Rossmick No. 1 Pty Ltd v Bank of Queensland Ltd

NEW SOUTH WALES DISTRICT REGISTRY NSD 1564 of 2007

NEW SOUTH WALES DISTRICT REGISTRY NSD 1712 of 2007

Introduction 1 The applicants in each proceeding move on a motion filed, in the case of NSD 1564 of 2007 ('the Rossmick Federal Court proceeding'), on 22 November 2007 and, in the case of NSD 1712 of 2007 ('the Jude Federal Court proceeding'), on 21 November 2007. Notice of those motions are in identical form and both seek an order that, pursuant to s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) ('the Cross-vesting Act') the proceeding be transferred to the Supreme Court of New South Wales ('the Supreme Court'). 2 I shall collectively refer to the applicants in both proceedings as the OMB parties and collectively refer to the respondents in both proceedings as the Bank parties. The Bank parties oppose the transfer of these proceedings to the Supreme Court. 3 Section 5(4) of the Cross-vesting Act relevantly provides as follows: 'Where: (a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Federal Court … (in this subsection referred to as the first court ); and (b) it appears to the first court that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory and it is more appropriate that the relevant proceeding be determined by that Supreme Court; (ii) having regard to: (A) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been incapable of being instituted in that court, apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and (B) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been capable of being instituted in the Supreme Court of a State or Territory, apart from this Act and any law of a State or Territory relating to cross-vesting of jurisdiction; and (C) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub-subparagraph (B) and not within the jurisdiction of the first court apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and (D) the interests of justice; it is more appropriate that the relevant proceeding be determined by that Supreme Court; or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory; the first court shall transfer the relevant proceeding to that Supreme Court.' 4 In other words, before this Court makes the order sought in each proceeding, it must appear to the Court that: (1) In each case of the Rossmick Federal Court proceeding and the Jude Federal Court proceeding, the proceeding arises out of, or is related to, another proceeding pending in the Supreme Court and it is more appropriate that the relevant proceeding be determined by that Court; or (2) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court.

Relevant Background 5 It is not in dispute that: (1) By an agreement in writing dated 14 October 2004 between the Bank of Queensland Limited ('the Bank'), Rossmick No. 1 Pty Ltd ('Rossmick 1'), Mr Chapman ('Chapman') and Mr Bradley ('Bradley'), said to be Directors and Principals of Rossmick 1 at all material times (the 'Maroubra Junction OMB Agreement'), the Bank appointed Rossmick 1 as its agent to operate an Owner Managed Branch (OMB) that was established at Shop 7, Maroubra Road/Anzac Parade, Maroubra Junction, Sydney. (2) By an agreement in writing in substantially identical terms dated 14 October 2004 between the Bank, Rossmick No. 2 Pty Ltd ('Rossmick 2'), Chapman, Bradley and Mr Nolan ('Nolan'), said to be Directors and Principals of Rossmick 2 at all material times (the 'Hurstville OMB Agreement'), the Bank appointed Rossmick 2 as its agent to operate an OMB that was established at 243 Forest Road, Hurstville, Sydney. (3) By an agreement in writing in substantially identical terms to the earlier two agreements, dated 23 September 2005, between the Bank, Jude Financial Services Pty Ltd ('Jude') and Mr Gardner ('Gardner'), said to be the sole Director and Principal of Jude at all material times (the 'Bathurst OMB Agreement'), the Bank appointed Jude as its agent to operate an OMB that was established at 39 William Street, Bathurst. 6 Controversy arose between the Bank on the one hand and Rossmick 1, Rossmick 2, Jude and the individual OMB parties as directors of the respective entities, in relation to a range of issues. 7 As a result, on 30 May 2007, Rossmick 1, Rossmick 2, Chapman, Bradley and Nolan commenced a proceeding against the Bank parties in the Industrial Court of New South Wales ('the Industrial Court') seeking orders pursuant to s 106 of the Industrial Relations Act 1996 (NSW) ('the IR Act') in relation to the Maroubra Junction OMB Agreement and the Hurstville OMB Agreement ('the Rossmick IC proceeding'). Similarly, on 7 June 2007, Jude, Gardner and Ms Gardner commenced a proceeding against the Bank in the Industrial Court seeking orders pursuant to s 106 of the IR Act in relation to the Bathurst OMB Agreement ('the Jude IC proceeding'). The applicants in those proceedings also sought orders in relation to collateral agreements and broader 'arrangements' said to have been made between the parties. 8 On 2 August 2007, the Bank parties commenced a proceeding in this Court ('the Bank's Federal Court proceeding') seeking a series of declarations that the Industrial Court did not have jurisdiction or power under s 106 of the IR Act to make orders sought by the OMB parties in the various proceedings commenced by them before the Industrial Court concerning the OMB agreements. 9 On 8 August 2007, Rossmick 1, Rossmick 2, Bradley, Chapman and Nolan commenced the Rossmick Federal Court proceeding against the Bank. This proceeding sets out particular representations said to have been made by the Bank parties and arrangements made between the Rossmick parties and the Bank, Mr Liddy, Mr Quinn and Mr Allsop and the relevant OMB parties concerning the Maroubra Junction and Hurstville OMB agencies. The contended representations on the part of the Bank parties and the arrangements that are said to have been made between the Bank parties and the relevant OMB parties, are set out in a lengthy pleading in the Rossmick IC proceeding (IRC928/2007). 10 Similarly, on 27 August 2007, Jude, Gardner and Ms Gardner commenced the Jude Federal Court proceeding asserting particular representations by the Bank parties and arrangements made between the Bank, Mr Liddy, Mr Quinn and Mr Allsop and the relevant OMB parties concerning the Bathurst OMB agency. The Jude arrangements and contended representations on the part of the Bank are set out in the Jude IC proceeding (IRC927/2007). 11 The OMB parties in these various proceedings contend that they were misled as to material matters in connection with the establishment and operation of each branch, acted in reliance upon the relevant matters, and suffered loss. They also contend that arrangements and agreements were made arising out of the pleaded conduct. Put broadly, the OMB parties seek remedial orders pursuant to the Trade Practices Act 1974 (Cth) ('the TPA') and the Fair Trading Act 1987 (NSW) ('the FTA (NSW)') in the Federal Court proceedings (and other relief) and, in the IC proceedings, orders are sought pursuant to ss 106 and 107 in respect of contended conduct of 'inducement'. 12 On 2 November 2007, the Supreme Court (Hamilton J) made orders removing the Rossmick IC proceeding and the Jude IC proceeding to the Supreme Court. The first of those removal orders was stayed until one week after an order is made by this Court transferring the Rossmick Federal Court proceeding to the Supreme Court and the second of those removal orders was stayed until one week after an order is made by this Court transferring the Jude Federal Court proceeding to the Supreme Court. 13 On 11 December 2007, Greenwood J heard two motions in the Bank's Federal Court proceeding. By the first, the OMB parties sought an order pursuant to s 5(4) of the Cross-vesting Act that the proceeding be transferred to the Supreme Court. By the second, the Bank parties sought an order that particular paragraphs of the defence of the OMB parties be struck out, although, in submissions, the order sought was more confined. On 7 March 2008, his Honour re-opened the hearing to hear further evidence on the transfer motion and on 12 March 2008, he dismissed the transfer motion and ordered that a number of paragraphs of the defence of the OMB parties be struck out: Bank of Queensland Limited (ACN 009 656 540) v Industrial Court of New South Wales (2008) 170 IR 427. 14 On 8 April 2008, Spender J granted leave to the OMB parties to appeal against Greenwood J's judgment. The Full Court that heard this appeal rightly construed it as being restricted to challenging the orders of the primary judge made on the strike-out application; indeed, it was common ground that no appeal could be brought against an order dismissing an application to cross-vest proceedings to another court under the Cross-vesting Act: s 13 of that Act. On 23 May 2008, the appeal was allowed in part; a number of paragraphs of the defence of the OMB parties were struck out with the OMB parties being granted leave to re-plead generally: Rossmick No. 1 Pty Ltd v Bank of Queensland Limited [2008] FCAFC 81. 15 On 19 June 2008, Greenwood J set the Bank's Federal Court proceeding down for hearing on 13 October 2008. On 7 July 2008, the OMB parties filed and served an amended defence and on 14 July 2008, the Bank parties filed a motion seeking to strike out a number of paragraphs of the amended defence. This motion was heard by Logan J on 18 and 22 July 2008 when his Honour reserved. 16 This was the state of play in the Bank's Federal Court proceeding when the transfer motions in the Rossmick Federal Court proceeding and the Jude Federal Court proceeding referred to in [1] above came before me on 7 August 2008. 17 Subsequently, on 19 September 2008, Logan J ordered that a number of paragraphs of the amended defence of the OMB parties be struck out: Bank of Queensland Limited v Industrial Court of New South Wales (No. 2) [2008] FCA 1435. 18 On 25 September 2008, the OMB parties filed an application for leave to appeal from the judgment of his Honour, Logan J, and that application, together with any ensuing appeal, will be heard by a Full Court on 26 November 2008. In the meantime, Greenwood J vacated the dates for the hearing of the Bank's Federal Court proceeding commencing on 13 October 2008, pending the hearing of the leave application and any ensuing appeal from Logan J's judgment. 19 This is the state of play in the Bank's Federal Court proceeding at the time of writing these reasons.

