Application for separate trial for issues - Principles to be applied - Whether complex case - Unmanageable - Need for proactive case management

Layne Christensen Co & Anor v Stanley & Ors [2000] WASC 179

Smith v Maloney (1998) 19 WAR 209

1 By a writ issued on 13 October 1998 the plaintiff company, domiciled in Italy, sued the defendant, a company domiciled in Western Australia, for payments for water taps and tapware. The defendant's counsel has set out a history of the proceedings to which no essential objection was taken. I attach that history and also an analysis of the pleadings as a schedule to this judgment.

2 This application is a summons for orders for a separate trial of issues, those issues being isolated within the summons as follows:

"(a) whether an exclusive agency agreement was entered into by the parties as alleged by the Defendant in paragraph 6 of the re-amended substituted defence, set-off and counterclaim;

(b) if the issue in (a) above is answered in the affirmative, which, if any, of the terms and conditions alleged by the Defendant in paragraphs 6A, 6B, 7 and 28 of the re-amended substituted defence, set-off and counterclaim formed part of the said exclusive agency agreement;

(c) whether the Plaintiff represented to the Defendant that the Plaintiff would sell its product in the market exclusively to the Defendant as alleged in paragraph 19 of the re-amended substituted defence, set-off and counterclaim.

(d) whether the supply of goods by the Plaintiff to the Defendant was subject to any of the terms and/or conditions as pleaded in paragraphs 1B(a), 1B(b) and 34 of the reply to the Defendant's defence and defence to set-off and counterclaim, and if so, which of the said terms and/or conditions."

3 This application is opposed by the defendant. The principles governing applications for the order of a separate trial of an issue are set out in a series of cases. I have paid particular regard to the following: Rocklea Spinning Mills Pty Ltd v Anti-Dumping Authority & Fraser [1995] FCA 1188; (1995) 129 ALR 401 at 416; Dunstan v Simmie & Co Pty Ltd [1978] VicRp 62; (1978) VR 669; Tilling v Whiteman [1980] AC 1; Smith v Maloney (1998) 19 WAR 209 at 223; Stirling Marine Services Pty Ltd v Austral Piling & Construction Pty Ltd, unreported; SCt of WA; Library No 970620; 21 November 1997; Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 at 55; Allen v Gulf Oil Refinery Ltd [1980] UKHL 9; [1981] AC 1001; Chenery & Anor v Conti [1999] WASCA 258; Perre v Arpand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180.

• A separate trial of issues is only appropriate in clear and simple cases.

• Separate trials of issues should only be embarked upon when the utility, economy and fairness are beyond question.

• The fact that the resolution of a separate trial may determine the litigation is relevant.

• Separate trials of issues may be appropriate where it is likely to save expense and inconvenience.

• There is a focus in the Rules of the Supreme Court on the expedition of determination of matters before the Court and separate trials of issues may advance the expedition.

• A possibility that the determination of issues tried separately may lead to settlement should be taken into account even though the issues may not finally dispose of the action.

• In many cases the formulation of specific questions to be tried separately, from and in advance of other issues, will assist in the resolution of the matters in issue if the questions are capable of final answer in accordance with the judicial process.

• Separate trials are inappropriate where the result depends on complex issues of fact or when a preliminary question is one of mixed fact and law.

• The procedure should be confined generally to cases where facts are complicated and the legal issues short, otherwise it can be a treacherous shortcut.

• Separate trials may be productive of delay, extra expense and uncertainty of outcome, which they are intended to avoid. Saving some time is often illusory when the parties have the necessity of making full preparation and factual matters relevant to one issue are relevant to others which overlap.

5 The statements of principle I have just set out are guides to the exercise of discretion. Discretion, however, must be exercised on a case by case basis, having regard to both the private interests of the parties and the public interest in the prompt and efficient resolution of litigation.

