T O'Connor & Sons Pty Ltd v Entact Clough Pty Ltd [1996] FCA 263

CATCHWORDS

PRACTICE AND PROCEDURE - Cross-Vesting - application to transfer Federal Court proceedings to Supreme Court of Western Australia - related proceedings commenced in the Supreme Court of Western Australia - whether it is more appropriate that these proceedings be determined by the Supreme Court of Western Australia than by the Federal Court - factors to be taken into consideration - in considering whether it is more appropriate that these proceedings be determined in the Supreme Court of Western Australia the Federal Court is no longer to be regarded as necessarily a more appropriate Court to hear a claim pursuant to Part V of the Trade Practices Act 1974 (Cth) - considerable weight must be given to the desirability of both sets of proceedings being in the same court where proper consideration can be given to their joint management, possibly leading to an order that they be heard together.

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) s 5(4)

Trade Practices Act 1974 (Cth) s 52 and s 86A

Teserioro v Matstar Pty Ltd & Anor (1990) 93 ALR 607

Central Bore Nickel NL v Richfile Pty Ltd & Ors (unreported, Supreme Court of Western Australia, 22 August 1995

No SG 89 of 1995

T. O'CONNOR & SONS PTY LTD (ACN 001 664 740) v ENTACT CLOUGH PTY LTD (ACN 052 178 088)

Branson J

Adelaide

22 April 1996

IN THE FEDERAL COURT OF AUSTRALIA)

)

SOUTH AUSTRALIA DISTRICT REGISTRY) No SG 89 of 1995

)

GENERAL DIVISION )

BETWEEN:

T. O'CONNOR & SONS PTY LTD

(ACN 001 664 740)

Applicant

- and -

ENTACT CLOUGH PTY LTD

(ACN 052 178 088)

Respondent

MINUTES OF ORDER

CORAM: Branson J

PLACE: Adelaide

DATE: 22 April 1996

THE COURT ORDERS THAT:

1. Pursuant to s5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) the Court directs the South Australian Registry of the Federal Court of Australia to transfer the whole of the proceedings SG 18 of 1995 between T. O'Connor & Sons Pty Ltd as applicant and Entact Clough Pty Ltd as respondent to the Supreme Court of Western Australia.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA)

)

SOUTH AUSTRALIA DISTRICT REGISTRY) No SG 89 of 1995

)

GENERAL DIVISION )

BETWEEN:

T. O'CONNOR & SONS PTY LTD

(ACN 001 664 740)

Applicant

- and -

ENTACT CLOUGH PTY LTD

(ACN 052 178 088)

Respondent

REASONS FOR DECISION

CORAM: Branson J

PLACE: Adelaide

DATE: 22 April 1996

The respondent has by notice of motion dated 14 February 1996 applied pursuant to s5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) ("the Jurisdiction of Courts Act") and s86A of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") for these proceedings to be transferred to the Supreme Court of Western Australia. The argument before me was almost exclusively directed to the Jurisdiction of Courts Act.

There are on foot two sets of proceedings between the parties arising out of the construction of an apartment complex for the Australian Government in Bangkok in the Kingdom of Thailand. It appears that the respondent, by an assignment of the head-contract for the construction of the apartment

complex, undertook responsibility to the Australian Government for the construction of the apartment complex. The respondent sub-contracted to the applicant the supply and installation of certain services such as fire protection, airconditioning, water treatment and distribution and communication services ("the subcontract").

The principal claim made in these proceedings is that the applicant was induced to enter into the subcontract by misleading and deceptive conduct on the part of the respondent. Such conduct is pleaded as representations and warranties made by the respondent as to the period of time within which the apartment complex would be completed. Claims in negligence relating to construction work and the security of the construction site are also made in these proceedings as is a relatively small claim pursuant to the subcontract.

In the proceedings commenced in the Supreme Court of Western Australia the plaintiff (the respondent to the proceedings in this Court) claims against the defendant (the applicant in this Court) for breaches of the subcontract. The breaches alleged include a failure to complete the subcontract work by the date provided for practical completion of the project and failure to carry out the subcontract work in a proper and "workmanlike" manner.

Section 5(4) of the Jurisdiction of Courts Act is in the following terms:-

"Where:

(a) a proceeding (in this subsection referred to as the "relevant proceeding") is pending in the Federal Court or the Family Court (in this subsection referred to as the "first court"); and

(b) it appears to the first court that:

(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory and it is more appropriate that the relevant proceeding be determined by the Supreme Court;

(ii) having regard to:

(A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of a State or Territory;

(B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub-subparagraph (A) and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and

(C) the interests of justice;

it is more appropriate that the relevant proceeding be determined by that Supreme Court; or

(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory;

the first court shall transfer the relevant proceeding to that Supreme Court."

