A Goninan & Co v Atlas Steels [2003] NSWSC 956 | Case summary

6085/01 A GONINAN & CO LTD V ATLAS STEELS (AUSTRALIA) PTY LTD & ANOR 4112/03 BHP STEEL (JLA) PTY LTD V SAMANCOR LTD & ORS 3355/03 ATLAS STEELS (AUSTRALIA) PTY LTD V BHP STEEL (JLA) PTY LTD & ORS 2237/02 A GONINAN & CO LTD V BHP STEEL (JLA) PTY LTD 1746/03 A GONINAN & CO LTD V SAMANCOR LTD & ORS JUDGMENT 1 HIS HONOUR: Pacific National (NSW) Pty Ltd ("Pacific National") is the owner of 520 coal wagons. It says that the coal wagons are defective. They were constructed and supplied by A Goninan & Co Ltd ("Goninan"), using steel supplied by Atlas Steels (Australia) Pty Ltd ("Atlas"). Atlas sourced that steel from BHP Steel Ltd ("BHP") and three companies which I shall describe together as the Columbus Joint Venturers (the companies being Samancor Ltd, Highveld Steel & Vanadium Corporation Ltd and Industrial Development Corporation of South Africa Ltd). 2 Five proceedings have been initiated, in the following sequence: · In proceeding No 4112 of 2003 (previously No 20447 of 2000), by a statement of claim filed on 15 August 2000 BHP sues the Columbus Joint Venturers. It alleges that the Columbus Joint Venturers breached their agreement to provide steel which was fit for the purpose for which it had been sold, that the steel was not of merchantable quality, and that the defendants engaged in conduct in contravention of ss 52, 53(a), 53(c) and 55 of the Trade Practices Act 1974 (Cth). · In proceeding No 6085 of 2001, by a statement of claim filed on 21 December 2001 Goninan sues Atlas and Pacific National. Goninan alleges that Pacific National breached two contracts by withholding payments for the supply of coal wagons. It alleges that Atlas breached two contracts to supply steel for the construction of the coal wagons by supplying steel which was not to the standard required by the contracts, and that Atlas breached the duty of care that it owed to Goninan by failing to exercise reasonable care, skill and diligence in the preparation and supply of that steel, and that Atlas engaged in conduct in contravention of s 52 of the Trade Practices Act. Pacific National has filed a cross-claim against Goninan and Atlas, claiming that the coal wagons supplied by Goninan were defective and that Goninan was in breach of contract and in breach of provisions of the Sale of Goods Act 1923 (NSW), that Goninan contravened ss 52 and 53 of the Trade Practices Act, that Goninan negligently misstated its ability to design, manufacture and supply coal wagons in accordance with the contracts, and that Goninan breached its duty to exercise reasonable care and skill in the construction of the coal wagons. Pacific National also alleges that Atlas owed it a duty to exercise reasonable care, skill and diligence in the preparation, supply and delivery of steel for the coal wagons, and that Atlas failed to discharge that duty. · In proceeding No 3355 of 2003 (previously No 20076 of 2003, initiated in the Supreme Court of Victoria on 5 February 2002 but transferred to this Court pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) on 11 March 2003), Atlas sues BHP, the Columbus Joint Venturers and Goninan. Atlas alleges that BHP and the Columbus Joint Venturers, respectively, failed to supply it with suitable steel for the coal wagons, in breach of contract. It alleges that BHP and Goninan breached their duties of care to Atlas by failing to exercise reasonable care to ensure that they respectively complied with the terms of their contracts with Atlas. It alleges that the Columbus Joint Venturers owed it a duty of care which they breached by failing to ensure that the BHP steel was suitable. It alleges that each of BHP, the Columbus Joint Venturers and Goninan made representations to it which contravened various provisions of ss 52, 53 and (in the case of the Columbus Joint Venturers) 55 of the Trade Practices Act, and that each of them by their negligent representations induced Atlas to enter into the contracts made by Atlas with BHP, Goninan and the Columbus Joint Venturers. · In proceeding No 2237 of 2002, by a statement of claim filed on 12 April 2002 Goninan sues BHP. It alleges that BHP breached its duty of care in supplying steel for the construction of the coal wagons, and by negligent misstatement as to its competency as a supplier of steel materials induced Goninan to enter into a contract for the construction of coal wagons and to procure steel from BHP for that purpose, and in negotiating for the supply, and supplying, Goninan with steel BHP contravened s 52 of the Trade Practices Act and the equivalent provision of the Fair Trading Act (NSW). · In proceeding No 1746 of 2003, by a statement of claim filed on 6 March 2003 Goninan sues the Columbus Joint Venturers. It alleges that the Columbus Joint Venturers negligently manufactured and supplied steel which was ultimately on-supplied to Goninan, that they negligently misstated the properties of the steel, and that they contravened s 52 of the Trade Practice Act. 3 All these proceedings arise out of a single, straightforward sale of goods dispute, conducted partly by recourse to the Trade Practices Act 1974 (Cth). Pacific National complains (in its cross-claim) that the goods supplied were defective, withholds payment and seeks compensation from the supplier of the coal wagons (Goninan) and the direct supplier of the steel used to manufacture the wagons (Atlas), asserting causes of action in contract, tort, under the Sale of Goods Act, and under the Trade Practices Act. In addition to contesting Pacific National's right to withhold payment on contractual grounds, Goninan seeks compensation from the suppliers of the steel used by it to manufacture the wagons, Atlas, BHP and the Columbus Joint Venturers, asserting causes of action in contract, tort and under the Trade Practices Act. Atlas seeks compensation from the suppliers of steel to it (BHP and the Columbus Joint Venturers), also asserting causes of action in contract, tort and under the Trade Practices Act. BHP seeks compensation from the Columbus Joint Venturers, asserting causes of action in contract, tort and under the Trade Practices Act. 4 No doubt there were historical or other reasons for the evolution of the dispute into five separate proceedings, but those reasons are not relevant now. What is clear is that the most rational way to present the dispute for determination would have been to constitute it as an action by Pacific National against Goninan and Atlas (and perhaps others) based upon alleged defects in the coal wagons; with cross-claims by Goninan against the other parties; Atlas against Goninan, BHP and the Columbus Joint Venturers; and BHP against the Columbus Joint Venturers (and perhaps other cross-claims for indemnity or contribution). 