CATCHWORDS PRACTICE AND PROCEDURE - actions in Federal Court of Australia and Supreme Court of Victoria - discretion of Federal Court as to exercise of accrued jurisdiction in Trade Practice Act claim for misleading conduct - application to stay Federal Court proceedings - factors influencing exercise of discretion. Trade Practices Act 1974 s.52 WELLINGTON FINANCIAL RESOURCES PTY LTD v TERRE ENTERPRISES PTY LTD JOHN ROBERT DE PTETRO No. VG 323 of 1986 Woodward J. 10 November 1986 Melbourne RECEIVED 1 1NOV1986 \, FEDERAL COURT OF \ AUSTRALIA PRINCIPAL REGISTRY wwe nee ee vo. oe, nee meee ee IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 323 of 1986 GENERAL DIVISION BETWEEN wee ww WELLINGTON FINANCIAL RESOURCES PTY LTD Applicant and TERRE ENTERPRISES Pry LTD JOHN ROBERT DE PIETRO Respondents MINUTES OF ORDER COURT : Woodward J. DATE : 10 November 1986 PLACE : Melbourne THE COURT ORDERS THAT: 1. All proceedings in this matter be stayed until judgment has been given in matter No 2383 of 1986 in the Supreme Court of Victoria, or further order. Each party have liberty to apply by notice of motion for the stay to be discharged if changed circumstances warrant such a course. Costs be reserved. (Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.) ee merece re rey meee 9 eee eye Thi seers 5 ~ ree i us FT ER IT oN ee a4 "~ + és an IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 323 of 1986 wee wwe GENERAL DIVISION BETWEEN : WELLINGION FINANCIAL RESOURCES Pry LTD Applicant and TERRE ENTERPRISES PTY LTD JOHN ROBERT DE PIFTRO Respondents COURT: Woodward J. DATE: 10 November 1986 PLACE: Melbourne REASONS FOR JUDGMENT In this matter the applicant has commenced proceedings in this Court seeking remedies under the Trade Practices Act 1974. The respondents have applied, by notice of motion, to have the action stayed until after an action in the Victorian Supreme Court, in which the first respondent is suing the present applicant, has been determined. The applicant wishes to press ahead with its application to this Court, and has foreshadowed an application to prevent the plaintiff in the Supreme Court from proceeding with its action there. The two actions arise out of the same transaction between the parties. Conflicts between parties as to the court in which such actions should be tried have been infrequent since the High Court clarified jurisdictional questions in cases such as Fencott v Muller (1983) 46 ALR 41, and Stack v Coast Securities (No 9) Pty Ltd (1983) 57 ALJR 731. However they still occur from time to time and require careful consideration when then do. Gibbs CJ said in Stack's case, at 738, "The only effective remedy for this overlap of jurisdiction, which tends to place two superior courts in unbecoming conflict, is to amend the Trade Practices Act so as to provide that the jurisdiction of the Federal Court, at least in actions ower which relate to an alleged contravention of a provision of Pt V, should no longer be exclusive ...." I note that a Jurisdiction of Courts (Cross-Vesting) Brill 1986 was introduced into the Federal Parliament three weeks ago; but until appropriate amendments come into effect, judicial comity requires the courts concerned to do everything possible to avoid 'unbecoming conflict'. In the present case the relevant facts may be summarized as follows. The applicant (which I shall call "the owner") engaged the respondent company through its manager director, the second respondent, (whom JI shall refer to jointly as "the builder") to construct six villa units. The owner alleges that before entering into a building contract a representation was made by the builder that the cost of construction would not exceed $4000 per square. This representation is denied by the builder. hoa oa ewes errno A cost-plus contract was signed onl July 1984. A further contract was signed between the parties on 31 October 1984 which provided for the payment of a fixed price of $195,000 for the same work. The owner alleges that this contract was intended by the parties to replace the cost-plus agreement. The builder says, as I am informed by its counsel, that this second contract was a sham, designed at the request of the owner to assist him in obtaining finance, and never intended by either the owner or the builder to bring about or affect legal relations between them. On 16 September 1985 the builder submitted an account to the owner, showing that between October 1984 and August 1985 it had submitted 18 accounts for progress payments, which had all been paid promptly. The account then proceeded, "Total amount paid to date $263,519.67 Amount agreed upon $280,000.00 Amount outstanding $_ 16,480.33" It seems that this "amount outstanding" was later paid, because on 13 March 1986 the builder issued a Supreme Court writ, with a statement of claim annexed which showed an amount of $280,000 as having been paid pursuant to the cost-plus' contract and a further sum of $99,377.82 as still owing. On 30 April 1986 the owner filed a defence, signed by counsel. The only paragraphs of the defence which do not consist of formal admissions, denials, or refusals to admit are those which allege, TI Pe ile oleate ree ne oe AL (a) "if there was an agreement between the Plaintiff and the Defendant it was constituted by written agreement dated the 3lst October 1984" and (b) —-that the amount of $16,480.33 referred to above was