Federal Court of Australia

JKC Australia LNG Pty Ltd v AkzoNobel NV (No 5) [2023] FCA 1248

ORDERS

THE COURT ORDERS THAT:

1.    The application filed by the respondents on 20 April 2023 seeking the transfer of this proceeding to the Supreme Court of Western Australia is dismissed.

2.    Costs reserved.

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

ORDERS

THE COURT ORDERS THAT:

1.    The application filed by the respondents on 20 April 2023 seeking the transfer of this proceeding to the Supreme Court of Western Australia is dismissed.

2.    Costs reserved.

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

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    This transfer application concerns parties to the proceedings that, adopting their convention, I will refer to as JKC, INPEX and ANIP.

2    In this Court there are two proceedings on foot brought by JKC and by INPEX respectively against ANIP, in which JKC and INPEX allege that ANIP engaged in misleading or deceptive conduct as the manufacturer of a protective coating product known as Intertherm 228 (I228).

3    These proceedings have been on foot since September 2017 and July 2021 respectively, are advanced, and are listed for trial commencing in June 2024. At present, 11 weeks are set aside to accommodate the trial. Whether 11 weeks are required, and how that period is utilised, will depend largely on steps that the parties are currently considering in an attempt to reduce some of the complexities and the scope of the documentary and other evidence to a human scale. Communications between the parties and the Court requesting that trial dates be reserved had commenced by October 2022.

4    In the Supreme Court of Western Australia there are currently two proceedings that have been consolidated and a third proceeding brought by INPEX against various insurers, in which INPEX seeks indemnity under insurance policies with respect to damages that are said to flow in part from the use of I228.

5    The proceedings in the Supreme Court were commenced in 2020 but were described by Lundberg J, who has carriage of the proceedings, in March 2023 as being 'at a relatively early stage': Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] [2023] WASC 61 at [131].

6    ANIP applies to have the proceedings in this Court transferred to the Supreme Court. Neither ANIP nor JKC are parties to the Supreme Court proceedings.

7    This concise introduction to the transfer application belies the complexity and scale of the respective proceedings. The proceedings in both courts are complex, and ANIP describes the amount at stake as being in the billions.

8    I have determined that it is not in the interests of justice that the proceedings in this Court be transferred at this late stage, and accordingly the transfer application should be dismissed. At a case management hearing on 10 October 2023, I informed the parties that I had reached this view, and now publish my reasons.

The proceedings

9    The proceedings in this Court are respectively designated WAD 448 of 2017 (commenced by JKC) and WAD 162 of 2021 (commenced by INPEX) (together the Representation Proceedings).

10    The proceedings in the Supreme Court are designated CIV 1361 of 2020, consolidated with CIV 1620 of 2020 (CAR Proceeding) and CIV 1729 of 2020 (together the Insurance Proceedings).

The Ichthys LNG Project

11    The Ichthys LNG Project is among the largest oil and gas projects in the world. It involves the offshore extraction of gas and condensate and its transportation by undersea pipeline to an onshore facility near Darwin for conversion into LNG for export.

12    A brief description of the three components of the project gives an indication of its scope. It comprises:

(a)    offshore facilities in the Ichthys natural gas field located in the Browse Basin off the coast of north west Australia, including a floating central processing facility and a floating production storage and offloading facility;

(b)    an 890 kilometre subsea gas export pipe, which delivers the natural gas and condensate from the central processing facility to the Ichthys onshore LNG facilities at Bladin Point near Darwin (Ichthys Onshore Project); and

(c)    the Ichthys Onshore Project, including two LNG trains, an onshore pipeline, LPG and condensate plants, a combined cycle power plant, product storage tanks, administration facilities, utilities and a jetty.

The role of the parties

13    JKC entered into a contract with the Ichthys LNG Project principal, INPEX Operations Australia Pty Ltd, to undertake certain engineering, procurement, supply, construction and commissioning for the Project. Relevantly, one of JKC's tasks under the contract was to develop coating specifications for pipework and equipment as necessary for the scope of its works. JKC identified the product I228 after communications with its manufacturer (the respondents that are referred to collectively as ANIP), and directed suppliers to use I228 on certain pipework and equipment modules forming part of the Ichthys Onshore Project.

14    The coating degraded and failed to provide a protective barrier, and it is not in issue that large scale reparation works have been undertaken.

The Representation Proceedings

15    In September 2017 JKC commenced proceedings WAD 448 of 2017 against ANIP. JKC alleges that ANIP engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law, being Schedule 2 of the Competition and Consumer Act 2010 (Cth), and analogous legislation.

16    It pleads a number of representations were made by ANIP, but in particular it alleges that in circumstances where ANIP knew that, if selected, I228 would be used on the Ichthys Onshore Project, and having regard to information provided by ANIP to JKC, it represented that I228, if applied in accordance with the requirements or recommendations of the product disclosure statements, would provide a corrosion resistant barrier in a range of highly corrosive environments on insulated and uninsulated steel operating at temperatures up to 230℃ and so was suitable for use on the Ichthys Onshore Project.

