Australasian Jet Pty Ltd v Air Affairs

Federal Court of Australia|2017-05-02|Before: Mr J, Bowen CJ, Lockhart JJ, Markovic J

Paragraph 7 of the defendant's interlocutory process filed on 3 April 2017 be dismissed.
The defendant pay the plaintiff's costs of the application made pursuant to paragraph 7 of the defendant's interlocutory process filed on 3 April 2017. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MARKOVIC J: 1 On 8 March 2017 Australasian Jet Pty Ltd (Australasian Jet) filed an application in the Victorian District Registry of the Court to wind up Air Affairs (Australia) Pty Ltd (Air Affairs). 2 On 3 April 2017 Air Affairs appeared before me in my capacity as Commercial and Corporations Duty Judge. At that time leave was granted to Air Affairs to file an interlocutory process in court and paragraphs 2 and 3 of the interlocutory process were heard instanter. Orders were made abridging the time for service of the interlocutory process and supporting affidavits on Australasian Jet and for service to be effected by sending it to Australasian Jet's solicitor by email and facsimile. 3 The balance of the relief sought by Air Affairs in the interlocutory process includes an application for leave pursuant to s 459S of the Corporations Act 2001 (Cth) (Corporations Act) that Air Affairs be entitled to oppose the winding up application on any ground it could have relied on to set aside the statutory demand under s 459G of the Corporations Act. In paragraph 7 of the interlocutory process Air Affairs applies for an order pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) (FC Act) that the proceeding be conducted or continued in Sydney. 4 It is the latter application that is now before me for determination. That is, whether the proceeding should be conducted or continued in New South Wales, as Air Affairs contends it should, or whether it should be conducted or continued in Victoria, where it was commenced, as Australasian Jet contends. The parties have agreed that the issue can be determined on the papers without the need for an oral hearing pursuant to s 20A of the FC Act. I am satisfied that determination of the matter would not be significantly aided by an oral hearing.

RELEVANT PRINCIPLES 5 Section 48 of the FC Act permits a Court or a Judge, at any stage of a proceeding, to direct that the proceeding or a part of it be conducted or continued at a place specified in the order, subject to such conditions, if any, as may be imposed. 6 Rule 2.02 of the Federal Court Rules 2011 (Cth) (Rules) permits a party to apply at the "proper place" for an order that the proceeding be transferred to another place. The "proper place" is relevantly defined in the Dictionary in Sch 1 to the Rules as the place where the proceeding is started. 7 There is no dispute between the parties about the principles applicable to an application to transfer a proceeding to another place. In National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155 a Full Court of this Court (Bowen CJ, Woodward and Lockhart JJ) said the following about the test to be applied at 161-162: The questions raised in this appeal must be considered in the context of the statutory provisions and rules of this Court mentioned earlier. The Federal Court is a court of wide jurisdiction throughout Australia whose judges may sit, whether as Full Courts or single judges, at any place in Australia. The Court has registries in each of the capital cities of the States and the Territories. The purpose of the provision in the rules of a "proper place" is to ensure the orderly and efficient conduct of the Court's business by requiring all documents filed in a proceeding to be in the custody and charge of the registry where the matter is then proceeding. The power conferred on the Court or a judge by s 48 is in terms wholly unfettered. It should be exercised flexibly having regard to the circumstances of the particular case. It would be regrettable and unwise if the Court were to circumscribe the general power conferred by s 48 with inflexible rules or impose inelastic constraints upon its exercise. As the power may be exercised subject to conditions, the Court or a judge is in a position to mould orders under the section to take account of the many and varied circumstances that arise in particular cases. The power conferred by s 48 recognises the national character of this Court. The factors which the Court is entitled to take into account in considering whether one city is more appropriate than another for interlocutory hearings or for the trial itself are numerous. The Court must weigh those factors in each case. Residence of parties and of witnesses, expense to parties, the place where the cause of action arose and the convenience of the Court itself are some of the factors that may be relevant in particular circumstances. The balance of convenience will generally be a relevant consideration, but not necessarily determinative of each case. A party commences a proceeding by filing an application in a particular registry of the Court. If that party or another party wishes to have the proceeding conducted or continued in another place he may apply to the Court for an order under s 48 or O 10, r 1(2)(f) or O 30, r 6 as the case may be. There is no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere. It should be noted that the Court may exercise its powers under O 30, r 6 either on the application of a party or of its own motion. The Court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the Court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the Court to such matters before directing that the proceeding should continue at a different place. The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court. It cannot and should not, in our opinion, be defined more closely or precisely. 8 In Mortimer v Opes Prime Stockbroking Ltd (administrators appointed) (in liquidation) [2009] FCA 227 (Mortimer) McKerracher J at [15]-[16] provided a convenient summary of the applicable principles: 15 The appropriate principles arising in this motion are not controversial. The relevant principles presently arising, in my view are these: • There must be sound reason to direct that the proceeding be conducted or continued elsewhere. If the party commencing the proceeding chose the place capriciously the Court would be justified in giving no weight to the choice of place. The balance of convenience is important but its weight must vary from case to case. What needs to be ascertained is where the case can be conducted or continued most suitably bearing in mind the interests of the parties, the ends of justice and determination of the issues between them, and the most efficient administration of the Court (National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 162). • The location of parties and witnesses, the place where the cause of action arose and the convenience of the Court are all factors (National Mutual 19 FCR 155 at 162, Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 at [21], Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 at [27]-[34] and [42]-[43]. • Typically there is no factor that is determinative but rather it is necessary to weigh all the relevant factors that might connect the proceedings to one jurisdiction or the other (Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 at [19]). • The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and the receipt of submissions is relevant. (Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239). • The question of which District Registry should conduct the proceedings does not raise matters of high principle. Essentially it is a matter of case management and proper recognition of the legitimate interests of each of the parties reflected in the balance of convenience as between them and the convenience of the Court and any economies and efficiencies which may attach to one choice or the other (Lamb v Hog's Breath Company Pty Ltd (No 1) [2007] FCA 49). • There may be flexibility - one Registry could conduct pre-trial management while allocating the trial to a judge in another Registry (Hog's Breath at [10]). • There is no burden of proof governing the exercise of the discretion in s 48 of the Act (National Mutual 19 FCR 155 at 162). • The existence of related proceedings which may be case managed jointly may be important (Wyllie Group Pty Ltd [2000] FCA 1382 at [14]-[19]). 16 Factors which may be relevant for consideration include: • the residence of the parties, the residence of the witnesses, the expense and prejudice likely to the respective parties, the likelihood of delay being a significant consideration, whether there is, in respect of the competing suggestions as to venue, any possibility of an interference with a fair trial of the hearing, the balance of convenience in regard to all considerations (Jacobs v Claudius Enterprises Pty Ltd [1985] ATPR 40-511).

