FEDERAL COURT OF AUSTRALIA

Oswal v Apache Corporation [2014] FCA 642

THE COURT ORDERS THAT:

1.    The application to stay the proceeding is dismissed.

2.    This matter proceed to a trial on all issues other than damages.

3.    The applicant pay the respondent’s costs of the stay application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The applicant seeks a stay of this proceeding on the basis that it raises for determination issues raised in another proceeding commenced in this Court (the WAD 66/2011 Proceeding). Whilst the present applicant is a party in those other proceedings, the respondent is not. The applicant submits that the determination of those issues in the WAD 66/2011 Proceeding will have a material effect on this proceeding. The parties filed extensive written submissions much of which is either factually or legally uncontroversial. It has been convenient to replicate some of those but without attribution at every point.

Background

2    This proceeding had its genesis in Houston, Texas. In May 2011, the applicant, and others, issued proceedings in the District Court of Harris County, Texas against the respondent (the Texas Proceeding).

3    That claim, as does this, sought damages for alleged contraventions of s 52 of the Trade Practices Act 1974 (Cth) (TPA). The basis of loss was said to result from the applicant allegedly entering into an agreement with Burrup Fertilisers Pty Ltd (BFPL) to pay cost overruns associated with the construction of the anhydrous ammonia plant on the Burrup Peninsula of Western Australia (the Alleged Cost Overruns Agreement) following the allegedly misleading or deceptive conduct of the respondent. BFPL is now known as Yara Pilbara Fertilisers Pty Ltd. However, I will continue to use its former name as that is how it is identified in the pleadings to which I have been referred.

4    The respondent brought an application for the dismissal of the Texas Proceeding on the ground of forum non conveniens. That application was heard on 22 March 2013.

5    On 18 June 2013, the Court in the Texas Proceeding found that Australia was an adequate and available forum for the Texas Proceeding and made an order dismissing the Texas Proceeding. The order of dismissal was expressly conditioned on the respondent complying with the terms of stipulations attached to the court order, relevantly:

In the event of dismissal of this lawsuit based on the forum non conveniens doctrine, Apache Corporation agrees to the following conditions should Plaintiffs refile this lawsuit in Australia within 120 days of either: (1) this Order of Dismissal (if no appeal is taken); or (2) the conclusion of the appellate process:

. . .

(c)    to waive any limitations defense (sic) in the Australian lawsuit that would have matured but for the filing of the petition in Harris County, Texas on the date it was filed.

6    In order to take advantage of the qualified waiver by the respondent of any limitation defence, which it might have had as a result of the applicant commencing the same proceeding in Australia and which it could not have raised in the Texas Proceeding, the applicant had to refile the proceeding in an Australian court within 120 days of 18 June 2013, namely, by 16 October 2013.

7    By cross-claim dated 30 June 2011 filed in the WAD 66/2011 Proceeding (the WAD 66/2011 cross-claim) the applicant again sought to raise issues associated with the Alleged Cost Overruns Agreement, this time in the context of a contractual claim. Relevantly, the applicant pleads in those proceedings that a term of the alleged agreement is that BFPL would pay him for any cost overruns he paid under the Alleged Cost Overruns Agreement. Accordingly, the principal legal foundation of BFPL's alleged liability to the applicant is in contract.

8    This proceeding was commenced on 11 October 2013 by the applicant, almost 120 days after the Texas Court made the order dated 18 June 2013 mentioned above. The applicant relies upon the same causes of action in this proceeding as he did in the Texas Proceeding.

9    The alleged legal basis for liability in this case is entirely different to the WAD 66/2011 cross-claim. The claim against the respondent is one for damages for contravention of the TPA.

