Section 18(d) of the Civil Procedure Act 2010 (Vic)

Section 18(d) of the Civil Procedure Act 2010 requires litigants and their lawyers alike not to make claims in civil proceedings, or defend such claims, unless ‘on the factual and legal material available to [them] at the time of making the claims’ the claim or defence has ‘a proper basis’.  A court may make any order it considers appropriate in the interests of justice if satisfied that a person has breached s. 18(d): s. 29 and may take any contravention into account in exercising any of its powers, including specifically in relation to costs: s. 28.

As Derham AsJ said in Matthews v SPI Electricity Pty Ltd (No 2) (below):
‘The overarching obligations [including that in s. 18(d)]:

(a)          apply to any legal practitioner or any law practice acting for or on behalf of a party: Civil Procedure Act10(1)(b), (c);

(b)          apply in respect of the conduct of any aspect of a civil proceeding, including, but not limited to any interlocutory application or interlocutory proceeding: Civil Procedure Act11(a);

(c)          do not override any duty or obligation of a legal practitioner to a client to the extent that those duties and obligations and the overarching obligations can operate consistently: Civil Procedure Act13(1); and

(d)          must be complied with by a legal practitioner or a law practice engaged by, or on behalf of, a client in connection with a civil proceeding despite any obligation the legal practitioner or the law practice has to act in accordance with the instructions or wishes of the client: Civil Procedure Act13(2).

In this very workmanlike post, I simply summarise the not particularly illuminating jurisprudence to have emerged around this new provision so far.

Sunland Waterfront v Prudentia Investments (14 September 2012)

Sunland Waterfront (BVI) v Prudentia Investments [2012] VSC 399 will be the subject of a future post.

Erlich v Fleiszig [2013] VSC 63 (22 February 2013)

In Erlich v Fleiszig [2013] VSC 63, Lansdowne AsJ had before her an application for an extension of time in which to bring a testator’s family maintenance claim. The deceased’s cousin had been left a bequest of $20,000 but sought half of the $2.2 million estate. Her Honour found that the claim was not hopeless but not strong. The respondent argued that the application should not be allowed because the applicant was in breach of s. 18(d).  Her Honour declined to analyse the case that way:

  1. ‘Here the second defendant contends that the size of the proposed claim is nevertheless relevant to those first two stages, the  issues of responsibility to make provision and whether the existing provision is adequate, as a factor under s 91(p); and is also relevant because of claimed breach of the obligation to make only claims with a proper basis in law and fact under the Civil Procedure Act.  I will deal with the second of these contentions first.
  2. Section 28(1) of the Civil Procedure Act allows the Court to take contravention of an overarching obligation into account in the exercise of “any power” in relation to a civil proceeding, which presumably would include the grant or refusal of an extension of time to bring a claim.  For a contravention fairly to be taken into account, however, clear notice of such an application should be given by the party contending that there has been a contravention to the party said to be in breach.  I do not consider that raising the matter in closing submissions is sufficient to make the application or to give notice of it.  Further, proof of contravention of the overarching obligation imposed by s 18(d) would require analysis of the “factual and legal material available to (the plaintiff) at the time of making (his) claim” and determination as to whether or not the claim thus made was justified on that material.  There is insufficient evidence before me to undertake this analysis.
  3. Finally, I accept the submission of the plaintiff that the better point in time to undertake this analysis, if an application in relation to a claimed contravention is to be made under either s 28 or 29 of the Civil Procedure Act, is at the hearing of the substantive claim, after all evidence is given and the Court is in a position to form a view as to the appropriate quantum for further provision, if any.’

Matthews v SPI Electricity  (8 March 2013)

In Matthews v SPI Electricity Pty Ltd (No 2) [2013] VSC 86 Derham AsJ dismissed an interlocutory application by the plaintiff made through her solicitors Maurice Blackburn.  The defendant applied for costs on grounds which included an alleged breach of s. 18 and sought orders that Maurice Blackburn as well as the plaintiff be ordered to pay them.  His Honour declined the application for reasons which are not easily summarised.

