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"" PRACTICE AND PROCEDURE ~- claim under Trade Practices Act arising out of representations prior to contract for provision of services - natural gas pipeline ~- computerised leak detection facility - matter subject of prior proceedings in Supreme Court ~- application for stay of Federal Court proceedings - application to restrain respondents from proceeding in Supreme Court - proceedings involving issues of factual and legal complexity ~- substantial work done in Supreme Court - date for hearing allocated - ability of Federal Court to give wide range of relief on wider bases - - power under s.87 to delete contract clause limiting liability - waste of judicial resources if Supreme Court proceedings aborted - issue estoppels permitting resolution of some issues for purposes of action in Federal Court - no estoppel to preclude exercise of exclusive jurisdiction by Federal Court - comity - application to stay Federal Court proceedings granted. State Ener Commission Act 1979 Trade Practices Act 1974 s.52, s.87 Jillawarra Grazing Company v John Shearer Ltd (1982) 60 FLR 339 Stack v Coast Securities tio. 9) Pty Ltd (1983) 154 CLR 261 Becher v Contour Laboratories Inc. 279 US 388 (1929) Lyons v Westinghouse Electric Corporation 222F.2d 184 (2d CIR) Wellington Financial Resources Pty Ltd v Terre Enterprises Pty Ltd [1986] ATPR 40-745 THE STATE ENERGY COMMISSION OF WESTERN AUSTRALIA v FLUOR AUSTRALIA PTY LTD and MAUNSELL & PARTNERS PTY LTD WAG 123 OF 1986 FRENCH J. - 26 March 1987 RECEIVED FEDER RALIA AINCIPAL EGISTRY IN THE FEDERAL COURT OF AUSTRALIA ) ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) ) GENERAL DIVISION No. WAG 123 of 1986 BETWEEN : THE STATE ENERGY COMMISSION OF WESTERN AUSTRALIA Applicant and FLUOR AUSTRALIA PTY LTD and MAUNSELL & PARTNERS PTY LTD Respondents MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 26 March 1987 WHERE MADE: Perth THE COURT ORDERS THAT: l. The applicant's motion is dismissed, 2. These proceedings be stayed pending the determination of the action no. 1924 of 1985 in the Supreme Court of Western Australia or further order. 3. Liberty to apply. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION ween No. WAG 123 OF 1986 BETWEE N: THE STATE ENERGY COMMISSION OF WESTERN AUSTRALIA Applicant and FLUOR AUSTRALIA PTY LTD and MAUNSELL & PARTNERS PTY LTD Respondents CORAM: FRENCH J. DATE: 26 March 1987 REASONS FOR JUDGMENT The applicant in these proceedings moves for an order restraining the first named respondent from the prosecution of cognate proceedings in the Supreme Court of Western Australia pending the determination of this application. The respondent conversely seeks to stay the proceedings in this Court pending the hearing and determination of the action in the State Court. The case concerns what might simplistically be described as the design and construction of a computerised leak detection system for the natural gas pipeline between Dampier and Perth. 2. The system in question is known as a "Supervisory Control and Data Acquisition" system but more conveniently by the acronym "SCADA". The applicant, the State Energy Commission of Western Australia ("SECWA") is a statutory body corporate deriving its existence from the State Energy Commission Act 1979. In 1980 the first named respondent ("Fluor") in association with the second named respondent ("Maunsell") (together called "Fluor-Maunsell") agreed with SECWA to provide management and associated services in connection with the construction of the pipeline (the "Pipeline Agreement"). The agreement was dated 25 November 1980 but was expressed to have commenced on 31 March 1980. The parties subsequently further agreed that Fluor Maunsell would provide consultancy services relating to the provision of a SCADA system for the pipeline (the "SCADA agreement"). The place of the SCADA agreement in the relationship between the parties 1s, on the pleadings in this and related proceedings in the Supreme Court, a matter which appears to be in dispute. mo nee 3. SECWA sets 1t up as a distinct agreement, partly oral and partly written, arising from a number of documents which came into existence between March and November 1980 together with Statements said to have been made by representatives of Fluor-Maunsell at meetings held on 26 September 1980. The parties appear to be on common ground that in June 1984 they executed a Deed of Variation by the terms of which the Pipeline agreement was varied to include the provision by Fluor-Maunsell of consultancy services in relation to the provision of the SCADA system. Fluor contended that the agreement made in that regard at the end of 1980 was an agreement to vary the pipeline agreement and in due course to execute a formal deed. Fluor claims to have provided SECWA with the requisite services but contends that SECWA has failed to pay the sum of $3,851,042.81 due to it for those services. On 28 August 1985 Fluor commenced proceedings in the Supreme Court of Western Australia claiming that amount together with interest. The proceedings from that point have a_ tortuous interlocutory history, the detail of which may be appreciated from the chronology annexed to and forming part of these reasons. 