5 Pacific National has made an application, by notice the motion filed on 15 July 2003, to consolidate the five proceedings so as to achieve a rational pleading of the issues in a single proceeding. That is the application before me for determination now. 6 Part 31 rule 7 of the Supreme Court Rules provides as follows: "Where several proceedings are pending in the same Division, then, if it appears to the Court - (a) that some common question of law or fact arises in both or all of them; (b) that the rights to relief claimed therein are in respect of, or arise out of, the same transaction or series of transactions; or (c) that for some other reason it is desirable to make an order under this rule, the Court may, on terms, order those proceedings to be consolidated or may order them to be tried at the same time or one immediately after the other or may order them to be stayed until after determination of any of them." 7 Pacific National invites the Court to use this provision to order that the five proceedings be consolidated to become the Consolidated Proceeding, and that in the Consolidated Proceeding: (a) Pacific National be the plaintiff; (b) Goninan, Atlas, BHP, and the Columbus Joint Venturers be the defendants; (c) provision be made for Pacific National to file a statement of claim in the Consolidated Proceeding, and for the other parties to file defences, cross-claims and replies; (d) for the purposes of the Consolidated Proceeding, claims be taken to have been first filed at the time and in the manner in which they were first filed in any of the five proceedings; and (e) any particulars provided in each of the five proceedings be particulars provided in the Consolidated Proceeding. 8 Consolidation of all five proceedings, as proposed in this fashion by Pacific National, is supported by the Columbus Joint Venturers and BHP, and it is not opposed by Goninan. Atlas does not oppose consolidation of the three proceedings commenced by Goninan, nor even consolidation of those three proceedings and the proceeding commenced by BHP, but it resists consolidation of the proceeding it commenced in Victoria (now No 3355 of 2003) with the other four proceedings. It would, however, consent to orders that all five proceedings be heard together, with evidence in each being evidence in every other. It resists consolidation of proceeding No 3355 of 2003 with the other proceedings on two grounds, namely that the Court does not have the power to make the orders that are proposed, and that consolidation of proceeding No 3355 of 2003 with the other proceedings would give rise to a substantial risk of prejudice to it. The Court's power to make the proposed consolidation orders 9 Atlas submits that Part 31 rule 7 does not empower the Court to make the orders proposed by Pacific National. 10 Some of the history of the development of the consolidation rule in England was outlined by Herring CJ in Cameron v McBain [1948] VLR 245. Prior to the enactment of the Judicature Acts of 1873-1875 in the United Kingdom, the English Courts of Common Law confined orders for consolidation, in the proper sense, to cases where the same plaintiff brought two or more actions against the same defendant, or where the same plaintiff brought actions against two or more defendants. The order would be made only on the application of the defendant or defendants. According to Herring CJ (at 246), where there were different plaintiffs the Court had no jurisdiction to bind one plaintiff in an action in tort by a decision in an action by a different plaintiff, even where the action was against the same defendant and arose out of the same transaction. The Court might, however, single out one of several actions and stay proceedings in the others until that one had been tried; sometimes on terms to the effect that the party applying for a stay would undertake to abide by the result of the action that was allowed to proceed. An order of this kind was made in Amos v Chadwick (1887) 4 Ch D 869. 11 I note in passing that the technique of staying all proceedings except one, which would proceed effectively as a test case, has been preserved after the introduction of the judicature system. It is expressly mentioned in Part 31 rule 7. It was used in Cameron v McBain itself, where three actions arose out of a motor vehicle accident, raising a common question of liability in negligence. The Court decided not to consolidate, or to order that the actions be heard together, because an order of either kind would lead to the actions being heard by the same jury, an outcome that would almost certainly have a depressing effect upon the amount of damages that each plaintiff might hope to receive (at 248). 12 After the enactment of the Judicature Acts, the English rule of court which became Order XLIX rule 8 stated that "causes or matters pending in the same Division may be consolidated by order of the Court or a judge in the manner in use before the commencement of the principal Act in the superior courts of common law." Perhaps surprisingly, this rule was held not to transport into the judicature system the restricted approach to consolidation that had been adopted in the three superior courts of common law. In Martin v Martin & Co [1897] 1 QB 49 it was held that an application under the rule for a consolidation order could be made by the plaintiff, notwithstanding the old common law practice. Lord Esher MR (with whom Chitty LJ agreed) held that the words "in the manner in use before the commencement of the principal Act" did not mean that the practice in force before the Judicature Act was to be continued. The proper construction, in his Lordship's view, was that these words required that if an order were made, it was to be treated in the same manner as before. This left the making of order for consolidation to the discretion of the judge. Chitty LJ said (at 431) that "the object of this rule was to save expense, and I think it ought to have as large an application as the words of it will reasonably permit." Lord Esher made an observation to similar effect. 13 But the discretion was not entirely at large. In Lee v Arthur (1909) 100 LT 61 the English Court of Appeal held that the rule did not authorise the consolidation of actions commenced by the same plaintiff against different defendants, without the consent of all parties, in a case where one of the proceedings raised an issue (whether the defendant had ceased to be in possession of premises) not raised in the other proceedings. The headnote to Lee v Arthur says that in those circumstances consolidation would not be ordered unless the issues to be tried were "precisely similar", but those words do not appear in the reported judgments (although Cozens-Hardy MR referred in the course of argument to consolidation being available where "precisely the same relief is claimed … but not otherwise"). In Horwood v Statesman Publishing Co Limited [1929] WN 38, 39, Sankey LJ expressed the opinion that the headnote in Lee v Arthur was inaccurate in this respect. 