Relevant issues in this proceeding

10    The applicant alleges in this proceeding that:

(a)    in reliance on representations made by the respondent, and induced thereby:

(i)    he entered into the Alleged Cost Overruns Agreement with BFPL, by which he agreed to pay cost overruns associated with the construction by BFPL of the ammonia plant located on the Burrup Peninsula in Western Australia (the Plant) and BFPL agreed to reimburse him for the cost overruns paid by him;

(ii)    he entered into an agreement with SNC Lavalin (SA) Inc and BFPL in terms of which SNC Lavalin (SA) Inc would enter into a fixed price contract with BFPL for the construction of the Plant; SNC Lavalin (SA) Inc would subcontract construction of the Plant to two companies associated with the applicant, Oxidental Engineering and Technical Supplies Fzco (OETS) and Oil Fields Construction Services Ltd (OFCS); and the applicant would pay the amount by which the cost of construction exceeded the prices fixed between SNC Lavalin (SA) Inc and OETS and OFCS;

(b)    SNC Lavalin (SA) Inc, SNC Lavalin Group Inc and BFPL entered into a written Engineering Procurement Construction Deed (EPC Deed) for construction of the Plant by SNC Lavalin (SA) Inc at a fixed price of USD $320 million;

(c)    SNC Lavalin (SA) Inc entered into an Engineering and Procurement Agreement [Offshore] with OETS under which SNC Lavalin (SA) Inc subcontracted certain of its obligations under the EPC Deed to OETS for a fixed price of USD $153,200,000 (OETS Subcontract);

(d)    SNC Lavalin (SA) Inc entered into a Procurement, Construction, Management and Commissioning Agreement [Onshore] with OFCS under which SNC Lavalin (SA) Inc subcontracted certain of its obligations under the EPC Deed to OFCS for a fixed price of USD $152,500,000 (OFCS Subcontract);

(e)    pursuant to the Alleged Cost Overruns Agreement and in reliance on the representations made by the respondent and induced thereby, which he would not otherwise have done, the applicant entered into a Subcontract Guarantee in favour of SNC Lavalin (SA) Inc and SNC Lavalin Group Inc (Subcontract Guarantee) guaranteeing the obligations of OETS and OFCS under the Engineering and Procurement Agreement [Offshore] and the Procurement, Construction, Management and Commissioning Agreement [Onshore] respectively;

(f)    in reliance on the representations made by the respondent, and induced thereby:

(i)    he paid USD $477,654,774.45, which he would not otherwise have done, to companies involved in the construction of the Plant; and

(ii)    he paid USD $13,345,225.55 to BFPL and to third parties, on behalf of and at the request of BFPL, in respect of non-construction project costs.

11    The respondent pleads in its defence, inter alia, that:

(a)    the applicant "purported" to enter into the Alleged Cost Overruns Agreement;

(b)    the applicant entered into an agreement with SNC Lavalin (SA) Inc and BFPL (albeit it is alleged that the person who allegedly acted on behalf of BFPL was only "purportedly" doing so) in terms of which SNC Lavalin (SA) Inc would enter into a fixed price contract with BFPL for the construction of the Plant; SNC Lavalin (SA) Inc would subcontract construction of the Plant to two companies associated with the applicant, OETS and OFCS; and the applicant would pay the amount by which the cost of construction exceeded the prices fixed between SNC Lavalin (SA) Inc and OETS and OFCS;

(c)    SNC Lavalin (SA) Inc, SNC Lavalin Group Inc and BFPL entered into the EPC Deed;

(d)    SNC Lavalin (SA) Inc and OETS entered into the OETS Subcontract;

(e)    SNC Lavalin (SA) Inc and OFCS entered into the OFCS Subcontract;

(f)    in reliance on the Alleged Cost Overruns Agreement, the applicant entered into the Subcontract Guarantee in favour of SNC Lavalin (SA) Inc and SNC Lavalin Group Inc;

(g)    the applicant has not suffered any losses attributable to the respondent because, if the Alleged Cost Overruns Agreement subsists and is enforceable, "which is denied" by the respondent, he should seek to recover any and all payments he made in respect of cost overruns from BFPL under the Alleged Cost Overruns Agreement "as purportedly agreed"; and

(h)    the applicant has brought a proceeding in this Court, in the WAD 66/2011 Proceeding, against BFPL, in which he seeks to recover more than USD $490 million pursuant to the Alleged Cost Overruns Agreement and BFPL is defending that claim by disputing the existence and/or enforceability of the Alleged Cost Overruns Agreement;

(i)    in the alternative, although the applicant entered into and was the "purported" guarantor under the Subcontract Guarantee, he did not personally make any of the cost overrun payments and, as such, has not suffered any losses; and

(j)    the applicant and BFPL embarked on a scheme to procure financing to construct the Plant by deceiving BFPL's proposed financiers into believing that BFPL’s liability for the construction costs of the Plant was limited to its liability under the EPC Deed to USD $320 million (the Project Finance Deception).