The Traderight Proceedings 20 Traderight (New South Wales) Pty Ltd ('Traderight') (together with a number of individuals) commenced proceedings in the Equity Division of the Supreme Court claiming relief pursuant to ss 82 and 87 of the TPA; ss 68 and 72 of the FTA (NSW); s 106 of the IR Act; s 12GM of the Australian Securities and Investment Commission Act 2001 (Cth) ('the ASIC Act'); and damages for breach of contract and breach of duty, in relation to an OMB Agreement between the Bank and Traderight to establish an owner managed branch of the Bank in Castlereagh Street, Sydney ('the Traderight Supreme Court proceeding'). The amended statement of claim sets out a series of meetings between Bank representatives and a number of the plaintiffs, a sequence of contended representations at various times, reliance upon the representations, the falsity of those representations, detriment and consequential loss and a claim for remedial orders. The pleading contends that particular agreements including the OMB Agreement arising out of the particular events are susceptible of orders declaring the agreements void ab initio (among other orders). 21 An action commenced by the Bank against Traderight in the Supreme Court of Queensland claiming the recovery of a debt and moneys due pursuant to guarantees has been cross-vested to the Supreme Court ('the Bank's Traderight Supreme Court proceeding'). The Traderight Supreme Court proceeding and the Bank's Traderight Supreme Court proceeding are hereinafter collectively referred to as 'the Traderight proceedings'.

The Respective Submissions of the Parties 22 Both the OMB parties and the Bank parties filed and served comprehensive written submissions in advance of the hearing of the motions and these were supplemented by oral submissions on the hearing of the motions, although the oral submissions did not stray outside the ambit of the written submissions. What follows paraphrases the respective written submissions.

