McNamara's Group Constructions Pty Ltd v The University of Western Sydney & Anor [1997] FCA 732

FEDERAL COURT OF AUSTRALIA

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. 776 of 1996 ) GENERAL DIVISION )

BETWEEN: McNAMARA'S GROUP CONSTRUCTIONS PTY LIMITED

Applicant

AND: THE UNIVERSITY OF WESTERN SYDNEY

First Respondent

R K SNEDDEN

Second Respondent

JUDGE: WHITLAM J PLACE: SYDNEY DATED: 8 AUGUST 1997

MINUTES OF ORDER

THE COURT ORDERS THAT: 1. Pursuant to s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 the proceeding is transferred to the Supreme Court of New South Wales. 2. The applicant pay the respondents' costs of the motion for transfer of the proceeding. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. 776 of 1996 ) GENERAL DIVISION )

BETWEEN: McNAMARA'S GROUP CONSTRUCTIONS PTY LIMITED

Applicant

AND: THE UNIVERSITY OF WESTERN SYDNEY

First Respondent

R K SNEDDEN

Second Respondent

JUDGE: WHITLAM J PLACE: SYDNEY DATED: 8 AUGUST 1997

REASONS FOR JUDGMENT The respondents have moved the Court for an order under s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 ("the Act") transferring this proceeding to the Supreme Court of New South Wales. The motion is opposed by the applicant. The applicant commenced this proceeding by filing with its application a statement of claim. As a pleading, it is an extraordinary document, comprising fifty-eight pages to which are annexed twenty-one pages of "schedules". The statement of claim also refers to "Arch File Schedules" said to be appended to it, although they do not appear to have been filed. The pleading is prolix and embarrassing. Nonetheless, it shows the nature of the applicant's claims. The statement of claim initially alleges several breaches by the first respondent of its obligations under two contracts. Copies of both contracts have been tendered by the respondents and received in evidence. They are dated respectively 30 May 1995 and 21 June 1995 and provide for the applicant to execute building works on the first respondent's campus at Blacktown. Each contract includes the Australian Standard form General Conditions of Contract 4th edition (AS 2124 - 1992). Notwithstanding that the statement of claim alleges breaches of contract, the applicant makes several claims for payment under the very terms of the contracts alleged to have been breached. These terms include provisions relating to amounts payable in respect of payments to subcontractors and relating to the valuation of variations to the works. The applicant also claims damages for breaches of alleged terms relating to furnishing information, providing adequate plans, obtaining approvals of authorities and giving necessary directions. These breaches are alleged to have occasioned loss and damage by reason of delay in the "critical path" of the works. The statement of claim contains a meaningless plea of estoppel, which may be meant as a reply in anticipation of a defence. There are claims against the first respondent for damages occasioned by delay and disruption and by acceleration of the works, which are not pleaded as causes of action at all. There is also a quantum meruit claim for all the works executed by the applicant at the request of the first respondent. The statutory causes of action pleaded against the first respondent rely on the Trade Practices Act 1974. The conduct alleged to have contravened s 52 of that Act consists of fourteen representations allegedly made by the first respondent, of which nine are defined as the "tender" representations and five as the "agreement" representations. These representations relate to aspects of the two contracts and the works executed by the applicant. (Curiously two of the "tender" representations are alleged to be "implied for the purposes of business efficacy", although they are later alleged to be, along with the other representations, false.) These same representations are also alleged to found causes of action in negligence against the first respondent. The applicant also claims against the second respondent, who was the superintendent appointed under each of the contracts. He is alleged to have breached a duty owed to the applicant "not to cause it economic loss" by the "careless or arbitrary" exercise of his powers. In addition to this negligence count, the applicant impugns the second respondent's conduct as constituting a contravention of the Trade Practice Act or of the Fair Trading Act 1987 (NSW). The respondents adduced evidence of the variations in dispute under the two contracts. This evidence indicated the number of claims, the different kinds of work and the amounts in issue. Without going into the detail, it is clear that the dispute between the parties is multifaceted. Enough has been said to indicate that, however it is dressed up, this proceeding is a "building case" and would be readily so labelled by any experienced litigator. That is why the respondents wish to transfer it to the Supreme Court. There they can require the proceeding be entered in the Construction List and can apply to have questions arising in it referred to a referee for inquiry and report. Part 14A of the Supreme Court Rules 1970 (NSW) provides for a Construction List. Additional provision for the conduct of proceedings in the Construction List is made by way of Practice Note No. 89: (1996) 38 NSWLR 382. This practice note is required to be gazetted, and I may take judicial notice of its contents. Directions hearings are held every week, and orders may be made for the reference to a referee of the whole of a proceeding or any question arising in it. The usual order for reference includes a direction that: "(c) the referee consider and implement such manner of conducting proceedings under the reference as will, without undue formality or delay, enable a just determination to be made including, if the referee thinks fit: (i) the making of inquiries by telephone; (ii) site inspection; (iii) inspection of plant and equipment; and (iv) communication with experts retained on behalf of the party [sic];" Such a direction is given under Pt 72 of the Supreme Court Rules, the provisions and history of which were explained in Super Pty Ltd (fka Leda Constructions Pty Ltd) v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 by Gleeson CJ at 556-560. His Honour pointed out that the Supreme Court Act 1970 (NSW) was amended to permit the making of the rules which provide for such a reference, and he referred to special considerations affecting delegations by Federal judges of judicial powers. In any event, such a facility is not available in this Court. Reference to a referee under Pt 72 of the Supreme Court Rules involves what Giles J described as a "special mode of trial": Leighton Contractors Pty Ltd v CE Heath Underwriting & Agency Services Limited (1994) 12 BCL 415 at 418. Counsel for the respondents accepts that in the present case sub-par (iii) of subs 5(4) of the Act is