Griffin Projects Pty Ltd v Pivot Ltd

Federal Court of Australia|2000-10-13|Before: Deane JJ, Sackville J

REASONS FOR JUDGMENT 1 At a directions hearing in these proceedings, held on 31 August 2000, I raised with the parties the possibility that the proceedings should be transferred to the Supreme Court of New South Wales. I provided the parties with an opportunity to file submissions on the topic and any evidence upon which they intended to rely in support of their respective submissions. 2 The parties have now filed written submissions. They also made brief oral submissions at a hearing on 12 October 2000. At that hearing, I made an order for transfer to the Supreme Court of the matters for determination in the proceedings in this Court. I said I would provide written reasons for the order. These are the reasons.

submissions 3 The applicant conceded that the Court has power to transfer the proceedings to the Supreme Court pursuant to s 86A(1) of the Trade Practices Act 1974 (Cth) ("TP Act"). The applicant submitted, however, that the proceedings should remain in this Court. The applicant contended that the "most significant part of its case" is an action against the first respondent ("Pivot") under ss 52, 53(a) and 53(c) of the TP Act. It said that the Federal Court has developed expertise in the interpretation and application of Part V of the TP Act and that it is in the interests of justice that this Court should determine the issues arising under that Act. 4 At the hearing on 12 October 2000 the applicant advanced a further contention. The applicant's counsel said that it has made an offer to the second respondent ("Duff") to settle the claim against it. It was submitted that no order for the transfer of the proceedings should be made until the outcome of settlement negotiations is known. 5 Pivot took a similar approach to that of the applicant, although its submissions focussed on s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), rather than s 86A(1) of the TP Act. Pivot submitted that, although the claim by the applicant against Duff is a contractual claim, the federal elements of the proceeding are substantial and do not require resolution of any technical issues that might be suitable for the reference procedure available under Part 72 of the Supreme Court Rules (NSW). Nonetheless, Pivot submitted that the purely contractual issues between the applicant and Duff should be determined before the Court considers the applicant's claim against it under the TP Act. 6 Duff submitted that the non-federal claim pleaded against it is not within the accrued jurisdiction of the Federal Court. It said that the claim against it is entirely contractual in character, arising out of an allegation that it repudiated a contract with the applicant, and that the claim under the TP Act against Pivot is entirely unconnected with the contractual claim. It follows, so it was said, that there is no common substratum of facts underlying each set of claims and that they cannot be said to be part of a single controversy: see Fencott v Muller (1983) 152 CLR 570, at 609-610 per Mason, Murphy, Brennan and Deane JJ; Re Wakim; Ex parte McNally (1999) 73 ALJR 839. 7 Duff's "fallback" position was that the Court should exercise its discretion in favour of transferring the proceedings. It submitted that, on the current pleadings, the contractual claims must be determined before the Court can consider the allegations against Pivot arising under the TP Act. Duff also submitted that the issues against it, at least so far as damages are concerned, raise technical issues that will be suitable for determination by a referee appointed under Part 72 of the Supreme Court Rules. Since, for constitutional reasons, a similar procedure is not available in this Court, there is an advantage to the proceedings being transferred to the Supreme Court.

THE APPLICANT'S CASE 8 The applicant's case is pleaded in the amended particulars of claim. What follows is a brief summary of the applicant's case as pleaded. 9 By contract dated 17 June 1998, the applicant agreed with HiFert Pty Ltd to design and construct new facilities at Kooragang Island, Newcastle. Between March 1998 and July 1998, the applicant had discussions with Pivot with a view to identifying competent subcontractors who might be invited to tender for work in connection with the head contract. Pivot represented that Duff had the relevant expertise to carry out the necessary work and had performed well on similar projects. The applicant relied upon these representations and invited Duff to tender for the subcontracting work. 10 In May 1998, Pivot made further representations to the applicant concerning the suitability of Duff as a subcontractor for the project. 11 The applicant relied on the representations made by Pivot in entering into a subcontract with Duff for works on the project. The subcontract provided that the works were to commence on 7 September 1998 and to be completed by 30 October 1998. 12 The representations made by Pivot were misleading and deceptive because, inter alia, Pivot was aware that Duff had performed poorly on other projects and was not a suitable subcontractor for the project. 13 Between 11 and 17 September 1998, Duff wrongfully repudiated the subcontract. On 18 September 1998, the applicant accepted the repudiation as terminating the subcontract. 14 In consequence of the applicant's reliance upon the representations made by Pivot, it suffered loss and damage. The loss and damage includes rectification work and the loss of business opportunities. A number of heads of damage identified in the amended particulars are said to be "the direct result of the non-performance by [Duff] of its contractual obligations". Other heads of damage are said to flow from Duff's "wrongful repudiation of the subcontract". 15 The applicant also pleads that Pivot was in breach of its duty of care to provide correct and reliable information concerning the suitability of potential subcontractors. The particulars of damage in relation to this cause of action are the same as those provided in respect of the claim under the TP Act. 16 The case against Duff is founded solely on its wrongful repudiation of the subcontract. The damages claimed against Duff are the same as those sought against Pivot.