claimed "by a statement in writing" and "the Defendant paid and the Plaintiff accepted the said sum of $16,480.33." Interlocutory orders for a reply and for affidavits of documents were made on 12 May 1986. The owner, for which there was no appearance, was ordered to pay the costs of the day. A reply was delivered on 14 May alleging that' the contract of 31 October 1984 was made without consideration and without any intention to create legal relations. Further detailed interlocutory orders were made on 2 June 1986. By 25 dune the owner was in breach of these orders for failing to serve a further and better affidavit of documents and failing to deliver a request for further and better particulars of the reply, both of which should have been done by 9 June. A letter pointing out these facts and their consequences was sent by the builder's solicitors to the owner's solicitors. On 4 August Nathan J made further orders, requiring the owner to make file and serve a further and better affidavit of documents and deliver sworn answers to interrogatories (which were by then some two weeks overdue), and ordering the owner to pay the costs of the day. . ee ogee Sore a wa v7 . Rone mrss ace omave Lf og . AT A bee Answers to interrogatories were sworn by the owner on 38 August but were considered by the builder's solicitors to be inadequate and on 1 September Nathan J ordered "that the defendant properly answer all of the plaintiff's interrogatories ..." and that the owner pay the builder's costs incurred by reason of the inadequate answers. Meanwhile, at some time shortly before 11 August, the owner's solicitors delivered a request for further and better particulars of the reply. They also, in an affidavit dated 1 September, alleged that (a) the owner was taken completely by surprise by the allegation that the fixed sum contract of 31 October 1984 was not meant to be binding, (b) "partly by reason of" this averment the owner took the view that it had been misled and deceived, and (c) accordingly, Federal Court proceedings had been instituted. (In fact this was done on 29 August.) The deponent went on to submit that further proceedings in the Supreme Court should be stayed. On 15 September a director of the owner swore answers to interrogatories which raised, for the first time in that Court so far as I am aware, the allegation that representations had been made that building costs would not exceed $4000 per square. On 6 October, Nathan J ordered that the matter be sent to the listing master for him to fix a date of hearing. In doing so he rejected an application that the builder should be ordered a Sar epee oe ET ee © clone or wee woes ae re eee ee ee ee to give further and better particulars of its reply. His Honour said, "It Cthe owner} has forgone its remedies in the various interlocutory steps by simply failing -~to pursue them and I am not satisfied that its Request for further and better particulars of the Reply goes in any way to the substance of the dispute." On the question whether the Supreme Court action should be stayed so that the action in this Court might proceed, Honour said, "The Federal Court under the provisions of Part V of the Trade Practices Act has the jurisdiction in cases of disputed contracts to rewrite the terms and to deliver the parties a remedy other than damages or rescission, that is unavailable to me. It goes without saying that the Federal Court proceedings which are founded, in this particular instance, upon Section 52 and 53 of the Trade Practices Act, namely deceptive and misleading conduct, would need to be in respect of the same issues currently in dispute between the parties in the Supreme Court. It is possible, however, and of course I do not have those proceedings before me, that the Federal Court proceedings are in respect of matters enlarged in kind than those which are before me. Issues as to competing jurisdictions between this Court and the Federal Court were raised in the various Coastal Estate cases. However I am satisfied that I must follow the injunctions of the procedures in this Court. That is, where a building dispute has been instituted and processed in this Court I should, as a matter of policy, bring it to trial as soon as_ practicable. I cannot, due to the paucity of the material before me, assess the nature of the defendant's claim in the Federal Court, nor under the present procedures am I required to do so. However I am positively enjoined to ensure that the litigation in this Court proceeds at a satisfactory pace as is consistent with the dictates of justice. I am satisfied in this case that the plaintiff has done all that could be expected of it to bring the matter on for trial. There have been several his ad re tee pee np aT ea ae mee te ee . ° ye Tats oe mo Lan ara ' eee ee ee ere appearances before me by way of summonses for directions. I have pronounced orders in respect of the interlocutory steps on the 12th May, the 2nd dune and the 4th August. The orders made set out a timetable for the pursuit of interlocutory matters. In most instances the defendant has not fallen -within those time constraints and as a result thereof 1s in default of various orders made by me. It is of no avail to the defendant to say that its default in respect of orders made by me arises out of the action it will probably pursue in the Federal Court. Its obligation, once having submitted to