Eden Constructions v State of New South Wales

[2004] NSWSC 410

CITATION:	Eden Constructions v State of New South Wales [2004] NSWSC 410
HEARING DATE(S):	7 May 2004
JUDGMENT DATE:	7 May 2004
JUDGMENT OF:	McDougall J at 1
DECISION:	Paragraphs [24]-[27],[41],[42]
CATCHWORDS:	CROSS-VESTING - notice of motion seeking order under s 6(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) - where special federal matter and non special federal matter claims pleaded - attraction of non federal jurisdiction to a case involving the exercise of federal jurisdiction - where all aspects of the plaintiff's claim arise from common factual matrix - whether claims other than the special federal matter within the jurisdiction of the Federal Court - whether "special reasons" why matter should be heard in Supreme Court - relevance of specialist Technology and Construction List - COSTS - where defendant neither opposed nor consented to making of order under s 6(3) - whether costs should follow the event
LEGISLATION CITED:	Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) Trade Practices Act 1974 (Cth) Federal Court of Australia Act 1976 (Cth)
CASES CITED:	Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 Matland Holdings Pty Ltd v NTZ Pty Ltd [2002] FCA 1590
PARTIES :	Eden Constructions Pty Limited (Plaintiff) State of New South Wales (Defendant)
FILE NUMBER(S):	SC 55025/03
COUNSEL:	C Ward (for plaintiff) G Curtin (for defendant)
SOLICITORS:	Johninfo Lawyers (for plaintiff) Crown Solicitors Office (for defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTIONLIST

McDOUGALL J

7 May 2004 (Revised 10 May 2004)

STATE OF NEW SOUTH WALES

JUDGMENT

1 HIS HONOUR: There were listed for hearing today two notices of motion. The first in point of time was the defendant's notice of motion filed 21 November 2003 seeking security for costs. For reasons that will be apparent from the transcript, the parties have accepted that that notice of motion should not proceed today.

2 The second notice of motion is the plaintiff's notice of motion filed 10 December 2003 for an order under s 6(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW), which I will call the Cross-vesting Act, that these proceedings be determined by this Court.

3 The requirement to consider s 6 of the Cross-vesting Act arises because it is common ground that an element of the plaintiff's case involves a special federal matter. That is the case pleaded in paragraphs 15 to 23 under the heading "Points of Claim" in part A of the plaintiff's further amended summons filed on 10 December 2003. The special federal matter is referred to in the further amended summons as "Misuse of Market Power". What is alleged is that the defendant had, and misused, its power in the market and thereby contravened s 46 of the Trade Practices Act 1974.

4 It is clear that this claim is a special federal matter as that expression is defined in s 3(1) of the Cross-vesting Act (which refers to the definition in the Jurisdiction of Courts (Cross-vesting) Act 1987 of the Commonwealth).

5 The claims that are pleaded in the points of claim are five in all. The first, pleaded in paragraphs 3 to 14, alleges that the defendant made a number of representations, concerning the plaintiff, that were false or misleading or misleading or deceptive; and, accordingly, that the plaintiff suffered damage. It is noteworthy that in this section of the claim the pleadings in paragraphs 7 and 8 make cross-reference to the market case.

6 The second part of the claim is that dealing with misuse of market power - the special federal matter to which I have referred.

7 The third aspect of the claim is pleaded in paragraphs 24 to 26B of the further amended summons. The plaintiff there asserts that the defendant failed properly to carry out its duties as a superintendent's representative under a contract relating to the Kremur Street pumping station and a contract for stormwater mitigation and associated civil works, each in Albury. That aspect of the claim is not cross-referenced to the market case.

8 The fourth aspect of the claim is pleaded in paragraphs 27 to 30 of the Points of Claim. It asserts that the defendant engaged in deliberate use of unlawful means in respect to the plaintiff's business by inducing or causing Albury Council to break its contract with the plaintiff, engaging in conduct in breach of the contract that is referred to, and misusing its market power. It is self-evident from this last point (see paragraph 27(c) of the Points of Claim) that this aspect of the case is cross-referenced to the market case. That is also apparent, in relation to this aspect of the case, from the particulars to paragraph 27 and the particulars to paragraphs 28 and 29.

9 The fifth aspect of the case is an assertion that the defendant has engaged in misfeasance in public office. That claim too is cross-referenced to the market case: see the particulars to paragraphs 34 and 35.

10 It is apparent that the whole of the case pleaded by the plaintiff against the defendant arises from the one factual matrix, or substratum of facts. So much was conceded in argument.

