Hughes Motor Service Pty Ltd & Ors v Wang Computer Pty Ltd [1978] FCA 105

Federal Court of Australia|1978-12-15

x | art 2. NR 6 [i supement No, OS. LEE , &C N Je his CATCHWORDS ~

Practice and procedure - Stay of proceedings - Discretion - Pending proceedings in State Suprere Court well] advanced -

Trade Practices Act 1974 ss.52, 53(a) and (c), 75; Federal

Court of Australia Act 1976 s.22; High Court Rules 0.63, r.1l

HUGHES MOTOR SERVICE PTV. LINITED & OPS. v. WANG COMPUG'R PRY. LIMLTOD

ORDER JUDGE MAKING ORDER: Bowen C.J. DATE OF ORDER: 15 Decerber 1978 WHERE MADE: Sydney

All parties be at liberty to apply on 7 days notice.

IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICY RAGISTRY) No. GLOl of 1978

KINGSFORD SMITH HIRE CARS (SYDNEY AIRPORT) PTY. LIMITED

BOWEN C.J. This is an application by Wang Computer Pty. Limited (hereafter called "Wang") against lWughes Motor Service Pty. Limited, Kingsford Smith Hire Cars (Sydney Airport) Pty. Limited, Kingsford Smith Transport Pty. Limited, Hire Cars of New South Wales Pty. Limited, Regal Hire Cars Pty. Limited and Gregory Aitkenhead

trading as Gloucester Service Station (hereafter called "lire Car

Group" or "Group") for an order that proceadines brought in the General Division of this Court for damages against Wang arising out of alleged contravention of ss.52 and 53(a) and (c) of the Trade Practices Act 1974 should be stayed either absolutely or, in the alternative, pending the determination of certain other proceedings in the Supreme Court of New South Wales.

On 28 June 1977 the Hire Car Group commenced proceedings against Wang in the Supreme Court of New South Wales, Common Law Division, Commercial List (No. 4462 of 1977). Also joined as defendants in those proceedings were Robert Waters and Robert Waters Associates Limited (hereafter called "Waters Associates"). The following 1s a summary of the statement of claim. It was alleged that the Hire Car Group owned and operated 103 hire cars, 22 buses and a garage to maintain and refuel the vehicles and carry on business as a service station; that Wang sanufactured designed and installed computer systems and equipment; chat Mr. Waters represented he was a computer consultant and systems analyst and designer and programmer; and, that Waters Associates were computer consultants and computer system designers, analysts and programmers. It was further alleged that the Hire Car Groun sought Wang's advice concerning the feasibility of installing for the Group a complete accounting system by computer and in doing so to Wang's knowledge relied on Wang's skill, judgrent and advice; that Wang advised the Group that the installation was feasible and its equipment would function and meet the Group's requirements and that Mr. Waters and Waters Associates were competent and skilled consultants. Then followed the

allegation of six representations as to the accuracy of Wang's

recommendaLlions and advice as to the suitability of its equipment; that the Group contracted with Wang and that the Group consulted with Mr. Waters and Waters Associates for its installation; that 1t was installed; and that the Group contracted with Waters Associates for implementation of the system devised by Mr. Waters. It was alleged that the equip- ment was incapable of satisfying the Group's requirements and was totally inadequate, in consequence whereof the Group suffered damage.

Three separate causes of action against Wang were raised, as a basis for claiming the damage. The first was based upon negligence in relation to Wang's advice to the Group and its recommendation of Mr. Waters and Waters Associates, also in relation to its failure to exercise proper care to ensure its representations were correct and 'ts fazrlure to rectify faults. The second was based upon the six representations which were alleged to be part of the express terms of the agreement belreen the Group and Wang and upon their having been breached. The thizd was based upon the same representations which were alleged to be misleading or deceptive conduct in trade or cormerce in

contravention of s.52 of the Trace Practices Act 1974 and to be

false representations in trade or commerce in contravention of s.53(c) and (f).

