In brief - New practice note affects the way litigation will be run
If you are currently involved in or are soon to commence proceedings in the Supreme Court of NSW, you must be prepared to serve your evidence at a relatively early stage in the proceedings, because a significant new practice note has commenced in the Supreme Court (Equity Division) which will affect the way that litigation will be run.
Practice Note No. SC Eq 11
Practice Note No. SC Eq 11 (PN11) commenced on 26 March 2012 and applies to all existing and new Supreme Court proceedings in the Equity Division including those in the Commercial List, Corporations List and Technology and Construction List. The Commercial Arbitration List is exempt.
Discovery no longer an automatic entitlement of parties to litigation
As seasoned litigants are aware, the discovery of documents is a crucial and routine step embarked upon by the parties in the litigation before the preparation of evidence.
This has now changed and discovery is no longer an automatic entitlement of the parties.
What is "disclosure"?
The term "disclosure" has now been adopted by the Supreme Court. (Disclosure is not defined in PN11 despite its usage. It is a phrase more commonly used in jurisdictions such as Queensland.)
In a forum held on 30 April 2012, Chief Justice Bathurst, Justice Bergin, Chief Judge in Equity, and Justices Brereton and Hammerschlag confirmed that the term "disclosure" includes discovery, as well as interrogatories, subpoenas and notices to produce.
New requirement of PN11 to serve evidence at an early stage
Essentially, PN11 requires the parties to serve their evidence before the Court will make any orders for disclosure.
Evidence includes witness statements and expert reports.
Disclosure orders not an automatic right
PN11 states that the Court will not make an order for disclosure, even by agreement of the parties, unless:
- There are "exceptional circumstances". Possibly this may include circumstances where neither party has the necessary and relevant documents and the Court considers that disclosure is justified in those circumstances.
- It is satisfied that disclosure is necessary for the resolution of the "real issues in dispute in the proceedings".
As such, any preconceptions that discovery is an automatic right have now been firmly dispelled.
Applications for preliminary discovery before evidence is served
In the forum, their Honours also confirmed that applications for preliminary discovery before evidence is served will be referred to the Chief Justice in Equity or the Duty Judge for determination.
Given the broad definition of "disclosure", a subpoena to produce documents before the service of evidence is no longer considered as routine but may in fact be an abuse of process and is liable to be set aside.
PN11 aims for quicker and cheaper resolution of disputes
PN11 aims to realign the objectives of the Supreme Court with the notion of the "just, quick and cheap resolution" of the real issues in dispute in the proceedings. This is because discovery is usually an expensive and time consuming procedure for litigants.
Moreover, discovery is often supplemented by the issuing of subpoenas to produce documents, which has also resulted in overwhelmed Court lists and increased costs for litigants and third parties.
As highlighted in the recent decision of Armstrong Strategic Management and Marketing Pty Limited v Expense Reduction Analysts Group Pty Ltd  NSWSC 393, Justice Bergin, Chief Judge in Equity, commented that orders for disclosure under PN11 will only need to be made if:
"...it appears necessary for disclosure of particular documents additional to those that had been relied upon by any of the parties [in preparing their evidence]".
By postponing disclosure until after the service of evidence, it is hoped that parties are better able to identify what the real issues in dispute are and to consider seriously whether there is any need for disclosure of additional documents.
Implications of PN11 for construction disputes
In construction disputes, the discovery of documents is a step which can be very important for the preparation of witness statements and expert reports. In particular, expert witnesses need to review construction documents such as plans, drawings, specifications, designs, test results and contemporaneous materials in order to reach an independent and reasoned opinion.
In the absence of discovered documents, greater emphasis is likely to be placed on the parties' pleadings as the reference point for the preparation of evidence.
Because construction disputes are typically very document heavy, PN11 may see a rise in applications for disclosure for construction documents if such documents are inaccessible by the parties and not included in any evidence served beforehand.
Expert witnesses may also be affected by PN11 if key documents required for an expert's consideration and opinion are not readily available or accessible by a party.
Practical effect of PN11 remains to be seen
It is hoped that the financial burden on litigants, particularly in large commercial litigation matters, will be significantly reduced.
Apart from costs savings, PN11 will change the way that proceedings are run:
- Early service of evidence in proceedings may likely result in the earlier settlement of matters. Parties served with their opponents' evidence will be in an earlier position to assess any risk and exposure.
- Disclosure may be narrower and more confined to specific documents and/or key issues in dispute should applications for disclosure be made after evidence. In this case, this will hopefully achieve cost benefits for the parties.
- The costs involved with disclosure will most likely be thoroughly examined as the Court can now impose a limit on the amount recoverable by a party for disclosure.
However it is reasonable to suggest that if proceedings are well advanced and discovery orders have already been made, then it is unlikely that those orders will be reviewed.
What is certain is that the adoption of PN11 over the next 12 months will prove an interesting time for litigants and other parties to litigation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.