Lenard's Pty Ltd & Anor v Kimart Pty Ltd & Ors [2009] QDC 150 (11 June 2009)

Last Updated: 11 June 2009

DISTRICT COURT OF QUEENSLAND

CITATION:	Lenard’s Pty Ltd and Anor v Kimart Pty Ltd and Others [2009] QDC 150
PARTIES:	Lenard’s Pty Ltd (First Plaintiff) And The Poultry Shop Leasing (NSW) Pty Ltd (Second Plaintiff) v Kimart Pty Ltd (First Defendant) And Kimart Pty Ltd as Trustee for the M & K Meredith Unit Trust (Second Defendant) And Kim Lorraine Meredith (Third Defendant) And Martin John Meredith (Fourth Defendant)
FILE NO/S:	421 of 2009
DIVISION:	Civil
PROCEEDING:	Application
ORIGINATING COURT:	District Court Brisbane
DELIVERED ON:	11 June 2009
DELIVERED AT:	Brisbane
HEARING DATE:	18 May 2009
JUDGE:	Shanahan DCJ
ORDER:	Application refused. Applicants to pay the Respondents’ costs of this Application on a standard basis.
CATCHWORDS:
COUNSEL:	Mr M T Hutchings for Applicants. Mr D P de Jersey for Respondents
SOLICITORS:	McIntosh, McPhillany & Co for Applicants. H W L Ebsworth Lawyers for Respondents.

[1] This is an Application by the defendants to a claim commenced in the District Court, Brisbane to stay the proceedings pursuant to s 20 Service and Execution of Process Act 1992 (Cth).
[2] The claim is based on a Deed of Termination in relation to a failed Franchise Agreement concerning a store which was operated in New South Wales. The applicants argue that New South Wales is the appropriate forum to determine the matter.
The Background
[3] The plaintiffs are the franchisor of a chain of stores which sell chicken products. On 26 November 1999 by a Master Franchise Agreement signed on that date, the plaintiffs granted the first and second defendants the right to operate outlets throughout New South Wales. The third and fourth defendants guaranteed the first and second defendants’ obligations under the Agreement.
[4] On 23 December 2004 the plaintiffs, the first and second defendants and Coolayfin Pty Ltd (“Coolayfin”) entered a Franchise Agreement pursuant to which Coolayfin was entitled to operate a Lenard’s store franchise at Parkes in New South Wales.
[5] Coolayfin subsequently defaulted in its obligations under the Franchise Agreement and the Franchise Agreement was terminated.
[6] On 21 December 2007 the plaintiffs and defendants entered a Deed of Termination pursuant to which the defendants agreed to indemnify the plaintiffs in respect of loss suffered by the plaintiffs as a result of Coolayfin breaching the Franchise Agreement.
[7] On 13 February 2009 the plaintiffs commenced a claim against the defendants in relation to moneys payable under the Deed of Termination or, alternatively, as damages for breach of contract.
The Deed of Termination
[8] Relevant to this Application, the Deed of Termination provided at Clause 21:

“This document is governed by the law of Queensland. The parties submit to the exclusive jurisdiction of its courts. The parties will not object to the exclusive jurisdiction of its courts. The parties will not object to the exercise of jurisdiction by those courts either for forum non conveniens or on any other basis. The parties will not take or continue legal proceedings anywhere else”.

The Application
[9] The Application was originally framed that the defendants sought an order dismissing the claim for want of jurisdiction on the basis that, pursuant to Rule 35 UCPR, the District Court of Queensland did not have jurisdiction to hear the claim.
[10] Rule 35 UCPR provides, as relevant,

“General Rule

35(1) A person must start a proceeding before a court in one of the following districts –

(a) the district in which the defendant or respondent lives or carries on business;
(b) if there is more than one defendant or respondent –
the district in which one or more of the defendants or of the respondents live or carry on business;
(c) if the parties to a proceeding to be started in the Magistrates Court or the District Court consent in writing and file the consent with the Registrar –

(i) for a Magistrates Court –
any Magistrates Court’s district; or
(ii) for the District Court –
any district of the District Court;
(d) if a defendant has agreed or undertaken in writing to pay a debt or another amount at a particular place – the district in which the place is located;
(e) the district in which all or part of the claim or cause of action arose.”

