Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd [1978] FCA 49; (1978) 35 FLR 346 (15 December 1978)

FEDERAL COURT OF AUSTRALIA

HUGHES MOTOR SERVICE PTY. LTD. v. WANG COMPUTER PTY. LTD. [1978] FCA 49; (1978) 35 FLR 346
Practice and Procedure

COURT

FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
Bowen C.J.(1)

CATCHWORDS

Practice and Procedure - Stay of proceedings - Discretion - Pending proceedings in State Supreme Court well advanced - Limited stay granted - Trade Practices Act 1974, ss. 52, 53 (a), (c), 75, 82 - Federal Court of Australia Act 1976, s. 22 - High Court Rules, O. 26 r. 18 (1), (2), O. 63 rr. 1, 2. The plaintiffs, five hire car companies, ("the Hire Car Group") brought proceedings in the General Division of the Federal Court against the defendant ("Wang") for damages arising out of alleged breaches of ss. 52 and 53 (a) and (c) of the Trade Practices Act 1974 ("the Act"). Prior to these proceedings the Hire Car Group had commenced proceedings against Wang and two other defendants, Robert Waters and Robert Waters Associates Ltd., in the Supreme Court of New South Wales. The latter two were computer consultants and computer system designers.

Wang brought an application in the Federal Court seeking an order that the Federal Court proceedings be stayed, either absolutely or, in the alternative, pending the determination of the Supreme Court proceedings.

The Hire Car Group alleged, in the Supreme Court proceedings, that it had contracted, on Wang's advice, with the other defendants for the supply and installation of a complete accounting system by computer. It was also alleged that the equipment was incapable of satisfying its requirement and as a result the various hire car companies suffered damage.

Three separate causes of action were raised against Wang in the statement of claim in the Supreme Court proceedings. The first was based on negligence in relation to Wang's advice to the Hire Car Group; the second upon six representations which were alleged to be part of the express terms of the agreement between them and upon their having been breached; and the third upon the same representations which were alleged to be misleading or deceptive conduct in trade or commerce in contravention of s. 52 of the Act and to be false representations in trade or commerce in contravention of s. 53 (c) and (f) of the Act. Separate claims were made against the other two defendants.

An amended statement of claim was subsequently delivered in the Supreme Court proceedings. The most significant change, so far as this application is concerned, was that paragraphs relating to ss. 52 and 53 (c) and (f) of the Act were omitted. The proceedings in the Supreme Court were not concluded at the time of this Federal Court application.

After certain interlocutory steps were taken in the Supreme Court, proceedings were commenced in the Federal Court against Wang. The Hire Car Group alleged in the Federal Court proceedings the same representations as it had in the Supreme Court proceedings. It was further alleged that the representations were untrue and were misleading or deceptive or likely to mislead or deceive and that Wang had thereby contravened ss. 52 and 53 (a) and (c) of the Act in consequence of which the Hire Car Group had suffered damage. The Hire Car Group alleged that it had suffered damage and sought damages pursuant to s. 82 of the Act. Robert Waters and Robert Waters Associates Ltd. were not joined as defendants.

Held: (1) The procedure of the Federal Court is governed by the High Court Rules. Order 26 r. 18 of those Rules does not assist Wang because the statement of claim discloses a reasonable cause of action, and the action is not frivolous or vexatious.

(2) Order 63 r. 1 provides that the court or a justice may, at any time after the institution of a proceeding, direct a stay of proceedings either as to the whole or part of the proceeding. These proceedings are not vexatious or oppressive or an abuse of the court within the meaning of O. 63 r. 2.

(3) However, the court has a general power to control its own proceedings and may exercise its general discretion by granting a limited stay.

L. Grollo Darwin Management Pty. Ltd. v. Victor Plaster Products Pty. Ltd. [1978] FCA 17; (1978), 33 FLR 170, referred to.

(4) The principles to be followed in the exercise of the court's discretion to stay its own proceedings referred to in some authorities i.e. the weighing of advantage to the plaintiff against disadvantage to the defendant, are not broad enough. Additional matters to be considered would be those comprised in the doctrine of forum non conveniens if that were adopted, also questions arising from the existence of State and federal courts existing side by side and questions of public interest involved in the application of the Trade Practices Act.

