Media

Judge lays down law to bosses

The Australian Financial Review 8 June 2007
By Matthew Drummond

Amid growing concern about the conduct of commercial litigation, a Victorian Supreme Court judge has taken the unprecedented step of demanding that executives from companies involved in a massive lawsuit attend court so they can be told how to pull their lawyers into line.

Faced with a potential eight-month trial, judge David Byrne asked the "decision makers" at the brawling companies, BHP Billiton Petroleum (Vic) and construction firms McConnell Dowell and AJ Lucas Drilling, to attend a directions hearing last month. Justice Byrne's desire to bypass the lawyers running the case so he could communicate directly with the executives calling the shots marks a new tactic by judges in dealing with mega-litigation.

More than 40 witnesses are scheduled to appear in the case, which turns on the construction of a gas plant owned by BHP Billiton near Port Campbell on the western coastline of Victoria.

At the hearing last month, the managing directors of McConnell Dowell and AJ Lucas Drilling, who were originally retained to construct the plant, and BHP Billiton Petroleum's general counsel, heard an impassioned plea from Justice Byrne that they look at resolving the dispute in a "more creative way."

"Traditionally the judge remains silent, a relatively passive spectator who listens to the evidence," Justice Byrne said. "Traditionally, too, litigation is considered an adversarial exercise. It's like World War I - everyone gets into the trenches and slugs it out."

After explaining the practical problems of hearing an eight-month trial - such as reviewing 7000 pages of transcript and assessing the credibility of witnesses against others who had been called half a year earlier - the judge asked the companies to insert some business acumen into how their lawyers were preparing the case.

"What I would encourage here - and particularly the businessmen who are in the back row - is to consider this litigation as if they would a substantial commercial enterprise," he said.

"I would like to approach this trial in a way which I would like to think that commercial people would approach it. That is to say, let's see how best we can achieve the result we set out to achieve and at minimum cost."

After assuring the companies that there would be "no slacking at this side of the bar table", Justice Byrne suggested arbitration-style time limits and breaking the case into parts. He said he was willing to adopt "even creative and very surprising procedures" to resolve the dispute more efficiently.

The parties have agreed to consider his plea and will return to court on June 22. The dispute was triggered when BHP Billiton Petroleum terminated McConnell Dowell's contract to build the gas plant midway through construction. AJ Lucas Drilling was a subcontractor retained by McConnell Dowell, which is seeking $92 million for work done before the termination. BHP has countersued for $80 million.

Justice Byrne has just spent seven months hearing a dispute about the contamination of a building site. Lawyers involved in that case, between developer Premier Building and Consulting and listed Spotless Group, estimate the legal fees would have topped $50 million - substantially more than the $20 million to $30 million damages being sought. During the trial a geologist called as an expert witness told the court the dispute could have been resolved for $6 million if the parties had negotiated before litigating. Strategies to reduce the cost of litigation are being considered by the Victorian Law Reform Commission. A spokeswoman for the VLRC said the review panel was preparing its final recommendations and they would be delivered to the state's Attorney-General, Rob Hulls, in September.

We gratefully acknowledge the permission from Matthew Drummond at The Australian Financial Review to reprint this article.