Monthly Archives: April 2012

Safeguard your Mareva injunction with a PPSA registration

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I have just put the finishing touches to a seminar paper I am delivering this week on the Personal Property Securities Act 2009.

My paper is not as unwieldy and dry as the PPS Act itself (is anything?) but I wouldn’t call it sexy either. I will post it on its own discrete (ie separately tabbed) page in this blog after the seminar.

For an extremely short synopsis of the PPS Act generally see my post of 10 February 2012 (which you can access by simply following the date prompts below the mugshot in the right-hand margin of this page.)

But let me take you straight to what might be the highlight for general commercial litigators with Mareva-type injunctions in their armoury (and they should be in every armoury).

Once Mareva orders (aka ‘asset preservation orders’ and ‘freezing orders’) and some analogous orders are obtained from any Australian court or tribunal it seems they can be ‘perfected’ by registration on the PPS Register.

Such registration will effectively advertise the existence of your client’s Mareva injunction to the world at large. That ‘perfection’, among other things, should constructively warn off third parties who might otherwise purchase or lend against the property in breach of a court order restraining the use and/or disposal of that property.

This new tool lies buried in reg 5.3(c) of the PPS Regulations. I am not aware of it having been used since the PPSA regime started on 30 January 2012.

Is this history waiting to be made or has it been made already?

Anyone?

Is your enemy’s enemy your friend? Proportionate liability cases and the rule in Jones v Dunkel

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The rule in Jones v Dunkel permits a court to draw an inference at trial from a party’s unexplained failure to call a witness logically within that party’s camp. The permissible inference is that the absent witness’s evidence, if led, would not have assisted that witness’s camp.

The rule is not new.  It actually predates the case from which it takes its name – Jones v Dunkel (1959) 101 CLR 298.

Particularly since the commencement in 2004 of Part IVAA of the Wrongs Act (Vic) and its federal equivalents, apportionable liability cases have become commonplace. This has complicated the application of the Jones v Dunkel rule.

Co-defendants in commerical litigation now typically pitch their case at two levels:

  • firstly, they will argue in unison that the plaintiff’s case should fail;
  • secondly, as a fallback, they will argue against each other that, if the plaintiff succeeds, the other co-defendant(s) should wear all, or most, of the resulting liability.

These issues arose (on the pleadings at least) in Goddard Elliott v Fritsch [2012] VSC 87 (see my post below of 29 March 2012 for a brief overview of the case’s facts and issues).

There a disgruntled client sued his solicitors, plus the silk and senior junior retained on his behalf.

He alleged, inter alia, negligence against each of them. Both barristers settled but the solicitors fought the case to verdict. The barristers remained as nominal parties in the trial for the purposes of the apportionment issues.

In defending the negligence claim the solicitors did not call evidence from the silk in support of their case. But neither did the client call evidence from that silk in support of his case.

The client then asked the court to draw an adverse inference against the solicitors in accordance with the rule in Jones v Dunkel.

‘But the silk is an independent party and not within our camp’, replied the solicitors.

Bell J disagreed. Here are some extracts taken from between para 32 and 49 of the 1136 paragraph judgment:

“In the negligence and other claims which have been made, and in the factual basis of what has been alleged, the nature of that case puts all of the defendants by counterclaim in the one camp….

“… It was within the power of [the solicitors] to call [the silk] as a witness in relation to important issues of fact in the case, particularly [the client’s] mental capacity and what occurred when the proceeding in the Family Court was settled…

“As [the silk) was in [the solicitors’ firm’s] camp, it was reasonably to be expected that it would call him to give evidence on its behalf. For reasons which were not explained, it failed to do so.

“The unexplained failure of [the solicitors] to call [the silk] gives rise to an inference that his evidence would not have assisted [the solicitors’] case.  That inference may be taken into account against [the solicitors] in evaluating the whole of the evidence of the case, including the evidence of [the client]. By reason of [the solicitors’] failure to call [the silk] I might more readily resolve any doubts I have about the reliability of [the client’s] evidence.

Conclusion

This ruling illustrates a conundrum likely to arise in many (perhaps even most?) multi-party cases where an apportionment of liability as between defendants (and/or joined parties) is sought.

For each co-defendant, the plaintiff will typically be the primary adversary but not the only adversary. Typically, each of the co-defendants will also be trying to shunt maximum liability on to each other’s plates. In that sense, every other ‘camp’ in the litigation will be an enemy camp.

But, for the purposes of the rule in Jones v Dunkell, your opposition’s opposition might be considered (by the Court at least) to be your friend.  The co-defendant trying to minimise his liability at your expense might very well be considered to have been within your ‘camp’ in the event of your unexplained failure to call evidence from that person.

But dare you call a hostile co-defendant to give evidence on your behalf?

Therein lies a post for another day…

Courage at all costs? Lawyers reminded of personal exposure in Centro

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Australia’s most famous English silk, Geoffrey Robertson, once rhetorically rolled his eyes at the concept of fearless lawyers in Anglo-Australian law.

He was all for the idea but his point was that a brave lawyer, here or in London, braves mainly the risk of occasional unkind words from the bench and the media.

