Classic Scaffolding Pty Ltd ACN 118785250 v Smartscaff Pty Ltd ACN 146220260

[2019] NSWDC 33

District Court

New South Wales

Medium Neutral Citation:	Classic Scaffolding Pty Ltd ACN 118785250 v Smartscaff Pty Ltd ACN 146220260 [2019] NSWDC 33
Hearing dates:	21 and 22 February 2019
Decision date:	01 March 2019
Jurisdiction:	Civil
Before:	Mahony SC DCJ
Decision:	Temporary stay of proceedings granted on terms; for orders see [61]
Catchwords:	Stay of proceedings
Legislation Cited:	Civil Procedure Act 2005 District Court Act 1973 Evidence Act 1995 Supreme Court Rules (General Civil Procedure) Rules 2015 (Vic)
Cases Cited:	L & W Developments Pty Ltd v Della [2003] NSWCA 140 Russell v Abbey [2018] VSC 259 Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287 Tomlinson v Ramsay Foods (2015) 256 CLR 507 UBS AG v Tyne [2018] HCA 45
Category:	Procedural and other rulings
Parties:	Classic Scaffolding Pty Ltd (Plaintiff/Respondent) Smartscaff Pty Ltd (Defendant/Applicant)
Representation:	Counsel: A Spencer (Plaintiff/Respondent) J S Zmood (Defendant/Applicant)   Solicitors: M+K Lawyers Group Pty Ltd Brown & Partners Solicitors
File Number(s):	18/153582
Publication restriction:	Nil

Judgment on notice of motion

1. The defendant, by Notice of Motion filed on 31 October 2018, seeks the following orders:

1. Pursuant to s 67 of the Civil Procedure Act 2005 (“CPA”) and/or s 156 of the District Court Act 1973 (“DCA”), that the proceeding be stayed permanently.

2. Alternatively, pursuant to s 67 of the CPA and/or s 156 of the DCA, an order that the proceeding be stayed until final judgment has been entered in the Victorian Supreme Court in proceeding number SECI‑2017-00130.

3. The plaintiff is to pay the defendant’s costs of the Notice of Motion.

4. The plaintiff is to pay the defendant’s costs of the proceeding.

5. Such further orders as the court thinks fit.

The evidence relied upon by the applicant

2. The applicant relied on three affidavits affirmed by Louisa Alice Dicker on 31 October 2018, 15 November 2018 and 4 December 2018. The last of those affidavits was in response to an affidavit relied on by the plaintiff/respondent of Patrick Gerard Ferguson affirmed on 28 November 2018.

3. The plaintiff also relied on an affidavit of Danielle Kalaf affirmed on 20 February 2019. At the commencement of the proceedings, rather than deal with a list of objections raised by the respondent, it was agreed that the application would proceed on the basis of the exhibits to the various affidavits.

4. Further, the parties agreed that a use of affidavits annexed to the affidavit of Ms Dicker affirmed on 31 October 2018, namely, that of Robert Oberstar sworn 28 March 2017 (also annexed to the affidavit relied on by the respondent of Patrick Ferguson sworn on 28 November 2018), and an affidavit of Ian Ammon sworn 5 April 2017 should be subject to an order pursuant to s 136 of the Evidence Act 1995 that the use of the affidavits was limited to identifying the various factual contentions advanced by the deponent in their evidence in proceedings in the Supreme Court of Victoria which are described below.

5. During the respondent’s submissions on the second day of the hearing, the applicant sought leave to rely on the contents of the affidavit of Ms Dicker affirmed on 4 December 2018, which leave was granted with the consent of the respondent, subject to a number of objections which were upheld.

The proceedings

6. The proceedings were commenced by Statement of Claim filed on 16 May 2018. In that document, the type of claim was described as follows:

“Torts – Trespass – Detinue

Torts – Trespass – Trespass to goods”

7. No sum of money was particularised as the relief claimed, rather, [28] set out the following prayer for relief:

“28 The plaintiff claims:

(a) return of the Bondi scaffold and the Waitara scaffold.

(b) damages

(c) costs”

8. The reference to “Bondi scaffold” and “Waitara scaffold” concerned first, scaffolding delivered by the plaintiff to a site in Bondi between 12 July 2015 and 10 August 2015, during which period, the plaintiff pleaded that the defendant (“Smartscaff”) or sub-contractors acting on behalf or at the direction of Smartscaff, attended that site and took possession of scaffold it had delivered there. The plaintiff further pleaded that Smartscaff had removed the relevant scaffolding to its premises at Ingleburn and despite demands for its return, had not returned the scaffolding and had continued to use it, as a result of which the plaintiff had suffered loss and damage, which was not particularised.