REASONING 17 For the reasons I gave in Crandell v Servier Laboratories (Aust) Pty Ltd [1999] FCA 1461, any order for transfer of the proceedings ought to be made under s 86A(1) of the TP Act, rather than under s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). Section 86A provides as follows: "(1) Where - (a) a civil proceeding instituted (whether before or after the commencement of this section) by a person other than the Minister or the Commission is pending in the Federal Court; and (b) a matter for determination in the proceeding arose under Part IVA, IVB or Division 1, 1A or 1AA of Part V; the Federal Court may, subject to sub-section (2), upon the application of a party or of the Federal Court's own motion, transfer to a court of a State or Territory the matter referred to in paragraph (b) and may also transfer to that court any other matter for determination in the proceeding. (2) The Federal Court shall not transfer a matter to another court under sub-section (1) unless the other court has power to grant the remedies sought before the Federal Court in the matter and it appears to the Federal Court that - (a) the matter arises out of or is related to a proceeding that is pending in the other court; or (b) it is otherwise in the interests of justice that the matter be determined by the other court. (3) Where the Federal Court transfers a matter to another court under sub-section (1) - (a) further proceedings in the matter shall be as directed by the other court; and (b) the judgment of the other court in the matter is enforceable throughout Australia and the external territories as if it were a judgment of the Federal Court." 18 There was no dispute that the Supreme Court has power to grant the remedies sought before this Court. The question is whether it is "otherwise in the interests of justice that the matter be determined" by the Supreme Court of New South Wales. In my opinion it is, for the following reasons: · There is no federal element in the applicant's claim against Duff. That claim is purely contractual in nature. · The claim against Pivot is, in substance, dependent upon the applicant succeeding in its contractual claim against Duff. The damages said to flow from Pivot's alleged contraventions of the TP Act, for the most part, are expressed to flow from Duff's failure to perform its contractual obligations. · There is a strong argument that the contractual claim against Duff, at least so far as liability is concerned, should be determined prior to the hearing of the case against Pivot. Both respondents support this course of action. If it were to be adopted, the first and possibly determinative stage of the case would involve no federal element. · There is a good chance that the most convenient and expeditious course in relation to the assessment of damages (should liability be established) will be to appoint a referee pursuant to Part 72 of the Supreme Court Rules. An equivalent procedure is not available to this Court. On the material available to me, it seems likely that the assessment of damages will involve issues typical of building disputes and thus be suitable for determination by a referee. 19 I do not think that any countervailing considerations are of sufficient strength to warrant the proceedings remaining in this Court. In particular, there is no reason whatever to doubt the Supreme Court has the requisite expertise to deal with any issues that might arise under the TP Act. There are no special features of this case that point to the need for specialist expertise on the part of the Court. 20 I accept the statement made by the applicant's counsel that the applicant has made an offer to Duff in an endeavour to settle the proceedings against it. However, it appears that the applicant made the offer very shortly before the hearing of 12 October 2000 and that Duff has not had an opportunity to consider or respond to it. 21 Had the parties reached an advanced stage of negotiations, there perhaps may have been some force in the contention that an order for transfer should not be made pending the finalisation of discussions. But there is nothing to indicate that the offer made by the applicant is likely to result in an early resolution of the proceedings between it and Duff. And of course there is nothing to prevent settlement discussions taking place between the parties should an order for transfer be made. 22 In my opinion, for the reasons I have given, it is in the interests of justice for the proceedings to be transferred to the Supreme Court of New South Wales. I have reached this conclusion independently of the jurisdictional question raised by Duff. I should record, however, that I doubt that Duff's submission on the jurisdictional question is well founded. 23 Accordingly, I order, pursuant to s 86A(1) of the TP Act, that the matters for determination in proceedings in this Court, N 1487 of 1999, be transferred to the Supreme Court of New South Wales. The costs of the hearings of 31 August 2000 and 12 October 2000, and of the preparation of written submissions on the question of transfer of the proceedings will be costs in the cause. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice SACKVILLE.

Counsel for the Applicant: P Tomasetti and J Johnson

Solicitor for the Applicant: Colin Biggers Paisley

Solicitor for the 1st Respondent: Blake Dawson Waldron

Trade Practices Act 1974(Cth)

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