14 The English rule was amended in 1964 so as to articulate, no doubt in light of Lee v Arthur and other cases, the prerequisites to an order for consolidation. According to the editors of The Annual Practice 1964, p 41, the new rule did not change the existing practice. The new wording appears to have been used as the model for the New South Wales rule. In their present forms, Part 31 rule 7 in New South Wales and Order 4 rule 9 in England are not materially different, although the New South Wales rule expressly permits the Court to make the order on terms. 15 It appears that the judicial interpretation of the rule has become less restrictive over time. In Lee v Arthur Moulton LJ had observed, at 62, that "consolidation is much more rarely applicable that is generally supposed", because of loose use of the word. That observation was referred to by Herring CJ in Cameron v McBain (at 247), who said that in later years the English Court of Appeal had taken a much more liberal view, adopting the principle that where several actions have been brought raising matters which might have been joined in one writ, the Court had power in its discretion to consolidate them under the English rule (citing Horwood v Statesman Publishing Co for that proposition). No doubt because of the expansion of scope of the consolidation rule, Herring CJ was led to the conclusion (at 247) that the cases provided him with no principle upon which the Court should exercise its discretion to order consolidation, and each case was to be decided in its own special circumstances. 16 Some observations in Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97 might, on first reading, be thought to revert to Moulton LJ's restrictive approach to the availability of consolidation, but a closer reading reveals that this is not so. The plaintiff, who had paid virtually the full purchase price for construction of a yacht, but had paid it to another entity, sued the builder of the yacht for detinue and conversion, when the builder refused to deliver up the yacht. After the action had been commenced, the defendant sold the yacht. At the conclusion of the trial, the judge permitted the plaintiff to issue a fresh writ against the defendant, based on alleged conversion by sale, and consolidated the new proceeding with the first action, directing that the pleadings in the two actions be deemed to form the pleadings in the consolidated action and that the hearing of evidence in the first action be deemed the hearing of evidence in the consolidated action. He then gave directions for written submissions. The effect of his orders was to introduce a new cause of action for determination, based on different components of the proven facts, after the closing of evidence. 17 On appeal Brooking J said (at 104): "The course taken in relation to the second action was highly unusual. It was a course that was not really resisted by the appellant, and no doubt what was done by the learned Judge was done by him with the entirely understandable desire of resolving all disputes between the parties as speedily and inexpensively as possible. The effect of a consolidation order is difficult to determine and in my opinion such an order should rarely be made. What was done in the present case went far beyond the making of a consolidation order and while I can, as I said, sympathise with the motives which prompted the making of the order …, I feel bound to say, with the benefit of hindsight, that perhaps the order would have been better not made." 18 In my opinion these observations should not be seen as authority for the proposition that a consolidation order should rarely be made in any circumstances. They are directed towards the specific order under consideration by the Full Court. It was, as Brooking J said, highly unusual and went far beyond consolidation. The effect of a consolidation order, at the end of the hearing when only final submissions were left, would indeed be difficult to determine and in those circumstances such an order should rarely be made. Indeed, one wonders why the trial judge did not merely grant leave to the plaintiff to initiate the new proceeding returnable forthwith, and make orders for the hearing and evidence in the first action to be deemed the hearing and evidence in the second action, without any need for consolidation. Where, on the other hand, an order is made to consolidate two or more existing proceedings well before the final hearing, and in sufficiently precise terms that its consequences are clear, Brooking J's observations seem inapplicable. 19 Young CJ (with whom Kaye J agreed) said (at 100): "Like Brooking J I sympathise with the learned trial Judge's attempt to assist the parties to a final resolution of their dispute by enabling the respondents to begin a second action and then making a consolidating order. In my opinion, however, a consolidating order should very rarely be made. The cases disclose no principle upon which the discretion of the Court to make a consolidating order should be exercised but, speaking generally, I think it is better to confine them to cases in which several actions have been brought which might have been joined in one writ [citing Cameron v McBain , Horwood v Statesman Publishing Co and Todd v Jones ]. Ex hypothesi that was not the case here. Some of the same consequences might have been achieved however by directing that the two actions be heard together and by making various enabling orders. There are vital distinctions between consolidating actions and directing that they be tried together …". 20 For present purposes, there are two components to these observations. First, there is the assertion that a consolidating order should very rarely be made. Secondly, there is the assertion, derived from Horwood v Statesman Publishing Co, that consolidation orders should be confined to cases where several actions have been brought which might have been joined in one writ. The two propositions are compatible only if it is very rare that several actions are commenced which might have been joined in one writ (probably not empirically true), or if the first assertion is read not as a statement of some general principle or approach to consolidation but as an observation directed to the kind of consolidation order made in the instant case. The fact that his Honour cited, evidently with approval, both Horwood v Statesman Publishing Co and Todd v Jones, cases in which consolidation orders were made in circumstances that were not especially rare, tends to reinforce the conclusion that Young CJ, like Brooking J, had in mind that consolidation should rarely be ordered in the way that the trial judge ordered it in the instant case. 21 The assertion may be made that consolidation orders are relatively rare, and that it is far more usual to order that proceedings be heard together, with evidence in each to be treated as evidence in the other (see, for example, LED Pty Ltd v Masterson Homes (NSW) Pty Ltd (1984) IPR 393, 400 per Master Gressier). But that is quite different from saying that consolidation orders should be rare, that is, that the Court should presume against them. 22 There are some additional restrictions arising out of the wording of the rule (to which I shall turn shortly). Beyond these restrictions, there is no longer any requirement to approach the exercise of the consolidation power with a prima facie reluctance to use it. We are left with the observation of Herring CJ in Cameron v McBain that each case is to be decided, in the exercise of the Court's discretion, by reference to its own circumstances. 