BETWEEN : ANDREW JOHN SAKER (AS LIQUIDATOR OF CREATIVE LAND MANAGEMENT AUSTRALIA PTY LTD (IN LIQUIDATION) (ACN 066 971 551))

BETWEEN : CREATIVE LAND MANAGEMENT PTY LTD (ACN 062 984 329)

BETWEEN : CREATIVE LAND MANAGEMENT AUSTRALIA (IN LIQUIDATION) (ACN 078 432 872)

Practice and procedure - Application for consolidation - Principles to be applied

Compania Sansinena de Carnes Congeladas v Houlder Brothers & Co Ltd [1910] 2 KB 354

CSR Ltd v Cigna Insurance Co Ltd (1997) 189 CLR 345

Foran v Wight [1989] HCA 51; (1989) 168 CLR 385

Guilfoyle v Bean [1926] VR 498

Hinchliffe v Carroll [1969] VicRp 18; [1969] VR 164

Re Pacific Hardware Brokers (Qld) Pty Ltd (1998) 16 ACLC 442

Payne v British Time Recorder Co [1921] 2 KB 1

Queensland Estates Pty Ltd v Co-Ownership Land Development Pty Ltd (No 2) [1971] Qd R 164

Tosich Construction Pty Ltd v Tosich (1997) 78 FCR 363

1 MASTER SANDERSON: This is an application for consolidation. The application is made under O 33 r 1 which reads as follows:

"Whenever any issues between the same parties can be conveniently tried together, or whenever it appears desirable notwithstanding that the parties are not identical and that the evidence necessary to prove the issues is not identical, the Court may consolidate any number of causes or matters in order to quiet all claims relating to one subject matter, transaction or event or to substantially similar subject matters, transactions or events."

2 There are remarkably few cases in this jurisdiction dealing with the principles upon which consolidation will be ordered. Perhaps that is because it has long been accepted that the court has an unfettered discretion as to whether or not to order consolidation and each case turns upon its own circumstances: see Cameron v McBain [1948] VicLawRp 41; [1948] VLR 245 at 247. In Bellview Investments Pty Ltd v Deans Investments Pty Ltd, unreported; SCt of NT; 18 December 1997, Thomas J set out the factors to be considered in an application for consolidation. His Honour's decision can be summarised in the following way:

1 are there common questions of law or fact, or a common transaction or series of transactions, of sufficient importance which render it desirable that the whole of the matters should be disposed of at the same time;

2 is it convenient that the Actions be consolidated in order to avoid a multiplicity of actions and ensure savings of time and costs;

3 is the Court satisfied that the consolidation is unlikely to result in unfairness to any party, or to prejudice a party's ability to conduct their case;

4 will the consolidation be conducive to a just resolution of the issues between the parties;

5 the Court should have regard to any relevant practical matters which may make it inexpedient to consolidate the proceedings.

3 In my respectful view, his Honour's outline of discretionary considerations is an extremely useful guide. All parties to the application accepted the principles set out by his Honour as being applicable in this instance.

4 The application is to consolidate three separate sets of proceedings. The factual situation is reasonably complex and I do not propose to examine each action in its own right in detail. Rather, I will summarise the facts which give rise to the three separate actions. CIV 1467 of 1998 is an action brought by Creative Land Management Pty Ltd ("CLM") against Natural Science Centre Pty Ltd ("Natural Science") and Bio-Genetic Laboratory Pty Ltd. Broadly speaking, this action relates to the termination of a distribution agreement between the parties to the proceedings. The second case, CIV 1496 of 1999 is brought by the Liquidator of Creative Land Management Australia Pty Ltd ("CLMA") against Barfam Holdings Pty Ltd ("Barfam") and two of its directors. That case, once again speaking broadly, relates to the price of goods sold and delivered. The third action is a preference case. It is brought by the Liquidator of CLMA against Natural Science. That is action COR 249 of 1998. The action by CLMA against Barfam has been entered for trial but has not yet been called over. The preference action is in all respects ready for trial and would be heard in chambers before a Master. Assuming the action was listed for hearing within the next two weeks it would, in all likelihood, be heard before the end of March.

