and — see Limitation periods Pseudonym orders identity, protection, [1.210] informers, [1.210] scope, [1.210] Public interest immunity appointment of special counsel, [14.340] cabinet deliberations, [14.280], [14.320] claims, [14.70] statutory corporations, [14.70] Crown documents, [14.280] disclosure injurious to public interest, [14.300] evidence excluded, [14.310] matters of state, [14.310], [14.320] information, types, [14.300] onus, [14.300], [14.330] standing and procedure, [14.290]

R Referee, use of appointment, [5.220] binding nature of, [5.10] compulsory referral, [5.210] overview, [5.10] proceedings under reference application for, [5.230] conduct of, [5.220], [5.250] interlocutory directions, [5.220] orders for, [5.240] parties, conduct, [5.270] remuneration, [5.220] two or more referees, [5.220] usual order for, [5.240] report, [5.220] courts discretion to adopt, vary or reject, [5.260] Relativity assisted review measuring and validating, [12.359]

S Search orders — see Anton Piller orders Security for costs burden of proof, [3.440] case management, [3.460] court, powers, [3.410] discretion, unfettered, [3.440], [3.450] criteria, [3.460] directions and orders, [3.460] impecuniosity of the plaintiff, [3.430] inherent jurisdiction, [3.480]–​[3.490] legal principles, [3.420], [3.490] natural persons vs corporations, [3.430]–​[3.440] non-​compliance, [3.410] dismissal of proceedings, [3.410] prompt application, [3.410] refusal of application for, [3.420] stay of proceedings, [3.470] Self-​incrimination privilege against, [6.260] Self-​represented litigant costs order, awarded, [3.350] out of pocket expenses, [3.350] partial indemnity, [3.360] power to, [3.380] disadvantages to, [3.360] fundamental right, [3.360] legal practitioner as, [3.370] costs, recovery, [3.370] Service accordance with agreement between parties, [11.350]

 

1067

Civil Procedure in New South Wales

Service — cont affidavit of, [11.70] not to annex copies of filed documents, [11.60] agreement, acknowledgment or undertaking, by, [11.150] agreement between parties, by, [11.160] beyond jurisdiction, [11.290] court registry, lodgement, [11.20] documents on overseas defendants, [11.440] evidence of service, [11.470] functions, [11.70] Hague Convention, [11.410], [11.450] informal, confirmation, [11.270] legislative framework, [11.30] methods, [11.40]–​[11.50] on each defendant, [9.55] originating process, of, [11.70], [11.330], [11.410] outside Australia application of division, [11.450] insufficient prospects, [11.430] notice to person served, [11.410] originating process, [11.390] service of documents, [11.360] strength of plaintiff case, [11.420] time for filing appearance, [11.410] without leave, [11.390] outside NSW but in Australia, [11.300]–​[11.330] overview, [11.10], [11.70] payment of costs, [11.470] procedural irregularities, directions as to, [11.80] procedure on receipt of certificate, [11.470] restriction on power to enter default judgment, [11.490] setting aside judgment in default of appearance, [11.490] solicitor, acceptance by, [11.170]–​[11.180] substituted and informal, [11.190]–​[11.220] court, order, [11.230]–​[11.240] personal service of subpoena to give evidence, exception, [11.250]–​[11.260] stay of proceedings, [11.330] time period of validity for, [9.50] waiver of objection, [11.280] Settlement negotiation privilege evidence excluded in public interest, [14.380] mediation, [14.390] agreements and arrangements, [14.390] evidence of offers, admissibility, [14.400] session, [14.390] purpose, [14.370] scope, [14.400] Subpoena to produce abuse of process, [12.390] addressee, [12.370] compliance costs and expenses, [12.370] criminal records, [12.430] custody of court, [12.370] documents court form, [16.120] disposal, [12.370] inspection of, and dealing with, [12.370] removal, return, copying and destruction, [12.370] forms, [12.370] 1068 