6 I have determined to exercise my discretion not to order separate trials. It is true that the counterclaim and set-off have added much complexity to the simple nature of the case pleaded by the plaintiff. However, I am not persuaded that the damages and set-off issues are of such complexity that there will be a substantial saving of time or cost if I ordered separate trials.

7 The issues identified by the plaintiff in the summons involve contentious issues of fact which will take time to try. Furthermore, there is an overlap between the fourth issue in the summons relating to the terms and conditions and the factual circumstances in relation to the claims of damages. The issues may not be finally determined in a vacuum of a construction of the term "conditions of sale" but may involve considerable factual evidence.

8 There is the question of the possibility of an appeal following the trial of the issues. Having regard to the sums claimed on either side, the complexity of some of the legal issues (the Trade Practices plea being one such example), an appeal might be considered to be a likely possibility. This would lead to further delay before the possible ultimate resolution of the action.

9 The plaintiff argues that the case has become unmanageable because of the set-off and counterclaim and the detailed evidence of the particular expert witnesses which will be necessary. There are I think two answers to that.

10 First, the plaintiff has been in possession of the particulars for over 4 years. I would expect that the plaintiff's preparation for its response to those particulars should be well advanced. If it is not, it ought to be. This summons is belated if the plaintiff seeks to avoid that work. The defendant obviously did much work in preparation of its particulars.

11 Secondly, this matter has hardly been managed at all. There have been approximately 34 hearings since the writ was issued. The progress has been glacial. The matter was admitted to the long causes list in 2002 and I was assigned to manage it. My role to date is not one of my better achievements, I must confess. On 18 April 2002 there was a preliminary directions hearing designed to give me an overview of the issue. On 30 May 2002 I made programming orders which included directions that the matter be returned to me within 10 days after the determination of a master of an application for further and better discovery. Nothing having occurred for nearly a year, on 7 March 2003 at my direction the parties came before me at which time I made the following orders:

"If this matter is to remain in the LCL it is to be managed closely in the future and in such a fashion that it is entered for trial before the end of the year.

Timetable to be set and adhered to by the parties to ensure that this matter is entered for trial ASAP.

If timetable is not complied with the matter will be struck out."

12 The matter was adjourned sine die but to come back before me within 4 weeks. On 30 April 2003 the parties filed a memorandum of consent orders which I agreed on 19 May 2003. The present amended application was set down for hearing, as I have observed, on 30 October 2003. It was in the end, through no real fault of the parties, that the matter could not proceed on that day.

13 I do not consider that this case is unmanageable. The case management rules are designed to deal with complex cases involving many issues. To date neither party has seriously advanced proposals to move this case to trial in a way that will make the issues comprehensible. I consider that in the circumstances proactive case management is both more convenient and more likely to result in a just disposition than an order for trial of separate issues. I therefore dismiss paragraph 2 of the summons.

1. The Action by the Plaintiff against the Defendant was commenced by a Writ dated the 13th October 1998.

2. The Plaintiff alleges that the Plaintiff and the Defendant entered into 11 separate Sales Agreements, each of which was partly written and partly to be implied: SC[3].

3. The Statement of Claim also provides details of the Plaintiff's allegations regarding how the purchase price for the goods delivered pursuant to the several Sales Agreements was to be made by the Defendant: SC[4a-c].

4. The Defendant filed its Re-Amended Substituted Defence, Set Off and Counterclaim on the 5th December 2001 pursuant to an Order made by Master Bredmeyer on the 21st November 2001.

5. The Defendant denies that it entered into eleven separate contracts with the Plaintiff, but claims that it had entered into an Exclusive Agency Agreement ("EAA") with the Plaintiff and the goods ordered by the Defendant were to be supplied under the terms of the EAA: DSC[68].

6. The Defendant also claims, inter alia, that:

(a) Although it received certain products on the Plaintiff's invoices, incorrect product not matching the product ordered by the Defendant was received;

(b) Goods were incorrectly packaged;

(c) Goods were damaged in transit;

(d) Goods were boxed by the Plaintiff pursuant to the EAA, but the boxes did not contain instruction sheets or contained incorrect instruction sheets; or

(e) The product was delivered late and not in accordance with the EAA.