9. Secondly, the plaintiff pleaded that on or about 28 August 2015, the plaintiff delivered scaffold planks to a corporation Capital Scaffold NSW Pty Limited (In liq) (ACN 149 189 346) (“Capital Scaffold NSW”) following an agreement made on 12 July 2015, that the plaintiff would hire scaffold to that company. The scaffold planks were delivered to a site at Waitara.

10. The plaintiff further pleaded that at some time prior to June 2016, Capital Scaffold or Smartscaff caused scaffold belonging to the plaintiff to be delivered to the Waitara site. Following the winding up of Capital Scaffold NSW on 2 June 2016, Smartscaff, between 10 June 2016 and 30 June 2016, took possession of scaffold at the Waitara site and removed it to its premises at Ingleburn. Smartscaff had subsequently refused to return that scaffold.

The Victorian Supreme Court proceedings

11. On 26 May 2017, Smartscaff had commenced proceedings in the Supreme Court of Victoria against a corporation, Capital Scaffolding Pty Limited (ACN 613162511), and another corporation, Ganellen Pty Limited (ACN 084147222) (“the Victorian proceedings”). The first defendant is controlled by the same person as the plaintiff in these proceedings, namely, Mr Ned Aleksic.

12. The first defendant in those proceedings brought an application to transfer them to the Supreme Court of New South Wales after the proceedings against the second defendant were dismissed. That application was refused by Robson J on 4 October 2017. In his reasons, his Honour noted that the plaintiff in those proceedings (the applicant here) was in the business of hiring scaffolding and alleged that it leased some 900 tonnes of scaffolding to a company controlled by Mr Slobodan (Denny) Aleksic called Capital Scaffold NSW. When Capital Scaffold NSW went into liquidation, the scaffolding stock of Smartscaff was taken over by another company controlled by Mr Denny Aleksic called Capital Scaffolding NSW Pty Limited. Smartscaff then entered into a hiring agreement with that company. When that company went into liquidation, the stock owned by Smartscaff was taken over by a third company, the defendant in those proceedings, namely, Capital Scaffolding Pty Limited, also under the control of Mr Denny Aleksic. Mr Denny Aleksic then went into bankruptcy and his son, Mr Nebojsa (Ned) Aleksic, became the sole director of the defendant.

13. Robson J noted, and it was common ground on the application before me, that the Victorian proceedings were essentially an accounting exercise to determine by way of the plaintiff’s records what it delivered to Mr Aleksic’s companies and what it received back. The plaintiff’s case concerned the defendant’s failure to return approximately 320 tonnes of scaffolding.

The evidence concerning particulars of the plaintiff’s claim

14. Following the commencement of the proceedings in this court, Smartscaff sought particulars of the plaintiff’s claim against it. By letter dated 3 August 2018, solicitors for the applicant wrote to the plaintiff’s solicitors stating as follows:

“Leaving aside the deficiencies in your client’s Second Answers, it has become evident that the Bondi and Waitara scaffold referred to in District Court proceeding directly relate to the reconciliation of the scaffold that is the subject matter of the Supreme Court of Victoria Proceeding, as detailed below.

Accordingly, we are of the view that your client hasn’t properly issued proceedings in the District Court of New South Wales.”

15. The solicitors then outlined the Victorian Supreme Court proceedings, in which it had alleged that Smartscaff had entered into contracts with the two Capital corporate entities referred to above, and noted that the sole director and shareholder of the plaintiff corporation, Classic Scaffolding Pty Limited, was Mr Nebojsa Aleksic, the son of Mr Slobodan Aleksic. The solicitors then stated:

“(6) We are instructed that the Capital Entities provided Smartscaff scaffold to Classic, who then on-hired the scaffold to various third party building companies;

(7) The third party building companies contracted with both, and/or either of the Capital Entities or Classic Scaffolding Pty Limited as a related entity (Related Entities) in relation to hire of Smartscaff’s scaffold; and

(8) We are instructed that the scaffold that is the subject of the District Court Proceeding relates to the reconciliation of scaffold that is the same subject matter of the Supreme Court Proceeding. This is further evidenced by the discovery produced by the parties in the Supreme Court Proceeding, which your office also acts in.

Next steps

As you are the solicitors on record for Capital in the Supreme Court Proceeding, we understand that your office has intimate knowledge of the subject matter in dispute in that proceeding. Despite this, as well as your respective clients intimate knowledge of both matters, your client has issued a separate District Court Proceeding on behalf of Classic for scaffold that ultimately relates to the subject matter of the Supreme Court Proceeding. We note that this is contrary to both your and your respective clients’ obligations to resolve the dispute between the parties in a just, quick and cost effective manner.

