FEDERAL COURT OF AUSTRALIA

Reading Australia Pty Ltd v Australian Mutual Provident Society

[1999] FCA 718

PRACTICE AND PROCEDURE – Federal Court Rules – application for order that the question of liability be determined separately from the question of damages – principles that govern the circumstances in which an order will be made under O 29 r 2 – circumstances where general rule has been modified – whether “just and convenient” to make an order under O 29 r 2

Federal Court Rules, O 29 r 2

Chippendale Printing Co Pty Ltd v Commonwealth (1995) 17 ACSR 328, cited

Blurton v Minister for Aboriginal Affairs (1991) 29 FCR 442, cited

Pritchard v Racecage Pty Ltd (1996) 64 FCR 96 and on appeal, (1997) 72 FCR 203, cited

South Pacific Air Motive Pty Ltd v Magnus (1998) 157 ALR 443, cited

Comite Interprofessionnel des Vins des Cotes de Provence v Bryce (1996) 69 FCR 450, cited

Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1985) 10 FCR 567, cited

Landsal Pty Ltd (in liq) v REI Building Society (1993) 113 ALR 643, cited

Bass v Permanent Trustee Co Ltd [1999] HCA 9, cited

Jacobson v Ross [1995] 1 VR 337, cited

Nissan v Attorney-General [1970] AC 179, cited

CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 601, cited

GMB Research & Development Pty Ltd v The Commonwealth [1997] FCA 934, cited

Arnold v Attorney-General for Victoria [1995] FCA 727, cited

Dr Martens Australia Pty Ltd v Bata Shoe Company of Australia Pty Ltd (1997) 75 FCR 230, cited

READING AUSTRALIA PTY LTD v AUSTRALIAN MUTUAL PROVIDENT SOCIETY, AMP INVESTMENTS LIMITED

NG 326 of 1997

BRANSON J

SYDNEY

1 JUNE 1999 (Publication of Reasons)

THE COURT ORDERS THAT:

The application be dismissed.

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

REASONS FOR DECISION

Introduction

1                     Pursuant to a notice of motion dated 3 March 1999, filed on 15 March 1999, the applicant moved for an order under O 29 r 2 of the Federal Court Rules that the question of liability be determined separately from the question of damages in this proceeding.  On 3 May 1999 I dismissed the motion.  I indicated at that time that I would give reasons for my decision at a later date.  These are the reasons for the dismissal of the motion.

2                     Order 29 rules 1 and 2 provide:

“1.       In this Order, “question” includes any question or issue in any proceeding whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise.

2.         The Court may make orders for –

(a)               the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings; and

(b)               the statement of a case and the question for decision.”

The Proceeding

3                     The application in this matter, which is dated 30 April 1997, seeks relief as follows:

“1.       The following DECLARATIONS:

(a)               AMP and/or Investments engaged in conduct that was misleading or deceptive or which was likely to mislead or deceive in contravention of Section 52 of the Trade Practices Act, 1974 (Act).

(b)               Induced by and acting in reliance on the representations made by AMP and/or Investments, Reading entered into the Agreement between the parties;

(c)               that a legally enforceable Agreement was entered into between the parties.

2.                  The following ORDERS:

(a)               specific performance of the Agreement entered into between the parties;

(b)               damages pursuant to Section 87 and Section 82 of the Act as the Court deems appropriate and as will compensate the Applicant in whole or in part for loss or damage it has suffered and will continue to suffer as a result of AMP/Investment’s contravention of the Act;

(c)                alternatively, damages for breach of contract;

(d)               interest;

(e)                such further or other order as the Court considers appropriate; and

(f)                 costs.

The claim for specific performance made by para 2(a) of the application is no longer pressed.

4                     The statement of claim filed by the applicant alleges that by an agreement between the applicant and the second respondent as agent for the first respondent (“AMP”), AMP agreed to lease to the applicant certain land (“the Land”) being part of a shopping centre development by AMP at Mt Gravatt in Queensland (“the Lease Agreement”).  It is common ground between the parties that AMP has not leased the Land to the applicant.  The statement of claim further alleges that AMP made repeated false and misleading representations to the applicant during the course of negotiations concerning the Lease Agreement upon which the applicant relied in entering into the Lease Agreement.