Separate claims were included against Mr. Waters and Waters Associates alleging reliance upon their advice, alleging that Mr. Waters designed a system and recommended Waters Associates; 'that a separate set of representations was made by Mr. Waters;

that the Group in relience upon the recommendations contracted

with Waters Associates to implement the system; that 1t was ampleacnted but remained incomplete and incapable ot satisfying the requirements of the Group and was totally inadequate.

The claims against Mr. Waters were based first, upon negligence in failing to design an appropriate system and in failing properly to advise the Group whereby the Group suffered damage; and secondly, upon the representations by Mr. Waters being express terms of the agreement between Waters Associates and the Group and such terms having been breached whereby the Group suffered damage. The statement of claim ended by claiming against Wang, Mr. Waters and Waters Associates jointly and severally and in the alternative darages of $250,000,

On il July 1977 Yang entered an appearance. On 26 July 1977 the solicitors for Wang requested particulars in the form of 137 nuvbered questions. Certain answers were given by the solicitors for the Group on 27 July 1977.

On 3 August 1977 the solicitors for the Group wrote to the solicitors for Wang enclosing an arenced statement of claim and asking for their consent to its being filed. This contained the same allegations as before concerning the advice and representations given and made by Vang and by Mr. Waters and the t. -s of the agreement with Wang and Waters Associates. There ere added Claims against Wang, based unon allegations that the Group mad? known to Wang the purpose for which the equipment was required and relied on Wang's skill and judgment; that there was an implied condition and a warranty the goods would be fit for the purpose; that the contract between the Group and Wang was for

the purchase of goods by description; and that the equipment

was nol rcaesonably fit for the purpose and was not of rerchantabla quality, 1n consequence of which the Group sufiered damage. The final paragraph claiming damages was in the same terms as in the original statement of claim, although it seems the specific

However, the most significant change, so far as the present application for a stay is concerned, was that paragraphs 17, 18 and 19 of the statement of claim relating to ss.52 and 53{c) and (£) of the Trade Practices Act were omitted.

On 4 August 1978 the Group filed a notice of motion for directions. On 17 August 1978 a Supreme Court Judge gave directions giving the Group leave to file the amended statement of claim, giving the defencants 21 days after sorvice of the amended staterent of claim to request particulars and standing the matter over for further mention to 21 September 1978. The amended statement of claim was filed on 23 August 1978. By letter dated 13 September 1978 Wang's solicitors asked for further and better particulars in 119 numbered questions. On 21 September 1978 the Supreme Court Judge directed that the Group provide proper replies to particulars on or before 4.00 p.n. on 28 September 1978; and, that the defendants file and serve defences on or before 4.00 p.m. on 12 October 1978. 13 Ecnour further laid down a timetable for discovery, inspection, interrogatories and answers to interrogatories, the last- mentioned being required on or before 19 January 1979. He finally directed the matter be mentioned on 8 February 1979.

By letter dated 28 September 1978 the Group's solicitors

wrote giving certain particulars. On 3 November 1978 the

solicitors for Wang filed its statement of defence; on 4 November 1978 they wrote seeking further and better particulars. I turn now to the proceedings in the federal Court of

Australia. On 5 October 1978 the Hire Car Group issued a writ with statement of claim endorsed against Wang out of this Court. In this statement of claim they alleged the same representations as having been made by Wang both as regards the cquipmant and as regards the competence of Mr. Waters and Waters Associates as consultants to advise, design and develop a programre for the Group. It was further alleged the representatrons were untrue and were misleading or deceptive or likely to mislead or deceive and that Wang had thereby contravened ss.52, 53(a) and 53(c) of the Trade Practices Act in consequence of which the Group had suffered damage. They sought an cxeder for damages pirsuant to s.82 of the Act. Mr. Waters and Waters Associates were not joined as defendants. Yang entered an apyearance on 16 Octcber 1978 but has not yet filed a defence. On 20 Novemb2r 1978, Wang filed the application for a stay which is now before me.