17    In July 2021 INPEX also commenced proceedings in this Court against ANIP. Similarly, it alleges that ANIP engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law in that it expressly or impliedly represented that I228 was capable of providing a protective barrier for a reasonable time against the external environment experienced when applied to steelwork that was exposed to ultraviolet light, salt spray and high humidity of the kind generally or regularly in Darwin and, or in the alternative, I228 was suitable for use on the Ichthys Onshore Project. The alternative plea that I228 was 'suitable for use on the Ichthys Onshore Project' is referred to by ANIP in this application as a general suitability representation. I will return to this below.

18    JKC and INPEX respectively plead their reliance on the representations, the falsity of the representations (in that I228 was not suitable as pleaded because the coating eroded and degraded), and an entitlement to damages including remediation costs.

19    ANIP denies liability on a number of grounds. It denies the representations were made. Expressed in general terms, it says that if the alleged representations were made, then there were grounds for making them and they were opinions or statements as to future matters. It denies that JKC or INPEX relied on any representations, and raises a number of jurisdictional and limitation issues and claims of contributory negligence.

The Insurance Proceedings

20    INPEX is the named insured under an 'Onshore Construction Risks - Material Damage - Project Insurance Policy' (CAR Policy) in respect of the design, fabrication, construction, erection, testing, and commissioning of the Ichthys Onshore Project. JKC is also a named insured within the definition of that policy.

21    In May 2020 JKC and INPEX commenced proceedings in the Supreme Court of Western Australia relating to the CAR Policy. The defendants in those proceedings are insurers under the policy, being a syndicate of some 25 named insurers. In their indorsed writs, JKC and INPEX claim from each of the defendants, in specified proportions, an indemnity against damage to insured property in relation to the specified coating and insulation systems on piping and equipment used in the Ichthys Onshore Project.

22    INPEX was substituted as the plaintiff in the proceedings commenced by JKC, following execution of a deed of assignment. The two actions were then consolidated: JKC Australia LNG Pty Ltd v AIG Australia Ltd [2021] WASC 471.

23    In July 2020 JKC issued proceedings in the Supreme Court under an 'Erection All Risks and Difference in Conditions Insurance Policy'. The single defendant in those proceedings is Mitsui Sumitomo Insurance Company Ltd. It appears that INPEX was later substituted as the plaintiff in those proceedings, following execution of the deed of assignment.

24    In Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2], Lundberg J attached a list of proposed substantive issues to be resolved in the Insurance Proceedings. These include issues specific to: the terms of the purported assignment as between INPEX and JKC; the construction of the insurance policies; the scope and application of exclusion clauses (said to be central to the determination of the proceedings); the effect of statutory time bars; an assessment of whether damage is fortuitous; an assessment of whether and when damage occurred having regard to the policies, the different components of the insured property and the use of I228 and other materials; the quantification of damages not excluded by the policies; and the amount payable under the policies with respect to each item of insured property.

Published reasons

25    Both this Court and the Supreme Court have published a number of judgments in the various proceedings. Therefore, it is neither necessary nor efficient to detail all of the relevant factual background and material. For completion, and because they assist in providing context, those published by this Court are: JKC Australia LNG Pty Ltd v AkzoNobel NV [2019] FCA 1032 (release from Harman undertaking); JKC Australia LNG Pty Ltd v AkzoNobel NV (No 2) [2020] FCA 1789 (scope of subpoenas); JKC Australia LNG Pty Ltd v AkzoNobel NV (No 3) [2021] FCA 1217 (release of undertaking in context of experts and related arbitration proceedings); JKC Australia LNG Pty Ltd v AkzoNobel NV (No 4) [2023] FCA 456 (discovery as to reasonableness of settlement between JKC and INPEX); and INPEX Operations Australia Pty Ltd v AkzoNobel NV [2023] FCA 382 (discovery).

26    Those published by the Supreme Court are: JKC Australia LNG Pty Ltd v AIG Australia Ltd (joinder and consolidation); Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] (separate trial application); Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 3] [2023] WASC 332 (discovery); and Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 3] [2023] WASC 332 (S) (special costs order on discovery).

Principles

27    The transfer application is brought under s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cross-vesting Act) or s 138C of the Competition and Consumer Act.

28    Section 5(4) of the Cross-vesting Act relevantly provides:

Where:

(a)    a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) (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 that Supreme Court;

…

(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.

29    Section 138C of the Competition and Consumer Act is in similar terms. There is no substantive difference between the considerations relevant to transfer under the Cross-vesting Act and the Competition and Consumer Act: York Civil Pty Ltd v BHP Billiton Mitsui Coal Pty Ltd [2014] FCA 1422 at [22]. It was not in issue between the parties that the question relevant to this application is whether it is in the interests of justice that the proceedings in this Court be determined by the Supreme Court.

30    The High Court said in BHP Billiton Limited v Schultz [2004] HCA 61; (2004) 221 CLR 400 (at [13]) that determining a transfer application under those provisions is a 'nuts and bolts' management decision as to which court, in the interests of justice, is more appropriate to hear and determine the substantive dispute. The question to be determined 'is where the balance lies in properly serving the interests of justice in each case': Amalia Investments Ltd v Virgtel Global Networks NV (No 2) [2011] FCA 1270; (2011) 198 FCR 248 at [34]. The decision is to be made as a matter of impression: Resource Equities Ltd (subject to Deed of Company Arrangement) v Carr [2007] WASC 246 at [9]; and Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] FCA 675 at [74].

