Associated Newsagents Co-operative Ltd v Honeywell Pty Ltd

[1987] FCA 668

rc. JUDGMENT No. b6.%j!.&?.....,,

NOT FOR GENERAL DISTRIBUTION

I N THE FEDERAL COURT OF AUSTRALIA 1 )

NEW SOUTH WALES D I S T R I C T R E G I S T R Y 1 N S W G . 4 3 1 Of 1987

G E N E R A L D I V I S I O N

I

BETWEEN:

I

A p p l i c a n t

I

AND :  HONEYWELL PTY L I M I T E D

F i r s t R e s p o n d e n t

B E R S A N D	O N L I N E	S E R V I C E S	PTY
L I M I T E D

Second R e s p o n d e n t

BERNARD J DAWSON

T h i r d R e s p o n d e n t

EXATRON PTY LIMITED

F o u r t h	R e s p o n d e n t
CORAM :	WILCOX J
PLACE :	SYDNEY

I	.	P	2.
I

THE COURT ORDERS THAT:

1. P e n d i n g t h e d t e r m i n a t i o n t h e s e f p r o c e e d l n g s o r

f u r t h e r order o f t h e C o u r t , t h e f o u r t h r e s p o n d e n t ,

E x a t r o n P t y L l m i t e d , b e r e s t r a i n e d from p r o s e c u t i n g

o r c o n t i n u i n g p r o c e e d i n g s	No.19947	of	1986	i n t h e
Commercial	L i s t of	t h e Common	L a w D i v i s i o n of	t h e

Supreme Cour t of N e w S o u t h Wales b e t w e e n t h e said

f o u r t h r e s p o n d e n t a n d t h e a p p l i c a n t , A s s o c i a t e d

Newsagen t s	Co-ope ra t ive	L imi t ed	(Manage r	and	Rece ive r
A p p o i n t e d ) .

2 . L i b e r t y b e g r a n t e d t o t h e s a i d f o u r t h r e s p o n d e n t t o

a p p l y o n	7	d a y s ' n o t i c e	f o r a	d i s s o l u t i o n o f o r d e r	1
i n t h e e v e n t	t h a t	t h e a p p l i c a n t	1s	i n d e f a u l t	i n a n y

way i n c o m p l l a n c e w i t h t h e d i r e c t i o n s made t h i s d a y .

Note :	S e t t l e m e n t	a n d	e n t r y	of	o r d e r s	i s	d e a l t w i t h	i n	Order	I i
, -.

36 of t h e F e d e r a l C o u r t R u l e s .

i

t

I

NOT FOR GENERAL DISTRIBUTION

I N THE FEDERAL COURT OF A U S T R A L I A

1

NEW	S O U T H	W A L E S	D I S T R I C T	R E G I S T R Y	)	N S W	G . 4 3 1	Of	1 9 8 7
)

D I V I S I O N G E N E R A L )

BETWEEN:  ASSOCIATED NEWSAGENTS

C O - O P E R A T I V E L I M I T E D

(MANAGER	AND	R E C E I V E R
A P P O I N T E D ) A p p l i c a n t

AND:  HONEYWELL PTY L I M I T E D

F i r s t R e s p o n d e n t

B E R S A N D	O N L I N E	S E R V I C E S	PTY	l
L I M I T E D	..

Second R e s p o n d e n t

I.

BERNARD J DAWSON

T h i r d R e s p o n d e n t

EXATRON PTY LIMITED

F o u r t h R e s p o n d e n t

CORAM:  WILCOX J

SYDNEY	PLACE:
DATE :  1 9 NOVEMBER 1987

I

EXTEMPORE REASONS FOR JUDGMENT '.

I

I 2.

The matter presently before me is an application made

on notlce by the appllcant, Associated Newsagents Co-operative

Limited (Manager and Recelver Appointed), by which it seeks to

obtain orders against the fourth respondent, Exatron	Pty
Limited in connection	with proceedlngs Instituted by Exatron

i

in the Supreme Court of New South Wales, being No.19947 of

1986. Those proceedings are listed in the Commercial Llst of

the Common Law Division of the Supreme Court. Associated

Newsagents seek an order that, pending the determination of

the proceedings in thls Court, Exatron	be restrained from
prosecuting or continuing the Supreme Court proceedings	or,
alternatively, an order that, pending the determination	of
these proceedings, the Supreme Court proceedings	be stayed.

