BWK Elders (Australia) Pty Ltd v Westgate Wool Company Pty Ltd

3 In this matter I shall deal with each of the factors to which the parties referred as relevant in the application of those general principles to the determination of the application. 4 The further amended Statement of Claim filed on 8 March 2002 discloses that the applicant's claim is based largely upon events which took place in Victoria. The applicant's claim is in respect of six separate transactions involving the purchase of wool from the first respondent. Each transaction took place following inspection of wool by an officer of the applicant resident in Melbourne at the premises of the first respondent in Melbourne. The claim in short is that the wool delivered was not the wool which was contracted by the first respondent to be sold, so the first respondent is liable to the applicant in contract and for misrepresentation about the quality of the wool which was offered for sale. It is further alleged that the first respondent made the representations fraudulently, as it did not at the time of making the representations and entering into the contracts then intend to deliver the wool which was the subject of the contracts and which had the quality represented. Each of the second to fourth respondents is a director and full-time employee of the first respondent, principally working in its premises in a suburb of Melbourne. They are alleged to be complicit in the alleged fraudulent conduct of the first respondent. Payment for the wool was made to the first respondent in Melbourne. 5 The loss alleged is the difference in value between the wool contracted to be purchased and the wool supplied, having regard to the time required to identify and confirm the applicant's claim that it did not receive the wool which it contracted to buy, plus the difference between the sale price which the applicant ultimately procured for the wool and what it would have received had the wool met the contracted and represented quality. The applicant also claims general damages for loss of its reputation and goodwill with its customers to whom it on-sold the wool, and for compensation paid to certain of its customers because it in fact supplied inferior wool, that being the wool delivered by the first respondent to the applicant, instead of the wool which it had contracted to purchase. The applicant also claims damages for loss of use of its monies, and exemplary damages. 6 There is a cross-claim by the first respondent against the applicant. The parties made no submissions that it added any relevant light to determination of the issues between the parties on this application, and I do not need to refer to it further. 7 In substance, I proceed on the basis that the elements of the cause of action arose in Victoria. I accept that the applicant says that, in a practical sense, the consequences of the conduct alleged have been a loss sustained in South Australia where its principal place of business is located. I do not think it is necessary to determine precisely where the cause of action arose, but I accept that in substance the events which give rise to the cause of action took place in Victoria. 8 It is not suggested that there is any applicable juridical or other advantage dependent upon whether the proper place of the proceeding is the South Australia District Registry or the Victoria District Registry of the Court. The law to be applied in each instance will be the same. 9 The next matter urged upon the Court on behalf of the respondents involves a combination of considerations in relation to where the trial of the proceedings will take place. The matter is not yet ready for trial. Nevertheless, it is appropriate to have regard to the material presented by the parties on that topic. The material refers to the number and place of residence of potential witnesses to be called, to the location of the solicitors and their respective resources and the location of counsel, and to the respective resources of the parties having regard to the costs involved in conducting the trial in Adelaide. Each of those matters is said to be of significance in the context of where the trial of the action should take place. As noted below, with one qualification, it was not contended by the respondents that there was a particular disadvantage in the conduct of interlocutory processes in Adelaide. 10 It is, in my view, important to note the distinction which has been recognised between the proper place of the proceedings and the place where the trial is to take place, either at the proper place or as ordered under O 31, r 6(2). In Andrew and Frewin Pty Ltd v Arrow Ltd [1990] FCA 247 the Court (Sweeney, Davies and von Doussa JJ) dismissed an appeal by leave from an order of a Judge at first instance declining to order a change in the proper place of certain proceedings. The Court at [11] said: "In his reasons for dismissing the application the primary judge noted a distinction between the purpose on the one hand, of O 10, r 1(2)(f) under which the application before him was made, and on the other hand of O 30, r 6. The purpose of the former rule, as already stated, 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 purpose of the latter rule is to enable trials to be conducted at a place or places which will best facilitate the ends of justice in the determination of the outstanding issues between the parties having regard to such factors as the convenience of the parties and of the witnesses, the most efficient administration of the court, and the minimisation of cost."