5 The circumstances in which these actions arose was as follows. CLM and CLMA are related companies. They have essentially the same directors and they have the same shareholders. Natural Science is a company which manufactures an agricultural chemical known as SC27. CLM has a distribution agreement for SC27 with Natural Science. CLMA has a sub-distribution agreement with Barfam. It is not entirely clear, either based upon the evidence or the three pleaded cases, as to what arrangement existed between CLM and CLMA. Neither is it entirely clear how the break in the distribution arrangement came about.

6 In December 1997 Barfam placed an order with CLMA for 100,000 litres of SC27. The Barfam proceedings raise a number of issues about that order, including whether or not it was bogus. In any event, the order was placed with CLMA who was not the distributor for Natural Science. However, CLMA placed an order with Natural Science for the same quantity of SC27. The SC27 was duly manufactured by Natural Science and it was delivered to Barfam's transport company. Natural Science generated an invoice to CLM. CLMA generated an invoice to Barfam. The contract price was $600,000. It is common ground between the parties that CLMA could not pay for the SC27 unless it was paid for the product by Barfam. Barfam did not pay.

7 Natural Science then sought to terminate its distribution agreement with CLM. This led to the first action - CLM sought to restrain Natural Science from terminating the distribution agreement. The argument was that Natural Science would be paid by CLM when CLMA was paid by Barfam. There was a round of injunction applications which ended inconclusively. On 25 October 1999 CLM sought summary judgment on its counterclaim. It was unsuccessful: see Creative Land Management Pty Ltd v Natural Science Centre [1999] WASC 271. That action is a long way from trial.

8 The Liquidator of CLMA then caused CLMA to sue Barfam. This is the Barfam action. In its defence, Barfam puts in issue the terms of trade between it and CLMA. It is Barfam's case that it only had to pay for the SC27 when it sold the product. That is to say there was a consignment agreement. The Barfam action has proceeded at a respectable pace and is, as I have said, now ready for trial.

9 The third action is a preference case. It is brought by the Liquidator of CLMA. It relates to the proceeds of sale of the SC27 which were paid by Barfam and were paid into a bank account in the name of CLM not CLMA. The Liquidator of CLMA says that these proceeds of sale were CLMA's property not CLM's and that a payment to Natural Science of that sum was a preference.

10 In the first action there is a counterclaim by Natural Science against CLM. The claim is for $84,000. That sum is part of the proceeds of sale of the SC27 sold by CLMA to Barfam. The Liquidator of CLMA asserts title to the $84,000 presently held in a bank account.

11 That then in summary is the nature of the proceedings between the parties.

12 All parties are agreed that there is one important issue common to all three actions. That issue is whether CLM used CLMA as its agent in selling to Barfam or whether it sold to CLM and CLM onsold. Each of the three counsel expressed the question in slightly different terms, but I think it can fairly be said that they were in broad agreement as to the nature of this issue. Thereafter counsels' views diverged. Counsel for CLMA/CLM, Mr Stone, submitted that there were a range of other common issues. Mr Taylor for Barfam and Mr Pringle QC for Natural Science submitted that there were no other significant common issues.

13 Central to Mr Stone's submission, was the importance of a meeting which took place in the winter of 1997 in Melbourne. It is referred to in the pleadings as the "Hyatt meeting". All parties were represented at the meeting and written minutes were produced. However, there does appear to be a difference between the parties as to precisely what it was that was agreed at the meeting. As I understand CLM/CLMA's position, they view the Hyatt meeting in the following light. At the meeting terms of trade as between Barfam and CLMA were agreed, as were the trading terms between CLM and Natural Science. It is submitted that the terms of trade must marry up. It would be unlikely Barfam would agree with CLMA for payment on consignment, while CLM agreed with Natural Science to make payment within 30 days of delivery. CLM/CLMA submit that by having all parties before the court when findings are made in relation to the Hyatt meeting all prospect of inconsistent decisions over a range of actions is avoided.