Accordingly, in consideration of the issues raised above, we require that your client discontinue the District Court Proceeding by no later than 4pm on Friday 10 August 2018.”

16. By letter dated 7 August 2018, the plaintiff’s solicitors replied to the contention that their client discontinue the District Court Proceedings as follows:

“That is said to be on the basis that you have been instructed that the scaffold in question in District Court Proceedings is the same scaffold as is the subject of proceedings in the Supreme Court of Victoria brought by Smartscaff against two other companies, Capital Scaffolding (NSW) Pty Limited and Capital Scaffold Pty Limited. We are instructed that is not the case.

Given that Classic Scaffolding is not a party to the Victorian Proceedings, it is difficult in the circumstances to see how either res judicata or Anshun estoppel could have any application in the circumstances.”

17. By letter dated 16 August 2018, solicitors for the applicant responded:

“We disagree that the matters raised in the Victorian Proceeding are not interrelated to the matters raised in the District Court Proceeding ...

For the sake of clarity, our client does not allege that the scaffold which is the subject of the Victorian proceedings is the same scaffold that is the subject of the District Court Proceeding. As we stated in our letter dated 3 August 2018, it is our client’s position the scaffold in the District Court Proceeding directly relates to the reconciliation, detinue and conversion of the scaffold that is the subject matter of the Victorian proceeding. The position is supported by the evidence as set out below …”

18. That letter went on to refer to discovery of documents in The Victorian proceedings which concerned scaffold delivered to both Waitara and Bondi sites.

Particulars of the plaintiff’s claim in the Victorian proceedings

19. The applicant further relied on particulars provided by it in the Victorian Supreme Court proceedings, filed on 19 February 2019, to establish the related nature of the proceedings. The particulars were provided in respect of [7] of the Statement of Claim in the Victorian Supreme Court proceedings, which provided as follows:

“(7) Despite demand, the Defendant has not returned scaffold in its possession in the amount of approximately 300 tonnes.

PARTICULARS

By 19 January 2017 the customers had returned approximately 650 tonnes of scaffold.

On or about 3 March 2017 Slobadan Aleksic informed Ian Ammon that it was Smartscaff (State Manager NSW) that about 200 tonnes of the plaintiff’s scaffold was yet to be returned to it. Mr Ammon disputed that figure in their discussions and informed Mr Aleksic that the figure in respect of outstanding scaffold was approximately 325 tonnes.

On or about 7 March 2017, the defendant returned a further small amount of the scaffold to the plaintiff. The defendant remains in possession of approximately 300 tonnes of the plaintiff’s scaffold.”

20. The further and better particulars provide as follows:

“1. As to paragraph 7:

a) From on or about May 2016 to on or about June 2016, the Plaintiff, with permission of Mr Slobodan (Denny) Aleksic and assistance of Mr Frank Queipo, took possession of, together with its own scaffold, certain quantities of green, grey and black scaffold from sites located at 241-245 Oxford Stereet, Bondi Junction New South Wales (Bondi Site) to net off the hired scaffold that had not been paid for. The Plaintiff took possession of the said green, grey and black scaffold from the Bondi Site at the direction of Denny Aleksic given to Mr Ammon of the Plaintiff herein in May 2016.

b) From on or about May 2016 to on or about July 2016, with the assistance of Mr Denny Aleksic, the Plaintiff entered the site located at 21-39 Waitara Avenue, Waitara, New South Wales (Waitara Site) and took possession of its own yellow scaffold with Mr Denny Aleksic taking possession of all residual scaffold located at the site that did not belong to the plaintiff.

c) It is in respect of those quantities of scaffold taken from the Bondi Site (referred to above) Classic Scaffolding Pty Ltd (ACN 119 785 250) (Classic Scaffolding) has asserted ownership. The claim by Classic Scaffolding has been made in the District Court of New South Wales in Proceeding (2018/00153582) filed 16 May 2018, (the District Court Proceeding). The Plaintiff, as defendant in the District Court Proceeding, denies the said claim and says that Denny Aleksic was acting as a de facto director, or agent, of Classic Scaffolding Pty Ltd (119 785 250) at the time of giving the direction referred to in paragraph 1(a) and (b), above.”

The applicant’s submissions

21. The applicant relied on a written outline of submissions. The applicant submitted that the court would grant a permanent stay for the following reasons:

1. The plaintiff, Classic Scaffolding Pty Ltd (Classic) has resolutely refused to provide any meaningful particulars to their claim in these proceedings since 1 June 2018, as set out in their own evidence;

2. When the commonality between these proceedings and the evidence in the extant Victorian Proceeding first came to light on 3 August 2018, Smartscaff again requested, and Classic again refused, to particularise their pleading or to respond beyond a bare denial of the common issues raised on the face of the pleading;

3. Orders made for the filing of a Defence were consequent upon the provision of particulars, which were not forthcoming. In default of particulars, Smartscaff put Classic on notice that a stay application would be pressed based on the common issues identified.

