Monday, 31 March 2014

'Watershed' moment in Victorian litigation culture?: Yara Australia Pty Ltd v Oswal [2013] VSCA 337

The Victorian Court of Appeal has sent a strong message that the overarching obligation under section 24 of the Victorian Civil Procedure Act 2010 - to ensure that the costs of litigation are 'reasonable and proportionate' - is ignored by lawyers and litigants at their peril.

The decision
The proceedings followed the collapse of a fertiliser business, which had been placed into administration in 2010.  Judicial commentary on the overarching obligations arose in an appeal against an earlier decision on security for costs.

An apparently straight-forward matter was attended by five senior counsel, six junior counsel, and five firms of solicitors, who filed over 2700 pages of evidence in support of the application.  The Court sought an explanation from the parties as to whether any breaches of the overarching obligations under the Civil Procedure Act 2010 had occurred.

The Court determined that the parties were not 'overrepresented' - due to the complexity of the issues and the likely costs of future proceedings.  As each of the applicants had separate and distinct interests, the Court found that each were entitled to separate representation.  The Court was careful to emphasise that section 24 of the Civil Procedure Act concerning proportionate costs 'is not to be construed as requiring a party to forfeit that right'.

The Court determined that much of the 2700 pages of material filed was either duplicative or 'peripheral to the application or entirely unnecessary', such as:

old statements of claim
reams of email correspondence
materials from related but immaterial proceedings in other states and jurisdictions.

It was found that the inclusion of the material violated section 24 on the basis that it increased costs for all parties and placed an unnecessary burden on the court.

What do the 'overarching obligations' require lawyers and litigants to do - or not do?
Section 24 of the Civil Procedure Act 2010 provides:

A person to whom the overarching obligations apply must use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to—
(a) the complexity or importance of the issues in dispute; and
(b) the amount in dispute.

The judgment cites the second reading speech to the Act, in which the then Attorney-General Hulls stated:

At the core of these reforms is the concept of proportionality. Participants in litigation will be required to use reasonable endeavours to ensure that legal and other costs spent in the proceeding are reasonable and proportionate to the complexity or importance of the issues in dispute, and the amount in dispute […] These provisions are designed to cure unnecessary expenditure on litigation and the inappropriate use of the courts as a public resource.

The overarching obligations apply to litigants and legal practitioners alike.  Importantly, legal practitioners are required to act in accordance with the overarching obligations even when this conflicts with client instructions.

What does this decision mean for litigation culture in Victoria?
Addressing a recent National Costs Lawyers conference at the Law Institute of Victoria, Justice Croft said that the judgment was a 'watershed' moment:

It is clear that practitioners can no longer hold the mistaken belief that the obligations under the Act are merely aspirational rather than obligatory.

Since late last year, the case has been raised in seven other proceedings, suggesting that Victoria's judiciary is willing to make use of case management tools to contain the costs of litigation.

But we're model litigants anyway, aren't we? 
The State of Victoria is subject to the Model Litigant Guidelines which require government entities to abide by high standards of litigant conduct, including keeping costs to a minimum, and avoiding unnecessary delay.

While the decision in Yara may not alter the approach of model litigants, it provides important guidance from Victoria's highest court on the scope of the overarching obligations contained in the Civil Procedure Act 2010, by which all litigants - including model litigants - are bound.

The Court warned future litigants that they will effectively be under a positive obligation to demonstrate that materials are compliant with the overarching obligations:

Where a large volume of material is provided to a court that is unnecessary and excessive, there will be a prima facie case that the overriding obligation has been breached. [emphasis added]

We will be watching this space closely for future decisions in this area.

For more information about Yara Australia Pty Ltd v Oswal [2013] VSCA 337, please contact:

Andrew Suddick
General Counsel
t 8684 0458

Antonio Mazzone
Managing Principal Solicitor
t 8684 0418

Wednesday, 19 March 2014

Does that clause have any claws? Re AEU and Public Sector Industrial Relations

The Federal Court’s recent decision in United Firefighters Union of Australia v Country Fire Authority [2014] FCA 17 (UFU v CFA) raises some important issues for public sector employers about the validity of certain clauses being included in industrial instruments.

The United Firefighters Union (UFU) instituted a claim against the Country Fire Authority (CFA) on the grounds that the CFA was not complying with Clause 27 of the Country Fire Authority/United Firefighters Union of Australia Operational Staff Enterprise Agreement 2010 (Agreement). Clause 27 imposed an obligation on the CFA to recruit 342 career firefighters over a six year period. The CFA filed a cross-claim seeking declarations that Clause 27, and a number of other clauses in the Agreement, were invalid on the basis that they were inconsistent with the Melbourne Corporation principle as it was applied in Re Australian Education Union; Ex parte Victoria [1995] HCA 71 (Re AEU).