4. As can be seen from that chronology, SECWA filed a defence and counterclaim to the claim by Fluor on 16 October 1985. That pleading was amended by leave on 21 April, 16 May and 10 June 1986. The defence admits the pipeline agreement and alleges the formation of the SCADA agreement on 21 November 1980. It alleges that SECWA was induced to enter the SCADA agreement and to appoint Fluor-Maunsell as SCADA system consultants by reason of certain representations made by Fluor. These 1t 1s said, were made negligently. SECWA also alleges that Fluor-Maunsell breached the terms of the SCADA agreement and alternatively were negligent in its performance. SECWA claims a set-off by reason of the damages flowing from the negligence and breaches of contract on the part of Fluor-Maunsell. In its counterclaim SECWA pleads the various representations said to have been made to induce it to appoint -~-Fluor-Maunsell as the SCADA consultants. The representations pleaded were as follows:- . Me ee it -- ee cee mre --- 5. "(1) Fluor had personnel with extensive and relevant gas pipeline SCADA system experience and expertise who would be available to provide the SCADA services; (2) Fluor had and would provide the necessary skill, experience and expertise as consultant to carry out the engineering design and project management for the SCADA system; (3) Fluor had experience and expertise in gas pipeline SCADA system consultancy of a comparable nature and size; (4) Fluor had and would provide such skill and expertise as was reasonably necessary to ensure that the requirements of SECWA in relation to a gas pipeline SCADA system would be met in a timely Manner and at a cost within the range forecast by Fluor." (References to Fluor in the counterclaim as pleaded are references to Fluor and Maunsell as joint defendants to the counterclaim). In reliance upon these representations according to SECWA it:- "(a) Retained Fluor as SCADA consultants; (b) Accepted and relied upon its recommendations as to a design report and specifications for the SCADA system; (c) Accepted and relied upon its recommendation of Teledyne Geotech ("Teledyne") as contractor for the supply of the SCADA system ("the Teledyne Contract"); (d) Accepted and relied upon its recommendations as to conditions of contract for the construction of the SCADA system; (e) Relied upon Fluor's supervision and administration of the Teledyne Contract and of the works being carried out by Teledyne." - ee 6. The various representations are said to have been untrue and negligently made. Alternatively they, together with certain other promissory statements, are pleaded as terms of the SCADA agreement and are said to have been breached by Fluor. It is also said that Fluor-Maunsell had a contractual duty and a duty of care in the performance of all phases of the SCADA consultancy services. These, it 1s alleged, have been breached in various ways which are specified in the counterclaim. In the event SECWA's counterclaim against Fluor-Maunsell was for the sum of $14,656,678.00 and interest. By their amended defence to the re-amended counterclaim, Fluor-Maunsell allege that the SCADA consultancy services were performed pursuant to the pipeline agreement as varied and alternatively, pursuant to the SCADA consultancy agreement on terms and conditions appearing in the original pipeline agreement. One of these terms is article 12 the effect of which, was, according to Fluor-Maunsell as follows:- 7. "(1) Fluor's liability for any breach of its obligation that the Pipeline Consultancy Services and the SCADA consultancy services were to be performed in accordance with the terms of the Pipeline Agreement and to the standard of diligence, skill and care reasonably to be expected of a competent engineering and construction management consultant employed on projects of the nature and size of that undertaken by SECWA in relation to the pipeline shall not exceed in the aggregate the sum of $1.5m; and (ii) SECWA otherwise releases Fluor from all further liability in connection with the performance of the Pipeline Consultancy Services and the SCADA consultancy services whether arising in contract or by reason of fault or negligence or otherwise." SECWA filed a rejoinder to the amended reply and a reply to the amended defence to counterclaim. Paragraph 10 of the rejoinder sought to answer the pleading of article 12 by:- (i) denying that it applied to SCADA consultancy services provided under the SCADA agreement. (ii) denying that it applied to SECWA's loss and damage and the circumstances giving rise to it. (iii) pleading that 1f article 12 did apply, as alleged by Fluor, then it would be unconscionable for Fluor to rely upon it and that if found to be a contractual provision relating to the SCADA consultancy services, it should be held unenforceable or set aside. (iv) pleading that Fluor is estopped from relying upon article 12. (v) Pleading that Fluor had a duty of care to advise SECWA against appointing it a consultant subject to a contractual limitation and claiming the difference between the amount limited and the actual damage suffered. 