Sequential trial model rubbished in Victoria

Victorian Court of Appeal has just slammed the use of the ‘’sequential trial model’ (STM) in a bitter family dispute involving breaches of trust and fiduciary duties.

Hoh v Ying Mui Pty Ltd [2019] VSCA 203

The STM was proposed by the trial Judge due to what he described as the extraordinary breadth of issues in dispute and in an endeavour to get the parties to try and resolve their differences.

The Court of Appeal did not accept this rationale, particularly in circumstances where one part opposed it and both parties were involved in a “bitter civil dispute”.

The STM involves the following key steps:

  1. parties go to trial and all evidence is considered
  2. Judge determines what key question tranches are to be decided in the case
  3. Judge answers first question and encourages both parties to go off and settle the proceedings
  4. parties attempt settlement
  5. if no settlement, second question is answered, and step 4 is repeated, and so on
  6. if settlement, case closes

The STM is sort of akin to the court being asked to deal with the question of insolvency before dealing with whether a director is liable for insolvent trading.

The Court of Appeal considered the following:

  • using STM significantly delays the result, if there is no resolution
  • the context of the bitter dispute
  • the likelihood of inconsistency in decisions increases
  • parties can re-argue the same matters already decided

Therefore, it will “rarely – if ever – be appropriate” to use STM if one party rejects the use of STM, and even if all parties agree, courts are strongly urged to re-consider its use.

What do you think about this approach by the court? Is this a situation of hampering innovation or just common sense?

#SVVoidables

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