The Court of Appeal clarifies the test for summary judgment in Victoria: Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158

On 24 June 2013, the Victorian Court of Appeal handed down a decision which provides useful and authoritative guidance on the test to be applied in applications for summary judgment under the Civil Procedure Act 2010 (Vic) (CP Act).  

Background

The summary judgment procedure allows a party to a legal proceeding to apply for another party’s claim or defence (or part thereof) to be determined in the party’s favour summarily, without having the matter determined at trial.

While the availability of this procedure has the potential to minimise wasted time and costs that would otherwise be incurred in hearing unmeritorious claims or defences, it necessarily has the effect of depriving the party against whom summary judgment is ordered the opportunity to fully litigate their case. 

Prior to the enactment of the CP Act, the test for summary judgment in Victorian civil proceedings was that the claim or defence must be ‘so clearly untenable’ that it must be considered ‘hopeless’ or ‘bound to fail’1.  Formulated in this way, the test sets a very high threshold for summary judgment applications, with the result that cases which are barely arguable and highly unlikely to succeed at trial nonetheless may not be susceptible to adjudication on a summary basis.

The introduction in 2010 of the CP Act led, as part of a raft of changes to civil procedures in Victorian courts, to a ‘reformed’ summary judgment procedure. Section 63(1) of the CP Act provides that:

...a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.

The changes to the summary judgment procedure were intended to ‘liberalis[e] the test for the summary disposal of unmeritorious claims and defences’ in response to a concern that the summary judgment procedure was ‘too restrictive’2.

In 2012, the Victorian Court of Appeal considered the ‘new’ summary judgment test under the CP Act in the case of Karam v Palmone Shoes Pty Ltd [2012] VSCA 97 (Karam). There, the Court of Appeal held that: 

the change in terms [under the CP Act] was not intended to establish a new or different test; rather to express more accurately the way in which the rule had been interpreted by the courts.  It remains, as the High Court said in Fancourt v Mercantile Credits Ltd, that the power to order summary judgment is to be exercised sparingly and not ‘unless it is clear that there is no real question to be tried’. 

More recently, in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158 (Blanalko), the matter came before the Court of Appeal, constituted by Warren CJ, Nettle and Neave JJA, upon a referral of a question of law by the trial judge3.  The issue that fell for determination by the Court of Appeal was to identify the test to be applied when determining whether to give summary judgment in a civil proceeding pursuant to section 63 of the CP Act.

The decision in Blanalko

The Court of Appeal held in Blanalko that the summary judgment test under the CP Act is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success, and – critically – that this is a lower threshold or ‘more liberal’ test than that which applied prior to the CP Act coming into force. The Court also held that the test is to be applied without comparison with the ‘hopeless’ or ‘bound to fail’ test under the previous law.

In doing so, the Court expressly disagreed with its earlier decision in Karam, noting that ‘on the present state of authority it is incorrect to say there is no difference between the tests’. Interestingly, Nettle JA was on the bench that heard both Blanalko and Karam.

In their joint reasons, Warren CJ and Nettle JA observed that, when taken at face value, the words ‘no real prospect of success’ in the CP Act appear not to significantly depart from the previous test, stating:

it is difficult to conceive of a case that could properly be described as lacking a real, as opposed to fanciful, prospect of success unless it were hopeless or bound to fail.

However, having regard to the apparent legislative intention to relax the summary judgment procedure, and a line of Queensland appellate authority to the effect that the test under the Queensland equivalent to the CP Act is more liberal4,  their Honours determined that the new test:  

permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success.

Notwithstanding their determination that the test under the CP Act is more liberal, Warren CJ and Nettle JA reiterated concerns previously raised by the High Court regarding summary judgment5,  that:

the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried...

Neave JA agreed in the result, but delivered separate reasons which went somewhat further than Warren CJ and Nettle JA, emphasising in particular the reformative objective of the CP Act and the intention of the CP Act to lower the bar for applicants seeking summary judgment. Her Honour was:  

concerned that undue emphasis on the caution with which a court must exercise the power of summary dismissal runs the risk of reinforcing the historical approach to summary dismissal and may result in the legislative liberalisation of the test in s 63 having little impact in practice. 

Conclusion

Blanalko is clear and unanimous appellate authority that the bar for obtaining summary judgment in Victorian Courts is now set lower than it was prior to the CP Act, and that a case does not have to be so untenable that it is bound to fail for summary judgment to be available, provided that it can be shown not to have a real prospect of succeeding.

It remains to be seen what, if any, practical difference there is between the previous ‘hopeless’ or ‘bound to fail’ test and the more liberal ‘real prospect of success’ test under the current law.

However, we can reasonably expect to see an increased willingness for parties to civil litigation in Victoria to seek summary judgment in respect of their opponents’ weak claims or defences as a result of this decision.