The Supreme Court proceedings were instituted on 10

I .

November 1986. There have been numerous directions hearlngs

and there has been default made	in compliance with certain
directions by Associated Newsagents, the defendant	in those
proceedings.	The current position, as I understand it, is

that a hearing	date, which was previously flxed for	24 August	, ,
1 -

1987, has been vacated and a new hearing date has been

nominated, being 20 November 1987. However, when this was

done, it was said that the hearing would be limited to the

plaintiff's claim.	This has been described today by counsel
€or Exatron as belng a quantification	of the plaintiff's claim
for goods sold and delivered and damages	for failure to accept

delivery. The claim relates to a contract for the supply of

400 computer terminals as part of a new computer system being

, L 3 .

set up by the applicant on behalf of its members, belny
approximately 1300 newsagents scattered throughout New South

Wales.

It appears from the material which has been put

before me that the system as installed did not work
satisfactorily. The letters which have been tendered suggest

an acceptance by some people connected with Exatron that the

terminals may have	had something to do with the problem. I
put this in tentative terms because only	some of the

correspondence is before the Court and it may well be that,

when the whole of the correspondence	is considered, a
different impression would emerge. However, I think there is	'>
/.I

enough to show that there is a genuine claim made by

Associated Newsagents against Exatron. Whether it turns out

to be well founded in fact and in law are matters for

consideration at a different ime. r '
t

The proceeding in this Court involves not only

Exatron but three other respondents.	The first respondent,
Honeywell Pty Limited, supplied the hardware involved in the
computer system together with operating software.	The second
respondent, Bersand Online Services	Pty Limited, supplied

application software and consultancy services. The third

respondent, Mr Bernard Dawson, is a person associated with the

second respondent and he	is joined under s.79B of the Trade
Practices Act 1974.	It appears from what has been said, and

stated in some of the documents which I have been shown, that

at a trial there would be a degree of cross-blaming amongst

the representatives of, and experts for, the various

respondents.

The current application is resisted by counsel for

Exatron, prlmarily on the ground of delay.	It is pointed out,
with some force, that 13 months have elapsed	ince the Supreme

Court proceedings were instituted. There is no reason why the
proceedings in this Court could not have been instituted in

October 1986 or at some subsequent period. It is true that

the matter is extremely complex, depending as	it does upon
technical reports.	It is also true that the amount of

evidence is quite extensive and that there have been other problems over the last 13 months caused by the flnancial

deterioration of the applicant, which deterioration	is clamed
by counsel for the applicant to be related to the problems	of
its computer system.

Bearing all those matters in mind, I nonetheless take

the view that the current proceeding should have been

instituted at a much earlier date. The question is whether i

this should be decisive so that, as a result of the delay, I

should take the view that this Court should not interfere in

any way in the Supreme Court proceedings. But for one factor,

I think that I would take that view. However, the

countervalling factor is one of considerable importance in	my
mind:	that is the question of fragmentation of the

litigation. There are only two parties in the Supreme Court, Associated Newsagents and Exatron. In that proceeding it will

i
!

not be LelevanL for the Court	to reach any conclusions as to
the extent to which the problems have been occasioned	by any

default by either Honeywell or Bersand Online Services. It is
quite possible that the litigation involving those parties

will have to proceed, notwithstanding whatever happens in the

Supreme Court, with a risk of repetition of evidence a d the

possibility that, because of different evidence, inconsistent

results will be reached. There is a possibility that, because

of inconsistent evidence, the applicant, although it

established that the system which was installed was

ineffective, would fail to make good a claim against any

I

respondent. There is equally a possiblllty that the applicant

would succeed, because of inconsistent evidence, in doubling

up its claim. This	is something which should not be allowed
to occur.

