The Civil Procedure Bill 2010 (Vic) (the Reforms) will result in significant changes to the conduct of civil litigation in Victoria. The Reforms follow a review of the civil justice system by the Victorian Law Reform Commission. According to the Explanatory Memorandum, the Reforms aim to redress an imbalance in the civil justice system to achieve the goals of accessibility, affordability, proportionality, timeliness, and getting to the truth quickly and easily.
The Reforms will apply to all civil proceedings in the Victorian Supreme Court, County Court and Magistrates’ Court and to any disputes that may lead to civil proceedings in those Courts. The Reforms will not apply to civil proceedings in the Victorian Civil and Administrative Tribunal or to proceedings commenced under certain Acts essentially unrelated to civil disputes.1
The Reforms were passed by the Victorian Parliament on 12 August 2010. They will come into effect on 1 June 2011, or on an earlier date if so proclaimed. The Reforms will take effect by way of amendments to the Acts governing the Supreme Court, County Court and Magistrates’ Court. Once in effect, the Reforms will generally apply to all civil proceedings in those Courts, regardless of whether the proceeding was commenced prior to the commencement of the legislation. A key exception is that the overarching obligations (see below) will not apply to a proceeding that is already being heard and determined prior to the commencement date.
Purpose of the Reforms
The overarching purpose of the Reforms is to “facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute”. Courts are to give effect to this overarching purpose in the exercise or interpretation of their powers.
To achieve the overarching purpose, a Court must have regard to the following objectives when making any order or direction in a civil proceeding:
- the just determination of the civil proceeding
- the public interest in the early settlement of disputes
- the efficient conduct of the business of the court
- the use of judicial and administrative resources
- minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required
- the timely resolution of the proceeding, and
- dealing with the proceeding in a manner proportionate to the complexity and importance of the dispute, and the amount in dispute.
The Reforms also impose overarching obligations on those involved in a civil proceeding, including the parties, legal representatives, insurers, litigation funders and (in part) expert witnesses. Importantly, those subject to the overarching obligations have a paramount duty owed to the Court to further the administration of justice. Previously, only lawyers owed such a duty to the Court. The overarching obligations and paramount duty apply to all aspects of a civil proceeding, including any interlocutory proceeding, appeal, or appropriate dispute resolution (ADR) process relating to a civil proceeding.
The overarching obligations are intended to change the culture of litigation, encouraging a less adversarial approach and discouraging abuse of the legal process for strategic purposes.
The overarching obligations are to:
- act honestly and co-operate with other parties and the court
- act promptly and minimise delay
- not make any claims or responses to claims that are frivolous, vexatious, an abuse of process, or that do not have a proper basis
- not engage in conduct that is misleading or deceptive or likely to mislead or deceive
- not take any step unless there is a reasonable belief that such a step is necessary to facilitate the resolution or determination of the proceeding
- use ‘reasonable endeavours’ to resolve a dispute or narrow the scope of issues in dispute by agreement between the parties
- use ‘reasonable endeavours’ to ensure that litigation costs are reasonable and proportionate to the complexity or importance of the issues in dispute
- disclose to each party the existence of all documents which “are critical to the resolution of the dispute” (Disclosure Obligation), and
- not use any information or documents received by a party as a result of the Disclosure Obligation for a purpose other than in connection with the civil proceeding.
The Disclosure Obligation applies in addition to the discovery obligations which already apply in a proceeding. Disclosure must occur at “the earliest possible time after the person becomes aware of the existence of the document”. According to the Explanatory Memorandum, the Disclosure Obligation will require a party to hand over documents that a party “relied on as forming the basis of the party’s claim when commencing the proceedings, as well as documents that the party knows will adversely affect the party’s case”.
The overarching obligations do not override any duty or obligation that is owed by a legal practitioner to a client to the extent that duty or obligation can operate consistently with the overarching obligations. However, a lawyer must not comply with any instruction or wish of a client that is inconsistent with the overarching obligations.
If a Court finds that there has been a contravention of any of the overarching obligations, the Court has a wide discretionary power to impose sanctions, including orders for immediate costs and compensation.
Importantly, the Reforms will impose pre-litigation requirements on parties to try to resolve most disputes even before court proceedings are issued.2 These requirements involve taking ‘reasonable steps’ to resolve a dispute by agreement or by narrowing the issues in dispute. The minimum ‘reasonable steps’ to comply with the pre-litigation requirements are to:
- exchange appropriate pre-litigation correspondence, information and documents critical to the resolution of the dispute, and
- consider options for resolving the dispute without the need to go to court, including through genuine and reasonable negotiations or ADR.
It will not be compulsory for parties to participate in ADR. However, parties involved in a civil dispute must not unreasonably refuse to participate in genuine and reasonable negotiations or appropriate dispute resolution.
Whilst a failure to comply with the pre-litigation requirements will not prevent the commencement of a proceeding, a court will have a wide discretion to impose consequences for non-compliance, such as costs and procedural orders.
Certification at Commencement of Litigation
The Reforms introduce the following certification requirements:
- a party’s legal practitioner must certify that there is a proper basis, on the factual and legal material available, for each aspect of the pleadings
- the parties must certify that they are aware of and understand their overarching obligations and the paramount duty, and
- each party or its legal representative must certify that the pre-litigation requirements have been complied with or, if they have not been complied with, why: reasons for non-compliance may include, for example, that a limitation period is about to expire or property is at risk.
Again, failure to comply with the certification requirements will not prevent a proceeding being commenced, but a court will have a wide discretion to impose consequences for non-compliance.
The Reforms improve the availability and flexibility of summary judgments, which should enable them to be used more often at an early stage of a proceeding to dismiss claims or defences that have no real prospect of success.
Disclosure and discovery
A major implication that flows from the Disclosure Obligation (see above) is that parties may be required to produce “critical documents” prior to the filing of any pleadings. This change is driven by the desire to minimise costs and extensive discovery processes.
The Reforms also confirm the wide discretion of Victorian Courts to make any appropriate order or direction in relation to formal discovery, such as orders for discovery of a class or sample of documents, limiting discovery to certain facts or disputed issues, or stipulating stages for discovery.
Case Management and Compulsory ADR Powers
The Reforms expressly provide Courts with the power to make orders and impose reasonable time limits to achieve better case management. The ultimate aim of those powers is to reduce costs and delay and increase the active management of proceeding by the Courts. For example, Courts may limit the time or issues for examination of witnesses, the length and duration of submissions and the number of documents that may be tendered into evidence.
Courts will also have the express power to refer a proceeding to a non-binding ADR process, without the consent of the parties.
In reality, these case management and ADR provisions do not greatly change the powers of the Courts, because Victorian Courts already have a broad discretion in how they manage civil proceedings. However, the express provision for these case management and ADR options in legislation may, in practice, result in more active management of proceedings by the Courts.
The Reforms herald a new dawn and cultural change in Victoria for the conduct of civil litigation. Overarching obligations will need to be complied with by all parties involved in a proceeding, not just the parties’ legal representatives, and several steps will need to be undertaken prior to the issue of a proceeding. The changes will help focus attention on resolving disputes at an early stage.