(5) It is undesirable to formulate, in precise terms, the principles which a federal court will follow in exercising its discretion to grant or refuse a stay.

(6) The jurisdiction in relation to the claim which the Hire Car Group now makes can be exercised only by this Court and cannot be exercised by the Supreme Court. An absolute stay of proceedings will not be granted as it would deny them the opportunity for doing so forever.

(7) In considering whether a temporary stay ought to be granted, it is relevant that the Hire Car Group originally chose the Supreme Court, that the proceedings there are well advanced and that it is only in the Supreme Court proceedings that orders can be made which will dispose of all matters in dispute between the various parties. Further, there should be, as far as practicable, an end to litigation and the law should avoid a multiplicity of proceedings in relation to similar issues.

(8) A temporary stay is ordered with a procedure provided for the Hire Car Group to obtain a lifting of the stay if they should abandon proceedings in the Supreme Court or if circumstances arise which make it appropriate to lift the stay. Costs reserved.

HEARING

Sydney, 1978, December 4, 5, 15. 15:12:1978
APPLICATION.

The applicant, a defendant in proceedings in which breaches of ss. 52 and 53 (a) and (c) of the Trade Practices Act 1974 were alleged, sought an order that those proceedings be stayed, either absolutely or, alternatively, pending the determination of certain other proceedings between it and the plaintiffs in the Supreme Court of New South Wales.

H. J. Mater, for the plaintiffs respondents.

G. A. Palmer, for the defendant applicant.
Cur. adv. vult.

Solicitor for the plaintiff respondents: A. R. Connolly.

Solicitors for the defendant applicant: Baker & McKenzie.

DECISION

December 15.

The following judgment was delivered.
BOWEN C.J. This is an application by Wang Computer Pty. Ltd. (hereafter

called "Wang") against Hughes Motor Service Pty. Ltd., Kingsford Smith Hire Cars (Sydney Airport) Pty. Ltd., Kingsford Smith Transport Pty. Ltd., Hire Cars of New South Wales Pty. Ltd., Regal Hire Cars Pty. Ltd. and Gregory Aitkenhead trading as Gloucester Service Station (hereafter called "Hire Car Group" or "Group") for an order that proceedings brought in the General Division of this Court for damages against Wang arising out of alleged contravention of ss. 52 and 53 (a) and (c) of the Trade Practices Act 1974 should be stayed either absolutely or, in the alternative, pending the determination of certain other proceedings in the Supreme Court of New South Wales. (at p348)

2. On 28th June, 1977, the Hire Car Group commenced proceedings against Wang in the Supreme Court of New South Wales, Common Law Division, commercial list (No. 4462 of 1977). Also joined as defendants in those proceedings were Robert Waters and Robert Waters Associates Ltd. (hereafter called "Waters Associates"). The following is a summary of the statement of claim. It was alleged that the Hire Car Group owned and operated 103 hire cars, twenty-two buses and a garage to maintain and refuel the vehicles and carry on business as a service station; that Wang manufactured, designed and installed computer systems and equipment; that Mr. Waters represented he was a computer consultant and systems analyst and designer and programmer; and, that Waters Associates were computer consultants and computer system designers, analysts and programmers. It was further alleged that the Hire Car Group sought Wang's advice concerning the feasibility of installing for the Group a complete accounting system by computer and in doing so to Wang's knowledge relied on Wang's skill, judgment and advice; that Wang advised the Group that the installation was feasible and its equipment would function and meet the Group's requirements and that Mr. Waters and Waters Associates were competent and skilled consultants. Then followed the allegation of six representations as to the accuracy of Wang's recommendations and advice as to the suitability of its equipment; that the Group contracted with Wang and that the Group consulted with Mr. Waters and Waters Associates for its installation; that it was installed; and that the Group contracted with Waters Associates for implementation of the system devised by Mr. Waters. It was alleged that the equipment was incapable of satisfying the Group's requirements and was totally inadequate, in consequence whereof the Group suffered damage. (at p348)

