How to use split hearings to resolve disputes
Greater efficiency in dispute resolution is a key focus of our legal system. In part 1 of a two-part series, Janine Stewart and Grant de Lisle from MinterEllisonRuddWatts discuss how split hearings can cut costs and facilitate access to justice
Decision-makers have long had the ability to conduct split hearings in relation to disputes.
In appropriate circumstances, the benefits are obvious: they streamline the process by limiting and/or refining the scope of the issues and, in some cases, they result in avoiding the need for a full hearing altogether.
But while the concept and benefits are well understood and uncontroversial, less well-known are the relevant legislative mechanisms and legal principles applying in different circumstances and in different dispute resolution forums.
Legal proceedings often involve complicated issues that overlap in matters of fact and law but this is not always the case. In some disputes, issues are sufficiently separate and/or determinative to justify split hearings.
In court proceedings, the possibility of a split hearing can arise in several ways. The High Court Rules 2016 provide several mechanisms through which the parties can ask the court to determine a preliminary or separate matter by way of split hearing.
Rule 5.49 is the most appropriate starting point as it relates to the court’s jurisdiction and the fundamental issue of whether a dispute can even be heard.
Rule 5.49 gives defendants the ability to file an appearance in lieu of a defence, and subsequently apply to have the proceeding dismissed for want of jurisdiction.
Challenges to jurisdiction under rule 5.49 include situations where the court’s jurisdiction is precluded by legislation or where the parties have agreed to have the dispute heard in an alternative forum such as arbitration, adjudication or expert determination.
Where the distinct issue does not relate to jurisdiction, other High Court rules apply. Rule 10.4 confers a power on the court to order separate trials for separable causes of action.
Rule 10.4 also permits the court to direct the sequencing of any separate trials and make any supplementary order it thinks just.
Rule 10.15 confers a power on the court to order the determination of any question be made separate to any other question either “before, at, or after any trial or further trial in the proceeding”.
While at first glance the effect of rules 10.4 and 10.15 appears similar, it is important to note the conceptual distinction between them.
Rule 10.4 is directed at situations where an entire cause of action can be split and heard separately, while rule 10.15 is directed at situations where there is a distinct question or element (either within or outside the cause(s) of action) that is capable of separation in a way that would promote efficiency, and save the parties and the court time and money.
When considering whether a separate hearing under rule 10.15 is appropriate, there are several matters to keep in mind.
First, the starting point is the presumption that all issues in dispute will be heard together and the onus is on the party seeking a separate hearing to demonstrate that it would be appropriate to do so.
Second, rule 10.15 expressly provides for questions to be determined separately even in situations where such determination would not dispose of the proceedings altogether.
This clearly contemplates situations where a separate hearing may effectively limit or refine the issue(s) in dispute, resulting in a more efficient and cost-effective proceeding.
Third, although sometimes referred to as a “preliminary question procedure”, the reference to an order “after” trial clearly contemplates the carving out of an issue or question that may be more appropriately determined after a decision on all other matters.
A common example is where a court decides it would be more efficient and just for quantum to be determined separately and after a determination of liability. We are seeing this with significant class actions being litigated in the High Court.
Although the format and general procedure in arbitration are often similar to court proceedings, the High Court Rules are not directly applicable.
So, the question of whether a separate hearing should be held will be assessed by reference to the Arbitration Act 1996 and any procedural process agreed between the parties.
Schedule 1, article 16 of the Act is a convenient starting point when considering an arbitrator’s ability to order a separate hearing.
Like rule 5.49 of the High Court Rules, article 16 relates to jurisdiction and allows an arbitrator to make an assessment of his/her own jurisdiction.
It is generally recognised a challenge to jurisdiction (provided it is not frivolous or dilatory) should usually be dealt with at a preliminary and separate hearing.
The onus is then on the party arguing otherwise to convince the arbitrator that it is not the most appropriate course.
If the arbitrator determines he/she has no jurisdiction, then the need to conduct a hearing in respect of the substantive dispute is avoided altogether, along with all the associated time and cost implications.
In most cases, any issue about jurisdiction will be sufficiently isolated and distinct from the substantive issues in dispute so the possibility of additional cost is unlikely.
Of course, the issue of jurisdiction may be so clear that the arbitrator can make a preliminary determination on the papers and no separate hearing need be held.
However, article 16(3) clearly contemplates the possibility of a separate hearing where there is a legitimate question and/or challenge to the arbitrator’s jurisdiction.
Where the issue of jurisdiction is difficult and/or costly to separate from the substantive dispute, the appropriate course would be to hear the issue of jurisdiction together with the substantive dispute.
The Act has no mechanisms equivalent to rules 10.4 or 10.15 of the High Court Rules. It does not confer any express power on arbitrators to order a separate hearing in respect of an otherwise separable and distinct issue or question.
To make such an order, an arbitrator would have to rely on the discretionary powers in Schedules 1 and 2 of the Act to conduct the proceeding as he/ she sees fit. It is inherently desirable for arbitrators to be able to do so, especially if it would facilitate the efficient, timely and cost-effective resolution of the dispute.
After all, efficiency, expediency and inexpensive dispute resolution are key benefits of the arbitration process.
The discretionary powers conferred by the Act, which support the suggestion that arbitrators can order split hearings (other than in relation to matters of jurisdiction) include: article 3(1)(j) of Schedule 2, which provides that the powers of an arbitrator include the ability to “order any party to do all such other things during the arbitral proceedings as may reasonably be needed to enable an award to be made properly and efficiently”; and article 19(2) of Schedule 1, which provides that in the absence of any agreement between the parties about procedure, an arbitrator may conduct the arbitration in such a manner as he/she considers appropriate.
It is also worth noting article 4 of Schedule 2 which, subject to the consent of the arbitrator(s) or the parties, provides a mechanism through which the High Court can determine a preliminary point of law arising in the course of the arbitration.
One size does not fit all. But greater focus on split hearings by litigants, lawyers and decision-makers and the potential cost and time savings is well justified.
Next week: the relevant considerations
Janine Stewart is a partner and Grant de Lisle is a solicitor at MinterEllison RuddWatts