4. By notice of Further & Better Particulars filed in the Victorian proceedings on 19 February 2019, Classic is named in the pleadings and may be joined as a "necessary party" pursuant to the Victorian Rules.

5. In the amended pleadings (above), Smartscaff has conceded that it retained certain scaffold taken from the "Bondi Site" and had passed on certain scaffold (to Denny Aleksic) from the "Waitara Site". The same sites as pleaded in this proceeding, during an overlapping time period (c. May 2016-c. July 2016);

6. Respectfully, as the pleaded facts are before the Victorian Supreme Court, that Court (which commenced first) is best placed to continue the extant proceedings;

7. In UBS AG v Tyne [2018] HCA 45, Kiefel CJ, Bell and Keane JJ said that either of two conditions enliven a court's power to stay proceedings for an abuse of process, namely where the use of the court's procedures occasions unjustifiable oppression to a party or where such use serves to bring the administration of justice into disrepute;

8. The exercise of power by the Court requires "a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case.

9. The Court would invoke the "abuse of process" doctrine as stated by the High Court in UBS v Tyne, in the circumstances in which the same "controlling mind' (Ned Aleksic) controls both Classic (plaintiff) and Capital Scaffolding Pty Ltd (Capital) (defendant in the Victorian Proceedings) and the maintenance of these proceedings unnecessarily bifurcates matters that could be dealt with once, by a single Court.

22. The applicant submitted alternatively that the court would grant a temporary stay for the following reasons:

1. The power of the Court to grant a temporary stay is exercisable where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first. That is this case;

2. Contrary to the plaintiff's submissions, the injuncture that the Court must exercise discretion "with great care" or with "extreme caution" arises only in respect of a permanent stay;

3. Lochkart J stated a non-exhaustive list of relevant considerations in Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287 (at 290-91 ). Those considerations would guide the Court;

4. The Court would give effect to the maxim: 'the law should strive against permitting multiplicity of proceedings in relation to similar issues'. By virtue of the overlap of the matters now pleaded in the Victorian Proceeding (above), these proceedings may be stayed pending final judgment in that Court;

5. The Victorian proceeding is well advanced, with extensive discovery completed, initial evidence on (Oberstar 277 pages; Ammon: 76 pages), potential experts have been simultaneously briefed with reports to be produced on resolution of this stay application), and with the likelihood of the same, or substantially the same witnesses being called, as would be called in these proceedings;

6. Classic would not be shut out and may re-activate these proceedings (to the extent that any residual matters remain after the conclusion of the Victorian Proceeding);

7. For these proceedings to proceed may leave open the prospect of inconsistent findings.

23. The applicant submitted that based on the further and better particulars to [7] of the Statement of Claim in the Victorian proceedings, the subject matter of those proceedings was “essentially the same” subject matter as these proceedings on the basis that there was an overlap of the scaffold the subject of those proceedings and the same question arose, namely, did Smartscaff take any of the scaffold that Classic says that it owns. On that basis alone, it was submitted a stay should be granted as a matter of prudence, relying on UBS AG v Tyne, supra, [27]. The applicant submitted that the Supreme Court Rules (General Civil Procedure) Rules 2015 (Vic), provides for joinder of a party where the plaintiff claims any relief to which any other person is entitled jointly with the plaintiff and informed the court that Classic shall be joined to the Victorian proceedings. The applicant submitted that those proceedings concerned some 320 tonnes of scaffolding not returned to it. It further submitted that by the further and better particulars referred to above, a concession was made which referred to the scaffold retained by Smartscaff to net off hired scaffold which had not been paid for by the Capital entities.

24. Prior to the liquidation of both Capital entities, Mr Denny Aleksic owned and controlled those companies. He remained an undischarged bankrupt and the defendant in the Victorian proceeding was now controlled by his son, Mr Ned Aleksic, who was also the sole director and shareholder of Classic, the plaintiff in these proceedings.

23. The plaintiff submitted that in refusing the application to transfer the Victorian proceedings to the New South Wales Supreme Court, Robson J stated that the ultimate task for the Victorian Supreme Court at trial would amount to a reconciliation, or an accounting exercise, in order to work out how much scaffold was delivered by Smartscaff to each of the Capital entities, how much had been purchased by Capital and whether any of the scaffold belonged to Smartscaff. It was submitted that it followed that the now amended Victorian pleading (i.e. the Further and Better Particulars to [7] of the Statement of Claim) must now include scaffold taken by Smartscaff from Classic.

