CSR Investments Pty Limited v Alcan Northern Territory Alumina Pty Limited - [2003] NSWSC 1137 - NSWSC 2003 case summary — Zoe

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CSR Investments Pty Limited v Alcan Northern Territory Alumina Pty Limited

[2003] NSWSC 1137

Supreme Court of NSW|2003-12-02|Before: Einstein J, Hunt J, Rolfe J

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Source facts

Court

Supreme Court of NSW

Decision date

2003-12-02

Before

Einstein J, Hunt J, Rolfe J

Source

Original judgment source is linked above.

Judgment (163 paragraphs)

[1]

CITATION : CSR Investments Pty Limited v Alcan Northern Territory Alumina Pty Limited [2003] NSWSC 1137 HEARING DATE(S) : 2/12/03 JUDGMENT DATE : 2 December 2003

[2]

JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Motion dismissed.

[3]

CATCHWORDS : Practice and Procedure - Commercial Contract - Claim for equitable set off - Summary dismissal - General Steel considerations - Practice and Procedure - Separate question determination - Overriding Purpose Rule Customs Regulations 1926 (Cth) LEGISLATION CITED : Supreme Court Act 1970 (NSW) Supreme Court Rules 1970 (NSW) Arrowcrest Group Pty Ltd v Gill (1993) 46 FCR 90 Australian Building Industries Pty Limited v Stramit Corporation Limited (Unreported, Federal Court of Australia, 1 December 1997; BC9706333) Australian Iron & Steel Pty Ltd v Jumbo Scheepvaart Maatschappij (Curacao) (1988) 14 NSWLR 507 Australian Mutual Provident Society v Specialist Funding Consultants Pty Ltd (1991) 24 NSWLR 326 AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056 Barclays Bank v Tom [1923] 1 KB 221 Blackburn v New South Wales (Unreported, Supreme Court of New South Wales, Hunt J, 31 January 1991, Hunt J) British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] 1 QB 137 CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 Commonwealth Development Bank of Australia Limited v Windermere Pastoral Co. Pty Limited (Unreported, Supreme Court of New South Wales, 8 June 1999, Rolfe J; BC9902982) D Galambos & Son Pty Limited v McIntyre (1974) 5 ACTR 10 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Dunstan v Simmie & Co Pty Ltd [1978] VR 669 Everett v Ribbands [1952] 1 KB 112 Fancourt v Mercantile Credits Limited (1983) 154 CLR 87 Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927 General Credits (Finance) Pty Limited v Stoyakovich [1975] Qd R 352 General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 GIO Australia Holdings Ltd v Steffey [2001] NSWSC 928 Government of Newfoundland v Newfoundland Railway Company (1888) 13 App Cas 199 CASES CITED : Grant v NZMC Ltd [1989] 1 NZLR 8 Griffiths v Northern Territory of Australia [2003] FCA 1177 Hamilton Ice Arena Ltd v Perry Developments Ltd [2002] 1 NZLR 309 Hill v Ziymack (1908) 7 CLR 352 Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 James v Commonwealth Bank of Australia (1992) 37 FCR 445 James v The Commonwealth Bank of Australia (1992) 109 ALR 334 Just Juice Corporation Pty Ltd, Re (1992) 37 FCR 445 Landsal Pty Ltd (in liq) v REI Building Society (now the Co-operative Building Society of South Australia) (1993) 41 FCR 421 Lord v Direct Acceptance Corp Ltd (1993) 32 NSWLR 362 Love v Mirror Newspapers Ltd [1980] 2 NSWLR 112 McCann v Fenech (Unreported, Supreme Court of New South Wales, Master Malpass, 22 July 1996) MEK Nominees Pty Ltd v Billboard Entertainments Pty Ltd (1993) V Conv R 54-468 Munnings v Australian Government Solicitor (1994) 68 ALJR 169 Rajski v Carson (1988) 15 NSWLR 84 Rawson v Samuel (1841) Cr & Ph 161; 41 ER 451 Roadshow Entertainment Pty Limited v (ACN 053 066 259) Pty Ltd (1997) 42 NSWLR 462 Rocklea Spinning Mills Pty Ltd v Anti-Dumping Authority (1995) 56 FCR 406 Royal Botanic Gardens and Domain Trust v South Sydney Council (2002) 186 ALR 299 Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 Tepko Pty Limited v Water Board (2001) 178 ALR 634 Tooth v Brisbane City Council (1928) 41 CLR 212 Webster v Lampard (1993) 177 CLR 598 PARTIES : CSR Investments Pty Limited (Plaintiff/Cross Defendant) Alcan Northern Territory Alumina Pty Limited (Defendant/Cross Claimant) FILE NUMBER(S) : SC 50088/03 COUNSEL : Dr AS Bell (Plaintiff/Cross Defendant) Mr BP Jones (Defendant/Cross Claimant) SOLICITORS : Freehills (Plaintiff/Cross Defendant) Deacons (Defendant/Cross Claimant)

