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Supreme Court of Victoria |
Last Updated: 2 November 2018
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
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JUDGE:
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WHERE HELD:
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Melbourne
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DATE OF HEARING:
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CASE MAY BE CITED AS:
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MEDIUM NEUTRAL CITATION:
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PRACTICE AND PROCEDURE – Application to stay proceedings for abuse of process where exclusive jurisdiction clause – No abuse of process shown – Application to transfer proceeding – Whether in the interests of justice to transfer proceedings – Transfer ordered – Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic), s 5(2)(b)(iii).
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiff
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Clayton Utz
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For the Defendant
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K&L Gates
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1 By summons filed 26 September 2018 the defendant, now named Van Dairy Group Pty Ltd (VDG), seeks an order that the proceeding be stayed permanently, or alternatively transferred to the Supreme Court of Tasmania.
2 The proceeding concerns a business sale agreement by which the plaintiff (TLC) sold its Tasmanian dairy farming business to VDG.
3 TLC’s registered office and principal place of business are located in Launceston, Tasmania. However, the plaintiff no longer conducts any business there except for investments which are unrelated to this proceeding. TLC is 100% owned by an entity based in New Zealand.
4 Mr Ronald Scott, one of the three directors of TLC, and its company secretary, Mr Joshua Taylor, are both residents of Tasmania. However, the two remaining directors, Mr Bruce Donnison and Mr Keith Sutton, are residents of Victoria and New Zealand respectively.
5 TLC’s current solicitors, Clayton Utz, are located in Melbourne, Victoria. Clayton Utz had previously represented the plaintiff in earlier proceedings commenced in Victoria in November 2015 (Previous Proceedings) wherein TLC was a defendant. TLC has also retained Victorian Counsel in this proceeding.
6 VDG’s registered office and principal place of business are located in Malaga, Western Australia.
7 Mr Sean Shwe, one of the directors of VDG, and the company secretary, Mr Neil Perkins, are residents of Western Australia whilst VDG’s other director, Mr Xianfeng Lu, is a resident of the People’s Republic of China.
8 VDG’s solicitors, K&L Gates, are located in Perth, Western Australia.
Nature of dispute
9 In the statement of claim filed 20 August 2018 the plaintiff relies upon an agreement entered into on 20 November 2015 whereby the plaintiff on behalf of itself and a related entity, Van Diemens Land Company (VDL), entered into a sale and purchase agreement whereby it sold, and the defendant purchased, the Tasmanian business of dairy farming and related activities carried on by the plaintiff. The purchase price was $275 million, plus or minus certain adjustments, payable or refundable on the date when the agreement closed (SPA).
10 The unchallenged evidence was that negotiations for the SPA primarily took place in and from New Zealand and were conducted between representatives based in New Zealand and Western Australia. The SPA was executed in New Zealand.
11 Clause 19.16 contained an exclusive jurisdiction clause and provided as follows:
Governing Law and Jurisdiction: This agreement is governed by the laws of Tasmania, Australia. The parties submit to the exclusive jurisdiction of the Tasmanian courts in respect of all matters relating to this agreement.
12 This clause was drafted and propounded by the plaintiff’s lawyers, Simpson Grierson, and accepted by VDG.
13 Clause 4 (with Schedule 4) provided for post-closing adjustments, while cl 7.1 of the SPA provided for a price adjustment to ‘accurately and fairly reflect the milk price’ as at the time of closing. This was because the SPA was related to a separate agreement originally between VDL and Fonterra Milk Australia Pty Ltd (Fonterra) wherein VDL supplied milk pursuant to an exclusive milk supply agreement dated 5 April 2011 (EMSA). The defendant was subsequently substituted as the supplier of milk pursuant to the EMSA pursuant to a Deed of Novation.
14 The price at which milk was to be sold pursuant to the EMSA was set by the price paid by an identified ‘volume leading milk processor’ which was Murray Goulburn Cooperative Co Ltd (Murray Goulburn). As a result of an announcement of Murray Goulburn, on 5 May 2016, Fonterra announced that the amount paid to the suppliers of milk for the 2015 to 2016 financial year would be reduced. As a consequence of this announcement, on or about 28 July 2018, SPA adjustments were agreed between the plaintiff and the defendant pursuant to a ‘Closing Agreement’ wherein the plaintiff made a $2.2 million compensation payment to the defendant.