Relevant issues in the WAD 66/2011 Proceeding

12    The application and statement of claim in the WAD 66/2011 Proceeding were filed on 10 March 2011 by the Receivers and Managers of BFPL in that company's name, alleging breaches by the applicant of directors’ duties under the Corporations Act 2001 (Cth) and equivalent equitable obligations. Relief sought, as amended, is an amount exceeding $200,000,000.

13    The applicant filed his defence and cross-claim in the WAD 66/2011 Proceeding on 30 June 2011. The latest version of the defence and cross-claim is entitled "First Respondent's Re-further Amended Defence and Cross-claim" and is dated 27 April 2012. The applicant primarily claims by way of set-off, alternatively, cross-claim, that BFPL is indebted to him in the sum of approximately USD $491,000,000 pursuant to, inter alia, the Alleged Cost Overruns Agreement.

14    The applicant pleads, inter alia, in his Re-further Amended Defence and Cross-claim in the WAD 66/2011 Proceeding that:

(a)    he entered into the Alleged Cost Overruns Agreement, by which he agreed to pay, or cause entities associated with him to pay, cost overruns associated with the construction by BFPL of the Plant and BFPL agreed to pay the amount of the cost overruns to him;

(b)    SNC Lavalin (SA) Inc, BFPL and the applicant agreed that:

(i)    SNC Lavalin (SA) Inc would enter into a fixed price contract with BFPL for construction of the Plant;

(ii)    SNC Lavalin (SA) Inc would subcontract construction of the Plant to OETS and OFCS; and

(iii)    the applicant would pay cost overruns.

(c)    SNC Lavalin (SA) Inc, SNC Lavalin Group Inc and BFPL entered into the EPC Deed;

(d)    SNC Lavalin (SA) Inc and OETS entered into the OETS Subcontract;

(e)    SNC Lavalin (SA) Inc and OFCS entered into the OFCS Subcontract;

(f)    pursuant to the Alleged Cost Overruns Agreement, the applicant entered into the Subcontract Guarantee in favour of SNC Lavalin (SA) Inc and SNC Lavalin Group Inc;

(g)    pursuant to the Alleged Cost Overruns Agreement, the applicant:

(i)    paid approximately USD $343,000,000 at the request of, and for the benefit of, BFPL for the purpose of funding cost overruns; and

(ii)    caused companies associated with him to pay a further USD $148,000,000 at the request of, and for the benefit of, BFPL, for the purpose of funding cost overruns.

15    BFPL, in its reply and defence to the applicant's Re-further Amended Defence and Cross-claim in the WAD 66/2011 Proceeding, denies each and every allegation set out in [14] above. BFPL pleads, in the alternative, that, even if the Alleged Cost Overruns Agreement was entered into, it was not binding or enforceable or was void and unenforceable or was voidable and liable to be set aside on a variety of grounds.

16    The applicant in this proceeding seeks to stay proceedings instigated by him in the Court in circumstances where he alleges that the respondent engaged in conduct, or was involved in conduct, that contravened s 52 of the TPA. Significantly to the disposition of this application, that alleged conduct, mostly alleged oral representations, is said to have occurred in 2000 and 2001 - some 13 to 14 years ago. The applicant in substance alleges that, relying on the alleged contravening conduct, he entered into the Alleged Cost Overruns Agreement and paid cost overruns. As such, the alleged liability of the respondent is based on statutory damages under the TPA.

17    The application to stay is brought on the premise that there should be a stay of the entire action for an indefinite period because there is a discrete issue common to this proceeding and the applicant's WAD 66/2011 cross-claim. There are other issues in both this proceeding and the WAD 66/2011 Proceeding which are not common.

Legal principles

18    The generally applicable principles in such an application are well established and were not in contention. As is so often the case it is the application to the particular circumstances which is engaged.

19    The Court has a general power to control its own proceedings pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) (FCA). That power extends to enable the Court to order a temporary stay of proceedings brought before it in various circumstances, including where proceedings are pending in another court and it is desirable that those proceedings should be finalised before the proceedings before the Court are further progressed: Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited (1992) 34 FCR 287 at 290-291.