23 That leaves Bolwell Fibreglass as authority only for the very broad principle that orders for consolidation should be confined to cases where several actions have been brought that might have been joined in one writ. 24 But that position is now subject to Part 1 rule 3, which requires the Court to interpret the rules, and exercise powers under them, in order to give effect to the overriding purpose of the rules, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Part 1 rule 3 does not replace the earlier reluctance to make a consolidation order with a prima facie willingness to do so, but it focuses the Court's attention, in the exercise of its discretion under Part 31 rule 7, on the factors that will contribute to just, quick and cheap resolution of the issues, and that focusing may lead to greater willingness than in the past to use the consolidation power where to do so is likely to enhance the achievement of the overall purpose. 25 It seems to me plain that in the present case, it would have been appropriate for the claims by all five parties to have been joined in a single proceeding. Indeed, for the reasons I have given, my view is that the most rational way of presenting the issues for curial determination would have been for Pacific National to commence a proceeding founded upon its allegation that the coal wagons were defective, and for the other parties to file defences and cross-claims inter se in that proceeding. It therefore seems to me that the principle articulated in Bolwell Fibreglass, following Horwood v Statesman Publishing Co, is satisfied in the present case. 26 The wording of the rule imposes three other limitations on the Court's power to consolidate. First, there must be several proceedings pending in the same Division. Here, each of the five proceedings is now in the Equity Division and they are all pending. The rule does not limit the number of proceedings that may be pending. Five is not too many. 27 Secondly, it must appear to the Court that one of the three subparagraphs of the rule is satisfied. Subparagraph (a), that some common question of law or fact arises in all of the proceedings, appears to me to be satisfied. Counsel for Atlas did not contend otherwise. As counsel for the Columbus Joint Venturers put it, there is in constitutional terms a single "matter" raised by the five proceedings. All the proceedings arise out of a single set of facts, relating to the ordering, construction and supply of the coal wagons, and the supply of the steel used to produce them, and the circumstances relied upon by Pacific National to make good its allegation that the wagons are defective for reasons having to do with the steel used in their manufacture. There will be, to the extent that a party appears in more than one proceeding, a substantial overlapping of issues of law concerning the liability of the various parties to Pacific National or inter se, if it is found that the wagons are defective. 28 The third limitation arising of the wording of the rule is that the order authorised by the rule is (relevantly) an order that the proceedings be "consolidated". An order for the consolidation of proceedings is, by the terms of the rule, different from an order that proceedings be tried at the same time or immediately after one another, or that one be stayed until determination of another. Sometimes, in the past, the word "consolidation" has been used in a looser sense to encompass these other kinds of orders: Lee v Arthur, at 62 per Moulton LJ. But in its "proper sense", an order for consolidation is an order "combining actions so that they thereafter proceed as one": Cameron v McBain, at 246 per Herring CJ; see also Thomas &Morgan (United Kingdom) Ltd v Erica Vale Australia Pty Ltd (1995) 31 IPR 335. 29 Pacific National's proposal for consolidation would do more than merely combine the existing proceedings. It would require the Court to (i) re-assign parties, so that Pacific National, presently a cross-claimant and a defendant in one proceeding, would become the plaintiff, and parties who were plaintiffs in various proceedings would become defendants/cross-claimants/cross-defendants; (ii) "re-classify" various claims: thus, Pacific National's cross-claim would become the statement of claim in the Consolidated Proceeding; and the statements of claim in all of the existing proceedings would become cross-claims in the Consolidated Proceeding; (iii) achieve this "re-classification" of claims by making directions for the filing of new pleadings, rather than simply re-designating existing proceedings; (iv) permit substantial revision of all claims, and permit those claims to be made against additional parties (so that, for example, Pacific National's existing cross-claim against Goninan and Atlas would become a statement of claim against Goninan, Atlas, BHP and the Columbus Joint Venturers); (v) make an order preserving the position of each party in the unconsolidated proceedings with respect to limitation periods. 30 Part 31 rule 7 would permit the Court to "consolidate" the existing five proceedings on terms having the effect that Pacific National's cross-claim would become a statement of claim in the Consolidated Proceeding, and the statements of claim in each of the other four proceedings would become cross-claims. That would mean, however, that the only to defendants in the Consolidated Proceeding would be Goninan and Atlas, the present cross-defendants to Pacific National's cross-claim. BHP would be a cross-claimant and a cross-defendant, and the Columbus Joint Venturers would be cross-defendants. 31 In my opinion Todd v Jones is authority for the proposition that in the process of consolidation, the Court may treat an existing statement of claim as a cross-claim and an existing plaintiff as a cross-claimant, and it must follow, conversely, that the Court is equally empowered, upon consolidation, to treat an existing cross-claim as a statement of claim and an existing cross-claimant as the plaintiff. In other words, steps (i) and (ii) in Pacific National's proposal are permitted by the consolidation rule. 32 Steps (iii) to (iv) are, however, rather a different matter. The requirement for fresh pleadings goes beyond mere consolidation. To treat parties as defendants who are not presently cross-defendants to Pacific National's cross-claim, thereby implying that there are causes of action asserted against them that have not yet been pleaded, cannot be authorised by the consolidation power. 