FEDERAL COURT OF AUSTRALIA

GMA Garnet Pty Ltd v Barton International Inc [2008] FCA 1998

GMA GARNET PTY LTD (ACN 009 344 227) and GARNET INTERNATIONAL RESOURCES PTY LTD (ACN 081 244 715) v BARTON INTERNATIONAL INC (ARBN 009 475 138)

WAD 79 of 2007

SIOPIS J

2 DECEMBER 2008

PERTH

THE COURT ORDERS THAT:

Applicants’ Notice of Motion to Further Re‑Amend the Statement of Claim

1.                  The Applicants have leave to further amend the Re‑Amended Statement of Claim in terms of the Fourth Minute of Further Re‑Amended Statement of Claim filed on 1 December 2008.

2.                  The Fourth Minute of Further Re‑Amended Statement of Claim do stand as the Applicants’ Further Re‑Amended Statement of Claim and service of the Further Re‑Amended Statement of Claim do be dispensed with.

3.                  The Applicants pay any costs thrown away by the Respondent by reason of the further amendment of the Re‑Amended Statement of Claim.

Respondent’s Notice of Motion for a split trial

4.                  The Respondent’s Notice of Motion dated 13 November 2008 be dismissed.

5.                  The Respondent do pay the Applicants’ costs of the Respondent’s Notice of Motion dated 13 November 2008.

Directions

6.                  The Respondent do file and serve any amendments to the Further Re‑Amended Defence by 4.00 pm on 23 December 2008.

7.                  The Applicants do file and serve any Re‑Amended Reply by 4.00 pm 16 January 2009.

8.                  The Applicants are to file and serve all their witness statements by 4.00 pm on 9 January 2009.

9.                  The Respondent is to file and serve its witness statements by 4.00 pm on 30 January 2009.

10.              The parties have leave to re‑list this matter for directions on 48 hours notice.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     By this motion the respondent seeks orders for the trial of separate issues pursuant to O 29 of the Federal Court Rules.

2                     The applicants’ application in this case is founded primarily on allegations of the respondent’s misleading or deceptive conduct and breach of contract.  The parties were previously joint venturers or parties to a relationship to like effect.  There are two contracts in question.  One is known as the principal contract and the other is a contract for the supply of garnets, and is known as the supply contract.  The applicants allege that the respondent breached a number of terms of the principal and supply contracts.  There is also a claim for the rectification of the contracts.

3                     The trial is due to commence in February 2009 and is set down for 10 days.  The respondent contended that the trial in February should be confined to the questions of whether impugned representations comprising the allegations of misleading or deceptive conduct were made; whether the supply contract contained the terms which are alleged; and whether one or both of the contracts should be rectified.

4                     In support of the application for the separation of the issues for trial, senior counsel for the respondent said that due to the applicants’ recent amendments to the statement of claim, it was not practical for the trial to proceed in February on all the issues.  It was said that the recent amendments had put in issue the intention which the respondent had held on each occasion when it issued an order for the supply of garnets under the supply contract.  Senior counsel went on to contend that because the amendments plead that there were 12 occasions on which such orders were issued, the effect of the amendments was to expand substantially the scope of the applicants’ case.  It would be necessary for the respondent’s solicitors to investigate the question of what was the respondent’s intention at the time it issued each of the orders.  Senior counsel for the respondent said that determining the respondent’s intention was not a simple matter because one department of the respondent had placed each order for the garnets and another department had marketed the garnets which were supplied.

5                     Generally speaking, when an application is made for a split trial it is incumbent upon the applicant for the split trial to demonstrate that the split trial will bring about a result which would be more efficient from a case management point of view.  In the case of Olbers v Commonwealth of Australia (No 3) [2003] FCA 651, French J (as he then was) referred to the disadvantages associated with a split trial.  He cited with approval the observations of Branson J in Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 which identified the prospect of witnesses having to be recalled to give evidence on matters affecting the separate issues and the issues at trial as being one disadvantage.  French J also referred to the prospect of the final outcome being delayed by reason of an appeal in respect of the separate preliminary matter.

6                     In this case, it seems that the parties agree that if the trial in February was confined to a trial of the issues proposed by the respondent, it would be concluded within the time allocated for the trial as there would only be a limited amount of oral evidence.

7                     However, I am not satisfied that there would be any case management advantage in splitting the trial as proposed by the respondent.  The trial dates for a trial of 10 days duration commencing in February 2009 have been known to the parties for some considerable period of time.  For the following reasons, I am not satisfied that a trial on all the issues cannot be commenced and be completed within the 10 days for which the trial is set down.

8                     First, the respondent has not yet filed a defence to amendments to the statement of claim going to the issue of its intention at the time the orders were placed.  I am, therefore, not in a position to make an assessment of the effect of the amendments on the matters that will be in dispute at the trial, and the extent to which, if any, the amendments will lengthen the trial.  It is not beyond the scope of realistic expectation that in respect of its intention on, at least, some of the relevant occasions, the respondent will admit that it had the intention which the applicants allege, because that intention is consistent with the view that the respondent has as to the proper construction of the supply contract.

9                     Secondly, I am not satisfied on the evidence that the investigations called for by the amendments would preclude the respondent from preparing adequately for trial on all the issues.  The evidence in support of the respondent’s motion is to be found in an affidavit of Mr Nicholas Cooper sworn on 13 November 2008.  Mr Cooper has deposed to the nature of the task at para 13 and para 14:

I am informed by Cliff Summers and believe that:

(a)                BII shipped and discharged the GMA garnet ordered by it under the GSA into the USA or Canada;

(b)                BII on‑sold the GMA garnet to its related company, Barton Mines Company, LLC (BMC);

(c)                BMC is the entity in the Barton Group of companies that was responsible for the marketing and sale of garnet in the USA or Canada;

(d)                BMC’s policies and practices as to the manner in which it markets and sells GMA garnet and other garnet obtained by it from other sources have varied over time according to various market factors and it is not possible to analyse BMC’s policies and practices as a single issue covering the whole of the relevant period under the GSA, namely between February 2005 and November 2005.

In the above circumstances, an investigation of all of these issues will be time consuming, extensive and expensive and will involve the disclosure of confidential and commercially sensitive information, particularly in circumstances where the Applicants or their related entities are trade rivals of BII and its related entities.  In this regard, I am informed by Cliff Summers of BII and believe that a related company of the Applicants is now competing with BMC in the USA, and it started its operations in around February 2006.

10                  In my view, this evidence is at too high a level of generality for the Court to conclude that it will not be possible for the respondent to prepare adequately for trial in respect of the matters raised by the amendments.

11                  Further, as already mentioned one of the vices associated with split trials is that it may be necessary for witnesses to be examined and cross‑examined both at the preliminary and any subsequent trials.  In my view, there is a prospect that this would occur in this case if a split trial was ordered.  This is because of the existing plea in the defence which puts in issue the extent of the knowledge that each party had during the contractual negotiations, of the business practices adopted by the other party.  This is an issue on which oral evidence would need to be given at the trial of the proposed preliminary questions by witnesses who would then need to be recalled at any subsequent trial.

12                  For these reasons, I dismiss the respondent’s motion to split the trial.

Associate:

Dated:         14 January 2009