15 The ‘Closing Agreement’ was constituted by a letter sent from Mr Shwe (in Western Australia) to TLC, in New Zealand. It recited, inter alia, that ‘in accordance with item 4(b) of Part B to Schedule 4 of the [SPA] Agreement,’ TLC and the purchaser have agreed that the Closing Accounts should result in an adjustment in the purchaser’s favour of $2.2 million.
16 However, as a result of a further announcement of a refund by Murray Goulburn in respect of the 2015 to 2016 financial year, Fonterra ultimately made an additional payment to the defendant in the 2017 to 2018 financial year in an amount totalling $2.3 million.
17 The plaintiff therefore says that the defendant has effectively received compensation in respect of the price of milk ‘twice’. It seeks the repayment of the amount paid to the defendant by way of compensation alleging that there has been a breach of a term (express or implied) of the SPA.
18 Alternatively, the plaintiff seeks compensation pursuant to unjust enrichment; total failure of consideration; and/or unconscionable conduct.
19 No defence has been filed. However, as fairly accepted by Counsel for the plaintiff, the critical issue turns on what legal inferences are to be drawn from agreed facts, in particular, whether there was a breach of the contract (with the matters of contentious evidence being very small).[1]
20 Mr Taylor (company secretary of the plaintiff) considers that the relevant witnesses will be himself and Mr Shwe for VDG. As indicated above, Mr Taylor resides in Tasmania and Mr Shwe in Western Australia.
21 On 23 August 2018 the proceeding was served on VDG at its registered office in Western Australia.
22 The defendant has subsequently filed a conditional appearance.
Application for stay
23 Extensive recourse was made to authority by both counsel. In the result, however, Senior Counsel for the defendant accepted that the power to grant a stay on the basis of forum non conveniens principles only applies in circumstances where the court is concerned with non-Australian courts.[2] This concession is appropriate.[3]
24 Nevertheless the defendant submitted that there remained a jurisdiction to stay proceedings pursuant to an abuse of process. Further, that there was such an abuse here given the breach of the exclusive jurisdiction clause and that the plaintiff has engaged in ‘forum shopping.’
25 In so saying, reliance was placed on a passage in Bankinvest AG v Seabrook & Ors (Bankinvest)[4] wherein Rogers A-JA made various remarks about the cross-vesting scheme including as follows:
By each State Act the Supreme Court of every other State is invested with the civil jurisdiction of the Supreme Court of the enacting State, both original and appellate (s 4(3)) with only immaterial exceptions. As well as its beneficial effects, this investment of jurisdiction entailed the danger of forum shopping.[5]
26 Reference was also made to the Second Reading Speech extracted in the judgment of Street CJ which referred to the formation of a committee of various Chief Justices to have a number of functions including:
To ensure that each judge becomes aware of the scheme’s intended purpose and operation; to ensure that any jurisdictional abuses or ‘forum-shopping’ by litigants is not acquiesced in by any court...[6]
27 Nevertheless Senior Counsel accepted that no judge has granted a stay on the basis of an exclusive jurisdiction clause effectively as an abuse of process of itself since 1988.[7]
Resolution
28 I do not consider that the passages in Bankinvest assist the defendant.
29 As explained by Rogers A-JA, the remarks were addressed to the fact that, by reason of the cross-vesting legislation, the Supreme Court of every other State is invested with the civil jurisdiction of the Supreme Court of the enacting State. Notwithstanding the beneficial effects, this entailed the danger of ‘forum shopping’ which he described as the institution of proceedings in pursuit of some ‘real or imaginary advantage’ notwithstanding that the dispute bore ‘no relation’ to the relevant initiation court.[8] For this reason (inter alia), s 5(2) was enacted.
30 The plaintiff has defended the application to transfer on the basis of a number of factors below. Although it has ultimately been unsuccessful, I am unable to find that the proceeding was issued in pursuit of some ‘real or imaginary advantage’ or that the dispute bore ‘no relation’ to Victoria at all.
31 In any event, the remarks in Bankinvest shed no light on the concept of an abuse of process. More particularly, they do not support the defendant’s contention that there is an abuse of process solely by reason of initiation of a proceeding contrary to the terms of an exclusive jurisdiction clause. In fact, such a suggestion is contrary to a decision of Zammit J in Correa v Carnival PLC[9] wherein her Honour directly rejected a submission to similar effect (i.e. that there was an abuse of process constituted by initiation of a proceeding contrary to an exclusive jurisdiction clause).