24. Since Robson J’s judgment, the Victorian proceedings have been regularised and stood over by consent of the parties to enable this application to be heard. Any delay was explained by a period during which negotiations took place between the parties and it was submitted that Smartscaff has not been dilatory in those proceedings.

25. The written submissions of the applicant then set out details of the procedural history of the proceedings. It was submitted that a comparison of the proceedings, namely, the Statement of Claim filed in the Victorian Supreme Court and the Statement of Claim in these proceedings, is striking, the claims relating to the same sites and timeframes, together with the allegation that Smartscaff took Classic’s scaffold.

26. The applicant set out well settled principles relating to applications for permanent stay of proceedings which were not in dispute, and are referred to in my determination below. In accordance with the High Court’s decision in UBS AG v Tyne, supra, it is clear that the court’s power to grant a permanent stay of proceedings is enlivened “where the use of the court’s procedures occasions unjustifiable oppression to a party, or whether the use serves to bring the administration of justice into disrepute”. Further, relying on Tomlinson v Ramsay Food Processing Pty Limited [2015] 256 CLR 507 at [26], “making a claim or raising an issue which ought reasonably to have been made or raised for determination in an earlier proceeding can constitute an abuse of process where the parties seeking to make the claim or raise the issue was neither a party nor the privy of a party to the earlier proceedings and therefore could not be precluded by estoppel”.

27. In applying those principles here, the applicant submitted that the same controlling mind (Mr Ned Aleksic) was in effective control of Classic and Capital (albeit with Mr Denny Aleksic as “shadow director”). Further, a common enquiry into the same subject matter was best undertaken once, and by a single court. The Victorian Supreme Court proceedings were well advanced and the pursuit by the plaintiff of a separate claim may amount to an abuse of process. It was submitted that the court would seek to guard against the danger or irreconcilable findings of fact being made.

28. The applicant also set out the applicable principles for a temporary stay of proceedings. The following list of relevant considerations, which is non‑exhaustive, was derived from the decision of Lockhart J in Sterling Pharmaceuticals Pty Limited v Boots Co (Australia) Pty Limited, supra:

• Which proceeding was commenced first.

• Whether the termination of one proceeding is likely to have a material effect on the other.

• The public interest.

• The undesirability of two courts competing to see which of them determines common facts first.

• Consideration of circumstances relating to witnesses.

• Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted.

• The undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues.

• How far advanced the proceedings are in each court.

• The law should strive against permitting multiplicity of proceedings in relation to similar issues.

• Generally balancing the advantages and disadvantages to each party.

31. It was common ground that the court does not have to find an abuse of process to temporarily stay proceedings. Rather, the public interest in the efficient administration of justice, consistent with the overriding/overarching purpose of the CPA which requires the just, quick and cheap resolution of the real issues in proceedings requires only one trial of the facts.

Respondent’s submissions

32. The respondent also relied on a lengthy written outline of submissions. It opposed the application for the following reasons:

“a. Classic is not a party to the Victorian Proceedings and has no right under the Victorian rules to be joined;

b. Smartscaff concedes that the scaffold with which these proceedings are concerned is not the same scaffold as the subject matter of the Victorian Proceedings;

c. The relevant period with which these proceedings are concerned is a different period to that with which the Victorian Proceedings are concerned;

d. Neither res judicata, nor Anshun estoppel have any application;

e. Even the expanded operation of the sanction for abuse of process as informed by the Uniform Civil Procedure Act does not extend to prevent a person who is not a party to earlier proceedings and has no right to intervene in them, from progressing a claim based on different facts which occurred at a different time.

f. It has been open to Smartscaff to apply to stay these proceedings from the outset (or to transfer them to Victoria) but it has not done so. By analogy with applications like forum non conveniens, an application such as this should be brought at an early stage and before taking other steps in the proceedings.”

33. The respondent went on to submit that the court was entitled to be “sceptical” about the application, having regard to a number of matters including the fact that Smartscaff has not filed a defence despite being ordered to do so; if it succeeds in its application for a permanent stay, Classic would have no avenue to pursue its claim; a temporary stay is discretionary and Smartscaff’s conduct should disentitle it to the relief sought; Smartscaff has also failed to comply with orders in the Victorian proceedings regarding service of evidence and has otherwise failed to progress them; and, at an early stage, Smartscaff contemplating joining Classic as a party to the Victorian proceedings and apparently elected not to do so.

34. The respondent’s written submissions then rehearse the procedural history of the Victorian proceedings, concluding that Smartscaff had not served its expert’s report in those proceedings in breach of court orders, and that in the time between commencing those proceedings in May 2007 and the filing of this application, it had served no further lay evidence, and failed to cooperate in the fixing of a mediation of the Victorian proceedings as ordered.