3. Three separate causes of action against Wang were raised as a basis for claiming the damage. The first was based upon negligence in relation to Wang's advice to the Group and its recommendation of Mr. Waters and Waters Associates, also in relation to its failure to exercise proper care to ensure its representations were correct and its failure to rectify faults. The second was based upon the six representations which were alleged to be part of the express terms of the agreement between the Group and Wang and upon their having been breached. The third was based upon the same representations which were alleged to be misleading or deceptive conduct in trade or commerce in contravention of s. 52 of the Trade Practices Act 1974 and to be false representations in trade or commerce in contravention of s. 53 (c) and (f). (at p349)

4. Separate claims were included against Mr. Waters and Waters Associates alleging reliance upon their advice, alleging that Mr. Waters designed a system and recommended Waters Associates; that a separate set of representations was made by Mr. Waters; that the Group in reliance upon the recommendations contracted with Waters Associates to implement the system; that it was implemented but remained incomplete and incapable of satisfying the requirements of the Group and was totally inadequate. (at p349)

5. The claims against Mr. Waters were based first, upon negligence in failing to design an appropriate system and in failing properly to advise the Group whereby the Group suffered damage; and secondly, upon the representations by Mr. Waters being express terms of the agreement between Waters Associates and the Group and such terms having been breached whereby the Group suffered damage. The statement of claim ended by claiming against Wang, Mr. Waters and Waters Associates jointly and severally and in the alternative damages of $250,000. (at p349)

6. On 11th July, 1977, Wang entered an appearance. On 26th July, 1977, the solicitors for Wang requested particulars in the form of 137 numbered questions. Certain answers were given by the solicitors for the Group on 27th July, 1977. (at p349)

7. On 3rd August, 1977, the solicitors for the Group wrote to the solicitors for Wang enclosing an amended statement of claim and asking for their consent to its being filed. This contained the same allegations as before concerning the advice and representations given and made by Wang and by Mr. Waters and the terms of the agreement with Wang and Waters Associates. There were added claims against Wang, based upon allegations that the Group made known to Wang the purpose for which the equipment was required and relied on Wang's skill and judgment; that there was an implied condition and a warranty that the goods would be fit for the purpose; that the contract between the Group and Wang was for the purchase of goods by description; and that the equipment was not reasonably fit for the purpose and was not of merchantable quality, in consequence of which the Group suffered damage. The final paragraph claiming damages was in the same terms as in the original statement of claim, although it seems the specific figure of $250,000 was later deleted. (at p350)

8. However, the most significant change, so far as the present application for a stay is concerned, was that pars. 17, 18 and 19 of the statement of claim relating to ss. 52 and 53 (c) and (f) of the Trade Practices Act were omitted. (at p350)

9. On 4th August, 1978, the Group filed a notice of motion for directions. On 17th August, 1978, a Supreme Court judge gave directions giving the Group leave to file the amended statement of claim, giving the defendants twenty-one days after service of the amended statement of claim to request particulars and standing the matter over for further mention to 21st September, 1978. The amended statement of claim was filed on 23rd August, 1978. By letter dated 13th September, 1978, Wang's solicitors asked for further and better particulars in 119 numbered questions. On 21st September, 1978, the Supreme Court judge directed that the Group provide proper replies to particulars on or before 4 p.m. on 28th September, 1978; and, that the defendants file and serve defences on or before 4 p.m. on 12th October, 1978. His Honour further laid down a timetable for discovery, inspection, interrogatories and answers to interrogatories, the last-mentioned being required on or before 19th January, 1979. He finally directed the matter be mentioned on 8th February, 1979. (at p350)

10. By letter dated 28th September, 1978, the Group's solicitors wrote giving certain particulars. On 3rd November, 1978, the solicitors for Wang filed its statement of defence; on 4th November, 1978, they wrote seeking further and better particulars. (at p350)

11. I turn now to the proceedings in the Federal Court of Australia. On 5th October, 1978, the Hire Car Group issued a writ with statement of claim endorsed against Wang out of this Court. In this statement of claim they alleged the same representations as having been made by Wang both as regards the equipment and as regards the competence of Mr. Waters and Waters Associates as consultants to advise, design and develop a programme for the Group. It was further alleged the representations were untrue and were misleading or deceptive or likely to mislead or deceive and that Wang had thereby contravened ss. 52, 53 (a) and 53 (c) of the Trade Practices Act in consequence of which the Group had suffered damage. They sought an order for damages pursuant to s. 82 of the Act. Mr. Waters and Waters Associates were not joined as defendants. Wang entered an appearance on 10th October, 1978, but has not yet filed a defence. On 20th November, 1978, Wang filed the application for a stay which is now before me. (at p350)

