Civil Procedure Overview
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CJR – lessons learned so far: a sharing of experience
Eric TM Cheung Assistant Professor, Faculty of Law, HKU 7 May 2010 1
Agenda • Some highlights of views expressed in the recent CJR International Conference jointly organised by HKU and UCL on 15 and 16 April 2010 (CJR: What Has It Achieved?) • Sharing of experience and discussion
Highlights of CJR Conference: CJR: What Has it Achieved? • Highlights of speech of Lord Neuberger (new Master of the Rolls as from 1 Oct 2009; NPJ of our CFA) • Woolf’s new approach to civil justice: overriding objective embedded with a commitment to proportionality and proportionate costs in the civil justice system • Overriding objective not new: pre-Woolf RSC’s implicit overriding objective: “to ensure that a decision on the merits, or substantive justice, was arrived at within any single piece of litigation” (quoting Dr Sorabji from his article in (24) CJQ (2005) 414 3
• Other 4 principles (equality principle, expense principle, expedition principle and the efficiency principle) also not new • Lord Clarke MR: “… Our civil justice system has always been committed to ensuring justice is achieved economically, efficiently, in a timely fashion, and through the application of equality of arms. There was nothing novel there… No, the significant difference between the Woolf reforms and what had gone before was the commitment to the proportionality principle.” (Proportionate Costs from Woolf to Jackson, 10 July 2009) 4
• Hence, parties are no longer automatically allowed to pursue claim at whatever costs are reasonably necessary to achieve substantive justice in that case irrespective of proportionality and the consequences for other litigants. • Case tracks system: Low value claims to be matched to a speedy and inexpensive process while high claims matched to a more complex and expensive process. • In an extreme case, substantive justice might be denied in its entirety, as pointed out by Lord Hoffmann in Sutradhar v Natural Environment Research Council  4 All ER 490 HL at .
• Lord Hoffmann at : The overriding objectives of the CPR include achieving justice for both claimants and defendants and saving time and expense. These objectives sometimes conflict and compromises are required. It is not the case that the administration of justice, alone among the services provided by the state, is exempt from any considerations of cost. It is obvious that a trial of this action…would be an enormous and expensive undertaking. …the costs incurred in these proceedings by the claimant and other residents of Bangladesh who wish to bring similar actions, at the expense of United Kingdom public funds, already exceed £380,000… But when one considers the scale and cost of a trial, the case for stopping the proceedings now appears to me to be overwhelming. 6
• Note: The Court considered proportionality not simply as between the parties but as between the parties and other litigants’ and the justice system as a whole, which might justify bringing a relatively weak claim to an end without a substantive judgment at trial
• Main Concern: Woolf’s overriding objective with the commitment to proportionality has downgraded the English civil justice system’s commitment to the achievement of substantive justice, or justice on the merits in a particular case. • UK new approach should be understood in the context of the unpalatable truth that only limited public resources are available for civil justice in the UK 8
• Prof Dame Hazel Genn: Increased costs in criminal justice: Crime control agenda (more criminalization, more enforcement, more defendants, more incarceration); HRA 1998 due process protection; more professional defence lawyers; increased cost of criminal legal aid • Civil justice in decline: Fixed justice budget and so no new money. • Civil process not protected by HRA • No votes in civil justice, no supporters • Civil justice undefended
• HK CJR approach • Concern raised to CJ’s Working Party’s Interim CJR Report that if a Woolf-style overriding objective was introduced into Hong Kong, it “might divert the court from deciding cases in accordance with their substantive merits” (see Final CJR Report at 46-49)
• Concern accepted => HK only had underlying objectives subject to the explicit caveat that “the Court shall always recognise that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties” (O 1A r 2(2)) • My observation: This fundamental difference seems to have been overlooked by some judges and practitioners when citing or applying English CJR cases and practices
• Lord Neuberger's other observations: • Woolf proposals suffered from a lack of statistically meaningful evidence, and were based on “impression, anecdotal evidence, common sense, judicial experience and foreign example.” • “But impression can be a euphemism for preconception; anecdotal evidence is often merely listening to the loudest shouters; common sense can equate to prejudice; judicial experience is by no means representative of the great run of cases – not least as the great majority settle; and what works in one jurisdiction doesn’t always transfer easily to another, with its different traditions and practices. And none of these compare in value with hard statistical evidence. Further, if there is no statistical evidence, how can you fairly and reliably assess the success of the reforms?” 12
• We should be cautious before making changes. • “Modifications in civil procedure... cause uncertainty and expense, while the consequences are worked out [i.e. While those changes are litigated and decided by the courts]. So, however beneficial a change may be in the long run, it must be right to take into account the uncertainties and expense which will be suffered in the short, even the medium term.”
