10 EARLIER DETERmINATION OF DISPUTES
10.7 ARGUmENTS FOR AND AGAINST REFORmING ThE TEST
In this as in many other areas of civil justice reform there are competing policy and practical considerations.
It is clearly desirable for unmeritorious claims or defences to be summarily disposed of without subjecting the parties and the court to the cost and inconvenience of protracted interlocutory steps and final adjudication. On the other hand, it may not always be readily apparent, particularly at an early stage of proceedings, whether a claim or defence has merit or whether it is likely to succeed at trial. Many cases involve disputed questions of fact and law which may not be appropriate for summary determination.
There are arguments that the summary judgment procedure is too restrictive, that the applicable test should be liberalised and that the procedure should be used more frequently and flexibly to dispose of claims or defences that are unmeritorious. It has also been noted that the common law standard for ‘a court to grant summary judgment was set in the days before the importance of caseflow management was established in Australian courts’.466 Case-flow management involves the court taking proactive
steps before trial to identify the real issues in dispute and to determine the appropriate interlocutory procedures. Arguably effective case management should require the screening out of unmeritorious cases prior to trial.
Constraints on the summary disposal of proceedings may facilitate unmeritorious claims or defences, including for non-legitimate tactical or commercial advantage. On the other hand, the process of seeking to determine whether a claim or defence has sufficient merit to be allowed to be maintained may itself give rise to expense, delay and possible appeal. A party whose claim or defence is summarily disposed of may have a justified feeling of resentment in not being permitted to proceed to trial. If the claim or defence in fact has merit then injustice will result. It may also be argued that more frequent use of the summary disposal of cases may stifle developments in the law. One can only speculate on what may have happened in the development of tort law if the plaintiff’s claim in Donoghue v
Stevenson467 had been summarily dismissed. At the time, the prospects of success, at least at first
instance, were remote.
A further complication is that unmeritorious claims or defences may be permitted to proceed, not because of inadequacies in the rules or principles governing summary disposition, but because of the reluctance of parties or courts to invoke or apply them. Liberalisation of the test for summary disposition will not necessarily mean either that the procedure will be utilised more frequently or that it will result in the summary disposal of more cases. At present it would appear that summary disposition is seldom sought and that summary judgment or other orders for summary disposal are seldom made.
The threshold issue is whether there should be a liberalisation of the criteria for summary disposal of a claim or defence. On balance, the commission has concluded that the present requirements to show that there is no defence, or no cause of action, or no real question to be tried are unduly restrictive. Summary disposition should be available where a claim or defence has ‘no real prospect of success’. This is arguably a more liberal test, is consistent with the rules applicable in some other jurisdictions, and a change in the formulation may encourage a more robust approach to be adopted by parties and courts.
As can be seen from the above, a liberalised test applies in the United Kingdom, the Federal Court and Queensland. It was also the formulation of the test supported in Going to Court and in the Federal
Civil Justice Strategy Paper and by the ALRC and the Law Reform Commission of Western Australia.
In Going to Court it was noted:
The present law and judicial approaches towards the issue often combine to dissuade parties from pursuing the remedy except in rare circumstances. Summary judgment is seen as a primary tool of caseflow management in the United States courts but in Australia it is rarely used and seldom successful. Indeed, in contrast to the United Kingdom and Australian court practice, the United States courts use summary judgment as a primary tool, available to both plaintiffs and defendants, to regulate court lists. Reformers in the civil procedure area such as Lord Woolf and commentators like Adrian Zuckerman have brought attention to summary judgment procedures as a fertile area for change in the way our courts operate.468
459 Submission ED2 9 (Federation of Community Legal Centres). 460 Submission ED2 19 (Maurice
Blackburn).
461 Submission ED1 7 (Judge Wodak). 462 Submission ED2 5 (Judge Wodak). 463 Section 7(2) Charter of Human Rights
and Responsibilities Act 2006.
464 Adrian Zuckerman, Civil Procedure—
Principles of Practice (2nd ed, 2006)
281.
465 Z v United Kingdom (2002) 34 EHRR 3. See Judiciary of England and Wales (2007) above n 433, 33 note 24. 466 Sallmann and Wright (2000) above n
9, 115.
