IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No NG249 of 1993 GENERAL DIVISION ) On an appeal from a single judge of the Federal Court of Australia BETWEEN: NEW WORLD OIL AND DEVELOPMENTS PTY LIMITED First Applicant JAMINO PTY LIMITED Second Applicant AND: 163 CLARENCE STREET PTY LIMITED First Respondent OPTIMUS PTY LIMITED Second Respondent CARRIER AIR CONDITIONING PTY LIMITED Third Respondent INTERIOR DIRECTIONS PTY LIMITED Fourth Respondent COURT: Black CJ, Jenkinson and Gummow JJ DATE: 6 March 1995 PLACE: Melbourne MINUTES OF ORDER The Court orders that: 1. Leave to appeal be granted. 2. The appeal be allowed. 3. The order of Einfeld J made on 24 February 1995, that the respondents' motion for a joint hearing of the claims and cross-claims be dismissed, be set aside. 4. The claims and the cross-claims be heard before the same judge and at the same time. 5. The fixture of the proceeding for trial on 13 March 1995 be confirmed. 6. The costs of the motion before Einfeld J be reserved to Einfeld J. 7. 163 Clarence Street Pty Limited pay the costs of New World Oil & Developments Pty Limited, Jamino Pty Ltd and Carrier Air Conditioning Pty Limited of the application for leave to appeal and of the appeal. Note: Settlement and entry of orders is dealt with under Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No NG249 of 1993 GENERAL DIVISION ) On an appeal from a single judge of the Federal Court of Australia BETWEEN: NEW WORLD OIL AND DEVELOPMENTS PTY LIMITED First Applicant JAMINO PTY LIMITED Second Applicant AND: 163 CLARENCE STREET PTY LIMITED First Respondent OPTIMUS PTY LIMITED Second Respondent CARRIER AIR CONDITIONING PTY LIMITED Third Respondent INTERIOR DIRECTIONS PTY LIMITED Fourth Respondent COURT: Black CJ, Jenkinson and Gummow JJ DATE: 6 March 1995 PLACE: Melbourne REASONS FOR JUDGMENT BLACK CJ: This is an application for leave to appeal from an order made by Einfeld J refusing an application by New World Oil and Developments Pty Limited ("New World") and Jamino Pty Limited ("Jamino") for the hearing of the applicant's claim against the respondents and the hearing of the respondents' claim against the cross-respondents to be returned to a joint hearing. The nature of this complicated litigation is described in the judgment appealed from and in earlier judgments of the learned primary judge delivered on 31 May and 25 November 1994 and need not be repeated here. I should note, however, that the applicant's claim against the respondents has been set down for hearing on 13 March 1995 and five days have been set aside for that purpose. The learned primary judge made an order on 31 May 1994 allowing the respondents to cross-claim against Optimus Pty Limited. On that occasion his Honour said: It is clear that the evidence to be brought in relation to the cross claim would cover aspects such as the cost of remedying the defects to the [air conditioning] system and the reduction in rental and resale price resulting from its defects. This evidence would not overlap with the evidence in the application itself. However, the major issues are the same, namely whether the system was "state of the art" or "hi-tech" and whether it was defective. It seems that in both sets of proceedings, expert evidence will be necessary and probably all or some of the same witnesses will give that evidence. On 25 November 1994, however, his Honour directed that the claim and the cross-claim be heard separately but he reserved liberty to make a further application for a joint hearing. It was pursuant to the leave so reserved that the present matter came before his Honour on the motion of New World on 4 January 1995. His Honour delivered judgment on 24 February 1995 dismissing the motion for a joint hearing of the claims and cross-claims. He referred to various matters in favour of a joint hearing including the risk of evidentiary overlap, repetition of evidence and the possibility of inconsistent findings. His Honour also referred to authorities, such as Standen v G.H. Varley Pty Ltd [1956] SR(NSW) 346, a decision in which the well known statement of Owen J appears at page 347. In a passage cited with approval many times since, Owen J said: In passing, I would say that in my view it is only in exceptional circumstances that the power [to order a separate trial of the issues between a defendant and a third party] should be exercised, since it is obvious that as a matter both of convenience and justice it is most desirable that the same tribunal should, at one and the same time, determine the rights and liabilities of all the parties concerned. His Honour was there speaking of matters arising for consideration under the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s.3, but the same principle applies here. Einfeld J also referred to Barclays Bank v Tom [1923] 1 KB 221 and Godfrey v Nominal Defendant; Burgess (Third Party) [1963] 63 SR(NSW) 412. It would appear, however, that his Honour was greatly influenced in his decision to reject the joint hearing by a statement made by counsel for the lessee, 163 Clarence Street Pty Limited ("163 Clarence"), to the effect that no technical evidence would be led by the lessee as to the cause of the alleged inadequacy of the air conditioning system. His Honour was also influenced by his conclusion that if the hearings were joined they could