Harris Scarfe v Ernst & Young (No 3) - [2005] SASC 407

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
HARRIS SCARFE & ORS v ERNST & YOUNG & ORS (NO 3)
Judgment of The Honourable Justice Bleby
28 October 2005
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PRACTICE UNDER RULES OF COURT
CASE MANAGEMENT - USE OF TECHNOLOGY
Contested application for use of electronic court at trial of complex matter – Power of Court to direct use of electronic court – Consideration of appropriate use of technology – Consideration of timing of directions as to use of technology – Consideration of scope of documents to be included in database – Consideration of who should bear expense associated with use of electronic court – Application of rules as to costs where electronic court used – Application granted.
Supreme Court Rules 1987 (SA) r 2.01, r 2A, r 3.04(g) r 3.06, r 55.11(y), r 78.01(2), r 101.02(1), r 101.07(6)(a), referred to.
Idoport Pty Ltd v National Australia Bank Ltd (No6) [2001] NSWSC 338; Kennedy Taylor (Vic) Pty Ltd v Grocon Pty Ltd [2002] VSC 32, applied.
Seven Network Ltd v News Ltd (No 9) [2005] FCA1394, considered.

HARRIS SCARFE & ORS v ERNST & YOUNG & ORS (NO 3)
[2005] SASC 407
BLEBY J:
Background

This is an action for damages by various companies in the Harris Scarfe Group which are now in liquidation, and by the ANZ Bank, the major lender to the Harris Scarfe Group. The action is brought against three firms of chartered accountants who, at various times, were auditors of the companies in the Harris Scarfe Group. The plaintiffs’ losses are said to have been incurred in consequence of the preparation by the defendants of half-yearly reviews and audits of the Harris Scarfe companies between years ended 31 July 1996 and 31 July 1999. The reviews and audits are said to have been prepared negligently, in breach of a contractual duty of care and in circumstances amounting to misleading conduct in breach of s 56 of the Fair Trading Act 1987 (SA).
In particular it is alleged that, in the preparation of the various reviews and audits, the defendants failed to detect that senior management of the Harris Scarfe companies had fraudulently manipulated the accounts so as to show substantial operating profits, whereas in reality throughout the relevant period the group had sustained significant losses. It is said that the net assets of the Harris Scarfe Group were thereby substantially overstated, and the liabilities understated.
The action is being managed in accordance with the provisions of r 2A of the Supreme Court Rules as a complex action.
After a number of amendments and interlocutory proceedings the plaintiffs’ statement of claim appears now to be reasonably settled. Orders are in place requiring the defendants to file amended defences by the middle of November 2005. Substantial expert reports, both in number and volume, have been delivered by the plaintiffs. The defendants’ responding reports are to be delivered at various times by the end of this year.
At this…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Harris Scarfe v Ernst & Young (No 3) and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2005] SASC 407
Decision Date: 28 October 2005

CaseChat Overview and Summary

The case of Harris Scarfe v Ernst & Young (No 3) involves a contested application concerning the use of an electronic court for the trial of a complex matter. The application was before the Supreme Court of South Australia and involved procedural issues under the Rules of Court, particularly regarding the use of technology in court proceedings. The primary legal issue the court needed to decide was whether it was appropriate to direct the use of an electronic court for the trial and, if so, what specific directions should be given regarding the implementation of such technology.

The court examined the benefits of using an electronic court, noting that similar trials in other jurisdictions had successfully utilized such technology to enhance efficiency. The court referenced its own Practice Direction 52, which encourages the use of technology in litigation, including electronic data for document lists and exchanges, and electronic versions of pleadings and reports. The court considered the timing of the direction for using an electronic court and concluded that it was not too early to decide, given the numerous advantages and the potential for early preparation of trial materials. The court directed that the trial should proceed using an electronic court, provided that the parties negotiate and agree on the service provider, the protocols for use, and the costs, which should initially be shared equally.

The court outlined specific orders for the use of an electronic courtroom, including the use of court book software and information technology services, to be provided by a service provider agreed upon by the parties or determined by the court. The parties were directed to negotiate and reach agreement on the service provider, the services to be provided, and the protocols for the use of equipment. Additionally, the court mandated that the parties confer on the inclusion of certain documents in the court book and the timing of their inclusion. The court emphasized the need for a cooperative approach to minimize disputes and applications related to the technology. The decision concluded with a provision that any unresolved issues regarding the implementation of these orders could be brought to the court for further directions.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