this jurisdiction, and it could not do otherwise, was to comply with its rules and dictates. I am not satisfied that the defendant is entitled to deny the plaintiff recourse to the appropriate trial forum, by way of the reasons advanced." It has been urged on me by counsel for the owner that only this Court can try all the issues which have arisen between the parties - because of its exclusive jurisdiction to deal with actions arising under Part VI of the Trade Practices Act for breaches of 5.52. There are also remedies available to this Court under s.87 of the Act which are not available to the Supreme Court. On the other hand it is clear that the central issue in the case, that is the nature of the true contract between the parties, can be determined in the Supreme Court proceedings - whether it turns out to be the first cost-plus contract, the second fixed-price written contract, either of those as amended by later agreement, or some different arrangement. This will dispose of the chief issue between the parties - the status of the fixed price agreement. nt pen ee be 7 an -t er re ee nen pee re we oe ; 7 " bas : fr pete ae, "wea, = Ina case such as this, where work has been fully performed pursuant to some contractual arrangement and the only dispute relates to moneys owing, it seems unlikely that any of the special powers given to this Court under s.87 of the Act would be required. The allegation that the owner was misled or deceived by an assurance that the cost of the work would not exceed $4000 per square becomes irrelevant if the owner establishes its basic argument that the parties agreed to a fixed price contract. Had it chosen to do so, the owner could have relied in the Supreme Court on the alleged representation as a collateral warranty or a fraudulent or negligent misrepresentation. It failed to do so, but has raised the issue in this Court. In my view that is a question which could, if necessary be litigated in this Court, in an action for damages, after judgment has been given in the Supreme Court. That would not be an entirely convenient course, but I believe it would be less inconvenient than stopping the Supreme Court proceedings at a time when they are ready for trial and Federal Court proceedings have barely been commenced. Even the statement of claim in this Court is clearly defective and would have to be amended, as counsel has conceded. In all the circumstances I have no doubt that the matter should proceed to trial in the Supreme Court and the application er te te pe re et ee hy on ea te we wre . Pan) 7 bia ' he rl op ee ae ep ne re ene = at ONE to this Court should in the meantime be stayed. I have reached this conclusion for the following reasons: Ll. -The Supreme Court action was on foot for almost six months before this application was made, and a great deal of interlocutory work has been done. The pleadings at least would be wasted if the matter were to proceed in this Court. 2. The builder has pursued its Supreme Court action with all due diligence. The owner, while not causing very serious delays, has been in default on at least three occasions, for which it has had to bear costs. 3. I am not persuaded that the owner will suffer prejudice if the basic issue in the case is determined in the Supreme Court. If the Supreme Court action leaves any issues undecided which can only be dealt with in this Court, I am confident that they can be speedily resolved. 4, There seems to be little scope, in the circumstances of this case, for the application of the wider remedies available under the Trade Practices Act 1974. 5. The question of which Court should deal with the matter has already been considered by the Supreme Court, which has decided to press on. In cases where another court has carefully considered both sides of the argument and elected to proceed, I think that comity and the best interests of the judicial process dictate that that decision should be accorded the highest respect, ' yay pe eee cme ne one Le ars on ae ene Saeed ~ pte aa - 10 - and only in the most unusual circumstances departed from, by any other equivalent Court asked to reach a different result. However, in the present case it appears that Nathan J did not feel that he could, on the material before him, adequately weigh the competing claims of the parties as to the appropriate Court, and he felt constrained by the policy of the Supreme Court to bring building disputes to trial as soon as possible. In these circumstances I have thought it proper to consider the question at issue fully for myself, and have reached the firm conclusion which I have already indicated. In doing so I am interested to note that I have reached the same conclusion, in somewhat similar circumstances, as Spender J in Pillifeant v Colemma Pty Ltd (unreported, 30 October 1984) although, as his Honour there says, each case must be decided on its own facts. The order of the Court will be that this matter be stayed until judgment has been given in matter No 2383 of 1986 in the Supreme Court of Victoria, or further order. I shall reserve liberty to either party to apply by notice of motion for the stay to be discharged if changed circumstances warrant such a course. Costs will be reserved. I certify that this and the nine (9) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon Mr Justice Woodward Dated: 10 November 1986 shen nenl aaa Contre geen prey a