35. The written submissions also outlined the procedural history of the New South Wales proceedings, including the correspondence concerning particulars which is referred to above.

36. The written submissions then outlined in detail the legal principles applicable to applications for permanent stay of proceedings based on abuse of process. Those principles are not in dispute and I refer to them below. The respondent also submitted that pursuant to the Victorian rules providing for joinder of claims and partyies, it was not open for Classic to be joined to the Victorian proceedings. Further, by comparison of the Victorian proceedings with these proceedings, and in the absence of a defence filed by the applicant in these proceedings, it was submitted that it is difficult to point to any overlap of issues in the proceedings that might give rise to any abuse of process. The applicant had made a concession in its letter dated 30 August 2018 that the scaffold subject of these proceedings is not the same the subject of the Victorian proceedings.

37. In oral submissions, learned counsel for the respondent outlined in detail why the High Court decision in UBS, supra, which informs the power of the court to permanently stay proceedings on the basis of abuse of process, does not apply to the present circumstances. In that case, the moving party (Tyne) had on two occasions declined to ventilate the same issues about the same subject matter in previous proceedings.

38. Counsel also rehearsed the written submissions as to whether joinder of the respondent was available in the Victorian proceedings under Victorian rules. It was submitted that the rules constituted a procedural barrier to the plaintiff being joined to those proceedings.

39. Further, the particulars now relied on by the applicant, which were filed two days before the hearing of this application, were a “bootstraps” attempt to bolster the plaintiff’s prospects of succeeding in this application by identifying similar issues in the proceedings. It was submitted that the provision of particulars amounted to “a bridge too far to connect the proceedings”.

40. Counsel for the respondent also referred to the affidavits contained in the plaintiff’s materials of Mr R Oberstar and Mr I Ammon, which had been sworn prior to the Victorian proceedings being commenced on 26 May 2017. Each of those affidavits had listed in the Schedule of Parties, Classic Scaffolding Pty Limited, with its correct ACN. No explanation had been provided why the Victorian proceedings were not brought against Classic and notwithstanding the proceedings were commenced on 26 May 2017, the originating document was not served until August 2017. By the time Robson J delivered his judgment, those proceedings only concerned one defendant, namely, Capital Scaffolding Pty Limited (in liq). Following that judgment, the proceedings were regularised by way of a Statement of Claim in which a claim had been made for aggravated damages (on the basis that the defendant in those proceedings had painted scaffold to conceal its true ownership).

41. Counsel also referred to the delay in bringing the present application. The explanation provided by the applicant here was that it did not realise the proceedings concerned scaffolding delivered to the Bondi and Waitara sites until 3 August 2018. Such delay affected the discretionary nature of the relief, that is that the applicant had not acted with due dispatch in either proceedings.

42. Counsel rehearsed the procedural history of the Victorian proceedings as outlined in the respondent’s written submissions. As the applicant had filed no defence in these proceedings, it was submitted that no inference should be drawn in its favour as to what their defence is, and therefore the court was unable to say whether the issues in these proceedings were similar to those in the Victorian proceedings.

43. A further matter of delay was that this application was filed on 1 November 2018 at a time when the applicant’s defence was three months overdue. The applicant had therefore, in accordance with the authorities, established no abuse of process, and no Anshun estoppel upon which a permanent stay could be granted.

44. On the question of a temporary stay, Counsel submitted that the case of Sterling Pharmaceutical, supra, did not assist the applicant here. The applicant here had commenced proceedings in Victoria which had nothing to do with the issues raised by the Statement of Claim filed in these proceedings, until the filing of its further and better particulars. It was submitted that there was no procedural path to ventilate the claim in these proceedings in Victoria.

45. In response to a question from the court regarding the “controlling mind” aspect of the proceedings, it was submitted that this was not the same type of case as the High Court determined in UBS, supra, where the same interest was sought to be litigated for a third time. It was submitted that this claim could not have been brought in the Victorian proceedings and in determining whether to exercise the court’s discretion, the question is what issue between the parties here will be resolved in the Victorian proceedings. Those proceedings concerned a different time period and in effect, how much scaffolding was returned to the plaintiff in those proceedings. The issues therefore were not the same as a practical matter and the court should refuse to exercise its discretion.

Submissions in reply

46. On the question of delay, Counsel for the applicant submitted that delay in the Victorian proceedings was mutual and was caused by settlement discussions which took place between the parties in 2008. Further, those proceedings were well advanced and discovery had taken place which now allowed the applicant to understand that the scaffolding the subject of these proceedings had to be taken into account as part of the reconciliation process in the Victorian proceedings.