The other aspect of fragmentation is one which is

very much in the hands of the Supreme Court; but	it can
hardly be ignored.	The Supreme Court has taken the view that,
because of various defaults by the present applicant, the
action brought by the plaintiff in	the Supreme Court should
proceed in advance	of consideration of the cross-claim and,

indeed, as I understand it, of the claim by the defendant in
those proceedings that the goods which were delivered were not

of merchantable quality. The forthcoming hearing will leave

those issues outstanding. I f the Supreme Court proceeds to

enter ~udgment for the plaintiff in advance of determining

those issues, a difficulty would seem to arlse in regard to

enforcement. If, on the other hand, ~udgment is not entered,

l

6.

then from the point of view of Exatron, not much has been

I

gained untll the other matters are litigated. There is no

reason apparent to me why those matters cannot be litigated in this Court as quickly as In the Supreme Court. However, to my

i

mind, the critlcal matter is the need to avoid duplication of

hearings and the possibility of inconslstent results.

One matter which I raised during the course of

discussion is whether this was a case suitable for transfer to

the Supreme Court, that is to say, the transfer of the whole

of the Federal Court proceedings, pursuant to s.86A of the

Trade Practices Act. However, no such application has been

I-

made.	It is a matter which involves all of the respondents.	t '
1.
Their counsel have not had time to consider it; and	I gather	I;
!.

there would be some opposition to that course being taken. As there is no application in that regard, it is not an option to which I need give further thought. I am confronted with only two choices. One is to take action which will effectively

stay the hearing in the Supreme Court and allow the whole

matter to be dealt with here; or, alternatively, to refuse a

stay with the problem	of fragmentatlon to which I have
referred. Under the	circumstances, I think the appropriate

course is for me to intervene.

I think the appropriate order is that, pending the	I ,
l

determination of these proceedings or further order of the t '

I

Court, the fourth respondent be restrained from prosecuting or

I

continulng proceedings No.19947 of 1986 in the Commercial List
of the Common Law Division of the Supreme Court of New South

I

7 .

1 ; . n

Wales b e t w e e n t h e f o u r t h r e s p o n d e n t a n d t h e a p p l i c a n t . I

p r o p o s e , a t a c o n v e n i e n t time l a t e r t o d a y , t o make d i r e c t i o n s

t o e n s u r e	t h e	ear l ies t	p o s s i b l e	t r i a l	of	t h e p r o c e e d i n g	i n
t h i s	C o u r t .	I	i n d i c a t e	now	t h a t	t h e	Court would expect t h a t

t h e r e w o u l d b e f u l l c o m p l i a n c e w i t h t h o s e d i r e c t i o n s b y a l l

p a r t i e s , a n d n o t least t h e a p p l i c a n t . T h e r e w i l l a l so b e

I

l i b e r t y	t o	a p p l y o n	s e v e n d a y s '	no t ice	f o r a	d i s s o l u t i o n o f	.I
:

t h e order t o which I h a v e j u s t referred, i n t h e e v e n t t h a t t h e

a p p l i c a n t is i n d e f a u l t i n a n y way i n c o m p l i a n c e w i t h t h e

I . '

d i r e c t i o n s . I do n o t t h i n k t h a t E x a t r o n s h o u l d b e p u t i n t h e

!

pos i t ion of h a v i n g i t s a c t i o n i n t h e S u p r e m e C o u r t s t a y e d b u t

b e l e f t f a c i n g a p r o l o n g e d d e l a y l n t h i s C o u r t .

I c e r t i f y t h i s a n d t h e s i x (6)

p r e c e d i n g p a g e s t o b e a t r u e c o p y of

t h e R e a s o n s	f o r J u d g m e n t	of
h i s	H o n o u r J u s t i c e	Wilcox.

Associate:

Date:

Counse l f o r t h e A p p l i c a n t : Mr P M Wood

S o l i c i t o r s f o r t h e A p p l i c a n t : J C Behm & A s s o c i a t e s

C o u n s e l f o r t h e F l r s t R e s p o n d e n t : Mr P M J a c o b s o n ! -

I

S o l i c i t o r s f o r t h e F i r s t

Respondent :  A l l e n A l l e n & Hemsley l "

I

Counse l for t h e S e c o n d a n d I.

T h i r d R e s p o n d e n t s : M r A G Todd

:.

S o l i c i t o r s for t h e S e c o n d

T h i r d R e s p o n d e n t s :  Gregory J H a l p i n

Counse l f o r t h e F o u r t h R e s p o n d e n t : Mr C D a r v a l l QC w i t h

Mr G P E l l i s

S o l i c i t o r s f o r t h e F o u r t h	!,
Respondent :	Wilmot & K l i m t

Date(s) o f h e a r i n g : 11 and 1 9 November 1987