D.1 Relevant Discretionary Factors and Consideration of their Weight
75 In Kadam at 312 [57]-[58], I said the following:
It follows that in considering whether to make … a reference, the starting (and in many cases the finishing) point will be the consideration of the overarching purpose. Of course, s 37M(2) gives some guidance as to how this is done by setting out a number of objectives which, without limiting s 37M(1), comprise the following:
(a) the just determination of all proceedings before the Court (s 37M(2)(a)) (Justice Factor);
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court, and the efficient disposal of the Court's overall caseload (ss 37M(2)(b)-(c)) (Efficiency Factor);
(c) the disposal of the proceedings in a timely manner (s 37M(2)(d) (Timeliness Factor); and
(d) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute (s 37M(2)(e)) (Cost-effectiveness Factor).
As can be seen, these four factors reflect what might be described as both party-centric and the macro considerations in relation to the administration of justice… They are not, however, exclusive considerations and the considerations in s 37M(2) should not be treated as 'tick box'; a wider evaluative process is to be undertaken: see Irwin v Irwin [2016] FCA 1565 at [37] per Charlesworth J.
76 The submissions of the Builders were appropriately directed to these factors. In particular, it was submitted that the referral sought will provide for: (a) the just determination of this proceeding, alongside the allied issues to be resolved currently before Dr Lindgren; (b) the efficient use of judicial administrative resources and the disposal of the proceeding in a timely manner, as it would enable the dispute to be determined at the same time as the arbitration, rather than having to be determined much later by the court; and (c) the resolution of the proceeding in a cost effective manner, as there will be cost efficiencies in having all matters, including all issues between the Builders and other parties, the subject of findings by Dr Lindgren.
77 In addition, it was said that the possibility of an order being made to refer issues to Dr Lindgren as a court-appointed referee was raised by the Court during the stay application proceedings in December 2017 and that the Builders had foreshadowed the application with Dr Lindgren, who indicated that he would consent to an appointment if so ordered.
78 In short, given the factual and legal overlap evident from Annexure A to these reasons, it is asserted that it makes great sense for the various claims which find reflection in both the ASOC and the various arbitrations to all be before Dr Lindgren. It is said that the only exceptions to the case maintained by the Builders in the proceeding which are not the subject of issues already required to be determined by Dr Lindgren in the extant arbitrations, are the negligent misstatement case summarised in the ASOC at [63]-[77] and the unconscionable conduct case summarised at ASOC [69] and, in any event, that the underlying factual matters relevant to the determination of those claims overlap, to a very great extent, with the factual contentions which arise in relation to various other claims before Dr Lindgren.
79 In response, there are a range of arguments advanced on behalf of the IC and the State. The first is what is said to be a procedural obstacle, and then the IC and the State point to a range of substantive issues which are said to be powerful discretionary considerations militating against the relief sought.
80 Dealing first with the procedural issue, all parties accept the broad notion that the temporary stays were interlocutory orders which can be revisited if there is a fundamental, or at least material, change in the basis upon which the stays were granted. However, the State submits that in order for the stay of the claims to be lifted, the Builders must show that there is "a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application", that would justify the stay being lifted: see Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46; Waters v Commonwealth of Australia (Australian Taxation Office) [2017] FCA 312 at [50]-[53]. It is said that in the present case the Builders have not satisfied either of the requirements of Brimaud or otherwise advanced a proper justification for the temporary stays to be lifted and, indeed, there is no such justification. Additionally, it is asserted that the issue of a referee could have been raised at either the earlier hearing or, alternatively, an application could have been made prior to the commencement of the Consolidated Arbitrations in front of Dr Lindgren.
81 Although there does need to be some change of circumstance and there has been no compelling explanation proffered by the Builders as to why this application could not have been made somewhat earlier, if not immediately after the issue relating to the IC Claim Arbitration arose, it seems to me the question of whether or not I should grant the relief is one which should be approached by reference to the duty of the Court to facilitate the just resolution of this dispute according to law and as quickly, inexpensively and efficiently as possible: see s 37M(3) of the Act.
82 It follows that if I was otherwise of the view that it was in accordance with the overarching purpose to now lift the temporary stays, I would not regard it as an insuperable barrier that there has been a failure to establish that there was a change of circumstances of particular significance or there was some tardiness in making the application (conscious though I am of the hesitancy of the court to revisit earlier interlocutory decisions except for where there is a sound reason).
