Case: Palm Springs Limited v Darling [2002] FCAFC 239 ; (2002) 123 FCR 527
Outcome: distinguished
As to the broader abuse of process point, Senior Counsel for the applicants submitted that the present case was on all fours with a number of decisions in this Court which have dealt with the cross-vesting legislation. In particular, he relied upon Palm Springs Limited v Darling [2002] FCAFC 239 ; (2002) 123 FCR 527 and Morningstar Research Pty Ltd v Fiduciary Ltd [2003] FCA 870 ; (2003) 131 FCR 236. 64 After reviewing two authorities in this Court ( Palm Springs [2002] FCAFC 239 ; 123 FCR 527 and Morningstar [2003] FCA 870 ; 131 FCR 236) , Mr West QC submitted that it was a legitimate tactical procedure for the applicants to engage the jurisdiction of this Court so as to enable the proceeding commenced in this Court as part of that strategy to be transferred to the Supreme Court of New South Wales in circumstances where the facts that such proceedings were pending and were related to other proceedings in a State court or tribunal were critical factors in enabling the applicants to have the McCauslands' IRC proceedings removed into the Supreme Court even though no substantive proceedings were on foot in that Court and even though that Court ordinarily had no jurisdiction to hear and determine those IRC proceedings. Mr West said that, expressed in those terms, such a use of this Court's processes was not improper nor did it constitute an abuse of the process of this Court. 72 In Palm Springs [2002] FCAFC 239 ; 123 FCR 527 a Full Court of this Court said at [26] [32] (pp 533 534): 26 There can be no doubt, and Palm Springs has frankly conceded from the outset of the Federal Court proceeding, that its intention is to seek to have the Federal Court proceeding cross-vested to the Supreme Court. It is equally clear however, and his Honour in the passage at [27] obviously accepted, that Palm Springs could not itself determine whether or not the Federal Court would make a cross-vesting order. If such an order were to be refused, Palm Springs' intention, as accepted by his Honour, is to pursue its claim to conclusion in the Federal Court. 27 We do not consider that any abuse of process was, or is, involved. What Palm Springs seeks is relief under the Trade Practices Act and the Corporations Act . If its cross-vesting application succeeds it will seek that relief in the Supreme Court, in the same proceeding . That proceeding will have been lawfully submitted to the jurisdiction of the Supreme Court pursuant to the Commonwealth Cross-Vesting Act. So what Palm Springs hopes to achieve is the very relief the Trade Practices Act and the Corporations Act hold out. The present case is a world away from the kind of collateral benefit that Dr Spautz sought: the acquiescence of defendants to demands which had no connection with his criminal defamation action. Palm Springs is not seeking an object "beyond that which the legal process offers": Williams v Spautz at 523. Seeking one forum in which all issues could be tried is a legitimate advantage for Palm Springs, indeed, as we shall later observe, for both parties: Bell Group (In liq) v Westpac Banking Corporation (1996) 20 ACSR 762 at 774 per R D Nicholson J. 28 Thus, the most that can be said is that the Federal Court proceeding was commenced in this Court, rather than in the Supreme Court, because of the forensic advantage that was perceived to be available under the cross-vesting legislation. There is no basis in the material before the primary judge to conclude, and his Honour did not conclude, that the predominant purpose for commencing the Federal Court proceeding, claiming the relief set out in the application, was other than to obtain that relief. There is no reason to conclude that the claims for relief would not be prosecuted to finality in the Federal Court, if an application for transfer under the cross-vesting legislation is refused, or in the Supreme Court, if such an application is granted. 29 In Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 725 Rogers AJA said: "It is important that full effect be given by the courts to the imaginative and detailed code for ensuring that throughout Australia, disputes are dealt with by the one court and that be the court most appropriate for the particular dispute. Consistently with the preservation of dual State and Federal Court systems and with the State Courts dispensing justice within the State boundaries in appropriate cases, no longer is it appropriate to view the court of another State as a foreign court." 30 The cross-vesting scheme, in its Federal to State and State to State aspects, remains fully operative and, to that extent, the observations of Rogers AJA, with which we agree, are still applicable. To have all disputes between a set of litigants resolved in the one Australian court which is the most appropriate is a legitimate, indeed self-evidently desirable, objective. If, as in the circumstances of the present case, that involves the Federal Court becoming a "jurisdictional transit point", we do not see that as in any way derogating from the dignity of the Court. The Federal Court will only make a cross-vesting order if, inter alia, it is satisfied that the interests of justice will be served. Determining whether the interests of justice are served by the making of an order for which a Commonwealth Act confers express jurisdiction seems to us to be not remote from the judicial function. 31 If Mr Darling's argument is correct, s 5(4) of the Commonwealth Cross-Vesting Act has a severely limited field of operation, at least insofar as applicants are concerned. Applicants seeking cross-vesting orders would need to show that the idea only occurred to them after their proceeding was instituted. To the extent they had cross-vesting in mind when they commenced the proceeding, they would be at risk of having it struck out as an abuse of process before any cross-vesting order could be obtained. 32 In any case, where litigants institute genuine claims with the hope or expectation that they will not proceed to judgment that, in itself, does not mean there is an abuse of process. Many claims are instituted in the hope, often reasonably based, that a settlement will be reached, but in the realisation that, in the absence of settlement, the matter will have to proceed to trial and final determination. 