12. The procedure of this Court in such a case is governed by the High Court Rules so far as they are capable of application and subject to any directions of the court or a judge. Order 26 r. 18 of those Rules would not appear to be of any assistance to the applicant. It cannot be said of the statement of claim in this Court that it does not disclose a reasonable cause of action (O. 26 R. 18 (1) (General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) [1964] HCA 69; (1964) 112 CLR 125, at p 129 ) nor can it be said that the action is "frivolous" or "vexatious" as those terms have been interpreted in the High Court (O. 26 r. 18 (2) (Dey v. Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 and General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) [1964] HCA 69; (1964) 112 CLR 125 ). (at p351)

13. Some assistance may be derived from O. 63 r. 1 which provides the court or a justice may, at any time after the institution of a proceeding, direct a stay of proceedings either as to the whole or part of the proceeding. But this rule does not indicate the principles upon which that discretion will be exercised although O. 63 r. 2 should perhaps be regarded as to some extent explanatory of its ambit. Order 63 r. 2 provides for an application to stay proceedings on the ground that there is not a reasonable or probable cause of action or that the proceeding is vexatious or oppressive or is an abuse of the process of the court. It is difficult to see that the proceedings in this Court should be regarded as falling within the words "vexatious" or "oppressive" or "an abuse of the process of the court" as those words have hitherto been understood by lawyers in this country, since this is the only court in which the Hire Car Group's cause of action under the Trade Practices Act can be litigated. Even if one seeks to apply to the words "vexatious" and "oppressive" in O. 63 r. 2 the "liberal" or "morally neutral" interpretation referred to by their Lordships in Atlantic Star (owners) v. Bona Spes (owner) (The Atlantic Star) (1974) AC 436 and MacShannon v. Rockware Glass Ltd. (1978) 2 WLR 362 it seems doubtful whether they should be held to reach the present case. And it would not seem proper to describe as an abuse of the process of the court the bringing of proceedings which, as I have said, can only be brought in this Court. (at p351)

14. However that may be, it is my opinion that this Court has a general power to control its own proceedings. Order 63 r. 1 appears to be consistent with that view. The Full Court of this Court in L. Grollo Darwin Management Pty. Ltd. v. Victor Plaster Products Pty. Ltd. [1978] FCA 17; (1978) 33 FLR 170 exercised such a general discretion in granting the limited stay which was ordered in that case. (at p351)

15. This brings me to the question: what principles should be followed in exercising the court's general discretion to stay its own proceedings? In my opinion, the court may usefully look for assistance to the principles discussed in relation to lis alibi pendens (see MacShannon v. Rockware Glass Ltd. (1978) 2 WLR 362 and see generally Halsbury's Laws of England (4th ed.) vol. 8, p. 506; Cheshire, Private International Law (9th ed., 1974) pp. 119 et seq.; Dicey and Morris, Conflict of Laws (9th ed., 1973) pp. 215 et seq.; Nygh, Conflict of Laws in Australia (3rd ed., 1976) pp. 55 et seq. and Pryles, "Liberalising the Rule on Staying Actions - Towards the Doctrine of Forum Non Conveniens" (1978) 52 ALJ 678) Broadly speaking, if the court followed the English authorities it would balance any advantage to the plaintiff in this Court against any disadvantage to the defendant in exercising its discretion (cf. Witten v. Lombard Australia Ltd. (1968) 14 FLR 322 ). I am of opinion the court should at least do that. But should it not also take other factors into account? The English judges have not, in the cases to which I have referred, directed their minds to the situation, which arises where there exists side by side a system of State and Territorial Supreme Courts on the one hand and a system of federal courts on the other. In Australia, some cases, rather distant in their facts from the present case, have occurred, where there might be said to have been competition between the two systems. I have already referred to L. Grollo Darwin Management Pty. Ltd. v. Victor Plaster Products Pty. Ltd. [1978] FCA 17; (1978) 33 FLR 170 . (at p352)

