In brief – Professional liability cases too costly and too lengthy

The Chief Justice of the Supreme Court of Victoria has now authorised the issue of a Practice Note that formally introduces a Professional Liability List into the court. The new List aims to provide a just and efficient determination of eligible professional liability proceedings, by identifying the substantive issues early and giving flexible and timely procedures for their future conduct.

Desire to improve management of claims against professionals

In recent years, there has been a developing practice on the part of the Supreme Court to establish specialist lists to better deal with particular disputes before the court.

In early 2012, the court established a Professional Reference Group to review the court's management of professional liability proceedings. The court sought input from the group (made up of various members of the legal profession) as to how the management of claims against professionals for breach of duty (whether in contract, tort or equity) could be improved.

Deliberate stalling tactics, excessive costs and work done at last minute

The Court's growing concern was that professional liability disputes tended to have some of the following features:

  • On occasions there was a tendency to adopt a "go slow" approach
  • Much of the work was done at the last minute, shortly before trial, putting the court and the parties under a significant amount of pressure
  • Matters were taking a disproportionate amount of the court's time at trial
  • The cost of discovery was very high
  • The narrowing of issues in the dispute was not addressed until very late in the piece
  • There was a high cost and sometimes unnecessary preparation of expert evidence

The Professional Reference Group agreed that closer judicial management of professional liability disputes could be a way to address some of these issues. The court gathered the group's responses and ultimately considered the question of whether the court should establish a specialist Professional Liability List.

Professional Liability List - Practice Note 3 of 2012

The Supreme Court of Victoria has now authorised the issue of Practice Note 3 of 2012, introducing the Professional Liability List. The practices and procedures outlined within this Practice Note apply from 1 October 2012.

The administration of the List will be undertaken by the List Judge (currently Justice Macaulay), to be assisted by the List Associate Judge (currently Associate Justice Daly).

What matters are eligible for the Professional Liability List?

To be eligible for entry into the List, the matter must involve an eligible professional liability claim. That is, a claim for economic loss against a professional for the breach of duty in tort or contract, a related statutory contravention (eg misleading and deceptive conduct), or for breach of equitable duties (such as fiduciary duties).

Examples of the types of matters which are appropriate for the List are claims for breach of professional duty against:

  • Legal practitioners
  • Financial advisers, including accountants, financial planners and financial brokers
  • Stockbrokers
  • Liquidators and other insolvency practitioners
  • Insurance brokers and agents
  • Real estate agents and conveyancers
  • Valuers

Excluded: claims against medical, construction and tax professionals

However, claims against the following professionals are excluded from the List:

  • Claims against medical and health practitioners, which are managed in the General List
  • Claims against building, construction and engineering practitioners, which are managed in the Technology Engineering and Construction (TEC) List
  • Claims against taxation professionals, which are managed in the Taxation List

Further, the List is not appropriate for either professional disciplinary or regulatory matters, or for professional costs disputes which do not include an eligible professional liability claim.

Closer judicial management with strict timetable and enforcement of obligations

In seeking to deal with its original concerns, the court now proposes to adopt a closer judicial management of professional liability disputes. Within 14 days of the filing of a defence, the court will arrange for an initial directions hearing.

At that time, it will be expected that parties’ lawyers will be properly briefed and familiar with the proceeding, so they can explain by brief oral submission the nature of the dispute and the substantive issues involved.

Matters to be determined at initial directions hearing

At the initial directions hearing it will be expected that the parties will have considered a number of matters outlined in the Practice Note, including, but not limited to:

  • Whether apportionment is sought against any party or other person
  • The scope of discovery
  • Whether expert evidence is appropriate for the resolution of the issues in dispute
  • Whether there should be an order for the separate trial of any question

It appears that at the initial directions hearing, the court will attempt to address the issue of parties adopting a go-slow approach by imposing a strict timetable and placing a greater emphasis on enforcing the parties' obligations under the Civil Procedure Act 2010 (Vic) to achieve the just and efficient resolution of disputes.

Number of directions hearings to be kept to a minimum

In adopting a practice of closer judicial management, the court encourages parties to communicate with the court as soon as it becomes apparent that there may be difficulties complying with orders, which will then trigger a further directions hearing.

However, the court will seek to keep the number of directions hearings to a minimum in order to avoid unnecessary costs.

As is becoming common practice within the Supreme Court, all matters within the Professional Liability List will be referred to mediation, unless there is a good reason to the contrary.

Court to note unnecessary delays when considering costs

Of particular concern to the court was the practice of making joinder applications late in the proceeding. This placed pressure on the parties and the court as the matter moved closer to trial.

The court now expects parties to make joinder applications at the earliest opportunity. The court will take into account any unnecessary delay on the part of the party when exercising its discretion to allow an application for joinder and in determining the related question of costs.

Practical effect of Professional Liability List yet to be seen

It will be interesting to see in a practical sense whether the introduction of the new Professional Liability List will address the issues that were originally of concern to the court.

However, all parties to litigation will no doubt support the aims of the List, which are to identify substantive issues early, provide flexible and timely procedures for the conduct of proceedings and afford a just and efficient determination.