11 It is therefore necessary to consider the requirements of s 6 of the Cross-vesting Act. I set out the relevant provisions as follows:

“(1) If:
(a) a matter for determination in a proceeding that is pending in the Supreme Court of a State or Territory is a special federal matter; and
(b) the court does not make an order under subsection (3) in respect of the matter;
the court must transfer the proceeding in accordance with this section to the Federal Court or a court mentioned in paragraph (2)(b).
Note: This section has effect subject to section 6A (special federal matters: Commonwealth authorities or officers acting under the laws of States).
(1A) However, the court must only transfer so much of the proceeding as is, in the opinion of the court, within the jurisdiction (including the accrued jurisdiction) of the Federal Court, or the court mentioned in paragraph (2)(b), as the case may be.
…
(3) The Supreme Court may order that the proceeding be determined by that court if it is satisfied that there are special reasons for doing so in the particular circumstances of the proceeding other than reasons relevant to the convenience of the parties.
(4) Before making an order under subsection (3), the court must be satisfied that:
(a) a written notice specifying the nature of the special federal matter has been given to the Attorney-General of the Commonwealth and the Attorney-General of the State or Territory where the proceeding is pending; and
(b) a reasonable time has elapsed since the giving of the notice for the Attorneys-General to consider whether submissions to the court should be made in relation to the proceeding.
…
(6) In considering whether there are special reasons for the purposes of subsection (3), the court must:
(a) have regard to the general rule that special federal matters should be heard by the Federal Court or a court mentioned in paragraph (2)(b), whichever is appropriate in the particular case; and
(b) take into account any submission made in relation to the proceeding by an Attorney-General mentioned in subsection (4).
… “.

12 At one stage, it appeared to be asserted that those aspects of the plaintiff's case, which did not include the pleaded s 46 case, were not within the jurisdiction of the Federal Court of Australia. However, in my judgment, it is clear that in principle they are. Section 32(1) of the Federal Court of Australia Act 1976 (Cth) confers jurisdiction on the Federal Court, to the extent that the Constitution permits, in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked. That jurisdiction, which is frequently referred to as associated or accrued jurisdiction, has been considered by a number of authorities in the High Court starting with Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 and concluding (in a different statutory context) with Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559.

13 The authorities were reviewed by Kenny J in Matland Holdings Pty Ltd v NTZ Pty Ltd [2002] FCA 1590. Her Honour referred at paragraph [16] to the judgment of Barwick CJ in Phillip Morris at 474, where his Honour said that, for something "to be outside the accrued jurisdiction" it:

“[m]ust be separate and disparate from the matter in relation to or in connection with which federal jurisdiction has been attracted.”

14 His Honour said further that:

“The emphasis on the disparate and independent nature of what is not part of or within the matter should ensure that no narrow view is taken of the parameters of the matter.”

15 At 475, his Honour said that it was settled in Australia that where a court that can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter.

16 Her Honour continued her review of the authorities and concluded at paragraph [22] that the Federal Court:

“[w]ill have jurisdiction to hear and determine the cross-claim in this proceeding, even though it raises no federal claim, if it shares a 'common substratum of facts' with the principal proceeding, or if the claims are related in the sense that the determination of one is essential for the determination of the other.”

17 I respectfully accept her Honour's summary as setting out, more clearly than I could, the relevant principle on the attraction of non-federal jurisdiction to a case involving the exercise of federal jurisdiction.

18 It is, therefore, clear in my view that the Federal Court would have jurisdiction to hear the whole of the plaintiff's proceeding so that, among other things, it is not necessary to give further attention to the requirements of s 6(1A) of the Cross-vesting Act.

19 It is clear that s 6 expresses what might be called a strong bias in favour of transferring matters to the appropriate Federal Court where the proceeding involves a special federal matter. That follows from the requirement of subsection (3) that "special reasons" which do not include "reasons relevant to the convenience of the parties" must be found if this Court is to retain jurisdiction in the proceeding.

20 It is in my judgment clear that the five aspects of the plaintiff's claim arise from this common factual matrix or same substratum of fact. If there were any doubt about this, the extent to which the claims are intertwined, through the pleading mechanism that I have referred to already, would make it clear. It is, therefore, clear as I have said that the matter is one that the Federal Court could deal with.

21 It was put for the plaintiff that there were special reasons why the matter should remain in this Court. They included the proposition that the issues would involve analysis and consideration of matters and questions of a building and construction nature, which were appropriate to be heard by a court, such as this Court, having a specialist Technology and Construction List. The matters that were relied upon in this context included the tendering process; the procurement of building and construction works for government authorities; the role of the defendant (under whatever name) in the building and construction industry in New South Wales; and the practices of the defendant in relation to contract review lists, references, contract review reporting and like matters.

22 I do not think that those matters are such that the expertise of a specialist list is required to determine them. It is clear that at least some aspects of the plaintiff's case will require consideration of matters that are ordinarily, and properly, heard in this Court in this list. For example, the plaintiff’s case in relation to the alleged failure of the defendant properly to carry out its duties as a superintendent's representative will involve, as paragraph 25 of the Points of Claim makes clear, whether the defendant properly performed its duties under the relevant contract and whether it properly assessed the work carried out by the plaintiff.