83 Turning to the substantive issues raised in resisting the referral, the State makes a number of arguments which can, conveniently, be placed into seven categories.
84 First, and importantly, it is said that the Builders' claims against the State are ancillary to the matters the subject of Project Co's stay (see judgment at [111(a)], [122]). This remains the case and no application has been made to have that permanent stay lifted.
85 Secondly, the arbitrator's award in those arbitrations which are currently before Dr Lindgren will be largely determinative of the claims made in this proceeding against the State (judgment at [111(b)], [122]). It was said that this factor has particular resonance in view of the fact that it is common ground that there is an "almost complete overlap" between the claims made against the State in the ASOC and those made in the Builders' Claims Arbitrations. As I have already noted, this is evident from Annexure A. It is said in this respect that the Builders have not descended to the detail of identifying any significant factual assertions in the ASOC that remain for determination following the conclusion of the Builders' Claims Arbitrations in relation to the claim made against the State.
86 Thirdly, it is said that there will be no costs or time savings in the lifting of the stay because all evidence relevant to the claims in the ASOC, including all expert evidence, will be heard and determinations in respect of it will be reached in the Builders' Claims Arbitrations.
87 Fourthly, it is said, consistently with what had previously been found in the judgment, that a temporary stay of the monetary claim is unlikely to visit any significant prejudice on the Builders.
88 Fifthly, there is the willingness of the State to submit to the arbitral process and the fact that the Builders are able to pursue its claims in the Builders' Claims Arbitrations and the parties have sought to progress these arbitrations together with the NOCE Arbitrations. This is said to point to the lack of utility of the stay being lifted.
89 Sixthly, it is said that the Court ought not to refer out the Builders' claims as those claims have not been properly pleaded and if the stay is lifted are likely to be the subject of interlocutory arguments advanced by the State and also the IC.
90 Seventhly, any referral will cause the State prejudice because any referred proceedings and the arbitrations will be subject to two very different regimes post-hearing such that they may ultimately result in different outcomes. It is said that the final nature of the arbitration - subject to the rights of challenge in the South Australian Supreme Court under the Commercial Arbitration Act 2011 (SA) - can be contrasted with the ability of the Court to deal with the report following the referral "as it thinks fit". It is conceivable inconsistent conclusions could be reached by the Supreme Court and this Court.
91 The submissions of the IC as to why discretion should not be exercised were somewhat more diffuse and in some respects broader. But it is convenient to mention them only to the extent that they do not already fall neatly within the categories I have already identified.
92 The first matter raised by the IC is that the proposed reference involves a novel issue of law inappropriate for the reference procedure. The second is that the proposed reference includes very serious allegations which are inappropriate for referral. The third is that the confidential nature of the arbitration makes a concurrent hearing of the arbitrations and reference unworkable. The fourth is that the proposed reference is contrary to what is described as the "open justice" principle. The fifth is that the proposed reference is inappropriate for proceedings that may involve witnesses seeking to invoke the privilege against self-incrimination. The sixth is that it is inappropriate for the reference to be heard concurrently with what is said by the IC to be "in substance a part-heard arbitration". The seventh is that a reference is inappropriate where issues of proportionate liability might arise. The eighth is that the usual mode of trial in the Federal Court is by judge alone. The ninth is that the reference is not by the consent of the parties and it is objected to; and the tenth is that there is no evidence as to the speed with which the reference might be heard and determined.
93 It is convenient for me to sweep away those matters raised by both the State and the IC which I consider to be either irrelevant or of such marginal significance that they do not weigh heavily in the discretionary analysis. As to those raised by the State:
(1) First, it seems to me that the submission that there will be no cost or time savings in lifting the stay, is incorrect, at least as a matter of theory. If all factual and legal matters were able to be determined by Dr Lindgren, it is likely that the entire justiciable controversy between the parties is likely to be resolved at an earlier time and at less cost. Having said this, I accept that the vast bulk of factual issues at least between the State and the Builders will be resolved in the course of determining the extant arbitrations currently before Dr Lindgren. This is a matter to which I will return below.
