5 Boroughs NY Pty Ltd v State of Victoria (No 4)
[2023] VSC 246
•10 May 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
GROUP PROCEEDINGS LIST
S ECI 2020 03402
| 5 BOROUGHS NY PTY LTD (ACN 632 508 304) | Plaintiff |
| -and- | |
| STATE OF VICTORIA & ORS (according to the attached schedule) | Defendants |
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JUDGE: | John Dixon J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 9 May 2023 |
DATE OF JUDGMENT: | 10 May 2023 |
CASE MAY BE CITED AS: | 5 Boroughs NY Pty Ltd v State of Victoria (No 4) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 246 |
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PRACTICE AND PROCEDURE – Interlocutory stay of group proceeding pending application for special leave to appeal to the High Court – Stay refused by primary judge and by Court of Appeal - Application made to primary judge rather than appellate court for stay - Principles.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Hochroth | Quinn Emanuel Urquhart & Sullivan |
| For the First Defendant | Mr M A McLay | MinterEllison |
HIS HONOUR:
On 23 February 2023, I dismissed the first defendant’s summons dated 16 September 2022 that sought a stay of a large, complex, group proceeding, pending the final resolution of a criminal prosecution brought against the Crown in the Right of the State of Victoria by the Victorian WorkCover Authority (VWA).[1]
[1]5 Boroughs NY Pty Ltd v Victoria [2023] VSC 22.
On dismissing that summons I made the following order:
3. By 4pm on 8 March 2023:
(a)the defendants shall serve on the plaintiff’s solicitors and provide to the Chambers of the Honourable Justice John Dixon (Chambers), a copy of their proposed defence (Proposed Defence); and
(b)the first defendant shall identify to the plaintiff’s solicitors, by a brief outline of its contentions, whether the disclosure of any part of the Proposed Defence would give rise to a real risk of prejudice to it in respect of the criminal proceeding currently before the Magistrates’ Court of Victoria (proceeding number M12097325) (including any continuation of that proceeding in another Court) (Criminal Proceeding), and if so, shall highlight any such part.
4.If the first defendant does not contend that the disclosure of any part of the Proposed Defence would give rise to a real risk of prejudice to it in respect of the Criminal Proceeding, it shall within 7 days of so indicating file its defence.
5.If the first defendant contends that the disclosure of any part of the Proposed Defence would give rise to a real risk of prejudice to it in respect of the Criminal Proceeding:
(a)the first defendant shall obtain a date from Chambers for the resumption of the case management conference;
(b)The plaintiff shall at least 5 business days prior to the date of the resumption of the case management conference file a brief outline of its response to the first defendant’s contentions; and
(c)The parties are to confer with respect to the redactions proposed to the defence prior to the resumption of the case management conference.
6.Until it is filed, disclosure of the Proposed Defence is prohibited save to the following persons:
(a)the plaintiff;
(b)the plaintiff’s solicitors and employees of the plaintiff’s solicitors to whom disclosure is reasonably necessary;
(c) Counsel retained on behalf of the plaintiff;
(d)any mediator engaged by the parties to this proceeding or appointed by the Court;
(e)any other person to whom the first defendant agrees in writing that the Proposed Defence can be disclosed; and
(f)his Honour Justice Dixon and any staff of the Court authorised by his Honour to review the Proposed Defence.
7.Prior to any disclosure of the Proposed Defence to any person referred to in paragraphs 6(a)-(e) above, the plaintiff’s solicitors shall provide the person with a copy of these orders.
Subsequent orders extended the applicable time limits and the Court of Appeal stayed the orders pending the hearing of an expedited application for leave to appeal sought by the first defendant.
The Court of Appeal refused leave to appeal my order dismissing the first defendant’s application for a stay of the proceeding,[2] which effectively enlivened these case management directions, although the time limits had passed and needed to be reset.
[2]Victoria v 5 Boroughs NY Pty Ltd [2023] VSCA 101.
