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The duty to cooperate further explained

The duty to cooperate further explained

By Legal Practitioners' Liability Committee

Civil Procedure Courts Obligations 

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A recent decision of Babcock & Brown DIF III Global v Babcock & Brown International Pty Ltd [2015] VSC 612 sheds further light on the Supreme Court’s expectations and interpretation of the overarching obligation to cooperate in the Civil Procedure Act 2010 (Vic).

The case involved an application to restrain a firm and their new senior associate from acting in a matter because the senior associate had previously been employed by the firm acting on the other side and was said to have had access to confidential information.

By the hearing the senior associate gave undertakings to stop acting and not disclose any confidential information. The firm was also ordered to undertake to put in place information barriers. The matter was stood down to allow the parties time to agree the terms of the undertakings and make submissions on costs.

The parties were unable to agree the terms of the undertaking about information barriers. The matter returned to court where Riordan J decided the issue and then considered the issue of costs. His Honour looked at the parties’ conduct before filing the summons and the judicial consideration of the duty to cooperate under section 20 of the Civil Procedure Act in detail.

He found the firm who employed the senior associate had failed to cooperate by:

  • refusing to withdraw the senior associate from the matter until the issue had been resolved
  • not setting out details of the senior associate’s recollections
  • delaying responding to requests
  • failing to make direct communication with the appropriate person at the other firm to attempt to resolve the issue.

The other firm was also found to be deficient in their obligations to cooperate. They failed to communicate directly with the relevant person at the other firm before embarking on the application despite the significant costs of bringing the application and the likely effect those costs would have on the settlement negotiations

His Honour commented that “experience shows that personal oral communication, particularly with senior persons not involved in the dispute, will frequently succeed where the ‘salvo of [confrontational] emails’ will fail.”

His Honour found that this interlocutory dispute took five days of court time and the costs were likely to be in excess of $500,000. He also found that the dispute could have been resolved by arrangement between the parties. As a result the parties were ordered to bear their own costs.

The judge made it clear that the court expects firms to do more than send ‘salvo emails’ batting issues like this back and forth. Genuine attempts to resolve interlocutory disputes need to be made and may require picking up the phone and negotiating a sensible outcome.

The original article is found on the LPLC website.


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