The procedure of this Court in such a case 1s coverned by the Rules of the High Court so Far as they are cavable of application and subject to any directions of the Court or a Judge. Order 26 r.18 of those Rules would not appear to be of any assistance to the applicant. It cannot be said of the statement

of claim in this Court that 1t does not disclose a reasonable

cause of action (0.26 r.18(1); General Stecl Industries Ine.

v. Commissiorer for Railways (N.S.W.) (1964) 112 C.L.R. 125 at

p-129); nor can it be said that the action is "frivolous" or

"vacatious" as those terms have been interpreted in the High

Court (0.26 r.18(2); Dey v. Victorian Rallyvays Covalssioners

(1949} 78 C.L.R. 62; General Steel Indu trics Inc. v.

Some assistance may be derived from 0.63 r.l which provides the Court or a Justice may, at any time after the institution of a proceeding, direct a stay of proceedings either as to the whole or part of the proceeding. But this rule does not indicate the principles upon which that discretion will be exercised although 0.63 r.2 should perhaps be regarded as to some extent explanatory of its ambit. Order 63 r.2 provides for an application to stay proceedings on the ground that there is not a reasonable or probable cause of action or that the procseding is vexatious or oppressive or is an abuse of the precess of the Court. It is difficult to see that the proceedings in this Court should be

regarded as falliag within the vords "vexatious" or "oppressive" or "an abuse of the process of the Court" as those words have hitherto been understood by lawyers in this country, since this

is the only Court an which the Hire Car Group's cause of action

under the Trade Pract:ces Act can be litigated. Evan if one

seeks to apply to the words "vexatious" and "oppressive" in

0.63 r.2 the "liberal" or "roralliy neutral" interpretation

referred to by their Lordships in The Atlantic Star (1974)

A.C. 436 and MacShannon v. Rockware Glass Limited (1978) 2 W.L.R.

362 it seems doubtful whether they should be held to reach the present case. And it would not seem proper to describe as an abuse of the process of the Court the bringing of proceedings

which, as I have said, can only be brought in this Court.

Hovever that may be, it 1s my opinion that thas Court has a general power to control its own proceedings. Order 63

r.l appears to be consistent with that view. The Full Court

of this Court in L. Grollo Darwir Mavagement Pty. Limited v.

Victor Plaster Products Pty. Limited (1978) 19 A.L.R. 621

exercised such a general discretion in granting the limited stay which was ordered in that case. This brings me to the question: what principles should be followed in exercising the Court's general discretion to stay its own proceedings? In my opinion, the Court may usefully look for assistance to the principles discussed in relation to

lis alibi cendens (see MacShannon v. Rockware Glass Liritcd

(1978) 2 W.L.R. 362; and see generally Halsbury's Lavs of

England 4th Edn Vol.8 p.506; Chechire's Pravato International

Lav 9th Edn (1974) pp.119 et seq; Dicey and Morris Conflict of

Laws 9th Edn (1973) pp.215 et seq; and Nych, Conflict of Laws

in Australia 3rd Edn (1976) pp.55 et seq; Pryles, Liberalising

the Rule cn Staving Actions ~ Towards the Doctrine of Torvm Non Conveniens (1978) 52 A.L.J. 678). Broadly speaking, 1£ the Court

followed the English authorities it would balance any advantage to the plaintiff in this Court against any Gisedvantage to the

defendant in exercising its discretion (cf. Watton v. Lombard

Australia Limited (J970) Australian Argus L.R.77). I am of

opinion the Court should at least do that. But should it not also take other factors into account? The English Judges have not in the cases, to which I have referred, directed their

minds to the situation, which arises where there exists side

by side a system of State and Territorial Supreme Courts on the one hand and a system of Federal Courts on the other. In Australia, some cases, rather dislant in their facts from the present case, have occurred, where there might be said to have been competition between the two systems. I have already

referred to L. Grollo Darwin Manacement Pty. Limited v. Victor

In Jones v. Jones (1928) 40 C.L.R. 315 comity between State and Federal Courts of co-ordinate jurisdiction appears to have been taken into account in refusing an application to the High Court in its original jurisdiction for leava to execute in Victoria a writ of attachnent issued out of the Supreme Court

of New South Wales. A similar applicaLlion had already been

refused by the Supreme Court of Victoria. 'fn Union Steamshio

Company of New Z2aland Limited v. The Caradale (1937) 56 C.L.R.

