Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd
[2013] VSCA 158
•24 June 2013
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2013 0052 | |
| LYSAGHT BUILDING SOLUTIONS PTY LTD (T/A HIGHLINE COMMERCIAL CONSTRUCTION) (ACN 103 232 444) | Applicant |
| v | |
| BLANALKO PTY LTD (ACN 005 822 926) | Respondent |
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| JUDGES | WARREN CJ, NETTLE and NEAVE JJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 27 May 2013 |
| DATE OF JUDGMENT | 24 June 2013 |
| MEDIUM NEUTRAL CITATION | [2013] VSCA 158 |
| JUDGMENT APPEALED FROM | [2013] VSC 201 (Vickery J) |
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PRACTICE AND PROCEDURE – Summary judgment – Whether test for summary judgment under s 63 of Civil Procedure Act 2010 more liberal than ‘hopeless’ or ‘bound to fail test’ applied under Order 22 of Supreme Court (General Civil Procedure) Rules 2005 – Gray v Morris [2004] 2 Qd R 118; The Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, followed; Spencer v The Commonwealth (2010) 241 CLR 118; White Industries Pty Ltd v Assistant Commissioner of Taxation (2007) 160 FCR 298, considered; Palmone Shoes Pty Ltd [2012] VSCA 97, explained – Civil Procedure Act 2010, s 63; Supreme Court Act 1986, s 17(B)(1); Supreme Court (General Civil Procedure) Rules 2005, Order 22.
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| Appearances: | Counsel | Solicitors |
| For the Applicant | Mr M Dempsey SC with Mr A Morrison | Holding Redlich |
| For the Respondent | Mr R J Manly SC with Mr P J Booth | Wisewould Mahony |
WARREN CJ
NETTLE JA:
There is before the court a question of law, referred to us pursuant to s 17B(1) of the Supreme Court Act 1986, as to the test to be applied when determining whether to give summary judgment in a civil proceeding pursuant to s 63 of the Civil Procedure Act 2010.
Sections 63 and 64 of the Civil Procedure Act provide that:
63. Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)-
(a) on the application of a plaintiff in a civil proceeding;
(b) on the application of a defendant in a civil proceeding;
(c)on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.
64. Court may allow a matter to proceed to trial
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because-
(a) it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.
The history of the legislation
As appears from the Civil Procedure Bill 2010 Explanatory Memorandum, those sections of the Act are based on recommendations of the Victorian Law Reform Commission in its Civil Justice Review Report of March 2008. According to the Explanatory Memorandum:
PART 4.4--SUMMARY JUDGMENT
The Commission stated that claims or defences that are without merit create problems for the parties and the administration of justice, subjecting plaintiffs and defendants to the inconvenience and expense of litigation. The pursuit of unmeritorious claims or defences also has adverse consequences for the administration of justice. Judicial and other publicly funded resources are expended and diverted from dealing with other cases.
The Commission stated 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 recommended that summary disposition should be available where a claim or defence has ‘no real prospect of success’.
The Bill reforms the procedure for the earlier determination of disputes, including liberalising the test for the summary disposal of unmeritorious claims and defences. This will help the courts to remove at an early stage cases where a party has no real prospect of success.
Clause 60 provides that the summary judgment provisions in this Part apply to counterclaims.
Clause 61 provides that a plaintiff may apply to the court for summary judgment on the ground that a defendant's defence, or part of that defence, has no real prospect of success.
Clause 62 provides that a defendant may apply to the court for summary judgment on the ground that a plaintiff's claim, or part of that claim, has no real prospect of success.
Clause 63 provides that a court may give summary judgment if it is satisfied that a claim, a defence or a counterclaim (or part of the claim, defence or counterclaim) has no real prospect of success. This may occur on application of a party or on the court's own motion.
Clause 64 provides that a court may order that a civil proceeding proceed to trial if it is satisfied that, despite there being no real prospect of success, the civil proceeding should not be disposed of summarily because it is not in the interests of justice to do so or the nature of the dispute is such that only a full hearing on the merits of the case is appropriate. This clause is intended to provide the courts with a residual discretion to hear a case in appropriate circumstances. A test case or case involving matters of public importance may fit into this category.
Clause 65 provides that the powers of a court under this Part are in addition to, and do not derogate from, any powers a court has under rules of court in relation to summary disposal of any civil proceeding. It is envisaged that the rules of court will continue to set out the detailed procedure in summary judgment applications.
