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Cairns, Bernard --- "Pleadings and case management" [2017] PrecedentAULA 53; (2017) 142 Precedent 4

PLEADINGS AND CASE MANAGEMENT

By Dr Bernard Cairns

INTRODUCTION

The formal rules of pleading in Australian higher and intermediate courts developed in the 19th century, before the advent of case flow management, the mass of electronically stored information and increasingly complicated commercial transactions. Nowadays, pleadings have to operate in the context of the civil justice overriding or overarching objectives of justice and efficiency, and case management.^[1] Martin CJ observed in Barclay Mowlem Construction Ltd v Dampier Port Authority^[2] that pleadings must identify the issues, disclose an arguable case or defence and apprise the parties of the case to be met at the trial. Beyond that, however, the court ought to be reluctant to allow an extensive debate about technical pleading rules that evolved in a different case management environment.

PLEADING RULES

Pleadings fundamentally distinguish between fact and evidence and fact and law. The Federal Court Rules 2011 (Cth) are sufficiently typical to demonstrate the situation in other jurisdictions. In pleading a statement of claim, the plaintiff must allege enough material facts to disclose a cause of action. In the defence, the defendant must explicitly plead a denial, an admission or a non-admission to each allegation of fact in the statement of claim. As well, the defendant must plead whatever material acts are necessary to constitute any positive defence the defendant proposes to raise. Pleadings cannot set out evidence, but they must be sufficient to give notice of the case to be made against the opposite party at the trial.^[3] To circumscribe the generality of allegations of material facts, the necessary particulars of any claim, defence or other matter must be stated in a pleading.^[4] In addition, by way of a special plea, either party must expressly plead any matter that does not arise from previous pleadings, might take a party by surprise or might render a claim or defence not maintainable.^[5] The whole point of the pleading system, Jessell MR explained in Thorp v Holdsworth,^[6] was to narrow the parties to definite issues. The parties must know, through their pleadings, the real point to be decided at the trial. In Banque Commerciale SA (en liq) v Akhil Holdings Ltd,^[7] the High Court accepted this as the proper role and function of pleadings.

Even though stating the basic pleading distinctions is simple, distinguishing among material facts, particulars and evidence is not necessarily straightforward. Particulars identify the facts that a party intends to prove to establish the material facts. In Bailey v Federal Commissioner of Taxation,^[8] the appellants challenged a tax assessment and applied to the Commissioner for particulars. Apart from stating the appellants were party to an arrangement for avoiding tax contrary to s260 of the Income Tax Assessment Act 1936 (Cth), the Commissioner refused to supply further particulars of the alleged arrangement. Gibbs J was explicit: particulars inform a party of the nature of the case to be met at the trial and limit the issues of fact to be investigated.^[9] As to facts, Mason J said the relevant facts included the Commissioner’s view of the facts on which the assessment was based and the manner in which the Commissioner arrived at the assessment.^[10] The Court rejected the submission that, as the facts of the arrangement were within the appellant’s knowledge, particulars were not necessary. The facts the Commissioner took into account in arriving at the assessment or would rely on at the appeal were not within the appellant’s knowledge. Particulars identify what the party will allege to be the facts, irrespective of the state of knowledge of the party seeking the particulars.^[11] Court case management regimes aim to avoid or at least reduce the opportunity for this kind of challenge.

CASE MANAGEMENT

In case management, particular types of cases are located to an appropriate special list where the court gives individual directions, including directions about pleadings. The Federal Court, for example, expects the parties to engage with it in a dialogue to achieve the overarching objective.^[12] In cases within its Commercial and Corporations National Practice Area, the Court gives directions about pleadings and whether the proceeding is suited to a modified and efficient form of pleading including concise forms, agreed statements of facts or more detailed pleadings.^[13] The fast track procedure, where fast track statements and responses replace pleadings, is still available for appropriate cases.^[14]

Federal Court practice notes operate in the context of the Court’s statutory powers under s23 of the Federal Court of Australia Act 1976 (Cth) and the Court’s general powers under the Federal Court Rules 2011. Section 23 of the Act confers on the Court ‘power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders ... as the Court thinks appropriate’. The Court has more specific powers under the Rules. The court may make any order it considers ‘appropriate’ in the interests of justice,^[15] dispense with compliance with the Rules^[16] or make an order inconsistent^[17] with them. In New South Wales (NSW), practice notes are extensive, have specific statutory authority and co-ordinate with the civil justice overriding objective.^[18] Part 4.2 of the Civil Procedure Act 2015 in Victoria confers extensive power on courts to give directions in individual cases to further the overarching objective. The Supreme Court of NSW Practice Note No. SC Eq 3 establishes the Commercial List and Technology and Construction List. Its purpose is to set case management procedures for the just, quick and cheap disposal of proceedings.