8. Pleadings in the Supreme Court action were closed with the delivery of the rejoinder on 17 July 1986. To date they occupy some 77 pages. On 15 October, Master Stables made an order that Fluor have leave to file a bank guarantee to stand as payment into Court for the purposes of 0.24 of the Rules of the Supreme Court. A guarantee was filed pursuant to that order on 23 October. The parties exchanged discovery on 15 October there being some 5,243 documents discovered by the applicant and 16,320 by the respondent. On 28 October 1986 Master Stables gave directions including the following:- "10. The action be entered for trial by 8 June 1987 failing which the dates fixed for the trial of the action will be vacated. 11. The trial of the action be fixed to commence on Monday the third day of August 1987 before the Honourable Mr Justice Kennedy." On the same day the solicitors for the parties exchanged congratulatory telexes on the first anniversary of the institution of the proceedings in the Supreme Court. The telex from SECWA's solicitors read:- ' - 9. "Thank you for your' felicitations. Amongst' the proposals on foot are to commence proceedings afresh in the Federal Court." The humour would no doubt have been lost on anyone other than the lawyers involved. In the meantime SECWA foreshadowed an application to amend its defence and counterclaim including amendments with respect to the pleaded misrepresentations. However this intention appears to have been overtaken by its decision to institute proceedings in this Court. So much appears from a letter dated 12 December 1986 from SECWA's solicitors to Fluor-Maunsell's solicitors which stated inter alia:- "It has been our client's intention for some little time to make amendments to the defence and counterclaim. The subject of the proposed amendments now appear in the Federal Court statement of claim. However it has not been possible in the time available since our client's decision to proceed in the Federal Court, to effect the amendments to the defence and counterclaim as well as to prepare and file the Federal Court statement of claim." At the date that the motions were argued in this Court there were outstanding interlocutory matters in relation to discovery and the delivery of interrogatories to be dealt with in the Supreme Court proceedings. 6 emer. a Te en, armen rameter ARRON ET EATERS oe < 10. Each party alleged that the other's discovery was defective. SECWA intended to file a further affidavit of discovery disclosing documents which came into 1ts possession after the preparation of 1ts principal affidavit. Its further discovery was to extend to documents relating to the purchase of a new SCADA system following the approval of a contractor for the supply of such a system. SECWA claims further that there are certain classes of documents which Fluor has failed to include in its discovery. Fluor, on 19 December administered extensive interrogatories incorporating some 5 volumes of documentary annexures. SECWA as at the date of the hearing of the motions had yet to administer its interrogatories. Some explanation of the late institution of proceedings in the Federal Court was offered in an affidavit sworn by Mr C. Edmonds, a partner in the firm of solicitors acting for the applicant. ll. Mr Edmonds said in his affidavit that upon receipt and consideration of the defence to his client's counterclaim in the Supreme Court, senior counsel raised the possibility of bringing a claim against Fluor Maunsell based on its alleged contravention of s.52 of the Trade Practices Act 1974. At that time however counsel's view was that the s.52 claim would not offer any real advantage over the claim for damages for negligent misrepresentation as pleaded in the Supreme Court action. In August 1986 when documents relevant to counsel's brief had been extracted from SECWA's files, a comprehensive brief was prepared and Messrs. McCusker OC and Shaw QC were asked to give opinions on the effect of the limitation clause in the pipeline agreement. On 15 October after written opinions had been provided, senior counsel advised SECWA for the first time that there was a distinct advantage in proceeding in the Federal Court under the provisions of the Trade Practices Act. The perceived advantage resided in the power of the Court conferred by s.87 of the Trade Practices Act 1974 to make orders varying contracts or arrangements entered into between a person who contravenes a provision of the Trade Practices Act and a person who suffers or is likely to suffer loss or damage thereby. 12. The specific application of the provision contemplated by SECWA is an order varying the pipeline agreement by excision of the limitation clause, article 12. This advice was considered by all three of SECWA's counsel at a conference held in Perth in November 1986. Written advice to the effect that SECWA should institute proceedings in the Federal Court was provided in late November 1986 and accepted by the SECWA board on 10 December. Mr Edmonds contended in his affidavit that the work done so far 1n the Supreme Court in relation to the pleadings, in the provision of particulars, in giving discovery, in carrying out inspection of documents and otherwise preparing for trial, would have been substantially the same had SECWA instituted proceedings un the Federal Court at the time that Fluor issued its writ in the Supreme Court. That proposition was relied upon for the contention that the work done in the Supreme Court proceedings would not be wasted in the event that the