14 Counsel for CLM/CLMA also made the point that tactically it was very much in his client's favour to have all parties before the court at the one time. If that were to happen it would virtually ensure that those who represented Natural Science and Barfam at the Hyatt meeting would have to give evidence in the consolidated proceedings. On the other hand, if the Barfam action were to proceed to court CLMA would run the risk of not having the Natural Science directors necessarily give evidence. Counsel for CLM/CLMA submitted this tactical advantage was a factor to be taken into account in determining whether or not to order consolidation.

15 Counsel for Barfam founded his submissions on two essential propositions. First, he submitted that there were not enough common issues between the three actions to warrant consolidation. Counsel acknowledged that there were a number of common issues but did not concede that the Hyatt meeting was properly considered a common issue between the parties. His submission was that central to the Barfam action were the terms of trade between Barfam and CLMA. To his client any terms of trade between CLM and Natural Science were irrelevant. Secondly, counsel pointed out that the Barfam action had been entered for trial. If the consolidation application was successful that entry would fall away and it would be 12 or perhaps 18 months before the consolidated action would be tried. Not only that, the estimated time for hearing of the Barfam action was three days. Counsel estimated that the consolidated action might run for five to six days. Counsel highlighted the fact that security for costs had been given by the plaintiff in the Barfam action and that security would have to be increased if consolidation was ordered. This point was subsequently conceded by counsel for CLM and CLMA who indicated that increased security would be provided.

16 Counsel for Natural Science also submitted that there were few common issues between the parties and certainly not enough to warrant consolidation. Counsel also went to some lengths to establish that both cases against his clients were weak. About that submission, two points can be made. First, on any interlocutory application it is extremely difficult to assess the merits of the action. That, after all, is the purpose of the trial. Based on the pleadings and the limited evidence available, I could not make any determination as to the strength or otherwise of the parties' respective positions. The second point is that in none of the reported cases is there any indication that the strength of a cause of action is a significant determining factor in whether to order consolidation. I accept that there are no hard and fast principles and that each case must depend upon its merits. It is also possible to imagine a case which is so weak that it would be a waste of time to consolidate it with any other action. But this is not such a case and in my view an examination of the merits of the claim is unhelpful.

17 Taking all matters into account, I am satisfied that this is not a case where it is appropriate for me to order consolidation. In reaching that conclusion I have been influenced by a number of factors. First, the Barfam action and the preference action are ready for trial and it should be possible to dispose of both in the near future. I see that as highly preferable to delaying all three actions for an indeterminate period, given all the negatives associated with delay. In the circumstances, it may have been appropriate for this application to have been made somewhat earlier - a point acknowledged by counsel for CLM/CLMA during the course of his submissions.

18 Secondly, I am not satisfied that consolidation of these proceedings will save any time or offer any reduction in expense to the parties. The time taken to try all three actions as a consolidated proceeding would be five to six days. If the actions are tried separately the time they will occupy is approximately the same. At best, any savings would be minimal.

19 Thirdly, it seems that one of the prime motivations for CLM/CLMA bringing this application is tactical. They are anxious to have Natural Science and Barfam before the court at the same time, particularly with respect to the Hyatt meeting. It may be that tactical advantage to one party or another is a factor in determining whether or not a consolidation order might be made. However, it is not a factor which has been decisive in any of the decided cases to which I have been referred. In the context of this case, I would not see any tactical advantage to CLM/CLMA as being sufficient reason to order consolidation.

20 Finally, I am not satisfied that there is any real prospect of inconsistent results by allowing the actions to proceed separately. The one real concern relates to the Hyatt meeting. In relation to that, the terms of trade as between CLMA and Barfam is an issue in the Barfam action and the terms of trade between CLM and Natural Science is an issue for that action. A decision in one does not in any way affect a decision in the other. None of the other common issues are so central to the resolution of the dispute that inconsistent decisions is a real concern.

21 Taking all matters into account, I am satisfied that I ought refuse the order for consolidation in this matter. The application will be dismissed and CLM/CLMA should pay the costs of the application including the reserve costs.