CONSIDERATION 9 There was disagreement between the parties as to the procedure to be adopted in bringing this application. Australasian Jet submitted that, by applying for the transfer in New South Wales, Air Affairs has not brought its application in the "proper place" and has thus failed to comply with r 2.02 of the Rules. Air Affairs submitted that it was not applying for a transfer of the proceeding pursuant to r 2.02 but an order under s 48 and thus that there was no requirement for the application to be made in the Victorian District Registry. 10 It is not necessary for me to adjudicate on this issue. Section 48 gives the Court power to make the order sought. But even if Air Affairs ought to have brought its application in the Victorian District Registry, given the overarching purpose of the civil practice and procedure provisions as set out in s 37M of the FC Act, I would dispense with the requirement to comply with that rule so that the issue could be resolved expeditiously. 11 I turn now to consider the factors relevant to this application.

The stage of the proceeding 12 The proceeding is at an early stage and the application was made in a timely fashion. Australasian Jet submitted that it was too early to determine venue because the evidence to be called at trial and those witnesses to be cross-examined have not been identified. I disagree. Australasian Jet has identified its intended witnesses, at least in opposition to the interlocutory process. Air Affairs has filed the evidence on which it proposes to rely and has indicated that it will not cross-examine at least two of the witnesses Australasian Jet proposes to call. 13 It is important that the issue of venue be resolved so that the Judge who will hear the matter can also case manage it. I do not think that determination of the issue of venue should be postponed.

