30 July 2013
Court of Appeal clarifies the test for summary judgment in Victoria
List member Kylie Weston-Scheuber has written a case note on the recent clarification of the test for summary judgment by the Victorian Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd.
Kylie practises primarily in commercial and administrative law. In addition to degrees in Law (Hons), Music and Arts, she has a PhD in Law from the ANU and co-authored the textbook “Principles of International Humanitarian Law” recently published by Edward Elgar.
In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd  VSCA 158 (24 June 2013), the Court of Appeal of the Supreme Court of Victoria clarified the test applicable to applications for summary judgment in Victoria. The court has confirmed that the test is somewhat more liberal than the approach that previously applied, however it is unclear how this will operate in practice.
The question of the test to be applied to applications for summary judgment was referred to the Court of Appeal by Vickery J pursuant to s 17B(1) of the Supreme Court Act 1986.
Section 63 of the Civil Procedure Act provides that a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, has ‘no real prospect of success’. Section 63 is subject to section 64, which provides that despite anything to the contrary in Part 4.4 of the Act (Summary Judgment), or any rules of court, a court may order that a proceeding proceed to trial if satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because it is not in the interests of justice to do so, or the dispute is of such a nature that only a full hearing on the merits is appropriate.
Sections 63 and 64 in their current form were introduced by the Civil Procedure Act 2010. Prior to the 2010 reforms, the test that applied in such applications was whether a respondent’s case was ‘hopeless or bound to fail’. The 2010 amendments were based on recommendations of the Victorian Law Reform Commission in its Civil Justice Review Report of 2008. As noted in the Explanatory Memorandum to the Civil Procedure Act 2010, that report noted that the ‘hopeless or bound to fail’ test was too restrictive and there was a need for it to be liberalised.
Section 63, like Rule 292 of the Uniform Civil Procedure Rules 1999 (Qld), adopts the approach taken in rule 24.2 of the UK Civil Procedure Rules 1998. By contrast, s 31A of the Federal Court of Australia Act 1989 adopts a test of whether a matter has a ‘reasonable prospect of success’ rather than a ‘real prospect’, and the provision expressly provides that a proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success.
In Lysaght, Warren CJ and Nettle JA considered the issue of whether section 63 introduced a different test to the previous test of ‘hopeless or bound to fail’. They noted that if there were no authority on the point, they would be inclined to think that there was not a great deal of difference between the two tests. Their Honours noted that it was difficult to conceive of a case that could properly be described as lacking a real as opposed to fanciful prospect of success unless it were hopeless or bound to fail . However, their Honours considered themselves bound by a line of Queensland authorities indicating that the new test is more liberal, as they did not disagree with that line of authority. Accordingly, they concluded that there may be cases, yet to be identified, in which a case has no real prospect of succeeding, notwithstanding that it is not hopeless or bound to fail -.
Their Honours noted that the conception of a ‘real question to be tried’, as referred to by McMurdo J in Gray v Morris  2 Qd R 118, may provide some useful guidance in determining whether or not a party has a real prospect of success .1
In reaching their conclusion, their Honours determined that the finding in Karam v Palmone Shoes Pty Ltd  VSCA 97 that the two tests did not differ was incorrect . Notably, Nettle JA had been a member of the Court of Appeal in that decision.
Warren CJ and Nettle JA reiterated however that the power to terminate proceedings summarily should be exercised with caution and therefore should not be exercised unless it is clear that there is no real question to be tried. This principle applies whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process .
Neave JA agreed with the approach taken by the other two members of the Court. However, her Honour expressed concern that the liberalisation of approach under the legislative amendment might be limited by unduly emphasising the caution to be applied in exercising summary dismissal powers. This, her Honour noted, would be inconsistent with the objective of reforming the law relating to summary judgment .
In summary, the Court of Appeal has determined that the test for summary judgment is whether the respondent has a ‘real’ as opposed to a ‘fanciful’ prospect of success, and that the test is to be applied by reference to its own language and without comparison with the old ‘hopeless’ or ‘bound to fail’ test.
The Court also declared that the approach to determining applications for summary judgment has to a degree been liberalised under ss 63 and 64 of the Civil Procedure Act. However, it remains to be seen whether and how this liberalisation of approach will effect any change in practice.
1 A majority of the High Court has determined that ‘real prospect of success’ and ‘reasonable prospect of success’ are not the same test: Spencer v The Commonwealth (2010) 241 CLR 118, 139-141 per Hayne, Crennan, Kiefel and Bell JJ.