33 Therefore, I cannot achieve the outcome proposed by Pacific National simply as a "consolidation" of the existing five proceedings. However, Part 31 rule 7 authorises me to make a consolidation order on terms. It is open to me to impose terms on the consolidation that I have just outlined, to the effect that all the parties be required to re-plead in the context of the Consolidated Proceeding. I have decided that I should do so. 34 The process of re-pleading may lead to applications by some or all the parties for leave to join additional respondents to their pleaded claims. Thus, in re-pleading its cross-claim as the statement of claim in the Consolidated Proceeding, Pacific National might decide that it wishes to seek leave to plead causes of action against BHP and the Columbus Joint Venturers, and therefore to join them as defendants in the Consolidated Proceeding. Likewise, Goninan, Atlas and BHP might seek leave to enlarge their claims, which will become cross-claims in the Consolidated Proceeding, by asserting causes of action against additional parties. The Columbus Joint Venturers might seek leave to assert causes of action against other parties. It is not appropriate for the Court to grant any such leave now, before the new pleadings articulate the relevant claims. 35 Consequently none of the three limitations to the exercise of the Court's power to consolidate would prevent the Court from setting up a framework through which Pacific National's objective could be achieved. But senior counsel for Atlas claimed that the power to consolidate is subject to another limitation, formulated in his written and oral submissions in three different ways. 36 First, counsel submitted that the rule does not empower the Court to "consolidate" proceedings that have the same party as a plaintiff in some proceedings and as a defendant in other proceedings. That submission is contrary to the outcome in Todd v Jones, where one of the parties (the driver who was not killed) was the plaintiff in one action and defendant in the other. It is contrary to the observation of Moore J in Muller v Human Rights and Equal Opportunity Commission (Federal Court of Australia, 17 July 1997, unreported), where his Honour remarked: "The fact that the applicant in one proceeding is a respondent in another does not preclude an order for consolidation." 37 I can see no reason of principle for limiting the words of the rule in this fashion. To do so would be contrary to the approach to the construction of the rule taken by Lord Esher MR and Chitty LJ in Martin v Martin & Co, and the more general proposition that it is ""inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words": The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404, 421; Knight v FP Special Assets Ltd (1992) 174 CLR 178, at 185, 202-3, 205. 38 Secondly, counsel submitted that the rule does not empower the Court to make orders whereby a fresh proceeding is created with Pacific National as the plaintiff. However, consolidation does not involve the creation of a fresh proceeding. As to whether the consolidation order can make Pacific National the plaintiff, there is no obvious reason why such a restriction should be imposed, and to convert a cross-claimant into the plaintiff in the consolidated proceeding, on that party's application, seems to me an uncontroversial extension of what was done in Todd v Jones, for the reasons I have expressed. 39 Thirdly, counsel submitted that the rule does not authorise the Court to create a proceeding, but only to merge existing proceedings. I agree with that submission, which flows from the meaning of the word "consolidate". Because of this, I have in mind (as I have explained) supplementing the order for consolidation with terms requiring fresh pleadings, in a context in which there may be applications for leave to join parties to the re-pleaded claims. 40 The only other issue concerning the Court's power to order consolidation in this case relates to the proposal that the Court's orders should seek to preserve the positions of the parties under relevant limitations statutes. It is proposed that the relevant order will say that, for the purposes of the Consolidated Proceeding, claims be taken to have been first filed at the time and in the manner in which they were first filed in any of the five proceedings. (Counsel for Goninan submitted that it would be better to use the expression "causes of action" rather than "claims" but in my opinion that could give rise to confusion; and he contended that the words "or in the consolidated proceeding" should be added, but that would be otiose.) 41 In my opinion the Court has the power to make orders necessary and appropriate to achieve consolidation, incidentally to the power conferred by Part 31 rule 7 to make a consolidation order. The rule empowers the Court to order consolidation "on terms", and an order preserving the position of the parties with respect to limitation periods is an appropriate term for consolidation. 42 I agree with counsel for the Columbus Joint Venturers that the position is analogous to the power to allow proceedings to continue as representative proceedings under Part 8 rule 13. That power has been taken to allow the Court to make incidental orders such as orders for advertising or the sending of "opt-in" notices: for example, Carnie v Esanda Finance Corporation Ltd (1996) 38 NSWLR 465, 473 per Young J. In the High Court, Toohey and Gaudron JJ had previously emphasised ((1994) 182 CLR 398, 422) that the power in Part 8 rule 13 is a flexible rule of convenience in the administration of justice, authorising the Court to give directions as to the conduct of the proceedings to enable it to monitor and finally determine the action with justice to all concerned. In my opinion the power in Part 31 rule 7 is equally a flexible rule of convenience in the administration of justice, which implies that the Court has the power to do what is necessary and appropriate to permit effective consolidation with a view to final determination of the real issues between the parties, with justice to all concerned. Prejudice 43 Atlas contends that there is a sufficiently substantial risk of prejudice to it with respect to its position in the proceeding it instituted in the Supreme Court of Victoria (now No 3355 of 2003) that for this reason alone, the Court ought to decline to consolidate that proceeding with the other four. The prejudice is said to arise because consolidation will or might put in jeopardy the alleged right of Atlas under s 11(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) (and/or the corresponding provision of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic)) to have its claims determined under Victorian law. Atlas refers to Fong Consultants Pty Ltd v Ati Management Pty Ltd (1992) 108 FLR 140, although the case does no more than to show that the Court may decline to make the order if consolidation would deprive a defendant of the right to plead that the plaintiff's claim in one of the proceedings is time-barred. 