47. It was submitted that the naming of Classic in the pre-litigation affidavits prepared for the Victorian proceedings was “inadvertent”. When the affidavits were read, there was no reference to Classic in the body of the affidavits, and in any event, there was provision for joinder under the Victorian rules and the applicant asserted that an application for joinder will be made when the matter is next before the Victorian Supreme Court. It was submitted that, contrary to the submissions made by the respondent, there was power to join a third party, relying on Russell v Abbey [2018] VSC 259 at [21].

48. Counsel again referred to the filing of the further and better particulars concerning [7] of the Victorian Statement of Claim, which identified the scaffolding subject of these proceedings. It was submitted that the failure by the applicant to file a defence in these proceedings was a factor to be taken into account in exercise of the court’s discretion. Further, the fact that there had been delay in the Victorian proceedings amounted to “slippage by the parties”, as the process of negotiations had led to delay. Notwithstanding that delay, the Victorian proceedings were vastly more advanced than these proceedings and covered the same subject matter. Further, the failure by the applicant to serve its expert’s report arose because of the extended discussions between the parties which had taken place in the Victorian proceedings.

Determination

49. Section 67 of the CPA provides as follows:

“67 Stay of Proceedings

Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day.”

50. Section 156 of the DCA provides:

“156 General power of court to stay proceedings

(1) At any stage of any proceedings, the court may, on terms, order that the proceedings be stayed.

(2) Nothing in subsection (1) limits any power conferred on the court or by a judge by any other provision of this Act or by any other Act or rule of law to stay proceedings.”

51. There was no dispute as to the principles applicable in considering an application to either permanently or temporarily stay proceedings. The power to order a permanent stay, on grounds that the proceedings are either oppressive or an abuse of process, is a power that should be exercised with great caution. Further, regard must be had to the overriding purpose of the CPA and Rules of court pursuant to s 56 of the CPA, i.e. to facilitate the just, quick and cheap resolution of the real issues in proceedings.

52. I accept the respondent’s submission that whilst the circumstances in which the use of the court’s processes will amount to an abuse are various, one of two conditions is required to be satisfied, namely, either the use of the court’s procedures constitutes unjustifiable oppression to a party, or the use brings the administration of justice into disrepute – see Tomlinson v Ramsay Foods [2015] 256 CLR 507 at [25].

53. No issue of Anshun estoppel arises here where the proceedings in Victoria and New South Wales are between different parties. Rather, the gravamen of the applicant’s submissions in support of a permanent stay is to the effect that the controlling mind of the plaintiff in these proceedings is the same controlling mind as the defendant in the Victorian proceedings, the proceedings relate to at least some of the same subject matter (i.e. scaffolding delivered to the Bondi and Waitara sites), the transactions took place over an overlapping period of time, and the maintenance of these proceedings unnecessarily replicates issues that will be dealt with in the Victorian proceedings, which are well advanced.

54. It is also common ground that the applicant for a temporary stay of proceedings is not required to establish an abuse of process in the relevant sense. Rather, the power to grant a temporary stay is exercisable where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first. There is a public interest in the same issues being subject to singular judicial determination, and therefore the power should be exercised to prevent multiplicity of proceedings in relation to similar issues.

55. The following chronology of the procedural steps taken and related matters assist in the resolution of this matter:

1. 26 May 2017 – Smartscaff files originating application in Victorian Supreme Court against Capital Scaffolding Pty Limited (Capital).

2. 15 August 2017 – Originating application served on Capital

3. 22 September 2017 – Capital files application for transfer of proceedings to New South Wales

4. 4 October 2017 – Capital’s application dismissed by Robson J and orders made regularising the proceeding

5. 25 October 2017 – Statement of Claim filed in Victorian proceedings

6. 5 December 2017 – Defence filed by Capital

7. 14 December 2017 – Orders made by consent for timetable for discovery, expert reports and mediation

8. 15 February 2018 to 30 April 2018 – Parties engage in without prejudice discussions

9. 1 May 2018 – Orders agreed by consent to extend timetabling

10. 16 May 2018 – Statement of Claim filed in District Court proceeding

11. 22 May 2018 – Statement of Claim served on defendant

12. 7 June 2018 – Mutual discovery takes place in Victorian proceedings

13. 4 July 2018 – Timetable set by Judicial Registrar. Particulars to be provided by 11 July 2018. Defence to be filed by 1 August 2018.

14. 3 August 2018 – First written notice by Smartscaff solicitors that proceedings commenced improperly and that Bondi and Waitara scaffold directly relate to the reconciliation of scaffolding the subject of the Victorian proceedings.