Jane v Bob Jane Corporation (4 September 2013)

In Jane v Bob Jane Corporation Pty Ltd (No 2) [2013] VSC 467, a case in which the plaintiff did not plead fraud (see [17]), Sifris J, 4 September) said:

  1. ‘The defendants contended that the plaintiff commenced and continued this proceeding in wilful disregard of the facts well known to him.  Critical to this submission was the inconsistency between the position Bob Jane took in the Family Court proceeding and the case that he sought to advance in this proceeding.
  2. Bob Jane admitted the inconsistency.  In particular he admitted that the case he sought to run in this proceeding was contrary to sworn evidence he had given in the Family Court proceeding.  However, he sought to explain the inconsistency by saying that he relied on trusted advisors to give him the correct financial information, particularly in light of the fact that he had suffered a stroke.  I rejected the explanation and regarded the inconsistency as an important factor in finding against Bob Jane.
  3. However, Bob Jane was entitled to run his case and endeavour to convince the Court that his explanation was valid and sufficient.  The fact that I disagreed with him says nothing about his entitlement to make the argument.  His case was that he did not disregard the known facts but disputed the accuracy and impact of those facts.  His evidence fell short and he failed.  The facts as found by the Court were only after a trial with evidence and cross-examination.  The conclusion after a trial does not necessarily mean that at the outset it was inevitable that the claim would fail.  The Court must avoid hindsight analysis, a point made by counsel for Bob Jane.[7]
  4. I consider that this case is distinguishable from Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3)[8], a case relied on by Senior Counsel for the defendants.  In any event each case must be considered on its own facts and peculiar circumstances and context.  In Sunland it emerged clearly at trial that the relevant important witnesses always knew and understood the correct position and that their claim was hopeless.  From the cross-examination at trial it was clear that the true position was known at the outset.  This case is different.  Unlike Sunland it cannot be concluded that Bob Jane always knew that he did not have a proper explanation for the inconsistency in his evidence and that his proposed and attempted explanation was hopeless.  It was weak and unsubstantiated as it turned out.  This case is not nearly as clear as Sunland and although the matter is finely balanced and not free from difficulty given the critical findings made by the Court, I do not consider that in all the circumstances I should exercise my discretion in favour of awarding indemnity costs.

    [7]          Reference was made to the decision of Redlich J (as his Honour then was) in Aljade & MKIC v OCBC [2004] VSC 351, [36]-[37].

    [8]          [2012] VSC 399 (‘Sunland’).

  5. Finally Croft J regarded the point as one that needed to be fully explored at trial.[9]  It was.  Bob Jane lost and must pay the costs.

    [9]          Ruling made on 28 September 2012.

  1. Finally, the defendants submitted that Bob Jane breached [s 18] by making a claim that did not have a proper basis …
  2. As pointed out above, the findings made after a trial with extensive cross-examination do not by their own force suggest that there was no basis for the claim.  It was a weak claim but Croft J permitted the claim to go ahead and Bob Jane was entitled to run his case as pointed out earlier in these reasons.’

Bodycorp Repairers v Maisano (18 October 2013)

In Bodycorp Repairers Pty Ltd v Maisano [2013] VSC 327 at [14], Elliott J found that one claim ‘failed at the threshold’ and another relied on an agreement which ‘could never have amounted to a binding agreement’.  He said at [25] that these claims may have breached s. 18(d) but declined to order indemnity costs against the party propounding them for the reasons stated in para [15]:

‘Against these matters, it must be said that both the South Melbourne Agreement claim and the All States Agreement claim formed a very minor part of Bodycorp’s case.  There was also evidence sought to be adduced from the defendants’ witnesses which might have assisted Bodycorp’s case if the evidence had been forthcoming as advanced by Bodycorp.  In my view, in the broader context of the case advanced by Bodycorp, the fact that these somewhat fragile claims were pursued to the conclusion of the trial does not, of itself, amount to the sort of exceptional circumstances that would be required to justify the court departing from the usual costs order.’

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