The Law Reform Commission’s recommendations[1] were based on a suggestion made in the 2000 discussion paper, Going to Court, [2] to adopt the approach to summary judgment provided for in Rule 24.2 of the Civil Procedure Rules 1998 (UK) (‘the CPR’). In turn, Rule 24.2 of the CPR was based on the 1996 Woolf Report recommendation that the then existing English procedures for summary judgment, summary determination of a point of law and the striking out of pleadings disclosing no cause of action be merged and subjected to the common test of ‘no real prospect of success’. The recommendation was explained in the Woolf Report, thus:
The test for making an order would be that the court considered that a party had no realistic prospect of succeeding at trial on the whole case or on a particular issue. A party seeking to resist such an order would have to show more than a merely arguable case; it would have to be one which he had a real prospect of winning. Exceptionally the court could allow a case or an issue to continue although it did not satisfy this test, if it considered that there was a public interest in the matter being tried.[3]
[1]Civil Justice Review Report, 14 March 2008, 349.
[2]Sallmann and Wright, Going to Court (2000),120.
[3]HMSO, London 1996, Ch 12, s 34.
Subsequently, in Swain v Hillman,[4] Lord Woolf MR, speaking for the English Court of Appeal, said of the effect of Rule 24.2, that:
The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success or … they direct the court to the need to see whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success.
…
It saves expense; it achieves expedition; it avoids the court's resources being used up on cases where this serves no purpose, and I would add, generally, that it is in the interests of justice. If a claimant has a case which is bound to fail, then it is in the claimant's interests to know as soon as possible that that is the position. Likewise, if a claim is bound to succeed, a claimant should know that as soon as possible.[5]
[4][2001] 1 All ER 91.
[5]Ibid 92, 94 (emphasis added).
Comparable provisions
Section 63 of the Civil Procedure Act is similar to Rule 292 of the Uniform Civil Procedure Rules 1999 (Qld) which, like s 63 of the Civil Procedure Act, also derives from the English reforms. It provides that:
292 Summary judgment for plaintiff
(1)A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.
(2)If the court is satisfied that –
(a) the defendant has no real prospect of successfully defending all or a part of the plaintiff's claim; and
(b) there is no need for a trial of the claim or the part of the claim;
the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff's claim and may make any other order the court considers appropriate.
In Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq.)[6] (‘QUT’) the Court of Appeal of Queensland held that the level of satisfaction required to meet the test of ‘no real prospect of succeeding’:
… may not require the meeting of as high a test as that posited by Barwick C.J. in General Steel:[7] ‘that the case for the plaintiff is so clearly untenable that it cannot possibly succeed’. The more appropriate inquiry is in terms of the Rule itself: that is, whether there exists a real, as opposed to a fanciful, prospect of success. However, it remains, without doubt, the case that: ‘great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case.’[8]
[6][2003] 1 Qd R 259.
[7]General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
[8][2003] 1 Qd R 259, 264-265 (Holmes J, with whom Davies JA and Mullins J agreed). Emphasis added.
With respect, it is not clear why their Honours considered that the real as opposed to fanciful prospects of success test ‘may not require the meeting of as high a test as [General Steel]’. As we apprehend the observations of Lord Woolf MR in Swain v Hillman, his Lordship conceived of the two tests as being in effect much the same.
In Bernstrom v National Australia Bank Ltd,[9] however, Jones J (with whom Cullinan J expressly agreed) also reached the view that Rule 293(2) had effected a change in philosophy from the old hopeless or bound to fail test:
This new rule [Rule 293(2) of UCPR] results, not only in a change in terms, but also reflects a change in the philosophy from that embodied in the former rules and in the propositions identified in Fancourt v. Mercantile Credits Ltd.[10] Wilson J. considered this new rule in Foodco Management Pty Ltd v. Go My Travel Pty Ltd[11] and found guidance in the approach taken by the Court of Appeal in the United Kingdom in Swain v. Hillman.[12] The latter case considered an equivalent rule in the United Kingdom, namely, r. 24.4 of the Civil Procedure Rules. That rule is couched in terms which are almost identical with r. 293(2) of the UCPR. The U.K. Court of Appeal also made reference, in the same case, to r. 3.4, which provides for the court to strike out a statement of claim if it appears that it discloses ‘no reasonable grounds for bringing or defending a claim’. That latter rule has its equivalent in the UCPR r. 171.
[9][2003] 1 Qd R 469, 475 [36].
[10](1983) 154 CLR 87, 99.
[11][2002] 2 Qd R 249.
[12][2001] 1 All ER 91.
