Durie Design Pty Ltd v Chiodo Corporation Operations Pty Ltd

Supreme Court of NSW|2020-07-14|Before: Henry J

l Partners Fund Limited v Babcock & Brown Limited (In Liq) (2010) 79 ACSR 383; [2010] NSWCA 196 Helen M Sedman & Associates Pty Ltd v Morgan Stanley Wealth Management Australia Pty Ltd [2013] VSC 549 James Hardie & Coy Pty Limited v Barry (2000) 50 NSWLR 357; [2000] NSWCA 353 Jardine Lloyd Thompson Pty Ltd v Puri [2016] NSWSC 150 Opes Prime Stockbroking Ltd (in Liq) v Stevens [2014] NSWSC 659 Parnell Manufacturing Pty Ltd v Lonza Ltd [2017] NSWSC 562 Patrick Badges Pty Limited v Commonwealth of Australia [2002] NSWSC 221 Singtel Optus Pty Ltd v Vodafone Pty Ltd (No 2) [2011] FCA 260 Tasmanian Land Company Ltd v Van Dairy Group Pty Limited [2018] VSC 618 Westpoint Finance Pty Limited v Chocolate Factory Apartments Limited [2002] NSWCA 287 Wholesome Bake Pty Limited v Sweetoz Pty Limited [2001] NSWSC 248 World Firefighters Games Brisbane v World Firefighters Games Western Australia [2001] QSC 164 Texts Cited: J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) Category: Procedural and other rulings Parties: Durie Design Pty Ltd (Plaintiff) Chiodo Corporation Operations Pty Ltd (Defendant) Representation: Counsel: Mr Weinberger (Plaintiff) Mr Dunning QC with Mr Taylor (Defendant)

Solicitors: Piper Alderman (Plaintiff) Brand Partners (Defendant) File Number(s): 2020/201423 Publication restriction: Nil

Judgment

The plaintiff, Durie Design Pty Limited, is in the business of providing design consultant services, such as design concepts and landscape design development, to property developers.
Late last year, Durie Design entered into a contract with the defendant, Chiodo Corporation Operations Pty Ltd, under which Durie Design agreed to provide consultancy design services to Chiodo in connection with the development of the Fairmont Hotel in Port Douglas, which is to be constructed by Chiodo and then managed by the Accor Group (Project).
Disputes have arisen between Durie Design and Chiodo concerning Durie Design's performance of its obligations under the contract and amounts claimed by Durie Design to be owed by Chiodo for services provided. Durie Design also claims to have validly revoked a licence granted to Chiodo under the contract to use materials provided in respect of the Project and that Durie Design is now entitled to the return of those materials.
On 8 July 2020, Durie Design commenced these proceedings on an urgent basis by summons and technology and construction list statement seeking declaratory and injunctive relief, on an interim and final basis, as well as damages against Chiodo. On that day, Durie Design obtained an order for short service and Durie Design's claim for urgent interim injunctive relief was listed for 13 July 2020.
By way of interim injunctive relief, Durie Design seeks orders that Chiodo deliver up hard copies, destroy electronic versions and/or otherwise be restrained from using materials which Durie Design asserts it provided to Chiodo in accordance with the contract. As finally put, the materials in respect of which interim relief is sought are those identified in an amended version of Annexure A to Durie Design's technology and construction list statement (Amended Materials).
On 13 July 2020, when the proceedings came before me, Chiodo sought leave, which I granted, for it to file in Court a notice of motion seeking an order under r 12.11(1)(b) of the UCPR that service of Durie Design's summons be set aside and an order that the proceedings be dismissed or alternatively, permanently stayed (Chiodo's motion). I adjourned the hearing of Chiodo's motion and Durie Design's claim for urgent interim injunctive relief to the following day to allow Durie Design an opportunity to consider and respond to the issues raised by Chiodo's motion.
These reasons deal with Chiodo's motion and the question of whether urgent interim injunctive relief of the nature sought by Durie Design should be granted.
Chiodo contends that Durie Design's claims in these proceedings, including its claim for urgent relief, should be stayed and not dealt with by this Court on the sole basis of what it asserts is an exclusive forum clause in the parties' contract in favour of the Courts in Victoria. It also submits that Durie Design's claim for urgent interim injunctive relief should be refused because monetary damages would be an adequate remedy, the balance of convenience favours Chiodo and the undertaking as to damages proffered by Durie Design is without substance.
Durie Design disputes that its contract with Chiodo contains an exclusive forum clause and contends that it is governed by the laws of New South Wales. It submits that, if the Court concludes otherwise, the relief sought in Chiodo's motion should be declined on discretionary grounds or, alternatively, the proceedings should be transferred to the Victorian Supreme Court pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (Cross-vesting Act) after this Court has determined its claim for urgent interim injunctive relief.
At the hearing, neither party made an application for the proceedings to be transferred to the Supreme Court of Victoria under the Cross-vesting Act. It was, however, common ground that this Court has jurisdiction to do so on its own motion if it appears to be in the interests of justice to do so: Cross-vesting Act, s 5(7).