For truly courageous lawyers, he said, look to places like Columbia.

There, some lawyers’ career alternatives boil down to either a safe and very comfortable life for themselves and their families, subsidised by the local drug lords, or a more principled career on a very modest government income which, among other things, is hopelessly inadequate to guard them and their families from the real possibility of kidnapping or assassination.

Columbia remains a long way off but Robertson QC’s disparagement of legal courage here might require some updating after Justice Michelle Gordon’s reported comments in the Centro case this week.

The case is in its seventh week in the Federal Court. There are hundreds of millions of dollars at stake. The auditors were always in the gun. Now their counsel and solicitors King & Wood Mallesons might be too.

See the Fairfax reports here and here.

A judge’s power to order costs against the lawyers is not in doubt (see for example my post here on Superior IP International Pty Ltd v Ahearn Fox Patent and Trade Mark Attorneys [2012] FCA 282 and the Allen Arthur Robinson post on a similar recent case here). But such costs orders typically involve after-the-event criticism of the lawyers from the bench.

Media reports of the Centro case suggest provisional criticism from the bench of the lawyers’ anticipated performance.

Assuming these reports are correct, what is a brace of silks and senior juniors and their über firm instructing solicitors to do?

While it would hardly look courageous, they could turn tail and run. Abandoning a line of argument in defiance of a client’s instructions is a real option in some cases. While obviously problematic (not least from the costs angle) it can be justified in the right circumstances by the lawyers’ overarching obligations under, among other things, the Federal Court Act, the Civil Dispute Resolution Act (Cth) and Victoria’s Civil Procedure Act.

Another option is persevering in the teeth of incoming judicial flak and attempting to win over an apparently very dubious judge. (although they have reportedly described their argument as “not without foundation” which sounds a mite trepidatious.)

But whichever course the auditors’ representatives now choose, they will probably require more guts than Robertson QC thought was usually required of Anglo and Australian lawyers.

This a nine-cornered stoush (yes, nine!) and costs will surely be running at several Portsea beach houses per week.

Stay tuned.

When a Calderbank offer is likely to be a hundred-to-one outsider

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At the track, bets are customarily not paid until the winning jockeys and their saddles have weighed in and the stewards have declared ‘correct weight’.

Similarly, in commercial litigation (never entirely dissimilar to gambling) the financial outcome of the courtroom contest is often unclear until the final costs orders are made.

But in retail tenancies cases at VCAT successful punters rarely even glimpse the stewards’ scales. This is because of the near-prohibition on costs orders contained in s 92 of the Retail Leases Act 2003 .

The latest illustration of this problem for successful litigants, and boon for unsuccessful litigants, is Complete Pets Pty Ltd v Coles Group Property Developments Pty Ltd [2012] VCAT 361.

A tenant, its guarantor and two investors together sued a landlord. The landlord cross-claimed. The landlord offered in a Calderbank letter and, later, in an open offer, that all claims be settled on the basis that each party walk away from the litigation and bear its own costs.

The tenant’s camp did not bite. They fought on with disastrous consequences. They were awarded zilch. The landlord won $342,901.

The landlord then sought its costs.

The landlord argued firstly that the guarantor and investors had brought their claims under the Fair Trading Act and accordingly were not caught by the savage restriction on costs orders contained in the Retail Leases Act.

Senior Member Riegler was unmoved, stating (at para 16): –

I am of the view that it is of no consequence that the relief is being sought under the Fair Trading Act 1999 …… The critical question is not what relief is being sought but rather whether the parties are parties to a proceeding before the Tribunal under Part 10 of the Retail Leases Act.

He concluded that the parties were involved in such a proceeding and, as a consequence, the landlord could not obtain a costs order against any of the tenant, guarantor or the investors unless it could show that one of the exceptions to s 92 of the Retail Leases Act applied. This required the landlord to satisfy VCAT that its opponents had conducted the proceeding either in a vexatious way that unnecessarily disadvantaged the landlord, or after failing to participate in alternative dispute resolution.

The landlord relied on its spurned settlement offers to make precisely those alternative submissions. It argued that as the ‘walk away’ offers it had made were clearly more favourable to the litigation’s losers than the end result vexatious conduct and/or the failure to participate in alternative dispute resolution should be inferred.

Again Senior Member Riegler was not persuaded. He said –

  • a litigant merely putting its opponent to its proof is not of itself vexatious;
  • neither is a litigant’s failure to accept an advantageous offer of settlement; and
  • the reference in the Retail Leases Act to alternative dispute resolution does not extend to settlement offers.

Conclusion

Is a party with a strong case wasting its time and money making a Calderbank offer (or similar) in VCAT’s Retail Tenancies List?

Probably.

Of course, not every punter who backs himself to pick the four winners necessary for a quadrella comes away disappointed – just the overwhelming majority.

In a retailing leasing dispute your client’s odds of getting a costs order are probably similar. Your punter might do much better taking a form guide to Flemington than a Calderbank offer to a costs application in the Retail Tenancies List.

Leading evidence from beyond the grave

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Your client has a commercial trial which is still months, even years, off. One of his witnesses is gravely ill and might not survive until the trial.