The respondent places reliance on s5(4)(b)(i). Plainly these proceedings are related to the proceedings between the same parties which have been instituted in the Supreme Court of Western Australia. The crucial issue is whether it is more appropriate that these proceedings be determined by the Supreme Court of Western Australia than by this Court.

It is contended on behalf of the respondent that the applicant's claims under s52 of the Trade Practices Act are ill-founded and made purely for the purpose of invoking the jurisdiction of this Court. The only pleadings filed to date are the application and statement of claim. I am not prepared at this early stage to act on any basis other than that the claims pursuant to the Trade Practices Act are a bona fide invocation of the jurisdiction of this Court.

The applicant places heavy reliance on the fact that it commenced its proceedings in this Court before the respondent commenced its proceedings in the Supreme Court of Western Australia. In Teserioro v Matstar Pty Ltd & Anor (1990) 93 ALR 607 Spender J stated at 608 as follows:-

"... the position so far as the Federal Court in Queensland is concerned in the future will be that, in the absence of special circumstances, the litigation should be pursued in the court in which it was first commenced."

His Honour had earlier pointed out that as the Federal Court no longer has exclusive jurisdiction under Part V of the Trade Practices Act it cannot be regarded as being necessarily the appropriate court to hear and determine matters under s52 of that Act.

Ipp J in Central Bore Nickel NL v Richfile Pty Ltd & Ors (unreported, Supreme Court of Western Australia, 22 August 1995) has also taken the view that it is undesirable that litigation should be commenced in one court when there is existing litigation in another court involving the same parties and substantially the same issues. His Honour there stated at page 7:-

"In my view the commencement of the action in Western Australia after a like action had commenced in New South Wales is precisely what the Act seeks to avoid. It is plainly highly undesirable for two actions so related to each other as the two in which CBN and Richfile are presently involved to run concurrently in two different States. Apart from the potential for conflict between courts, the existence of parallel proceedings results in the unnecessary use of the judicial services of at least one court and in the incurring of unnecessary legal costs. One of the main points of the Act is to avoid the need for this occurring."

With respect I agree with everything said by his Honour in the above passage.

The circumstances here, however, are not identical with those that confronted Ipp J in the Central Bore Nickel Case. First, as the applicant has been at pains to stress, the two sets of proceedings although related, do not involve substantially the same issues. The proceedings in this Court are based on allegations of misleading and deceptive conduct leading up to the entering into of the subcontract: the Western Australian proceedings allege breaches of the subcontract.

Moreover, the issue of the timing of the commencement of the respective proceedings in this case has a slightly unusual history. In the course of correspondence between the parties on the subject matter of the dispute between them, the respondent by letter dated 3 November 1995 advised the applicant as follows:-

"Entact Clough is presently preparing a formal Statement of Claim which shall be issued and served after further reasonable notice to T. O'Connor & Sons if Entact Clough considers that T. O'Connor & Sons is not seriously and actively attempting to achieve an expeditious settlement of this matter."

The applicant's reply of 30 November 1995 included the following:-

"As your letter of 3 November 1995 suggested, we have considered your claim and have exhaustively researched our own project records, interviewed the relevant staff involved and also obtained legal advice regarding our position.

The advice given to me by my staff and legal advisers is that, not only is your claim against T. O'Connor unsustainable, but also that T. O'Connor has a legitimate claim against Entact Clough for a very substantial sum.

Attached to this letter is a copy of the Statement of Claim which has been filed in the Federal Court of Australia which sets out the basis of our entitlement to damages.

Please note that the provision of the Statement of Claim is not by way of service. This means that for the moment, you do not need to file an Appearance or Defence to the claim.

We believe that an appropriate course of action would be to convene a meeting within 14 days to attempt to resolve the claim.

Failing such a meeting, we would have no option but to proceed to serve you formally with the Statement of Claim and Application in which case, you would need to file pleadings in the Federal Court."

It seems fair to conclude from the above correspondence that the decision of the applicant to commence proceedings in this Court was precipitated by the advice which it had received from the respondent that it was preparing a statement of claim which it proposed to issue and serve, after notice, if settlement negotiations did not proceed satisfactorily. Its disinclination immediately to serve the application and statement of claim tends to support an inference that it sought to gain a tactical advantage by commencing proceedings in the Federal Court ahead of the institution of the proceedings by the respondent of which it had been given conditional notice.

It appears that service of the two sets of proceedings respectively was effected at virtually the same time on 20 December 1995.

In the circumstances I am prepared to give less weight to the fact that the proceedings in this Court were instituted before those in the Supreme Court of Western Australia than I would in more usual circumstances.