[11] It was argued in correspondence between the parties that, as none of the defendants had any connection to Queensland and that the cause of action arose at Parkes in New South Wales, that Rule 35 UCPR precluded the action being brought in the District Court of Queensland.
[12] In my view that argument misconstrues the impact of Rule 35. Rule 35 simply regulates in which court district within Queensland a proceeding may be commenced. The civil jurisdiction of the District Court of Queensland is provided by sections 8A and 68 of the District Court of Queensland Act 1967. In my view Rule 35 UCPR does not preclude this action being brought before the District Court of Queensland.
[13] This argument was not pressed by the applicants at the hearing of the Application.
[14] The Applicants argued that the proceedings be stayed pursuant to s 20 Service and Execution of Process Act 1992 (Cth) on the basis that the appropriate State jurisdiction to determine this matter is New South Wales.
[15] S 20 Service and Execution of Process Act 1992 (Cth) provides, as relevant here,

“20 Stay of Proceedings

...

(2) The person served may apply to the court of issue for an order staying the proceeding.

(3) The court may order that the proceeding be stayed if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters.

(4) The matters that the court is to take into account in determining whether that court of another State is the appropriate court for the proceeding include:

(a) the places of residence of the parties and of the witnesses likely to be called in the proceeding; and

(b) the place where the subject matter of the proceeding is situated; and

(c) the financial circumstances of the parties, so far as the court is aware of them; and

(d) any agreement between the parties about the court or place in which the proceeding should be instituted; and

(e) the law that would be most appropriate to apply in the proceeding; and

(f) whether a related or similar proceeding has been commenced against the person served or another person;

but do not include the fact that the proceeding was commenced in the place of issue.”

[16] The applicants submit that the original Franchise Agreement was executed in New South Wales and that all relevant events took place in New South Wales. The only connection of that agreement to Queensland was that Lenard’s Pty Ltd has its place of business in Queensland. The applicants argued that the jurisdiction with the most natural connection with these proceedings is New South Wales. In that regard all witnesses relevant to the defendants’ case reside in New South Wales.
[17] The applicants submit that a jurisdiction clause in an agreement is only one of the factors to be considered in the exercise of the discretion under s 20 Service and Execution of Process Act 1992 (Cth).
[18] The applicants further argue that the District Court of Queensland is a court of inferior jurisdiction and that the District Court Act confers jurisdiction in relation to events that occurred in Queensland. Any agreement by the parties that the law of Queensland would be the proper jurisdictional law for the conduct of proceedings does not mean that the District Court of Queensland would be the proper forum.
[19] The respondents submit that there are a number of features of the litigation which do bring it within the jurisdiction of the Queensland courts. The Deed of Termination was negotiated in Queensland. The cause of action (failure to pay a debt owing under the Deed of Termination) was completed when the defendants failed to make payment to the plaintiffs in Queensland. All of the plaintiffs’ witnesses reside in Queensland. By the jurisdiction clause in the Deed of Termination, the parties agreed to submit to the jurisdiction of the courts of Queensland. Full weight should be given to that agreement.
Section 20 Service and Execution of Process Act 1992 (Cth)
[20] The power of a court to stay a proceeding pursuant to s 20 “is predicated on the court being satisfied that another State court having jurisdiction to determine “all the matters in issue” between the parties is the “appropriate court” to determine those matters.” (St George Bank Limited v McTaggart [2003] 2 Qd R 568 at 571 per McPherson JA). McPherson JA continued at page 572,

“[10] In Valkama v Jamieson (1994) 11 S. R. (W.A.) 246, 250, His Honour Judge Blaxell in the District Court of Western Australia said of the expression “appropriate court” in s 20 of the Act that, in his view, it is “the one with which the action has the most real and substantial connection, and which can therefore be regarded as the natural forum.”

The test propounded there has been adopted in subsequent District Court decisions including at least one in Queensland.”