44 Section 11(1) of the Cross-Vesting legislation of New South Wales, which is identical to s 11(1) of the Victorian legislation, provides: "Where it appears to a court that the court will, or will be likely to, in determining a matter for determination in a proceeding, be exercising jurisdiction conferred by this Act or by a law of the Commonwealth or a State relating to cross-vesting of jurisdiction: (a) subject to paragraphs (b) and (c), the court shall, in determining that matter, apply the law in force in the State or Territory in which the court is sitting (including choice of law rules); (b) subject to paragraph (c), if that matter is a right of action arising under a written law of another State or Territory, the Court shall, in determining that matter, apply the written and unwritten law of that other State or Territory; and (c) the rules of evidence and procedure to be applied in dealing with that matter shall be such as the court considers appropriate in the circumstances, being rules that are applied in a superior court in Australia or in an external Territory." 45 Part 74 rule 9 of the Supreme Court Rules makes provision for a party who contends that the Court should apply the written law or the rules of evidence or procedure of another State under s 11(1)(b) or (c), to file and serve a notice of that contention. On 11 April 2003 Atlas filed, in proceeding No 3355 of 2003, a notice under Part 74 rule 9 stating that it seeks to have Part IV of the Wrongs Act 1958 (Vic) applied, on the grounds that it is the proper law to be applied, and should appropriately be applied in the interests of justice. Part IV of the Wrongs Act deals with claims to contribution amongst tortfeasors. 46 Counsel for the Columbus Joint Venturers submits that the argument of Atlas on this point is fundamentally misconceived, and that there is no arguable case that Atlas might be prejudiced by consolidation in this manner, because s 11(1) can have no application. I agree with this submission. 47 The submission centres on the distinction between federal jurisdiction and other jurisdiction. Section 77(iii) of the Constitution, when read together with s 76(ii), authorises the Commonwealth Parliament to make laws investing federal jurisdiction in a State court in any matter arising under any laws made by the Commonwealth Parliament. Pursuant to that grant of power, s 39(2) of the Judiciary Act 1903 (Cth) invests in State courts (including the Supreme Court of New South Wales) federal jurisdiction in matters including matters arising under Commonwealth statutes. As far as the Trade Practices Act is concerned, the vesting of federal jurisdiction in State courts is reinforced by s 86(2), with respect to matters including any matter arising under Part V in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission. 48 In proceeding No 3355 of 2003, Atlas makes claims under Part V of the Trade Practices Act, a Commonwealth statute. It thereby calls upon the Supreme Court of New South Wales to exercise the federal jurisdiction granted to it in respect of a "matter" by s 39(2) of the Judiciary Act and s 86(2) of the Trade Practices Act. 49 Of course, Atlas also makes claims under the common law and State legislation, and seeks to invoke Part IV of the Wrongs Act of Victoria. But there is only one "matter" in which Atlas makes its various claims. Once a matter is within federal jurisdiction, in this case under Part V of the Trade Practices Act, the entirety of the matter is a matter in federal jurisdiction. The balance of the claim is made in accrued federal jurisdiction. As Barwick CJ said in Felton v Mulligan (1971) 124 CLR 367, 373, "if federal jurisdiction is attracted at any stage of the proceedings, there is no room for the exercise of the State jurisdiction which apart from any operation of the Judiciary Act the State court would have had." There is similar reasoning at 380 (per McTiernan J), 392-5 (per Windeyer J) and 411-3 (per Walsh J), and in Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 471 (per Gibbs J) and 479 (per Stephen, Mason, Aickin and Wilson JJ). Even if Atlas were to discontinue all its claims under the Trade Practices Act, or those claims were defeated, the matter would remain in federal jurisdiction, because once a matter is in federal jurisdiction it retains that character: Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212, 219 (per Bowen CJ, Morling and Beaumont JJ); Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564, 597 per French J (with whom Beaumont and Finkelstein JJ agreed). 50 The proceeding commenced by Atlas in the Supreme Court of Victoria was transferred to this Court by orders of that Court made under s 5(2) of the Victorian Cross-vesting Act. That provision is capable of operating in a case where the Supreme Court of Victoria is exercising federal jurisdiction, and is not confined cases where the Victorian Court is exercising jurisdiction in respect of a State matter. However, after the proceeding was transferred to the Supreme Court of New South Wales, the matter to which it related continued as a matter involving the exercise of federal jurisdiction vested in a State court by the Judiciary Act and the Trade Practices Act of the Commonwealth. 51 Section 4(3) of the Victorian Cross-vesting Act, which says that the Supreme Court of another State has and may exercise original and appellate jurisdiction with respect to State matters, is and was at all times irrelevant to proceeding No 3355 of 2003. This is because the proceeding does not involve any "State matter", defined in s 3(1) to mean a matter in which the Supreme Court has jurisdiction "otherwise than by reason of a law of the Commonwealth or of another State" [emphasis added]. Likewise s 9 of the Cross-vesting Act of New South Wales, which authorises this Court to exercise jurisdiction conferred on it by a provision of a law of the Commonwealth or a State relating to cross-vesting of jurisdiction, is irrelevant here because the Court's jurisdiction, though conferred by Commonwealth statutory laws, is not conferred by a law relating to cross-vesting of jurisdiction. 