11 In that matter, the Court concluded that the Judge at first instance had not fallen into error because he was able to indicate at the time of the application that the Court would meet the convenience of the parties and witnesses by hearing the trial in several places, and on the material before the Judge at first instance there was no reason why the pre-trial aspects of the proceedings could not be continued in the registry in which the proceedings had been instituted. The fact that the Court was able to meet the convenience of parties and witnesses by hearing the trial in several places meant that the claims of inconvenience and cost would in large measure be accommodated. The Court added at [14]: "It will frequently be helpful if a judge faced with questions similar to those in the present case gives an intimation such as that here given by the primary judge."

12 See also per O'Loughlin J in Australian Competition & Consumer Commission v Pauls Ltd [2002] FCA 71 at [10]. 13 A solicitor for each of the parties has deposed to instructions as to the likely witnesses to be called at the trial. The applicant has a provisional list of thirteen proposed witnesses, eight of whom are located in Adelaide, four in Melbourne and one in Italy. It also refers to "suitably qualified expert witnesses" from wool testing authorities in New Zealand and South Africa. One of its proposed witnesses will be its General Manager, whose absence from Adelaide for any prolonged period would cause (unspecified) "undue disruption to" the applicant's business. No reference is made to any independent accounting expert evidence on the question of damages. The respondents provided a provisional list of nine proposed witnesses, including the second to fourth respondents, of whom six reside in Melbourne and three in New Zealand. Each of the second to fourth respondents is said to intend to attend at each hearing day as well as give evidence, and as each works full-time in the first respondent's business, it is said that each would be unable to attend to that business on a day-to-day basis if the hearing were to take place in Adelaide. It is obvious that, if each attends at the hearing as intended, their ability to attend to the day-to-day affairs of their business whether the hearing takes place in Adelaide or Melbourne will be very substantially restricted, although I accept that physical proximity to Melbourne would enable some greater degree of attention to be given to the business than would be the case if restricted to telephone and facsimile communications whilst the hearing takes place in Adelaide. There is however no evidence indicating the extent to which their inability to attend to the business of the first respondent by reason of being in Adelaide for a period of time during the trial would affect the operations of the business compared to their inability to attend to the business if the hearing takes place in Melbourne. Information is given that the number of employees in the business is relatively small, of about eight in number. But the respondents have not explained its management structure or sought to explain in any substantive way the impact upon the first respondent's business by the hearing or part of the hearing taking place in Adelaide compared to Melbourne. No reference is made to independent experts, although I suspect that the proposed witnesses from New Zealand are in fact independent wool testing experts. 14 I am also somewhat cautious about treating the proposed lists of witnesses as in any way definitive. That is simply because, although the pleadings are closed, the extent to which each factual issue will be ultimately contested is unclear. For instance, it is unclear whether the respondents would wish to challenge in detail the evidence of each of the applicant's witnesses as to how the contracts came to be made or as to the presentation or contents of the documents or samples upon which the alleged representations are said to have been made. Senior counsel for the respondents, in reply to a contention that the respondents have pleaded no positive case, referred to paragraphs of the defence in which it is asserted that the wool as contracted to be sold was in fact delivered. That would suggest that the area of dispute will be a relatively refined albeit complex one. As senior counsel for the respondents pointed out, it may turn upon the accuracy of the original wool testing procedures as, he contended, the pleadings indicate different results from different tests of the same wool. Beyond that, counsel seemed to accept that the respondents will be putting the applicants to proof of their case. 15 The intimation of senior counsel for the respondents confirms my expectation, gleaned from the