The Submissions of the OMB Parties 23 The OMB parties submitted that, with the exception of the Bank's Federal Court proceeding, all the substantive proceedings involving the former franchisees of the Bank (whether parties to these proceedings or not) and the Bank parties involve (or will involve) the following two elements: (a) Claims brought by the former franchisees of the Bank for relief in connection with their dealings with the Bank parties and the failed operation of their New South Wales OMB of the Bank ('the OMB franchise'). These claims have been brought under s 106 of the IR Act, as well as the TPA and FTA (NSW), the ASIC Act, contract law, common law and equity; and (b) claims brought by the Bank against the former franchisees (whether as separate proceedings or cross-claims to the proceedings referred to at (a) above) which seek to call upon the guarantees and securities given to the Bank (by various former franchisees and their guarantors) in connection with loans provided by the Bank to the OMB parties for the purpose of fitting out and operating their respective OMB franchises and in connection with indemnities provided to the Bank by the OMB parties with respect to the operation of the OMB franchise. 24 The Bank's Federal Court proceeding is peripheral to the substantive proceedings in [23] above. The outcome in the substantive proceedings is not affected by the Bank's Federal Court proceeding. 25 The only court that has jurisdiction to hear all aspects of the substantive proceedings is the Supreme Court. The Bank accepts that the Federal Court does not have jurisdiction to hear the s 106 claims. 26 The OMB parties submitted that the existence of the Bank's Federal Court proceeding is no basis for this Court to resist the transfer of these proceedings to the Supreme Court for the following reasons: (a) The Traderight proceedings are entirely unaffected by the Bank's Federal Court proceeding and are, in any event, firmly entrenched in the Supreme Court and can only be determined in their entirety by the Supreme Court; (b) quite apart from the fate of the Bank's Federal Court proceeding, the proceedings before this Court are 'related' in the relevant statutory sense to the proceedings presently before the Supreme Court; and (c) it is in the interests of justice that these proceedings be transferred to the Supreme Court to be determined with, or otherwise case managed alongside, the balance of the related proceedings (all of which, with the exception of the Bank's Federal Court proceeding, have been cross-vested to the Supreme Court). 27 The OMB parties seek that all the matters (including the Bank's Federal Court proceeding) be heard by one court and one judicial officer; the Supreme Court (as being the only court that can hear all matters). Greenwood J did not agree to transfer the Bank's Federal Court proceeding to the Supreme Court. The next best thing the OMB parties can ask for (in order to avoid multiple trials of fact on the same issues and involving the common parties, witnesses etc), is that the rest of the related matters be transferred to the Supreme Court. 28 Further, any proposal put forward in relation to cross-vesting must deal with the reality of the Traderight proceedings and the fact that the only court that can hear the entirety of the Traderight proceedings is the Supreme Court. 29 The Traderight proceedings are entirely unaffected by the Bank's Federal Court proceeding. The Traderight Group is not a party to that proceeding. 30 The Bank's preliminary attempt to strike out the s 106 component of the Traderight proceedings failed. This means that, regardless of what Greenwood J decides in respect of the Bank's 'constitutional challenge', the s 106 issue will be alive in the substantive proceedings in respect of at least the Traderight proceedings that are already before the Supreme Court. 31 The only court that has jurisdiction to hear all aspects of the case is the Supreme Court. The Bank accepts that this Court does not have jurisdiction to hear the s 106 claims.

The Proceedings before this Court are 'related' to the Proceedings before the Supreme Court of New South Wales 32 The requirement of s 5(4) of the Cross-vestingAct is the existence of 'related proceedings' between the court in which the application is made and the court to which the matters are being sought to be transferred. The authorities on this issue establish that there do not need to be identical parties to the two, or more, proceedings before they can be considered to be 'related' for the purposes of enlivening the cross-vesting power of the court. It is enough that the proceedings have one common party and involves common issues and common questions: Watson v CGU Insurance Limited [2006] FCA 1630; AMP Financial Planning Pty Ltd v Green (2004) 51 ACSR 693.

Related Proceedings - Identical Parties, Common Facts and Common Issues 33 In respect of the Rossmick Federal Court proceeding, the OMB parties submitted that it is 'related' to the proceedings listed below which involve identical parties, common facts and common issues: (a) The Rossmick IC proceeding that is the subject of cross-vesting orders made by Hamilton J on 2 November 2007 to transfer that proceeding from the Industrial Court to the Supreme Court (once certain conditions have been met); and (b) the Bank's Queensland District Court proceeding initiated against the Rossmick Group. An application to cross-vest this proceeding to the Supreme Court has previously been foreshadowed and will, in due course, be made. 34 In respect of the Jude Federal Court proceeding, the OMB parties submitted that it is 'related' to the proceeding listed below which involves identical parties, common facts and common issues: (a) The Jude IC proceeding that is (just like the Rossmick IC proceeding) the subject of cross-vesting orders made by Hamilton J on 2 November 2007 to transfer those proceedings to the Supreme Court (once certain conditions have been met).

