Federal Court of Australia

Exhibit Design and Construction Pty Ltd v Azam [2024] FCA 1296

ORDERS

THE COURT ORDERS THAT:

1.    The respondents be restrained from taking any further steps directly or indirectly in proceeding XD664/2024 in the ACT Civil and Administrative Tribunal (other than to stay or discontinue those proceedings).

2.    The costs of the interlocutory application dated 31 October 2024 be the respondents’ costs in the cause.

3.    The proceeding be referred to the National Operations Registrar to be docketed.

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

REASONS FOR JUDGMENT

(Delivered ex tempore; revised from the transcript)

STEWART J:

Introduction

1    By interlocutory application, the applicant seeks an injunction restraining the respondents from taking any further steps in a proceeding that they have brought against the applicant in the Australian Capital Territory Civil and Administrative Tribunal (ACAT). The underlying reason for that anti-suit injunction is that the applicant has a claim against the respondents arising out of the same underlying dispute which it quantifies in an amount substantially in excess of ACAT’s jurisdiction with the result that ACAT cannot determine both the respondents’ claim against the applicant and the applicant’s claim against the respondents. Instead, the applicant has commenced a proceeding in this Court on its claim. If the anti-suit injunction is not granted, there is a risk of conflicting outcomes in the two separate proceedings in relation to the same underlying dispute.

The facts

2    On 26 March 2022, the applicant issued a “Company Overview + Tender Proposal” to the respondents with respect to the construction of a home on a property referred to as Block b Section BJ in Macnamara, ACT. The applicant’s statement of claim avers that that was part of a “house and land package” offered by the applicant for the sum of $1.1m of which $400,000 was for the land and $700,000 for the construction.

3    On 1 April 2022, the applicant and the respondents concluded a Master Builders ACT home building contract for the construction of a house on a site described as “TBC” for a total contract sum of $699,400. A deposit of 5% was payable, ie $34,970. The respondents paid that deposit on 12 April 2022.

4    At that time, there was no contract for the purchase of the site. The applicant’s explanation for that which it subsequently gave to ACAT is that the land had not yet been developed so the only title particulars at the time of entering into the construction contract were those reflected in the tender document. It says that it is standard for a house and land package contract to include only a floor plan and elevations as further detail cannot be provided until site inspections are undertaken.

5    On 13 September 2022, the respondents wrote to the applicant saying that recent events had caused huge mental and financial stress on them and that the planned investment property would be “hard to afford at this point with recent changes in personal and overall economic conditions.” They said that they could not afford the property and asked what the process was to obtain a refund of the deposit that they had paid.

6    On 9 December 2022, the respondents followed up their request for the return of their deposit. They said that they could definitely not proceed. On 20 December 2022, they sent an email to the applicant saying that no land contract had been signed, and that the land had not yet been released.

7    On 12 September 2023, a year after the respondents had first said that they cannot proceed with the contract, the applicant wrote to the respondents saying that the land release was occurring and that it would be “sent” for settlement on 20 September 2023. The respondents replied on 19 September 2023 again saying that they would not proceed. The applicant followed up on 12 October 2023, complaining that the land contract had been sent to the respondents but that the applicant had not heard back from them. The applicant sent several further follow-up emails in November and December 2023.

8    On 15 December 2023, the respondents wrote to the applicant saying that they had no intention of proceeding and again requested a refund of the building deposit that they had paid.

9    On 20 February 2024, solicitors for the applicant wrote to the respondents outlining much of the history canvassed above and asserting that the respondents’ communications saying that they did not intend proceeding with the building contract amounted to a repudiation. The solicitors stated that they accepted the repudiation on behalf of the applicant and thereby terminated the building contract. The solicitors went on to say that the applicant was currently quantifying its loss and damages, that initial calculations showed that they would exceed the deposit and that the applicant would therefore retain the deposit in part satisfaction of its expected loss and damages.

10    On 15 March 2024, solicitors for the respondents replied. They argued that the applicant had not accepted the repudiation within a reasonable time after having been advised of the respondents’ position as early as 13 September 2022. They said that the applicant’s conduct in purporting to terminate the contract was a repudiation, which they accepted on behalf of the respondents. They also argued that the applicant had failed to mitigate its alleged loss. They demanded a refund of the deposit.

11    On the same day, the solicitors for the respondents made an open offer to the applicant that it repay the sum of $25,000 from the deposit and retain the balance, namely $9,970. The applicant did not accept the offer.

12    On 17 May 2024, the respondents initiated a proceeding in ACAT seeking the refund of the deposit, but limited to the sum of $25,000 (being the jurisdictional limit of ACAT pursuant to s 18 of the ACT Civil and Administrative Tribunal Act 2008 (ACT)) plus the ACAT filing fee of $635. A hearing was listed for 7 August 2024.

