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Precedent (Australian Lawyers Alliance) |
By Stephen O’Meara QC and Matthew Hooper
When the Civil Procedure Act 2010 (Vic) (CPA) was enacted, it was expected to be interpreted and applied largely in conformity with existing principles affecting the conduct of civil litigation. However, in 2013 the highest appellate court in Victoria embraced the Act and emphasised its potential to not only reinforce, but also operate beyond pre-existing obligations, with sobering potential for practitioners.
In Yara Australia Pty Ltd v Oswal, the Court of Appeal explained:
‘The Court’s powers under s29 of the Act include the power to sanction legal practitioners and parties for a contravention of their obligations as the heading to Part 2.4 indicates. In our view, these powers are intended to make all those involved in the conduct of litigation – parties and practitioners – accountable for the just, efficient, timely and cost effective resolution of disputes. Through them, Parliament has given the courts flexible means of distributing the cost burden upon and across those who fail to comply with their overarching obligations...
Section 28(2) enables a court, in exercising its discretion as to costs, to take into account any contravention of the overarching obligations. In our view, the enactment of s29 together with s28(2) imbues the Court with broad disciplinary powers that may be reflected in the costs orders that are made. The Court is given a powerful mechanism to exert greater control over the conduct of parties and their legal representatives, and thus over the process of civil litigation and the use of its own limited resources.’ [1]
The Court stressed that the CPA ‘does not merely reaffirm the existing inherent powers of the court’[2] but also confers ‘a panoply of powers’ not found in the existing Rules of Court.[3] It is clear that the provisions of the CPA go beyond the more aspirational language of the legislation applying in NSW and in the Federal Court.[4]
This article commences with a summary of the relevant provisions of the CPA and considers recent cases in which the Victorian Court of Appeal and trial division of the Supreme Court have embraced the CPA as a means for examining and disciplining the conduct of practitioners.
THE CPA: ‘OVERARCHING PURPOSE’ AND ‘OVERARCHING OBLIGATIONS’
Sections 7, 8 and 9 of the CPA require courts to give effect to the CPA’s overarching purpose; namely, to facilitate the just, efficient, timely and cost-effective resolution of disputes. In making orders in civil proceedings, Victorian courts must have regard to a number of objects, including the efficient use of judicial and administrative resources; the timely determination of proceedings; and dealing with disputes in a manner proportionate to their complexity and the amount of money in dispute.[5]
In Setka v Abbott, Warren CJ, Ashley and Whelan JJA emphasised that:
‘[T]he over-arching purpose which, by operation of the Civil Procedure Act 2010, applies to both litigants and their advisers, is not simply a pious but toothless statement of the considerations which are to motivate participants, lay and professional, in civil litigation. So much was powerfully emphasised by this Court in Yara Australia Pty Ltd v Oswal. The just, efficient, timely and cost-effective resolution of the real issues in dispute in a case cannot be facilitated if a party and the party’s advisers do not take adequate steps to identify the issues which require determination early in the life of the proceeding. This is not to deny that the circumstances of litigation may develop in unpredictable ways.’ [6]
Beyond the statements of its overarching purpose, the CPA creates several overarching obligations. The statutory obligations apply to parties and their lawyers, and some also apply to expert witnesses.[7] The overarching obligations take precedence over any obligation owed, for example, to one’s client where there is inconsistency between the two.[8] A lawyer must refuse to act in accordance with the client’s instructions if it would involve a contravention of an overarching obligation.[9] Otherwise, the overarching obligations are intended to operate concurrently with other duties and obligations.[10]
The overarching obligations include the following obligations[11] to:
• act honestly;
• not make claims without a proper basis;
• only take those steps necessary to facilitate the resolution or determination of the proceeding;
• co-operate with all parties;
• not engage in conduct likely to mislead or deceive;[12]
• disclose the existence of ‘critical documents’ – an obligation additional to discovery, and which would extend to expert reports; and
• not use documents so disclosed other than in connection with the proceeding in respect of which the disclosure took place – notably, breach of this obligation constitutes a contempt of court.