[11]

(c) alternatively to (b), an order that the questions of construction identified in the Notice of Motion be determined prior to, and separately from, the issues the subject of ANTA's Cross-claim. Overview position as put by CSRI 5 The short overview position as put from CSRI's perspective is as follows: · CSRI seeks to strike-out paragraph 4.9 of ANTA's defence (a purported claim for equitable set-off) on the basis that, whatever the merits of ANTA's cross-claim in the proceedings, no facts are said to be disclosed, pleaded or particularised that would promote that claim to the status of a defence in equity. · CSRI seeks the orders for a separate hearing on the basis that its claim is said to involve a confined legal argument on a common factual base as to the correct construction of a particular clause in an agreement between the parties. CSRI contends that, in contrast, ANTA's claims will involve a complex matrix of facts, lay evidence and technical expert evidence and consequential cross-examination of numerous witnesses, the review and discovery of extensive documentary material to be obtained from the parties and third parties and a lengthy hearing. There is said to be no factual or legal overlap between CSRI's claim and ANTA's claims. The quantum of CSRI's claim (US$21.9 million, being A$30.3 million at current exchange rates) apparently far exceeds that of both ANTA's claims together (at most, A$18.3 million). · CSRI further submits that it is appropriate for the Court to exercise its discretion to order a separate hearing and determination of CSRI's claim irrespective of the outcome of the application to strike out the defence of equitable set-off. It is said that this is because that defence, if properly available (CSRI contends it is not), is at best a partial defence to what is a very substantial claim. The claim put forward is that CSRI's claim can be disposed of quickly and in advance of the much more complex and time consuming process of dealing with the cross-claim which is, in any event, said to be the same as the alleged set-off defence. 6 Both parties have addressed detailed written submissions in relation to the motion presently before the court. The convenient course is to commence by setting out CSRI's submissions.

[103]

