FEDERAL COURT OF AUSTRALIA Total Development Supplies Pty Ltd v GRD Building Pty Ltd [2007] FCA 2032 TOTAL DEVELOPMENT SUPPLIES PTY LTD v GRD BUILDING PTY LTD (ACN 114 871 082) NTD 19 OF 2007 REEVES J 17 DECEMBER 2007 DARWIN IN THE FEDERAL COURT OF AUSTRALIA NORTHERN TERRITORY DISTRICT REGISTRY NTD 19 OF 2007 BETWEEN: TOTAL DEVELOPMENT SUPPLIES PTY LTD Applicant AND: GRD BUILDING PTY LTD (ACN 114 871 082) Respondent JUDGE: REEVES J DATE OF ORDER: 17 DECEMBER 2007 WHERE MADE: DARWIN THE COURT ORDERS THAT: 1. The applicant's notice of motion dated 11 December 2007 be dismissed. 2. The applicant pay the respondent's costs of and incidental to the notice of motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NORTHERN TERRITORY DISTRICT REGISTRY NTD 19 OF 2007 BETWEEN: TOTAL DEVELOPMENT SUPPLIES PTY LTD Applicant AND: GRD BUILDING PTY LTD (ACN 114 871 082) Respondent JUDGE: REEVES J DATE: 17 DECEMBER 2007 PLACE: DARWIN REASONS FOR JUDGMENT INTRODUCTION 1 This is an application for an anti-suit injunction by Total Development Supplies Pty Ltd (TDS) on the ground that certain appeal proceedings being pursued by GRD Building Pty Ltd (ACN 114 871 028) (GRD) in the Local Court at Darwin are vexatious or oppressive. In the alternative TDS seeks a stay of the Local Court appeal proceedings relying upon the inherent jurisdiction of the Supreme Court to control the processes of inferior courts in the interests of justice. TDS claims the Federal Court can exercise this jurisdiction relying upon the Jurisdiction of Courts (Cross Vesting) Act of the Commonwealth and Northern Territory. BACKGROUND 2 On 17 January 2006 (although this date appears to be disputed) GRD, as the head contractor, and TDS, as the subcontractor, entered into a "standard minor works subcontract" for the supply and installation of various materials in connection with the construction of an eight level residential apartment building in Darwin to be known as the Cascade Apartments. During the term of this contract a dispute arose between GRD and TDS. For its part TDS claims that GRD made representations to it about the dimensions of various parts of the apartment building and the program of works for the construction of the apartment building which were misleading or deceptive in breach of s 52 of the Trade Practices Act. On the other hand GRD claims that TDS failed to perform its obligations under the contract within the time required thus necessitating GRD completing those obligations at its expense. 3 In October 2007 GRD decided to pursue its claims against TDS by making an application to have a payment dispute adjudicated under the provisions of s 28 of the Construction Contracts (Security of Payments) Act Northern Territory. Within a couple of days of this application being lodged, Mr Brian Gallaugher was appointed as the adjudicator to determine the payment dispute under that Act. After receiving written submissions about the issue, on 26 November 2007 Mr Gallaugher determined that GRD's application had not been made within the time limits set by s 28 of the Construction Contracts (Security of Payments) Act and dismissed GRD's application. This led GRD to apply to the Local Court at Darwin on the 29th of November 2007 seeking a review of the adjudicator's decision pursuant to the provisions of s 48 of the Construction Contracts (Security of Payments) Act. These are the Local Court appeal proceedings to which TDS's application is directed. 4 For its part, TDS decided to pursue its claims against GRD by filing an application in the Federal Court on 23 November 2007. TDS's application to this Court was supported by a statement of claim. At the first directions hearing on 5 December 2007, I made various directions and gave the proceedings an indicative trial date of the four days commencing 21 April 2008. During that directions hearing I was told about the existence of the Local Court appeal proceedings and the intention of both parties to seek to stay the others' proceedings. One of the directions I gave at that directions hearing was that GRD should file a defence and any cross claim it has to TDS's statement of claim on or before 14 January 2008. 5 On 11 December 2007 TDS filed the notice of motion which has led to this decision. That notice of motion was supported by an affidavit sworn by Paul Gerard Maher with numerous annexures which set out much of the history of the dispute between the parties. I do not need to go into the detail of that history here. On 12 December 2007 GRD filed a notice of motion seeking to have these proceedings stayed until further order. At this stage I am only required to determine the former notice of motion. During the course of submissions I was informed that the Local Court appeal proceedings have now been set down for hearing for one day on 25 February 2008. THE SUBMISSIONS 6 Mr Ford of counsel for TDS submitted that the Local Court appeal proceedings being pursued by GRD have the effect of being vexatious or oppressive. He did not submit that those proceedings were lodged for that purpose; he submitted he did not have to go that far. Mr Ford relied upon the principles set out in the High Court's decision of CSR Limited v Cigna Insurance Australia Ltd [1996 – 1997] 189 CLR 345, particularly at 393. That decision establishes, among other things, that where litigation is pending in one jurisdiction and a party to that litigation commences proceedings in another jurisdiction (in that case a foreign jurisdiction), when complete relief may be had in the first proceedings in the sense that there is nothing to be gained by the second proceedings over and above what may be gained in the first, the commencement of the second set of proceedings is generally considered to be vexatious or oppressive to the opposite party. Based on that principle Mr Ford submitted that the Local Court proceedings are vexatious or oppressive of TDS. He submitted that the Local Court appeal proceedings will involve TDS in unnecessary costs and they will act as a distraction to it in its pursuit of its proceedings in this Court, all for no benefit. On the question of unnecessary costs, Mr Ford pointed out that even if TDS succeeds against GRD in the Local Court appeal proceedings, TDS would not be entitled to an order for costs in its favour because O 38.09 of the Local Court Rules provides each party is to bear its own costs of such an appeal. 