Anderson Formrite Pty Ltd v Baulderstone Hornibrook Pty Ltd

REASONS FOR JUDGMENT 1 By a Notice of Motion filed 1 February 2008 the applicant has sought judgment against the respondent in relation to part of the proceeding. 2 The orders sought in the Notice of Motion were as follows: 1. Summary judgment be entered against the Respondent, on part of the Applicant's claim against the Respondent, in the sum of $309,455.00 pursuant to Section 31A of the Federal Court of Australia Act 1976. 2. The Respondent pay the Applicant interest pursuant to Order 35 Rule 8 of the Federal Court Rules from 13 May 2002 until the judgment amount is paid. 3. The Respondent pay the Applicant's costs of this motion 3 Section 31A of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court of Australia Act') was inserted into the Federal Court of Australia Act by the Migration Litigation Reform Act 2005 (Cth). Section 31A makes provision for the Court to give summary judgment for an applicant in relation to the whole or any part of the proceeding upon it being satisfied that the respondent has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. It also provided for a judgment in the nature of summary dismissal of the whole or any part of a proceeding on the application of a respondent in the event that it was satisfied that the applicant had no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. 4 The effect of s 31A was to soften the test for a successful application for summary judgment as stated by the High Court in Theseus Exploration N.L. v Foyster (1972) 126 CLR 507 ('Theseus Exploration') and also the test for a successful application for summary dismissal as stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 ('General Steel Industries'). 5 Section 31A of the Federal Court of Australia Act provides as follows: 31A(1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. 6 In General Steel Industries which, of course, was decided before the passage of s 31A(3) of the Federal Court of Australia Act, Barwick CJ stated the then test for summary dismissal at 128-130 as follows: The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. … [the] cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". … … Dixon J. (as he then was) sums up a number of authorities in Dey v Victorian Railways Commissioners where he says: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." Although I can agree with Latham C.J. in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed. … [footnotes omitted] 7 In Theseus Exploration an application for summary judgment, as opposed to summary dismissal, was refused by the primary judge. By special leave the plaintiff appealed from that refusal to the High Court. Having entertained full argument upon the legal matters in dispute between the parties and in circumstances where there were no disputed issues of fact, the High Court allowed the appeal and ordered that summary judgment be entered for the plaintiff. However, the High Court did not formally rule upon the primary judge's refusal of the application for summary judgment. Theseus Exploration was also decided before the passage of s 31A(3) of the Federal Court of Australia Act. At 514 Barwick CJ said: … The jurisdiction to give summary judgement should not be exercised "where a difficult question of law is raised" - see generally the Supreme Court Practice (1970) vol. 1 pp. 126-130. Perhaps the summary intervention to prevent the continuance of a plaintiff's action ought to be much rarer than the giving of summary judgment but there is sufficient correspondence in the two situations to make apposite to this case much of what I said in General Steel Industries Inc. v. Commissioner for Railways (N.S.W.). [footnotes omitted] 8 Gibbs J, as his Honour then was, considered that the primary judge had been completely justified in dismissing the application for summary judgment. At 514-5 his Honour said: … Indeed, on one view of the law as stated in Bundock Bros. v. Bergl and Co., he was bound to dismiss it. In that case Griffith C.J., speaking for the Full Court of the Supreme Court of Queensland in a case arising under an earlier rule ... said,: "It is settled that when there is a serious point of law raised by a defendant, the Judge in Chambers ought not to decide it, but ought to give unconditional leave to defend." Similarly in Commonwealth Dairy Produce Equalisation Committee Ltd. v. Hansen Mansfield J., as he then was, said that leave to defend should be given where there is a difficult question of law, and cited Electric and General Contract Corporation