Melbourne Corporation principle

The Melbourne Corporation principle in the context of UFU v CFA can be expressed most simply as a principle imposed by Australian courts to the effect that the Commonwealth Constitution contains an implied limitation on federal legislative power which prohibits a law from operating to destroy or curtail the continued existence of the States or their capacity to function as governments.

This principle has been applied by the High Court in an industrial context in Re AEU, where it was held that the principle extended to the State's right to determine:
  • the number and identity of its employees;
  • the term of appointment of those employees; and
  • the number and identity of employees it wishes to make redundant.


The UFU conceded that the clauses fell within the Re AEU categories. However, they argued that because the CFA, and thereby the State of Victoria, had agreed to the clauses being included in the Agreement, they did not infringe Re AEU because they had not been imposed on the State by the Commonwealth.

The CFA argued that because the clauses in the Agreement were only given effect by certification of the Fair Work Commission (FWC), and because the source of the FWC's power is Commonwealth legislation (i.e. the Fair Work Act 2009 (Cth) (FW Act)), clauses in the Agreement which infringe Re AEU would be invalid and unenforceable on the basis that the FWC had no power to certify them.

The decision

Justice Murphy of the Federal Court agreed with the CFA's submissions and held that the clauses were invalid and unenforceable, even though they had been entered into voluntarily by the CFA. His Honour held that, because '(t)he implied limitation is a recognition that the Constitution is concerned with the federal structure of government in Australia', the important thing to focus on was the limiting effect of the Commonwealth law, as opposed to the fact that the State had agreed to that limitation.

Impact on compliance with your industrial instrument

If the employment relationship in your organisation is governed by an enterprise agreement or workplace determination which has been certified by the FWC in accordance with the FW Act, it may be prudent to conduct a review of the instrument to determine whether any of its clauses fall within the Re AEU categories outlined above.

If a union is purporting to rely on suspect clauses, your organisation may decide to seek a declaration in the Federal Court that the clauses are invalid and unenforceable.

Some common examples of clauses which could infringe Re AEU include:

  • Limits on offering fixed-term employment;
  • Job security provisions;
  • Maintenance of classification provisions;
  • No contracting out provisions; and
  • Minimum numbers of employees provisions.

Having provided those examples, we recommend that legal advice is sought to address these matters in light of the specific industrial context in which your organisation exists.

There will also be policy considerations to be taken into account. For instance, the nature of the relationship between each organisation and its corresponding union could necessitate the adoption of a particular approach. Moreover, we note that public sector organisations are required to comply with the Public Sector Workplace Relations Policies.

Impact on enterprise bargaining

If your organisation is currently engaged in bargaining for a new industrial instrument, you will need to consider the content, scope and operation of the clauses you are currently negotiating. If any of the clauses could potentially infringe Re AEU, the organisation should request that the union withdraw those claims, as they will fall outside the scope of the FWC's certification powers.

A bargaining representative cannot pursue claims in bargaining that are unlawful or not about permitted matters, and, in light of UFU v CFA, the position previously put forward by unions that the State’s agreement is enough to displace the operation of Re AEU is no longer valid. If a bargaining representative continues to press for the inclusion of matters which are inconsistent with Re AEU in an enterprise agreement, they may leave themselves open to being found in breach of the good faith bargaining requirements of the FW Act.

If you are currently bargaining for a new enterprise agreement, we recommend that you raise your concerns directly with the bargaining representatives during bargaining, and subsequently in writing. If the union with which you are currently negotiating will not withdraw the claims that are believed to be inconsistent with Re AEU, your organisation should consider making an application under s 229 of the FW Act for good faith bargaining orders.

Watch this space

The UFU has appealed Justice Murphy’s decision to the Full Court of the Federal Court. Given the significance of this issue for public sector industrial relations, we suspect that the matter will eventually be considered by the High Court.

If you are in the Victorian Government and would like more information on the effect of UFU v CFA on your specific industrial instrument, please contact:

Matt Garozzo
9032 3006

Matthew Minucci
0417 695 188

Friday, 14 March 2014

Commonwealth Privacy Reform - time to get APP-y

12 March 2014 sees the commencement of long-awaited changes to the Privacy Act 1988(Cth) (Privacy Act). On 12 March 2013, the Privacy Amendment (Enhancing Privacy Protection) Act 2012 comes into effect. It represents a watershed moment in the Commonwealth privacy law reform process, which commenced some 10 years earlier. 