not commence on 13 March 1995 so that the lessee would be subjected to further delay. In these respects, I am persuaded that his Honour was in error. Accepting that the lessee does not propose to prove systemic or fundamental faults in the system by expert witnesses called by itself, but proposes to confine its evidence to matters of observation, it does not follow that the problems that a joint hearing is ordinarily intended to avoid will, in fact, be avoided. New World will argue by way of defence on the facts that any observed deficiencies in the system are attributable to the lessee's fit-out. It will call expert evidence to that effect. The lessee says that this evidence will amount to little but it will no doubt need to meet it and will no doubt wish to do so by cross-examining the witnesses who give that evidence. The trial judge will then have to make findings of fact about the issues so raised by New World and the relationship between any observed deficiencies and the fit-out. Only in that way will it be possible to resolve the primary issues between the lessee and New World should it be necessary to determine whether the alleged representations were in truth misleading or deceptive. These findings of fact will bear directly on the issues raised in the cross-claims. Thus regardless of how the case is presented on behalf of the lessee, there would arise problems of over-lapping issues, repetition of evidence and the possibility of inconsistent findings on the same or different evidence: cf. Barclays Bank v Tom [1923] 1 KB 221 at 224 per Scrutton LJ. Given the strength of the considerations in favour of hearing all matters at the one time, as to which reference should also be made to s.22 of the Federal Court of Australia Act 1976, I consider that his Honour ought to have made an order for a joint hearing. His Honour was, in my view, in error in proceeding on the footing that "normally" claims and cross-claims arising out of the same subject matter will be heard together; the authorities to which I have referred put the position higher than that. As I have said, I consider that his Honour was also in error in taking the view that the trial could not commence on 13 March as a joint hearing. In my view, there is no good reason why the trial should not commence on that date as a joint hearing. The case can be opened and the evidence for the applicant called, although the applicant's case should probably not be allowed to conclude during those five days so that other parties, such as Carrier Air Conditioning Pty Limited ("Carrier"), who are newly joined, might at a later stage have an opportunity to cross-examine the applicant's witnesses if there is any need to do so. Although Mr Hayes, QC for the applicant in the proceeding argued persuasively that the matter should be left to be worked out when the case next comes before the trial judge, I do not consider this provides a sufficient answer to the arguments in favour of the grant of leave to appeal. In these circumstances, although the court is naturally reluctant to grant leave to appeal from decisions involving matters of practice and procedure, I consider that leave should be granted to avoid injustice resulting from further procedural complexity. In these circumstances, I would grant leave to appeal. I would allow the appeal and set aside the order of Einfeld J made on 24 February 1995 that the respondent's motion for a joint hearing of the claims and cross-claims be dismissed. In lieu thereof, I would order that the claims and the cross-claims be heard before the same judge at the same time. I would order that the fixture of the proceeding for trial on 13 March be confirmed. I would order that the costs of the motion before Einfeld J be reserved to him and I would order that 163 Clarence pay the costs of New World, Jamino and Carrier of the application for leave and of the appeal. JENKINSON J: I agree and I have nothing to add. GUMMOW J: I agree and I have nothing to add. The Court orders that: 1. Leave to appeal be granted. 2. The appeal be allowed. 3. The order of Einfeld J made on 24 February 1995, that the respondents' motion for a joint hearing of the claims and cross-claims be dismissed, be set aside. 4. The claims and the cross-claims be heard before the same judge and at the same time. 5. The fixture of the proceeding for trial on 13 March 1995 be confirmed. 6. The costs of the motion before Einfeld J be reserved to Einfeld J. 7. 163 Clarence Street Pty Limited pay the costs of New World Oil & Developments Pty Limited, Jamino Pty Ltd and Carrier Air Conditioning Pty Limited of the application for leave to appeal and of the appeal. I certify that this and the preceding 6 pages are a true copy of the Reasons for Judgment herein of the Court. Associate: Date: 6 March 1995 Counsel for the Applicants : J.D. Heydon QC C.P. Comans Solicitors for the Applicants : Corrs Chambers Westgarth Counsel for the First Respondent : P.R. Hayes QC D. Libling Solicitors for the First Respondent : Gadens Ridgeway Solicitors for the Second Respondent :Phillips Fox Counsel for the Third Respondent : R. Forbes Solicitors for the Third Respondent : Mallesons Stephen Jacques The Second Respondent was excused from appearing by the Court. Date of Hearing : 6 March 1995 Place of Hearing : Melbourne Date of Judgment : 6 March 1995