Parties must also use reasonable endeavours to resolve the dispute, including by ADR; to narrow the issues in dispute; to ensure costs are reasonable and proportionate; and to act promptly and minimise delay.[13]
THE CPA: SANCTIONS, COMPENSATION AND COSTS ORDERS
The breadth of the potential for sanctions arising from a breach of the Victorian CPA is unique among the Australian jurisdictions. The provisions of the CPA are not merely compensatory in nature – practitioners must be aware there is also a punitive element to the jurisdiction.[14] The Court of Appeal in Yara endorsed the use of sanctions as providing:
‘a valuable tool for improving case management, reducing waste and delay and enhancing the accessibility and proportionality of civil litigation. Judicial officers must actively hold the parties to account.’[15]
Further, the Court noted the relative rarity of sanctions being imposed:
‘... When no party invites the court to determine whether there has been a breach of the Act, there may be a judicial disinclination to embark upon such an own-motion inquiry for fear that inquiry as to a potential breach may be time consuming and may require the introduction of material that was not before the court as part of the proceeding. Such fears cannot relieve judges of their responsibilities. ... As the sanction for a breach will usually lie in an appropriate costs order, a judge may at the conclusion of the reasons for judgment immediately invite oral submissions as to why there should not be a finding that the Act was contravened. The judge may in a relatively brief way deal with that issue in providing succinct reasons for a finding that there has been a breach of the Act and how that finding affects the orders for costs that are to be pronounced.’ [16]
Section 29(1) provides for far-reaching relief. Such relief may be granted either on the application of a party, a person with a sufficient-interest in the proceeding, or on the court’s own motion. In addition to costs orders and compensation, the court may make ‘any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations’.[17]
Further, both barristers and solicitors can be ordered to pay compensation to ‘any person for any financial or other loss materially contributed to by a contravention of an overarching obligation’.[18] Needless to say, with civil litigation frequently involving hundreds of thousands of dollars, and often millions, the power to award such compensation to a party whose case is lost by reason of a breach of an overarching obligation is a power of major potential significance. One aspect of significance – yet to be explored – is whether the CPA, to the extent of providing a power to award compensation, has impliedly modified or curtailed the advocate’s common law immunity.[19]
As noted above, the legislature has also enacted a Harman-type obligation,[20] being an obligation owed to the court, the breach of which may result in a finding of contempt of court. It is therefore imperative for practitioners to remember the need to seek leave to be released from the obligation, as provided for in s27(3), to avoid potential liability.
As emphasised at the outset, it is now evident that these various obligations and potential sanctions are more than lifeless statutory sentiments. The Victorian courts have embraced them as a means of disciplining the profession in respect to the preparation and conduct of civil litigation in the state.
APPLYING THE CPA: THE VOLUME OF REPRESENTATION AND MATERIAL
The first appellate consideration of the CPA occurred in Yara.[21] In that case, the Court of Appeal (after dismissing the substantive application for leave to appeal) requested the parties to address the question of whether there had been any breach of the overarching obligation in s24 to use reasonable endeavours to ensure that the costs incurred in the proceeding were reasonable and proportionate to the complexity and importance of the issues and sums in dispute. The Court noted that the need to ensure that costs were reasonable and proportionate was a core objective of these reforms.[22]
The two issues for consideration in Yara were the potential ‘over-representation’ of parties by senior and junior counsel and the six volumes of material produced in the appeal books (more than 2,700 pages) on an application for leave to appeal an interlocutory application for security for costs. An explanation was required to be given. In respect of counsel, the explanation about the changing availability of counsel at short notice was accepted, and it was held that there was no breach of s24. However, the solicitors for each of the applicants were required to indemnify their clients for 50 per cent of the costs of certain unnecessary or duplicated material in the application books, and were disallowed from recovering from their clients 50 per cent of the whole costs relating to the preparation of the application books.