16. In Jones v. Jones [1928] HCA 2; (1928) 40 CLR 315 comity between State and federal courts of co-ordinate jurisdiction appears to have been taken into account in refusing an application to the High Court in its original jurisdiction for leave to execute in Victoria a writ of attachment issued out of the Supreme Court of New South Wales. A similar application had already been refused by the Supreme Court of Victoria. In Union Steamship Company of New Zealand Limited v. The Caradale [1937] HCA 1; (1937) 56 CLR 277 an action had been commenced in the Supreme Court of Victoria against the owner of a ship for damages arising out of a collision. Subsequently, the defendant in those proceedings commenced proceedings in the High Court in its admiralty jurisdiction for damages against the other ship arising out of the same collision. An application in the High Court for a stay of its proceedings was refused. Dixon J. weighed the inconvenience, the fact that certain different remedies would be available in the High Court and the fact that the matter would in the High Court be decided without a jury in accordance with the traditional procedure in admiralty. In The Queen v. Langdon; Ex parte Langdon [1953] HCA 66; (1953) 88 CLR 158 Taylor J. in a diversity case refused an application by a wife for custody and maintenance. There was concurrent jurisdiction in the High Court and the Supreme Court of Tasmania. His Honour expressed the view that it would be most inappropriate for the High Court to make such an order where there existed courts specially constituted for the purpose and which might, if and as occasion required, review the matter from time to time. In Maple v. David Syme & Co. Ltd. (1975) 1 NSWLR 97 the conflict was between proceedings brought in the Supreme Court of Victoria and the Supreme Court of New South Wales. Applying the principles laid down in The Atlantic Star case (1974) AC 436 the New South Wales Supreme Court granted a stay of its proceedings. (at p353)

17. In my opinion there are many matters to be considered in exercising this Court's discretion besides weighing the advantage to the plaintiff against the disadvantage to the defendant. Some might be comprised in the principle of forum non conveniens if that were adopted. This would involve consideration of circumstances relating to the witnesses. In cases where, as in the present case, many of the issues of fact and the relief claimed were the same, it would involve consideration of the fact that the work done on pleadings, particulars, discovery, interrogatories and preparation generally might be found, when the hearing of the second case came on, to have been wholly or partly thrown away. This would be due to the creation of an issue estoppel in respect of the making of the representations and their falsity (Blair v. Curran [1939] HCA 23; (1939) 62 CLR 464, at pp 531-532 and Brewer v. Brewer [1953] HCA 19; (1953) 88 CLR 1, at pp 14 et seq cf. "The Collateral Estoppel Effect of Prior State Court Findings in Cases within Exclusive Federal Jurisdiction" (1978) 91 Harvard LR p. 1281) and to the fact that the Hire Car Group, if they were successful against Wang, could not recover the same damages twice (cf. Hills v. Co-operative Wholesale Society Limited (1940) 2 KB 435, at pp 438-440 ). In addition, the court might have to consider other matters. Thus in some sense the public interest may be involved in deciding whether two cases claiming the same damages and involving substantial issues of fact, which are the same in each case, should be allowed to proceed simultaneously in the State and federal systems of justice. This would certainly open the way to tactical manoeuvres in which the appearance might well be presented to the public of two court systems competing to see who determined the common facts first. It would be unfortunate if we adopted practices and procedures which facilitated this. In MacShannon v. Rockware Glass Limited (1978) 2 WLR 362 Lord Diplock thought it relevant to consider the substantial waste of time and effort if it became a common practice to bring in England actions arising out of industrial injuries in Scotland when the matters were referred by trade unions to English solicitors for them. (at p353)

18. It appears to me to be proper to take into account all the matters which I have mentioned. Furthermore, in some cases, the public interest may be involved in the very relief sought. The consumer protection provisions of the Trade Practices Act are directed towards protecting the public. Even in a case such as the present this public interest is to some extent involved though not, in my opinion, to such an extent that it should lead me to reject the application for a stay. In other cases, as, for example, where the Trade Practices Commission or a private individual or company proceeds under s. 52 or s. 53 of the Trade Practices Act seeking an injunction to restrain advertising which may mislead or deceive the public generally, the weight of public interest in the scales in favour of rejecting an application for a stay would be very heavy. (at p354)