7. Particulars of those claims are set out in paragraph 4(b) of the Defendant's Re-Amended Substituted Defence, Set Off and Counterclaim dated the 5th December 2001 and Schedule "B".

8. The particulars regarding the Defendant's allegation with respect to the EAA are set out in paragraph 6(a) of the Re-Amended Substituted Defence, Set Off and Counterclaim ("the Defence, Set off and Counterclaim") dated the 5th December 2001 and in Answers 2, 3 and 5 in the Defendant's Answers to Requests for Further and Better Particulars dated the 20th January 1999 ("the first Answers").

9. The Defendant claims at paragraph 8 of its Defence, Set off and Counterclaim that between 1996 and July 1998 the Plaintiff sold product using watermark number designs prepared by the Defendant with material the Defendant had had approved by the Australian State Water Boards directly to other tapware wholesalers and/or retailers who were in the Australian market. The Defendant identified the other tapware wholesalers and/or retailers. See Answers 3 and 4 of the first Answers.

10. In the Plaintiff's Revised Minute of Plaintiff's Amended Reply to the Re-Amended Substituted Defence, Set Off and Counterclaim dated the 4th December 2001, the Plaintiff claims that the Defendant is precluded from raising the matters pleaded in paragraphs 4(b) and 4(d) of the Defence, Set Off and Counterclaim having regard to the terms contained in the Plaintiff's General Sale Conditions to which the Sale Agreements were subject. The Plaintiff denies the existence of the EAA. See paragraphs 2, 3, 4 and 5 of the Amended Reply.

11. The Plaintiff claims that the Defendant is precluded from relying on the provisions of Section 52 of the Trade Practices Act and Section 10 of the Fair Trading Act as pleaded in paragraphs 19 to 24 of the Defence, Set Off and Counterclaim because the proper law governing the matters alleged by the Defendant in those paragraphs is Italian Law. See paragraph 1B(c)(i) of the Amended Reply.

12. The Defendant in its Minute of Amended Reply to the Defendant's Amended Defence, Set Off and Counterclaim dated the 6th May 2003, at paragraph 4 sets out the reasons why the Defendant relies on the proposition that the proper law to be applied in the Action is Australian Law and that the provisions of the Trade Practices Act 1974 (Commonwealth) and/or the Fair Trading Act 1987 (WA) apply to the EAA.

1. THE TERMS OF THE CONTRACT ARE DISPUTED

The Plaintiff's Position

The Plaintiff's position is that by various contracts made between the Plaintiff and the Defendant in the period between 18 March 1997 and 30 January 1998 (defined in the Statement of Claim as "the Sale Agreements"), the Defendant agreed to buy and the Plaintiff agreed to sell certain goods manufactured by the Plaintiff at an agreed price per unit in Italian Lire.

The Plaintiff says that it was a term of each of the Sale Agreements that:

(a) Half of the purchase price for goods delivered pursuant to the relevant Sale Agreement was due and payable by the Defendant to the Plaintiff within 90 days after the date of issue of the invoice relevant to those goods ("the Initial Payment"); and

(b) The balance of the purchase price for goods so delivered was due and payable by the Defendant to the Plaintiff within 120 days after the date of issue of the invoice relevant to those goods ("the Balance Payment"),

(together, the Contract Price)

(c) The Defendant would pay interest to the Plaintiff for late payment of the Contract price, such interest to be calculated at a rate of 20% per annum on such part of the Contract Price as remained unpaid as at its due date.