467 Donoghue v Stevenson [1932] AC 562. 468 Sallmann and Wright (2000) above n
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One consideration is whether there is a real practical difference between the traditional test and the liberalised test. In Three Rivers District Council v Bank of England, which considered the rule in England and Wales, Lord Hope said:
The difference between a test which asks the question ‘is the claim bound to fail?’ and one which asks ‘does the claim have real prospect of success?’ is not easy to determine … While the difference between the two tests is elusive, in many cases the practical effect will be the same.469
A similar attitude has been taken to the rule in Queensland by the Court of Appeal in Gray v Morris. In that case, Justice Chesterman concluded:
In my opinion summary judgment is not to be given either to the defendant or plaintiff, except where it is just to do so and it will not be just to deprive a party of a trial unless it can be seen that their case is hopeless, or bound to fail. Unless that can be said of it, the conclusion cannot be reached that a claim or defence has no ‘real’ prospect of success.470
As can be seen from these judgments, all statutory provisions are subject to judicial interpretation and a change in language does not necessarily give rise to a change in approach. Even with a change in formulation, courts would still be likely to exercise a cautious approach, given concerns about access to justice issues and right to a hearing. This is reinforced by the submission by the Supreme Court of Victoria in response to the Consultation Paper.
Also, in public interest or test case litigation, there may be an event greater disinclination to exercise powers of summary disposal.
This perhaps highlights that the more important consideration is whether a change in the test would bring about a change in attitude and make parties more inclined to seek summary disposition and courts more prepared to grant it than is presently the case.
We are of the view that changing the threshold may serve as a catalyst to a change in attitude, particularly where it is coupled with explicit case management objectives.
Other reforms
To reinforce a change of attitude to the summary judgment process, we propose that there should be in the rules of court a statement of an explicit case management objective along the lines of the objective stated in rule 1.4(2)(c) of the UK Civil Procedure Rules. The objective should provide that the court should decide promptly which issues need full investigation and trial and accordingly dispose summarily of the others.
In keeping with this case management objective there should be a discretion for the court to initiate the summary judgment procedure of its own motion where early disposal of a proceeding, or an issue in a proceeding, appears desirable.
We also propose that there should be a restatement and simplification of the rule. In particular, it should be made clear that summary judgment may be obtained by both plaintiffs and defendants based on the same principle. In particular, in the Magistrates’ Court the rule should be extended to allow a defendant to apply for summary dismissal of the proceeding or summary judgment (and not merely summary judgment on a counter claim).
Further, the limitations on categories of cases that are excluded from the procedure in the Supreme and County Courts471 should be removed. The current list of exceptions appears to have an historical
basis. The exceptions are not part of the Federal Court, Queensland rules or the rules in England and Wales. Also, the Magistrates’ Court rule should not be limited in its application to where the claim is for a debt or liquidated demand.
In relation to the types of cases presently exempted from the rule in the County and Supreme Courts, the undesirability of excluding from the ambit of powers of summary disposal claims based on fraud is perhaps illustrated by the recent BCCI litigation referred to above. In that case, proceedings against the Bank of England and 22 of its present and former staff were brought by the liquidators of the Bank of Credit and Commerce International (BCCI). The claim, for misfeasance in public office required proof of bad faith amounting to dishonesty or fraud on the part of the defendant bank and individual officials. Other allegations of dishonesty were made. BCCI had been closed by the Bank of England in 1991 after major frauds became known.
The action was announced in 1993 and the trial commenced in the High Court in London in January 2004. The proceedings had been struck out by the trial judge but reinstated following a decision of the House of Lords (3:2) in March 2001. The trial continued until November 2005 although no witnesses were called by the plaintiff. Senior counsel for the plaintiff addressed the court for 86 days. Senior counsel for the Bank of England addressed the court for 119 days between July 2004 and June 2005. In November 2005, the action was discontinued, without notice. In January 2006 the judge ordered the liquidators to pay the Bank of England’s costs on an indemnity basis. Interlocutory appeals also went to the Court of Appeal on two occasions in respect of issues of privilege. In the course of the proceedings, the trial judge, Justice Tomlinson, had consulted and warned the then Lord Chief Justice, Lord Woolf, that ‘the case was a farce’. It would also appear that the trial had proceeded on grounds different from those which the House of Lords had considered fit to allow to proceed.
Residual discretion
As referred to above, in Victoria a court may be satisfied not to give summary judgment where ‘there ought for some other reason be a trial’.472
There is also residual discretion in Queensland where the court must be satisfied that ‘there is no need for a trial of the proceeding’ or the part of the proceeding.473
The Woolf Report proposed a residual discretion in the court to allow a case to continue if there is a reason for the matter to proceed to trial. This would allow for a full hearing of the matter, for example, in cases of public interest. The discretion has been retained in rule 24.02(c) of the UK Civil
Procedure Rules.