applicant's motion were to succeed. There is some basis for that argument. In Jillawarra Grazing Company v John Shearer Ltd (1982) 60 FLR 339 Toohey J. refused to stay proceedings in the Federal wes wt reg se 13. Court instituted by the applicant in that case some 13 months after it had commenced related proceedings in the State Supreme Court. At 341 his Honour said:- "In the present case, if a stay is not granted the disadvantage to the respondent is essentially that costs which have been incurred by it in the Supreme Court may have been wasted. There are, I think, two answers to this. The first is that the entirety of the work done in the Supreme Court will not have been wasted. Discovery and interrogatories, for instance, may be equally applicable in both courts. But more importantly any such disadvantage is capable of being cured by an order for costs in favour of the defendant. It was not suggested that the proceedings in the Supreme Court had reached a point where an appropriate order for costs in favour of the defendant would not be adequate compensation." No doubt, the Court in this case could direct that discovery given in the Supreme Court proceedings stand as discovery for the purposes of the application in this Court. Leave could be given to interrogate in the terms in which interrogatories were administered in the Supreme Court and an appropriate costs order made for costs thrown away by reason of the respondents' inability to further prosecute its action in the Supreme Court. On the other hand it must be recognised that in terms of the sheer complexity of the issues of fact and law involved and the very substantial amount of work done in bringing the Supreme Court proceedings to their present stage, this case is a very different one from the Jillawarra case. 14. It 1s also relevant to note that in the Jillawarra case the rival proceedings were both instituted by the same party. In this case the proceedings in this Court were instituted by the defendant to the Supreme Court action. It is clear that the pleadings filed in the Supreme Court could not be used in this Court without' substantial restructuring. As it is, the statement of claim in this Court raises a significant number of additional misrepresentations attributed to Fluor-Maunsell and said to constitute misleading and deceptive conduct on their part. In its counterclaim in the Supreme Court, SECWA has pleaded some 4 misrepresentations, the terms of which have already been set out in these reasons. In its statement of claim in the present application SECWA (referring to Fluor Maunsell as ''Fluor') has altered the terms of the representations previously attributed to Fluor Maunsell and alleged further representations so that' the combination thereof reads as set out in paragraphs 10 and 11 of the statement of claim:- "10. In order to induce SECWA to enter into an agreement to appoint Fluor as the SCADA consultant Fluor represented to SECWA in effect that: a af ne meee na (1) (2) (3) (4) (5) 15. Fluor had the intention and the capacity to make avarlable for the SCADA services Fluor personnel with extensive and relevant gas pipeline SCADA system experience and expertise; Fluor had the intention and the capacity to provide the necessary skill experience and expertise as consultant to carry out' the engineering design and project management for the SCADA system; Fluor had experience and expertise in gas pipeline SCADA system consultancy of a comparable nature and size; Fluor had the intention and the capacity to provide such skill and expertise as was reasonably necessary to ensure that~ the requirements of SECWA in relation to a gas pipeline SCADA system would be met in a timely Manner and at a cost within the range forecast by Fluor; Fluor had the intention and the capacity to provide for and in connection with the SCADA services, as necessary, relevant specialist skill and experience from Fluor, and from Fluor Corporation Ince. and its subsidiaries and related companies ("the Fluor Group"), in that Fluor represented that: (6) (7) (8) Fluor had the experience and capability to undertake all of the activities described in the advertisement; Fluor had had specific experience in Australia with SCADA systems similar to that described in the advertisement; Fluor intended to and had the capacity to draw upon and bring to the engineering design and project management of the SCADA system the extensive experience gained in SCADA projects carried out overseas by the Fluor Group including experience gained from the Alyeska Pipeline and the gas gathering and transmission systems in Saudi Arabia and extensive capabilities in the design specification and application of SCADA systems; (9) (10) (11) (12) (13) (14) (15) 16. Fluor intended to and had the capacity to draw upon the relevant gas pipeline SCADA experience of Fluor Engineers and Constructors Inc., Fluor Ocean Services Inc., and Fluor Power Services Inc.; Fluor intended to and had the capacity to draw upon and bring to the engineering design and project management of the SCADA system up to date knowledge acquired by the Fluor Group they having kept abreast of rapidly expanding technologies in the fields of process monitoring and control, data acquisition and management information systems, supervisory and DDC