Related Proceedings - Common Parties, Common Facts and Common Issues 35 The OMB parties submitted that the Rossmick Federal Court and the Jude Federal Court proceedings are also 'related' to each other as well as the other OMB and Bank proceedings in the Supreme Court, because they involve common parties, common facts and common issues: (a) The Traderight Supreme Court proceeding (which in addition to its s 106 cause of action, pleads other causes of action pursuant to the common law, TPA and FTA (NSW), contract law and equity in connection with the operation by the Traderight Group of an OMB Bank franchise which failed); and (b) the Bank's Traderight Supreme Court proceeding initiated against the Traderight Group (in which the Bank seeks to call upon the guarantees and securities given by various members of the Traderight Group to the Bank in connection with loans made by the Bank to the Traderight Group for the purpose of fitting out their OMB franchise and indemnities provided to the Bank by the Traderight Group related to operating their OMB franchise); (c) the Bank's Supreme Court proceeding initiated against SME Business Assist (which is substantially identical as the Bank's claim against the Traderight Group outlined in the immediately preceding paragraph, but also includes claims in connection with loans made by the Bank to SME Business Assist for the purpose of operating their OMB franchise); (d) the SME Business Assist's s 106 proceeding that is (just like the Rossmick and Jude IC proceedings) the subject of cross-vesting orders made by Hamilton J on 2 November 2007 to transfer those proceedings to the Supreme Court (once certain conditions have been met). 36 The Bank is a common party (applicant or respondent or plaintiff or defendant) to all of the proceedings referred to at [35] above. 37 There are common documents to all the proceedings. For example, the OMB Agreement is identical in its terms, save for the different name of the parties in all cases. 38 The same authorised officers of the Bank conducted negotiations on behalf of the Bank in connection with the introduction and purchase of the respective franchises by the OMB parties in these proceedings and the OMB agents in the Traderight proceedings, as well as the other related proceedings. 39 Similar facts and issues as to the experience of the proprietors of Traderight in the operating of their OMB franchise will arise in relation to dealings the Bank and its staff had in connection with the operation of all of the OMB franchises in these proceedings. 40 The OMB parties in these proceedings have experienced the same or similar financial issues as those experienced by the proprietors of Traderight in operating their OMB franchise. 41 The dealings complained of by all the OMB agents concern the same or similar alleged express and implied representations and warranties made by the Banks' servants and agents to induce their agreement to become OMB agents and, later, to continue to conduct the OMB business in the face of substantial losses, and the apparent falsity of the representations. 42 Broadly, the representations/warranties claimed by all OMB agents are: (a) The viable business representation (that there were reasonable grounds for believing a viable business of conducting a Bank agency for the Bank's financial products could be conducted in New South Wales); (b) turnover (sales) representations; (c) set-up costs representations; (d) the 'break even' representation, as to when a cash flow positive business would emerge (and its related capital requirements representation); (e) the Bank's support of OMB business representations; and, Post commencement of business: (f) the 'everyone else is doing fine, keep going and try harder' representation. 43 The OMB parties submitted that the OMB businesses in New South Wales were, with a few exceptions, a financial disaster for the operator with little market penetration of the Bank's product into the New South Wales finance market. 44 Because the Bank was for the most part, funding the OMB setup and operating capital by loans made before and after inception, the extent of the primary losses is the amount claimed by the Bank in its debt claims against the OMB agents and the guarantors and security providers. 45 The relief claimed by the OMB agents in all proceedings is to set aside the contractual arrangements that inflict losses on them (such as loans, guarantees, etc) or be indemnified in respect of them and/or damages to that amount and more in relation to opportunity costs from their involvement in OMB franchises. 46 Orders have been made in relation to discovery in relation to the proceedings before this Court. These orders were sought by the OMB parties in an attempt to progress the matters (notwithstanding the cross-vesting applications) on the basis that substantially identical discovery orders would be obtained in the Traderight proceedings when they were next before the Court. The OMB parties have tried to obtain discovery orders in the Traderight proceedings but this has been resisted by the Bank, as it turns out so that they could point to the proceedings before this Court as being 'by far the most progressed' as a basis of opposition to the cross-vesting. The OMB parties submitted that the Court should see through this strategy deployed by the Bank parties. The enormity of the discovery task, and the commonality of documents that the parties will be required to produce, lend weight to the applicants' cross-vesting motion because it would be more efficient and cost effective if discovery was conducted in one set of proceedings. 47 There will be many witnesses who will be called by the OMB agents in their various proceedings who are likely to be common witnesses to all other OMB agents' proceedings. Many of these witnesses will be called in the proceedings involving Traderight that are already cross-vested to the Supreme Court. These witnesses will be called to adduce evidence concerning the course of their negotiations with the Bank (and its authorised officers) in relation to: (a) The negotiation and purchase of their respective Bank's OMB franchise; (b) the making of representations by the Bank and its authorised officers; (c) their respective experiences in the conduct of the OMB franchise and, in particular, in relation to: (i) their experience in relation to the competitive position of the Bank's financial product in New South Wales, relevant to the competitive product representations pleaded; (ii) the diligence and speed with which transactions and loan applications were processed by the relevant officers and employees of the Bank; (iii) the financial results of their endeavours; and (iv) the making of them of the equivalent of the continuing business representations made to the OMB agents during their time as franchisees. 48 From the materials served by the Bank in related proceedings, the Bank proposes to call 20 - 30 witnesses or more. This lends weight to the notion that one court and one judicial officer should receive the evidence of all of these parties. 49 Expert evidence as to the reasonableness of the proposition that a competitive business of private and commercial lending could be conducted by the Bank in New South Wales would be common to all matters given that all OMB agents rely on the proposition that there were no reasonable grounds for believing that this was the case, and that it was not the case in fact. It is likely that experts with expertise in the New South Wales banking and financial services industry will need to be retained and those experts are likely to be residents of New South Wales. 50 Furthermore, the OMB agents are all residents of New South Wales and have the closest connection with the New South Wales forum.

Interests of Justice Considerations and Why it is More Appropriate that the Proceeding be Determined by the Supreme Court of New South Wales 51 The OMB parties submitted that it is in the interests of justice for these proceedings to be cross-vested to the Supreme Court for the following reasons: (a) The hearing of these proceedings as separate matters from the substantive proceedings in the Supreme Court will represent an inefficient use of the resources (financial, time and otherwise) of the Court and the parties having regard to the substantial duplication of effort in the Supreme Court in relation to its s 106 proceedings and the other related matters; (b) this proceeding should be cross-vested to the Supreme Court so that all parties avoid incurring duplicated costs in the re-litigation of the same facts and matters in the substantive proceedings; (c) the risk of inconsistent verdicts being delivered by different tribunals of fact (where there are multiplicity of proceedings) is avoided and the risk of difficult questions of issue estoppel arising as a result of these findings of fact can, likewise, be avoided; (d) it represents an efficient use of the resources of the Supreme Court to have all of the related proceedings heard and determined in the one forum under one judicial officer. There are obvious economies of scale that can be achieved and efficient use of resources by avoiding duplicated discovery, production of documents, evidence (both from witnesses and experts) and the calling of witnesses at trial; (e) the work performed by all the OMB agents and related parties was performed in New South Wales and concerns a New South Wales banking environment; (f) there is no pressing forensic advantage for the proceeding to remain in this Court in circumstances where there are significant legitimate and forensic advantages to be gained by the parties and the court system by having this proceeding cross-vested to be heard and determined in the course of the substantive proceedings before the Supreme Court; (g) the Bank parties are better resourced to deal with interstate litigation. The Supreme Court is convenient for the OMB agents because it is more cost effective for them to litigate in this jurisdiction (as opposed to the Queensland jurisdiction) - recently, the OMB agents in the context of the Bank's 'constitutional' proceedings have been denied the ability to appear via video-conferencing and have had to, as a result, incur additional expense when the Bank is better able to bear such expenses.