The central consideration here, in my view, is the fact that there is likely to be overlap in the evidence required to be given in the two sets of proceedings. Although the case of
the applicant largely, but not wholly, relates to matters which predate the entering into of the subcontract, it seems almost inevitable that its witnesses will be cross-examined on the issue of reliance by reference to the terms of the subcontract. The extent to which the respondent owed to the applicant a duty of care in respect of the carrying out of the construction work is also likely to involve consideration of the terms of the subcontract. The applicant's claim pursuant to the subcontract will necessarily involve issues of its interpretation.

In my view considerable weight must be given on this application to the desirability of both sets of proceedings being in the same court where proper consideration can be given to their joint management, possibly leading to an order that they be heard together.

In considering whether it is "more appropriate" that these proceedings be determined in the Supreme Court of Western Australia, it is, I consider, legitimate to note, as Spender J did in Teserioro v Matstar Pty Ltd, that the Federal Court is no longer to be regarded as necessarily a more appropriate Court than a State or Territory Supreme Court to hear a claim pursuant to Part V of the Trade Practices Act. On the other hand, building disputes, including this one, generally lack a federal element and are traditionally and properly regarded as appropriate for determination in State courts.

Other factors to be taken into account include the likely hearing date in each court, the place where the parties respectively reside or carry on business, the places where witnesses reside or carry on business, the location of other evidence, the place of the occurrence of events the subject matter of the litigation, the law governing the questions which will fall for determination and the question of the minimisation of legal costs.

The significance of the various factors will vary from case to case. Limited evidence has been placed before me on certain of the above factors.

Nothing before me suggests that a hearing date in this Court could be obtained significantly earlier than a hearing date in the Supreme Court of Western Australia, or that the reverse is the case.

The applicant's registered office is in Sydney, New South Wales. It has an office in Regency Park, a suburb of Adelaide, South Australia, as well as an office in a suburb of Perth, Western Australia. It holds at least 135 arch lever folders and a large quantity of drawings relevant to the proceedings between the parties at its Regency Park premises. Nothing was put to me which suggested that such material was not readily transportable.

The witnesses which the applicant proposes to call at the hearing of these proceedings are all, or nearly all, residents of Adelaide. The applicant does not intend to call any witnesses resident in Western Australia. The applicant has retained Adelaide solicitors in respect of these proceedings, and I infer, in respect of the Western Australian proceedings.

On the respondent's side, its registered office is in West Perth, Western Australia. It has no place of business in South Australia. Its documentation is in Western Australia or will be returned to Western Australia from Thailand. As is the case with respect to the applicant's documents, nothing was put to me which suggested that such documentation is not readily transportable. None of the witnesses which the respondent proposes to call in these proceedings resides or carries on business in South Australia. Slightly more than half of such witnesses are not based in Western Australia. On balance it does not seem to me that such witnesses would be significantly more inconvenienced by being required to travel to Adelaide rather than to Perth. Those based in Melbourne and Canberra may, indeed, find Adelaide more convenient. The respondent has retained Perth solicitors in respect of both sets of proceedings.

It appears that the pre-contractual negotiations and arrangements which are at the centre of these proceedings took place in Perth. It seems unlikely on the material before me that the proper law of the subcontract would be found to be that of South Australia. It may be, although I cannot find that it will be, found to be the law of Western Australia.

Nothing before me suggests that there is any material difference between the cost of conducting proceedings in the Supreme Court of Western Australia as compared with this Court.

Although not without some hesitation, I have on balance concluded that it is more appropriate that these proceedings be determined in the Supreme Court of Western Australia.

Were it not for the existence of the Western Australian proceedings I would not have taken the above view. I am aware that an application has been made in the Supreme Court of Western Australia for those proceedings to be transferred to this court in its South Australia registry. I have not considered it appropriate to speculate as to the likely result of that application. It is certainly not for me to suggest how a Supreme Court might exercise its jurisdiction. No application was made for these proceedings, or this application, to be stayed pending a determination of the application to transfer the Western Australian proceedings. I have considered it appropriate to deal with this application solely on the evidence placed before me.

I order that these proceedings be transferred from the Federal Court of Australia to the Supreme Court of Western Australia.

I certify that this and the preceding pages are a true copy of the Reasons for Decision of the Honourable Justice Branson.

Associate:

Dated:

Counsel for the Applicant : Mr D A Trim

with him

Mr B M O'Brien

Solicitors for the Applicant : Windervere Bellman

Counsel for the Respondent : Mr M Beamond

Solicitors for the Respondent : Mellor Olsson

as agents for

Jackson MacDonald

Hearing Dates : 27 March 1996

9 April 1996

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