• Jackson LJ’s recent Review of Civil Litigation Costs in England and Wales (commenced on 1/1/2009 with a final report produced on 14/1/2010) • Evidence based review • Evidence shows that litigation costs after Woolf reform go up rather than down • Identified the conditional fee agreement (CFA) regime (with success fee and After the Event Insurance premiums recoverable from losing party) as the largest single cause of disproportionate costs. • [2.20] “First, claimant costs are substantially higher than defendant costs. Secondly, claimant costs in CFA cases are substantially higher than in non-CFA cases. …claimant costs in the CFA cases…range between 158% and 203% of the damages awarded. Claimant costs in the non-CFA cases…range between 47% and 55% of the damages awarded.” 14
Highlights of Prof Genn’s Speech • Correct starting point: Civil justice is a public good • Civil justice system contributes quietly and significantly to social well-being: Supports economic activity; Protects the weak; Controls exercise of executive power in democracies governed by the rule of law; Underpins sense of orderly society with rights that can be made good • Ability to participate in redress systems is a measure of the health of democracies • See two slides below taken from Prof Genn’s PowerPoint: 15
The Reality of the Dispute Resolution Iceberg Legal problems/ disputes
Judicial determination provides framework for settlement in common law system
Settlements take place in shadow of adjudicated cases
Lessons learned on Mediation in UK • High level of satisfaction among volunteers, but litigants do not like to be forced into mediation • Successful mediation reduces costs, but unsuccessful one may increase costs • Principal motivation for mediating is to avoid anticipated cost, delay and discomfort of trial • Not about positive potential of mediation for reconciliation, creative settlements or “harmony” • More recently, motivation is the desire to avoid risk of Dunnett v Railtrack cost penalties
• Increased pressure to mediate appears to lower settlement rates: parties may just go through the motions to avoid costs penalty • Most settlements involve simply transfer of money – minority are creative • Claimant makes significant discount in mediated settlement including small claims
Danger • Woolf Report anti-adjudication/anti-lawyer rhetoric repeated around the world • Opinion leaders co-opted by emerging profession seeking a market • Promotion of ADR as a central solution to the problems of civil justice • Presentation of legal disputes as private problems • Conceived judicial determination as failure 20
• Focus on ADR diverts attention from need for accessible adjudication system • Civil justice system associated with private resolution rather than as a public good • Public losing confidence in judicial determination system
Highlights of HK Judiciary’s views • Ma CJHC: Judiciary is compiling data to measure the effectiveness of CJR objectively • Li CJ: HK Judiciary is not suffering from insufficient resources => reducing cases and court workload is not an objective of CJR (and of promoting mediation in particular) • Registrar Au-yeung: Affordability and costseffectiveness can be reflected by how well CJR can improve the efficiency of the proceedings and eliminate delays. • Hence: Focus on specific CJR measures to reduce steps and hence costs in litigation 22
• These include: – Measures in the pleadings stage (O 13A admission; SOT reduces substantial amendments to pleadings); – Control over time extensions (use of unless order as the norm); – Control over interlocutory applications (cut down call-over hearings and use of summary assessment); – Case management; – Encouragement of Mediation; – Measures in taxation (simplified format of taxation bills; use of paper taxation). – Sanctioned offers and payments
• Reyes J: Fostering dispute resolution and costs effectiveness through case management • In a Case management Conference, Court and parties should try to achieve: • (1) Identifying the issues in dispute • (2) Mapping the steps which have to be taken to resolve the dispute • (3) Working out a timetable for the steps to be taken • (4) Considering whether in conjunction with that timetable mediation might be attempted
• Reyes J: Admitted to be a convert of mediation • “Much still needs to be done in terms of promoting mediation in Hong Kong to bring about a culture where mediation is attempted as a matter of course in most cases at the earliest opportunity.” • Court imposing costs sanction for refusing to attempt mediation: no difference in principle from imposing sanctions for failure to beat payment into court or Calderbank offer, as court should encourage settlement • My comments: One can measure objectively whether a winning party obtains a better result by insisting on trial instead of accepting a PIC. Court does not impose costs sanction for a party’s refusal to negotiate settlement. Why should court penalise a party for not trying one of the means to achieve settlement, but who insists on court performing its primary role to resolve justly a dispute according to the parties' substantive rights?