While the circumstances of individual cases must vary, the potential for such examinations of preparation after the case has been conducted must be of particular concern to the personal injury lawyer acting on a no-win, no-fee basis, where the court might be prone to inquire into the degree of work or costs incurred in circumstances where the client is not required to pay for legal work performed until a later point in time, and so might not be actively concerned with the amount of costs being incurred in the course of the litigation. Whether in respect of court books or the briefing of counsel, solicitors must use reasonable endeavours to ensure legal costs and disbursements of all kinds are of a reasonable amount and proportionate to the dispute in question.
APPLYING THE CPA: LATE AMENDMENTS AND SEEKING ADJOURNMENTS
The Chief Justice of Victoria has stressed that the CPA now demands that courts ‘place a greater emphasis on ensuring the timely and efficient disposition of matters as part of ensuring the just determination of a civil proceeding’.[23]
Practitioners must be conscious that this reflects a changed emphasis in approach to the late amendment of pleadings and adjournments sought to enable further preparation of the case, including for expert reports. The burden of a busy practice or heavy file load will not excuse a breach of the overarching obligations. A law firm will be vicariously liable for any conduct of its employee solicitors, no matter how junior and untrained, or conversely how experienced and competent.
In Eaton v ISS Catering Pty Ltd,[24] the Court of Appeal noted the earlier predisposition for allowing amendments and adjournments, if a refusal would shut a party out from presenting its case. Justices Neave, Hargrave and Dixon stated that:
‘[such a] predisposition must now be qualified in light of the importance which is now accorded to case management principles, following the High Court’s decision in AON,[25] the subsequent enactment of the Civil Procedure Act 2010 and the further authorities mentioned below. ... parties cannot casually ignore case management orders or directions.’[26]
With respect to personal injury practice, the Court stated:
‘The only explanation put forward by the appellant for not [applying for an extension of time for a further expert report] was given from the Bar table – to the effect that a decision was made to defer seeking expert evidence until after the mediation. The fact that the parties sought to mediate the dispute did not relieve the appellant’s solicitors from the responsibility of complying with Court ordered time limits. The conduct of the appellant’s solicitors in ignoring the Court’s directions as to the time for serving expert evidence undermines the overarching purpose under the Civil Procedure Act 2010 and is contrary to the overarching obligations to which the solicitors were subject. ...
If there is a perception among plaintiffs’ lawyers in personal injuries litigation that they need not comply with court directions which require steps to be taken before mediation, including seeking expert reports, or a practice of not doing so, such a practice is in our opinion contrary to the overarching obligations. It is no excuse that “no win, no fee” lawyers wish to see whether a case settles at mediation before spending the necessary funds required to comply with court orders. Although each case must, of course, depend upon its own facts and circumstances, the adoption of such a practice may well lead to an application to vacate the trial date or, as here, to adjourn the trial being refused.’[27]
APPLYING THE CPA: DEALING WITH EXPERT WITNESSES
The overarching obligations, of course, also have the potential to affect the substance of dealings between practitioners and expert witnesses.
In Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No. 4),[28] and after a jury verdict had been delivered following a trial in which the plaintiff claimed damages for personal injury, Dixon J resolved to conduct an own motion inquiry into dealings between the solicitors, counsel and an expert engineer engaged on behalf of a plaintiff worker. Those dealings had emerged (in part) in the course of the trial and had been the subject of strong criticism in an address to the jury by counsel for one of the defendants. The trial judge refused the plaintiff’s application to discharge the jury on the basis of the comments made in address, but later resolved to conduct the own motion inquiry, the decision in which remains reserved.
Separate to the own motion inquiry, the worker appealed to the Court of Appeal in respect to the verdict at trial and, in particular, the decision not to discharge the jury. The appeal was allowed by majority.[29] Following delivery of reasons in respect to the issues on the appeal, the Court sought submissions as to why the worker’s counsel and solicitors should not be ordered to pay various costs.