series of interlocutory hearings to date, that the case will largely turn upon the quality of the wool supplied. In large measure, I imagine that that will be a matter for expert evidence, rather than disputing evidence as to chain of possession or as to selectivity of samples. Interlocutory orders have already been made to minimise the areas of dispute relating to chain of possession evidence, or selectivity of samples, including by having all parties present during the taking of samples. In addition, the Court has powers to order the independent experts to confer prior to the hearing to isolate the areas of dispute between them, and to direct that they give evidence together: O 34A of the Rules. It would be surprising if, in a matter of such significance to the wool industry of Australia and of New Zealand, the reliability of wool testing procedures and reports provoked great dispute between independent experts. The reasons are obvious. 16 It is also unclear as to the extent of the dispute about the quantification of the applicant's claims. Detailed particulars on many aspects of the applicant's claim have been provided, and in the near future each expert's quantification or review of the damages claimed will be available. Generally, such reports are based upon documentation, the authenticity of which is not in dispute. The issues arise more often as to the use to which such documents are put, and as to the significance of other materials to the conclusions which have been reached. Again, the party's experts can be directed to confer to determine the extent to which there is in reality a dispute between them, and to explain the basis of their dispute to the Court. 17 At present, I think the position is simply that there will be significant evidence given in Melbourne, and some but perhaps less significant evidence given in Adelaide. I am not able to form a view about the respective extent of that evidence. I note also that both parties propose evidence to be called from overseas, but in that context the costs of those witnesses coming to Adelaide or to Melbourne overall are not of great significance. 18 I am also mindful that the parties are represented by experienced senior counsel. Each would be well aware of the general principle that in the efficient and proper conduct of civil litigation, even hard fought civil litigation, it should be recognised that in the propounding of issues for trial the parties should take steps to ensure that the parties are cognisant of what the real issues are: see per Allsop J in White v Overland [2001] FCA 1333 at [4]. It is desirable that considerations of efficiency, common sense, and an appreciation of the costs and resources involved in the conduct of complex litigation should be borne in mind by those responsible for the conduct of that litigation. I am confident that the parties, through their counsel, are conscious of the need not to waste valuable public resources nor to incur unnecessary costs in the conduct of this proceeding. The desirability of counsel for the parties frankly focussing on the real issues between the parties was affirmed by Heydon JA in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 at 128, where his Honour cited with approval the observations of Allsop J in White v Overland referred to above. At a more practical level, Heerey J in Cultivaust Pty Ltd v Grain Pool of Western Australia [2000] FCA 974 at [8] noted that many of the issues identified may ultimately become either non-contentious or subject to proof by documentary evidence, and that in the course of pre-trial management towards an efficient trial such matters would be addressed. 19 I accept that the parties have resolved upon retaining their present solicitors and counsel. Solicitors and counsel retained by the parties would now have substantial familiarity with the issues. I accept their respective assessments that it is more efficient to retain their present solicitors and counsel than for the applicants to engage fresh solicitors in Melbourne or to engage agents in Melbourne if this application is successful, or on the other hand for the respondents to engage fresh solicitors in Adelaide or to engage Adelaide agents if this application is unsuccessful. Consequently, there will be costs incurred by the party or parties who must travel to the place of hearing. 