ANU versus AON case reduces lawyers making admendments

29-November-2010 Commercial Disputes By admin

Case forces unprofessional lawyers to lift their game

In a decision on 5 August 2009 the High Court significantly revised the guiding principles relating to case management of proceedings brought before the Courts in Australia.  The decision overruled the previous authority of Queensland v J L Holdings Pty Ltd [1997] HCA 1

The Situation Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (5 August 2009)

This case reached the High Court from a dispute between the Australian National University (ANU) against its insurance broker Aon Risk Services Australia Limited (Aon) and insurers in which it sought indemnity for losses by reason of the destruction and damage to buildings at their Mount Stromlo Complex in January 2003 fires.  At the hearing before the trial judge in November 2006 the ANU settled with their insurers but then sought an adjournment of the trial to make substantial amendments to its statement of claim against AON.

The trial judge permitted the adjournment and ordered that ANU pay AON’s costs and had regard to the authority of J.L. Holdings in which the primary consideration for the rule in J.L. Holdings is as follows:

It is held to be authority that while case management are a relevant consideration the interest of justice must always be the paramount consideration [100] – [102].

The case progressed to the Court of Appeal of the Supreme Court of the Australian Capital Territory which on 25 August 2008 allowed the appeal but only so far as it modified the costs order to an indemnity basis and continued to permit the amendment to the pleadings.

On 5 August the High Court overturned these two lower Court decisions.  The High Court noted that there was an increasing degree of case management in the Courts and this was reflected in legislation implemented after the J.L. Holdings decision.  The Court considered the A.C.T. equivalent of section 56 – 59 and 61 (1) of the Civil Procedure Act 2005 (NSW) which has the stated intention that the purpose of the Rules of Court are to facilitate the just resolutions of the real issues in civil proceedings with the minimum delay and expense.

The Court acknowledged that having regard to the other “costs” incurred by a party in litigation – such as the opportunity cost of litigation, the strain of litigation upon the witnesses, employees and offices of corporate litigants that it is in the public interest that there be proper and efficient use of public resources.

This decision has been quickly applied in a recent decision in the Supreme Court of New South Wales.  Justice Gzell in the Supreme Court of New South Wales on 14 September 2009 applied this case in refusing leave to a Plaintiff to amend its statement of claim on the first day of trial to expand the potential entities the subject of the alleged wrong doing from 65 to 196 and to split the case from liability into two parts and deal only with liability (leaving quantum for separate and subsequent assessment).  Bastas v Hodes [2009] NSWSC 968

Justice Gzell declined this application on the above authority.

Comment from Mark Streeter Sydney LawyerMark Streeter Sydney Lawyer

Personally I see this decision as a very important one. It could have the impact of forcing lazy lawyers to modify the style of practice! The decision in AON provides very strong support for the case management practices of the State and Federal judges.  It is expected that if parties do not comply with directions and properly prepare and present their cases then they will lose the opportunity to “fix it up” later.

If there is an “application to amend” then the side which wants it must provide an explanation for the delay. They must also demonstrate that this movement (or delay) is brought in good faith. They need to bring to the Court’s attention the circumstances that gave rise to amendment so it may be weighed against the effects of any delay and the objectives of the “just, quick and cheap requirement” of the Court Rules.

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