So, too, in Gray v Morris,[13] McMurdo J concluded that the change from the words of previous rules created a new and different test to be applied by reference to what his Honour described as its ‘clear and unambiguous language’, without need of paraphrase or comparison with the previous rule. As his Honour expressed it:
In Bernstrom v. National Australia Bank Limited,[14] it was said[15] that ‘This new rule results, not only in a change in terms, but also reflects a change in the philosophy from that embodied in the former rules and in the propositions identified in Fancourt v. Mercantile Credits Ltd’.[16] Before r. 293, there was no rule by which summary judgment could be given for a defendant. But in relation to summary judgment for a plaintiff, there was a change from the terms of previous rules[17] to r. 292, and each of rr. 292 and 293 requires the court to be satisfied that the party against whom judgment is sought has no real prospect of success and that there is no need for a trial. So in that way there is a change from the words of previous rules. With respect to those who may have expressed a different view, it seems to me that rr. 292 and 293 should be applied by reference to their clear and unambiguous language, without a need for any paraphrase or comparison with a previous rule. But in the application of the plain words of rr. 292 and 293, and in particular the consideration of whether there is a need for a trial, a court must keep in mind why the interests of justice usually require the issues to be investigated at a trial. In my view it surely remains the case, as Mason, Murphy, Wilson, Deane and Dawson JJ. said in Fancourt,[18] that ‘The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried’. That remains a forceful and authoritative guidance and is in no way in tension with the application of these rules according to their own terms.
[13][2004] 2 Qd R 118, 133 [46] (McMurdo J, with whom McPherson JA agreed), sed, per contra, 127 [23] (Chesterman J).
[14][2003] 1 Qd R 469.
[15]Ibid 475 [46].
[16](1983) 154 CLR 87, 99.
[17]Orders 18, 18A and 19 of the Rules of the Supreme Court.
[18]Ibid.
Chesterman J dissented on the point. His Honour said that:[19]
I would respectfully disagree. In my opinion summary judgment is not to be given, either to 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.
[19][2004] 2 Qd R 118, 127 [21]-[23] (Mc Pherson JA did not express a view on the point).
More recently, in Deputy Commissioner of Taxation v Salcedo,[20] a majority of the Queensland Court of Appeal concluded that the new test is different and is to be applied according to its own terms rather than by reference back to what went before; albeit, as their Honour emphasised, that the power is to be exercised in accordance with the established principle that issues raised in proceedings are to be determined summarily only in the clearest of cases and, therefore, it remains necessary for an applicant for summary judgment to demonstrate a ‘high degree of certainty as to what would happen if the matter proceeded to trial’. As McMurdo P said:[21]
UCPR r. 292 and r. 293 should be applied using their clear and unambiguous language and keeping in mind the purpose of the UCPR to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.[22]
Nothing in the UCPR, however, detracts from the well established general principle that issues raised in proceedings will be determined summarily only in the clearest of cases. Gaudron, McHugh, Gummow and Hayne JJ. said in Agar v. Hyde,[23] recently cited with approval by Gleeson C J, McHugh and Gummow JJ in Rich v CGU Insurance Ltd:[24]
… Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.
[20][2005] 2 Qd R 232.
[21]Ibid 233 [2]-[3].
[22]UCPR, r. 5.
[23](2000) 201 CLR 552, 575-576 [57].
[24](2005) 79 ALJR 856, 859 [18]-[19].
Likewise, after reviewing the authorities, Williams JA concluded that:[25]
… there has been a significant change brought about by the implementation of r. 292 and r. 293 of the UCPR. The test for summary judgment is different, and the court must apply the words found in the rule. To use other language to define the test (as was contended for in this case by counsel for the appellant relying on the reasoning of Chesterman J in Gray v Morris) only diverts the decision-maker from the relevant considerations. But, and this underlies all that is contained in the UCPR, ultimately the rules are there to facilitate the fair and just resolution of the matters in dispute. Summary judgment will not be obtained as a matter of course and the judge determining such an application is essentially called upon to determine whether the respondent to the application has established some real prospect of succeeding at a trial; if that is established then the matter must go to trial. In my view, the observations on summary judgment made by the judges of the High Court in Fancourt v. Mercantile Credits Ltd[26] are not incompatible with that application of r. 292 and r. 293; what is important is that in following the broad principle laid down by their Honours the test as defined by the rules is applied.