32 I am not satisfied that there is any abuse of process demonstrated in the current case. The defendant did not substantiate that this proceeding was issued for some ulterior purpose. I am further not satisfied that the initiation of the proceeding occasions unjustifiable oppression to a party, nor that it brings the administration of justice into disrepute.[10]
33 The application for a stay on the basis of an abuse of process is rejected.
Transfer application
Relevant principles
34 The defendant placed reliance on s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) which provides as follows:
(2) Where—
(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court (in this subsection referred to as the first court); and(b) it appears to the first court that—
...(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory—
the first court shall transfer the relevant proceeding to that other Supreme Court.
35 Accordingly, the issue is whether it is in the ‘interests of justice’ that the relevant proceeding be determined by the Supreme Court of Tasmania.
36 In the High Court case of BHP Billiton Ltd v Schultz (Schultz),[11] the Court highlighted that the cross-vesting legislation requires a court to ensure that cases are heard in the forum dictated by the interests of justice.[12] No question of discretion arises.[13] Rather, the court is required to consider which forum is the ‘natural forum’ on the basis of a consideration of relevant ‘connecting factors’,[14] which do not include the plaintiff’s choice of forum.
37 In Irwin v State of Queensland (Irwin),[15] a decision of Robson J of the Supreme Court of Victoria, his Honour considered the decision of Schultz as well as a decision of Gillard J in Ewins v BHP Billiton Ltd.[16] His Honour then helpfully set out the relevant principles, which include:[17]
(a) The Act requires that the [first] court should exercise the power of transfer whenever “it appears” that it is in the interests of justice that it should be exercised.(b) It is not necessary that it should appear that the first court is a “clearly inappropriate” forum. It is both necessary and sufficient that it appears that, in the interests of justice, the second court is more appropriate than the first court.
(c) The Court is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the Court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice.
(d) The interests of justice are not the same as the interests of one party, and there may be interests wider than those of either party to be considered. Even so the interests of the respective parties, which might in some respects be common (as for example cost and efficiency) and in other respects conflicting, arise for consideration.
(e) The power to exercise the jurisdiction is not a discretionary power but a mandatory obligation. No question of discretion arises.
(f) It is inapt to speak of an applicant for an order for transfer as bearing a burden of persuasion analogous to an onus of proof. Rather the jurisdiction must be exercised when “it appears” to the court that “it is in the interests of justice” that the proceeding be determined in the Supreme Court of another State or Territory rather than the court of where the proceeding has been issued. Unless it so appears, the court does not have power under the Act to transfer the proceedings. To that extent it may be said that an applicant assumes some onus of persuasion.
(g) The court should adopt what has been described as a “nuts and bolts” management decision as to which court, in the pursuit of the interests of justice, is more appropriate to hear and determine the substantive dispute.
(h) The appropriate court is the natural forum as determined by connecting factors to that forum.
(i) Relevant connecting factors include matters of convenience and expense such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law covering the relevant transaction.
(j) In many cases there will be a preponderance of connecting factors with one forum so that it can readily be identified as the most appropriate of natural forum. In other cases, there might be significant connecting factors with each of the two different forums. Some of the factors might cancel each other out.
...
(o) The plaintiff’s choice of forum by itself is not a relevant connecting factor.
(p) Each case depends on its own particular facts.
...