(2) Secondly, as to the point that the temporary stays are unlikely to visit any prejudice on the Builders, this is true but somewhat misses the point. The fact is that the Builders seek to facilitate a regime where matters are resolved with the greatest degree of efficiency and that, really, is the whole point of the application. This consideration transcends the notion of prejudice to the parties (although prejudice would, of course, be a relevant factor in the evaluative assessment).
(3) Thirdly, as to the willingness of the State to undertake to submit to the arbitral process, and the fact that the arbitrations are ongoing and will resolve most issues, is clearly important and does bear upon the utility of the stay against the State being lifted, but that has more to do with the issues that will be determined, rather than the willingness of the State to participate in the process.
(4) Fourthly, the issue of the prejudice raised by both the State and the IC as to the possibility of the two different regimes post-hearing that may ultimately result in very different outcomes is not a matter which I regard as one of any real significance. As I raised during the course of oral argument, the notion that it will be necessary to bring an application under s 27J of the Commercial Arbitration Act in the Supreme Court of South Australia is one that I do not accept. If an application is to be made pursuant to s 27J, I do not understand why there is any inhibition in bringing such an application in a separate proceeding in the South Australian registry of the Federal Court. It is necessary to explain this conclusion in a little detail. Section 79 of the Judiciary Act 1903 (Cth) is intended to facilitate the exercise of federal jurisdiction by the application of a "coherent body of law" consisting of Commonwealth law and, where applicable, the laws of the States and Territories in which such jurisdiction is being exercised: Northern Territory of Australia v GPAO [1999] HCA 8; (1999) 196 CLR 553 at 588 [80] (Gleeson CJ and Gummow J). A fundamental component of all parties' arguments in this court is that any controversy arising out of the arbitrations (including any dispute over an error of law) arises out of the same substratum of facts and which is to be quelled by either the arbitrations or in the exercise of Chapter III judicial power. Obviously enough, even though the provisions of the Commercial Arbitration Act refers to a "court" which, save in limited circumstances, is the Supreme Court of South Australia (see s 2 (1); Acts Interpretation Act 1915 (SA) s 4(1)), it is well established that a State cannot limit the way in which federal jurisdiction is to be exercised. There does not seem to me to be any reason why, in accordance with principle, the s 27J argument could not be determined by this Court exercising federal jurisdiction in South Australia: see Australian Securities and Investments Commission v Edensor Nominees Pty Limited [2001] HCA 1; (2001) 204 CLR 559 at 586-588 [55]-[59]. Accordingly, the prejudice seems to me, if it exists, to be very minor and related to the commencement of a separate proceeding and the logistical difficulty in having this proceeding transferred to the South Australian District Registry to be heard together with any such additional proceeding.
(5) Fifthly, as to the argument that this Court should not refer out the claims as they have not been properly pleaded, again this does not seem to me to be a real difficulty. If the matter was referred to Dr Lindgren, he would be required to ensure that any issues between the parties were determined in a way that afforded procedural fairness. To the extent that there needed to be further identification of the material facts and particulars relied upon to make out particular allegations, it would be within the power of the referee to make whatever directions he regarded as necessary and appropriate to facilitate procedural fairness being provided. This point was also raised by the State, at an earlier stage, as a reason why the hearing of this interlocutory application ought to be delayed. In my view, it would have been inimical to the overarching purpose for there to be an adjournment in order for the Builders to prepare a statement of claim in circumstances where it may be that, in the event the matter was referred, the referee would regard it as more cost-effective and appropriate for any pleading and particularisation to be done in a way which would best facilitate the joint conduct of the arbitrations and the reference.
94 Turning to the matters raised by the IC, which again I do not consider have any real substance:
(6) Sixthly, the notion of the proposed reference is inappropriate where proceedings before the referee may involve a privilege against self-incrimination, does not give sufficient account to the fact that a regime could be put in place whereby the referee could ensure that directions could be sought by the referee pursuant to powers conferred upon him if some unforeseen difficulty arose in this regard.
(7) Seventhly, the fact that there is a proportionate liability claim raised, does not seem to me to bear upon the matter at all. Each of the arbitration agreements make provision as to how the arbitrator is, to the extent permitted by law, to have regard to the proportionate liability legislation but, absent agreement, the position would be different in respect of the balance of the issues to the extent that they arise on the referred issues. Why this would cause some sort of insuperable problem was never really articulated.