20    In Union Steamship Company of New Zealand Limited v The Caradale (1937) 56 CLR 277, Dixon J observed, at 281, that "[t]he inconvenience and embarrassment of allowing two independent actions involving the same question of liability to proceed contemporaneously in different courts needs no elaboration".

21    Sterling Pharmaceuticals concerned parallel proceedings in two forums concerning the same subject matter (allegations of misleading or deceptive conduct), although different parties were involved in each proceeding. The first proceeding involved a New Zealand subsidiary of a United States company (Sterling) suing a New Zealand subsidiary of a United Kingdom company (Boots) in the High Court of New Zealand. That action was brought under the Fair Trading Act 1986 (NZ), relying on sections equivalent to those under the TPA relied upon in the Australian proceeding and based on facts similar to the Australian case. The second proceeding involved an Australian subsidiary of Sterling (Sterling Australia) suing an Australian subsidiary of Boots (Boots Australia) in the Federal Court of Australia. Boots Australia applied for a stay of the proceedings in the Federal Court. Lockhart J, in effect, stayed the proceeding before him by standing it out of the list for a substantial period of time.

22    Lockhart J held that the Court has a general power to control its own proceedings and that power extends to enable it to order a temporary stay of proceedings in various circumstances, including, as I mentioned, "where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first" (at 290-291). His Honour identified the following considerations as a non-exhaustive guide relevant to the exercise of that power in such a case (at 291):

(a)    which proceeding was commenced first;

(b)    whether the termination of one proceeding is likely to have a material effect on the other;

(c)    the public interest;

(d)    the undesirability of two courts competing to see which of them determines common facts first;

(e)    consideration of circumstances relating to witnesses;

(f)    whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted;

(g)    the undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues;

(h)    how far advanced the proceedings are in each court;

(i)    the law should strive against permitting multiplicity of proceedings in relation to similar issues; and

(j)    generally balancing the advantages and disadvantages to each party.

23    The legal issues in the New Zealand case were not identical with the Australian case although importantly there was a significant degree of commonality of relevant facts. His Honour was satisfied that there was substantial identity of issues in the two proceedings, though the issues in the New Zealand proceeding were wider. His Honour adopted a common-sense approach and noted, at 292, that the resolution of issues in the New Zealand case, unless there was some serious deficiency in the evidence of the unsuccessful party in the New Zealand proceeding, should determine the issues in the Australian proceeding. His Honour went on to say:

Indeed, whether the parties to the Australian proceeding do or do not agree to accept the result of the New Zealand proceeding, this Court will be able to control the future conduct of the Australian proceeding by giving directions with the benefit of the findings in New Zealand which may substantially reduce the scope of the issues in the Australian proceeding, in particular, the medical issues.

24    His Honour referred to the duplication in preparation for and the conduct of the two sets of proceedings and inconvenience for expert witnesses and for officers of the respective companies. The Australian proceeding commenced "many months" after the complaint had been made by Sterling Australia against Boots Australia and, in the meantime, the New Zealand proceeding had commenced 12 months earlier.

25    Lockhart J weighed the advantages and disadvantages to each party in the Australian proceeding and concluded that, although he was satisfied that the interests of justice were best served by acceding to the motion of Boots Australia, it was not necessary that the Australian proceeding be stayed even on a temporary basis, since a preferable solution, in the circumstances, was that the matter be stood out of the list to a date later in the year (the judgment was delivered in February) with liberty being reserved to either party to restore the matter to the list on reasonable notice in the event that circumstances changed.

26    Sterling Pharmaceuticals has been cited with apparent approval in decisions of the High Court including in Henry v Henry (1996) 185 CLR 571 at 590 and CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 at 390. It has also been followed on numerous occasions in this Court (e.g., Oswal v Burrup Fertilisers Pty Ltd (recs and mgrs apptd) (2011) 85 ACSR 531 at [29]-[30]).

27    As I mentioned, there is no controversy as to the relevant legal principles. The question is as to their application in the circumstances of this application.

Consideration

28    The applicant applies for a stay of this proceeding primarily on the basis of the commonality of issues between this proceeding and the WAD 66/2011 Proceeding.