applicable and, accordingly, it must appear that it is "in the interests of justice that the ... proceeding be determined by the Supreme Court". He submits that the statement of claim and the evidence before the Court show that a determination of the issues likely to be in dispute will require a detailed factual examination of the circumstances surrounding the progress of the works. These questions are appropriate for referral to a referee for inquiry and report. That facility exists in the Supreme Court, not in this Court. The special mode of trial will permit the just, quick and cheap disposal of the proceeding. Counsel also relied upon the observation of Wilcox J that "greater flexibility in regard to Court-controlled arbitration may constitute a reason for determining that it is "in the interests of justice" to transfer the proceeding to the Supreme Court": Trade Practices Commission v Collings Construction Co Pty Ltd (1994) 53 FCR 137 at 147. Finally, counsel submits that the Supreme Court is the appropriate court to determine this proceeding since all the matters for determination are within its jurisdiction, whereas only those arising under the Trade Practices Act are, apart from the cross-vesting scheme and any accrued jurisdiction, within the jurisdiction of this Court. The solicitor for the applicant submits that the nature or subject matter of the contract should not be determinative of the question in which court the proceeding will be tried. He contends that, in the absence of a defence being filed, it cannot be assumed that the case will involve lengthy technical evidence suitable for consideration by a referee. Indeed, he goes so far as to say that the whole proceeding might be disposed of by answering a question of interpretation arising under the General Conditions of Contract. Dr Doyle further submits that the applicant is entitled to choose this Court as the forum for determination of the matters in the proceeding. His client is entitled to have his case heard by a judge and not to have it transferred to a "boutique" list, where his claims may effectively be determined by some person such as an engineer or architect. Indeed, he firmly, but politely, cautions me that I must guard against fettering the exercise of my discretion by adherence to a policy that all building or construction cases should be transferred, where transfer is sought to a Supreme Court with such a specialist list. Two particular matters are also relied on in the present case. The first is that the applicant has made an offer of compromise under O 23 of the Federal Court Rules. It is submitted that the making of such an offer does not fall within the expression "steps that had been taken for the purposes of the proceeding" used in s 11(3) of the Act so that, if the proceeding is transferred, the applicant will lose the possibility of being entitled to have a costs order taxed on an indemnity basis under O 23 r 11(4). The other matter relates to the discrepancy between filing fees in this Court and in the Supreme Court. The fee payable on filing the application commencing this proceeding was $1,200. The fee payable on filing a summons commencing proceedings in the Commercial List of the Supreme Court would have been only $485. Dr Doyle submits that transferring this proceeding to the Supreme Court would amount to an acquisition of property otherwise than on just terms within the meaning of s 51(xxxi) of the Constitution. This is said to be so because it would involve the extinguishment of (1) the applicant's "chose in action with respect to its offer of compromise" and (2) its "right to litigate" in this Court consequent upon the acceptance of its filing fee. He also submits that a direct benefit or financial gain flows to the Commonwealth equivalent to the difference in filing fees. I respectfully agree with what Wilcox J said in Trade Practices Commission v Collings Construction Co Pty Ltd (at 148-149) about the "interests of justice" including adjectival matters. I propose to follow the approach mandated by the New South Wales Court of Appeal in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 714. Dr Doyle's submission that this case is likely to be disposed simply of on a construction point is rejected. It is apparent from the statement of claim that this case will involve a detailed consideration of many aspects of the works. A defence is not necessary to see that, although such a perception is reinforced by the material adduced by the respondent. The judges administering the Construction List in the Supreme Court are vastly experienced in determining whether questions should be referred out and, if so, what kind of expertise a referee should have to deal with the reference. Most importantly, proceedings under a reference will be informal and will be conducive to a quick and cheap resolution of the dispute. The applicant will have an opportunity to be heard on what questions, if any, should be referred to a referee. Super Pty Ltd and Leighton Contractors show how a judge, in reviewing a referee's report submitted under Pt 72 of the Supreme Court Rules has a judicial discretion to exercise in deciding whether to adopt, vary or reject it. I am firmly of the view that, having regard to the range of matters in dispute and their nature, this case can be better managed in the Supreme Court. So far as the applicant's offer of compromise is concerned, this is plainly a matter that the Supreme Court may take into account in moulding any eventual costs order in favour of the applicant. Counsel for the respondent concedes as much. A difference in fees, such as daily hearing fees, might be a relevant consideration if it affected a party's ability to sustain litigation in one court rather than another. But that is not the case here. Order 23 of the Federal Court Rules does not create any cause of action. Fees payable in this Court are prescribed by the Federal Court of Australia Regulations. The payment of such a fee does not invoke any acquisition of property by the Commonwealth. Nor will the making of an order for transfer to the Supreme Court invoke the acquisition of any "right" to litigate in this Court. The matters for determination in the proceeding will simply be determined in another court. The respondents seek an order that the proceeding be transferred to the Construction List of the Supreme Court. That is not an appropriate order. Listing arrangements in that court are a matter for it. However, under the Supreme Court Rules the respondents may require the proceeding to be entered in that list by appropriately endorsing their defence. They will be required to move for directions at the same time. The motion has been vigorously contested. Each side seeks costs. I order that this proceeding be transferred to the Supreme Court of New South Wales and that the applicant pay the respondents' costs of the motion. I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam