13 Jun 2008

Lowering the threshold for the granting of summary judgment

by Julian Arndt

Ultimately, it will be judicial interpretation that will define the benefits and detriments of the threshold of summary judgment.

At its heart, the judicial system seeks to promote justice. Ensuring justice while a workable degree of efficiency remains the central and eternal balancing act of the modern court. A discussion of summary judgment perhaps represents this conflict in its purest form.

This essay will firstly seek to outline the broad philosophical benefits and detriments of any lowering of the threshold of summary judgment, and will then assess such a threshold practically especially in regard to section 31A of the Federal Court of Australia Act 1976 (Cth). It will become clear that this issue is more complex than a mere trade-off between efficiency and justice. In identifying the procedural ramifications of implementing summary judgments, this essay will outline the ways in which the concerns of justice and efficiency interconnect and interact.

Background

Broadly, summary judgment is a mechanism for litigants to obtain a final judgment without trial. It is a mechanism aimed squarely at promoting efficiency within the judicial system by minimising both the time and cost of litigation by allowing judgment at an early stage of proceedings. This focus on efficiency can obviously be seen to have detrimental effects on the ethos of "doing justice" As such, traditionally in Australia, the mechanism of summary judgment has been used cautiously by the courts. The common law tests as developed and applied in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 have set a high threshold for attaining summary judgment with a requirement that there be "no reasonable cause of action", requiring the case to be "manifestly groundless" or "clearly untenable."

These common law tests have recently been supplemented by section 31A of the Federal Court of Australia Act 1976 (Cth), an amendment brought in by the Migration Litigation Reform Act 2005 (Cth). Relevantly, this amendment lowers the summary judgment threshold in the Federal Court (over all matters, not just migration cases) to the requirement that a party has "no reasonable prospect of success." Significantly, the amendment makes clear that this standard does not require the proceeding to be "hopeless" or "bound to fail."

An acceptable threshold?

Section 31A has in theory lowered the bar for the granting of summary judgment. An examination of the explanatory memorandum for the Migration Litigation Reform Bill 2005 (Cth) clearly reflects this intent. The amendment is aimed squarely at promoting efficiency within the judicial process by allowing the court greater "flexibility" to deal with unmeritorious proceedings. The practical effect of liberalising the granting of summary judgment has perhaps not been as pronounced as was intended. Initially, the courts have continued their cautious approach by declining to define the scope of "no reasonable cause of action" and seeking to continue to implement the more strict common law test. Justice Rares however, undertook a substantial treatment of section 31A in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352. Essentially he sought to construe the test of " no reasonable prospects of success" as meaning that there can be only one reasonable outcome.

The purpose of this essay is not to evaluate the current threshold as appropriate or inappropriate; it is to express more generally the advantages and disadvantages of lowering such a threshold. What can be said in reference to the Boston case is that it clearly demonstrates that the threshold of summary judgment will necessarily be defined by judges rather than politicians. As commentators like Michael Legg point out, despite the fact that legislation like the Migration Litigation Reform Act theoretically lowers the threshold of attaining summary judgment, it remains to be seen whether a cautious bench will translate this fact into greater numbers of summary judgments.

Advantages of lowering the threshold of summary judgment

In theory at least, the advantages of lowering the threshold of summary judgment are many and pertain not only to efficiency, but also to justice. As mentioned above, legislatively lowering the threshold of summary judgment does not guarantee an increased application of the summary judgment mechanism. It is very much dependent on the interpretation and the disposition of the judiciary as to whether the practical threshold will be lowered. Nevertheless a system in which summary judgments are granted "liberally" is a system that will:

  • greatly reduce the cost of some legal proceedings by granting judgment at an early stage. This could arguably make the judicial system more accessible and equitable to those of limited funds.
  • greatly reduce the time taken to process cases. This can free up the court system to process more claims, thereby "doing more justice." As above, this truncation of some proceedings may also negate the prohibitive costs of legal proceedings.
  • greatly reduce the amount and scale of unmeritorious cases. As was suggested previously, section 31A was introduced under the Migration Litigation Reform Act and although it applies to all Federal Court proceedings, one gets the impression that it was specifically introduced to combat the substantial amount of unmeritorious (and invariably unsuccessful) migration appeals. The explanatory memorandum of the Act answers this concern squarely.

These three advantages of a lowering of the summary judgment threshold can be seen to be seen as pragmatic appeals to efficiency with some latent (but not insignificant) benefits to the aim of "doing justice". These advantages when held in the light of section 31A are obvious. The section 31A summary judgment provision, if applied as seemingly intended, will go some way to addressing a perceived problem within the Federal Court of unmeritorious claims. Practically, the new provision may go some way to addressing the issue of the 90 percent of migration cases that are unsuccessful at appeal. In this context, the advantages are obvious. Appeals are quick and inexpensive, leaving the system free to decide more meaningful and meritorious claims. What is blindingly obvious however is the dangerous slope on which this argument runs.

Disadvantages of lowering the threshold of summary judgment

Despite the above contentions, the judicial system does not prize efficiency above all else.

The most obvious and disturbing disadvantage of lowering the threshold of summary judgment is the potential that meritorious cases will be dismissed without necessary examination. An increase in summary judgments necessarily raises the risk that meritorious cases will be rejected without proper analysis. This point needs no further elaboration.

Secondly an increase in summary judgment necessarily disadvantages the already disadvantaged within the legal system. Unrepresented litigants are more likely to have difficulty in legally articulating grounds for complaint. This lack of technical acumen, especially at the initial stages of litigation, brings a risk that an unrepresented litigant’s case may be summarily dismissed despite potentially having merit. In specific reference to migration proceedings, many applicants are unrepresented or unable to secure pro-bono representation until after the proceedings have commenced. This leaves these applicant vulnerable to summary dismissal, regardless of the merits of their case.

Summary judgments and efficiency: the procedural paradox

The final disadvantage of lowering the threshold of summary judgment is that is can be necessarily selfdefeating. In theory, liberal summary judgment provisions save both time and money. In practice, however, given the investigation that needs to go into a summary judgment and the appeal process that can follow it, summary judgment can lead to increased costs and unnecessary time in court.

Before summary judgment: making the decision to grant summary judgment

If a lowering of the threshold of summary judgment is to have any effect, ie. if the "no reasonable prospects" standard is to be used to more liberal effect than the "no reasonable cause" standard, there must be cases in which summary dismissal will now be used where it would have be been previously denied. The decision to grant summary judgment necessarily entails the presentation and examination of the evidence to prove the "reasonable prospects of success" standard. While it may be argued that this examination is substantially shorter and less expensive that conducting a full trial, if the application for summary judgment is denied, then the system and its participants must bear the cost of not only a full trial but also the cost of the initial examination of the summary judgment question.

It stands to reason that in a system where the threshold for summary judgment is lowered, particularly where judges will interpret the threshold conservatively, significant resources will be wasted. The prospect of an increase in "mini-trials" on a summary judgment question followed in any case by a full hearings, significantly weakens an argument to lower the threshold of summary judgment.

After summary judgment: the appeal

The avenue of judicial appeal is the fundamental element of the judicial system to ensure justice. Summary judgment decisions, particularly as they pose such a potential threat to justice, will tend almost invariably to be appealed. Given the caution rightly exercised by judges in dismissing claims outright, these appeals have the potential, much like the "mini-trials" discussed above, to cost the system greater resources than if the issue had been heard fully at first instance. Particularly in the context where a higher court will send the decision back to the lower court to be remade, summary judgment decisions have the potential to cost the system far more than full trials.

Conclusion

It is tempting simply to state that lowering the threshold of summary judgment will make the courts more efficient but potentially less just. The reality of the situation, when taking into account procedural limitations, is that granting more summary judgments may potentially lead to an increase in the waste of time and cost. It can also be said that if the judiciary can rid the system of a substantial number of unmeritorious claim through a more liberal summary judgment provision, then perhaps resources can be freed up to ensure that the court’s primary responsibility to justice can be satisfied.

Whatever the case and whatever definition Parliament decides to frame the threshold of summary judgment by, the usefulness of the mechanism depends almost solely on the disposition of the judiciary in both granting summary judgments and reviewing them on appeal. Ultimately, it will be judicial interpretation that will define the benefits and detriments of the threshold of summary judgment. As always, it will be the judges balancing the concerns of efficiency and justice, the latter of course paramount but the former not unrelated.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.