73 In Palm Springs [2002] FCAFC 239 ; 123 FCR 527 , there were two sets of proceedings instituted in the Supreme Court of New South Wales which had some real connection with the proceedings which had been brought in this Court. The first of those two sets of proceedings involved a claim for rectification of a share sale agreement. The second set of Supreme Court proceedings was a proceeding in which Palm Springs sought an order removing the IRC proceedings into the Supreme Court and an order that those proceedings then be consolidated with the extant rectification proceedings in that Court. In the Federal Court proceedings in Palm Springs [2002] FCAFC 239 ; 123 FCR 527 , relief was sought under the Trade Practices Act 1974 (Cth) alleging misleading and deceptive conduct in respect of the very same share sale agreement. In the related proceedings in the IRC in Palm Springs [2002] FCAFC 239 ; 123 FCR 527 , orders were sought varying that same share sale agreement based upon substantially the same misrepresentations as were to be litigated in the Federal Court. 74 It is thus quite clear that the observations which the Full Court made in Palm Springs [2002] FCAFC 239 ; 123 FCR 527 were in a setting where there was a substantial overlap in the allegations made in the IRC and in the Federal Court and a very real connection between the claims made in those two sets of proceedings and the subject matter of the Supreme Court proceedings. In every sense, there were genuine disputes raised in each of the three Courts where proceedings were on foot. 75 In Palm Springs [2002] FCAFC 239 ; 123 FCR 527 , the Full Court held that there was no basis for a conclusion in that case that the predominant purpose for commencing the Federal Court proceedings was other than to obtain the relief claimed in those proceedings and that there was no reason to conclude that the claim for relief made in the Federal Court would not be prosecuted to finality if an application for transfer to the Supreme Court under the cross-vesting legislation were refused. The Court also held that there was no reason to conclude that that claim would not be prosecuted to finality in the Supreme Court, if an application for transfer were granted. 76 I have formed the contrary view in the present case. 77 In pars 45 54 and 58 59 of these Reasons, I have made certain observations and findings. The matters to which I have referred in those paragraphs are relevant to the second and broader of Mr McCausland's grounds of challenge to these proceedings. I will not repeat them here. 78 The important factors for present purposes may be summarised as follows: (a) The issues raised by the non-money claims for relief made in these proceedings can be adequately ventilated and determined in the IRC. This Court need not be engaged in order to deal with those claims; (b) The money claim is tiny and would not ordinarily have been brought in this Court; (c) The claim is a relatively simple one and has been put in the way that it has solely in order to present it as legitimately being within this Court's jurisdiction; (d) The relevant events occurred between five and six years ago. There has been significant delay in bringing forward the claim. The delay has not been explained; and (e) The claim in this Court is inconsistent with the defences adopted by the applicants in the IRC. Those defences have been supported by affidavit evidence whereas there has been no verification of the claim made in this Court. 79 In my judgment, the proceedings in this Court have been instituted solely (or, at the very least, predominantly) for the purpose of enabling the removal of the IRC proceedings brought by Mr and Mrs McCausland into the Supreme Court by order of that Court: (i) Against the wishes of Mr and Mrs McCausland who had the right to choose the IRC as the forum in which to litigate their claims; (ii) In circumstances where there is no substantive claim on foot in the Supreme Court and where the Supreme Court has no jurisdiction to hear and determine claims made pursuant to ss 105 and 106 of the Industrial Relations Act 1996 (NSW); and (iii) In circumstances where there is no genuine intention on the part of the applicants to prosecute to finality the claims made in this Court should it be necessary to do so (whether in this Court or in the Supreme Court). 81 In Morningstar [2003] FCA 870 ; 131 FCR 236 , as in Palm Springs [2002] FCAFC 239 ; 123 FCR 527 , there were real disputes in several courts on foot at the same time. The first of those proceedings was a suit in the Equity Division of the Supreme Court brought by the group which Hely J described as " the Rich interests ". The second proceeding was a proceeding commenced in the IRC by the Rich interests seeking relief pursuant to s 106 of the Industrial Relations Act 1996 (NSW). The next important proceeding was the filing by the Morningstar interests against the Rich interests of a significant cross-claim in the Supreme Court proceedings. The last proceedings to be commenced were the proceedings in the Federal Court commenced by the Morningstar interests. The Statement of Claim in the Federal Court proceedings in effect replicated the cross-claim filed by the Morningstar interests in the Supreme Court proceedings. 85 There was an acceptance by the Rich interests in Morningstar [2003] FCA 870 ; 131 FCR 236 that the claims made by the Morningstar interests in their cross-claim in the Supreme Court and in their Statement of Claim in the Federal Court were genuine claims and were not being agitated for an improper purpose such as the type of collateral benefit sought by Dr Spautz in the proceedings to which reference was made by the Full Court in Palm Springs [2002] FCAFC 239 ; 123 FCR 527 at [22] (p 532) and again at [27] (p 533). 86 In my judgment, the present case can be distinguished from Morningstar [2003] FCA 870 ; 131 FCR 236. My reasons for doing so are substantially the same as the reasons which I have given for distinguishing Palm Springs [2002] FCAFC 239 ; 123 FCR 527. To use the words of Hely J: The applicants " ... do not genuinely seek to obtain the relief ... " which they have sought in the proceedings in this Court. 87 Accordingly, I am of the view that neither Palm Springs [2002] FCAFC 239 ; 123 FCR 527 nor Morningstar [2003] FCA 870 ; 131 FCR 236 requires me to reject Mr McCausland's application. On the contrary, the reasoning in both of those cases requires that I should accede to it.