v. Thomson-Houston Electric Co. in support of this proposition. No doubt the remarks in these cases were not intended to preclude the exercise of some discretion by a judge to whom application for summary judgment is made in deciding whether the question of law raised is so difficult that it ought not to be decided summarily, and no doubt also sometimes some explanation or reference to authorities will be necessary to enable a judge to decide whether a question is really unarguable. However, in the present case the questions were serious and disputable and, assuming that the learned primary judge had a discretion, it was entirely proper for him to decline to dispose of them in chambers. [footnotes omitted] 9 In Fancourt v Mercantile Credits Limited (1983) 154 CLR 87 Mason, Murphy, Wilson, Deane and Dawson JJ said in respect of an application for summary judgment at 99: The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: see Clarke v. Union Bank of Australia Ltd.; Jones v. Stone; Jacobs v Booth's Distillery Co. [footnotes omitted] 10 The Explanatory Memorandum circulated by authority of the Attorney-General in relation to the Migration Litigation Reform Bill 2005 revealed the purpose of the new s 31A of the Federal Court of Australia Act. It relevantly provided: 21 … Section 31A provides that the Court may give summary judgment in a matter where it is satisfied that a proceeding or part of a proceeding, or a defence to a proceeding or part of a proceeding, has no reasonable prospect of success. 22. Subsection 31A(3) provides that for the purposes of giving summary judgment, a proceeding or part of a proceeding, or a defence to a proceeding or part of a proceeding, need not be hopeless or bound to fail for it to have no reasonable prospect of success. This moves away from the approach taken by the courts in construing the conditions for summary judgment by reference to the 'no reasonable cause of action' test, in Dey v Victorian Railways Commissioners … and General Steel Industries Inc v Commissioner for Railways (NSW) … [both of which were summary dismissal cases]. These cases demonstrate the great caution which the courts have exercised in regard to summary disposal, limiting this to cases which are manifestly groundless or clearly untenable. 23. Section 31A will allow the Court greater flexibility in giving summary judgment and will therefore be a useful addition to the Court's powers in dealing with unmeritorious proceedings. … 11 In his Second Reading Speech in the House of Representatives (Hansard 10 March 2005 at p.3) the Attorney-General said, amongst other things: The bill also strengthens the power of the courts to deal with unmeritorious matters, by broadening the grounds on which federal courts can summarily dispose of unsustainable cases. … A like observation was made by the Minister delivering the Second Reading Speech in the Senate (Hansard 11 May 2005 at p139). 12 It may be observed that the word 'may' in the expression 'may give judgment' in s 31A(1) and s 31A(2) is permissive not mandatory. 13 The concept of 'no reasonable prospect of successfully prosecuting' a proceeding, which is a relevant issue where summary dismissal is sought under s 31A(2) of the Federal Court of Australia Act, was addressed by Rares J in Boston Commercial Services Pty Ltd (ACN 114 658 070) v G E Capital Finance Australasia Pty Ltd (ACN 070 396 020) (2006) 236 ALR 720. At [43] his Honour said: … The concept of a party having "no reasonable prospect of successfully prosecuting a proceeding" has some similarity to the test at common law for determining whether a jury properly instructed could reach a verdict for the plaintiff. … [emphasis added] At [44] Rares J said: [44] In a case to which s 31A applies, where there is a real issue of fact to be decided in the sense identified in the above principle [a reference to [43] and to Hocking v Bell (1945) 71 CLR 430 at 441-2], and, possibly, where there is a real issue of law of a similar kind, it is obviously appropriate that the matter goes to trial. … 14 In Paramasivam v University of New South Wales [2007] FCA 875, another summary dismissal case under s 31A(2), Tamberlin J said at [14]: … it is essential that the Court must be careful not to do an injustice by summarily dismissing proceedings, or denying an applicant an opportunity to ventilate their case. … 15 In White Industries Australia Ltd v FC of T (2007) ATC 4441 Lindgren J said at [50] that s 31A 'is concerned with the bringing and defending of proceedings, not just with pleadings; with substance, not just with form'. 