The dissimilarity between the subject matter of the parties' claims means that there will be no duplication in the cost of preparing for each claim and there will not be any material increase in the overall hearing time of each of the claims. The confined preparation and hearing time required for the determination of CSRI's claim means that there will be no impediment to the parties continuing with the extensive preparation required for ANTA's claims." Deciding the issue 8 I have come to the clear decision that, in general terms, the submissions of ANTA are of substance and should be acceded to. They are generally adopted in what follows. But before proceeding further it is appropriate to note some general matters: · Caution requires to be taken before the Court, particularly in a case such as the present, peremptorily carries out radical surgery in terms of the making of orders for separate hearings [as here sought in terms of the proposed separate hearing of the cross-claim] or otherwise orders that particular questions be determined prior to and separately from other issues; · Clearly enough the Supreme Court Rules, and importantly the Overriding Purpose Rule, require that the appropriate discretion be exercised in a manner such as to achieve a just, quick and cheap resolution of the real issues in the proceedings; · Each case requires to be determined on the instant facts and there can be no real generalizations; · Ultimately however applications such as those presently before the Court call for a judgmental decision against a background where it is not uncommon to find that the apparent early attraction of bifurcated hearings or separate question determinations prove ultimately to have been inefficient, or even worse, on occasion may cause the hearing to miscarry: cf Tepko Pty Limited & Ors v Water Board (2001) 178 ALR 634, Kirby and Callinan JJ (paragraph 168 at 675) put the matter as follows: "The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others and they all overlap." · Experience in relation to the proper construction of a complex commercial agreement proves that the type of background matters sought to be relied upon on one or other of a number of possible bases require careful attention at a forensic level and, depending upon rulings as to admissibility, may require very careful attention as part and parcel of the determination of the proceedings. That evidence is commonly tendered to establish the commercial matrix in which the subject agreement was entered into. That matrix may have a relevance to allegations that particular terms should be implied into a contract and will often be relevant in other ways. Whilst it may be possible in any given case to have that matrix examined on different occasions and by reference to evidence which may differ, that situation should obviously be avoided where possible; · Section 63 of the Supreme Court Act has a particular purpose to ensure that all disputes between parties be determined to the extent practicable together and at the same time. 9 In other words, sometimes the adage "the longest way is often the shortest way" holds true. In my view the case presently before the Court shows such a circumstance, and more particularly so because of the commonality of background evidence likely to be called on the issues in the proceedings proper and on the cross-claim proceedings. 10 Further it is correct to say that what CSRI is about, at least at one level, amounts effectively to an application for a summary dismissal of the claim to the equitable set-off. General Steel considerations arise. 11 Whilst of course the Court has the power, even on such a summary dismissal application, to enter into an examination of complex questions of legal principle which may include the construction of a complex commercial contract, the exercise of that power requires caution in a case such as the present. 12 Clearly enough, there would seem to be no point to a separate hearing of the summons if the equitable set-off defence is not struck out. 13 ANTA seeks to establish an equitable set-off. There is no issue but that relevant tests have been enunciated by the authorities as set out in CSRI's submissions. It cannot be said that the authorities are always four-square with one another. The matter is pointed up by the following extract from Sterling Press Pty Limited [Supreme Court of New South Wales, 19 March 1998; BC 9801692, Einstein J at BC 11-13]:

[155]

One factor relevant to the exercise of the Court's discretion is CSRI's interest protection. The relevance of this factor is clear from the following passage of the judgment of the NSWCA in Roadshow Entertainment Pty. Limited v CEL Home Video Pty. Limited (1997) 42 NSWLR 462 at 489E : "... CEL/Vision were protected against delay by their prima facie entitlement, under s.94 of the Supreme Court Act 1970, to pre-judgment interest from the date their causes of action accrued."
CSRI's position in this respect is particularly robustly protected because of Clause 14.9 (p.41) of the SSA which provides, in effect (see definition of "Default Interest Rate" in Clause 1.1 at p.3) provides for an interest regime of 2% above market lending rates compounded monthly. This, of course, translates into an onerous simple interest rate. 29 Ultimately the CSRI contention has been that the ethos underpinning the practice and proceeding of the Commercial List is for the efficient determination of commercial disputes and that the Court has presently before it for decision by paradigm example, a case crying out for that treatment. I have no doubt but that the reference to the ethos underpinning the practice and proceeding of the Commercial List is of substance as long as the overriding purpose rule is regarded as a correct statement of that ethos. The matter here for decision, however, concerns the proper exercise of the Court's discretion to make the summary orders sought in the motion in this particular set of proceedings. 30 In my view and notwithstanding the submission by CSRI that stripped of the baggage comprising the equitable set-off claims, these proceedings would take only a few hours to be determined on a final basis and are ready now for that treatment, the proper exercise of the Court's discretion is to dismiss the motion. The equitable set-off issue is indeed that - an issue. ANTA is entitled to its day in court on that issue. And significantly ANTA is entitled to litigate a case asserting that all adjustment claims having been made and being before the Court, a claimant for one adjustment has its title to that adjustment impeached by the existence of claims for other adjustments. This is an arguable issue. Whether and, if so, to what extent ANTA succeeds upon an application to call evidence in support of its claimed construction and/or in support of the implied terms for which it contends will remain to be seen, but what is common ground is that, to adopt the words used by the High Court in Royal Botanic Gardens and Domain Trust v South Sydney Council (2002) 186 ALR 299 at 292-293:

CSR Investments Pty Limited v Alcan Northern Territory Alumina Pty Limited

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