Johnson Tiles Pty Ltd v Esso Australia Limited

REASONS FOR JUDGMENT 1 In September 1998 an explosion and fire occurred at the respondents' ("Esso") Longford plant. Shortly thereafter the applicants commenced a representative proceeding against Esso under Pt IVA of the Federal Court of Australia Act 1976 (Cth) ("the FCA Act"). Esso brought a cross claim seeking contribution and indemnity from numerous cross respondents, including agencies of the State of Victoria ("the State entities"). 2 The applicants' proceeding in this Court was based on two causes of action: negligence and breach of s 52 of the Trade Practices Act 1974 (Cth). After numerous interlocutory challenges to the s 52 claims, a Full Court finally struck them out as untenable: see Johnson Tiles Pty Ltd (ACN 004 576 103) v Esso Australia Ltd (2000) FCA 1572. Although a Pt IVA proceeding requires a federal claim to found the jurisdiction of the Court (s 33G of the FCA Act), the Full Court concluded that the Court's accrued jurisdiction enabled it to hear and determine the negligence claims. 3 On 16 February 2001 the High Court granted Esso and the State entities special leave to appeal against the Full Court's decision that this Court has jurisdiction in respect of the negligence claims. In substance, Esso and the State entities claim that only the Supreme Court of Victoria has jurisdiction in relation to negligence claims, with the consequence that any proceeding based on such claims must be commenced and determined in that court, rather than in the Federal Court. As a condition of the grant of special leave, the High Court required Esso and the State entities to undertake that, in the event of the appeal succeeding, they will consent to orders that all interlocutory steps taken in the representative proceeding in this Court stand as interlocutory steps taken in any new proceeding commenced by the applicants in the Supreme Court. 4 The negligence claims are not statute barred until September 2004. Accordingly, the sole significance of the jurisdictional dispute is to determine whether the negligence claims are to be heard in this Court or in the Supreme Court. The present case is yet another example of the problems created by the return of the "arid" jurisdictional disputes that bedevilled litigation in the earlier part of the 1980s (Fencott v Muller (1983) 152 CLR 570 at 609). 5 The applicants and the group members they represent desire a hearing of their negligence claims in a court that has undoubted jurisdiction to hear those claims. When the representative proceeding was commenced in this Court no real issue was raised as to its jurisdiction to hear the matter. That situation changed after the Full Court struck out the s 52 claim and the High Court granted special leave to appeal against the Full Court's decision that the Court has jurisdiction in the matter. The jurisdictional dispute has now been further broadened as a result of Esso's application to amend its defence to challenge the constitutional validity of Pt IVA. Although a Full Court has upheld Pt IVA as valid (Femcare Ltd v Bright (2000) 100 FCR 331), on 15 December 2000 the High Court referred the application for special leave to appeal in that matter to a Full Court of the High Court to be heard as if it was an appeal. It is unlikely that the two jurisdictional issues will be resolved for some time as the parties indicated that the appeals will not be heard until towards the end of 2001. 6 It was in the above context that I listed the proceeding for directions and orders concerning the future conduct of the matter. The main issue I raised with the parties was whether the matter should remain in the Court to await the outcome of the appeals or whether it should now be cross vested under s 5(4) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Vic) ("the CVA") to the Supreme Court of Victoria. 7 Under s 5(4) of the CVA the Court may transfer the proceeding to the Supreme Court if there is a related proceeding pending in that Court and it is more appropriate that the proceeding be determined in that Court (s 5(4)(b)(i)) or if it is otherwise in the interests of justice that the proceeding be determined in the Supreme Court (s 5(4)(b)(iii)). Under s 5(7) the Court may transfer the proceeding, inter alia, on the application of a party or of its own motion. Section 11(3) provides that where a proceeding is transferred, subject to any order of the transferee court, the steps taken in the transferring court shall stand as if the steps were taken in the transferee court. 8 The applicants preferred option was for the proceeding to remain in this Court to await the outcome of the appeals in the High Court. Alternatively, they sought a stay of the proceeding in this Court so they could commence and pursue a group proceeding in the Supreme Court. The applicants least preferred position was a cross-vesting of this proceeding to the Supreme Court. The applicants' counsel stated that if the latter course was determined by the Court to be in the interests of justice, the applicants would wish to be afforded the opportunity to commence a group proceeding in the Supreme Court so the proceeding transferred from this Court could be consolidated or heard together with that proceeding. 