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

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

Purpose and background to the Act

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

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

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

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

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

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

Summary of the Act's provisions

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

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

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

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

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

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

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

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

LLRO:

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

ELRO:

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

GLRO:

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

Acting in concert order:

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

Appeal restriction order:

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

Leave to proceed where an LRO is in force

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

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

Discussion

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

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

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

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

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

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

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

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

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

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

The most contentious aspects of these reforms are:

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

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

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

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

Summary of the reform

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

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

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

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

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

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

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

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

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

Discussion

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

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

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

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

Click here for the link to the Explanatory Memorandum.

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

The amending legislation does the following to the CPA:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Facts

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

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

The expert disallowed the proposed amendment because:

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

There were terms of the building contract including:

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

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

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

Decision

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

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

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

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

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

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

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

Discussion

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

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

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

Electronic court books, and running trials electronically

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

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

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

Electronic court book structure

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

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

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

Electronic court book documents

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

The following is an example of the structure:

• [Matter name] court book [folder]
• 1 indexes [subfolder]
• 2 tabbed documents in court book [subfolder]
• 1 statement of claim of the plaintiff dated [###]
• 2 defence of the defendant dated [###]
• 3 amended statement of claim of the plaintiff dated [###]
• ...
• 17 contract of sale dated [###]
• 18 amended plans dated [###]
• ...
• 50 expert report of Webster dated [###]
• 51 joint expert report dated [###]
• ...
• 3 aides [subfolder]
• ...

Text recognition, annotation and bookmarking

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

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

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

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

Transcript annotation and bookmarking

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

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

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

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

Efficiency in preparing submissions

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

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

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

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

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

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

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

Authorities

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

• [matter name] folder of authorities [folder]
• apportionment [subfolder]
• estate agents act [subfolder]
• misleading or deceptive conduct [subfolder]
• disclaimers [subfolder]
• reliance [subfolder]
• contract [subfolder]
• damages [subfolder]

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

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

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

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