5                     The statement of claim discloses that the applicant’s claims for relief are based upon the following premises:

(a)                that the respondents or one of them engaged in conduct, in trade or commerce, which was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the TP Act”);

(b)               that the respondents or one of them breached the Lease Agreement by purporting unilaterally to terminate it;

(c)                that the respondents are estopped from denying the existence of the Lease Agreement; and

(d)               that the applicant has suffered loss by the misleading or deceptive conduct of the applicants within the meaning of s 82 of the TP Act.

By their defence, the respondents have denied virtually all of the substantial allegations in the statement of claim.

Consideration

Legal Principles

6                     Order 29 rule 2 gives to the Court wide powers to regulate the procedures to be adopted for the hearing and determination of a proceeding.

7                     Ordinarily all issues of fact and law in a proceeding will be determined at the one time by the Court following a trial (O 32).  However, the authorities show that O 29 r 2 has been relied on to support the making of orders that have modified this general rule in the following ways:

(a)                by requiring that certain questions, formulated by the order, be decided separately from (and presumably, before) any other questions in the proceeding on the basis of a special case stated in accordance with O 50 r 1 (see, for example, Chippendale Printing Co Pty Ltd v Commonwealth (1995) 17 ACSR 328);

(b)               by requiring the determination of a preliminary issue of law in circumstances in which it was unnecessary for any facts to be stated or evidence to be adduced (see, for example, Blurton v Minister for Aboriginal Affairs (1991) 29 FCR 442);

(c)                by requiring the determination of certain preliminary questions of law as to the competence of the case of the applicant on the basis of certain agreed facts (see, for example, Pritchard v Racecage Pty Ltd (1996) 64 FCR 96 and on appeal, (1997) 72 FCR 203; South Pacific Air Motive Pty Ltd v Magnus (1998) 157 ALR 443);

(d)               by requiring the separate trial “as a preliminary issue” of certain of the claims made by the applicant (see, for example, Comite Interprofessionnel des Vins des Cotes de Provence v Bryce (1996) 69 FCR 450);

(e)                by requiring that the question of the respondents’ liability be tried separately, and that any question as to the quantum of any damages to be paid by the respondents, or any of them, to the applicants, or as to the taking of any account of the respondents’ profits, be tried separately and at a dated to be fixed after the determination of the question of liability (see, for example, Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1985) 10 FCR 567).

8                     The principles that govern the circumstances in which an order will be made under    O 29 r 2 are relatively well established.  They may be summarised as follows:

(a)                the term “question” in O 29 r 1 includes any question or issue of fact or law in a proceeding.  The distinction in the rule between an “issue” and a “question” is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an “issue”, and less decisive matters of dispute being “questions” (Landsal Pty Ltd (in liq) v REI Building Society (1993) 113 ALR 643 at 647);

(b)               a question can be the subject of an order for a separate decision under O 29 r 2 even though a decision on such a question will not determine any of the parties’ rights (Landsal Pty Ltd (in liq) v REI Building Society at 647);

(c)                however, the judicial determination of a question under O 29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties (Bass v Permanent Trustee Co Ltd [1999] HCA 9 at para 45);

(d)               where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined (Jacobson v Ross [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1970] AC 179 at 242-243 per Lord Pearson; Bass v Perpetual Trustee at para 53);

(e)                care must be taken in utilising the procedure provided for in O 29 r 1 to avoid the determination of issues not “ripe” for separate and preliminary determination.  An issue may not be “ripe” for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved (CBS Productions Pty Ltd v O’Neill per Kirby P at 606);

(f)                 factors which tend to support the making of an order under O 29 r 2 include that the separate determination of the question may –

(i)                  contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or

(ii)                contribute to the settlement of the litigation (CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 601 per Kirby P at 607);

(g)                factors which tell against the making of an order under O 29 r 2 include that the separate determination of the question may -

(i)         give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial (GMB Research & Development Pty Ltd v The Commonwealth [1997] FCA 934;

(ii)        result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding (GMB Research & Development Pty Ltd v The Commonwealth; Arnold v Attorney-General for Victoria [1995] FCA 727).  This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or

(iii)               prolong rather than shorten the litigation (GMB Research & Development Pty Ltd v The Commonwealth).