[25][2005] 2 Qd R 232, 236-7 [17]; see also Coldham-Fussell v Commissioner of Taxation (2011) 28 ACSR 439, 466-7 [98]-[103] (White JA); Thomas v Balanced Securities Ltd [2012] 2 Qd R 482, [69] (White JA).
[26](1983) 154 CLR 87, 99.
The third member of the Court, Atkinson J, was similarly of the view that the new test had wrought a change such that a party seeking summary judgment is no longer required to satisfy the test set out by Barwick CJ in General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) ’that the case of the plaintiff is so clearly untenable that it cannot possibly succeed’.[27] Her Honour did not refer to the principle that summary judgment is to be awarded only in the clearest cases.
[27][2005] 2 Qd R 232, 242 [46]-[47] (citations omitted).
Section 63 of the Civil Procedure Act is also similar to s 31A of the Federal Court of Australia Act 1989 (C’th), which provides that:
31A Summary judgment
(1)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is prosecuting the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is defending the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a)hopeless; or
(b)bound to fail;
for it to have no reasonable prospect of success.
(4)This section does not limit any powers that the Court has apart from this section.
(5)This section does not apply to criminal proceedings.
It is to be noted, however, that there are two significant differences between Section 31A of the Federal Court of Australia Act and s 63 of the Civil Procedure Act (and also, therefore, Rule 292 of the Uniform Civil Procedure Rules1999 (Qld) and Rule 24.2 of the CPR), namely: (1) it prescribes a test of ‘reasonable prospect’ of success as opposed to ‘real prospect’ of success; and (2) it contains an express provision in s 31A(3) that, for the purposes of the section, a proceeding or part of a proceeding need not be hopeless or bound to fail for it to have ‘no reasonable prospect of success’.
Prior to the decision of the High Court in Spencer v The Commonwealth,[28] the Federal Court treated the first of those differences as immaterial and thus the formulations of ‘no real prospect of success’ and ‘no reasonable prospect of success’ as if they were same. Lindgren J summarised the then state of Federal Court authority, in White Industries Pty Ltd v Assistant Commissioner of Taxation,[29] as follows:
The ‘no reasonable prospects of success’ formula of s 31A is that which was adopted in r 24.2 of the United Kingdom’s Civil Procedure Rules (the CPR) following the recommendation of Lord Woolf, Master of the Rolls, in his Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales.[30] The same test has been adopted in rr 292(2) and 293(2) of Queensland’s Uniform Civil Procedure Rules 1999 (Qld).
Under s 31A I must be satisfied that the applicants have no reasonable prospect of success, but as s 31A(3) makes clear, this does not mean that I must be satisfied that the proceeding is hopeless or bound to fail. I suggest that the legislature’s intention in enacting s 31A was to lower the bar for obtaining summary judgment (including summary dismissal) below the level that had been fixed by such authorities as Dey v Victorian Railway Commissioners[31], and General Steel Industries Inc v Commissioner for Railways (NSW):[32] see Lawrenson Light Metal Die Casting Pty Ltd (in liq) v Cosmick Pty Ltd.[33]
Section 31A and the identically worded s 17A of the Federal Magistrates Act 1999 (Cth) (‘the FM Act’) were introduced by the Migration Litigation Reform Act 2005 (Cth) (No 137 of 2005) which commenced on 1 December 2005. On the second reading speech on the Bill for that Act, the Attorney-General said that the new provision would strengthen ‘the power of the courts to deal with unmeritorious matters, by broadening the grounds on which federal courts can summarily dispose of unsustainable cases’. By ‘broadening the grounds’ the Attorney-General was referring to the formula ‘no reasonable prospects of success’ as contrasted with a ‘hopeless’ or ‘bound to fail’ test. It is reasonable to think that the Attorney-General may have had in mind migration cases in particular.[34]
…
I do not propose to add greatly to the discussion of the meaning and effect of s 31A. In the United Kingdom it has been held in the context of the similar r 24.2 of the CPR noted at [53] above, that the expressions ‘no real prospect of succeeding’ and ‘no real prospect of successfully defending’ require attention to be given to real, as opposed to ‘fanciful’ or ‘merely arguable’ prospects: Swain v Hillman;[35] Three Rivers District Council v Governor and Co of the Bank of England (No 3);[36] ED & F Man Products Ltd v Patel.[37] The Queensland Court of Appeal has similarly held, following Swain v Hillman and Three Rivers District Council v Governor and Company of the Bank of England, that the ‘no reasonable prospects of success’ test requires the court to determine whether there are ‘real’ as opposed to ‘fanciful’ prospects of success: Deputy Commissioner of Taxation v Salcedo.[38] The New South Wales Court of Appeal had to consider the expression ‘reasonable prospects of success’ as it occurred in s 198J of the Legal Profession Act 1987 (NSW) in Lemoto v Able Technical Pty Ltd.[39] That section prohibited a solicitor or barrister from providing legal services on a claim or defence of a claim for damages unless the solicitor or barrister reasonably believed on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence had reasonable prospects of success. Later subsections elaborated on the meaning of the prohibition. This fact, coupled with the fact that the prohibition was directed to the reasonable belief of the solicitor or barrister, renders the discussion not directly relevant to the summary dismissal context in which the court is required to determine if there are reasonable prospects of success following an inter partes hearing.[40]
[28](2010) 241 CLR 118.