13    The ACAT application was served on the applicant’s registered office, being the office of its accountant. Due to an internal administrative error in the accountant’s office, the applicant was not itself informed of the hearing listed for 7 August 2024.

14    On 7 August 2024, in the absence of anyone on behalf of the applicant, Senior Member Orlov made orders declaring the building contract void for uncertainty and requiring the applicant to pay the respondents $28,995.14 (including interest) by 15 August 2024.

15    The applicant received the orders of 7 August 2024 by email from ACAT on 8 August 2024. The applicant then brought an application before ACAT to set aside the orders made in its absence. That was heard on 3 September 2024. On that day, orders were made setting aside the orders of 7 August 2024 and timetabling the matter for final hearing on 11 November 2024, which is to say on Monday of next week.

16    At the hearing on 3 September 2024 and thereafter there were discussions between the parties with regard to whether they would agree that ACAT hear both the claim for the return of the deposit and the claim for damages. That is because ACAT’s jurisdictional limit can be increased by agreement under s 20 of the Act. However, the parties failed to reach any such agreement.

17    The applicant then resolved to commence a proceeding for damages in this Court. The originating application and statement of claim were filed on 24 October 2024. Although not reflected in those documents, in the affidavit of Ms Burt, the applicant’s solicitor, supporting the present application it is said that the applicant’s instructions are that its claim is estimated to have a value of $220,000. There is no evidence on how that figure is arrived at.

18    Also on 24 October 2024, the applicant filed an application in ACAT seeking a stay of that proceeding so that the claim and counterclaim could be heard in the proceeding in this Court. On 29 October 2024, that application was refused by Senior Member Orlov.

19    The interlocutory application for anti-suit relief with a supporting affidavit were filed in this Court on 31 October 2024.

The relevant principles

20    The principles governing the exercise of a court’s power to grant an anti-suit injunction in respect of foreign proceedings are identified in CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; 189 CLR 345 (CSR v Cigna) at 396-398. First, the court must be satisfied that it is not a clearly inappropriate forum in the sense discussed in Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; 171 CLR 538. Secondly, the court must consider whether the applicant for the anti-suit injunction should first be required to seek a stay in the foreign court. Thirdly, if the court is not a clearly inappropriate forum and it is not considered expedient or desirable to require the applicant to seek a stay or dismissal of the foreign proceeding (or if that was done but without success), the court must proceed in accordance with the practice which ordinarily applies with respect to interlocutory relief. That is to say, it must determine whether there is a serious issue to be tried and, if so, whether the balance of convenience favours the grant of an interlocutory injunction. Additionally, the power to grant injunctions in restraint of foreign proceedings should be exercised with caution.

21    It was recognised in CSR v Cigna at 392 that there are two bases on which an Australian court might by anti-suit injunction prevent a party subject to its jurisdiction commencing or continuing a suit in a foreign forum. One is if the foreign proceeding interferes with or has a tendency to interfere with a proceeding pending in the Australian court, ie when it is necessary for the protection of the court’s own proceedings or processes. The other is in order to restrain unconscionable conduct or the unconscientious exercise of legal rights.

22    When it comes to anti-suit injunctions in a domestic context, different considerations may apply. State and Territory Supreme Courts are prevented by s 21 of the Service and Execution of Process Act 1992 (Cth) from restraining a party from pursuing a case in another such court. This Court is not caught by that provision, although it is clear that this Court and the Supreme Courts would require at least “powerful reasons” before ordering an anti-suit injunction in respect of each other’s proceedings: Wigmans v AMP Ltd [2018] NSWSC 1118 at [18] per Ward CJ in Eq; Wileypark Pty Ltd v AMP Ltd [2018] FCAFC 143; 265 FCR 1 at [11] per Allsop CJ, Middleton and Beach JJ agreeing; Brewster v BMW Australia Ltd [2019] NSWCA 35; 366 ALR 171 at [17] per Meagher, Ward and Leeming JJA.

23    In respect of an anti-suit injunction sought in a superior court in respect of a proceeding in a statutory tribunal, it has been said that the basis for such a restraint is the requirements of the interests of justice: Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association [2020] FCA 682 at [9] per Katzmann J.

Consideration

24    This Court has jurisdiction in respect of the applicant’s claim, as already mentioned. This Court is not a clearly inappropriate forum for the determination of the parties’ dispute. The only consideration to the contrary is the small value of the applicant’s claim which casts doubt on whether a Superior Court should be called on to determine it. Although the applicant’s claim could not have been brought in Division 2 of the Federal Circuit and Family Court of Australia because s 4 of the Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT) does not give jurisdiction on “ACT matters” to that Court, under s 32AB(1) of the Federal Court of Australia Act 1976 (Cth) this proceeding as a proceeding in this Court can be transferred to that Court. There would appear to be very good reason to do that, which is a matter that the docket judge can consider once a docket judge is assigned. The parties also indicated that they would be amenable to very early mediation.