Victorian agencies remain subject to the Information Privacy Act 2000 (Vic). That hasn't changed. What will change is how the Privacy Act applies to Commonwealth agencies, some businesses and individuals and what the Australian Information Commissioner can now do to enforce the Privacy Act. 

So what's going to change?

From 12 March 2014, there will be three significant changes: 

  1. 13 Australian Privacy Principles will replace the Information Privacy Principles and National Privacy Principles; 
  2. Credit reporting laws will change to allow more credit information to be shared between credit providers; and 
  3. The Australian Information Commissioner's regulatory and enforcement powers will be strengthened. 

1. Australian Privacy Principles

For the first time, a set of 13 harmonised privacy principles, the Australian Privacy Principles (APPs) will apply to Australian government agencies and some private businesses. Up until 12 March 2014, agencies were subject to the Information Privacy Principles (IPPs) and businesses were subject to the National Privacy Principles (NPPs).

The APPs make significant changes to some of the privacy principles that were embodied in the IPPs and NPPs. They are more comprehensive than their predecessors, and more rigorous in what agencies and businesses must do to comply. These new APPs have been designed to respond to changes in information technology and emerging privacy issues and aim to address changes in privacy law.

Under the new APPs, agencies and providers will need to maintain and make available, a comprehensive privacy management policy, an APP Privacy Policy. It must include information such as the kinds of personal information the entity collects or holds, how it collects and holds it and for what purposes, how an individual may access their information, and information of the entity's complaints handling and resolution processes. The APPs also specifically deal with opting-out of direct marketing, dealing with unsolicited information and cross-border data flows.

What will the APPs mean for Victorian agencies?

Victorian agencies should keep these changes in mind when dealing  their Commonwealth counterparts or private entities who are subject to the Privacy Act.  There are some key points for Victorian agencies:

Victorian government Departments or agencies are not required to comply with the APPs, even under any contracts they have with Commonwealth agencies.  This is because State or Territory authorities are not 'organisations' that can be 'contracted service providers' or 'APP entities' under the Privacy Act.

The APPs won't apply directly to organisations who are contracted service providers to Victorian government agencies with respect to what they do for the purposes of meeting their contractual obligations to the agency.  Victorian government contracted service providers are still subject to the IP Act. However, Victorian government agencies should review their contracts with contracted service providers to see whether those providers have referred specifically to NPPs and if so, agencies should vary those contracts to replace these NPPs with the appropriate APP.

There are more circumstances in which APP entities can disclose personal information to Victorian agencies, if the disclosure to the Victorian agency is not related to the primary purpose of collecting that personal information.  APP entities can disclose personal information in 'permitted general situations' specified in the Privacy Act.  These permitted general situations could apply to Victorian agencies working with Commonwealth agencies to assist them in their functions: for example, an APP entity may disclose personal information if the entity has reason to suspect that unlawful activity or misconduct of a serious nature relating to the entity's functions has been, is being, or may be engaged in, and it reasonably believes that the disclosure is necessary for it to take appropriate action in relation to that matter. 

The Office of the Australian Information Commissioner has produced Guidelines to support entities' compliance with the APPs.

2. Credit reporting law changes

Under the new Part IIIA of the Privacy Act, credit reporting arrangements will allow for more information to be included in an individual's credit report. From 12 March, information about an individual's current credit commitments and repayment history over the previous two years will be made available to, and can be transferred between, licensed credit providers. If an adult defaults on a credit repayment of over $150, this information can be shared between providers and considered the next time the adult wishes to obtain a credit card, home loan or other credit facility.

In addition to credit repayment information, licensed providers will be able to collect and disclose information about a person's credit type, credit limit, terms and conditions of the credit facility, and the day on which the credit facility commenced and ceases.

3. Australian Information Commissioner with enhanced powers

The Australian Information Commissioner will have a suite of enhanced regulatory and enforcement powers (which would generally be exercised by the Privacy Commissioner). Under the changes, the Australian Information Commissioner will be able to: 

  • assess agencies' privacy management processes and systems;
  • assess agencies' compliance with the APPs;
  • accept enforceable undertakings from entities to act or to refrain from acting in a particular way; 
  • apply to the courts to compel an entity to comply with an enforceable undertaking; and 
  • apply to the courts for civil penalty orders: in serious cases or for repeated breaches, civil penalties can be sought for up to $1.7 million. 