16 Section 31A(1) of the Federal Court of Australia Act permits the Court to give judgment for an applicant against a respondent 'in relation to … any part of a proceeding' if the applicant is prosecuting 'that part of the proceeding' and the Court is satisfied that the respondent has no reasonable prospect of successfully defending that part of the proceeding. 17 In the present case the applicant is not presently 'prosecuting the proceeding', rather, it is prosecuting 'a part of the proceeding'. The relevant 'part' was identified by the applicant by reference to prayer for relief No. 5 as contained in the Application filed 5 July 2007. The Application contained the following prayers for relief: On the grounds stated in the accompanying statement of claim, the applicant claims: 1. Compensation under s.298U of the Workplace Relations Act in the sum of $11,367,732 plus any further amounts payable by the applicant to Rapid Metal Developments (Australia) Pty Ltd. 2. Damages for the tort of conspiracy in the sum of $11,367,732 plus any further amounts payable by the applicant to Rapid Metal Developments (Australia) Pty Ltd. 3. Further or alternatively, damages pursuant to s.82 of the TPA or compensation pursuant to s.87 of the TPA in the sum of $11,367,732 plus any further amounts payable by the applicant to Rapid Metal Developments (Australia) Pty Ltd. 4. Further or alternatively, damages for the tort of conversion in the sum of $2,160,584 plus any further amounts payable by the applicant to Rapid Metal Developments (Australia) Pty Ltd. 5. Alternatively, damages of $3,363,858 plus any further amounts payable by the applicant to Rapid Metal Developments (Australia) Pty Ltd or such other sum as this Court shall determine. 6. Interest pursuant to s.51A of the Federal Court Act (sic) 1976. 7. Costs. 18 The part of the proceeding in relation to which the applicant presently seeks judgment is itself said to be part of the applicant's claim covered by prayer for relief No. 5 above. The sum of $309,455.00 is said to form part of the 'damages of $3,363,858' sought in prayer for relief No. 5. 19 The context in which the applicant brought its proceedings against the respondent was that during 2000 the respondent had been engaged to build a high rise office tower at 240 St George's Terrace, Perth, Western Australia. The building, subsequently known as the Woodside Building, was duly erected. 20 The applicant's interest in the project was as a formwork subcontractor. 21 In its defence filed 15 November 2007 the respondent admitted that it entered into a written contract with the applicant on or about 25 September 2001. The recitals to that agreement provided: A. The Principal has engaged the Main Contractor [referring to the respondent] to carry out and complete the Main Contract Works on the terms and conditions of the Main Contract. B. The Main Contractor wishes to engage the Subcontractor [referring to the applicant] to carry out and complete the Subcontract Works. C. The Subcontractor has agreed to accept the engagement and carry out the Subcontract Works in accordance with the Subcontract. 22 The Subcontract Works were defined in clause 1 of the General Conditions of Subcontract to mean: …the whole of the Work to be carried out and completed in accordance with the Subcontract, including Variations provided for by the Subcontract, which by the Subcontract is to be handed over to the Main Contractor; 23 Clause 5 of the General Conditions of Subcontract called for the applicant to 'provide security in accordance with Item 19' [referring to item 19 in Annexure Part A]. Item 19 of the Annexure to the General Conditions of Subcontract was expressed as follows: 19. Subcontractor's security (a) Form Unconditional Bank Guarantee in the form of Annexure Part B given by an approved Australian Trading Bank (clause 5) (b) Amount of maximum percentage of the original Subcontract Sum (clause 5) 5% If nothing stated, 10% of the original Subcontract Sum (c) If retention moneys, percentage of each Payment Advice Not applicable (clause 5 and subclause 37.2) If nothing stated, 10%, until the limit in Item 19(b) (d) Time for provision (except for retention moneys) If nothing stated, 28 days (clause 5) (e) Additional Security for unfixed plant and materials (subclauses 5.4 and 37.3) Unconditional Bank Guarantee in the form of Annexure Part B given by an approved Australian Trading Bank (f) Subcontractor's security upon Certificate of Practical Completion is reduced by (subclause 5.4) 50% of amount held If nothing stated, 50% of amount held