issuing party, [12.370] legitimate forensic purpose, without, [12.400], [12.420], [12.430] fishing exercise, [12.410], [12.430] mere relevance not sufficient, [12.420] principles, [12.420] non-​compliance, [12.360] contempt of court, [12.370] warrant for arrest, [12.450] oppression, [12.410] overview, [12.10] privilege, claim, [12.360] –​see also Privilege production otherwise than on attendance, [12.370] registrar, [12.370] scope of, principles, [12.445] setting aside, [12.370], [12.380], [12.430], [12.445] grounds, [12.390] test, [12.420], [12.440] third parties, [12.360] attend to give evidence, [16.130] Substantive law procedural law, distinction, [1.20] Summary dismissal defence, striking out of, [15.170] discretion of court, [15.160] effect, [15.190] failure to comply with directions, [15.180] frivolous and vexatious proceedings, [15.110]–​[15.120] no reasonable cause of action, [15.100] no reasonable prospect of success, [15.140] principles, [15.130] want of prosecution, [15.150] Summary disposal conclusion before trial, [15.20] default judgment, [15.30]–​[15.40] setting aside, [15.50]–​[15.60] defence, striking out of, [15.170] discretion of court, [15.160] overview, [15.200] summary dismissal, [15.100] effect, [15.190] failure to comply with directions, [15.180] frivolous and vexatious proceedings, [15.110]–​[15.120] no reasonable prospect of success, [15.140] principles, [15.130] want of prosecution, [15.150] summary judgment, [15.70]–​[15.90] Suppression orders adverse effect on open justice, whether, [1.290] application of, [1.280] confidentiality, [1.290] court, definition, [1.280] definition, [1.280] duration, [1.280] grant, powers, [1.180], [1.280] grounds, [1.280] risk of self-​harm, [1.295] victim of sexual assault, [1.298]

Index

Suppression orders — cont information, definition, [1.280] institutional integrity, [1.180] interim orders, [1.280], [1.290] jurisdiction, [1.180] legislative framework, [1.280] news media organisation, definition, [1.280] open justice, departure, [1.180] opposed, [1.290] party to proceedings, definition, [1.280] power to make, [1.160], [1.270] proceedings, definition, [1.280] public interest, [1.180] publish, definition, [1.280] statutory powers, [1.280] Supreme Court of NSW appeals to, [15.390]–​[15.400] Commercial Arbitration List, [5.180] Practice Note SC Eq 9, [5.200] electronic case management, [2.300] jurisdiction, [1.470] overview of, [1.470]

Uniform Civil Procedure Rules (UCPR) application, [2.220]–​[2.265], [11.410], [11.470] creation, [2.320] procedure on filing and lodgment, [11.450]

V Victorian Law Reform Commission Civil justice Review, Report 14 — see Civil Justice Review, Report 14

W

Termination of proceedings implied jurisdiction, and, [1.70]

Witnesses affidavits, [13.50] alterations, [13.100] annexures and exhibits, [13.100] each page signed by deponent, [13.100] format, [13.100] heading, [13.100] illiterate persons, by, [13.100] legal requirements, [13.60]–​[13.90] name of legal practitioner or commissioner for affidavits, requirement, [13.100] Oaths Act 1900 (NSW), [13.110] person who may make, [13.100] court direction to furnish statement, [13.100] manner of giving evidence, [13.30] overview, [13.10] preparation, [13.20] ethical and effective, [13.40] statements, [12.90]

U

Workers Compensation Commission overview of, [1.520]

T TAR 2.0, [12.358] relativity assisted review, [12.359] Technology assisted review (TAR), [12.356] predictive coding, [12.357]

Uniform Civil Committee administrative matters, [2.330] commercial arbitration appeal, leave to, [5.180] Commercial Arbitration List, [5.180] definitions, [5.180] enforcement, [5.180] evidence, [5.190] subpoenas, [5.180] time for applications and appeals, [5.180] composition, [2.330] establishment of, [2.330] UCPR, creation, [2.320]

Writ for levy of property application, [15.490] affidavit in support, [15.490] procedure, [15.485]–​[15.490] purpose, [15.480] Writs of execution application, [15.490] affidavit in support, [15.490] definition, [15.460] expiry and renewal, [15.490] leave requirements, [15.470] legislative framework, [15.460]

 

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