25    As the applicant has already sought a stay in ACAT which has been refused, there is no need to consider whether to require the applicant to take such a course. Unfortunately, no reasons for ACAT’s decision appear to have been published. In any event, they have not been made available to me. The result is that I am not able to understand why the stay application was refused and whether the reasons are such as to persuade me that this anti-suit injunction application should also be refused.

26    There is no doubt that it would be contrary to the interests of justice for both proceedings to continue in parallel. That would raise the spectre of conflicting outcomes, but it would also be wasteful of the parties’ resources, as well as the public resources committed to the administration of justice by this Court and ACAT. Every consideration of convenience, expense and efficiency demands that one or other of the proceedings does not progress and that the parties’ dispute be determined in one forum.

27    There is however only one forum where both sides’ claims can be heard and determined in full, and that is this Court. That is because the claim that the applicant asserts is over the jurisdictional threshold of ACAT. The applicant could abandon that portion of its claim that exceeds the threshold of $25,000, and in that way have both claims heard in ACAT, but that could potentially do substantial injustice to the applicant.

28    I am satisfied on the facts that I have set out above that there is a serious issue to be tried in relation to the termination of the contract and consequently the entitlement of the respondents to the return of their deposit or the applicant to any damages. There is also doubtless a serious issue to be tried on the question of steps taken by the applicant, if any, to mitigate its damages.

29    The matter that troubles me is the quantum of the applicant’s claim. As I have said, there is essentially no evidence to justify the quantum at the level of $220,000 or indeed at any level above the ACAT jurisdictional limit. Mr Buckland, who appears for the applicant, draws attention to the provision in the contract that in respective of any variation, the applicant is entitled to a “builder’s margin” of 20%. The difficulty with that is the contract states that that is not the profit that the builder is receiving on the contract, and in any event that would reach a figure of $140,000 not $220,000 – although nevertheless substantially above the ACAT threshold. The sum of $220,000 represents a margin of 31%. That is manifestly excessive.

30    Mr Buckland also submits that the court can and should infer from the applicant’s conduct in applying to set aside the orders in ACAT that were made in its absence, applying to ACAT to stay the proceeding there, bringing the proceeding in this Court and now applying for the anti-suit injunction in this Court, that the applicant does indeed have a reasonably arguable claim at an amount significantly in excess of the ACAT jurisdictional limit.

31    There is, of course, some force in that, although there is also the available inference that the applicant has taken those steps to frustrate the respondents’ efforts to obtain the refund of their deposit. That would be consistent with what seems to me to be the extraordinary and oppressive conduct of the applicant in holding the respondents to the contract a year after they had first said that they cannot afford to go ahead with it. That may well raise issues of estoppel and unconscionable conduct, but those are not issues for decision at this stage.

32    The Court is in the horns of a difficult dilemma. That is because, on the one hand, it might be said that there is insufficient evidence before the Court to be satisfied that there is a serious issue to be tried on the question of quantum above the ACAT jurisdictional limit, such as to justify the exercise of the discretion against ordering an anti-suit injunction, but on the other hand, if the anti-suit injunction is refused, the two parallel proceedings would continue with all that that entails.

33    It seems to me that the omission of adducing any evidence to support an assessment of quantum may have been because of oversight, rather than because the quantum is likely to be less than the ACAT jurisdictional limit. On that basis, I am satisfied that there is a serious issue to be tried on that question.

34    Turning to the question of the balance of convenience, I accept that there is considerable prejudice to the respondents if they are, at this late stage, merely days before their final hearing in ACAT, to be restrained from continuing that proceeding. But, ultimately, the considerations with regard to the interests of justice, which are essentially subsumed into the balance of convenience inquiry, must carry the day. It would seriously undermine the public’s confidence in the administration of justice if a situation could be allowed to continue where the same dispute is being litigated in two parallel forums.

35    So, with considerable reservation, I conclude that an anti-suit injunction must issue. In the circumstances, there must be an injunction restraining the respondents from taking any further steps in the ACAT proceeding, including seeking any relief at the hearing next week, other than to apply to stay or discontinue that proceeding.

36    Because what might otherwise have been a relatively straightforward case is not so, arising from the applicant’s failure to adduce any evidence or explanation in support of its quantum, and as an expression of the court’s disquiet in that regard, the costs order that is fair and appropriate in the circumstances is that the costs of the interlocutory application be the respondents’ costs in the cause in the principal proceeding.

Associate:

Dated:    7 November 2024