277 an action had been com-enced in the Sucreme Conrt ot Victerir against the owner of a ship for danages arising out of a colliszon. Subsequently, the defendant in those proceedings commenced proceedings 1n the High Court in its admiralty jurisdiction for damages against the other ship arising out of the same collision. An application in the High Ccure for a stay of its proceedings

was refused, Dinon J. woicghed the inconverience, tne fact tha certain different renedies would be available in the High Court and the fact that the matter would in the High Court he decided

without a jury in accordance with the traditional procedure in

admiralty. In The Qucen v. Langdon; Ex parto Langdon (1953) 88

c.L.R. 158 Taylor J. in a diversity case refused an application

cee ee ope en me ree me ei ae cme een eens ncertre orem enmeruanen=

by a wife for custody and maintenance. There was cOacurrent jurisdiction in the liigh Court and the Supreme Court of Tasmania. Wis Honour expressed the view that 1t would be most inappropriate for the High Court to make such an order where there existed courts specially constituted for the purpose and which might, if and as occasion required, review the macter

from time to time. In Maple v. David Svre & Co. Lirited (1975)

1 N.S.W.L.R.97 the conflict was between proceedings brought in the Supreme Court of Victoria and the Supreme Court of New

South Wales. Applying the principles laid down in The Atlantic

Star Case (supra) the New South Wales Suprere Court granted a stay of its proceedings.

In my opinion there are many matters to be considered in exercising this Court's discretion besides weryghing the advantege to the plaintiff against the disadvantage to the defendant. Sore might be comprised in the princizle of forum

that were adopted. This would involve consi@eration of circurstances relating to the witnesses. In cases where, as in the present case, many of the issues of fact and the relief claired were the same, it would anvolve considera~ tion of the fact tnat the work done on pleadings, particulars, discovery, iunterrcgatories and preparation generally might be found, when the hearing of the second case came on, to have been wholly or partly thrown away. This would be due to the creation of an issue estoppel in respect of the making of the represen-

tations and their falsity (Blair v. Curran (1939) 62 C.L.R. 464

at pp.531-532; Brewer v. Brewer (1953) 88 C.L.R. 1 at pp.l4 et

seq; cf. The Collateral Estoppel Effect of Prior State Court

Findings in Cases vithin B.clu. ive Federal Juriedicticn 91

Haxsvard L.R. (April, 1978) p.12St) and to the fact that the Hire Car Group, if they were successful against Wang, could

not recover the same damages twice (cf. Hills v. Co-operative

Wholesale Society Limited (1940) 2 K.B. 435 at pp.4d38-440).

In addition, the Court might have to consider other matters. Thus in some sense the public interest may be involved in deciding whether two cases claiming the same damages and involving substantial issues of fact, which are the same in each case, should be allowed to proceed simultaneously in the State and Federal systems of justice. This would certainly open the way to tactical manoeuvres in which the appearance might well be presentcd to the public of two court systems competing to see who determined the common facts first. It would be unfortunate if we adopted practices and procedures

which facilitated this. In MacShannon v. Rockware Glass

Limited (supra at ppo.368 et seq) Lord Diplock thought it

relevant to consider the substential waste of time and effort, if it became a common practice to bring in England actions arising out of industrial injuries in Scotland wnen the matters were referred by verade unions to Englash solicitors for then, It appears to me to be proper to tale into account all the matters, which I have mentioned. Turthermore, in some cases, the public interest may be involved in the very relief sought.

The consumer protection provisions of the Trade Practices Act

are directed towards protecting the public. Even in a case such as the present this public interest is to sore extent

involved though not, in my opinion, to such an extent that it

should lead me to reject the application for a stay. In other cases, as, for exa ple, where the Trade Practices Commission or a private individual or company proceeds under s.52 or s.53

of the Trade Practices Act seeking an injunction to restrain

advertising, which may mislead or deceive the public generally, the weight of public interest in the scales in favour of rejecting an application for a stay would be very heavy.