20 I do not consider that that matter is, however, of much significance in deciding the present application. Firstly, as indicated below, it is likely that the trial will take place partly in Adelaide and partly in Melbourne so that additional cost burdens will be shared. Each of the parties, by counsel, has acknowledged to the Court that it or they will consent to an application by the other party or parties to allow so much of the trial to occur in Melbourne or Adelaide as is reasonably necessary to ensure that no party or its witnesses are unduly disadvantaged or put to excessive expense in the course of the proceedings. Of course, if this application is successful, it will be up to the trial Judge to decide the extent to which, if at all, orders should be made under O 30, r 6(2) of the Rules, and I do not presume to seek to inhibit the exercise of that discretion. However, given the position of the parties, at this point I think it is reasonable to anticipate that, to the extent to which it is necessary to avoid undue disadvantage or excessive expense, the hearing may take place in two places. Secondly, the additional costs burden to the successful party will only be temporary. The successful party is likely to secure an order for costs, and to recover the costs involved in travelling to another place for the purposes of the hearing. The applicant has not suggested that this temporary costs burden will adversely affect its ability to conduct its case. 21 Senior counsel for the respondents submitted that there was an imbalance of resources between the applicant and the respondents, based upon the evidence as to the respective sizes of the staff of the applicant and the first respondent, and upon the evidence as to the extent of financial facilities available to the applicant. I do not take the imbalance of resources per se into account in this matter, as the respondents have put forward no evidence to indicate the nature and extent of their financial resources. There is no evidence as to the assets of any respondent, or as to the nature of those assets, or as to the banking facilities available to them. There is no financial evidence as to the turnover or net profit of the first respondent. The only information is that the turnover of the first respondent significantly fell following publicity given to the Anton Pillar order made when these proceedings were commenced. But that does not show that the additional expense which the respondents would incur, to the extent to which the trial takes place in Adelaide (whether the proper place of the hearing is the South Australia District Registry or the Victoria District Registry), would inhibit it in its conduct of the proceedings. If the respondents are successful, it would recover those reasonable costs. 22 The issue concerning the respective resources of solicitors for the parties was also put forward by senior counsel for the respondents as a factor relevant to the transfer of the proceedings to the Victoria District Registry. The solicitors for the applicants are clearly a substantial firm with no resource restrictions. The respondents' solicitor is a sole practitioner, in Ivanhoe in Melbourne, with one legal secretary. He deposes to having a busy practice with a number of commercial litigation and property matters which often require prompt and sometimes urgent attention. To the extent that the trial takes place in Adelaide, the respondents' solicitor will not have the opportunity prior to, during and after each day of hearing to attend to his office and to undertake urgent work. He also deposes to anticipating difficulties in ensuring the proper conduct of some files under his control if the trial is in Adelaide for the period of greater than one or more weeks. 23 I do not consider that I should take that consideration into account. It is for the parties to select the solicitors and counsel they wish to conduct the proceedings. At an early stage, the respondents were confronted with an Anton Pillar order. It is understandable that they may then have wished to retain the solicitor they had instructed generally with respect to their affairs over some years. (There is no evidence as to that, but senior counsel for the respondents submitted that that was the case in the course of submissions.) It is also clear that, at an early stage, it was apparent to the parties that the litigation would be complex. It is in that context that the respondents have selected their solicitors and counsel. Rule 1.1 of the Model Rule of Professional Conduct and Practice issued by the Law Council of Australia in March 1996 is consistent with the general ethnical obligations of solicitors. See in r 1.1 of the New South Wales Practice Rules, r 1.2 of the ACT Practice Rules and with analogues in South Australia, the Northern Territory and Western Australia. It provides: "A practitioner must act … with competence and diligence in the service of a client, and should accept instructions, and a retainer to act for a client only when the practitioner can reasonably expect to serve the client in that manner and attend to the work required with reasonable promptness."