9                     Ultimately the issue for the Court to determine when consideration is being given to the making of an order under O 29 r 2 is whether it is “just and convenient” for the order to be made (Arnold v Attorney-General for the State of Victoria).  There are classes of proceedings in which it is commonly recognised that it is just and convenient for an order under O 29 r 2 to be made.  One such class is proceedings concerning intellectual property rights where an applicant can not be compelled to make an election as between damages and an account of profits at least until all of the evidence has been received so that, if an order has not been made separating the determination of the issues of liability and relief, the parties will have to call evidence to deal with both damages and an account of profits (Dr Martens Australia Pty Ltd v Bata Shoe Company of Australia Pty Ltd (1997) 75 FCR 230).  Another class is proceedings in which an application in the nature of a demurrer is appropriately made.  An application of this kind assumes the truth of the pleaded facts.  In a case in which it is clear that the pleadings contain all of the relevant facts but one party contends that the pleading does not disclose a cause of action, or a defence or a matter of reply, as the case may be, an application in the nature of a demurrer will have obvious utility (Bass v Permanent Trustee Co Ltd at para 50).

The Present Case

10                  The present case is not one where it can readily be demonstrated that it would be just and convenient for an order to be made under O 29 r 2 for the separate trial of the issues of liability and damages.  First, this is not a case in which the parties have reached agreement as to the facts.  There are important factual disputes between the parties both on the issue of liability and on the issue of damages that require determination by the Court.  Further, if an order is made for the determination of liability as a separate question, there will be a real risk, in my view, of overlapping evidence being called on the hearing of the preliminary question and, should liability be established, at the later hearing concerning damages.  It seems that at least one significant witness, and possibly more, whose credit may be in issue, may have to be called at both stages of the hearing of the proceeding.

11                  Secondly, the application seeks relief in part by way of declarations.  Declarations are a form of discretionary relief.  Ordinarily a court will wish to be able to consider all relevant matters before determining whether any particular declaration should be made.  For example, a factor commonly taken into account by a court asked to make a declaration that a corporation engaged in conduct that contravened s 52 of the TP Act is whether the applicant for the declaration suffered any loss by the conduct found to be misleading or deceptive.  In the circumstances of this case, I do not consider that it would be appropriate for the Court to give consideration to the making of at least the first two declarations sought by the applicant without having before it the evidence of the parties concerning the relevant loss or damage, if any, suffered by the applicant.

12                  Thirdly, the applicant seeks relief under ss 82 and 87 of the TP Act.  Relief is available under those sections only where a court finds, in the case of s 82, that a person has suffered loss or damage or, in the case of s 87, that a person has suffered, or is likely to suffer, loss or damage.  It is not possible in respect of these claims for determination of the issues of liability and damages to be wholly separated. The same is likely to be the case in respect of the applicant’s claim that the respondents are estopped from denying the existence of the Lease Agreement. To establish the alleged estoppel the applicant will be required to show, amongst other things, that it has suffered detriment. There is a risk that is seeking to do so, questions touching on the applicant’s claim for damages will arise.

13                  The Court has not been invited to determine as a separate question whether the applicant and AMP entered into the Lease Agreement as pleaded by the applicant.  Had the applicant’s case been pleaded purely in contract it may well have proved just and convenient for this legal issue to be determined as a preliminary question.  However, the pleading of the applicant’s case, in the alternative, under the TP Act has the result that the separate determination of the issue of whether the applicant and the AMP entered into the Lease Agreement would leave a number of significant and interrelated issues unresolved.  Moreover it would almost certainly result in witnesses who had given evidence on the hearing of the preliminary question being required to give evidence again at a later stage in the proceeding.  As to some, if not all, of such witnesses it is likely that the Court would be required to form a view as to their credibility for the purpose of determining the preliminary issue.  This could cause embarrassment, and possibly found an application for the judge who determined the preliminary question to disqualify himself or herself from continuing to hear the matter.

14                  Finally, no party suggested, and I see no reason to conclude, that preliminary determination of any question touching upon the respondents’ liability in this case would be likely to lead to a settlement of the proceeding as a whole.

15                  For the above reasons I formed the view that the application for an order that the question of liability be determined separately from the question of damages in this proceeding should be dismissed.

Associate:

Dated:              1 June 1999