15. 15 October 2018 – Victorian proceedings stood over by consent for stay application to be determined in District Court

16. 31 October 2018 – Notice of Motion filed

17. 19 February 2019 – Further and better particulars filed in Victorian Supreme Court Proceedings.

56. Notwithstanding that the defendant in the Victorian proceedings and the plaintiff in these proceedings are different corporate entities, I am satisfied that Mr Ned Aleksic is the sole shareholder and director of each company and is the controlling mind of each. Whilst it would appear from the proposed parties to the Victorian proceedings listed in affidavits prepared prior to filing the originating process for those proceedings included Classic, and that a forensic decision was made by Smartscaff not to proceed to sue Classic in the Victorian proceedings, that fact alone is of little weight in the balancing exercise that goes into the court’s discretionary power being exercised. I find that there is power within the Victorian rules for joinder of a non-party to those proceedings, and for the purpose of this application accept Counsel for the applicant’s assertion that Classic will be joined to those proceedings. As the respondent takes a contrary position, any stay should be conditional on the joinder issue being determined in the Victorian proceedings. Russell v Abbey, supra, is authority for the proposition, that joinder under Rule 9 is available where a party is either a proper or necessary party and where certain conditions under that Rule are satisfied. The question of joinder is a matter for determination by the Supreme Court of Victoria.

56. Looking to the substance of the Victorian proceedings, which the parties agree involves a reconciliation of scaffold from various sites, I am comfortably satisfied that those sites include scaffolding from the Bondi and Waitara sites, which are the subject of the New South Wales District Court proceedings. There is also an overlapping of the time period over which the transactions took place. An entitlement to that scaffolding from those sites will therefore be subject of judicial determination in the Victorian proceedings.

57. I accept that there has been some delay in Smartscaff prosecuting the Victorian proceedings, however, that delay has been the outcome of a period of settlement negotiations between the parties, the time taken for the discovery process to take place, and, since discovery, the time taken for this present application to be dealt with by the court. Whilst the applicant is in breach of a court order to file its defence in these proceedings, and acknowledges its breach, it would not be in the public interest to duplicate costs in proceedings where such proceedings were to be stayed either permanently or temporarily. The failure by the applicant to file its defence is therefore a matter that does not weigh heavily in the exercise of the court’s discretion here.

58. I am not satisfied that these proceedings should be permanently stayed. First, the proceedings are between parties different from those engaged in the litigation in Victoria. Secondly, the applicant has made a limited concession that the subject matter of these proceedings is not identical to that of the Victorian proceedings. Rather, it is relevant that the reconciliation process that is to be adjudicated between the parties in those proceedings will, to that extent, require judicial determination of the entitlement to the Bondi and Waitara scaffolding referred to in the event that Classic is joined as a party to the proceedings. I am therefore not satisfied that these proceedings constitute an abuse of process, in the relevant sense, that would warrant a permanent stay being ordered.

59. However, on the basis that Classic will be joined as a party to the Victorian proceedings, the following matters should be taken into account in determining whether a temporary stay should be ordered. First, the Victorian proceedings were commenced first and are well advanced. It is likely, in the event that Classic is joined as a party, that the determination of those proceedings is likely to have a material effect on these proceedings. Thirdly, it is in the public interest that matters of some substance be judicially determined only once. It is certainly undesirable and a substantial waste of resources, and in breach of the overriding purpose of the CPA for actions to proceed in two courts involving substantially the same issues – see L & W Developments Pty Ltd v Della [2003] NSWCA 140. In balancing all of those matters here, it is in the public interest to temporarily stay these proceedings, on the proviso that Classic is joined as a party to the Victorian Supreme Court Proceeding, and following such joinder, until those proceedings are determined. As a practical matter, the stay should initially be for a period of three months to enable the joinder application to be determined, and in the event that it is unsuccessful, the stay will lapse. In the event that the joinder application is successful and Classic are joined to the Victorian proceedings, the stay will be granted until conclusion and final determination of those proceedings.

Orders

61. I therefore order as follows:

1. I refuse to grant the relief sought in Order 1 in the applicant’s Notice of Motion filed on 31 October 2018.

2. I grant a stay of these proceedings for a period of three months to allow the applicant to join the respondent as a party to Victorian Supreme Court Proceedings No: SECI-2017/00130.

3. In the event that that application is successful, the stay is extended until final determination of those proceedings, including any appellate proceedings arising therefrom.

4. If the joinder application is unsuccessful, the stay is to lapse.

5. The plaintiff is to pay the defendant’s costs of the Notice of Motion.

6. The parties are granted liberty to apply on three days’ notice in respect of any extension of the stay of these proceedings.

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Decision last updated: 01 March 2019