[29](2007) 160 FCR 298.
[30]HMSO, London, 1996, Ch 12, ss 31–36.
[31](1949) 78 CLR 62, 91–2.
[32](1964) 112 CLR 125, 129-30.
[33][2006] FCA 753, [15].
[34](2007) 160 FCR 298, 310-311 [53]-[55].
[35][2001] 1 All ER 91, 92.
[36][2003] 2 AC 1, [90], [95], [133]-[134], [158]-[162].
[37][2003] EWCA (Civ) 472, [8].
[38][2005] 2 Qd R 232, 235.
[39](2005) 63 NSWLR 300.
[40](2007) 160 FCR 298, 312 [59].
In Spencer v The Commonwealth,[41] French CJ and Gummow J expressed a similar view. After observing that s 31A derived from Rule 24.2 of the Civil Procedure Rules 1998 (UK), and that both the Federal Court and the Queensland Court of Appeal had embraced Lord Woolf’s exposition of the ‘real prospect of success’ test as one which required a ‘realistic’ as opposed to a ‘fanciful’ prospect of success,[42] their Honours stated that:
Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a ‘fanciful’ prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.[43]
[41](2010) 241 CLR 118.
[42]Earlier in their judgment, French CJ and Gummow J criticised that dichotomy, in terms that: ‘This exegesis adds little to the words of s 31A’: (2010) 241 CLR 118, 130 [22].
[43](2010) 241 CLR 118, 132 [25] (emphasis added).
Their Honours also stressed the continued application to s 31A of the principle that the power summarily to terminate proceedings must always be attended with caution:
The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action[44] or on the basis that the action is frivolous or vexatious or an abuse of process.[45] The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said:[46]
[44]General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 128-130 (Barwick CJ).
[45]Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 (Dixon J).
[46](1983) 154 CLR 87, 99. See also Webster v Lampard (1993) 177 CLR 598, 602-603 (Mason CJ, Deane and Dawson JJ).
The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.
More recently, in Batistatos v Roads and Traffic Authority (NSW)[47] Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde[48] which included the following:
Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways,[49] but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.
There would seem to be little distinction between those approaches and the requirement of a ‘real’ as distinct from ‘fanciful’ prospect of success
contemplated by s 31A.[50] That proposition, however, is not inconsistent with the proposition that the criterion in s 31A may be satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions.[51]…
Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant. The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact.[52]
[47](2006) 226 CLR 256, 275 [46].
[48](2000) 201 CLR 552, 575-576 [57].
[49]Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 (Dixon J); General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 130 (Barwick CJ).
[50]In A v Essex County Council [2011] 1 AC 280; [2010] 3 WLR 509, the criterion of ‘real prospect of success’ was variously equated to whether the plaintiff ‘could succeed at trial’, whether there was a ‘triable issue’ and whether there was the ‘least doubt’: at [44] (Lord Clarke of Stone-cum-Ebony JSC; 541 [119] (Baroness Hale of Richmond JSC; 544 [133] (Lord Brown of Eaton-under-Heywood JSC; 552 [163] (Lord Kerr of Tonaghmore JSC).
[51](2010) 241 CLR 118, [24].
[52]Ibid, 132 [26] (citations omitted).
Hayne, Crennan, Kiefel and Bell JJ approached the matter differently. Their Honours stated that the difference between a real prospect of success and a reasonable prospect of success and, perhaps still more so, the express provisions of s 31A(3), significantly distinguished the effect of s 31A from the effect of the real prospect of success test identified in provisions like Rule 24.2 of the Civil Procedure Rules 1998 (UK) and Rule 292 of the Uniform Civil Procedure Rules1999 (Qld). They concluded that:
Because s 31A(3) provides that certainty of failure (‘hopeless’ or ‘bound to fail’) need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different enquiry from that which had to be made under earlier procedural regimes. It follows, of course, that it is dangerous to seek to elucidate the meaning of the statutory expression ‘no reasonable prospect of successfully prosecuting the proceeding’ by reference to what is said in those earlier cases.
