Why there is an argument that Court proceedings should be the last resort in resolving disputes: AMCOR Limited v Barnes

By Alicia Hill, Principal and Lee Filkin, Law Clerk

The decision in AMCOR Limited v Trevor Mark Barnes [2021] VSCA 6 provides a useful reminder to parties and legal practitioners of reason why litigation is could be considered the last resort to resolving disputes and the need to manage efficiently litigation when it is commenced.

Background

AMCOR comprises an international group of companies that conducts businesses including package manufacturing and distribution.

In 2003, one of the companies in the AMCOR group sold its business (ACB Business) to a party related to the company. It was not disclosed to AMCOR that some AMCOR executives held, or planned to hold, a financial interest in that business after its sale. This constituted a breach of the executives’ duties to AMCOR.

The terms of the sale agreement (Agreement) contained provisions requiring one of the AMCOR companies to supply to and purchase from the new owner of the business (Achilla) certain materials in relation to the ACB Business. These terms under the Agreement were allegedly breached.

In addition, James George Hodgson (Hodgson), an employee of AMCOR, was dismissed on 1 October 2004. He brought a claim against AMCOR for entitlements due to him upon termination.

Course of litigation

The above events have led to over 15 years of litigation.  There have been two major trials on different issues, culminating in first instance judgments of respectively 1,795 and 1,741 paragraphs in length.  The present judgment is 751 paragraphs long. There have been many other hearings, rulings and judgments on related and separate discrete issues.

Rather than providing any particularly valuable points of law in relation to the issues considered on appeal, the decision of Ferguson CJ, Beach and Whelan JA provides a useful caution to parties and participants about involvement in court proceedings.

Issues in the current appeal

The range of issues in the appeal can be summarised into three distinct areas:

1. AMCOR’s claims against former executives for breach of duty;
2. Hodgson’s claim against AMCOR concerning his dismissal; and
3. Achilla’s counterclaim against the AMCOR parties for breach of the supply and purchase obligations under the Agreement. 

Leave to appeal was granted in relation to some of the grounds under the above categories, but all appeals were nevertheless dismissed. In dismissing the appeals, their Honours stated that they would hear from the parties in relation to the orders to be made.

As such, a final step remains before the proceedings can be concluded.

Issues encountered when litigating – sequencing, co-operation

Ferguson CJ, Beach and Whelan JJA noted that the sequencing of hearings in this matter contributed to the extensive length of the litigation.

Sequencing involves demarcation of the issues in the proceedings, allowing separate issues to be dealt with via interlocutory proceedings. Their Honours suggested that sequencing of hearings may be an efficient means of determining disputes in some limited circumstances. However, use of the sequencing process “more often than not” will result in the following problems as:

1. the judge who begins the sequence may be unable to complete it. A second judge will then be required to undertake the burden of familiarisation with issues already the subject of a substantial hearing and determination;
2. there is potential for parties to seek a revision of determinations previously made; and
3. there may be dispute as to the status of matters previously determined, and uncertainty over whether an argument has been previously determined in prior proceedings, or if a claim ought have been brought in prior proceedings (these principles are known as issue estoppel and Anshun estoppel respectively).

The Court considered all of the above problems had occurred in the course of the AMCOR case.

Their Honours commended the parties and practitioners in the current appeal for their efficiency relative to previous stages in the matter, noting this appeal was about 15 years after the filing which started the proceedings.

Their Honours stated that:

1. litigants and their legal representatives must constantly give attention to conducting court proceedings realistically;
2. procedural matters should only be pursued when there is real substance to them;
3. the proceedings should be confined to the real issues in dispute; and
4. cooperation in the conduct of the proceeding is paramount, parties must not pursue every possible point merely because an argument is capable of being articulated.

An view was expressed, that, in light of the enactment of the Civil Procedure Act 2010 (Vic) and the development of stronger case management practices by judges, grossly delayed litigation as was seen in this case will not be repeated in the future.

Key takeaways

Litigation can sometimes be the sole avenue available to enforce rights or seek relief. It can be intense, heated, hard fought and strongly resisted resulting in animosity, resentment and disbelief as to the conduct or claims being made.

When accessing the courts though, it is important to remember the ultimate goal being sought to be achieved and only taking the steps in litigation necessary to advance to that goal despite the aggravating factors that may arise.

In practice that may mean:

• not every point available is pleaded in a statement of claim, just the strongest points more likely to be determined in the party raising them’s favour;
• that every infringement of a court rule is not brought back before a judge seeking orders to have the rule enforced, when belated compliance may occur or it is not critical to the main case to be determined;
• making reasonable offers to resolve the proceedings to the other party or parties and exploring all opportunities to resolve a case as soon as possible or even after earlier resolution attempts have failed..

Obligations now exist on parties and their advisers to ensure efficient determination of matters which may mean having regard to the ultimate goal will help shorten the time to determination saving parties to the proceedings money, time and stress.

Sanctions can be imposed for breach of these obligations resulting in costs of an opponent parties having to be paid, even where a party is ultimately successful in prosecuting its case.

If you have any questions regarding this decision or any matters raised by it, please contact Lee Filkin or Alicia Hill on (03) 8540 0200 or alicia.hill@mst.com.au.