Seamus E. Byrne's - In Pursuit of Relevance

Attorney-General Robert McClelland has presented a Bill for "an Act to amend legislation relating to federal courts, and for related purposes."

You may track the progress of the Bill via ParlInfo.

Explanatory Memorandum Key Points – Case Management

13. Item 6 inserts a new part in the Federal Court Act dealing with civil proceedings (this part does not apply to the Court’s exercise of criminal jurisdiction).

Section 37M - The overarching purpose of civil practice and procedure provisions

14. New section 37M is the centre-piece of the case management reforms. It provides that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
15. This provision will apply to both the Court and parties to the proceedings, in recognition of the fact that it would not be possible for either the Court or the parties to achieve this objective without the assistance of the other. It applies to all civil proceedings before the Court, both in the Court's original and appellate jurisdictions.
16. New section 37M will provide support to judges so they can confidently employ active case management powers. The intention is to overcome the restrictive interpretation by the courts of what is in the interests of justice following the High Court’s decision in State of Queensland v J L Holdings Pty Ltd (1997) 141 ALR 353 (in which the High Court stated that case management could not supplant the attainment of justice).
17. Subsection 37M(2) elaborates on the objectives of the overarching purpose. These are:

• the just determination of all proceedings before the Court;
• the efficient use of the judicial and administrative resources available for the purposes of the Court;
• the efficient disposal of the Court’s overall caseload;
• the disposal of all proceedings in a timely way; and
• the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

18. Particular concern has been raised about the resources used for 'mega-litigation'. This provision is intended to be a reminder to litigants that costs should be proportionate to the matter in dispute. It is not only the cost to the parties that is relevant. The efficient use of the Court’s resources needs to be taken into account. However, at the same time, due process will be observed so that justice may be done in the individual case. These objectives will support the intention that both the Court's and the litigant's resources are spent efficiently.
19. Subsection 37M(3) notes that the civil practice and procedure provisions and any power conferred or duty imposed by them must be exercised in the way that best promotes the overarching purpose.
20. Subsection 37M(4) defines the civil practice and procedure provisions as the Rules of Court and any provision in the Federal Court Act or other Acts dealing with civil practice and procedure.
21. The overarching purpose is not intended to prevent the exercise of judicial discretion in managing particular cases. In the NSW Civil Procedure Act 2005, section 56 uses the term 'overriding purpose'. An 'overriding purpose' would trump any other inconsistent purpose. For example, if a party required a certain number of witnesses or a certain number of hearing days, but this was inconsistent with the just, quick, and cheap resolution of the real issues in the proceedings, the court would be required to give effect to the purpose, as it is overriding. These amendments however provide for an 'overarching' purpose, which is more in the form of guidance and may be read subject to other specific instances of inconsistent purpose.