When the Court of Appeal refused leave to appeal, the first defendant did not seek a stay from that court pending an application for special leave to appeal to the High Court of Australia, notwithstanding that the Court of Appeal was better placed to consider such an application than I am. The present application is, in substance, one that ought to have been made to an appellate court, and on the basis of, at least, a draft application and draft grounds of appeal.
However, all that is now clear is no more than that the first defendant has not progressed beyond considering such an application and also considered it appropriate to bring it before the primary judge on inadequate material. The merit in this approach is questionable and not to be encouraged. The first defendant contended that compliance with the revived case management directions, the operation of which is now pressed by the plaintiff, might cause its possible prospective application for special leave to be rendered nugatory.
In this context, the first defendant sought directions that would effectively delay any further case management of the group proceeding towards trial pending the resolution of this possible application for special leave.
I dismissed the first defendant’s application, extended the date in paragraph 3 of my orders of 23 February 2023 to 26 May 2023, and substituted in paragraph 5(b) the word ‘serve’ for the word ‘file’, stating that my reasons for doing so would soon follow.
Absent a draft application for special leave and proposed notice of appeal, the first defendant submitted, in general terms, that it had strong prospects of obtaining special leave. It submitted that substantially the same arguments as were put before me and before the Court of Appeal will be put in support of the special leave application, while contending that matters of general public importance were raised. Very briefly, the first defendant contended the High Court would recognise the need to resolve a novel question on the issue of whether the ‘companion principle’ applies to government entities, to resolve a conflict of authority as to whether a ‘derivative use’ concern arises in these circumstances, and would accept that the first defendant’s rights as a criminal accused would be undermined, and the basis of the appeal destroyed, by ‘derivative use’ of information obtained by the plaintiff’s legal team in proofing witnesses, if the group proceeding continued.
Accordingly, how the first defendant’s contends that it is entitled to refuse to make disclosures that might assist the prosecution against it by the VWA in its defence, notwithstanding the particular approach to case management that is being implemented is well rehearsed both in my reasons and those of the Court of Appeal, which considered that I applied settled principle without error. Ultimately, the issue is whether the case management process in the group proceeding, which will next consider whether the first defendant should be permitted to file a redacted defence in accordance with the directions set out above, would render nugatory the first defendant’s asserted rights. This is what I take to be the subject matter of the interlocutory applications in which the parties are currently embroiled that the first defendant submitted will be destroyed.
It is well recognised that granting a stay to preserve this right as the subject matter of this interlocutory process pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted.[3]
[3]Jennings Construction Limited v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681, 684.
In Edelstein v Ward (No 2), Brennan J observed:
That is a jurisdiction which, as has been repeatedly pointed out, is an exceptional jurisdiction. It is one which can only be exercised in extraordinary circumstances. It is as well to emphasise that observation again lest the impression be created that, in the conduct of litigation, the orders of this court are available to keep matters in status quo until the litigation is finally resolved. That is not the purpose of the inherent jurisdiction. Something quite exceptional must be shown before that jurisdiction is exercised.[4]
[4](1988) 63 ALJR 346, 346.
In Rahma v Commonwealth Bank of Australia, Dean J added:
… It is only in demonstrably exceptional circumstances, such as the immediate threat of the destruction of the subject matter of the litigation or of grave and irreparable damage being sustained, that an application to this court for interlocutory relief can be justified.[5]
[5](1993) 117 ALR 618, 620.
The first defendant did not contest the plaintiff’s submission that I ought to apply the principles identified by the High Court, and by the Court of Appeal, as applicable when exercising its discretion to grant a stay of one of its orders pending an application to the High Court for special leave to appeal. In Jennings, the High Court identified the following factors as being relevant to such an application:
(a) whether there is a substantial prospect that special leave to appeal will be granted;
(b) whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending;
(c) whether the grant of the stay will cause loss to the respondent; and,
(d) where the balance of convenience lies.[6]
[6]Jennings, 685 (n 3).
