FEDERAL COURT OF AUSTRALIA

Pegasus Gold Inc v Bateman Project Engineering Pty Ltd [1999] FCA 490

PRACTICE AND PROCEDURE – consolidation of proceedings.

Federal Court Rules, O 29 r 5

Cousins v Cousins (1948) 51 WALR 57 considered

Re Ling, ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129 cited

Muller v Human Rights and Equal Opportunity Commission (Moore J, unreported, 17 July 1997) cited

PEGASUS GOLD INC and PEGASUS GOLD CORPORATION v BATEMAN PROJECT ENGINEERING PTY LIMITED, KINHILL PACIFIC PTY LIMITED (ACN 010 241 620) and KILBORN ENGINEERING PACIFIC PTY LIMITED (ACN 000 864 353)

NG 471 OF 1998

and

PEGASUS GOLD AUSTRALIA PTY LTD (Subject to a Deed of Company Arrangement) (ACN 009 628 924) v BATEMAN PROJECT ENGINEERING PTY LIMITED, KINHILL PACIFIC PTY LIMITED (ACN 010 241 620) and KILBORN ENGINEERING PACIFIC PTY LIMITED (ACN 000 864 353)

NG 1403 OF 1998

JUDGE:          BEAUMONT J.

DATE:            22 APRIL 1999

PLACE:          SYDNEY

AND

THE COURT ORDERS THAT:

1.                  These proceedings be consolidated.

2.                  The costs of this application be the respondents’ costs in the proceedings.

3.                  Liberty to apply be reserved.

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

AND

REASONS FOR JUDGMENT

BEAUMONT J:

1                     This is an application by the respondents, pursuant to O 29 r 5, for consolidation of these two sets of proceedings.  The applicants in both proceedings oppose the application, but they would consent to orders that evidence in one proceeding be evidence in the other;  and that the proceedings be heard together.  The applicants also accept that discovery will need to be managed so that unnecessary expense, e.g. because of duplication, is avoided.

2                     Order 29 r 5 provides:

“5.       Where several proceedings are pending in the same Division, then, if it appears to the Court –

(a)               that some common question of law or fact arises in both or all of them;

(b)               that the rights to relief claimed therein are in respect of, or arise out of, the same transaction or series of transactions;  or

(c)                that for some other reason it is desirable to make an order under this rule,

the Court may order those proceedings to be consolidated or may order them to be tried at the same time or one immediately after another or may order them to be stayed until after the determination of any of them.”

3                     In Cousins v Cousins (1948) 51 WALR 57, Wolff J said of consolidation (at 60):

“The matter is purely one of procedure.  Provided the Court, in dealing with the evidence, applies it in strict relevance, there can be no legitimate objection to the decision arrived at.  Some question may arise as to costs, but this is a matter for the trial Judge.

In my opinion, consolidation is desirable and should be allowed where, as here, the issues are substantially the same, and the evidence is to all intents and purposes identical.  I would, however, hesitate to lay down any inflexible rule.  Consolidation is intended to save time and expense, as well as to avoid the awkward consequences of contrary findings on the same set of facts.  Because it cannot be shown to have been done before in a like instance, it does not follow that the course of procedure which was ordered is not a proper one.”

4                     As to the width of the Court’s discretion, see also Re Ling, ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129 at 134D-F:  Muller v Human Rights and Equal Opportunity Commission (Moore J, unreported, 17 July 1997).

5                     The context of the present application is as follows:

·                    Pegasus Gold Inc, a Canadian corporation, is the holding company of a group that includes Pegasus Gold Corporation and Pegasus Gold Australia Pty Ltd, the latter being an Australian company.  All three corporations are under some form of external administration, and the interests of their respective creditors appear not to be identical.

·                    Each of the proceedings appears to raise complex issues of fact for determination arising out of the carrying out by the respondents of gold mines feasibility study work.  Different causes of action, and different defences, are pleaded in the two sets of proceedings, but it appears that some common questions of fact are likely to arise in each set, although it is not yet possible to identify the exact extent of their overlap.

6                     In support of the present application, the respondents rely upon the practical considerations in the promotion of efficiencies in the litigation previously mentioned.  Particular concern was expressed at the prospect of the need to communicate with two firms of solicitors who would be representing the same corporate interest, viz. the Pegasus Group.  Other duplication, e.g. in discovery is mentioned, and I think, probable.  These matters are entitled to considerable weight in the balancing process, as is the circumstance that the applicants have not offered to be bound by findings in the other proceedings.

7                     In answer, the applicants point to the differences in the causes of action and defences and, if liability were to be found, the potential for divergences in the respective measures of damages.  They also point to potential for a conflict in the interests of the respective creditors, especially if settlement is mooted, and a question of apportionment arises within the Pegasus Group, if a global offer of settlement were to be made by the respondents.

8                     In my view, there is considerable force in the respondents’ contentions because of the inconvenience and inefficiencies potentially inherent in the concurrent conduct of hearings of similar factual issues between ( in corporate group terms) virtually identical parties.  On the other hand, whilst reasonable compromise is always to be encouraged by courts, it is, in truth, no more than a collateral consideration in the present context, and as a factor here is thus entitled to little weight in the balancing process.

9                     In the exercise of my discretion, I think that the proceedings should be consolidated.

10                  It is true, as has been noted, that because the litigation is still in its relatively early stages, the exact identification of anticipated common factual issues is not yet possible.  It may be, although I do not expect this to happen, that it will not eventuate that there are any common factual issues.  This possibility can be accommodated, however, by the specific reservation of liberty to apply for deconsolidation for good cause should it later emerge that the anticipated overlap of factual issues then appears unlikely to crystallise, or that the bringing of cross-claims is likely to have a bearing upon the present question.

ORDERS

11                  I make the following orders:

4.                  That these proceedings be consolidated.

5.                  That the costs of this application be the respondents’ costs in the proceedings.

6.                  That liberty to apply be reserved.

Associate:

Dated:              22 April 1999