31    Having said that, the authorities recognise a number of matters relevant to the task. In Commissioner of Taxation v Residence Riverside Proprietary Limited as Trustee for the D&J Discretionary Trust and as Trustee for the D&J Investment Trust [2013] FCA 720, McKerracher J expressed the view that:

[17]    … ordinarily where cross-vesting transfer occurs, the factors in support of it would be obvious and a conclusion that the value judgment or decision about whether it is in the interests of justice for the proceeding to be dealt with in another court will be readily instinctive taking into account a variety of matters including:

•    the stage of the proceedings in the respective courts;

•    the commonality or diversity of the parties;

•    the nature of the proceedings;

•    the commonality or diversity of the issues;

•    the risk of conflicting findings of fact or conflicting orders;

•    a cost benefit analysis;

•    the potential unnecessary drain on judicial and other public and private resources; and

•    whether there is any particular judicial expertise residing in one court or the other.

32    His Honour referred again to these matters in Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 at [26].

33    As to the first of those factors - the stage of the proceedings in the respective courts - a relevant consideration is whether the proceeding sought to be transferred will be resolved more quickly in the court from which transfer is sought. Such a circumstance will favour refusal of the application: Porteous v Donnelly (Trustee), in the matter of Hancock (Bankrupt) [2003] FCA 783 at [18].

34    As to the fourth of those factors - the commonality or diversity of issues - although the overlap of issues between the two proceedings is a consideration, the mere overlap of some issues will not, of itself, require transfer: Winpar Holdings Ltd v National Consolidated Ltd [2001] FCA 1663 at [16].

35    Even where there is a substantial overlap on the facts between the two proceedings in question, other circumstances may combine to justify a transfer application, such as where a transfer would result in one of the parties 'becoming entwined in another larger, more complex, and slower-moving proceeding' to which it is not a party: Porteous v Donnelly (Trustee), in the matter of Hancock (Bankrupt) at [18]; and Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers Appointed) (in liquidation) (Controllers Appointed) [2012] FCA 1051 at [36].

36    As to the fifth of the factors collected by McKerracher J - the risk of inconsistent findings - the risk is one that is said to potentially bring the justice system into question: Trade Practices Commission v Port Adelaide Wool Company Pty Ltd (1995) ATPR 41-441; Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698; (2004) 138 FCR 496 at [62]; Australian Health and Nutrition Association Ltd v Hive Marketing Group Pty Ltd [2019] NSWCA 61; (2019) 99 NSWLR 419 at [81]; and Bell Group Ltd v Westpac Banking Corporation [2000] FCA 439; (2000) 104 FCR 305 at [212]-[218]. Further cases are mentioned below.

37    The timing of the application is also relevant, together with other case management issues. Delay in making an application for transfer is a matter 'that will ordinarily weigh heavily against the grant of applications [to transfer] because of the significant prospect that the other party who is opposing the application for transfer will have incurred significant legal costs during the period of delay': Resource Equities Ltd (subject to Deed of Company Arrangement) v Carr at [51]. A party 'should not be permitted, by conducting a case for a time in one court, to, in effect, approbate and reprobate by then applying to have the matter transferred to another court': Slater & Gordon Pty Ltd v Porteous [2005] VSC 398 at [19].

Current stages of the proceedings

38    The transfer application in both matters was accepted for filing on 20 April 2023 and heard on 31 May 2023.

39    By that time, in the JKC Proceeding: the pleadings had closed and amended pleadings had been filed (by June 2020); rulings had been made on a Redfern schedule (January 2019); JKC had filed lay witness statements (by November 2020); ANIP had filed lay witness statements (by March 2021); rulings had been made on a further Redfern schedule (13 April 2021); ANIP had been notified of the terms of the general settlement deed between JKC and INPEX (December 2021); further amended pleadings were filed (by April 2022); JKC filed its coating expert report (3 May 2023); and orders were made programming the remaining matters, such as filing of further evidence, joint expert reports, conferral as to use of referees and the time of mediation, taking into account the anticipated trial dates (orders made 1 May 2023).

40    By that time, in the INPEX proceeding: the pleadings had closed (by March 2022, with an amended defence filed in January 2023); discovery was undertaken and INPEX had confirmed completion of all undisputed discovery requests (by 12 April 2023); a hearing was conducted and reasons published on disputed categories (26 April 2023); INPEX filed its lay and expert witness statements (by 21 May 2023); and, similarly, programming orders to trial had been made (1 May 2023).

41    I acknowledge that some of the above steps were undertaken or completed after the transfer application was filed but before its hearing, but those steps would have been anticipated and underway prior to the date of the transfer application. I also note that between the date of the hearing and the publication of these reasons, further steps have been completed by the parties, and unless transferred, or resolved at a pending private mediation, the trial of the Representation Proceedings is currently on track to commence in June 2024.

42    On the other hand, I referred at [5] above to the observation of Lundberg J that the Insurance Proceedings are at 'at a relatively early stage'. The latest published decisions indicate that discovery is underway.

Summary of the position of the parties

43    The main factor upon which ANIP relies in support of its application is the potential risk of inconsistent findings in the Representation Proceedings and the Insurance Proceedings, because (it says) INPEX asserts alternative cases. It seeks to have both matters heard by the same judge in the Supreme Court. It also emphasises the overlap in the cases. It wishes to rely on what is said in the INPEX pleaded case in the Insurance Proceedings to demonstrate that the representations, said in the Representation Proceedings to have been made by ANIP, were not false.