29    The respondent submits that although there are discrete issues common to this proceeding and the WAD 66/2011 cross-claim, the stay should be refused for at least the following reasons:

(a)    the substantive allegations in this proceeding, grounded as they are in s 52 of the TPA, are not in issue in the WAD 66/2011 cross-claim;

(b)    the respondent is not a party to the WAD 66/2011 Proceeding and therefore the issues must be resolved in this proceeding in any event;

(c)    whether the determination of the WAD 66/2011 cross-claim has any potential material effect on this proceeding depends on the outcome of that determination. If the applicant fails on the WAD 66/2011 cross-claim (failing to establish the existence or enforceability of the Alleged Cost Overruns Agreement) a highly undesirable and unacceptable consequence is that a stay might simply delay this proceeding by, potentially, years; and

(d)    case management principles of this Court favour refusal; a balancing of the advantages and disadvantages to the parties favours refusing to stay this proceeding; and all other recognised factors favour refusal of the stay.

Which proceeding was commenced first?

30    The WAD 66/2011 cross-claim was commenced on 30 June 2011. This proceeding was commenced on 11 October 2013, more than two years later.

31    This proceeding, as I observed, actually originated in Harris County in May 2011.

Determination of one proceeding having a material effect on the other

32    The applicant submits that the determination of the WAD 66/2011 Proceeding will have a material effect on this proceeding because if he recovers the cost overruns in the WAD 66/2011 Proceeding, he will have suffered no damage for the purposes of this proceeding "by the conduct" of the respondent allegedly done in contravention of s 52 of the TPA. He points out that the respondent has pleaded, in the alternative, that he has not suffered any losses attributable to the respondent because, if the Alleged Cost Overruns Agreement subsists and is enforceable, which the respondent denies, he should seek to recover any and all payments he made in respect of cost overruns from BFPL under the Alleged Cost Overruns Agreement. This, he says, is precisely what he is doing in the WAD 66/2011 Proceeding.

33    He submits that there is a risk of duplicating the hearing of issues and inconsistent findings being made by different courts, if this matter proceeds concurrently with the WAD 66/2011 Proceeding, because of the identity of issues in both proceedings, namely:

(a)    whether or not the applicant and BFPL entered into the Alleged Cost Overruns Agreement and, if they did, the terms thereof, and whether it is binding and enforceable;

(b)    whether or not the applicant, SNC Lavalin (SA) Inc and BFPL entered into an agreement for the construction of the Plant, involving SNC Lavalin (SA) Inc entering into a fixed price contract with BFPL, SNC Lavalin (SA) Inc subcontracting construction to OETS and OFCS and the applicant paying the cost overruns;

(c)    whether the applicant paid any cost overruns and the amount of such payment; and

(d)    whether the applicant committed the Project Finance Deception.

34    The respondent is neither a party to the WAD 66/2011 cross-claim nor the WAD 66/2011 Proceeding and will not be bound by any determination of the Court in relation to the WAD 66/2011 cross-claim. Indeed, the only party in common between any of these proceedings is the applicant. The respondent submits that it does not follow that a determination in the WAD 66/2011 Proceeding will necessarily have any material effect upon the present proceedings.

35    By the WAD 66/2011 cross-claim, the applicant raises a contractual claim against BFPL related to the Alleged Cost Overruns Agreement and the payment of cost overruns.

36    In this proceeding, the applicant alleges that the respondent engaged in conduct (pleaded in [7] of the statement of claim - being alleged oral representations made in 2001), which was misleading or deceptive in contravention of s 52 of the TPA and, alternatively, that the respondent was involved in conduct contravening s 52 by its subsidiary, Apache Energy Limited (such conduct is pleaded in [17] of the statement of claim - including alleged oral representations in 2000 and 2001). Further, it is claimed that in reliance on the contravening conduct, the applicant (essentially) entered into the Alleged Cost Overruns Agreement and paid cost overruns. As such, the alleged liability is based on statutory damages under the TPA against an entirely different entity: the respondent.

37    The WAD 66/2011 cross-claim does not concern questions of whether the respondent engaged in, or was involved in, conduct that contravened s 52 of the TPA. These allegations will not be determined in the WAD 66/2011 cross-claim. Further, the WAD 66/2011 cross-claim does not address the respondent's alleged liability for misleading and deceptive conduct to the applicant. This, too, will not be determined in the WAD 66/2011 cross-claim.