The location of the parties 14 Australasian Jet is located in Victoria and Air Affairs is located in New South Wales. They have each engaged legal teams, located in Melbourne in the case of Australasian Jet and located in Sydney in the case of Air Affairs. 15 Air Affairs submitted that given its location in Yerriyong, near Nowra, a one to two day hearing in Melbourne would result in its managing director, Christopher Sievers, and its chief pilot, Andrew Edwards, being absent for three to four days from the company's premises. It submitted that their attendance at the hearing is likely to require additional days' absence because of the additional travel time required to travel from Nowra to Sydney and then Sydney to Melbourne if the hearing is run in Melbourne as opposed to Sydney. 16 Air Affairs also submitted that there were intangible costs associated with the absence from the business of its managing director and its chief pilot for the time required to conclude the hearing. It contended that, because of the actions of Australasian Jet in seeking the winding up of Air Affairs, Mr Sievers is required to spend considerable time reassuring Air Affairs' customers, suppliers and banks about the situation and that the matter is being dealt with as expeditiously as possible. 17 Air Affairs further submitted that it had retained its Sydney-based lawyers prior to the service of the statutory demand and that it was reasonable that it continued to retain those lawyers when it became necessary to deal with the winding up application. It also contended that any potential disruption to the practice of Australasian Jet's solicitor is largely, if not entirely, irrelevant. Air Affairs contended that the current situation is the result of Australasian Jet's decision to attempt a winding up of a New South Wales company rather than proceed to enforce its contractual rights in a Victorian Court. 18 Australasian Jet's evidence is that it has over 100 staff, which is more than Air Affairs; that its operations are more complex than those of Air Affairs; that it has three Air Operator Certificates while Air Affairs has one; that it has three chief pilots while Air Affairs has one; that it has international operations; and that for many of the same reasons that it would be inconvenient for Mr Sievers to travel to Melbourne, it would be inconvenient for Paul Sawyer, its general manager, and Andrew Lamb, its managing director, to travel to Sydney. 19 Australasian Jet submitted that Air Affairs was aware prior to filing its interlocutory process that the proceeding had been commenced in the Victorian District Registry, that it could have engaged Victorian legal representation and that its choice of New South Wales representation cannot be a justification, or consideration, for a change of venue. It further submitted that a transfer of the proceeding to New South Wales would be disruptive to its solicitor's practice, which is described as being, in effect, a sole practitioner assisted by two junior solicitors who require constant supervision. The same is not said to be the case for Air Affairs' solicitors. 20 Both parties would suffer a degree of inconvenience in having to travel to a different city to attend a hearing and, in doing so, being absent from their businesses. Both parties will be distracted from their businesses by reason of the proceeding. For Air Affairs it is inevitable that its executives will be required to travel, whether the proceeding is held in Sydney or Melbourne, given their location in or around Nowra. To that end, the factor weighs in favour of the proceeding remaining in Melbourne, where only one party is put to the inconvenience of travel. 21 The suggestion by Air Affairs that a fairer outcome is achieved if both parties are required to travel is rejected. To allow both parties to incur additional costs is in my opinion contrary to the spirit and effect of s 37M of the FC Act, if not common sense. In forming this view I have not considered the convenience of the parties' respective solicitors. I accept Air Affairs' submission that the convenience of solicitors is not a relevant factor or that, if it is, it is of little weight, particularly in light of modern technology.

Location of witnesses 22 Air Affairs' evidence is that it intends to rely on the following witnesses at the hearing who are located in Sydney or near Nowra, which Air Affairs submitted is approximately a three hour drive from Sydney: Mr Sievers, its principal and managing director; Steven John Lynch, its external accountant; Mr Edwards, its chief pilot; and Jannamaria Robertson, a partner at Deloitte Financial Advisory Pty Limited. Ms Robertson, who has prepared a report going to the issue of Air Affairs' solvency, is assisted by her partner, Kathryn Evans, but only Ms Robertson has sworn an affidavit. 23 At this stage, Australasian Jet has not yet filed and served the affidavits upon which it proposes to rely in the substantive proceeding. But its evidence is that it anticipates that the following people, all of whom are located in Victoria, will swear affidavits in opposition to the interlocutory process: Mr Lamb, its managing director; Mr Sawyer, its general manager; Greg Meredith, who will give expert evidence on the issue of solvency; Agnieszka Korneluk, an executive assistant at Australasian Jet's solicitors, in relation to service of the originating process; a Mr King, as to publication of the Form 9 winding up notice; and Rawle Michael Watson-Jones, the principal of Australasian Jet's solicitors, in relation to service of the statutory demand and lodgement of the Form 519 with the Australian Securities and Investments Commission. 24 Air Affairs has indicated that, of Australasian Jet's witnesses, it will not require Ms Korneluk or Mr King for cross-examination. It is not clear at this stage who of the balance of the witnesses either party will require for cross-examination. 25 Both parties provided evidence of the cost of travel, in the case of Air Affairs to Melbourne and in the case of Australasian Jet to Sydney, for the purpose of a one to two day hearing. Air Affairs' evidence is that nine people would be required to travel at a cost of at least $20,887.20. Australasian Jet has not provided a total figure but has provided indicative costs for flights, accommodation and taxis which are similar to the indicative costs for those items provided by Air Affairs. It is not clear how many people would be required to travel for Australasian Jet. 26 The indicative costs for various items of travel are similar and would vary subject to the number of people required, a matter not yet determined. Further, subject to the views of the Docket Judge and the parties, it may be possible for some witnesses to give their evidence by video link, thus obviating the need for all witnesses to travel. This may be particularly so if ultimately the issues in dispute are, as Air Affairs contends, largely questions of law. Such practices, which are now commonplace, are adopted to suit the convenience of parties and to ensure the cost-effective and efficient disposal of proceedings in the Court. Accordingly, the factor of cost of travel and inconvenience to witnesses is, in my opinion, neutral.