Prematurity Issues 52 The Bank wants all other proceedings to stop in their tracks and await the outcome of the Bank's Federal Court proceeding. The Bank parties keep saying that the cross-vesting motions are 'premature'. 53 This proposition was expressly rejected by Hamilton J. The proposition was put by senior counsel for the Bank to Byrne J in defence of the OMB agents' cross-vesting application in respect of the Bank's 'debt and guarantee' claim against SME Business Assist and was also rejected by Byrne J. 54 The OMB parties submitted that they should not be stopped from progressing their substantive proceedings in circumstances where their substantive proceedings can be validly progressed to finality without reference to s 106 relief (that is, even if s 106 is struck out in terms of relief, the balance of the claims will need to be prepared with exactly the same evidence that would have been filed for the s 106 proceedings in any event). Therefore, there is nothing to be lost by progressing the substantive proceedings by making a cross-vesting order so that all related proceedings (except the Bank's Federal Court proceeding) are in the one court under the purview of one judicial officer. 55 However, conversely, the OMB parties submitted that there is a lot to be lost if the Court does not make this order. The OMB parties are approaching the two year anniversary of when the first of the substantive proceedings was filed and pleadings have still not closed in that matter, because the Bank has resisted filing its defence and has engaged the Court in unsuccessful preliminary strike out applications. It is an unacceptable outcome for the OMB parties to await outcomes in peripheral matters when the history of this matter demonstrates that the Bank will take every interlocutory point to stop the substantive progress of these matters. There is a strong 'interests of justice' requirement for the OMB parties to have resolution of their substantive proceedings.

The Submissions of the Bank Parties 56 Upon analysis of the OMB parties' submissions, the Bank parties submitted that there are two identifiable bases upon which the OMB parties seek to have these proceedings cross-vested to the Supreme Court. The first is that they have commenced two proceedings in the Industrial Court pursuant to s 106 of the IR Act and those proceedings have been ordered by Hamilton J to be removed into the Supreme Court pursuant to s 8 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW). His Honour's order is stayed until one week after an order is made by this Court of cross-vesting these proceedings to the Supreme Court. That is, the removal order is conditional. The OMB parties contend that these proceedings should be cross-vested to be heard with the s 106 proceedings. 57 The second basis is that these proceedings are related to the Traderight proceedings. It is said to be the ambition of the OMB parties to have one court and one judicial officer dealing with all of the related matters.

The First Basis 58 The Bank's Federal Court proceeding, in essence, seeks declarations that the Industrial Court has no power pursuant to s 106 of the IR Actto make any order affecting the OMB agency agreements and associated agreements between the OMB parties and the Bank by reason of the effect of s 7(1)(c) of the Independent Contractors Act 2006 (Cth). 59 If the Bank's application is successful, the effect will be that there are no proceedings by the OMB parties capable of being pursued in the Industrial Court which can be removed into the Supreme Court. 60 That basis for an order cross-vesting these proceedings to the Supreme Court would then be gone. 61 The Bank parties submitted that if this Court determines that the only proper basis to make an order cross-vesting these proceedings is the continued existence of the Industrial Court proceedings, then these motions should be adjourned to await the decision in the Bank's Federal Court proceeding.

The Second Basis 62 The OMB parties' case has as its underlying assumption that, if transferred to the Supreme Court, these proceedings, because of their commonality of issues with the Traderight proceedings, would be more efficiently disposed of than if they remained in this Court. 63 Upon a proper analysis, the Bank parties submitted that there is no warrant for that assumption. 64 Paragraph [51] above makes it tolerably clear that the OMB parties' position is that these proceedings will be consolidated, or at least heard together, with the Traderight proceedings. The suggestion in para [46] above that discovery might be conducted in one set of proceedings indicates an apparent intention to seek consolidation of these proceedings with the Traderight proceedings. 65 The OMB parties' submissions substantially overstate the commonality of issues between the three sets of proceedings and ignore the cogent reasons why the proceedings would neither be consolidated nor heard together. 66 The Bank parties submitted that in considering whether the proceedings would be consolidated or heard together, similar issues arise under Rule 28.5 of the Uniform Civil Procedure Rules 2005 (NSW) as would arise on an application for joinder in reliance on O 6 r 2(b) of the Federal Court Rules. Matters relevant to the exercise of the discretion in respect of the latter rule were considered by Wilcox J in Bishop v Bridgelands Securities (1990) 25 FCR 311. Of particular relevance to this application is the passage at 314 - 315 where his Honour said: 'Similarly, although all applicants might propose to rely upon some common, or similar facts, there may be such differences between the evidence intended to be relied upon in support of the claims of particular applicants as to make it inexpedient to join the claims. The discrete material may overbear that which is common to all the claims. Again, there may be cases in which the sheer number of the claims, if joinder is permitted, will impose an undue burden on the respondent; although it seems to me unlikely that this will be so except in cases where separate evidence is proposed to be adduced in support of individual claims.' 67 It is inherent in the OMB parties' submissions that they propose to lead evidence from the OMB parties, the Traderight applicants and, it seems, others which will fall into the category of evidence governed by s 97 of the Evidence Act 1995 (Cth). That is, it appears to be the OMB parties' intention to call evidence from one person that representation X was made to that person for the purpose of persuading the Court that it is more likely that the same representation was also made to one or other of the various applicants. 68 There is no attempt in the OMB parties' material to identify with precision the evidence which falls into this category. There are merely general assertions. For evidence to be admissible under s 97(l) of the Evidence Act, it must have significant probative value. In determining whether evidence has significant probative value, the Court would take into account the differences in the representations alleged to have been made as well as the timing of the representations (cf. Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51 at 69 - 71). 69 To the extent that an assumption can be made that the evidence of various of the OMB parties will reflect the allegations in their statements of claim, then it is apparent that there are substantial differences with respect to representations said to have been made to the OMB parties in the respective proceedings. 70 From the Traderight statement of claim, it is apparent that the Traderight proceedings concern events occurring between 28 January 2004 and 30 August 2006. There are 26 meetings pleaded and in 23 of them, representations are said to have been made. Those claimed to have made representations are Mr Allsop, Ms Quinn, an unnamed branch manager from New Farm, Mr McCarthy, Mr Liddy, Mr Teitzel, Mr McEvoy, Mr O'Brien, Mr Edwards, Ms Smith and Mr Ferguson. 71 In the Rossmick proceedings, the events occur between 3 March 2004 and 30 June 2006. There are nine pleaded meetings at which representations are made. The only identified persons alleged to have made representations are Mr Allsop, Ms Quinn and Mr Liddy. There are, in addition, a number of unnamed persons said to have made representations. 72 In the Jude proceedings, the relevant events occur between 7 July 2005 and 16 April 2007. There are alleged to be 15 meetings at which representations are alleged to have been made. The alleged representors are Mr Allsop, Mr Baer, Mr Edwards, Ms Quinn, Mr Swift, Mr Clancy and Mr Brady. 73 A number of what might be regarded as key alleged representations, differ. For example, in the Traderight proceedings it is alleged (at para 75(e), that a representation was made on 28 January 2004 by Mr Allsop that a branch could expect to reach break-even point between revenue and expenses within three to six months of opening. In the Rossmick proceedings (at para 28(1), on 3 March 2004, Mr Allsop is alleged to have said that the break-even point should be reached within six to eight months). In the Jude proceedings (at para 46(d)), it is alleged that Mr Allsop represented on 7 July 2005 that the break-even point could be expected to occur within three to four months. 74 Whilst the Traderight and Rossmick proceedings involve allegations that representations were made that the OMB would be able to write loans totalling $4m per month, in the Jude proceedings the representation is alleged to be concerning writing loans totalling $3m per month. 75 In the Traderight proceedings it is alleged (at para 89(x)) that on 30 January 2004, Mr Allsop represented that the franchisee would require working capital of the order of $50,000 to $70,000. In the Rossmick proceedings (at para 28(j)) on 3 March 2004, the representation was said to need working capital of approximately $70,000 to $100,000. 76 These are examples of key differences. There are numerous representations in each of the proceedings which have no equivalent in other proceedings. 77 The Bank parties submitted that the extent of the differences in matters allegedly said makes it likely that a court would find that evidence from one OMB party of matters said to that OMB party would not be admissible under s 97 of the Evidence Act in respect of the proceedings by other OMB parties. 78 The consequence would be that if a trial of all proceedings was to be heard concurrently, there would a great deal of complexity about what evidence was admissible in each case. The potential is high that the Bank parties would be prejudiced. 79 If one attempts to identify the evidence which would genuinely be common between the different sets of proceedings, it is of quite limited scope. There would be evidence about whether the Bank's products were competitive. There is little else which is genuinely common. 80 The suggestion, advanced by the OMB parties, that the evidence from personnel from different OMBs about their experience with the processing of applications would be common to all proceedings also runs into the hurdle of s 97 of the Evidence Act. In order to determine whether the manner in which loan applications from one OMB were processed is relevant to the manner in which loan applications from another OMB were processed, one would have to have some basis for saying that the individual loan applicants were comparable and the application procedures were followed in a substantially identical way by the OMBs. There is presently no warrant for the view that the evidence of loan processing with respect to one OMB is in any way relevant to loan processing in respect of another OMB. 81 The Bank parties submitted that it is, in fact, quite unlikely that the Supreme Court would order consolidation of these proceedings with the Traderight proceedings or order that the proceedings be heard together if these proceedings were cross-vested to that court. The foundation of the application to cross-vest therefore lacks substance. 82 The Bank parties submitted that the OMB parties' second basis does not provide a proper basis to order cross-vesting. 83 The OMB parties' submissions about the desirability of the proceedings being heard in New South Wales do not assist them. These proceedings are, and ought to remain, in the New South Wales Registry of this Court. The Bank parties submitted that this Court has more flexibility with regard to the places at which evidence might be heard which would be to the advantage of all parties. 84 The proceedings in this Court are well advanced and afford the most obvious opportunity for the OMB parties in these proceedings to obtain the early trial dates which they assert they want.