38    It is only in the event that the applicant makes out his claim that the respondent engaged in misleading or deceptive conduct that any issue of overlap arises. If the issues regarding the respondent's alleged contravening conduct are determined in favour of the respondent, this proceeding must necessarily be dismissed. This could occur without the need to determine questions regarding the existence and enforceability of the Alleged Cost Overruns Agreement and the alleged payment of cost overruns by the applicant. This is because the hearing and determination of the issues regarding contravening conduct are confined in scope and capable of much quicker resolution than the WAD 66/2011 cross-claim.

39    The respondent submits, and I accept, that what is arguably the most important of the considerations identified by Lockhart J in Sterling Pharmaceuticals, the material effect of one proceeding on the other if both continue, involves assessing practical and legal effects.

40    The respondent submits that unlike Sterling Pharmaceuticals, only a decision in the WAD 66/2011 cross-claim in favour of the applicant on the Alleged Cost Overruns Agreement and related issues could have a material effect on this proceeding, in that, if the applicant succeeds entirely in the WAD 66/2011 cross-claim and recovers his alleged losses, he will not have suffered any losses and this proceeding would become redundant.

41    This is not correct. If the applicant is unsuccessful in his WAD 66/2011 cross-claim, it would be an abuse of process for him to claim damages for cost overruns which he failed to establish in his cross-claim.

42    Accordingly, in my opinion, the determination of his cross-claim, whether won or lost, will likely have a material effect on this proceeding. Indeed in either event it is likely that this proceeding would come to an end. If the applicant wins his cross-claim and recovers damages he would have no actionable case against the respondent as he would have suffered no loss. There was no evidence that such damages might not be recoverable. Were he to lose his cross-claim he could not contend in this proceeding that he had suffered any loss.

Public interest

43    The applicant submits that the public interest is not served by allowing two proceedings dealing with the same controversy to be litigated in two different proceedings in the same court of this country: that it would be a waste of judicial resources and public funds and prejudice other litigants, whose access to the Court would be thereby impeded, if the Court allowed the two proceedings, which are likely to be lengthy and costly for the parties, as well as the Court, to proceed in parallel universes.

44    The applicant notes that the respondent disputes that there were any cost overruns at all, let alone that the applicant paid any of them and that this in itself is a major issue of some complexity. The number of contractors and subcontractors who received payment for work undertaken in relation to the construction of the Plant is significant, as evidenced by the number subpoenas which have been issued in the WAD 66/2011 Proceeding (in excess of 100) and the numerous witnesses who will be involved.

45    The applicant submits that granting a stay would also further the overarching purpose of the civil practice and procedure provisions of the Court's rules to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible: s 37M(1) of the FCA.

46    Again the question of how those considerations apply in this case is one for judgment which involves a practical and common-sense approach.

Undesirability of two courts competing to determine common facts first

47    The applicant submits that it is plainly undesirable for there to be a perceived competition between two cases in the Court for the determination of common facts first. This apart, I do not think there is any real concern of conflicting determinations as to the Alleged Cost Overruns Agreement for reasons I have already given.

Circumstances relating to witnesses

48    In Sterling Pharmaceuticals, Lockhart J placed reliance on the burden of the parties as well as their expert witnesses having to prepare for and participate in both proceedings: at 292. The applicant submits that given the extent of overlap of subject matter, there is a real risk that the same expert witnesses and a substantial number of the same lay witnesses will be required to give evidence in both proceedings and that those witnesses should not be taxed with having to prepare to give the same or similar evidence in two proceedings. However, this was not developed with any specificity.

49    However, I do accept the respondent’s submission that given the apparent complexities of the WAD 66/2011 Proceeding, it is likely that any stay could operate for a number of years. This would be highly prejudicial to the respondent's ability to call witnesses to assist it in defending the applicant's claim.

50    The statements alleged to have been made by the respondent, directly or indirectly, go back almost 14 years. The applicant pleads that most of the alleged statements were made orally.

51    The six lay witnesses that the respondent intends to call range in age from 56 to 66 years; most are no longer employed with the respondent or its affiliates and some have retired. The prospect that some may become unavailable to assist by reason of infirmity, ill health or death only increases with the further passage of time.