NARRATIVE PLEADINGS

Statement-type or narrative pleadings, ameliorating rigid pleading distinctions, are consistent with current case flow management practices. von Doussa J noted in Beach Petroleum NL v Johnson^[19] that the distinction between material facts and particulars had become obscured. Pleadings according to traditional rules did not adequately make known to the court and the parties the nature of the opposing cases. The tendency, according to von Doussa J, was towards narrative pleading. The court will receive technical objections to pleadings for want of form with less enthusiasm than previously. Even so, pleadings must still disclose a cause of action and the case the opposing party will have to meet at the trial. Drummond J agreed in Queensland v Pioneer Concrete (Qld) Pty Ltd.^[20] This approach, Drummond J said, reflected the objectives of the court’s case management system and its discretionary power to control pleadings. The court has discretion to deal flexibly with pleadings that do not comply strictly with the rules. Short of striking out a non-compliant pleading, the court may remedy the situation by giving directions or ordering further particulars.

The NSW Commercial List and the Technology and Construction List is designed for commercial and technical and construction cases.^[21] The plaintiff files a commercial list statement or, as appropriate, a technology and construction list statement. Avoiding formality, the statement must set out, inter alia, the nature of the dispute, the issues, facts and the plaintiff’s contentions and allegations with adequate particulars and identify the legal grounds of the plaintiff’s claim. The defendant files a corresponding statement. In Brambles Australia Ltd v Tatale Pty Ltd,^[22] Bergin J treated these statements as pleadings. While avoiding formality, the pleading should make clear the allegations of fact for the relief claimed. Allsop P explained in Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (Baulderstone)^[23] that parties in a commercial list proceeding, through their legal representatives, must co-operate, before and during the trial, to identify the issues in contention.

This co-operation is essential in civil litigation, including in commercial cases. Clarity, precision and openness is part of co-operation. This has been emphasised in the context of ambush and surprise and, according to Allsop P, clear articulation of the issues is the responsibility of parties and their legal representatives. They must assist the court in furthering the civil justice overriding objective to justly, quickly and cheaply resolve the real issues.

Proceeding in this manner envisages that pleadings or equivalent documents will be updated or amended from time to time as necessary to disclose the active issues. The principles as to amending pleadings therefore come into play. In most jurisdictions, an amendment that is necessary to determine the real issues in a proceeding must normally be allowed; other amendments are within the court’s discretion.^[24] In Aon Risk Services Australia Ltd v Australian National University,^[25] the High Court found it unnecessary to decide whether the overriding objective applied to necessary as well as to discretionary amendments. As it was, the amendment in question was discretionary and therefore subject to the overriding objective. The plurality still thought a necessary amendment would be unlikely to cause delay and would not cut across the overriding objective. In this context, commercial and similar lists aim to implement to the overriding objective. Their pleadings, as a matter of course, would normally consist of necessary matters.

Ipp JA reviewed the requirements for commercial list statements in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd^[26] in the NSW Court of Appeal. Although parties have latitude in explaining their contentions, commercial list statements perform essentially the same function as pleadings. They must set out not only the facts, but also the legal grounds for the relief claimed. Practice in the commercial list allows the parties, in pleading their cases, to comply with the surprise rule and to lay their cards clearly on the table. The requirements of the practice note ensure that each party knows the case made against it, the ambit of pre-trial procedures such as discovery and the limits for conducting the trial. The propositions Ipp JA put forward may be summarised:^[27]

• Confining relief to that available on the pleadings ensures a party’s right to procedural fairness;

• Unless the parties agree to disregard the pleadings or a party acquiesces in another party’s departure from the pleadings, relief granted at the trial must be founded on the pleadings;

• While cases are to be decided on a basis that embraces the real controversy, the real controversy must be determined in accordance with these principles.

Applying these principles to preparing pleadings ensures procedural fairness to the parties. Deviating from pleadings is permitted only where it is necessary to do so to preserve procedural farness, such as where the parties agree or where they conduct a trial outside the pleadings.^[28] Departing from pleadings at a trial is a matter for the trial judge’s discretion: sometimes it might be unjust to prevent the parties from departing from the pleadings.^[29] But an appeal court only cautiously reverses or varies a trial judge’s discretionary decision on a matter of practice or procedure.^[30] Nonetheless, litigation, as Allsop P observed in Baulderstone,^[31] is a dynamic activity. Changes in how a case is put can be expected, particularly in large commercial cases. Such changes make it all the more important for the parties and their legal representatives to make sure the clear enunciation of issues keeps pace with those changes. What is in issue and what ceases to be in issue must be made clear.