Likewise, it is dangerous to apply directly what has been said in the United Kingdom about the application of a test of ‘no real prospect’ or what has been said in United States decisions about summary judgment. The United Kingdom cases are directed to a different test. The controversies in the United States about what is sufficient to resist a motion for summary judgment, reflected in the recent decisions of the Supreme Court of the United States in Ashcroft v Iqbal[53] and Bell Atlantic Corp v Twombly[54] and in that Court's earlier decision in Conley v Gibson,[55] turn upon the requirements of the Federal Rules of Civil Procedure applied to a system of ‘notice’ pleading. The notion of what is not a ‘plausible claim, discussed in Iqbal and Twombly, may in some cases overlap, but does not coincide, with the notion of ‘no reasonable prospect’.
How then should the expression ‘no reasonable prospect’ be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is ‘no reasonable prospect’. The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like ‘no reasonable prospect’ is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes,[56] as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt.[57]
[53](2009) 173 Law Ed (2d) 868.
[54](2007) 550 US 544.
[55](1957) 355 US 41.
[56]Weiss v The Queen (2005) 224 CLR 300, 312-318 [31]-[47].
[57](2010) 241 CLR 118, 140-141 [56]-[58].
We note that s 63 of the Civil Procedure Act and Rule 23.01(1)(a) of the Supreme Court (General Civil Procedure) Rules 2005 have been considered a number of times in the Trial Division.[58]
[58]See Wheelahan and Anor v City of Casey and Ors (No.3) [2011] VSC 15, [8] (Osborn J); Matthews v SPI Electricity Pty Ltd and SPI Electricity Pty Ltd v Utility Services Corporation Limited and Ors(Ruling No.2) [2011] VSC 168, [18]-[22] (J. Forrest J); Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd and anor [2011] VSC 222, [8]-[18] (Dixon J); JBS Southern Australia Pty Ltd and Anor v Westcity Group Holdings Pty Ltd and Ors {2011] VSC 476, [39]-[50] (Croft J).
The meaning of s 63
In face of these decisions, what meaning is now to be attributed to s 63 of the Civil Procedure Act?
If the question were without authority, we should be inclined to think that s 63 has not made a great deal of difference to the test in General Steel. According to the plain and ordinary meaning of the language of the section, it is difficult to conceive of a case that could properly be described as lacking a real, as opposed to fanciful, prospect of success unless it were hopeless or bound to fail. As Lord Hope of Craighead observed in Three Rivers District Council v Bank of England [No 3]:[59]
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.
[59][2003] 2 AC 1, [91]-[92].
Likewise, at a practical forensic level, as Lindgren J noted in White Industries,[60] it is hard to envisage circumstances in which there could be any difference between what is needed to demonstrate that a case does not have a real as opposed to fanciful prospect of success and what is needed to show that it is hopeless or bound to fail. Immediately following the passage of his judgment which is set out above, his Honour observed that:
Section 31A and the identically worded s 17A of the Federal Magistrates Act 1999 (Cth) (the FM Act) were introduced by the Migration Litigation Reform Act 2005 (Cth) (No 137 of 2005) which commenced on 1 December 2005. On the second reading speech on the Bill for that Act, the Attorney-General said that the new provision would strengthen ‘the power of the courts to deal with unmeritorious matters, by broadening the grounds on which federal courts can summarily dispose of unsustainable cases’. By ‘broadening the grounds’ the Attorney-General was referring to the formula ‘no reasonable prospects of success’ as contrasted with a ‘hopeless’ or ‘bound to fail’ test. It is reasonable to think that the Attorney-General may have had in mind migration cases in particular.
If the government’s chief purpose [in ‘broadening the grounds on which federal courts can summarily dispose of unsustainable cases’ by adoption of the ‘no reasonable prospects of success’ as contrasted with a ‘hopeless’ or ‘bound to fail’ test] was to facilitate expeditious disposal of legally unmeritorious migration cases, in my respectful view the measure was misconceived. First, I suggest that any assumption that there were migration cases that were not summarily dismissed because they were found not to be ‘hopeless’ or ‘bound to fail’, but that would have been summarily dismissed because they were without any reasonable prospect of success, is without foundation.[61]
[60]White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298.
[61]Ibid [55]-[56] (emphasis added).