computer application and advanced instrument hardware requirements; Fluor intended to and had the capacity to make available to SECWA rapid and simple interchange of information and key personnel from the Fluor Group thus ensuring that specialised talents and techniques of the Fluor Group would be available for the SCADA services; Fluor intended to and had the capacity to draw upon and integrate into its Australian operations the specialist technical skills, design capability, project management and overseas procurement resources available from the offices of the Fluor Group; Fluor intended to and had the capacity to provide: (i) specialist assistance at key stages of the SCADA services from the Fluor Group; (ii) extensive participation at key stages by a Fluor consultant with extensive SCADA system experience; There were available to Fluor, employees of the Fluor Group in the United States of America with experience of gas pipeline SCADA systems similar to that of the nominated specialist consultant to Fluor (i.e. R.I. Williams); Fluor intended to and had the capacity to make available the services of Fluor employees in the United States of America with experience of gas pipeline SCADA systems similar to that of the nominated specialist consultant to ~~, Aas HOE TEIT rT feet Xa ee FF ll. (16) (17) (18) (19) 17. Fluor (1.e. R.I. Williams) to assist with the work or in reviews or in a technical overview of the SCADA system design and specification or aS an alternative to the specialist consultant; Fluor had the expertise and capacity properly to undertake and complete each of the SCADA services and in particular it had _ the expertise and capacity to undertake engineering and detailed design of the SCADA system; Fluor had the expertise and capacity to undertake the basic conceptual design and the preparation of the specification for the purchase of the SCADA system; There were no disadvantages to SECWA, then known to Fluor, 1n the appointment of Fluor as SCADA consultant; Fluor had the capacity and intention to cause SCADA work undertaken in Australia to be overviewed by SCADA system experts from the Fluor Group, and Fluor further had _ the capacity and intention, in the event that persons dedicated to the project became unavailable, to obtain the services of experts from the Fluor Group. ("the representations"). Further, in order to induce SECWA to enter into an agreement to appoint Fluor as the SCADA consultant Fluor further represented to SECWA in effect that: (1) (2) (3) Fluor would provide as was necessary during the course of the SCADA services Fluor personnel with extensive and relevant gas pipeline SCADA system experience and expertise; Fluor would provide as was necessary during the course of the SCADA. services" skill experience and expertise as consultant to carry out the engineering design and project management for the SCADA system; Fluor would provide as was necessary during the course of the SCADA services experience and expertise in gas pipeline SCADA system consultancy of a comparable nature and size; err aren enn er os (4) (5) 18. Fluor would provide during the course of the SCADA services such skill and expertise as was necessary to ensure that the requirements of SECWA in relation to a gas pipeline SCADA system would be met in a timely manner and at a cost within the range forecast by Fluor; Fluor would provide as was necessary during the course of the SCADA services, relevant specialist skill and experience from Fluor and from the Fluor Group "the future representations.")" The insertion of the words "in that Fluor represented that" after sub-paragraph (5) of paragraph 10 of the statement of claim 1s rather puzzling as the contents of sub-paragraphs (6) to (19) inclusive of paragraph 10, do not appear to be subsidiary to the representations alleged in sub-paragraphs allege independent representations. (1) Accepting that amendments embodying allegations may be allowed in the Supreme Court, to (5) but to the additional the necessary consequential amendments to subsequent pleadings would at least work on an established foundation. On the other hand the pleading process after statement of claim in this Court would involve substantial additional work with an associated wastage of that which has been carried out in connection with the Supreme Court proceedings. In my opinion it 1s not a sufficient answer to that concern to say that the respondents in these proceedings may be 19. compensated by an order in its favour for the costs thrown away in the Supreme Court. I doubt whether any costs order could adequately compensate for the waste incurred by an_= order effectively halting the further progress of the Supreme Court proceedings at this time. Even if such an order were able to be formulated that is not the end of the matter. For what could not be recovered in full is the expenditure of public resources in bringing the case towards trial in the Supreme court. In a community of limited judicial resources, the burden of wastage of those resources falls on all and not merely on the parties to the particular proceedings in question. That is a factor which I think has particular significance in the circumstances of this case. The point of departure in deciding on the motions must however be the passage in the joint judgment