44    INPEX contended that it should be inferred that ANIP's strategy in bringing the transfer application is delay - that there is no other explicable reason why it would seek to tether itself to the complex Insurance Proceedings. Whilst it accepts there is some overlap between the proceedings, it says that the potential risk of inconsistent findings is exaggerated and based on a misunderstanding of the case INPEX pleads in both proceedings, and that such risk is outweighed in this case by the assessment of other matters relevant to the interests of justice. It points to delay by ANIP in bringing the application, and unfairness to the parties, having regard to the different stages of the respective proceedings, the different parties in the respective proceedings and the absence of any information as to the position of the insurers.

45    JKC's position is that it has no role in the Insurance Proceedings and that in those circumstances it will be dragged 'kicking and screaming' to the Supreme Court, acknowledging that the debate on this application is really one between ANIP and INPEX. JKC submitted that there is no real issue on the pleadings in the proceedings in the respective courts as to why I228 did not work, and that the risk of inconsistent findings is therefore not real.

46    I address the various submissions under the headings below.

Risk of inconsistent findings and overlap

Preliminary points

47    There are two preliminary points to note. First, I have referred above to Australian Health and Nutrition Association Ltd v Hive Marketing Group Pty Ltd. Although this case did not involve cross vesting, but rather a stay application which raised questions as to the enforceability of contractual exclusive jurisdiction clauses, the prospect of concurrent hearings was addressed. President Bell said in that context:

[81]    … two very powerful policy considerations may be in play and, depending on the facts, in tension. They are, on the one hand, the desire to and importance of holding commercial parties to their bargain, and, on the other hand, trying to ensure that all aspects of a dispute between all parties (including, relevantly, non-contracting parties) be resolved in one place at the one time, the rationale for this being not only judicial 'tidiness' and 'efficiency' but, perhaps more profoundly, the high desirability of minimising the possibility or prospect of different courts reaching different decisions (whether as to the facts or the law or both) in relation to the same dispute, a consequence apt to undermine confidence in the rule of law were it to materialise.

48    As this passage indicates, the relevance of inconsistent findings is to be considered having regard to minimising the risk of undermining confidence in the rule of law. Some inconsistencies may be of small consequence in the greater scheme of things, and can readily be tolerated. Others may have more grave significance.

49    By way of example, in Donohue v Armoco Inc [2001] UKHL 64; [2002] 1 All ER 749, an issue said to be crucial in determining how the fragmented litigation should proceed was that the truth or falsity of allegations of a fraudulent conspiracy were central. It followed that a court hearing the matter would need to form a judgment on the honesty or motives of parties, and that task was best done by the one tribunal, hearing all of the evidence: at [33]-[34]. The decision was referred to by this Court in Incitec Ltd v Alkimos Shipping Corporation.

50    I acknowledge that inconsistent judgments are undesirable even where issues of credibility, penalties or the like are not involved. The tendency to bring the administration of justice into disrepute remains. But it is appropriate to consider the nature of that risk having regard to the particular circumstances.

51    For example, in Lin v One Funds Management Pty Ltd [2021] NSWSC 1450, in refusing a transfer application from the Supreme Court of New South Wales to this Court, Ball J said:

[21]    … A conclusion in one case that OFML breached its duty and in the other that it did not does not involve inconsistent findings. It is possible that if the two cases are heard by different judges, those judges could express different views on the same question. For example, it is theoretically possible that one judge could conclude that no trustee, consistently with its duties, could have acquired ALT debentures in any circumstances, whereas another may conclude that in the particular circumstances of the case, OFML did not breach its duties by acquiring ALT debentures. But those possibilities are merely speculative. Similar issues arise if the one judge hears the two cases but on the basis of different evidence. The important point is that the two proceedings raise different albeit similar issues. If they are heard separately, they will be decided on the basis of different evidence. In those circumstances, there seems little risk of the type of inconsistency that is likely to bring the administration of justice into disrepute. …

52    Second, ANIP itself does not face the risk of inconsistent findings in the respective proceedings, as it is not a party to the Insurance Proceedings. Rather, it is INPEX that faces the risk of inconsistent findings, a risk it contends is not real or in any event not great. Assuming ANIP seeks to rely on perceived inconsistencies or admissions by INPEX in its pleaded case in the Insurance Proceedings in order to undermine or resist INPEX's case against it, it is open to ANIP, amongst other forensic exercises, to cross examine witnesses in the trial of the Representation Proceedings about those inconsistencies.

53    However, as INPEX properly acknowledges, the issue is a broader one of confidence in the administration of justice, and so it remains a factor to be considered in this application.

The pleaded cases

54    So, it is necessary to address the respective pleaded cases, although it should be acknowledged that this is not the occasion to determine pleading disputes, undertake a detailed assessment, or obtain a comprehensive understanding of the voluminous pleadings filed across the proceedings in both courts. Nor, having regard to the complexity of the respective proceedings, is it appropriate to delve into the question of merits.

55    Although the written submissions as to the respective pleaded cases were detailed, the main issues at the hearing distilled to two: first, an alleged tension in the manner in which INPEX pleaded its case as to the suitability representation in the Representation Proceedings and the Insurance Proceedings respectively; and second, the different questions and mechanisms for inquiring into and establishing damages that are said to arise in the respective proceedings.