The Defendant's position

The Defendant's position is that in or about 1984 the Plaintiff and the Defendant entered into an Exclusive Agency Distributorship Agreement defined in the Amended Substituted Defence as "the Exclusive Agency Agreement" ("the EAA"). (See paragraph 6(a) of the Defence, Set off and Counterclaim). The Defendant says that the following were terms of the EAA:

Express Terms:

(a) The Plaintiff would supply its range of tapware manufactured to meet Australian and New Zealand statutory requirements and which was a range of tapware designed exclusively for the Australian/New Zealand market ("the market") to the Defendant exclusively ("the product"). See paragraph 6(a) of the Defence, Set Off and Counterclaim;

(b) The Defendant would act as exclusive distributor of the product setting up agencies within the market, purchasing product from the Plaintiff, selling and distributing the product to the agencies. See paragraph 6(a) of the Defence, Set Off and Counterclaim;

(c) Payment by the Defendant to the Plaintiff would be made by telegraphic transfer from the Defendant's banker to the Plaintiff's banker by equal instalments due 90 days and 20 days after invoice. See paragraph 3 of the Defence, Set Off and Counterclaim;

(d) In the event of delays in manufacture by the Plaintiff, the Plaintiff would air-freight product to the Defendant and the Plaintiff would pay the cost of such air-freight or, alternatively, reimburse the Defendant for the cost of air-freight. See paragraph 28(b) of the Defence, Set Off and Counterclaim;

(e) The Plaintiff's product would carry a five year manufacturer's warranty on all component parts of the product. See paragraph 28(c) of the Defence, Set Off and Counterclaim;

(f) From 1984 and, in particular, from 6 November 1992 until July 1997, the Plaintiff would supply component parts pursuant to the manufacturer's warranty free of charge to the Defendant and the Plaintiff would pay all call out costs charged by a licensed plumber. See paragraph 28(a) of the Defence, Set Off and Counterclaim;

(g) From July 1997, the Plaintiff would pay or reimburse the Defendant for half the cost of the call out costs charged by a licensed plumber to carry out work and the plaintiff would supply filter cartridges for the product requiring repair. See paragraph 28(e) of the Defence, Set Off and Counterclaim;

(h) The Defendant would arrange and pay for product testing fees required to obtain the relevant statutory licences and the corresponding annual fees and the Plaintiff would pay the audit fees payable to the Australian Standards Association. See paragraph 28(g) of the Defence, Set Off and Counterclaim;

(i) The Plaintiff would pay the Defendant the sum of $10,000.00 towards the design and printing of brochures and sales manuals for the product. See paragraph 28(i) of the Defence, Set Off and Counterclaim;

Express and/or Implied Terms:

(j) The Plaintiff would sell product in the market solely to the Defendant and would not offer the product for sale or supply to any other person in the market. See paragraph 6A of the Defence, Set Off and Counterclaim;

(k) The Defendant would purchase sufficient quantities of the product to enable the Defendant to supply the market. See paragraph 7 of the Defence, Set Off and Counterclaim;

(l) The Plaintiff would supply at its costs outer and inner boxes (designed by the Defendant) for the product for shipment and display. See paragraph 28(f) of the Defence, Set Off and Counterclaim;

(m) The Defendant would design instruction sheets for the product and the Plaintiff would print the sheets at the Plaintiff's cost. See paragraph 28(j) of the Defence, Set Off and Counterclaim;

Implied Terms:

(n) The product would be supplied to the Defendant by the Plaintiff for on sale by the Defendant to the market. See paragraph 6B of the Defence, Set Off and Counterclaim;

(o) The Plaintiff would manufacture the product in such quantities as to fill a sea-freight container. See paragraph 28(a) of the Defence, Set Off and Counterclaim;

(p) The Plaintiff would correctly box the product in boxes which correctly described the particular product. See paragraph 28(i) of the Defence, Set Off and Counterclaim;

(q) The Plaintiff would pre-pack all product for the market in boxes containing the correct instruction sheets and all components parts for the particular product. See paragraph 28(k) of the Defence, Set Off and Counterclaim;

(r) The Plaintiff would fill the Defendant's orders for the product within a reasonable time from the date of placement of the order. See paragraph 28(l) of the Defence, Set Off and Counterclaim;

(s) The Plaintiff would correctly supply the product ordered by the Defendant. See paragraph 28(m) of the Defence, Set Off and Counterclaim.