As was earlier noted, however, the Civil Procedure Bill 2010 Explanatory Memorandum stated that it was the intention of s 63 to adopt the Law Reform Commission’s recommendation that the General Steel test should be liberalised by adopting the ‘no real prospect of success’ test. Those statements reflect a Parliamentary perception that, over the decades, the courts had been unduly restrictive in the application of the law relating to summary judgment. Bearing in mind s 35 of the Interpretation of Legislation Act1984, they suggest a need to avoid an unduly constrained, historical approach to the construction of s 63 lest it subvert the purpose of the provision.[62]
[62]Of course, as the High Court recently stated in another context in Baini v R (2012) 246 CLR 469, 482 [34]-[35], no matter how clear extrinsic materials may appear to be, they ‘must not be adopted as a substitute for the statutory language…it is the statutory question which must be asked and answered’.
Additionally, although equivocal, some provisions of the Civil Procedure Act apart from s 63 tend to imply that s 63 was intended to effect a change in the test for summary judgment. They include s 1(2)(e) (which states that the Act provides inter alia for ‘reform of the law relating to summary judgment’) and s 65 (which provides that the powers conferred by s 63 are in addition to existing powers to award summary judgment).
Most importantly, however, the question is not without authority. As has been seen, there is now a significant body of case law, including the succession of decisions of the Queensland Court of Appeal concerning Rules 292 and 293 of the Uniform Civil Procedure Rules1999 (Qld) earlier referred to, to the effect that the test of ‘real prospect of success’ is more liberal than the ‘hopeless’ or ‘bound to fail test’, or at least that it is a different test and that there may be circumstances in which it is possible to satisfy the former without necessarily complying with the latter. Given that Rules 292 and 293 of the Uniform Civil Procedure Rules1999 (Qld) are in pari materia with s 63 of the Civil Procedure Act, we are bound to follow the Queensland Court of Appeal unless convinced that they are plainly wrong.[63] We do not consider that they are wrong. To the contrary, with respect, whatever might be the practical effect of the new test, it is difficult to disagree with McMurdo J in Gray v Morris[64] and McMurdo P in The Commissioner of Taxation v Salcedo[65] that it should be applied by reference to its own language, without paraphrase or comparison with the previous rule, always bearing in mind the principle that the power to award summary judgment is only to be exercised with caution and, therefore, not unless it is clear that there is no real question to be tried.
[63]Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, 151-152 [135].
[64][2004] 2 Qd R 118, 133 [46].
[65][2005] 2 Qd R 232, 233 [2]-[3].
Counsel for the applicant submitted that McMurdo J was in error in importing the idea that summary judgment is not to be awarded unless there is no real question to be tried. He argued that the notion of no real question to be tried was a product or concomitant of the old hopeless or bound to fail test and should not be permitted to restrict the operation of the new test. We do not accept the argument. So long as the conception of a real question to be tried is understood as one of a question which realistically might result in the respondent to an application for summary judgment succeeding in the proceeding – which after all is its natural and ordinary meaning – it may provide some useful guidance.
It follows that, for present purposes, the test under s 63 of the Civil Procedure Act should be construed as one of whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success; that the ‘real chance of success’ test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent’s case is not ‘hopeless’ or ‘bound to fail’, it does not have a real prospect of succeeding.
Karam v Palmone Shoes Pty Ltd
It remains to observe that the question of the proper construction of s 63 of the Civil Procedure Act was referred to this court for decision largely because of uncertainty created by Nettle and Osborn JJA’s joint judgment in Karam v Palmone Shoes Pty Ltd.[66]
[66][2012] VSCA 97.
In that case, their Honours said that:
Since the coming into force of s 63 of the Civil Procedure Act 2010, the test for summary judgment in favour of a plaintiff in a civil proceeding has been whether a defence or part of it ‘has no real prospect of success’. In terms, it is a little different to the criterion under Rule 22.02 of the Supreme Court (General Civil Procedure) Rules 2005, of whether the defendant has no defence. But the change in terms was not intended to establish a new or different test; rather to express more accurately the way in which the rule had been interpreted by the courts. It remains, as the High Court said in Fancourt v Mercantile Credits Ltd,[67] that the power to order summary judgment is to be exercised sparingly and not ‘unless it is clear that there is no real question to be tried’. Accordingly, we agree with the judge that the Magistrate correctly identified the test for summary judgment as being that it should only be granted if it is clear there is no real question to be tried.[68]
[67](1983) 154 CLR 87, 99.