7 Mr Roper for GRD began by referring to s 47 of the Construction Contracts (Security of Payments) Act. While he accepted that despite GRD's notice of motion seeking to stay these proceedings, TDS was probably entitled under s 47(1) of that Act to pursue its proceedings against GRD in this Court, he submitted that s 47(2) of that Act made it clear that the proceedings in this Court could not be used as a basis to stay the adjudication proceedings under the Construction Contracts (Security of Payments) Act because that section provides: "If other proceedings are started in relation to a payment dispute that is being adjudicated under this Part, the adjudication must proceed despite the proceedings unless all of the parties, in writing, require the appointed adjudicator to discontinue the adjudication." Mr Roper attempted to extend that embargo to the Local Court appeal proceedings by claiming that they were an integral part of the adjudication process. I do not accept that submission because the word "adjudication" is defined in s 4 of the Construction Contracts (Security of Payments) Act to mean "the adjudication of a payment dispute under Part 3" and in my opinion that limits the operation of s 47(2) to the adjudication of the payment dispute and does not extend to any review of an adjudicator's decision under s 48 of that Act. However that is not fatal to GRD's position. 8 Turning to the Local Court appeal proceedings, Mr Roper submitted that if his client is successful in its appeal the Local Court will be required by s 48 of the Construction Contracts (Security of Payments) Act to refer the matter back to the adjudicator to make a determination under s 33(1)(b) of that Act. That section effectively requires the adjudicator to determine the application on its merits under the provisions of that Act. I should interpolate that Mr Ford disputes this construction and says that TDS will be entitled to raise at least two further preliminary issues if the matter is referred back to the adjudicator and before the adjudicator determines the application on its merits. I do not need to determine this issue here. 9 Mr Roper submitted that if his client is successful in having the matter referred back to the adjudicator and it is wholly or substantially successful in its application on the merits under the provisions of the Construction Contracts (Security of Payments) Act, then his client will have a determination which can be enforced as a judgment in a court of competent jurisdiction pursuant to s 45 of that Act. In that event he submitted his client may not wish to raise any cross claim in these proceedings. Mr Ford responded that even if that is so, his client will be entitled to challenge such a determination by seeking restitution pursuant to s 47(4)(b) of the Construction Contracts (Security of Payments) Act. I am not certain that s 47(4)(b) of that Act has that effect but again I do not need to determine that issue here. DECISION 10 In my view TDS's application for an anti-suit injunction to prevent GRD pursuing the Local Court appeal proceedings must fail. The Local Court appeal proceedings could only have the effect of being vexatious or oppressive if complete relief may be had in the proceedings in this Court in the sense that there is nothing to be gained by the Local Court appeal proceedings over and above what may be gained in the proceedings in this Court: see CSR Limited v Cigna Insurance Australia Ltd [1996 – 1997] 189 CLR 345. Under the express provisions of s 48 of the Construction Contracts (Security of Payments) Act, GRD can only obtain a review of the adjudicator's decision in the Local Court. It can not seek that review in this Court. Thus GRD has something to gain by its Local Court appeal proceedings that it cannot gain in these proceedings. The situation is somewhat akin to the statutory treble damages that CSR was able to claim against Cigna in the US proceedings under the Sherman Act that led to the High Court to set aside the anti-suit injunction in that case: see CSR at 399. It follows that the Local Court appeal proceedings do not have the effect of being vexatious or oppressive and TDS's application for an anti-suit injunction to prevent them continuing must be dismissed. Furthermore, because TDS's alternative application to stay the Local Court proceedings essentially relies upon the same ground, viz vexation or oppression, it too should be dismissed. 11 Out of deference to the detailed submission made by both counsel, I would add that TDS's application for an anti-suit injunction, or a stay, has only been directed to the Local Court appeal proceedings. It could not at this stage be directed to the payment dispute adjudication proceedings under the provisions of s 28 of the Construction Contracts (Security of Payments) Act because those proceedings were brought to an end by the adjudicator's decision that they were out of time. However, if the payment dispute adjudication proceedings are given new life as a result of GRD's Local Court appeal proceedings, different considerations will obviously arise in relation to those proceedings and whether they may be liable to be prevented by an anti-suit injunction and the related question as to what effect, if any, s 47(2) of the Construction Contracts (Security of Payments) Act may have on the powers of this Court to issue such an injunction. It is not necessary for me to decide these questions at this juncture. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. Associate: Dated: 18 December 2007 Counsel for the Applicant: Mr C Ford Solicitor for the Applicant: Paul Maher Solicitors Counsel for the Respondent: Mr W Roper Solicitor for the Respondent: Clayton Utz Solicitors Date of Hearing: 14 December 2007 Date of Judgment: 17 December 2007