There remains the issue of payment of the costs of the service provider. Those costs should initially be shared equally by the parties as a disbursement to be adjusted between them in accordance with any ultimate order for costs.Conclusion For these reasons I conclude that it is appropriate that the hearing of this matter proceed in an electronic court. I will hear the parties as to the precise details of the directions to be made at this stage. An initial proposal is attached to these reasons. Other directions may be necessary as the case proceeds. However, I expect the parties to use their common sense in the light of the advice of their legal advisers in order to agree as much as is reasonably possible on the subject of procedures and protocols for the establishment and use of the electronic court, including the documents and classes of documents to be included in the database and the time at which it is appropriate to upload them. There may be instances in which agreement cannot be reached. I will deal with such issues if they arise. However the benefits of this course of action will be diminished somewhat if there are endless applications relating to the use of the technology. I urge the parties to adopt a cooperative approach from now on in the implementation of the technology.ATTACHMENTProposed Orders1.That the trial of this action be conducted by means of an electronic courtroom and ancillary services, including the use of court book software, associated information technology services and appropriate computer software and hardware.2.That such services be provided by or in association with a commercial service provider to be agreed by the parties and the Registrar or in default of agreement to be determined by the Court.3.That the costs of the service provider, other than for the provision of computer hardware for use by the Court, be paid equally by the parties.4.That the parties enter into negotiations forthwith as to the appropriate service provider and with the nominated provider with a view to reaching agreement as soon as possible as to the services to be provided, the protocols for the use of the equipment and the cost of providing such services.5.That representatives of the parties confer as to documents to be included in the court book and the process and the timing of their inclusion, provided that such documents are to include:(a)Pleadings as amended and particulars;(b)Parties’ lists of documents;(c)Expert reports reasonably expected to be tendered or used at the trial;(d)Statements of witnesses to the extent that they are directed to be prepared for use at the trial;(e)All documents, whether at present in hard copy or electronic form, which are reasonably expected to be tendered or used at the trial.6.In the case of any doubt or difficulty in the implementation of these orders any party, including the Registrar, be at liberty to apply for further directions.

Ratio Decidendi

Legal Principle Established

Much shorter trials than the one presently contemplated have been seen in other jurisdictions to warrant the use of this type of courtroom technology in the interests of efficiency. The Victorian equivalent to South Australian Practice Direction 52[3] goes a step further in that it has annexed to it a series of “default” or minimum technological requirements which will be applicable should the parties be unable to agree as to the systems and protocols to be utilised. [3] Practice Note No 1 of 2002 Guidelines for the Use of Technology in Litigation in Any Civil Matter [2002] 5 VR 107.Policy considerations A brief survey of recent decisions in the Federal, New South Wales and Victorian courts demonstrates that in those jurisdictions the basic question of whether to use an electronic court at all is generally no longer argued as the benefits are widely acknowledged. However, judges are still called upon occasionally to rule on the appropriate use of technology where the parties fail reach agreement. This Court, by its own Practice Direction[4] requires consideration and adoption, where appropriate, of technology of this type. The direction sets out various recommendations as to the electronic exchange of documents, use of technology in the discovery process and at the hearing. Paragraph 2 relevantly provides:Parties to any proceedings are encouraged where appropriate to:(1) use electronic data to create lists of their discoverable documents;(2)make discovery by exchanging electronic data created in accordance with an agreed protocol;(3)exchange electronic versions of documents such as pleadings, reports and statements;(4)arrange for inspection of discovered material by way of images if appropriate; and(5)consider the use of electronic data at trial.[4] Practice Direction 52 - Guidelines for the use of technology in litigation in any civil matter. Paragraph 22 refers specifically to technology for the hearing and relevantly provides:More generally, parties should consider:(a)the equipment and services (including appropriate hardware, software and additional infrastructure) that they and the relevant court may require at the trial; and(b)the arrangements that may need to be made between the parties, the court and any third party service providers to ensure that appropriate equipment and services are available at the hearing. Thus strong encouragement is given by the Court to parties to consider carefully and to use the appropriate technology at trial. In the event of disagreement it will then fall to the Court, in the exercise of its jurisdiction to control the conduct of trials, to give appropriate directions[5] as to the use of that technology.[5] See SCR 3.04(g) and 55.11(y).Timing of the direction A major argument put forward by the second and third defendants was that the proceedings are not sufficiently advanced for an informed decision to be made as to the use of an electronic court. It was contended that the decision should be delayed at least until the finalisation of pleadings and expert reports and ideally until notices to admit and tender lists have been prepared. I disagree that it is too early to decide whether an electronic court will be of assistance. There are numerous aspects of this matter, as already outlined, which point to the conclusion that, no matter what changes might be made to the pleadings and expert reports, the use of an electronic court for the trial is appropriate. I also consider that having the arrangements in place at an early stage can only assist in the preparation of notices to admit, tender lists and the timely preparation of the court book.