Suitability

56    As to the suitability issue, ANIP submitted that:

(a)    INPEX pleads a general suitability representation in the Representation Proceedings;

(b)    a representation that a product is generally suitable for use is not falsified if it can be used in specific conditions (citing the approach of the Court of Appeal in Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [2014] VSCA 338 at [111]-[114], [152]);

(c)    INPEX's pleading in the Representation Proceedings does not encompass a plea that I228 was suitable under specific conditions;

(d)    however, INPEX makes a positive plea in the Insurance Proceedings that in order to properly cure, I228 needed to be cured at elevated temperature, and that in the case of post-curing, the I228 should not have been exposed to the environment prior to use (referring to para 23 of INPEX's statement of claim in the CAR Proceeding, summarised further below);

(e)    INPEX should not be permitted to run cases in different courts that depend on the same significant issue about whether I228 was incapable or inherently unsuitable, or whether I228 did not work because it was not applied properly and the steelwork was exposed to the environment; and

(f)    ANIP should have the benefit of the positive case INPEX seeks to make in the Insurance Proceedings about the requirement that the coating be properly cured.

57    I should add that INPEX has filed expert evidence in this proceeding, and the experts have said that the cause of the failure was the failure to have an elevated temperature cure of the I228.

58    I also note that the question of misapplication is apparently not in issue in the Insurance Proceedings. Nor does ANIP plead a positive case in the Representation Proceedings that I228 was applied in a manner inconsistent with the requirements in the product disclosure statements or coating specifications. The suggestion of misapplication would not seem to be of any great significance to the trial as the respective cases stand.

59    INPEX and JKC point to a number of issues with ANIP's emphasis on potentially inconsistent findings or the tension it asserts arises in INPEX's respective cases.

60    INPEX's primary case in the Insurance Proceedings (para 27(a) of the pleading in the CAR Proceeding) is that:

… the I228 was a product that was not suitable for use within the Environmental Conditions of the applicable Pre-Assembly Yard and at the Darwin Site, in that, in those conditions, it was not capable of fulfilling the function and use …

61    INPEX submitted that its alternative case in the Insurance Proceedings is complementary of, rather than inconsistent with, both this primary case and its case in the Representation Proceedings. This alternative case (para 23(g)) is that:

I228, at all material times … required an elevated temperature cure, either at the time of application to the substrate … or by way of post-curing … in order to achieve and exhibit a high uniformity and density of cross-linking.

62    Importantly, in response to this allegation, all of the insurer defendants other than Mitsui admit this pleaded fact. Mitsui does not admit the allegation but does not advance a positive case to the contrary.

63    Accordingly, INPEX submitted, it does not run a case in the Insurance Proceedings that will require examination of whether I228 was inherently unsuitable for use: it does not need to do so, because it relies on the absence of a proper cure in support of its claim of insurable property damage, and the admissions of the respondent insurers. There will be no cause for the Supreme Court to make a finding as to the 'inherent unsuitability' of I228 and so no risk that the different courts will make inconsistent determinations in that regard.

64    INPEX contended that the inconsistency to which ANIP refers is best understood as a tension between a potential finding in this Court that I228 was inherently unsuitable for use on the Ichthys Onshore Project, while the Supreme Court might find that the I228 caused the damage because it was not properly cured. INPEX says that findings that I228 is both inherently unsuitable and unsuitable for a specific reason are not inconsistent, the latter being logically a subset of the other. It does not follow, INPEX submitted, from finding that I228 failed because it was not properly cured, that I228 did not fail because of an inherent unsuitability. But INPEX submitted that even if those pleas were inconsistent in part, then those inconsistencies about a coating were not of the type likely to bring the administration of justice into disrepute.

65    Further, INPEX submitted that ANIP's reliance on the Court of Appeal's criticism of a general suitability representation in Protec was fact specific, and that the decision is not authority for a general proposition that a non-specific suitability plea is inherently inappropriate (so much is apparent from what is said in Protec at [224]). I accept INPEX's submission in this regard, although I do not purport to resolve such a pleading issue on this application. Protec was decided on the basis of the manner in which the suitability pleading was drafted in that case: see [100]-[115], [152]-[153], [224]. The content of the suitability pleading in this case will fall to be examined more closely in due course, but at present it would appear to be no more than a relatively conventional allegation of a representation as to suitability for use or fitness for purpose.

66    According to INPEX, ANIP has not as yet disclosed any case about the cause of the failure of I228. Relevantly, it has not disclosed whether it contends that I228 required an elevated temperature cure in order to be suitable for use on the Project.

67    In summary, INPEX submitted that in the current scenario - where ANIP does not put on a positive case about whether I228 required high level curing or put it in issue - it is apparent that the real fight between the parties to the Representation Proceedings is about the content of the written representations that were made as to I228, the attribution of responsibility for making those representations and reliance.

Damages

68    Turning to the risk of inconsistent findings and overlap relating to damages, there is some attraction to ANIP's arguments in this regard. Undoubtedly both courts will be obliged to consider some aspects of the remediation and rectification costs that flow from the use of I228. However, there are many discrete issues, particularly in the Insurance Proceedings, and this warns against assuming that there will be either an overlap in the inquiry or a risk of inconsistency in the ultimate findings of the significance suggested by ANIP.