52 Similarly, s 11(1) of the Cross-vesting Act of New South Wales applies only where it appears to the Court that in determining a matter for determination in a proceeding, it will, or will be likely to, be exercising jurisdiction conferred by that Act or by a law of the Commonwealth or a State relating to cross-vesting of jurisdiction. In this proceeding the Supreme Court of New South Wales is not exercising, and is not likely to be exercising at any stage, jurisdiction conferred by a law of the Commonwealth or a State relating to cross-vesting of jurisdiction; instead, it is exercising federal jurisdiction conferred upon it by Commonwealth laws (s 39(2) of the Judiciary Act and s 86(2) of the Trade Practices Act) that do not relate to cross-vesting. An indication of the difference is this: when the Court exercises federal jurisdiction, it applies its own laws relating to choice of law, procedure and evidence by force of s 79 of the Judiciary Act; whereas where the Court exercises cross-vested jurisdiction with respect to a State matter, choice of law is determined by s 11(1)(a) and (b) of the Cross-vesting Act of New South Wales, and the rules of procedure and evidence are those considered appropriate by the Court under s 11(1)(c). 53 Case law supports this analysis. In David Syme & Co Ltd v Grey (1992) 38 FCR 303 Gummow J said (at 329-30): "It should also be noted that the definition of 'State matter' which I have set out means that, as between State Supreme Courts there is no cross-vesting of accrued jurisdiction being claims at common law or under State statute law which are attached to a federal claim all comprising the one federal 'matter'. The jurisdiction with which a State Supreme Court is invested by s 39 of the Judiciary Act is not conferred upon another State Supreme Court by the cross-vesting legislation: see GJ Lindell, 'The Cross-Vesting Scheme and Federal Jurisdiction conferred upon State Courts by the Judiciary Act 1903 (Cth), ' (1991) 17(1) Monash Law Review 64 at 68-70; Enid Campbell, 'Cross-Vesting of Jurisdiction in Administrative Law Matters' (1990) 16 Monash Law Review 1 at 7. … If a State Supreme Court already has federal jurisdiction over a 'matter', s 11(1) has no application: Professors D St L Kelly and J Crawford, 'Choice of Law under Cross-Vesting Legislation,' (1988) 62 ALJ 589 at 603. On the other hand, if the Supreme Court is not exercising federal jurisdiction, then par (b) applies, and this may require the application of law of another State as the lex causae. If the Supreme Court exercises federal jurisdiction then the choice of law rules will be those 'picked up' by s 79 of the Judiciary Act: Musgrave v Commonwealth; Pollack v Commissioner of Taxation (1991) 32 FCR 40 at 49, 59-61. If there is also a disparate non-federal claim in the one proceeding, the Supreme Court may be exercising jurisdiction flowing from two sources and par (b) may apply to one branch of the case and s 79 to another. … Section 11 should not be read as operating where, in truth, the court is exercising not cross-vested but federal jurisdiction, so that s 79 of the Judiciary Act 'picks up' a choice of law rule which may differ from that supplied by s 11(1)(b)." 54 In Abrook v Paterson (1995) 58 FCR 293, where a proceeding was transferred from the Supreme Court of South Australia to the Federal Court, Branson J dealt (at 297-8) with a supplementary argument based upon s 11(1). She said: "I do not consider that s 11(1) of the Cross-vesting Act has any application to this case. In my view there is no reason to conclude that in this matter the Court will, or will be likely to, be exercising jurisdiction conferred by the Cross-vesting Act or by a law of a State relating to cross-vesting of jurisdiction. The statement of claim in this matter seeks relief based upon, amongst other things, the provisions of the Trade Practices Act 1974 (Cth). The authority of this Court to adjudicate upon this dispute derives from the Commonwealth Constitution, the Federal Court of Australia Act 1976 (Cth) and the Trade Practices Act. Such authority extends to those parts of the proceeding which arise under the common law or State jurisdiction provided that they arise out of the 'same substratum of facts' ( Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457). In my view this Court has 'accrued' jurisdiction to deal with this proceeding in its entirety." Her Honour cited and agreed with Gummow J's remarks in the David Syme case, at 330 (quoted above). 55 I should add that if, contrary to the above analysis, Atlas had an entitlement to invoke Part IV of the Wrongs Act of Victoria prior to consolidation, I do not see why the consolidation of proceeding No 3355-2003 with the other proceedings would destroy or impede the exercise of that right. Atlas merely submitted that the position would be unclear and that there would be a risk that its right might be compromised. No precise analytical reasoning was supplied to support that submission. 56 My conclusion is that Atlas has not established any risk of prejudice arising out of its claim to invoke Part IV of the Wrongs Act. 57 When the application for consolidation was heard on 8 October 2003, I asked senior counsel for Atlas whether his client relied on any other ground of prejudice, and he replied in the negative. However, senior counsel for Atlas drew attention to the fact that the submission by the Columbus Joint Venturers with respect to the Part 74 Notice had been made only recently, and he sought time to consider and respond to it. I made directions to give Atlas the opportunity to make written submissions in response to the submission to the Columbus Joint venturers concerning the Part 74 Notice, and for the other parties to reply by written submissions. My orders were not intended to permit Atlas to raise any new grounds, and the wording of the orders made my intentions clear. I made it clear that subject to written submissions on the Part 74 point, the hearing of the application had come to an end. 58 Nevertheless, in the written submissions of Atlas dated 17 October 2003, a further ground of prejudice was raised. Atlas submitted that it would be prejudiced by the loss of its position as plaintiff, and contended that to deny that benefit to it would be fundamentally to offend notions of fairness. It referred to Saker v Creative Land Management (Supreme Court of Western Australia, unreported, February 2000), Bellview Investments Pty Ltd v Deans Investment Pty Ltd (Supreme Court of Northern Territory, unreported, 18 December 1997) and Lauren & Jendas Pty Ltd v Jolly (Supreme Court of Victoria, unreported, 26 August 1996). 