Provided they are clear, narrative pleadings have their virtues. They must disclose material facts and demonstrate a foundation for relief or a defence. Jackson J emphasised the value of material fact pleading in examining a narrative-style statement of claim running to some 290 paragraphs in Mio Art Pty Ltd v Macequest Pty Ltd.^[32] A pleading must identify the material facts that constitute each cause of action asserted, especially where there are multiple parties and several causes of action. Lengthy pleadings, common in commercial litigation, must connect each cause of action with the corresponding material facts, not leave them disconnected or separated in a long historical narrative. The ‘conceptual power of the material fact model of pleading is not recognised often enough’, Jackson J said. He could not agree with the trend to treat pleading material facts as ‘best overtaken by detailed factual and legal submissions’. Neither, he said, have the pleading rules been altered to countenance it. There was a place for detailed factual and legal submissions, but not as a replacement for identifying material facts. The plaintiff succeeds on the cause of action by proving the material facts. The case is reduced to its factual skeleton, which serves the purpose of efficiency and cost-saving. Pleaded facts are the basis for a civil trial, but pleadings are critical well before the trial. They establish whether the alleged facts demonstrate a reasonable cause of action or defence, whether an application for summary judgment is necessary or whether a pleading ought to be struck out as infringing the pleading rules. Also relevant, as Jackson J put it, a pleading must not oppress a defendant by vague or uncertain allegations that lack particularity. A lengthy pleading is not necessarily a vice, his Honour acknowledged, so long as it isolates the issues and co-locates the material facts and the applicable cause of action. Jackson J struck out the statement of claim for lack of clarity and gave leave to re-plead in Mio Art Pty Ltd v Macequest Pty Ltd (No 2).^[33] In making an order for costs, he summarised the defects with the statement of claim. Because of the structure of the statement of claim there was a problem identifying precisely the case the defendants had to respond to. A problem of that kind is not a technicality or a matter of fashion. It goes to the ‘heart of the fairness of the adjudicative process’. Not all narrative pleading is objectionable, it was only that particular statement of claim that was defective.

Dr Bernard Cairns is a Barrister and Adjunct Associate Professor at the University of Tasmania Law School. PHONE (03) 6226 2740 EMAIL bernard.cairns@utas.edu.au.

^[1] B C Cairns, Australian Civil Procedure (Lawbook Co, 11^th ed, 2016) [6.15], [6.440].

^[2] Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 at [7] – [8]. See also Hamilton v Australian Capital Territory [2011] ACTSC 45 at [23] – [34] per Refshauge J.

^[3] Federal Court Rules 2011 (Cth), r16.02.

^[4] Ibid, r16.41.

^[5] Ibid, r16.08.

^[6] Thorp v Holdsworth [1876] UKLawRpCh 167; (1876) 3 Ch D 637 at 639.

^[7] Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990)169 CLR 279. See also G Curtin, ‘The Art of Pleading’ in Legg (ed), Resolving Civil Disputes (LexisNexis 2016) 79; Campbell, ‘The Purpose of Pleadings’ (2004) 25 Aust Bar Rev 116.

^[8] Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214.

^[9] Ibid, 219.

^[10] Ibid, 221.

^[11] Sides Engineering Pty Ltd v Energetech Australia Pty Ltd [2005] FCA 1672 at [5] per Edmonds J.

^[12] Federal Court, Practice Note CPN 1 – Central Practice Note: National Court Framework and Case Management, 25 October 2016, at [7.3] – [7.4].

^[13] Federal Court, Commercial and Corporations Practice Note (C&C-1) (25 October 2016).

^[14] Federal Court, Practice Note CPN 1 – Central Practice Note: National Court Framework and Case Management, 25 October 2016, at [6.5]. For an example of a redacted fast track statement, response and reply for Andrews v Australia & New Zealand Banking Group Ltd [2012] HCA 30; (2012) 247 CLR 205 see: <http:// www.fedcourt.gov.au/law-and-practice/class-actions/class-actions/docs> (viewed 28 June 2017).

^[15] Federal Court Rules 2011 (Cth) r1.32.

^[16] Ibid, r1.34.

^[17] Ibid, r1.35.

^[18] Civil Procedure Act 2005 (NSW) s15.

^[19] Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466.

^[20] Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] ATPR 42,821 at [18] – [22].

^[21] Supreme Court of NSW, Practice Note No. SC Eq 3, Supreme Court Equity Division – Commercial List and Technology and Construction List, 10 December 2008.

^[22] Brambles Australia Ltd v Tatale Pty Ltd [2006] NSWSC 204 at [9].

^[23] Baulderstone at [160] – [163] per Allsop P.

^[24] See eg Civil Procedure Act 2005 (NSW) s64.

^[25] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [71] – [72] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.

^[26] Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 73 NSWLR 653 at [415] – [428].

^[27] Ibid, [424].

^[28] Ibid, [421] – [422], quoting Banque Commerciale SA v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-7.

^[29] Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 73 NSWLR 653 at [425 – [427], quoting Leotta v Public Transport Commission of NSW (1976) 50 ALJR 666 at 668.

^[30] Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 73 NSWLR 653 at [458 – [459], quoting Re the Will of F B Gilbert (Deceased) [1946] NSWStRp 24; (1946) 46 SR(NSW) 318 at 323; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at 177.

^[31] Baulderstone at [160] – [163].

^[32] Mio Art Pty Ltd v Macequest Pty Ltd [2013] QSC 211; (2013) 95 ACSR 583 at [58] – [70].

^[33] [2013] QSC 271 at [41].