69    In the Representation Proceedings, there will be an issue as to when actionable loss or damage was suffered in the context of the Australian Consumer Law (and analogous legislation relied upon), and there will be a requirement of a global assessment of damages. The relevant inquiry does not involve identifying which parts of the plant have degraded.

70    I do not pretend that such global assessment will be easy. There will be significant expert evidence involved and the potential use of a referee (this is the subject of discussion between the parties as part of the case management of the proceedings). Although there is some work that remains ongoing, the vast majority of the remediation work has already been undertaken, and so there is concrete evidence of the actual costs and expenses involved.

71    The issue of damages arises in the Insurance Proceedings by different causes of action and with different inquiries. This does not suggest INPEX's case in each is inconsistent. Because of the operation of the exclusion clauses, the request for indemnity under the policies will require an inquiry as to precisely when and how various parts of the plant were damaged and how the policy responds to such damage. It is true that the costs of certain remediation work are in issue on the pleadings. I accept that there will be some overlap in evidence and potentially some findings may be required in each court in order to assess aspects of the remediation costs. That potential overlap must be viewed in the context of the scale of the proceedings as a whole and the distinct tasks required in them.

72    A particular matter relevant to the damages assessment exercise raised by ANIP is the separate claims in the Insurance Proceedings about the use of flexible elastomeric foam (FEF) insulation, used to surround the I228 coating in order to provide water protection. However, INPEX submits that the claims about FEF in those proceedings do not impact significantly on the damages assessment in the Representation Proceedings. The reason, it says, is that if it was necessary to remove the FEF in order to access and remediate the I228, then the costs of doing so would follow as part of the damages claim in the Representation Proceedings, regardless of any other disputes about the suitability or use of FEF between the parties to the Insurance Proceedings. According to INPEX, even if it is necessary to make allowances in the quantification task that relate to the removal of the FEF, the overlap would not be significant, and would not dominate the assessment process in a manner that unduly complicates the assessment in this Court. JKC potentially has some interest in whether the costs relating to the FEF might be isolated from the costs of remediating the effects of the failed I228: see JKC Australia LNG Pty Ltd v AkzoNobel NV (No 4) at [16] and JKC's submission as to whether the settlement sum payable under the general settlement deed may have taken into account damage relating to the FEF. Despite this, JKC does not support the transfer application. Therefore, I infer that JKC agrees with INPEX that it will not be a complicated task to deal with any overlap related to FEF in any quantification assessment in the Representation Proceedings.

73    JKC supports the position of INPEX in the transfer application. It relies on the absence of any positive plea by ANIP to the effect that I228 did not need to be cured at an elevated temperature, and the admissions of the insurers as to the modality of failure to which I have already referred. It submitted that in those circumstances ANIP has not identified a modality of failure issue that has to be resolved in both courts.

74    More specifically, senior counsel for JKC submitted that:

On any view, my client will be asked to be picked up and [be] transferred into a case that it's a stranger now to because of the assignment but which will involve questions that have absolutely nothing to do with us in this court. What does LEG 2 [exclusion clause] mean? How does LEG 2 operate? How might a quantum position under an insurance policy operate on various different hypotheses of whether LEG 2 applies or doesn't apply and what its meaning might be, that is, can INPEX recover some costs down there, or is it limited in what it can recover under an insurance policy? Those matters are just strangers to me, but my client will be dragged along and delayed while those matters, which are not common to these proceedings, occupy significant periods of time, both in preparation and the hearing.

Conclusion on inconsistency/overlap

75    When one undertakes the kind of analysis suggested by INPEX and JKC, determination of these types of factual matters does not, in my view, give rise to a level of concern about undermining confidence in the rule of law that would outweigh all other factors in the circumstances of this case. Although important, these are not findings of a nature where the concern about undermining confidence in the rule of law is heightened. That concern, however, remains, and I have given it close consideration. I have also considered it in a context where ANIP has not disclosed a case about the cause of failure of I228 (see [66] above).

76    As a matter of impression, I do not consider on the materials currently before me that a dispute as to the cause of failure of I228 will feature in any substantive way in the Insurance Proceedings, having regard to the admissions as to the requirement of an elevated temperature cure made by all but one insurer. That is, the matters in issue in the Insurance Proceedings, and the manner in which INPEX will now run that case, have been narrowed by the admissions. I accept, having regard to ANIP's submission, that there remain issues on the pleadings in the Representation Proceedings that it intends to rely upon and that cannot properly be resolved now. However, I am not persuaded that the suitability case run by INPEX in the respective proceedings remains one where there is a real risk of inconsistency.

77    As to the task of assessing damages, I consider the risk of inconsistent findings is mitigated by the different tasks and inquiries required in the respective proceedings. I accept that there may be some areas of assessment where there may be an element of overlap, and so a risk that some inconsistent findings might result, but I consider that risk to be tolerable and manageable, when one has regard to the overarching interests of justice that I am to consider. I generally accept the submissions of INPEX and JKC in this regard.

78    At a more practical level, inevitably there will be overlap in that, absent a transfer, some witnesses will be obliged to give evidence twice. I consider that any inconvenience and expense occasioned by the hearing of similar evidence in two courts is likely outweighed by other matters such as the potential costs (see [86]-[88] and [90] below) and inevitable delay in the hearing of the Representation Proceedings. I do not consider this overlap to be an issue of great weight in the determination of this application.