Where the proceeding was commenced 27 The proceeding was commenced in the Victorian District Registry. Air Affairs approached me in my capacity as Duty Judge in the New South Wales District Registry for leave to file its interlocutory process and to seek orders in relation to service of the interlocutory process. But the interlocutory process was thereafter filed in the proceeding. 28 Air Affairs submitted that there is no imperative that the proceeding be conducted in Melbourne. It contended that according to Australasian Jet's evidence the statutory demand served on Air Affairs relates to a debt which arises pursuant to an agreement for sale and purchase of an aircraft between Australasian Jet as vendor and Air Affairs as purchaser (Agreement); that the statutory demand describes the debt as an amount due under an invoice dated 21 November 2016, a description which is incomplete as it implies that the alleged debt is for goods sold and delivered, which is not the case; and that the description of the debt as one which arises pursuant to the Agreement demonstrates that the fundamental issue in the proceeding is whether Australasian Jet could establish anything more than a right to enforce a contract, as opposed to a debt. Air Affairs submitted that Australasian Jet's submissions on venue should be considered in light of this issue, which Air Affairs contended is susceptible of only one answer and is substantially a question of law. 29 Air Affairs further submitted that matters relevant to the law of the Agreement are secondary if not largely inconsequential to the primary question of whether Australasian Jet has merely a right to enforce an executory contract. Air Affairs further submitted that the matters to be determined in relation to that primary question (whether a debt was incurred; solvency; service; and the public interest) are all matters which involve events and circumstances existing in New South Wales. 30 Air Affairs also submitted that the proceeding is an abuse of process and therefore that the decision to commence it was capricious in the circumstances. 31 Australasian Jet submitted that there was no suggestion that its decision to commence the proceeding in the Victorian District Registry was capricious. It referred to cl 11.15 of the Agreement, which provides that: 11.15 Governing law This Agreement shall be governed by and construed in accordance with the law from time to time in force in Victoria of Australia and each of the parties submits to the non-exclusive jurisdiction of the courts of Melbourne in Victoria of Australia. 32 Australasian Jet submitted that the clause is an example of Air Affairs' recognition that Victoria would be the location of any dispute in relation to the subject matter of the Agreement. 33 The commencement of the proceeding in the Victorian District Registry was not capricious. To the extent that Air Affairs submitted that the proceeding is an abuse of process and therefore that the decision to commence it was capricious, that is a different issue going to the whole of the proceeding as opposed to the choice of venue for commencement of the proceeding. There is no requirement that a proceeding to wind up a New South Wales company be commenced in New South Wales. It will not always be desirable that a winding up proceeding be commenced or conducted in the State of incorporation of the company that is the subject of the winding up proceeding. All relevant considerations must be taken into account. 34 The governing law clause in the Agreement is not a matter that weighs heavily in favour of either party in the context of this dispute, where the issues are not about construction or enforcement of the Agreement but rather about whether a debt exists. This is a Court of national jurisdiction and, as was recognised by Besanko J in Duncan v AAI Limited, in the matter of Quinnco Pty Ltd (receivers and managers appointed) [2016] FCA 1035 at [23], questions of cross-vesting are not relevant. Further, a non-exclusive jurisdiction clause "in a change of venue application does not carry significant weight where federal legislation is involved": Mortimer at [26]. The clause does not weigh the balance in either party's favour.

conclusion 35 The factors that are relevant to and that I have considered in determining this application are for the most part evenly balanced. I say for the most part because, whether the proceeding is heard in Sydney or Melbourne, Air Affairs' executives and its external accountant, if required for cross-examination, will likely need to travel. Presumably Air Affairs will need to incur some cost in doing so and, in the case of Air Affairs' executives, incur the additional intangible cost of their being absent from the business. But Australasian Jet's choice of venue was not capricious. The Victorian District Registry was an equally appropriate venue for commencement of the proceeding as the New South Wales District Registry given the respective locations of the parties. 36 In the circumstances of this case I would decline to make the order sought in paragraph 7 of Air Affairs' interlocutory process that the proceeding be conducted or continued in Sydney. Given that outcome, it follows that Air Affairs should pay Australasian Jet's costs of this application. I will make orders accordingly. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.

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