9 The reasons for the applicants' preferences were not altogether clear. It appears that their main fear was that if the Federal Court proceeding was found to fail for want of jurisdiction then its transfer to the Supreme Court may not found jurisdiction in that Court. A further concern related to whether the Federal Court representative proceeding would be deemed by s 11(3) of the CVA to have been commenced prior to the Supreme Court having jurisdiction in group proceedings. In that regard, Pt 4A of the Supreme Court Act 1986 (Vic), which conferred that jurisdiction on the Supreme Court, only came into operation as from 1 January 2000. Understandably, the applicants were concerned to retain the benefit of the undertakings extracted from Esso and the State entities by the High Court and thereby minimise the risk of duplication of interlocutory proceedings and of liability for interlocutory costs incurred in this Court in the event it is found that the Federal Court is without jurisdiction in the matter. 10 Esso was not prepared to move the Court to cross-vest the proceeding in the Supreme Court but supported the Court doing so of its own motion. Esso was also not prepared to proffer undertakings to the effect of those given to the High Court, notwithstanding that the transfer would effectively deliver to Esso the result it is seeking on the appeal. 11 The State entities argued that the proceeding should not be cross-vested and should remain in this Court pending the outcome of the High Court appeals. That position is not easily reconciled with the State entities' claim that only the Supreme Court can have jurisdiction in the matter. However, the State entities argued that the course contended for by them was necessary if the State entities were to obtain the protection of s 11 of the Federal Courts (State Jurisdiction) Act 1999 (Vic), which would enable the Supreme Court to treat the Federal Court proceeding as validly brought in the Supreme Court in the event that the High Court allows the appeals of the State entities and Esso. The remaining cross respondents adopted the submissions of the State entities. 12 In Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572 French J (with whom Beaumont J and Finkelstein J agreed) stated (at [95]): "The question whether the common law claim should continue in this Court or should be stayed on the basis that it be pursued in the Supreme Court of Victoria is to be decided by determining whether or not this Court should decline to exercise its jurisdiction properly invoked in this matter. There can be no doubt that the Supreme Court of the State of Victoria is as well equipped as this Court to deal with a claim in negligence and the associated cross-claims. The action for negligence is one which could well have been commenced in the State Supreme Court. Nevertheless, the applicants having commenced their proceedings in this Court and having properly invoked federal jurisdiction, there would need to be demonstrated some reason for this Court declining to fulfil what would ordinarily be its obligation to exercise its jurisdiction. While the claim is a non-federal claim it is based not upon a statute peculiar to Victoria but upon the common law of Australia, albeit the question of liability may turn in part upon at least one Act of the Victorian Parliament, namely the Gas Industry Act 1994 (Vic) and the Victorian Gas Customer Service Code which is incorporated into the terms of gas retail licences issued under the Act. Further, and from a practical point of view, all parties have expended considerable time and incurred substantial costs in the proceedings in this Court. The statement of claim has been through a process of refinement. The discovery process is about eighty per cent complete and has cost millions of dollars according to counsel for the State Entities. The case is in the docket of a Judge who is thoroughly familiar with it. There is no reason now to impose upon the parties the additional burdens associated with this Court declining further to exercise its jurisdiction notwithstanding that it has before it an arguable claim of considerable importance and complexity. In my opinion, the Court ought not to decline the jurisdiction which it has. The negligence claim should therefore continue in this Court." 13 French J was dealing with the question of whether the Court "should decline to exercise its jurisdiction properly invoked in this matter" by staying the Federal Court proceeding because the federal claim had been struck out. In that context his Honour concluded that the Court ought not decline to exercise its jurisdiction and that the negligence claims should continue in this Court. 14 As the negligence claims were ready to proceed to trial, I fixed those claims for hearing in April 2001. The hearing date was vacated as a result of parallel criminal proceedings in the Supreme Court. However, more importantly for present purposes, the issue of whether this Court has jurisdiction in the representative proceeding is now to be finally determined in the two appeals to the High Court. Although two Full Courts have determined that the Court has jurisdiction, it seems to me that the fact that the High Court has granted special leave to appeal in one of the cases and is treating the other as an appeal to it, warrants the conclusion that the appeals have raised a real issue about this Court's jurisdiction, with the risks and uncertainty that entails for the future conduct of the proceeding in this Court. It is in that quite different context that I turn to consider the separate and distinct question of whether it is now in the interests of justice that the proceeding be transferred to the Supreme Court. 15 I have concluded that it is in the interests of justice that the proceeding be transferred to the Supreme Court of Victoria under s 5(4)(b)(iii) of the CVA. My reasons, cumulatively, for arriving at that conclusion are as follows.