[21] The decision as to which State court is the appropriate court to determine all the matters in issue requires a consideration of all the matters specified in s 20(4). Those are not an exhaustive code (St George Bank Limited v McTaggart (above); Willabrae Pty Ltd & Others v Bridgestone Australia Limited [2007] QDC 7 at [17]). None of the matters are given any particular weight. The existence of a jurisdiction clause is a relevant but not a determinative matter.
[22] The decision under s 20 requires a consideration of the specified matters as well as any other relevant matter to determine if a court of another State has jurisdiction to determine all matters in issue between the parties and that the court of that State is the appropriate court for the proceeding.
[23] With respect to a jurisdiction clause, it is often an important consideration in the exercise of a discretion under s 20. In World Firefighters’ Games Brisbane v World Firefighters’ Games Western Australia Incorporated & Others [2001] QSC 164; (2001) 161 FLR 355 Philippides J considered the importance of an exclusive jurisdiction clause in the context of cross-vesting legislation. She stated,

“The authorities favour the view that under the cross-vesting legislation, the exclusive jurisdiction clause remains a relevant consideration, on the basis that the “interests of justice” require that due acknowledgement be accorded to such a clause as representing the bargain between the party and that proper regard be given to the need to hold the parties to their bargain. Nevertheless, in my opinion, in considering the weight to be given under the legislation to such a clause, one should not start from the position that such clauses should be viewed with the “strong bias” in their favour previously accorded to them at common law. The weight to be given to such clauses will vary depending on the other surrounding and countervailing circumstances.”

See also Nase DCJ in Burnan Pty Ltd & Anor v Bolton & Anor [2008] QDC 32. Similar principles apply to the discretion under s 20. Section 20 of the Service and Execution of Process Act 1992 (Cth) provides that a specified jurisdiction clause in an agreement is but one matter to be considered in the exercise of discretion under that section.
Determination
[24] The State courts of New South Wales clearly have the jurisdiction to determine all the matters in issue between the parties. That is not in contention. It is also clear that the fact that the proceedings have been commenced in Queensland is not relevant to the issues to be considered under s 20.
[25] With respect to s 20(4)(a), it is my view that the residence of the parties and witnesses balance each other in that whichever forum is appropriate there will be additional inconvenience and expense to either the plaintiffs or the defendants.
[26] With respect to s 20(4)(b), although the action is founded on the original Franchise Agreement which related to a place of business in New South Wales, this action relates to an alleged default in relation to the Deed of Termination. The place of the original franchise seems to have little relevance to that action. The respondents also submit that the Deed of Termination was entered into in Queensland with the Deed signed by the plaintiffs in Brisbane and the defendants communicating acceptance of the Deed by facsimile transmission and mail received by the plaintiffs in Brisbane.
[27] With respect to s 20(4)(c) there appears no relevant difference between the circumstances of the parties.
[28] Clearly with respect to s 20(4)(d) there was an agreement between the parties as to Queensland being the appropriate jurisdiction.
[29] With respect to s 20(4)(e) there appears to be no relevant differences between the law of New South Wales or Queensland which would make one the most appropriate to apply.
[30] With respect to s 20(4)(f) there are no related or similar proceedings commenced.
[31] I am of the view that a number of matters are balanced with respect to the connection of the action to each jurisdiction. Each of the parties and their respective witnesses are situated in one jurisdiction or the other. There is an argument that the Deed of Termination was entered in Queensland. This is counterbalanced by the fact that the original Franchise Agreement related to a business operated in New South Wales. In my view the jurisdiction clause should be given significant weight. It was an agreement between the parties as to the appropriate jurisdiction. The respondents presumably agreed to it with full knowledge that it might involve inconvenience and expense to them should legal action be taken.
[32] I am not satisfied that a court of New South Wales is the appropriate court to determine this matter.
[33] In relation to the argument that the District Court of Queensland may not be the appropriate court in this State to determine the matter, the jurisdiction clause specifies that the parties submit to the exclusive jurisdiction of Queensland courts and the document is governed by the law of Queensland. With respect to the jurisdiction of the Queensland courts, the dispute falls within the civil jurisdiction of the District Court including the monetary limit. I reject that argument.
[34] The Application is refused.
[35] In correspondence between the parties prior to the hearing of the Application, each suggested it would apply for indemnity costs. In my view there is nothing in the Application which warrants the awarding of indemnity costs. Costs should follow the event. The applicants are to pay the respondents’ costs of this Application on a standard basis.