(8) Eighthly, the fact that the reference is not by the consent of the parties is, in my view, of little weight. Although it might be appropriate for the court to give some weight to the fact that one or other party opposes the reference, ultimately the decision is guided by whether it facilitates the overarching purpose and recent developments have shown an increasing disinclination to place any significant emphasis on the attitude of the parties in such matters.
(9) Ninthly, although the usual mode of trial in the Federal Court is by judge alone and principles of open justice apply, it seems that there was somewhat of a tension between this argument advanced and the fact that the IC contends that the current parties to the arbitrations will be unlikely to agree to confidentiality being waived in relation to the current arbitrations. Open justice is an important principle, as is the usual mode of trial adopted in this Court. In Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558; (2012) 203 FCR 520 at 530 [34], 534-535 [49]-[50], these considerations were the subject of consideration by Rares J, although the consideration of the issue of open justice considerations was heavily fact dependent.
95 I now turn to the issues which seem to me to be of more significance and, when taken together, are decisive on the application.
96 The reason why the temporary stays were ordered in the first place is that they were ancillary to the matters the subject of Project Co's permanent stay. No application has been made to lift the permanent stay, although an order is sought that the claims made by Project Co against the IC in ACICA case number 2018-115 (being the IC Claims Arbitration) also be referred for inquiry and report. Although the factual matters underlying the claims as between Project Co and the IC, as I previously indicated, will be the subject of factual inquiry during the course of the arbitrations, the claims themselves, that is the claims as between Project Co and the IC, are not before the court in this proceeding or in any other proceedings. Additionally, while the claims were made in the proposed arbitration, the present position is that the arbitrator ruled that he had no jurisdiction to determine them. Although I have some sympathy for the pragmatism in trying to fashion a solution to the problem that has arisen by the State not consenting to commencing an arbitration against the IC in its present form, or a form containing all the claims which the Builders and Project Co seek to pursue so that the IC Claims Arbitration might proceed, this is ultimately the consequence of the particular detailed contractual regime which is a feature of this project.
97 The existence of this contractual regime is important. I dealt with the contracts and the arbitration agreements in Section B.1 of my judgment. They were structured in a deliberate way whereby there was no direct contractual obligations between the Builders and the State or the Builders and the IC to determine disputes between them by way of arbitration. This reflected the mutual contractual intention to put in place a process where the State contracted with Project Co to provide the project, leaving it to Project Co to arrange for the financing, design and construction and the provision of services.
98 These contractual arrangements have consequences. There is a bargain agreed between Project Co and the State whereby the issues that have arisen are to be worked out in accordance with the dispute resolution processes provided for in those agreements. In a way, the fact that Project Co has been unable to put in place the IC Claims Arbitration successfully is, as Mr Hyde submitted, more of a problem for Project Co than anyone else. In circumstances where there was no (and could be no) attempt to revisit the mandatory stay in respect of claims brought by the Builders against Project Co, this is an important factor in that the stays the subject of this application were ancillary to the granting of that mandatory stay.
99 Additionally, it cannot be gainsaid that this is a case of some real significance. As the IC submits, the Builders are relying on a novel legal point in seeking damages exceeding $795 million against the IC. In doing so, it has made an allegation in the following terms (ACOC at [83]):
...each of the State and/or the IC has caused economic loss to the builder (or, alternatively - the builder ... by unlawful means and/or, alternatively, deliberately sought to inflict economic harm upon the builder ...
100 As I previously indicated, the case made against the State is of unlawful conduct, being the intentional and wrongful infliction of economic loss on the Builders. These are not insignificant allegations, particularly made against the Crown.
101 It appears to be common ground that the High Court is yet to determine whether a stand-alone action for causing loss by unlawful means exists in Australia. The Builders accept that the law in this regard is "developing". They are correct to do so. In Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd [2014] VSCA 348; (2014) 45 VR 571, the Victorian Court of Appeal referred to the cause of action proposed by the Builders and said at 577 [31]:
As already noted, the question of the existence of the broader tort has been the subject of consideration by the High Court. To date, that court has declined to decide whether the broader tort should be recognised as part of Australian law. The definitive decision which the appellant seeks - that the broader tort is not part of the common law of Australia - is a decision which could only be made by the High Court. That is especially so in view of the asserted corollary, that is, that rejection of the broader tort would entail the de-recognition of the tort of intimidation, the existence of which has been recognised by the High Court as recently as October this year.