of Mason, Brennan and Deane JJ in Stack v Coast Securities (No. 9) Pty Ltd (1983) 154 CLR 261 at 298 where their Honours said:- "The first and paramount consideration in the exercise of this discretion is to do what is best in the interests of the litigants. In this respect the Federal Court can resolve the entire controversy; the Supreme Court cannot do so because the second limb of s.86 of the Act stands in its way. The court which can resolve the entire controversy has an obvious' advantage. Generally speaking, its determination of all the issues will be made more effectively and more expeditiously and at less expense than the resolution of the controversy 20. which depends on determinations made by two courts in separate proceedings in which the issues are necessarily fragmented. To offset this advantage offered by the Federal Court powerful countervailing reasons need to be shown. For example, 1t may appear that the federal issue is raised at such a late stage in the Supreme Court proceedings that 1t would be a waste of time and lead to needless expense and inconvenience not to proceed to a hearing in that Court. Or it may appear that the federal issue is so insubstantial or removed from the non-federal issues that the Supreme Court should proceed with the determination of those issues. It may even appear that the federal issue 1s but one of many issues making up the entire controversy and that it is indistinguishable from one of the non~federal issues in the sense that the resolution of one necessarily leads to a resolution of the other. In such a case there will be stronger ground for allowing the action to proceed in the Supreme Court." There is no doubt that the Federal Court could in this case resolve the entire controversy between the parties. It alone 1s authorised as the law presently stands, to adjudicate upon the question whether there has been a contravention of s.52 of the Trade Practices Act 1974. It alone may determine whether, if there has been such contravention, loss or damage flows therefrom. It alone is empowered to grant relief under s.87 of the Trade Practices Act 1974. The cause of action which arises from a contravention of s.52 of the Trade Practices Act 1974 does not have, as one of its elements, the breach of a duty of care which must be established in order to make good a cause of action in negligence. 21. Nor does it require proof of a contractual obligation which must be shown in order to establish a cause of action in breach of contract. In that sense the basis upon which relief 1s available in the Federal Court 1s wider than that upon which 1t 1s available in the State Supreme Court. Further, by virtue of the provisions of s.87 of the Trade Practices Act 1974 there is a wider range of remedies available to the litigant. Counsel for Fluor Maunsell submitted that it is difficult to imagine a practical case in which s.52 would apply but ordinary common law doctrines would not. With due respect to that argument I do not consider that it does justice to the very real advantage conferred on the applicant who 1s able to invoke s.52 over the plaintiff who is limited to common law causes of action - see for example Clarke - Developments in the Use of Section 52 As An Alternative to Remedies in Tort ~ Developments in Section 52 of the Trade Practices Act - Law Press - Centre for Commercial Law and Applied -- Legal Research - Monash University at 73. It must be accepted for the purposes of this case that there is a real and legitimate juridical advantage to SECWA in proceeding in the Federal Court. wr ee we tm err i ere re ------- sist NI aig Be airy Da] 4 pe PS TREY ey ES 22. The grant of a stay of proceedings in this Court will not deprive it of that advantage but postpone its enjoyment. There are a number of factual issues capable of resolution in the Supreme Court which would, by way of issue estoppel, be so resolved for the purpose of the proceedings in this Court. If the Supreme Court were to find that the representations alleged were not made, or that they were made but were true, then there would be little room to pursue any remedy here. But that circumstance would arise because the applicant had had its day in court on those issues. There is nothing unfair about the refusal 1n such circumstances to entertain a re-run of the litigation in relation to those matters. What would be of grave concern is any possibility that by reason of proceeding in the Supreme Court, SECWA might be prevented from ventilating in this court matters within its exclusive jurisdiction. Counsel for SECWA at one point seemed to suggest that such a possibility exists. 