Delay in bringing application

79    Since at least October 2022 the parties were conferring and communicating with my chambers as to indicative trial dates for the Representation Proceedings. In December 2022 the parties inquired as to my availability for trial in 2024, and by February 2023 the months of June to August 2024 had been identified with the parties and reserved for trial. ANIP's solicitors participated in those communications and did not indicate that they had any issue with the trial dates being set. The other parties (and the Court) have therefore allocated resources and undertaken work having regard to those dates. I assume that until the question of a transfer arose, witness statements were prepared on behalf of JKC and INPEX having regard only to the matters the subject of the Representation Proceedings. I infer that some trial preparation would have been different and may have been deferred, had a transfer application been anticipated earlier.

80    The existence of the Insurance Proceedings in the Supreme Court was a matter of public record. The evidence relied upon by ANIP in this application includes evidence that the Supreme Court provided copies of the writs in the Insurance Proceedings to ANIP's solicitors in December 2020. The indorsements in the respective writs reveal that the ramifications of the use of I228 were in issue. They provide:

The plaintiff:

…

(b)    claims, from each of the defendants, in the proportions set out in [an attached table]:

1.    an indemnity in accordance with the Basis of Settlement (as defined in the Policy, including costs as referred to in Insuring Clauses 1.4 and 1.7), against Damage (as defined in the Policy) to Insured Property (as defined in the Policy) occurring during the Construction Period (as defined in the Policy) and/or in respect of the Defects Liability Period (as defined in the Policy) from any cause whatsoever not excluded under the Policy including defects of material, workmanship, design, plan or specification in relation to the:

i.    Intertherm 228 coating system;

…

used on the Project (as defined in the Policy); and

2.    reimbursement of its Additional Costs and Expenses … incurred by the plaintiff from any cause whatsoever not excluded under the Policy including defects of material, workmanship, design, plan or specification in relation to the:

i.    Intertherm 228 coating system;

…

used on the Project (as defined in the Policy); and

…

81    The existence of the Insurance Proceedings was referred to by this Court by at least October 2021: JKC Australia LNG Pty Ltd v AkzoNobel NV (No 3) at [23] and referred to in the orders.

82    Mr Timothy Donisi, special counsel at Clayton Utz, provided an affidavit on behalf of ANIP and said that in about February 2022 he sought copies of additional pleadings in the Insurance Proceedings from the Supreme Court, which were provided in July 2022. He deposed that:

As I now understand from reviewing the statement of claim filed in these actions (referred to in paragraph 19 below), CIV 1620 and CIV 1631 involve claims by INPEX Operations Australia Pty Ltd (INPEX), the First Applicant in INPEX v ANIP, against its insurers under a Construction All Risks insurance policy pertaining to construction of the Ichthys Onshore Project.

83    Mr Donisi also refers to the need to retain new senior counsel in November 2022, and communications between Clayton Utz and Corrs in March 2023 about the prospect of the matters being determined by the same judge.

84    Whilst I accept that the detailed nature of the Insurance Proceedings may not have been known to ANIP until it received the pleadings in July 2022, in my view it was readily apparent from December 2020, when copies of the writs were received, that there was a prospect of overlap in the proceedings, it being identified in those writs that the Insurance Proceedings related to I228 and the Project. In any event, the majority of the pleadings were received in July 2022.

85    There was then a period of time that passed between receipt of those pleadings and the communications with this Court about listing the Representation Proceedings for trial. If there was an identified concern about inconsistencies and overlap, it is surprising that it was not raised at that time.

86    I take into account the exigencies of the availability of senior counsel. However, there was a lengthy delay between when the risks that ANIP now seeks to rely upon could have been relevantly identified and acted upon, and when the transfer application was filed. During that period ANIP participated in the listing of the Representation Proceedings for trial. Significant work has been undertaken by the parties in the intervening period directed at facilitating the trial, as discussed at [39]-[40] above.

87    It is no answer to say that all the work that has been undertaken to date would be necessary even if the Representation Proceedings are transferred. I accept that some work would have been required regardless. But if the matters become intertwined by being heard together or managed together, there is a real risk that the parties in the Representation Proceedings will become participants in a more complex action with additional and different features, and will be required to repeat, revise or reconsider work already undertaken. They have, since December 2020 and since July 2022, prepared for the case they need to meet in this Court.

88    If INPEX and JKC had known that they were to run a concurrent hearing of the Insurance Proceedings and the Representation Proceedings, then I accept INPEX's submission that they would have gone about preparing their evidence in a different manner. That extends to discovery and other evidence gathering tasks such as the preparation of witness statements.

89    INPEX was ultimately obliged to replace its senior counsel in the Representation Proceedings as its former senior counsel was unable to accommodate the identified dates in June 2024. That is no small thing in a matter of this size and complexity, particularly where the former senior counsel had been retained (it appears) from the commencement of the INPEX action in this Court, had signed the pleadings and had appeared in interlocutory hearings. The step of replacing senior counsel may have been unnecessary had the transfer application been foreshadowed and brought earlier. This is not a matter that would be persuasive on its own, but it nevertheless weighs in the balance.

90    All of these matters persuade me that delay is a significant factor that weights against transfer, as the parties have incurred costs having prepared their cases in this Court on a particular basis, and with a particular timeframe in mind.

91    I have taken into account ANIP's submission that INPEX delayed in bringing court proceedings in the first place, having regard to the time when events occurred, and so a delay in a determination of all proceedings should not be considered real prejudice.