Response to the First Basis 85 The contentions raised by the Bank parties' at [59] and [60] above are wrong at law for the following reasons: (a) The Bank parties' success in the Bank's Federal Court proceeding will not fully dispose of the s 106 proceedings for each of the Rossmick and Jude Groups. The 'other arrangements' aspect of the s 106 proceedings will remain and the Supreme Court (exercising the jurisdiction of the Industrial Court) will have jurisdiction to hear and determine this aspect of the proceedings (because it is contended that the operation of the Independent Contractors Act does not and cannot extend to 'arrangements'); (b) The basis for cross-vesting the s 106 proceedings to the Supreme Court remains and, indeed, it is the sensible thing to do so that those proceedings can be case managed together with the Traderight proceedings (which pleads a s 106 cause of action as well) and with the proceedings the subject of this application (which plead different causes of action but rely on the same substratum of fact as their s 106 counterparts). 86 In response to of the Bank parties' submissions at [61] above, and for the reasons stated in the immediately preceding paragraph, there are no grounds to adjourn this cross-vesting application to await a decision in the Bank's Federal Court proceeding because the 'continued existence' of the s 106 proceedings is assured regardless of the fate of the Bank's Federal Court proceeding.

Response to the Second Basis 87 The Bank parties submitted that this Court should not be troubled by the form the proceedings are to take in the Supreme Court. All this Court is required to determine is whether the grounds to cross-vest these proceedings to the Supreme Court have been satisfied. The OMB parties contend that they have. 88 The way that the proceedings before the Supreme Court (including these proceedings, if cross-vested) should be case managed and what orders should be made (to consolidate the proceedings or have them proceed as representative proceedings or have them case managed and heard together with some form of regime adopted to achieve economies of scale and the court's overriding purpose for the 'just, quick and cheap' resolution of the real issues in the proceedings) is a matter that should appropriately be determined by the judge assigned to these matters in the Supreme Court, in consultation with the legal representatives of the parties. This will assist to imbue the proceedings with more certainty and cohesion going forward. 89 The reason advanced by the Bank parties for opposing the OMB parties' cross-vesting motions is a suggestion that the OMB parties have 'overstated the commonality of issues' between the proceedings before this Court and the Traderight proceedings. For the reasons outlined below, this proposition is factually incorrect and not supported on a review of the issues.