(See generally Ross, Ethics in Law, 3rd ed. Butterworths 2001 at [10.1 - 10.4].) 24 I am sure that the solicitor for the respondents is conscious of those obligations, and will order his workload to ensure that he complies with his obligations to the respondents. 25 More importantly, for present purposes, it is inappropriate that a party to litigation should, by reason of the selection of its solicitor, create a circumstance whereby the Court is called upon to determine that the proper place of a proceeding should be a place other than where the proceeding was commenced. There may be circumstances where, given the nature of the proceedings, the respective resources of the parties, and the particular circumstances such as the time of the application, the Court may take into account the ability of a party to re-engage fresh solicitors where the solicitors on the record at the proper place of the proceedings have very substantially worked to complete preparation of the matter. In this matter, however, from an early point the respondents were aware of the nature of the proceedings, and that they were instituted in the South Australia District Registry. Whilst the application to transfer the proceedings was then made promptly, I do not think it is appropriate to have regard to the possibility that the solicitor they have instructed is unable properly to conduct the matter if it be conducted at a proper place other than the Victoria District Registry. O'Loughlin J observed in Australian Competition and Consumer Commission v Pauls Ltd [2002] FCA 71 at [13] that it is the free and unfettered right of a litigant to arrange for legal representation of its choosing, and in doing so may select a solicitor with whom it has a long standing relationship, irrespective of the location of the litigation. But, in the absence of peculiar circumstances such as those to which I adverted, or in the absence for instance of solicitors at the proper place available to conduct the proceedings on behalf of the particular client, the choice of solicitors and counsel cannot provide a justification for a change of proper place. O'Loughlin J indicated that a client's ongoing relationship with its advisers may be a matter to be weighed in the balance, but "without the details of the relationship" between the respondents and their legal advisers in that case, the application to transfer the proceedings was not materially assisted by the place of residence of the solicitors. In this matter, similarly, there are no details of the ongoing relationship between the respondents and the solicitor on the record appearing for them, so similarly that matter is of no particular significance. 26 In addition, the focus of the solicitor's contention is the difficulties in conducting the trial if the proper place remains in the South Australia District Registry, and the hearing involves a hearing of more than one week. It is not a complaint made in respect of the conduct of interlocutory proceedings. To date, I have not discerned any particular disadvantage to the respondents in the conduct of interlocutory proceedings. As noted, such interlocutory issues as have taken place to date have involved attendances in person, by video link, and by telephone link. There is no submission made on behalf of the respondents that that procedure has caused them or their legal representatives particular disadvantage to date. Subject to one matter, there is no reason to think that further interlocutory processes could not be conducted with equal facility in that way. 27 Finally in respect to this group of submissions, I note that the Court as presently constituted is able to indicate that it will accommodate the reasonable wishes of the parties for the hearing to take place partly in Adelaide and partly in Melbourne, so that, subject to one matter discussed below, the factor about where the trial is most conveniently to be conducted is not of great weight in the scale at this point in the proceedings. 28 There are, however, two particular outstanding motions of an interlocutory nature which require consideration. The respondent has sought interlocutory orders directing the Australian Wool Testing Authority (AWTA) to make available to the respondents certain wool samples or portions of certain wool samples for testing, and for third party discovery. The two notices of motion have not yet been heard. The AWTA are located in Melbourne. If the motions are to be opposed, it would be more convenient for them to be heard in Melbourne. The respondents have also submitted that, depending upon the outcome of its further enquiries, they may wish to join the AWTA as a party. I do not have regard to that foreshadowed possibility as a consideration on this application. It is at this stage purely speculative. 29 Apart from the respondents' two motions against the AWTA, the inter partes interlocutory processes at present can be conducted by the Court either in Melbourne or in Adelaide and, depending upon the location of where they are conducted, will cause some but not significant additional expense to the party or parties affected but would not otherwise cause any real disadvantage to either party. 30 As noted in the course of submissions, given the serious nature of the allegations made against the second to fourth respondents, in my view the interests of justice indicate that the Court should endeavour to accommodate their expressed desire to be present during the course of the hearing. That does not mean that they need to be present at all times. As I understand it, much of the proposed evidence of the applicant to be heard in Adelaide relates to the question of quantum. But at least insofar as the evidence concerns their alleged participation in fraudulent conduct, I think it is desirable that they should have the opportunity of being present to hear the opening and to hear the evidence which directly affects them. They have indicated through their counsel that they wish to do so. In my view that consideration is one which should weigh in the scale in favour of a change in the proper place of proceedings. It is true, as counsel for the applicant acknowledged, their concern can largely be accommodated by an order under O 30, r 6(2) of the Rules, and further that at present the Court has little knowledge as to the nature of the disputes. I have sought above to identify what senior counsel for the respondents indicated was the real issue: that the wool delivered was the wool contracted to be sold. The evidence that they would be significantly impeded from attending a hearing which partly takes place in Adelaide is, as I referred above, slight. Moreover, if that is the defence, it is not a matter of particular conduct on the part of the respondents which will be inquired into, at least from the respondents' point of view. However, the allegations of the applicant are considerably more extensive, and involve allegations of particular conduct on the part of each of the individual respondents apparently to indicate complicity on their part in the presentation of the wool of the wrong description. 31 The applicant also pointed to the advantage of the docket Judge as relevant to the efficient administration of the Court. In this matter, there has been prolonged skirmishing about the quality of the applicant's pleadings as a result of which it is correct that I have obtained a reasonable familiarity with the detailed nature of the allegations and of the issues. There is some loss of efficiency in another Judge having to freshly acquaint himself or herself with that information. On the other hand, these proceedings have progressed only to the point where the pleadings have closed and the detailed and complex nature of the pleadings might conceal what is said to involve, on both sides, relatively uncomplicated issues. I am mindful that, in Cultivaust, Heerey J had regard to the detailed knowledge of the case which the docket Judge had then obtained, and his Honour's capacity in the light of that knowledge to direct the future trial management in a way consistent with earlier directions and the parties' expectations arising from those directions. His Honour remarked at [10] in that case: "It would be a disruption to the efficient management of the case if another Judge … had to start afresh. The adoption by the Court of the individual docket system was designed to achieve a number of objectives, not least of which are the advantages which flow from consistent management directions by the one Judge who will manage interlocutory proceedings and conduct the trial."