[68][2012] VSCA 97, [28].
Looked at in hindsight, it is apparent that what was said there led to misunderstanding. Perhaps, it might have been understood as an endeavour to emphasise the point essayed by French CJ and Gummow J in Spencer that there appears to be little distinction in practical effect between the General Steel ‘hopeless’ or ‘bound to fail’ test and the requirement of a ‘real’ as opposed to ‘fanciful’ prospect of success test prescribed by s 63; and that, under the new test, just as under the old, the power to award summary judgment must be exercise with caution. But, even so, on the present state of authority it is incorrect to say that there is no difference between the tests. As noted, there is a succession of Queensland Court of Appeal decisions to the effect that the two tests are different. And, as Osborn J (as his Honour then was) had earlier recognised in Wheelahan v City of Casey (No 3),[69] despite such similarities as there may be between the tests, the test under s 63 of the Civil Procedure Act has been interpreted as a more liberal test which may in some circumstances extend to cases not regarded as sufficiently hopeless to warrant striking out under the Rules.
[69][2011] VSC 15, [8]-[10].
Charter of Human Rights and Responsibilities
Finally, we note that it was not suggested that the construction of s 63 of the Civil Procedure Act is affected by the operation of the Charter of Human Rights and Responsibilities[70] and, therefore, we have not considered its application.
[70]Charter of Human Rights and Responsibilities Act 2006.
Conclusion
For the reasons we have given, we would answer the question posed for the determination of the court as follows:
Upon the present state of authority:
a) the test for summary judgment under s 63 of the Civil Procedure Act2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
b) the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
c) it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of
action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.
NEAVE JA:
I agree with the answer given by the Chief Justice and Nettle JA to the question referred to the court under s 17B(1) of the Supreme Court Act 1986.
As their Honours explain, s 63 reflects the influence of the United Kingdom Woolf reforms. In his 1996 report on Access to Justice,[71] Lord Woolf said that:
In the interim report I explained that the important purposes of case management are stopping weak cases from dragging on and reducing complexity and cost by eliminating issues as the case proceeds. One means of achieving these purposes is for the court to exercise its power of summary disposal on a wider basis than it does at present….
The procedure would be available on the application of any part or of the court’s own volition. The test for making an order would be that the court considered that a party had no realistic prospect of succeeding at trial on the whole case or on a particular issue. A party seeking to resist such an order would have to show more than a merely arguable case; it would have to be one which he had a real prospect of winning. Exceptionally the court could allow a case or an issue to continue although it did not satisfy this test, if it considered that there was a public interest in the matter being tried.[72]
[71]The Right Honourable the Lord Woolf, Master of the Roles, Access to Justice (July 1996).
[72]Ibid [31]–[34].
In its 2008 Civil Justice Review, the Victorian Law Reform Commission discussed the English approach and examined the case law interpreting the traditional tests for summary dismissal which were expressed by the High Court in cases such as Dey v Victorian Railways[73] and by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW).[74] The Commission said that:
[73](1949) 78 CLR 62.
[74](1964) 112 CLR 125.
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 with be the same.[75]
[75]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.
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.[76]
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 [sic] 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.[77]
[76]Gray v Morris [2004] QCA 5, [23] (Chesterman J).
[77]2008 Civil Justice Review, the Victorian Law Reform Commission, 356.
Later in the Report the Commission again said that the more liberal test was likely to provoke 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 .…’.[78]
[78]2008 Civil Justice Review, the Victorian Law Reform Commission, 357.
In sub-paragraph (d) of [35] Warren CJ and Nettle JA observe that the power of summary dismissal ‘should be exercised with caution.’ It goes without saying that courts must consider applications for summary dismissal with appropriate care. That is inherent in the nature of a process which may deprive a plaintiff of the ability to pursue a claim or a defendant of an ability to argue a defence.
Nevertheless I am concerned that undue emphasis on the caution with which a court must exercise the power of summary dismissal runs the risk of reinforcing the historical approach to summary dismissal and may result in the legislative liberalisation of the test in s 63 having little impact in practice. That approach would be inconsistent with the objective of reforming the law relating to summary judgment, expressed in s 1(2)(e) of the Civil Procedure Act, and with the requirement that the Court give effect to the over-arching purposes of that Act, imposed by s 8.
In my opinion the power of summary dismissal should be exercised consistently with the over-arching purposes of the Civil Procedure Act 2010 and having regard to the fact that, if granted, it will deprive the relevant party of the opportunity to pursue their claim or defence.
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