key takeaways
Summary judgments may appear to be an attractive method to finalise legal proceedings as quickly as possible. However, the Court will not enter summary judgment lightly. The ACT Supreme Court matter of Aspen Medical Pty Ltd v BA Capital Inc [2021] ACTSC 321 (Aspen v BA Capital) is an extremely useful case, as it examines established precedents and the principles which exist within them to form a distinct method for determining a summary judgment application.
background
Aspen Medical Pty Ltd (Aspen) is an Australian company that provides health services in Australia and overseas. Aspen contracted with BA Capital Inc (BA Capital), incorporated in Canada, for the supply of 20 million face masks at a cost of $140.4 million. The contract required that BA Capital deliver the facemasks by instalments pursuant to a tight timeframe. If the timeframe was not met, Aspen could reduce the number of facemasks to be supplied with a corresponding reduction in the amount to be paid.
Only 5 million facemasks were supplied. Additionally, Aspen claimed that 500,000 facemasks were defective (as they did not comply with the requirements of the contract). Aspen accordingly commenced action against BA Capital, seeking recovery for $3.51 million for the defective masks. BA Capital filed a defence to Aspen’s claim, and Aspen’s solicitors sought further and better particulars of that defence. Following this, after a number of procedural directions, by consent, it was ordered that BA Capital answer Aspen’s request for particulars - this order was never complied with. The matter was relisted, and another order extending the timeframe for particulars was made; however, this order was never complied with either.
Due to the failure of BA Capital to provide Aspen with their request for further and better particulars, Aspen filed an Application in Proceeding, which, among other orders, requested that an order for summary judgment under rule 1146 of the Court Procedures Rules 2006 (ACT) (CPR) in favour of Aspen be made.
6 key principles
A number of precedents were considered by Crowe AJ, which, he concluded, provided guidance as to the hearing of summary judgment applications. His Honour used these precedents to establish six key principles to guide the Court’s approach to such an application.
The first principle stated by His Honour was the following:
'The discretion granted to enter judgment in favour of the plaintiff must be exercised with considerable caution, with appreciation that the outcome will deprive the defendant of a full contested hearing of the claim.'
His Honour quoted Spencer v The Commonwealth [2010] HCA 28 which included a quote from Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27 where it was stated:
'Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.'
In summary, the court is reluctant to deny a defendant their right to defend proceedings, and so a plaintiff must approach any application with this in mind.
The second principle relied upon by His Honour was that the Court should not embark on a ‘mini-trial’ to decide real issues of fact or fact and law. His Honour quoted from Financial Integrity Group Pty Limited v Farmer [2009] ACTSC 143 (Financial Integrity Group), where the following was established:
'The requirements for an affidavit or affidavits is preserved in r 1149 of the Rules…It is clear, however, that the use of these affidavits is not designed to encourage, or perhaps even permit, the courts to adjudicate on matters of fact. . . The courts have made it clear it is inappropriate to proceed to summary judgment where there is a conflict on matters of fact.'
His Honour’s view was that where there are conflicts on matters of fact, the matter is to proceed to a full hearing, allowing the regular court processes to determine a decision.
The third principle espoused by His Honour was that it is necessary for the plaintiff to have adduced apparently reliable evidence establishing the facts asserted in the Statement of Claim.
The fourth principle formulated by His Honour was the following:
'Once the plaintiff has provided that evidence, the onus moves to the defendant to demonstrate a good arguable defence as a matter of law, or, by reference to evidence, as a matter of fact and law. (In that context, I see the reference to the requirement for the defendant to satisfy the court as to a defence “on the merits” and “sufficient facts” being disclosed as placing an evidential onus on the defendant once step (3) has been complied with.)'
Crowe AJ relied upon Kevern v Marshall [2012] ACTSC 9. In this case, it was stated that the defendants could defeat a summary judgment application by showing that:
- The plaintiff’s application is irregular;
- The claim is of a type that cannot be disposed of summarily; or
- There is a factual dispute, which, if resolved in the defendant’s favour, raises a defence.
The fifth of His Honour’s principles was the following:
'Having regard to the issues raised in the defence, it is necessary for the Court to make a careful assessment, by reference to the evidence, whether the defence does in reality raise issues which should be determined at a full hearing. That determination should not be made against the defendant merely on the basis of improbability or implausibility.'
The case Galovac Pty Ltd v Australian Capital Territory [2010] ACTSC 132 was quoted by His Honour in his consideration of this fifth principle. It was stated in this case that the mere implausibility of the claim or improbability of success is insufficient and that instead, there must clearly be no real question to be tried in the sense that the claim is bound to fail.
The final principle given by Crowe AJ in Aspen v BA Capital to approach summary judgment applications was the following:
'If the Court is satisfied that the defence does not raise such issues, it should, in the light of s 5A of the CPA, enter judgment in favour of the plaintiff unless some good reason be demonstrated why that course should not be taken.'
summary judgments and the cPA
The Court Procedures Act 2004 (ACT) (CPA) under section 5A states the following:
'The main purpose of the civil procedure provisions is to facilitate the just resolution of disputes—
- according to law; and
- as quickly, inexpensively and efficiently as possible.'
Therefore, in order to promote efficiency where there are no real issues to be determined, summary judgments should be entered (with caution) to maintain the objectives established in the CPA.
While this is an ACT matter, the wording of rule 1146 of the CPR is similar to other states’ civil procedures rules. It is expected that if the case was heard in any other state, the outcome is likely to be the same.
In Richard v Han [2020] FCA 1886, which was an interlocutory proceeding for summary judgement in the Federal Court of Australia, Thawley J warned against applications for summary judgement where there are obviously factual and/or legal issues in dispute. Thawley J stated:
'Having examined the extensive evidence filed on this application and the parties’ written submissions and having carefully considered the pleading, I have come to the view that the interlocutory applications are hopeless. They have brought about significant delay and expense in circumstances where the parties’ time and money would have been better spent preparing for trial. Applications of this kind in circumstances such as these should be discouraged.'
Application to Facts in Aspen v BA Capital
The principles applied to the facts in Aspen v BA Capital led to a decision that the evidence provided by the plaintiff demonstrated that there were no real issues raised by the defence that would require a full hearing. The following concluding statement was made:
'In any event, I am not satisfied that the defendant has a good defence to the plaintiff’s claim on the merits. Nor am I satisfied that the sufficient facts are disclosed to entitle the defendant to defend the claim generally. Indeed, it seems to me that the defence, as filed, is without substance. Bearing in mind the need for caution referred to above, I am satisfied that the defence does not raise issues which require determination at a full hearing. It is in the interests of justice, in my view, that the plaintiff’s claim should not be further delayed, nor should the plaintiff be put to further expense in conducting this litigation. I propose to enter judgment in favour of the plaintiff pursuant to r 1146 of the CPR.'
The summary judgment was entered for the plaintiff and the sum of $3,712,301.69 plus costs for the application in proceeding and of the proceeding.
conclusion
Without an arguable defence, a court is required to promote efficiency and, therefore, cannot require a full hearing without real cause once a summary judgment application has been made. While courts will exercise caution in entering summary judgments and do not intend to impede on a defendant’s right to defend proceedings brought against them, it is imperative that the defence can establish an issue of fact or fact and law.
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