On the other hand the retention of this discretion was not supported by the Law Reform Commission of Western Australia.474
On balance, we think it should be retained. There may be many situations where there may be utility in allowing a matter to proceed to trial, even though it may not appear, at that time, that a claim or defence has sufficient merit. For example, in test cases or public interest litigation or in other situations an adjudication of the issue(s) may provide guidance to other persons with similar claims or defences. We are, however, mindful that retaining a discretion to allow matters to proceed in circumstances where they do not appear to have merit may subvert the objective of liberalising the threshold criterion for summary disposition.
However, as we are proposing that the limitation on categories of cases that are excluded from the procedure be removed, the retention of this discretion provides an important safeguard. It is also an important safeguard for use in matters where one party may be unrepresented and the process may be used in an oppressive way by a more resourceful or powerful party.
10.8 CONCLUSIONS AND RECOmmENDATIONS
A more liberal test applies in the United Kingdom, the Federal Court and Queensland. It was also supported in Going to Court and in the Federal Civil Justice Strategy Paper and by the ALRC and the Law Reform Commission of Western Australia. Although submissions were divided on the issue of reform, there was support for the commission’s draft proposal.
One important consideration is whether a change in the test would bring about a change in attitude and make parties more inclined to seek summary judgment and courts more prepared to grant it than is presently the case. The commission is of the view that changing the test may facilitate a change in attitude and may bring about a change in practice, particularly where it is coupled with explicit case management objectives.
In considering the proposed criterion for summary disposal of unmeritorious claims or defences it should be borne in mind that one of the elements of the proposed overriding obligations (outlined in Chapter 3) provides that all relevant participants in the civil litigation process shall not make any claim or respond to any claim in the proceeding, or assist in the making of any claim or response to any claim in the proceeding, where a reasonable person would believe that the claim or response to the claim (as appropriate) is frivolous, vexatious, for a collateral purpose, or does not have merit. It is to be hoped that the imposition of such a requirement will filter out many unmeritorious claims and defences rather than require them to be disposed of through procedures for summary disposition. The proposed certification requirements outlined in Chapter 3, together with the proposed sanctions for breach of the overriding obligations, should serve to increase the threshold of merit and decrease the necessity for more proactive use of summary disposal powers.
469 Three Rivers District Council v Bank
of England [2001] 2 All ER 513,
541. See also other English cases
Celandor Productions Ltd v Melville
[2004] EWHC 2362 and The Bolton
Pharmaceuticals Company 100 Ltd v Doncaster Pharmaceuticals Group Ltd
[2006] EWCA Civ 661. 470 Gray v Morris [2004] QCA 5, [23]
(Chesterman J).
471 Libel, slander, malicious prosecution, false imprisonment, seduction or a claim based on an allegation of fraud: Supreme Court (General Civil
Procedure) Rules 2005 r 22.02(3).
472 Supreme Court (General Civil
Procedure) Rules 2005 r 22.06(1)(b); Magistrates’ Court Civil Procedure Rules 1999 r 10.13(1)(b).
473 See Uniform Civil Procedure Rules
1999 (Qld) rr 292(2)(b), 293(2)(b).
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The commission proposes that:
1. The test for summary judgment in Victoria should be changed to provide that summary judgment can be obtained if the other party has ‘no real prospect of success’.
Comment: It may be that this provision, and the provisions below, should not be limited to summary judgment but should extend to other methods of summary disposal, including a stay, dismissal or striking out of proceedings.
2. There should be in the rules of court a statement of an explicit case management objective that the court should decide promptly which issues need full investigation and trial and accordingly dispose summarily of the others.
3. There should be a discretion for the court to initiate the summary judgment procedure of its own motion where early disposal of a proceeding appears desirable.
4. There should be a restatement and simplification of the rule. In particular, it should be made clear that summary judgment may be obtained by both plaintiffs and defendants and the rules should be based on the same test. The Magistrates’ Court rule should be extended to permit a defendant to apply for summary dismissal of the proceeding or summary judgment.
Comment: Also, the rule in the Magistrates’ Court should not be confined in its application to cases where the claim is for a debt or liquidated demand. The present rule permits a defendant to seek summary judgment against a plaintiff on a cross claim.
5. The categories of cases that are excluded from the procedure in the Supreme Court and the County Court should be removed.
6. The court should retain a residual discretion to allow a matter to proceed to trial even if the applicable test for summary disposition is satisfied.