23. The way he put it was that there 1s potential for an argument that once a decision was made by the Supreme Court giving effect to the limitation clause article 12, then the Federal Court could not delete the clause in the exercise of its powers under s.87. In my opinion however, it is beyond argument that the Supreme Court could not by its judgment prevent SECWA from invoking the exclusive jurisdiction of the Federal Court and in aid of that jurisdiction the powers conferred on it by s.87. While not embracing the possibility to which he referred, counsel for SECWA contended that the risk of any such argument would be removed if the matter were to be dealt with entirely in this Court. The possibility propounded is, in my opinion, without foundation and is not to be taken into account in determining whether or not to grant a stay of the proceedings in this Court. It is perhaps undesirable to explore further and in the abstract the extent to which State Court findings may generate estoppels in exclusive federal jurisdiction. I was not referred to any Australian authority on the subject and my own researches have not discovered any. eon TO THis Sas wo RACE} SE PEAT 24. There 1s one decision of the United States Supreme Court on the subject to which I was referred, namely Becher v Contour Laboratories Inc. 279 US 388 (1929). That case concerned a machinist employed by an inventor to construct an invention. Contrary to the terms of his contract of service, the employee obtained the issue of a patent for himself. His employer sued him for damages in a State Court claiming breach of contract and fiduciary duty. Becher instituted proceedings for patent infringement in the Federal Court. The issues of fact and law in the two suits being similar, the Supreme Court upheld an appellate court ruling that State Court determinations precluded relitigation of those issues in the Pederal Court. The grant of exclusive jurisdiction as the Court said "does not give sacro-sanctity" to questions of fact which might be conclusive of the federal claim. The Court drew a distinction between establishing a fact and giving a specific effect to it by judgment. In Lyons v Westinghouse Electric Corporation 222F.2d 184 (2d CIR) Westinghouse had sued Lyons in a State Court for breach of an agency contract. Lyons raised the defence that the agreement was contrary to Federal anti trust law. The State Court found that defence without merit and found for Westinghouse. While an appeal from the State Court decision was pending, Lyons instituted proceedings against Westinghouse in the a nr 25. Federal District Court for breach of the anti trust laws. The District Court stayed the federal proceedings pending resolution of the State action, but the second circuit issued a writ of mandamus ordering the District Court to vacate the stay. The District Court's stay of federal proceedings assumed that State findings on the federal issues would prevent consideration of these issues in the federal action. Judge Learned Hand writing for the majority, held that exclusive federal jurisdiction over anti trust claims required a more limited preclusive effect and made a distinction between the finding of one of the constituent facts that together make up a claim and the entire congeries of such facts taken as a unit. This distinction it has been said, 1s generally equated with the distinction between findings of fact and the application of law to fact. - see The Collateral Estoppel Effect of Prior State Court Findings in Cases Within Exclusive Federal Jurisdiction ~ 91 Harvard Law Review 1281 at 1284. The application of that approach in the present case would I think, lead to the conclusion I have formed that this Court is not precluded by any decision of the Supreme Court from the exercise of its exclusive jurisdiction. Reference was also made in argument to the need to respect principles of comity between the Federal Court and the State Supreme Courts. ey OF eer = 26. The term "comity" in its judicial context derives primary meaning from the Law of Nations in which principles of comity are distinguished from rules of international law proper asi- ",..Rules of goodwill and civility founded on the moral right of each State to receive courtesy from others." - Starke - Introduction to International Law 8th Edition at 22. It is I think in that sense that comity is used to describe the principles that should govern the relations between courts of co-ordinate or overlapping jurisdiction. A direct application of principles of comity would arise if the Supreme Court had been asked to stay its own proceedings pending the outcome of the action in this Court and had declined to do so. An order of this Court restraining a party from continuing with proceedings in the Supreme Court would in such circumstances, conflict with the decision of that court and would affect comity - Wellington Financial Resources Pty Ltd v Terre Enterprises Pty Ltd [1986] ATPR 40-745 at 48, 120 per Woodward J. No such direct conflict arises in this case. Nevertheless the work done in the Supreme Court to date in connection with the action and the allocation of time for its 27. trial, represents a considerable investment of judicial resources by that court. It seems at least likely that the commitments which have been made to the hearing of the action have impinged upon the process of planning the allocation of judicial time in that court. Considerations of comity and the efficient use of resources both therefore weigh in favour of a stay of the proceedings in this Court pending the outcome of the action in the Supreme Court. Accepting that the Federal Court is the forum in which the entire controversy between the parties could be litigated, there are in this case powerful countervailing reasons which favour a stay of these proceedings until the conclusion of those in the Supreme Court. Viewed globally it may not be the most convenient disposition of the dispute