The Court as presently constituted has in the period to now conducted twelve interlocutory hearings, including two lengthy hearings on 6 August 2001 and 2 February 2002 as well as the present hearing. It therefore has a reasonably detailed knowledge of the nature of the disputes between the parties, and of their respective issues. If this present application were to succeed, a new docket Judge would need to become familiar with the detail of each of the party's pleadings and the nature of their respective cases. The applicant submits that that would not assist or serve the efficient administration of the business of the Court, or the efficient disposition of the case and would not otherwise be in the interests of justice. 32 The Full Court in Sentry at 162 said: "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 interest 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."

33 In determining whether there is a sound reason to accede to the present application, it is appropriate to bear in mind that the Court is a national Court. The Judges of the Court move from State to State and Territory to Territory to achieve the interests of justice and the efficient administration of the Court at any stage of the conduct of a proceeding, whether interlocutory or the final hearing. The Court may do so without the need for an order formally changing the venue of the proceedings. 34 In this matter, having regard to the various considerations to which I have referred, to the extent to which I have recognised them as bearing some weight, I have reached the view that I should accede to the application. The factors which, in my view, lead to the conclusion that there is a sound reason for that finding are that Victoria is the place where the principal events giving rise to the cause of action occurred, the desirability in the interests of justice of the second to fourth respondents being able to attend the hearing having regard to the serious allegations against them, the convenience of certain interlocutory processes concerning AWTA being heard in the Victoria District Registry, and the general sense that it will be appropriate for more of the trial to take place in Melbourne than in Adelaide. I do not think that such an order will place undue inconvenience on the applicant, having regard to the acknowledgment given by senior counsel for the respondents that his clients will consent to any application by the applicant to allow so much of the trial to occur in Adelaide as is reasonably necessary to ensure that no party or its witnesses is unduly disadvantaged or put to excessive expense in the course of the proceedings. 35 Accordingly, pursuant to O 10, r 1(2)(f) of the Rules, I direct that the proceeding be transferred to the Victoria District Registry of the Court. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate: Dated: 27 June 2002 Counsel for the Applicant and Cross-Respondent: Mr R White QC with Mr R Kennett

Solicitor for the Applicant and Cross-Respondent: Kelly & Co

Counsel for the Respondents and Cross-Claimants: Mr J Hammond QC with Mr N Russell

Solicitor for the Respondents and Cross-Claimants: Andrew Woolfe & Co

Date of Hearing: 7 June 2002

Date of Judgment: 3 July 2002