23 However, the case as pleaded and particularised does not appear to me to involve such specialist issues that it would be in a sense unfair to burden the Federal Court with them or, alternatively, highly desirable for them to be determined by this Court. In that context it may be noted that the plaintiff does not contend that the reference procedure for which Pt 72 of the Rules provides is appropriate. Ordinarily, the hallmark of a technical case can be found in the circumstance that reference of some or all the questions is desirable, so as to obtain the benefit of specialist assessment.

24 Accordingly, I am not satisfied that there are special reasons, within the meaning of s 6(3) of the Cross Vesting Act, for the proceedings remaining in and being determined by this Court.

25 It follows, from s 6(1), that the proceedings must be transferred to the Federal Court of Australia.

26 For the purposes of s 6(4) of the Cross Vesting Act, I am satisfied that notice has been given to the Attorney-General of the Commonwealth and the Attorney-General of the State and I am satisfied that each of them has indicated, by letter, that he does not wish to intervene or make submissions in these proceedings.

27 I therefore order, pursuant to s 6(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (NSW) that proceedings number 55025/03 in this Court be transferred to the Federal Court of Australia.

[DISCUSSION AS TO COSTS]

28 The defendant points to the circumstance that the plaintiff did not obtain the order that it seeks, and says in substance that the ordinary rule - that costs should follow the event - should apply.

29 I do not think that the matter can be determined by application of the ordinary rule. In paragraph 3 of its written submissions dated 6 May 2004, the defendant stated that it, "neither consents to, nor opposes, an order that these proceedings be determined by the Supreme Court rather than being transferred to the Federal Court". In paragraph 4, the defendant rightly pointed out, "that this is not an issue which could be dealt with by consent". The reference in paragraph 4 was, of course, a reference to the application for an order under s 6 (3) of the Cross Vesting Act.

30 Having taken that position, the defendant put on detailed submissions which, as I indicated in the course of argument, I found to be most helpful.

31 Because the defendant did not oppose (nor did it consent to) the order under s 6(3), it does not seem to me that there has been a winner and a loser in the ordinary way. That is why, I think, the ordinary rule as to costs is inapplicable.

32 The defendant points to the circumstance that the matter was raised in the context of a strike-out application heard by Einstein J on 24 November 2003 and decided by his Honour on 25 November 2003 - see [2003] NSWSC 1098. The defendant says, with some justification, that the matter could then have been dealt with simply and cheaply. If, however, that had happened, there would still have been a hearing of the application for security for costs.

33 In my judgment, the appropriate order in relation to costs of the plaintiff's notice of motion filed 10 December 2003 is that those costs be costs in the proceedings.

34 The position in relation to the defendant's notice of motion for security is a little more difficult. The matter was listed before Bergin J on 2 April 2004 when her Honour gave directions for evidence and submissions, and listed both motions for hearing today. The directions made by her Honour included that the defendant file and serve all evidence (in reply) relating to security for costs by 28 April 2004.

35 It appears that, on 29 April 2004, the defendant's solicitor informed the plaintiff's solicitor that the defendant would not be able to comply with her Honour's direction. There was some discussion as to whether the hearing date could be changed, but the plaintiff indicated that there were problems. Accordingly, it was agreed that as long as the evidence in question was in reply, “the plaintiff would not object to it being served late so long as it is served on us no less than 24 hours prior to the hearing date so that we and our counsel can give it proper consideration”.

36 The evidence was filed and served yesterday. It comprised some four affidavits: one by Mr Creais sworn 5 May 2004, one by Mr Wood sworn the same date, one by Mr Elliott sworn the same date and one by Mr Matters sworn 6 May 2004. The affidavits of Messrs Creais and Elliott included detailed and substantial exhibits comprising a large number of documents.

37 It is, I think, legitimate to say that the bulk and complexity of the material that was served was such that it was unreasonable to expect the plaintiff's solicitors and counsel to "give it proper consideration" prior to this morning. That is why, as matters proceeded, it was accepted that the hearing of the application for security for costs should not proceed.

38 It may very well be that protests should have been raised yesterday at the bulk of the evidence. If that had happened, then, perhaps there might have been some small saving of costs - although I doubt that. But even though that was not done, the failure to do it does not seem to me to be a reason to visit the plaintiff with costs of today. Clearly, I think, when the consent to extension of time was given to which I have referred, it was not contemplated that the evidence would be of the magnitude and detail of that which was in fact served.

39 Again, I think, the appropriate order in relation to the costs of today of the defendant's notice of motion filed 21 November 2003 is that those costs be costs in the proceedings.

HUNT: Costs in the motion or costs in the proceeding?

40 HIS HONOUR: You are quite right. I will make them costs in the motion.

ARDEN: Yes, your Honour.

41 HIS HONOUR: I order that the costs of the plaintiff's notice of motion filed on 10 December 2003 be costs in the proceeding.

42 I order that the costs of the defendant's notice of motion filed 21 November 2003 be costs in that notice of motion.

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Last Modified: 05/14/2004