It appears to me to be undesirable co formulate 1n precise terms at this stage, the principles which this Court will follow zn exercising its discretion to grant or refuse a stay. These will no doubt emerye From case to case.

Turning to the present case, 1t appears to me that juris- diction in relation to the claim which the Hire Car Grouv now makes 1n the Federal Court can be exercised only by this Court and cannot be exercised by the State Supreme Court. In ry opinion, they are entitled to core to the Federal Court to establish their right and they should not be dgonied the ovpor- tunity of doing so forever, sit ply because there are on foot other proceedings involving similar issues of fact and claiming the same damages in another court. For this reason I am not prepared to exercise my discretion in granting an absalate stay of the procecdings in this Court.

On the other hand, it is clear that the Hire Car Group originally chose the Supreme Court of New South Wales as the forum for determination of their dispute with Wang and indeed for their related dispute with Mr. Waters and Waters Associates,

They have proceeded since June 1977 with those procecdings and

as late as Sentember 1978 cbtained directions from the Judge dealing with Commarcial Causcs in the Supreme Court specifying in some detail a timetable for discovery, inspection, anter- rogatories and answers to interrogatories and standing tha Matter over to 8 February 1979 for further mention. The proceedings in the Supreme Court are well advanced. Counsel appeared to anticipate that provided the timetable was observed as directed there might be a prosnect on 8 February 1979 erther of obtaining from the Supreme Court a reasonably early date for hearing or at the worst, obtaining an early entry in the call- over in the Commercial List, at which call-cver a reasonably early hearing date might be e..pected to be given. It is further to be observed that it 1s only in the proceedinss tn the Suprere Court that oréers can be nade which will dispose of all setters in dispute between the various parties. Eoth Courts are recurred to endeavour to detexnine as far as possible ail matters in controversy between the parties and to avoid all multiplicity

of proceedings concerning any of those mattcrs (Tedoral Court of

Australia ?ct 1976, s.22; Sunreme Covrt Act 1970, s.63). 'The proceedings brought in the Federal Court are narrower in col.poss and will not bind Mr. Waters or Waters Associates. If no stay

is granted in this Court and both sats of proceedings are allowed to continue the result may well be that the intervening procedures

prior to hearing may, to a sianificant extent, be wasted in those

proceedings which come on to be heard last. Painally, if dawages

are awarded in, for example, the Supreme Court proceedings before the Federal Court proceedings come on for hearing, then it would seem that the claim for damages in the Tederal Court proceedings wil] necessarily fall to the ground.

Tt apoears to ma thit justice and good sensa require that there should so far as praccicable be an end to liliyation ard that the law should strave against permitting multoplicity of proceedings in relation to similar issues. The considerations pointing to the exercise of discretion in favour of granting a limited stay in the present case are very strong.

I have come to the conclusion that if a temporary stay is ordered with a procedure provided for the Hire Car Group to obtain a lifting of the stay 1f they should abandon the proceedings in the Supreme Court or if circumstances arise which make it appropriate to lift the stay, then justice will be done. If the Supreme Court prececdings core on first and 1t is consicered by the Hire Car Group thit they have any residual right to be asserted in the Federal Court they ray

then come to this Court and assert their richt here. The

Trade Practic7s Act 1tself is not inconsistant with che prior

disposal of issues in another court (see s.75). In my opinion

the proceedinvs in the Su»nreme Court should first yo to trial.

(1) That tne proccedings setveen Hughes totor Service Pty. Lirated, Kingsford Smith Hire Cars (Sydney Airport) Pty. Limited, Kingsford Snith Transport Pty. Limited, Hire Cars of ilew South Wales Pty. Limited and Regal Hire Cars Pty. Lamited and Gregory Aitkenhead trading as Gloucester Service

Station, plaintiffs and Wang Computer Pty. Limited,

Y STacts. 6 fp a Uru cony or the Pees 2.3 Por io. one non tuo! nas Honour the Caner Tucjge, S22 Nigel Boven cs aA , | ORCC oe Oa Lhe ™ en { Ansociato { }

iw j futed: 15 12-78 j

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