Commonwealth privacy amendments will certainly receive much public attention this month. Victoria will have its turn later this year when amendments to the Information Privacy Act 2000 (Vic) and the Commissioner for Law Enforcement Data Security Act 2005 (Vic) are introduced. VGSO will be providing guidance and training on these amendments following their introduction into Parliament in coming months. 

Of course, privacy is a matter to which agencies must give their attention throughout each year. If you are in the Victorian Government and would like assistance to ensure your agency's privacy practices comply with the Information Privacy Act 2000 (Vic), or if you would like to discuss changes to the Privacy Act, call:

Joanne Kummrow
Special Counsel
8684 0462

Katie Miller
Managing Principal Solicitor
8684 0460

Steven Brnovic
Senior Solicitor
8684 0453

Wednesday, 5 March 2014

New laws may make discovery less awful!

The discovery process in litigation has broken many a litigation lawyer's heart, and horror stories of junior lawyers spending endless months reviewing documents abound.

The Australian Law Reform Commission recently noted that discovery is often the single largest cost in commercial litigation. It can amount to huge public cost and represents a barrier to justice reducing the effectiveness of the court system.

Indeed, in the Supreme Court matter of Matthews v SPI Electricity Pty Ltd & Ors, Associate Justice Zammit stated:
discovery is a topic that attracts a great deal of attention due primarily to the exorbitant costs that are incurred by the parties and the delay caused in litigation. The Court has long recognised that discovery disputes, large scale unfocussed discovery exercises and the resulting costs, work against the interests of the parties to the litigation, the operation of the civil justice system and ultimately the interest of the community.

Fortunately, the Government has introduced legislation granting courts greater discretionary case management powers to simplify and reduce the costs of discovery and disclosure of documents for parties in civil litigation.

The Justice Legislation Amendment (Discovery, Disclosure and Other Matters) Bill 2014 (the Bill) amends the Civil Procedure Act 2010 (the Act) to give the courts additional powers to better manage the discovery process.

Under the amendments, the courts could order that parties discuss the preparation of a statement of the main issues in the proceeding. This statement would be used in pre-trial processes to narrow the issues in dispute. This approach is consistent with the overarching obligation in s 23(b) of the Act which states that a party must use reasonable endeavours to narrow the scope of the remaining issues in dispute. Traditionally, the purpose of pleadings is to outline the issues in dispute, but they can be long and difficult documents which sometimes fail to adequately do this. The statement will not replace pleadings but will give the courts and litigants a new tool to help litigation run more efficiently and cost effectively.

To ease the costs burden, the court will also be able to order that the party who requested discovery pay some or all of the costs where appropriate. In other words, a court will be able to say to a party, ‘if you want it, you pay for it’.

To further reduce the cost burden on the providing party, the Bill also allows the court, if the parties consent, to order a party to provide to another party all documents within their possession or control that are related to the issues in the proceedings, subject to safeguards to ensure that a party is not prejudiced. This will mean that the requesting party rather than the providing party is responsible for the time and cost of reviewing the documents, again encouraging parties to minimise the cost of discovery. This is a significant amendment and one which it will be interesting to see if it is taken up by commercial litigants and their lawyers, anxious not to forego privilege despite the amendments providing safeguards to ensure that privilege is safeguarded.

Problems can arise when companies use different systems and databases to store their business records. This can cause delay and increase costs as discoverable documents are difficult to identify. The Bill aims to remedy this by providing courts with the power to order that parties give an affidavit which sets out information regarding a party’s document management systems, volume, manner of arrangement, and location of documents. If required the deponent of an affidavit or other suitable person can be orally examined on those matters dealt with in the affidavit.

This will allow parties to more easily identify documents, particularly in the context of complex document storage and other IT systems, and minimise disputes about discovery.

So the new Bill won't go so far as to make discovery enjoyable, but it will hopefully encourage a cultural shift in Victorian litigation to make the process less painful for lawyers and clients alike.


The take home points

  • The Bill builds on last year's rule changes which also aimed to reduce the costs of discovery
  • Clients will need to be able to readily identify their data storage systems
  • Victorian Government parties should seek advice before disclosing documents subject to public interest immunity or state secrecy obligations under the new regime. Remember: the State bears the burden of establishing that production would not be in the public interest.
For more information about discovery or this Bill, please contact:

Andrew Suddick
General Counsel
t 8684 0458

Antonio Mazzone
Managing Principal Solicitor
t 8684 0418

Gabriella Mazzone
Seasonal Clerk