Those submissions are recorded in the subsequent reasons of the Court of Appeal, in which the Court referred to the circumstances pertaining to the dealings with the expert engineer.[30] Those circumstances included the fact that one of the reports emanating from the expert engineer had not in all respects been prepared and authorised by him and that the report did not comply with Order 44 of the Supreme Court Rules because it failed to identify an important source of factual information. The Court considered these apparently innocent but nonetheless significant infractions to have been ‘the fundamental cause of what went wrong in this trial’.[31]
Whelan JA, with whom Warren CJ and Tate JA relevantly agreed, stated the applicable principles to include the following:
‘[65] As to the position of the lawyers, ... s29 of the Civil Procedure Act empowers the Court to make orders as to costs against a lawyer who contravenes any of the overarching obligations provided for in that Act. Amongst other things, there are overarching obligations to disclose critical documents ... .
[66] In Yara this Court emphasised the significant changes in approach to civil litigation which the Civil Procedure Act requires, particularly in relation to costs.’[32]
In the result, the Court considered the overarching purpose of the CPA to affect the disposition of the proceeding, in that it supported remittal of the proceeding to the trial judge for re-trial rather than the ‘wastage and injustice’ of an entirely new trial.
The Court also evidently considered the overarching obligations to bear upon its determination to order that the worker’s solicitor and senior counsel indemnify the unsuccessful defendant on appeal for 80 per cent (being 40 per cent each) of the costs that it must pay on the appeal. The costs of the trial were to be dealt with by the trial judge.
The case is a poignant reminder of the great care that must be taken in dealings between practitioners and expert witnesses. Practitioners need to be aware of the potential for this obligation to be embraced as an aspect of the overarching obligations, the infraction of which can carry stinging costs consequences.
APPLYING THE CPA: ASPECTS OF APPELLATE PRACTICE
Trial lawyers have always been mindful of the principles attending the appellate jurisdiction, particularly that a party will not usually be permitted to run a case on appeal different to that which was run below.[33] However, these and other such principles may now be regarded as particular manifestations of the obligations stated in the CPA, which was made evident by the Court of Appeal in Setka v Abbott[34] and then later in Wingfoot Australia Partner Pty Ltd v Jovevski.[35]
In Setka, the plaintiff in a defamation proceeding sought leave to appeal from interlocutory orders, by which, in substance, the primary judge had refused various arguments that would have had the effect of striking out the defendants’ defences. On an application for leave to appeal, in addition to an argument raised below, the plaintiff sought to raise some additional arguments. The plaintiff submitted that it was convenient to deal with all of the arguments at that point, but the Court of Appeal (Warren CJ, Ashley and Whelan JJA) disagreed and refused the application for reasons that included reference to the overarching purpose of the CPA and the earlier decision in Yara.
Later, in Wingfoot, an employer appealed from a County Court finding of a serious injury. The employer sought to argue on appeal that the worker’s compensable shoulder injury was not a cause of the psychiatric condition that the trial judge had determined met the serious injury test of being ‘severe’ in its consequences. The Court of Appeal (Warren CJ, Tate and Osborn JJA) did not find the employer’s argument persuasive. However, the decision of the Court went further and characterised the employer’s argument as amounting to a new case that should not be entertained.[36] The Court referred to authorities including Yara and Setka and considered that the CPA, in addition to existing authority, did not permit the argument to be raised on appeal.[37]
A separate aspect of appeal practice, namely the drawing of appeal grounds, was highlighted by the Court of Appeal in Kalinic v Acron Engineering Pty Ltd.[38] The worker was successful by majority in an appeal against a refusal of his serious injury application. However, he was deprived of 40 per cent of his costs of the appeal because his notice of appeal contained 14 grounds, one of which included nine sub-grounds. Submissions and oral argument were prepared in answer to all grounds. At the start of the appeal hearing, however, the worker’s counsel abandoned all but four grounds. The Court ultimately ordered that the worker obtain only 60 per cent of the costs of the appeal, noting that the exercise of its discretion as to costs must now be guided by the CPA.
WHERE TO GET HELP WHEN YOU HAVE AN ‘OVERARCHING’ DILEMMA
Although it came into force in 2011, the CPA is now emerging as a statutory innovation of great practical significance in trial and appellate practice. The cases referred to in this article show that problems can arise, and sometimes with little or no notice. It is now clear that as a solicitor or barrister one needs to be particularly aware of the effect of the CPA obligations and what the court might consider to be the consequences of those obligations for your prosecution or defence of a particular case.