In Mann v Paterson Constructions Pty Ltd,[7] the Court of Appeal identified these factors as equally relevant to its exercise of its discretion to grant of stay of one of its orders that is the subject of an application for special leave to appeal to the High Court. The Court of Appeal added that the factors relevant to an assessment of where the balance of convenience lies included (in the context of a final judgment at trial):
[7][2018] VSCA 313.
(a) Whether, if a stay is not granted, there is a real risk that it will not be possible for a successful appellant to be restored substantially to its former position if the judgment against it is executed;
(b) Whether, if a stay is not granted, there is a real risk that a successful appeal would be rendered nugatory, for example, where due to the respondent’s financial state, there is no reasonable prospect of recovering monies paid pursuant to the judgment at first instance;
(c) Whether, if a stay is granted and either the application for special leave to appeal or any ensuing appeal is unsuccessful, there is a real risk that the respondent would be deprived of the fruits of its judgment.[8]
[8]Ibid [22].
Although the first defendant appeared simply to be applying to extend the date for the filing of its defence, being in default of prior orders, it is clear that I should apply these principles to resolve this application, construing the references to a final judgment to the potential irreparable breach of the ‘companion principle’ to the detriment of the first defendant in the VWA prosecution.
First, in respect of the first factor identified in Jennings, it is not necessary that the applicant’s prospects be assessed as ‘high’ but I need to be satisfied that there exists a substantial ground for special leave.[9]
[9]Ibid [23]-[26]; CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd (No 3) [2017] WASCA 132, [13]; Rinehart v Welker (2012) 83 NSWLR 347.
I cannot be satisfied that there is a substantial prospect that special leave to appeal will be granted. The first defendant has invited me to make that assessment, one not usually made by the primary judge, without proper material in circumstances where the Court of Appeal refused leave to appeal – noting, in doing so, that the evidence of prejudice to the first defendant was ‘thin to non-existent’.
Further, appellate courts exercise particular caution in reviewing appeals on interlocutory decisions pertaining to matters of practice and procedure for good reason.[10]
[10]Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170, 177.
It is not a matter for me to second guess whether the High Court would regard the questions that the first defendant may raise on such an application to be of sufficient importance or for the proceeding to be a suitable vehicle for the consideration of those questions, or that the first defendant’s contentions are sufficiently arguable to attract the exercise of the High Court’s jurisdiction. My reasoning was described by the Court of Appeal as ‘plainly correct’ and free of any House v King error. The cases to which the first defendant alludes in suggesting the High Court needed to resolve conflict in the authorities were described by the Court of Appeal as expressing settled principles. The first defendant not has demonstrated substantial prospects of a grant of special leave.
The second question, whether the grant of a stay will cause loss to the respondent, must be answered in the affirmative for the reasons to be explained in considering the third question of where the balance of convenience lies. In context, this question invokes a comparison of the potential prejudice that the stay may cause for the plaintiff with the first defendant’s claim of irreparable prejudice through having its appeal rendered nugatory.
The balance of convenience lies with the plaintiff. There is a real risk that the plaintiff and the substantial class of group members it represents, will suffer real prejudice through prolonged delay in the determination of the group proceeding. The first defendant submitted that this factor must be discounted because it was not disputed that the criminal trial must precede the civil trial. This concession, of itself, accepts that the proper balance of relevant considerations must occasion some delay in the civil proceeding. In other words, the application for special leave was not on the critical path to resolution of the group proceeding. This submission mischaracterises the impact of relevant delay, which I discussed in my primary reasons and which was also noted in the reasons of the Court of Appeal. The group proceeding can proceed and be managed prior to the trial of the VWA prosecution in a fashion that enables preparation of it for trial after the criminal proceedings are completed by taking such steps in the group proceeding as will not prejudice the first defendant’s legitimate rights, an assessment made by reference to an analysis of the circumstances rather than the bald assertion of principle. If these necessary steps are not taken until after the prosecution is completed, it cannot be said that the group proceeding could rapidly proceed to a trial.