Section 37N - Parties to act consistently with the overarching purpose

22. New section 37N imposes a duty on the parties to act consistently with the overarching purpose. If the Court makes directions under new section 37P, the Court may make an order or directions if parties do not comply with those directions. Subsection 37N sets out a non-exhaustive list which may include orders which limit the proceedings in some way or which include cost orders against a party.
23. The duty is important to ensure that everyone involved in litigation is focussing on the real issues in dispute and resolving them as early and quickly as possible. If the parties conduct settlement negotiations and/or participate in alternative dispute resolution with this goal in mind, they may not need to proceed to a hearing.
24. Subsection 37N(2) recognises that parties may need assistance from their lawyers to act consistently with the new duty. Parties may engage legal representation to, amongst other things, assist them to comply with all relevant legislation, including new sections 37M and 37N of the Federal Court Act. The new subsection requires lawyers to assist their clients to comply with these duties.
25. If, for example, a party wishes to prolong the litigation as a strategy to increase the costs of the other party, their lawyer would be obliged to explain that this behaviour is contrary to the overarching purpose and may have adverse cost consequences. Also, if a party is refusing to accept a reasonable offer of settlement, a lawyer will have to explain that it is in their interest to accept the offer and that failing to do so may be regarded by the Court as acting inconsistently with the overarching purpose.
26. Subsection 37N(3) is also intended to assist parties to comply with their duty by making informed decisions about the progress of their matter. The Court may order a party’s lawyer to give them an estimate of the likely duration of the proceedings and the likely amount of costs the party will have to pay in connection with the proceeding. This may have the effect of assisting the party to prioritise the issues in dispute, or re-consider the resources they wish to allocate to the litigation.
27. Pursuant to subsection (4), the Court must consider whether to impose costs for any failure to comply with the duty. The Court currently has power in the Court Rules to make disciplinary costs orders where costs have been incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default. (Order 62, Rule 9) This new provision will give legislative support to these powers and will make it clear that the court can order costs in a way other than costs against the unsuccessful party.
28. In connection with the amendments to section 43 of the Federal Court Act, the Court will have the discretion to award costs against a party to the proceeding for conduct that breaches the duty, or against a party’s lawyer personally for failing to assist the party to comply with the duty.
29. In the event that an order is made for a lawyer to bear costs personally where they have failed to comply, subsection 37N(5) ensures that the lawyer cannot pass the cost on to their client through contracts about the payment of their fees or any other way. The purpose of this amendment is to ensure that lawyers take responsibility for their own failure to comply with their duty under subsection 37N(2).
30. Examples of the type of conduct that the Court might consider to be a breach of this duty, and therefore impose costs, include the following (this is a non-exhaustive list that applies equally to the behaviour of applicants and respondents):

• unreasonably refusing to participate in conciliation, mediation, arbitration or other alternative dispute resolution opportunities, because alternative dispute resolution provides a mechanism for the parties to resolve their dispute early, quickly and cheaply;
• failing to act in good faith in attempting to resolve or narrow issues in the proceedings;
• unreasonably rejecting an offer of settlement of part or whole of the proceeding; or
• pursuing issues in the proceeding that had no reasonable prospect of success. This might include issues that were vexatious or frivolous.

31. The intention of this amendment is to bring about a cultural change in the conduct of litigation so that the Court and the parties are focussed on resolving disputes as quickly and cheaply as possible. Parties who act consistently with this duty will be able to avoid cost orders being made against them and overall, their litigation costs should be reduced.

Section 37P - Power of the Court to give directions about practice and procedure in civil proceedings

32. New section 37P confirms the kinds of directions the Court may make regarding practice and procedure in a specific proceeding, which may be about practice and procedure to be followed in relation to the whole or part of a proceeding. Such directions can be made at any stage of a proceeding, including at any time during or after the trial.
33. Some examples of the types of directions that the Court may make are provided in subsection 37P(3). They include setting time limits and limiting the length of submissions. These examples are not intended to limit the powers of the Court to manage proceedings on a case-by-case basis. They are intended to assist with the practical implementation of the overarching purpose.
34. Subsection 37P(4) provides that the Court may also consider whether to make an order under section 53A(1) when giving directions. In conjunction with the amendments being made to subsection 53A(1) (items 9, 10 and 11 of this schedule), this will allow matters or parts of matters to be referred to mediation, arbitration or other alternative dispute resolution processes.
35. The Court will have broad discretion, including the power to waive the application of any rule of Court. This subsection also clarifies that directions can be amended or revoked. This is to give the Court flexibility in managing cases in a way that is appropriate to the particular matter to be decided.
36. Subsection 37P(5) provides if a party fails to comply with a direction, the Court may make any order or direction the Court or Judge thinks appropriate. A 'Court or Judge' is defined in section 4 of the Federal Court Act as a Judge sitting in Chambers.
37. Subsection 37P(6) provides that the Court or Judge may dismiss the proceeding in whole or in part, strike out, amend or limit any part of a party's claim or defence, disallow or reject any evidence; or award costs against a party. Paragraph 37P(6)(e) makes it clear that such costs may be awarded on an indemnity basis.
38. Directions under new section 37P are likely to be made at an interlocutory stage. Section 24 provides that interlocutory orders cannot be appealed without leave. Therefore, case management decisions under new section 37P can only be appealed if the Court grants leave for an appeal.