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]).