The Commonality of Issues, Steps, Documents, Parties, Systems, etc 90 The OMB parties contended that the 'tendency' evidence issue raised by the Bank parties does not successfully dispose of the overwhelming commonality of issues, documents, parties and matters in these proceedings. Based on the pleadings (which includes the Bank's responsive pleadings), the OMB parties contend that the evidence will establish that there were a series of 'common steps' that were undertaken by prospective OMBs in order to: (a) Make enquiries and find out about becoming an OMB agent; (b) put forward an application and, ultimately, be approved to become an OMB agent; (c) undertake the work required to open an OMB franchise; and (d) perform as an OMB franchisee. 91 The OMB parties contend that this evidence will demonstrate that there was a 'system' or 'business practice' put in place by the Bank parties to administer the roll out and expansion of their OMB franchise programme in New South Wales. 92 In their submissions, at [79] above, the Bank parties concede that the competitiveness of the Bank's products is common to all the proceedings. That issue is one of the most significant issues between the parties and intersects significantly with other common issues including: (a) the due diligence the Bank undertook to support its expansion programme into the New South Wales financial services market; (b) the success of the OMB model in New South Wales in terms of objective performance; (c) whether the OMB model was a viable business model and the extent to which the Bank did know or should have known about the viability of the OMB franchise model. 93 By the Bank parties' own submissions, they concede that there is close proximity in the timing of the relevant representations as well as the steps undertaken by the various parties. The total time span concerned in respect of the Rossmick, Traderight and JFS proceedings is January 2004 to April 2007 (just over three years). The steps taken by the Rossmick 1 and Traderight parties were virtually concurrent in timing, with Rossmick 1 having commenced its investigations with respect to becoming an OMB agent only one month after Traderight commenced its investigations. Thereafter, Rossmick 2 commenced investigations with respect to becoming an OMB agent around February 2005, which was only some months earlier than when Jude started its investigations (July 2005). The systems in place by the Bank parties (which involved Mr Allsop working to a 'script' in introducing prospective OMBs to the franchise model, as well as attendances at common functions, the making of common representations and the receipt and completion of common documents) also means that there is an overwhelming commonality between these proceedings. It is therefore important that the fact-finding tribunal has all the relevant and common matters before it to enable it to undertake its fact-finding exercise with confidence, fairness, justice and the avoidance of prejudice to any party. 94 Further, again by their own admission, the common Bank parties to all the proceedings are Mr Allsop and Mr Quinn. Mr Liddy is common to Traderight and Rossmick. Mr Edwards is common to Jude and Traderight. Once the discovery process is complete, further common parties are likely to come to light. It is in the interests of justice between the parties and the efficient and sound administration of that justice that the credibility of the Bank's representatives is scrutinised in one forum under the purview of one judicial officer that has all of the relevant material before them. 95 The OMB parties submitted that the overwhelming commonality of issues, representations, documents and the like strengthen the probative value of the evidence to be given quite apart from any tendency use which it may have. In the final analysis, these issues are to be appropriately determined by the one judicial forum and, in the circumstances of these proceedings, the only judicial forum that can deal with all these issues is the Supreme Court. They are referred to herein in more specific terms for the purpose of demonstrating to this Court that the weight of the evidence before it supports the making of the cross-vesting orders sought by the OMB parties.

The Bank Parties' Reliance on Order 6 Rule 2(b) of The Federal Court Rules: Joinder of Parties 96 The Bank parties submitted at [66] above, that 'in considering whether the proceedings would be consolidated or heard together, similar issues arise under Rule 28.5 of the New South Wales Uniform Civil Procedure Rules as would arise on an application for joinder in reliance on O 6 r 2(b) of the Federal Court Rules'. 97 Yet, there are significant and apparent differences and, for this reason, the Bank parties' speculation as to what the Supreme Court may determine in respect of its future case management decisions is of little value when that very speculation is based on an exploration of the Federal Court regime, rather than the rules and discretion afforded to the Supreme Court under r 28.5 of the Uniform Civil Procedure Rules. 98 The most important difference is that the Court's discretion under r 28.5 of the Uniform Civil Procedure Rules is expressed more broadly (and also has a broader application extending to the management and form of the proceedings) than the Federal Court Rules (which is more narrow in its discretion, scope and application) being expressed to relate to the 'joinder of parties' specifically: '28.5 Consolidation etc of proceedings If several proceedings are pending in the court and it appears to the court: (a) that they involve a common question, or (b) that the rights to relief claimed in them are in respect of, or arise out of, the same transaction or series of transactions, or (c) that for some other reason it is desirable to make an order under this rule, the court may order those proceedings to be consolidated, or to be tried at the same time or one immediately after the other, or may order any of them to be stayed until the determination of any other of them.' 99 Compare this to the more narrow discretion at O 6 r 2 of the Federal Court Rules which is expressed to be limited to 'joinder of parties': 'Joinder of parties generally Two or more persons may be joined as OMB parties or Bank parties in any proceeding: (a) where: (i) if a separate proceeding were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and (ii) all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or (b) where the Court gives leave so to do …' 100 It is clear from a review of these provisions, the rules as they are to be applied by the Supreme Court express the court's discretion to order the consolidation or case management of proceedings more broadly than the counterpart rules in this Court. As r 28.5(a) and (b) combine to make clear, there is no specific principle requiring consolidation, nor any specific limitation against ordering it: A Goninan & Co Ltd v Atlas Steel (Aust) Pty Ltd [2003] NSWSC 956. 101 If any of the conditions in r 28.5(a), (b) or (c) are met, proceedings may be consolidated (or dealt with in any way outlined in the rules) despite the fact that they have completely different parties. 102 The conditions for the making of an order for consolidation imply that the principal purpose of such an order is to minimise cost and delay in the determination of the proceedings. That conclusion is reinforced by s 56 of the Civil Procedure Act 2005 (NSW).

The case of Bishop v Bridgelands Securities 103 The Bank parties drew the Court's attention to a selected passage in Bishop 25 FCR, where Wilcox J considered matters relevant to the exercise of the Court's discretion. This case was decided by reference to O 6 r 2 of the Federal Court Rules so it cannot be relied upon as authoritative on how the Supreme Court is likely to make future case management decisions with respect to these matters under r 28.5 of the Uniform Civil Procedure Rules. 104 In any event, the case assists the OMB parties cross vesting motion, as the following excerpt at 314 indicate: 'As the discretion conferred by sub-rule (b) is, in terms, unconfined, it would be inappropriate to specify circumstances in which it might be applied. Everything must depend upon the facts of the particular case. But it is appropriate to consider what principles ought to guide the exercise of such a discretion. The basic principle, as it seems to me, is that the Court should take whatever course seems to be the most conducive to a just resolution of the disputes between the parties, but having regard to the desirability of limiting, so far as practicable, the costs and delay of the litigation. Considerations of costs and delay may often support the grant of leave under sub-rule (b); but, in my opinion, leave ought not to be granted unless the Court is affirmatively satisfied that joinder is unlikely to result in unfairness to any party. Secondly, regard must be had to practical matters. For example, if would normally be inappropriate to grant leave for the joinder of applicants who were represented by different solicitors. There must be a single solicitor, or firm of solicitors, who is accountable for the conduct of the proceeding on the applicants' side of the case.' 105 It is clear that the OMB parties in the proceedings before this Court and the plaintiffs in the Traderight proceedings are all represented by McCabe Terrill Lawyers. 106 There are good reasons to minimise the costs and make the most efficient use of the Court's time and resources (as well as the parties') by having these matters heard by one court under the purview of one judicial officer.