19. It appears to me to be undesirable to formulate in precise terms at this stage the principles which this Court will follow in exercising its discretion to grant or refuse a stay. These will no doubt emerge from case to case. (at p354)

20. Turning to the present case, it appears to me that jurisdiction in relation to the claim which the Hire Car Group now makes in the Federal Court can be exercised only by this Court and cannot be exercised by the State Supreme Court. In my opinion, they are entitled to come to the Federal Court to establish their right and they should not be denied the opportunity of doing so forever, simply because there are on foot other proceedings involving similar issues of fact and claiming the same damages in another court. For this reason I am not prepared to exercise my discretion in granting an absolute stay of the proceedings in this Court. (at p354)

21. On the other hand, it is clear that the Hire Car Group originally chose the Supreme Court of New South Wales as the forum for determination of their dispute with Wang and indeed for their related dispute with Mr. Waters and Waters Associates. They have proceeded since June 1977 with those proceedings and as late as September 1978 obtained directions from the judge dealing with commercial causes in the Supreme Court specifying in some detail a timetable for discovery, inspection, interrogatories and answers to interrogatories and standing the matter over to 8th February, 1979, for further mention. The proceedings in the Supreme Court are well advanced. Counsel appeared to anticipate that, provided the timetable was observed as directed, there might be a prospect on 8th February, 1979, either of obtaining from the Supreme Court a reasonably early date for hearing or at the worst, obtaining an early entry in the call-over in the commercial list, at which call-over a reasonably early hearing date might be expected to be given. It is further to be observed that it is only in the proceedings in the Supreme Court that orders can be made which will dispose of all matters in dispute between the various parties. Both courts are required to endeavour to determine as far as possible all matters in controversy between the parties and to avoid all multiplicity of proceedings concerning any of those matters (Federal Court of Australia Act 1976, s. 22; Supreme Court Act 1970, s. 63). The proceedings brought in the Federal Court are narrower in compass and will not bind Mr. Waters or Waters Associates. If no stay is granted in this Court and both sets of proceedings are allowed to continue the result may well be that the intervening procedures prior to hearing may, to a significant extent, be wasted in those proceedings which come on to be heard last. Finally, if damages are awarded in, for example, the Supreme Court proceedings before the Federal Court proceedings come on for hearing, then it would seem that the claim for damages in the Federal Court proceedings will necessarily fall to the ground. (at p355)

22. It appears to me that justice and good sense require that there should so far as practicable be an end to litigation and that the law should strive against permitting multiplicity of proceedings in relation to similar issues. The considerations pointing to the exercise of discretion in favour of granting a limited stay in the present case are very strong. (at p355)

23. I have come to the conclusion that if a temporary stay is ordered with a procedure provided for the Hire Car Group to obtain a lifting of the stay if they should abandon the proceedings in the Supreme Court or if circumstances arise which make it appropriate to lift the stay, then justice will be done. If the Supreme Court proceedings come on first and it is considered by the Hire Car Group that they have any residual right to be asserted in the Federal Court they may then come to this Court and assert their right here. The Trade Practices Act itself is not inconsistent with the prior disposal of issues in another court (see s. 75). In my opinion the proceedings in the Supreme Court should first go to trial. (at p355)

24. The orders of the court will be: (1) That the proceedings between Hughes Motor Service Pty. Ltd., Kingsford Smith Hire Cars (Sydney Airport) Pty. Ltd., Kingsford Smith Transport Pty. Ltd., Hire Cars of New South Wales Pty. Ltd. and Regal Hire Cars Pty. Ltd. and Gregory Aitkenhead trading as Gloucester Service Station, plaintiffs and Wang Computer Pty. Ltd., defendant (No. G101 of 1978) be stayed until further order. (2) That costs be reserved. (3) That the proceedings be stood over generally. (4) That all parties be at liberty to apply on seven days notice. (at p355)

ORDER

Orders accordingly.