If you are concerned that a case you are working on raises a question about compliance with the overarching obligations, the first thing to do is to raise the issue with a superior or mentor. The options include:
• for solicitors
o discuss the case with another lawyer or your supervising partner;
o consider whether you have just cause to terminate the engagement, on reasonable notice to the client;[39]
• for barristers
o discuss the case with another barrister, including your mentor;
o consider whether you can or should return the brief – consult the Victorian Bar Rules;
o consider whether a member of the Ethics Committee might usefully advise you, or obtain a Committee ruling, if the matter is not time-critical.
Lawyers practising in Victoria now, more than ever, have the incentive to be familiar with and act in accordance with their obligations as reinforced and extended by the CPA. Since 2013 the highest Victorian courts have embraced the potential of the CPA as an agent for the administration of professional discipline. It is likely that this will continue. In this setting, practitioners must be alert to the problems that can arise, and must seek guidance early to avoid the potential for sanctions.
Stephen O’Meara QC and Matthew Hooper are barristers practising at the Victorian Bar.
[1] Yara Australia Pty Ltd v Oswal, [2013] VSCA 337 at [20]–[21].
[2] Ibid at [22].
[3] Ibid at [25].
[4] Ibid at [17] referring to the Civil Procedure Act 2005 (NSW) and s37N(4) of the Federal Court of Australia Act 1976 (Cth).
[5] Civil Procedure Act 2010 (Vic) (CPA) ss7–9.
[6] Setka v Abbott, [2013] VSCA 345 at [31].
[11] CPA ss17, 18, 19, 20, 21, 26 and 27, respectively.
[12] Note especially the similarity to the former s52 of the Trade Practices Act 1974 (Cth), now s18 of the Australian Consumer Law, for which there is no requirement of intention to mislead or deceive. Thus, lawyers must be careful to be accurate, as even an innocently made statement that is misleading will give rise to a contravention.
[13] CPA ss22, 23, 24 and 25, respectively.
[14] Hudspeth v Scholastic Cleaning & Consultancy Services Pty Ltd (No. 4) [2013] VSC 14 at [5]- [7] (Dixon J) cited without disapproval in Yara Australia Pty Ltd v Oswal [2013] VSCA 337 at [24].
[15] Yara Australia Pty Ltd v Oswal [2013] VSCA 337 at [26].
[16] Ibid at [27].
[19] See Kieran Hickie ‘The quiet erosion of the advocates’ immunity under the Civil Procedure Act 2010 (Vic)’ (2013) 37 Australian Bar Review 259.
[21] [2013] VSCA 337, above n15.
[22] Ibid at [6].
[23] Hudspeth v Scholastic Cleaning & Consultancy Services Pty Ltd [2014] VSCA 3 at [34]- [35] (Warren CJ).
[24] Eaton v ISS Catering Pty Ltd [2013] VSCA 361.
[25] AON Risk Services Australia Pty Ltd v Australian National University (2009) 239 CLR 175.
[26] Eaton v ISS Catering Pty Ltd above n24, at [47]
[27] Ibid at [54]–[55].
[29] Hudspeth v Scholastic Cleaning & Consultancy Services Pty Ltd [2014] VSCA 3.
[30] Hudspeth v Scholastic Cleaning & Ors [2014] VSCA 78.
[31] Ibid at [69].
[32] Ibid at [65]–[66].
[33] See Water Board v Moustakas (1988) 180 CLR 491 and Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 cited in Wingfoot Australia Partner Pty Ltd v Jovevski [2014] VSCA 21 at [56]- [57].
[36] Wingfoot Australia Partner Pty Ltd v Jovevski [2014] VSCA 21 at [7].
[37] Ibid at [59]–[63].
[38] Kalinic v Acron Engineering Pty Ltd [2013] VSCA 363.
[39] Professional Conduct and Practice Rules 2005 (Vic).
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URL: http://www.austlii.edu.au/au/journals/PrecedentAULA/2014/33.html