Response to the Bank Parties' Submissions at [83] and [84] 107 The OMB parties submitted that the Bank parties' submission at [83] above is just not true. The Supreme Court has flexible arrangements and can accommodate the hearing of evidence to take these matters into account. In any event, the balance of convenience for the parties is clearly the Supreme Court (to which all of the Traderight proceedings were cross-vested with the consent of the Bank). There is no basis to distinguish Rossmick or Jude. 108 In response to the Bank parties' submissions at [84] above, there is no suggestion being made that the progress of the Rossmick and Jude Federal Court proceedings will set back the progress of the matters if they were all before the Supreme Court.

Analysis and Conclusion 109 With respect, I am unable to agree with the submissions of the Bank parties at [58] to [61] above. 110 First, for the reasons set out at [116] and [117] below, I do not think that the only proper basis to make an order cross-vesting these proceedings is the continued existence of the Industrial Court proceedings conditionally transferred into the Supreme Court. 111 Second, even if the Bank's Federal Court proceeding is successful in obtaining declarations that the Industrial Court has no power pursuant to s 106 of the IR Act to make any order affecting the OMB agency agreements, that will not necessarily be the end of the s 106 proceedings. As the OMB parties submitted at [85(a)] above: 'The "other arrangements" aspect of the s 106 proceedings will remain and the Supreme Court (exercising the jurisdiction of the Industrial Court) will have jurisdiction to hear and determine this aspect of the proceedings (because it is contended that the operation of the Independent Contractors Act 2006 (Cth) does not and cannot extend to "arrangements").' 112 When I put this to senior counsel for the Bank parties during the hearing of the motions, he responded: 'It's an issue which we ventilated with his Honour Logan J the week before last in the strike-out application. It's a complex argument. We don't intend, if your Honour doesn't mind, … to ventilate it fully before your Honour but we can tell your Honour it's been raised with his Honour Logan J as part of the strike-out application.' 113 His Honour's (Logan J's) response to that ventilation is instructive. At [19] of his Honour's reasons, he observed: 'There is Full Bench authority in the New South Wales Industrial Commission, in Court Session, which would support an argument that "the making of representations known to be acted upon by a person in considering entry into a contractual relationship and on the basis of which representations an agent as the representor intends the person to act may well, quite apart from any other connection with the contract subsequently made, be itself an arrangement whereby work is performed in an industry, or, at the least, a collateral arrangement to such a contract or arrangement": Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420, at 432, [28]. Contrary to the submission of the BoQ parties, it is thus not impossible for a representation to constitute an "arrangement". Further, if it is one, as the amended summons apparently alleges, and the submissions of the BoQ parties seem to ignore, whereby a person performs work in an industry, that arrangement, if unfair, may, all other things being equal, be the subject of relief under s 106 of the NSW Act. The Independent Contractors Act may or may not intrude on the ability to grant that relief, but that is not a matter for summary resolution.' 114 For these reasons, I do not think there is any utility in adjourning these motions to await the outcome of the Bank's Federal Court proceeding. It would be a total injustice to the OMB parties; at its present rate of progress, it could take years. For the same reasons, it is more appropriate (there can be no argument that the Rossmick Federal Court proceeding and the Jude Federal Court proceeding are respectively related, in the relevant statutory sense, to the Rossmick IC proceeding and the Jude IC proceeding) that these proceedings be determined by the Supreme Court; the same court will then hear all four proceedings. 115 On this basis alone, I am of the view that these proceedings should be transferred to the Supreme Court. 116 But I am also of the view that the second identified basis for the transfer of these proceedings to the Supreme Court impels, if not compels, one to the same conclusion. It cannot be seriously contended that the proceedings are not 'related', in the relevant statutory sense, to the Traderight proceedings and the proceedings of other OMB agents (see [35] above) all of which are pending, on an unconditional basis (unlike the Rossmick IC and Jude IC proceedings) in the Supreme Court. That being the case, the only issue is whether it would be more appropriate for the Supreme Court to also hear these proceedings. Prima facie, I would have thought that there could only be one answer to that question. 117 On the other hand, the Bank parties point to a range of issues - the issue of the consolidation of proceedings, the issue of the hearing of proceedings together, evidentiary issues, the different timing of relevant events in each proceeding and different alleged representations - as mitigating against any advantage to be gained from transferring these proceedings to the Supreme Court. With respect, again I cannot agree. These are 'case management' issues which I know the Supreme Court is as equipped and able to deal with as this Court. In deciding whether it is more appropriate to transfer these proceedings to the Supreme Court, I do not need to exercise the prescience to assess whether the inherent potential advantages in having one court hear all proceedings will, ultimately, all be realised; for one reason or another, they may not. It is sufficient that those inherent potential advantages, savings in cost, time and resources, exist at the time I am called upon to make that assessment and, in my view, they do exist in the present case. 118 There will be orders that pursuant to s 5(4) of the Cross-vesting Act, each proceeding be transferred to the Supreme Court. The Bank parties must pay the costs of the OMB parties of, and incidental to, the hearing of the motions and, in my view, they should be paid forthwith. I certify that the preceding one hundred and eighteen (118) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.

Counsel for the First, Second, Third, Fourth and Fifth Applicants: Mr B Walker SC wth Ms K Rose

Solicitor for the First, Second, Third, Fourth and Fifth Applicants: McCabe Terrill Lawyers

Counsel for the First and Second Respondents: Mr S Couper QC with Mr A Moses

Solicitor for the First and Second Respondents: Home Wilkinson Lowry