• Lam J: mediation in the context of CJR and the role of the judiciary • Benchmark for assessment: not on number of cases settled by mediation, but on change of mindsets of litigants and lawyers from adversarial approach to collaborative approach • Why should a judge be involved?: proactive case management under O 1A R 4(2); unique position to give impartial view on proportionality and appropriateness of mediation; civil litigation only one of the means to resolve dispute
• Preparation of Mediation Certificate: Solicitors needs to exercise his mind on the option of mediation before he advises his client on its pros and cons; client goes through an education process on mediation • Mediation briefing: voluntary mediation briefing by Masters; information sessions by Mediation Information Office and Mediation Co-ordinator’s offices • Role of judiciary: costs sanction only secondary; primary goal is to facilitate the parties to understand the option of mediation and to make an informed decision • My query: In practice, is the judiciary giving a balanced view on the pros and cons of mediation and allow the parties to make an informed decision?
Highlights of Practitioners’ views • Martin Rogers: • What has been working well: • SOT for pleadings; tighter control of pleading timetable; more vigorous scrutiny of applications to amend pleadings; • less late applications shortly before trial; • tighter control over deployment of expert; • less appeals against interlocutory decisions
• Not working well: • court scheduling (citing examples of waiting for 4 to 8 months to get a date for CMC, hearing for a leave application for appeal, and for striking out part of a pleading); • case management (not many firms handle CMC well and judiciary not robust enough to ensure compliance); • mediation (unclear intention stated as to whether to mediate; pushing for mediation even if there is no real prospect of success; lack of recognition of the need to ensure impartiality of the mediator in the appointment process) • Judiciary should compile useful statistics of what is actually happening in the courts and be transparent in disclosing their concerns as to where the system is not working well.
• Other views expressed: • It cannot be cost-effective to have legal representation to pursue a claim of less than $200,000 or $300,000. Should Small Claims Tribunal’s jurisdiction be further increased to, say, $250,000 (or have a concurrent jurisdiction with DC for claim between $50,000 and $250,000)? • Not enough has been done to deal with e-discovery • Should HK follow the recent Australian practice to have experts giving concurrent evidence at trial (let the experts deal with each other’s queries/comments direct, and discuss together)? • Normally get less upon summary assessment of costs than on taxation (my observation: should lawyers ask for provisional summary assessment instead?) • Very few practitioners follow the PD and serve the costs estimate together with the skeleton arguments
General Issues for Discussion • Any significant change to the litigation mindset and culture? • Are lawyers ready for advising and dealing with mediation? • Is the court pushing too far/little on mediation? • Will Honey Moon period be over and will the court be more robust to ensure due compliance? • Any saving of costs, delay, and complexity? • Is litigation now more affordable and costeffective? • How well do the new CJR rules operate on unrepresented litigants? 31