What are your options?

You probably have three:

  • Arrange to have the sick witness’s evidence taken on commission or in a de bene esse examination;
  • Take an affidavit from that witness and tender it at trial in the event that the witness dies in the interim; or
  • Do nothing beyond simply hoping for the best and trusting to the power of modern medicine and/or prayer.

This dilemma was one of several interesting issues which arose in Goddard Elliott v Fritsch [2012] VSC 87 (see my earlier blogs of 29 March 2012 and 2 April 2012 – both below – dealing with other aspects of the same case).

A witness for the defendant had died almost 2 years before the trial began. At trial the defendant sought to tender an affidavit that the witness had sworn only four days before his death, for the purposes of the trial. Justice Bell described the affidavit as having high probative value despite parts of it being “misleading and confusing”.

But was it admissible?

The plaintiff objected. It argued that the affidavit was clearly hearsay and should be excluded as such in accordance with section 59(1) of the Evidence Act 2008. The defendant countered that the exceptions to the hearsay rule in s 63 of the Evidence Act applied in the circumstances.

Bell J resolved the argument by looking to the court’s general discretion under s 135 of the Evidence Act to exclude evidence. He concluded that while the affidavit was prejudicial to the plaintiff’s case it was not unfairly prejudicial.

“I am not satisfied that the inability of [the plaintiff] to cross-examine [the affidavit’s deponent] will result in unfair prejudice such that the probative value of [the dead man’s] evidence is substantially outweighed by the danger of the evidence being unfairly prejudicial to that party. However, [the] affidavit must be given less weight because [the deponent] was not able to be cross-examined.”

Is your enemy’s enemy your friend? Proportionate liability cases and the rule in Jones v Dunkel

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The rule in Jones v Dunkel permits a court to draw an inference at trial from a party’s unexplained failure to call a witness logically within that party’s camp. The permissible inference is that the absent witness’s evidence, if led, would not have assisted that witness’s camp.

The rule is not new.  It actually predates the case from which it takes its name – Jones v Dunkel (1959) 101 CLR 298.

Particularly since the commencement in 2004 of Part IVAA of the Wrongs Act (Vic) and its federal equivalents, apportionable liability cases have become commonplace. This has complicated the application of the Jones v Dunkel rule.

Co-defendants in commerical litigation now typically pitch their case at two levels:

  • firstly, they will argue in unison that the plaintiff’s case should fail;
  • secondly, as a fallback, they will argue against each other that, if the plaintiff succeeds, the other co-defendant(s) should wear all, or most, of the resulting liability.

These issues arose (on the pleadings at least) in Goddard Elliott v Fritsch [2012] VSC 87 (see my post below of 29 March 2012 for a brief overview of the case’s facts and issues).

There a disgruntled client sued his solicitors, plus the silk and senior junior retained on his behalf.

He alleged, inter alia, negligence against each of them. Both barristers settled but the solicitors fought the case to verdict. The barristers remained as nominal parties in the trial for the purposes of the apportionment issues.

In defending the negligence claim the solicitors did not call evidence from the silk in support of their case. But neither did the client call evidence from that silk in support of his case.

The client then asked the court to draw an adverse inference against the solicitors in accordance with the rule in Jones v Dunkel.

‘But the silk is an independent party and not within our camp’, replied the solicitors.

Bell J disagreed. Here are some extracts taken from between para 32 and 49 of the 1136 paragraph judgment:

“In the negligence and other claims which have been made, and in the factual basis of what has been alleged, the nature of that case puts all of the defendants by counterclaim in the one camp….

“… It was within the power of [the solicitors] to call [the silk] as a witness in relation to important issues of fact in the case, particularly [the client’s] mental capacity and what occurred when the proceeding in the Family Court was settled…

“As [the silk) was in [the solicitors’ firm’s] camp, it was reasonably to be expected that it would call him to give evidence on its behalf. For reasons which were not explained, it failed to do so.

“The unexplained failure of [the solicitors] to call [the silk] gives rise to an inference that his evidence would not have assisted [the solicitors’] case.  That inference may be taken into account against [the solicitors] in evaluating the whole of the evidence of the case, including the evidence of [the client]. By reason of [the solicitors’] failure to call [the silk] I might more readily resolve any doubts I have about the reliability of [the client’s] evidence.

Conclusion

This ruling illustrates a conundrum likely to arise in many (perhaps even most?) multi-party cases where an apportionment of liability as between defendants (and/or joined parties) is sought.

For each co-defendant, the plaintiff will typically be the primary adversary but not the only adversary. Typically, each of the co-defendants will also be trying to shunt maximum liability on to each other’s plates. In that sense, every other ‘camp’ in the litigation will be an enemy camp.

But, for the purposes of the rule in Jones v Dunkell, your opposition’s opposition might be considered (by the Court at least) to be your friend.  The co-defendant trying to minimise his liability at your expense might very well be considered to have been within your ‘camp’ in the event of your unexplained failure to call evidence from that person.

But dare you call a hostile co-defendant to give evidence on your behalf?

Therein lies a post for another day…