102 Balanced against this is that the Builders point to the fact that the principles applicable in adoption hearings means that the court takes a somewhat different view in relation to adoption of findings of law to findings of fact. On any adoption hearing, the Court is likely to receive detailed submissions of law and will be required, in a judgment, to consider and determine these legal issues. Accordingly, an anterior reference would not result in any lack of analysis of legal questions (at primary judge level) if it later came to an intermediate appellate court or the High Court dealing with the novel cause of action in due course.
103 This point has substance up to a point. No doubt the court would be greatly assisted by reasons provided by someone of the eminence of Dr Lindgren, if he was to be appointed a referee as to legal questions as well as factual issues; but as intermediate courts and the High Court have repeatedly emphasised, it is the duty of a single judge to make such findings of fact as are necessary to ensure that there be an effective rehearing on appeal, if necessary, particularly in the context of there being developments in the law by the application of the law to those facts as found. There is an inevitability about both issues of fact and law relevant to the determination of this novel claim to be hotly contested. It seems to me, given this forensic reality, it is preferable that the facts be found by a judicial officer who will then need to apply them to the law in this novel and potentially complex area of legal discourse. This conclusion weighs in the discretionary balance against the relief that the Builders seek.
104 An even more significant factor, however, seems to me to be the seriousness of the claims made. This goes well beyond the quantum of the claim (although this is also a relevant factor); what is more significant, is the nature of what is alleged and against whom it is alleged.
105 I was referred to a number of cases which stood for the proposition that where there are allegations of serious wrongdoing, a court should be chary in referring matters to a referee. It is unnecessary to refer to all these authorities as I think the current practice is captured by Einstein J in CPC Energy Pty Limited v Bellevarde Construction Pty Limited [2006] NSWSC 1120 at [22], where his Honour said:
On the question of whether the hearing of the balance of the issues to be determined on trial should be referred out or determined by the Court, this is in truth a matter for the List Judge in case managing the proceedings. Having said that it must be acknowledged that as a general matter, there are particularly strong reasons why the Court would not refer out questions of fraud except in exceptional circumstances. However albeit rarely, the Court has exercised the discretion by referring even proceedings raising questions of fraud to a referee...
106 Of course, Rares J's decision in Optiver, to which I have already made reference, is an example of this occurring. Having noted this, it is well to remember that were two factors present which made the case for a hearing before a judge in Optiver less compelling than might have otherwise been the case in other matters where allegations of serious wrongdoing were advanced. The first factor, not present here, is that a substantial part of the evidence in Optiver would have been required to be taken in either closed court or in circumstances where the subject matter of the evidence was said to be confidential (hence an observer or a member of the public would be left in the dark as to what points were being made). The second factor is, however, also present here, where the proposed reference is to an eminent former judge.
107 This is not to say that there is some inflexible rule that where serious allegations are made it is always inappropriate for such cases to be referred to a referee. I have recently referred in Australian Securities & Investments Commission v AMP Financial Planning Pty Ltd [2018] FCA 1708 to the possibility of a referee determining relevant facts in a civil penalty proceeding (albeit not the question of whether or not there has been the contravention of a norm giving rise to the civil penalty). On balance, however, the seriousness of the allegations made in the present case, weighs considerably against the granting of the reference.
108 Connected to this point are broader public interest considerations. Although not directly applicable to the orders sought on the present application, it is not insignificant that in Part VAA Div 2 of the Act (dealing with suppression and non-publication orders), the Court is required to take into account that a "primary objective of the administration of justice is to safeguard the public interest in open justice". Open justice is basic to the functioning of this Court as an arm of government. Arguments concerning open justice seem to me to be brought into sharper focus the more serious the allegation; a fortiori when such allegations relate to governmental matters and, more particularly, concern a matter of such intense public interest as an allegation of wrongdoing by the executive government in relation to the State's most significant and expensive infrastructure project. Although the adoption hearing will be in open court, for reasons I already explained, this will not amount to a rehearing of the evidence, and in the particular circumstances of this case, I do not consider this to be sufficient in a case of this type and, in particular, with the political dimension to which I have made reference.