52    The remarks of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 are especially relevant here:

Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive…within the meaning of s 52 of the Trade Practices Act 1974 (Cth)…, it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

53    Similar remarks were made by Gummow and Hayne JJ in relation to the fallibility of witness memory the longer the hearing of a claim is delayed: Jackamarra v Krakouer (1998) 195 CLR 516 at 526.

Whether work done might be wasted

54    If a temporary stay is granted, no further preparation will be required to be done in this matter.

55    However, the applicant submits that, by way of contrast, if a stay is not granted, substantial and unnecessary waste will occur by reason of the necessary duplication in preparing to deal with the same subject matter twice.

56    I do not accept these submissions. So far as concerns the Alleged Cost Overruns Agreement and related issues, there is very little scope for the applicant to engage in duplication. If, as the applicant says, the issues are common, whatever work is done on those issues in the WAD 66/2011 cross-claim will simply translate to this proceeding. The applicant has the same solicitors in both proceedings.

57    As for work regarding other issues that are not common, that work will need to be carried out in any event.

Stage which the proceedings are at

58    It is the case that the WAD 66/2011 Proceeding is presently more advanced than this matter.

59    In the WAD 66/2011 Proceeding discovery has been, or is close to being, completed. More than 100 subpoenas have been issued, some of which remain outstanding. However, little, if any, evidence has been filed and a trial date has not been set. The WAD 66/2011 Proceedings involves multiple parties and complex claims and the litigation has been protracted. It is reasonable to infer that it will be some considerable time before it is ready to be tried. Such a trial will no doubt last for a number of weeks. Accordingly, it is not unreasonable to think that it might be at least two years until there might be judgment in that proceeding. Then there is the likelihood, in such complex and monetarily valuable commercial matters, of an appeal whatever the outcome at first instance. This could well add a further year or more to the ultimate end of the litigation. Then there is the prospect of a special leave application to the High Court. In contrast, the respondent here submits that the more limited scope of this proceeding suggests that with appropriate timetabling it could quickly catch up to and likely overtake the state of the WAD 66/2011 Proceeding. Indeed, it is the respondent's position that discovery and evidence could be completed and a hearing date scheduled within a relatively brief period of time. That remains to be seen.

Overall balancing

60    Contrary to the submission of the applicant, I consider that there are significant disadvantages to the respondent by the stay of this proceeding pending the outcome of the WAD 66/2011 Proceeding and the WAD 66/2011 cross-claim. This mainly concerns the further impact such a delay might have on the capacity of the respondent’s witnesses to give reliable evidence for the kinds of reasons identified by McLelland CJ in Eq in Watson v Foxham, to which I have referred. Additionally, there are serious allegations made against not only the respondent but its employees and former employees. These reputational issues ought be determined sooner rather than later.

Conclusion

61    There is a half-way house in this matter. I consider, balancing all of the above considerations, that the stay should be refused but that this matter proceed to a trial on all issues pleaded other than damages. The respondent agrees to this course. The applicant does not. The issue of damages can be tried thereafter, if necessary, in a separate trial. This will meet my concern in relation to the respondent’s witnesses. There will be no prejudice to the applicant in continuing to prosecute the WAD 66/2011 cross-claim. It is the case that, in the event that the applicant succeeds in the WAD 66/2011 cross-claim, the respondent will not be bound by any findings in the cross-claim. However, that was always going to be the case. On the other hand, whether he wins or loses his cross-claim, from a practical perspective, the applicant will be bound in the present proceeding. If the former, assuming he recovers all his damages, he could not prosecute this claim. If the latter, he would commit an abuse of this Court’s process if he were to allege loss and damage already rejected in the WAD 66/2011 cross-claim.

62    Assuming, as is likely, that trial of the liability issues in this proceeding will be determined before the resolution of the WAD 66/2011 Proceeding and cross-claim, it may well be that the parties in this proceeding, in the event that the applicant were to succeed on liability in this proceeding, would be prepared to await the outcome of the WAD 66/2011 cross-claim. Accordingly, there is some likelihood, although not inevitable, for the reasons I have mentioned, that the damages issues in this proceeding may never proceed to a trial in this proceeding.

63    This course will meet the demands of s 37M of the FCA.

Orders

64    There will, for these reasons, be orders that the application for a stay of this proceeding is dismissed with costs and that this matter proceed to a trial on all issues other than damages.

Associate:

Dated:    24 June 2014