2. BREACH OF TERMS OF THE CONTRACT

The Plaintiff's position is that:

(a) It delivered to the Defendant the goods the subject of the Sale Agreements and issued invoices to the Defendant for those goods. See paragraph 5 of the Statement of Claim;

(b) The Defendant was required to pay certain amounts to the Plaintiff by various dates ("the Outstanding Amounts"). See paragraph 6 of the Statement of Claim;

(c) In breach of the Sale Agreements, the Defendant has failed to pay the Outstanding Amounts to the Plaintiff, despite repeated requests. See paragraph 7 of the Statement of Claim.

The Defendant's position is that:

(a) The Plaintiff breached each of the terms of the EAA detailed above. The details are contained in the Defence, Set Off and Counterclaim at paragraphs 4, 16, 27 to 29 inclusive;

(b) Specifically, in breach of the EAA, between late 1996 and July 1998, the Plaintiff began selling the product directly to other tapware wholesalers and/or retainers within the market at prices less than that at which the Plaintiff sold the product to the Defendant. See paragraphs 8, 9, 10, 11, 12, 14 and 15 of the Defence, Set Off and Counterclaim and paragraphs 14, 15, 17 and 18 of the Amended Reply.

3. TERMINATION OF THE CONTRACT

The Defendant's position is that the Plaintiff's acts amount to a repudiatory breach of the EAA by the Plaintiff and in or about August 1998 the Defendant elected to treat the EAA as at an end. See paragraph 25A of the Defence, Set Off and Counterclaim.

4. TRADE PRACTICES ACT (S52) CLAIM

The Defendant says that:

(a) The Plaintiff expressly and/or impliedly represented to the Defendant that the Plaintiff would sell its product in the market exclusively to the Defendant. See paragraph 19 of the Defence, Set Off and Counterclaim;

(b) The representations were made in the course of trade and commerce. See paragraph 20 of the Defence, Set Off and Counterclaim;

(c) In reliance upon the representations, the Defendant was induced to purchase sufficient product to supply the market. See paragraph 21 of the Defence, Set Off and Counterclaim;

(d) The representations were false and misleading in that from early 1996 the Plaintiff was supplying product directly to other tapware wholesalers and/or retailers in the market. See paragraph 22 of the Defence, Set off and Counterclaim.

The plaintiff disputes these allegations. See paragraphs 22, 23, 24 and 25 of the Amended Reply dated the 5th December 2001.

5. QUANTUM

Debt:

(a) The Plaintiff claims the sum of 655,192,201 Italian Lire;

(b) The Defendant claims the sums of 4,636,440 and 51,884,034 Italian Lire.

Damages:

(a) The Defendant's claim is quantified in its Answers to Requests for Further and Better Particulars dated the 14th December 1999 and on the 17th March 2000. (Pursuant to an Order made by Master Bredmeyer on the 7th December 2001, the "reasonable notice" period for the Defendant's claim for damages against the Plaintiff be limited to a post termination period from August 1998 to 30th June 1999. Master Bredmeyer also struck out paragraphs of the Defendant's Further and Better Particulars dated the 14th December 1999 as they appear in the Schedule of Orders made by Master Bredmeyer on the 7th December 2001. A copy of the Orders made by Master Bredmeyer in Chambers on the 7th December 2001 with a Schedule to Orders are attached).

(b) The Defendant seeks to offset the damages it claims against the debt claimed by the Plaintiff. See paragraph 30 of the Defence, Set Off and Counterclaim

Interest and Costs:

(a) The Plaintiff claims interest pursuant to Section 32 of the Supreme Court Act at the rate of 324,402 Italian Lire per day from 14 October 1998;

(b) The Defendant claims interest pursuant to Section 32 of the Supreme Court Act;

(c) Both parties claim costs.