The first defendant emphasised what it described as the impossibility of avoiding leakage of confidential material through derivative use, with particular reference being made to the process of taking proofs of evidence from witnesses, meaning it would not be possible for the appellant, if successful, to be restored to its former position. An appeal would be rendered nugatory because the companion principle would be effectively breached by the filing of the defence in the manner contemplated by my orders. I do not accept that such risks are incapable of being managed.
First, I stated, and the Court of Appeal affirmed, that it should not be assumed that those persons who are bound to observe the overarching obligations to the proper administration of justice,[11] will not honour their obligations. The first defendant submitted that derivative use could be an unconscious inevitability, not a conscious choice. The plaintiff’s lawyers, once aware not so much of specifically pleaded facts and positive defences but of the general case theory of the defence, might probe issues with potential witnesses that could, to the State’s detriment, elicit some unarticulated perspective, memories, context or some fact that might, when they give evidence and/or consult with the prosecution lawyers in the criminal proceeding, reveal some important aspect of the defence that assisted in proof of its guilt.
[11]Civil Procedure Act 2010 (Vic) s 10.
In the abstract, this path of causal reasoning is tenuous, vague and not compelling. It inappropriately assumes, in circumstances where the plaintiff’s lawyers, aware of the concept of derivative use, would be highly conscious of their obligation to disregard redacted portions of the defence when proofing witnesses, lack the skill, or judgment, to discharge their duty to the proper administration of justice.
Secondly, and perhaps unnecessarily but in order to make the point, the plaintiff by its counsel undertook not to take any step to proof witnesses in the proceeding prior to the conclusion of any application concerning the confidentiality of redacted material in the defence.
Thirdly, and perhaps out of an abundance of caution, the first defendant should make clear to the Director of Public Prosecutions and her legal team that should they obtain information that the court has ordered to be kept confidential from them in the context of the group proceeding, their duties to the proper administration of justice would preclude use of that material, particularly in the context of how this matter is developing, without the leave of the court first had and obtained.
On the one hand, the conclusion has not been successfully challenged that the plaintiff and group members will suffer considerable prejudice through significant delay occurring after the criminal trial process is concluded. On the other hand, particular steps are being taken to ensure that the prospect of any prejudice to the first defendant in the circumstances is minimised. I am satisfied that a stay pending resolution of a special leave application or any subsequent appeal will adversely affect the critical path to the ultimate resolution of the group proceeding. Given this approach, I am not persuaded that the manner in which the group proceeding is to be managed would render any application for special leave to appeal to the High Court nugatory in the sense of destroying the subject matter of the application. The balance of convenience favours the course I am taking, which carries the imprimatur of the Court of Appeal.
I have not been persuaded that demonstrably exceptional circumstances exist that justify the exercise of the jurisdiction that the first defendant seeks to invoke.
SCHEDULE OF PARTIES
S ECI 2020 03402
BETWEEN:
| 5 BOROUGHS NY PTY LTD (ACN 632 508 304) | Plaintiff |
| -and- | |
| STATE OF VICTORIA | First Defendant |
| THE HONOURABLE JENNY MIKAKOS (IN HER CAPACITY AS THE FORMER MINISTER FOR HEALTH AND MINISTER FOR THE COORDINATION OF HEALTH AND HUMAN SERVICES: COVID-19) | Second Defendant |
| THE HONOURABLE MARTIN PAKULA (IN HIS CAPACITY AS THE FORMER MINISTER FOR THE COORDINATION OF JOBS, PRECINCTS AND REGIONS: COVID-19) | Third Defendant |
| KYM LEE-ANNE PEAKE (IN HER CAPACITY AS THE FORMER SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES) | Fourth Defendant |
| SIMON GRANT PHEMISTER (IN HIS CAPACITY AS THE SECRETARY, DEPARTMENT OF JOBS, PRECINCTS AND REGIONS) | Fifth Defendant |
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