involving as it may, consecutive litigation in two courts. That inconvenience however is a necessary consequence of the institution of proceedings in this Court more than a year after those in the Supreme Court were commenced and the events that have occurred in the meantime. It is in my view outweighed by the various factors to which I have already referred favouring the disposition in the Supreme Court of the common law elements of the contoversy. eof 28. I will therefore dismiss the applicant's motion and make in favour of the respondents an order that these proceedings be stayed pending the determination of the action in the Supreme Court or further order. There will of course be liberty to apply in the event that any unforeseen delay in the progress of the Supreme Court proceedings might unnecessarily prejudice the applicant in the prosecution of its action in this Court. I hereby certify that this and the preceding twenty seven (27) pages are a true copy herein of the Reasons for Judgment of his Honour Mr Justice French. Associate: Clgateth Me nolerer Date: Lb * Mart (767 vr ae PETER OUI 29. Counsel - for the applicant Mr M. McCusker Q.C. and Mr C. Edmonds instructed by Messrs. Jackson McDonald . for the respondents Dr. C. Pannam 0.C. and Mr C. Steytler instructed by Messrs. Parker & Parker Date of Hearing: 23 January 1987 Date of Judgment: 26 March 1987 28/08/85 09/09/85 18/09/85 16/10/85 11/11/85 05/12/85 12/03/86 13/03/86 15/04/86 18/04/86 21/04/86 21/04/86 12/05/86 14/05/86 15/05/86 16/05/86 19/05/86 filed 30/05/86 04/06/86 "HRONOLOGY Supreme Court Action No 1924 of 1985 FLUOR v. SECWA Writ failed Appearance filed Statement of Claim filed Defence and Counterclaim filed Summons to strike out the Defence and Counterclaim filed First day of the strike out application Second and third days of the strike out application Decision handed down on the strike out application Sumrons for directions Defence and Counterclaim ordered to be struck out Directions - Directions ordered Amended Defence and Counterclaim filed Summons for an Order that the amended defence and counterclaim made comply with Order 21 Rule 9 of the Supreme Court Rules Summons for leave to further amend the amended defence and counterclaim Ordered that the amended defence and counterclaim be uplifted, amended further and substituted Further amended defence and counterclaim Summons to strike out the further amended defence and counterclaim Bill of costs for the strike out application heard on 05/12/85 and 12-13/03/86 taxed 09/06/86 10/06/86 10/06/86 10/06/86 16/06/86 16/06/86 02/07/86 10/07/86 10/07/86 10/07/86 17/07/86 24/07/86 31/07/86 31/07/86 31/07/86 01/08/86 Summons for leave to amend further' the further amended defence and counterclaim Summons for directions Orders for leave to further amend the further amended defence and counterclaim Orders for further directions Request for further and better particulars of the reamended defence and counterclaim Reply to reamended defence and defence to reamended counterclaim filed Amended reply to reamended defence = and amended defence to reamended counterclaim filed Summons for orders compelling SECWA to comply wath directions Summons for further directions Request for further and better particulars of amended reply to reamended defence and amended defence to reamended counterclaim Rejoinder to amended reply to reamended defence and a reply to amended defence to reamended counterclaim filed Summons for orders extending the time for discovery and varying the directions filed by SECWA Request for further and better particulars of the rejoinder to amended reply to reamended defence and reply to amended defence to reamended counterclaim Answers to requests for further and better particulars of the amended reply to reamended defence and amended defence to reamended counterclaim Orders varying the directions Orders compelling SECWA to answer the request for further and better particulars of the rejoinder to amended reply to reamended defence and their reply to amended defence to reamended counterclaim 2. ee tagEros ot cod XN Ep! Wire 12/08/86 13/08/86 20/08/86 22/08/86 08/10/86 09/10/86 15/10/86 15/10/86 23/10/86 28/10/86 28/10/86 08/12/86 17/12/86 17/12/86 19/12/86 2855E/jm Summons for orders compelling SECWA_ to comply with the orders made on 31/07/86 Springing order against SECWA for failure to comply with the orders made on 31/07/86 Answers to the request for further and better particulars of reamended defence and counterclaim filed Answers to the requests for further and better particulars of the rejoinder to the amended reply to reamended defence and of the reply to the amended defence to reamended counterclaim filed Summons for further directions filed Summons for leave to make a payment into court by bank guarantee Affidavits and list of documents filed Leave to pay into court with bank guarantee Notice of payment into court and bank guarantee filed Consent orders and directions Amended statement of claim filed Summons for leave to further amend reamended defence and counterclaim Minute of further amendments to reamended defence and counterclaim filed Summons for orders compelling further and better particulars of reamended defence and counterclaim and rejoinder and reply filed Interrogstories Fluor to SECWA