59 In my opinion this additional submission should not have been made without leave. Further, I agree with the subsequent written submission by the Columbus Joint Venturers that the point is without merit. I recognise that in some cases there may be a specific and identified forensic advantage in conducting litigation as plaintiff. I do not accept, however, that the position of plaintiff is always and necessarily so special that any consolidation order must ensure that a party who insists on retaining its position as plaintiff becomes the plaintiff in the consolidated proceeding. The cases cited by Atlas do not support any such proposition, and both Todd v Jones and Muller v Human Rights and Equal Opportunity Commission indicate that consolidation may be ordered even where a person who was the plaintiff in an unconsolidated proceeding ceases to be plaintiff after consolidation. Loss of the status of plaintiff is a matter to be taken into account by the Court in the exercise of its discretion, but in my view the general disadvantage that Atlas may suffer by ceasing to be plaintiff does not outweigh the considerations strongly pointing to the desirability of consolidation. Atlas has not pointed to any specific disadvantage that it will suffer in this case. Discretionary considerations generally 60 In my opinion the consolidation of the five proceedings into a single Consolidated Proceeding, on terms requiring re-pleading, will achieve some real gains in terms of efficiency, time and costs, and to that extent facilitate the just, quick and cheap resolution of the real issues between the parties. First, it will reduce the sheer volume of pleadings. Rather than having five sets of pleadings, in respect of each of which there is the likelihood that eventually, there will be multiple cross-claims, there will be a more rational pleading structure in which the person complaining that the product is defective will be the plaintiff, and all of the defendants will be able to make cross-claims against one another, to the extent they consider it appropriate and obtain such leave as may be required. The reduction in volume of the pleadings may not in itself create a huge saving, but it should create a non-trivial improvement that will lead to the other advantages that I shall mention. 61 The second advantage is that a more rational pleading structure should enable the parties to identify with clarity and precision the causes of action they assert, and the persons against whom they assert them. My impression is that at the present time there is a comparative lack of rigour on these matters, which may have been contributed to by the subdivision of the dispute into five proceedings. 62 Thirdly, a single set of pleadings in a Consolidated Proceeding should assist the parties, and the Court, to identify the real issues as the matter approaches trial. 63 Fourthly, this ought to assist to resolve any contentious questions relating to discovery and subpoenas, and the use of documents. 64 Fifthly, at the trial, it should be possible to minimise the amount of time needed to correlate claims and counterclaims, and to conduct the hearing in a more straightforward and efficient manner than would be possible if five proceedings remain. 65 Atlas contends that nothing will be gained by consolidating the five proceedings beyond what would be available if they were heard together or sequentially, with orders that evidence in one be evidence in every other proceeding. I disagree with this. Although concurrent hearing would be substantially more efficient than five separate hearings, there would still be a degree of artificiality imposed on the trial by the need to acknowledge, in submissions and in other ways, the presence of five separate proceedings and five separate sets of pleadings. There is no good reason for preserving the separation of the proceedings and pleadings, and so it is appropriate to maximise the efficiency gains of combination by ordering the consolidation of the proceedings. 66 In their submissions, some of the parties expressed the desire that there be a short and strict timetable for implementing consolidation so that the matter can proceed to final hearing as expeditiously as practicable. In the end, however, the parties did not invite me to settle the timetable, suggesting instead that the matter be referred to the Registrar for that purpose. Conclusions 67 I have decided that the case for consolidating the existing five proceedings has been made out. I shall make the following orders in each proceeding:

Upon the terms stated in order 2 below, the following proceedings in this Division are consolidated to become the Consolidated Proceeding: No 6085 of 2001; No 2237 of 2002; No 1746 of 2003; No 3355 of 2003; and No 4112 of 2003.
Order 1 is made upon the following terms: (a) the Consolidated Proceeding is to bear the number 6085 of 2001; (b) in the Consolidated Proceeding: (i) Pacific National (NSW) Pty Ltd is the plaintiff; (ii) A Goninan & Co Ltd and Atlas Steels (Australia) Pty Ltd are the defendants; (iii) the cross-claim in proceeding No 6085 of 2001 is the statement of claim in the Consolidated Proceeding; (iv) the respective statements of claim in proceedings No 6085 of 2001, 2237 of 2002, 1746 of 2003, 3355 of 2003 and 4112 of 2003 are, in the Consolidated Proceeding, cross-claims by the respective plaintiffs as cross-claimants against the respective defendants as cross-defendants; (v) the plaintiff and the cross-claimants in the Consolidated Proceeding are to re-plead and make any necessary applications for leave to join parties or add causes of action, and the defendants and cross-defendants are to re-plead in response, in accordance with a timetable to be settled by directions of the Registrar; (vi) for the purposes of the Consolidated Proceeding, claims are to be taken to have been first filed at the time and in the manner in which they were first filed in any of the five unconsolidated proceedings; and (vii) any particulars provided in each of the five unconsolidated proceedings are to be particulars provided in the Consolidated Proceeding.
The Consolidated Proceeding is stood over to the Registrar's 9:30am list on 10 November 2003 for directions. 68 It is implicit that nothing in these orders deprives any party of its entitlement to apply for leave to add causes of action or defences not raised in the pleadings to date, or to join parties not presently joined. 69 As to costs, Goninan submitted that Pacific National ought to pay the costs thrown away by reason of the consolidation, with costs of the motion to be costs in the cause. The submission was that Goninan would not have been required to bring the other separate proceedings it brought, or to defend the separate Atlas proceeding, if Pacific National had sought earlier to consolidate the various proceedings or to commence proceedings itself to prevent limitation periods from expiring. The evidence before me now does not fully make out this contention. It seems to me undesirable to determine the question of costs of the consolidation application at this stage, when further steps need to be taken to implement the new regime and the ultimate outcome is still somewhat uncertain. For that reason, I regard it as inappropriate at this stage to order, as contended by the Columbus Joined Venturers, that Atlas play the costs of the application. The right course, suggested by Goninan as an alternative, is that the costs of the existing proceedings and of the motion should be reserved. **********

A Goninan & Co v Atlas Steels

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