92    It is public knowledge that INPEX and JKC have engaged in an international arbitration process and have entered into a settlement deed (JKC Australia LNG Pty Ltd v AkzoNobel NV (No 3) at [22]; JKC Australia LNG Pty Ltd v AkzoNobel NV (No 4) at [9]-[13]). Remediation works have been undertaken. The delay in commencing court proceedings is not to be viewed in isolation. Nor do I see past delay as justifying further delay. There is no simple answer to how delay is to be weighed in this case. There may well be unforeseen delays that now occur in the Representation Proceedings. There is no doubt that issues such as the time required to write a judgment in a matter of this size and the prospect of appeal(s) deny the possibility of giving an accurate indication of when the proceedings in this Court might be finalised. This does not justify interrupting the current momentum directed at conducting the trial in 2024.

93    Finally on this point, I note ANIP's submission that if delay is treated as pivotal, it is used as if to punish a party. That is not my intention. This is not about punishment. It is about addressing the circumstances in which the parties and the Court find themselves at the moment - and that includes taking into account the fact that the transfer application could have been brought or anticipated earlier, and in the meantime, the parties have proceeded to prepare for a trial commencing in June 2024 and have deployed costs and resources accordingly.

Resources of the Court

94    These respective proceedings have already required two judges to consider the overarching facts in issue and make a number of substantive interlocutory decisions.

95    I accept for the purpose of this application that there is a prospect that if this matter were to be transferred to the Supreme Court, then it would be allocated to Lundberg J for case management and that potentially the trial of all proceedings might be undertaken by his Honour. Whether that might happen can be put no higher than that. A letter from the chambers of the Chief Justice of Western Australia to ANIP's solicitors was to the effect that whether Lundberg J would be allocated as the case manager of any further actions between the parties would depend upon the circumstances relating to the Supreme Court's list at the time of allocation and the interests of all parties. The letter stated that it was not possible to be more specific. So much is unsurprising and consistent with the position of the (then) Chief Justice of Western Australia referred to in Sino Iron Pty Ltd v Mineralogy Pty Ltd at [81].

96    If the Representation Proceedings were allocated to Lundberg J for case management and if his Honour were allocated all proceedings for trial, it would remain a matter for his Honour as to whether to hear the Representation Proceedings first (having regard to the more advanced stage of their preparation, the complexity of each set of proceedings and the different issues involved) or to hear them concurrently with the Insurance Proceedings. There was no suggestion that, if transferred, the Representation Proceedings could be heard in the Supreme Court in the same window of time already allocated by this Court. If the matters were heard consecutively, it is not clear that there would be any significant saving of judicial resources: two trials would proceed in the Supreme Court as against one proceeding in this Court and one proceeding in the Supreme Court. I accept that there might be some benefit in terms of judicial resourcing in that the first trial would cement the trial judge's familiarity with matters that may assist in the running of and understanding of the Insurance Proceedings. If all proceedings are heard concurrently in the Supreme Court, the time that would otherwise be allocated to hearing only the Insurance Proceedings in the Supreme Court is likely to be extended, a matter which would no doubt affect the costs of (at least) the insurer parties. JKC would also face additional costs (see [74] above). In the end, as the authorities record, the consideration and the weighing of all of these matters are intuitive tasks and to some extent speculative. In my view it is by no means clear that there would be a saving of judicial resources achieved by a transfer at this stage of the Representation Proceedings.

Other matters

97    ANIP considers, perhaps understandably, that INPEX and JKC have 'agreed to share and help' in their pursuit of ANIP. So much is said to arise from the general settlement deed, discussed in JKC Australia LNG Pty Ltd v AkzoNobel NV (No 4).

98    That may well be so, but absent the suggestion of abuse of process, or deliberate non-compliance with the Court's processes or the like, it is not for the Court to speculate as to litigation strategies that might be deployed by the parties.

99    It was always open to JKC and INPEX to pursue ANIP, just as it was open to them to pursue their insurers. I am not aware of any obligation that they pursue their insurers first or concurrently. Nor are JKC and INPEX to be criticised for settling certain disputes between themselves arising out of the Ichthys LNG Project. The terms of the general settlement deed have been disclosed to ANIP and it may make forensic use of the deed and the circumstances of settlement in the Representation Proceedings as it considers appropriate. Whilst it may be accepted that under the general settlement deed there may be an allocation or apportionment as between INPEX and JKC of any moneys received as a result of all litigation, that of itself does not justify deferring resolution of the Representation Proceedings until some unknown time in the future.

Determination

100    I do not accept INPEX's submission that ANIP brought this application in order to delay proceedings. I also note that there has been forensic benefit to the parties and the Court as a result of this application in that particular arguments have been aired as to what the respective cases are, or are not, about. However, in the end, I am not persuaded that it is in the interests of justice to transfer the Representation Proceedings to the Supreme Court, having regard to their advanced stage in this Court and the delay in bringing the application. Further, that conclusion is supported by the discrete and complex nature of many of the issues in question in the Insurance Proceedings, and the prospect that the risk of inconsistent findings of a nature that might otherwise bring the administration of justice into disrepute, is significantly reduced by the manageable and tolerable nature of some inevitable overlap between the respective proceedings.

Associate:

Dated:    18 October 2023