38 Both Counsel made reference to a number of decisions which have dealt with exclusive jurisdiction clause cases. This included the following:
• In the decision of Air Attention WA Pty Ltd v Seeley International Pty Ltd[18] Walsh J of the Supreme Court of Western Australia had regard to matters of convenience and expense, but found that the relevant clause was ‘determinative in the sense that it brings the balance down in favour of the applicant’;[19]
• Rolfe J in West’s Process Engineering Pty Ltd v Westralian Sands Ltd[20], of the New South Wales Supreme Court (NSWSC), acknowledged that the relevant clause was not determinative, but in circumstances where the matter was finely balanced ultimately determined that the decision ‘must turn on the effect to be given to the exclusive jurisdiction clause’;[21]
• In Wholesome Bake Pty Ltd v Sweetoz Pty Ltd[22], Bryson J, of the NSWSC, held that a (Victorian) exclusive jurisdiction clause had a ‘strong claim to fulfilment’ when considering what is required in the interests of justice.[23] An order was thereby made to transfer the proceeding to Victoria;
• In the Queensland Supreme Court decision of World Firefighters Games v World Firefighters Games Western Australia Incorporated & Anor[24] Philippades J stated that an exclusive jurisdiction clause was a relevant consideration. However, she rejected that the starting position was that there was a ‘strong bias’ in favour of such clauses. Rather, that the weight to be given to such a clause varies according to other surrounding and countervailing circumstances.[25] She nevertheless found that the factual context of that case indicated that the exclusive jurisdiction clause should be given a weight which ‘overrides’ the other relevant factors including inconvenience factors.[26] This approach was endorsed by the Queensland Court of Appeal in River Gum Homes Pty Ltd v Meridian Pty Ltd;[27]
• In another NSWSC decision, Patrick Badges Pty Ltd v Commonwealth of Australia,[28] Howie J made an order for transfer notwithstanding that the plaintiff was to be inconvenienced, noting that such inconvenience was foreseeable at the time the plaintiff entered the relevant agreement;
• In the NSWSC decision of Freeman and Anor v Kellerberrin Farmers Co-Operative Company Limited and Ors[29] Shaw J observed that consideration of the clause affected his decision as to whether there should a transfer to the Supreme Court of Western Australia.[30] In the result, orders were made to transfer the proceedings;
• In the Supreme Court of Victoria Daly AsJ in Sedman & Associates Pty Ltd v Morgan Stanley Wealth Management Australia Pty Ltd[31] gave limited weight to the exclusive jurisdiction clause in the circumstances of that particular case.[32]
39 Overall, then, although exclusive jurisdiction clauses do not have the effect they had in the forums non conveniens context, they remain relevant and may be determinative depending on the facts of the case.
40 It is also important to consider the circumstances in which such a clause was agreed. Thus, as stated by Whelan J (as his Honour then was) in Slater v Gordon Pty Ltd v Porteous:[33]
Such a clause may indicate that the parties turned their minds to the question of where litigation should occur and agreed upon a single exclusive venue. This factor may be particularly compelling where it can be said that the parties must have been conscious at the time of the agreement of the existence of connecting factors between potential disputes and a State other than the exclusively designated State, and must have been conscious of the existence of potential inconvenience for one of the parties in litigating in the exclusively designated State.
Submissions of parties
41 The defendant invited the Court to give significant weight to the exclusive jurisdiction clause.
42 The plaintiff does not dispute that the proceeding is within the scope of the exclusive jurisdiction clause, being a matter ‘relating to’ the SPA[34] and that the exclusive jurisdiction clause was not ‘unimportant’.[35]
43 However, it was submitted that the following four factors suggested that it was in the interests of justice for the matter to remain in Victoria:
(a) That a previous proceeding which lasted three months had taken place in Victoria where the plaintiff was a party and engaged its own Victorian lawyers who now have relevant history and expertise. The case of Spiliada Maritime Corporation v Cansulex Ltd (Spiliada)[36] was also cited in support;(b) Secondly, the parties were prepared to engage in a mediation and meet in Melbourne;
(c) Thirdly, that negotiations for the Closing Agreement included some face to face meetings in Melbourne;
(d) Finally, that the EMSA may need to be interpreted and contained a non-exclusive jurisdiction clause for Victoria.
Resolution
44 The Previous Proceeding was brought by a (former) alleged purchaser of the business (Tasfoods) against the current plaintiff in late 2015. Tasfoods sought to rely on its own sale of business agreement of 6 November 2015 (not the SPA the subject of this proceeding) in seeking an interlocutory injunction to prevent the sale to VDG. The defendant to this proceeding was not a party to that proceeding although it did appear as an intervenor. On 10 December 2015 Judd J refused the injunction and listed the matter for an urgent trial. Tasfoods then filed application seeking leave to appeal. The proceeding ultimately settled on 22 January 2016.
45 The Previous Proceeding has limited relevance for this proceeding since it was not concerned with the enforceability of the particular contract before me. Thus, the suggestion that there is a body of ‘knowledge, expertise and experience’ which would enable the parties to pursue this claim has to be treated with less significance given the different issues involved.
46 Insofar as the decision in Spiliada is concerned, that case related to an application for a discharge of an order for service out of the jurisdiction (in England). The proceeding was brought by a shipowner against shippers alleging that damage had been caused to a vessel in the loading of wet sulphur. The trial judge dismissed the application, which decision was ultimately upheld by the House of Lords. In so doing the trial judge placed weight on the fact that he had already started to hear the trial of a similar action (in England) involving the same shippers and thereby took into account the accumulated experience of the lawyers derived from that proceeding.
47 The principles utilised in Spiliada (for service out of the jurisdiction) appeared to raise similar issues to the present case (i.e. a consideration of the interests of justice). However, the case is distinguishable from the present case on a number of bases. Thus, the relevant previous UK proceeding in that case went to trial on an estimate of 6 months in circumstances where there was no less than 15 counsel engaged and where both parties had expended considerable resources in engaging expert evidence (concerned with difficult scientific questions) and witnesses. By way of contrast, the Previous Proceeding in this case was much less extensive. Further, although the owners in the two cases were different, the solicitors for the owners were in both cases instructed by the same insurers. Finally, the subject matter of the two proceedings were said to be ‘similar.’ There was also no suggestion of an exclusive jurisdiction clause.
48 The second matter raised was the willingness to engage in a mediation in Melbourne. However, the fact that parties were prepared to meet or mediate in Melbourne does not shed light on where the dispute should be heard in the interests of justice. This is particularly so given the relevant correspondence from the defendant’s solicitors (K&L Gates) agreeing to mediation, highlighted that the parties had agreed to submit to the exclusive jurisdiction of the Tasmanian courts.
49 Insofar as the Closing Agreement was concerned, this was clearly made pursuant to the primary SPA agreement. There was no suggestion that the Melbourne negotiations would be of significance in circumstances where the arrangement was ultimately constituted by correspondence from Western Australia to New Zealand.
50 Finally, consistent with the approach of Counsel, the pleadings suggest that the current dispute turns on the construction of the SPA not the EMSA.
51 Considering the case overall, I accept that there might be inconvenience to the plaintiff if the case was to be transferred given its preferred legal team (which has been involved in previous litigation for the plaintiff) is based in Melbourne.
52 However, I do not consider the other factors cited to be significant. Nor do the other matters generally suggest that Victoria is the natural forum.
53 Against this, however, is the significant fact that the parties have chosen to make Tasmania the exclusive venue in the contract that is the subject of the current dispute. In fact the plaintiff’s lawyers actually drafted and propounded the exclusive jurisdiction clause. This is despite the fact that it must have been apparent to them that there may be potential inconvenience with such a course.
54 In such circumstances, I consider that the exclusive jurisdiction clause is the overwhelming connecting factor in all the circumstances of this particular case.
55 It is therefore appropriate for the matter to be transferred in the interests of justice.
Conclusion
56 There will be an order for the transfer of this proceeding to the Supreme Court of Tasmania.
57 I will hear from the parties on the question of costs.
[1] Transcript of Proceeding (15 October 2018) 86.
[2] Transcript of Proceeding (15 October 2018) 35.
[3] Schmidt v Won [1983] 3 VR 435, also citing Bankinvest.
[5] Ibid, 724.
[6] Ibid, 715.
[7] Transcript of Proceeding (15 October 2018) 21, 22.
[8] Bankinvest (1988) 14 NSWLR 711, 725.
[10] See UBS AG v Scott Francis Tyne as Trustee for the Argot Trust [2018] HCA 45 at [1] per Kiefel CJ, Bell and Keane JJ.
[11] [2004] HCA 61; (2004) 221 CLR 400.
[12] Ibid 421, [14] (per Gleeson CJ, McHugh and Heydon JJ); 439, [77] (Gummow J, with Hayne J agreeing).
[13] Ibid 434-435, [62]-[63] (per Gummow J, with Hayne J agreeing).
[14] Ibid 422-423, [18] (per Gleeson CJ, McHugh and Heydon JJ).
[17] Irwin [2011] VSC 291, [14] (citations omitted).
[18] (Unreported, Supreme Court of Western Australia, 3 September 1996).
[19] Ibid, 8.
[20] (Unreported Judgment, Supreme Court of New South Wales, 6 August 1997).
[21] Ibid 12.
[23] Ibid [17].
[24] [2001] QSC 164; (2001) 161 FLR 355.
[25] Ibid [38].
[26] Ibid [76].
[30] Ibid 13.
[32] Ibid [46].
[33] [2005] VSC 398 [26].
[34] Transcript of Proceeding (15 October 2018) 99.
[35] Transcript of Proceeding (15 October 2018) 78.
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