Evidence and further background

At the hearing, Durie Design relied on an affidavit of Jamie Durie, the sole director and secretary of Durie Design, sworn 7 July 2020 and written submissions dated 13 July 2020. Chiodo relied on the affidavit of Paul Chiodo, the sole director and secretary of Chiodo, sworn 12 July 2020 and written submissions dated 13 July 2020. Mr Durie and Mr Chiodo were not cross-examined.
On 9 December 2019, Durie Design and Chiodo entered into a contract described as a Professional Services Agreement (Landscaping & Concept Architectural Services) and dated 29 November 2019 (PSA).
The PSA comprises 20 clauses and three Annexures. Annexure A to the PSA is a schedule that identifies certain contract information; Annexure B comprises certain design documents; and Annexure C is a letter dated 3 December 2019 from Durie Design to Chiodo that contains sections headed "Fee Submission", "Scope of Services", "Fee Schedule" and "Conditions of Engagement".
Relevantly, the PSA and Annexure C contain the following: PSA 2. Interpretation 2.1 In the interpretation and application of this Contract the following rules apply unless the context otherwise requires: (b) This document is governed by the laws of the State of Victoria and its courts are the exclusive forum for any dispute. (k) For the purpose of clarifying any ambiguities the terms and conditions contained with the body of this Professional Services Agreement and Annexure A shall take precedence over other documents such as fees proposals and the like. Annexure C - Conditions of Engagement 23. Governing Law 32.1 These Terms & Conditions are governed by the laws of N.S.W Australia.
The PSA and Annexure C also contain the following terms and conditions: PSA 3. Consultant's primary obligations 3.1 The Consultant must: (a) carry out the Services in accordance with this Contract; 4. The Services: 4.1 The Services must be performed by the Consultant with recognised methods and standards of professional practice. 4.4 The Principal may elect to terminate this agreement at any time for any reason. The Principal will pay the Consultant the works that has be completed to date in line with the fee schedule. 5. Principal's primary obligations The Principal must pay to the Consultant the Contract Sum and any moneys which become due under this Contract in accordance with this Contract and otherwise comply with this Contract. 9. Payments 9.1 The Principal will pay to the Consultant the Contract Sum in accordance with and subject to this Contract. Annexure C, Conditions of Engagement 10. Copyright and Use of Documents 10.1 Subject to any express written agreement to the contrary, all Intellectual Property created by us in connection with the Project is our property and automatically vests in us. 10.2 For the purpose of this agreement, Intellectual Property means all present and future rights to Intellectual Property including any inventions and improvements, trade marks (whether registered or common law trade marks), concepts, design, slogans, promotion techniques, copyright, any corresponding property rights under the laws of any jurisdiction and any rights in respect of an invention, discovery, trade secret, secret process, know-how, concept, idea, information, process, data or formula; 10.3 Subject to clause 10.4, you alone have a licence to use such documents for the purpose of completing the project, but you shall not use, or make copies of such documents in connection with any other work not included in the project. Should Durie Design be terminated prior to completion of the project all rights and use of documents are void for use in design, construction and promotion. The use of Jamie Durie name or Durie Design may not be used in promotion without prior written approval and will be subject to alternate fee arrangements. 10.4 If you are in breach of any obligation to make a payment to us, we may revoke the licence referred to in clause 10.3, and you shall then cause to be returned to us all documents provided to you, and all copies of those documents. 19. Documents 19.4 Instruments of Service. Drawings, specifications and other documents, including those in electronic form, prepared by Durie Design and their consultants are "Instruments of Service" for use solely with respect to this Project. Durie Design and their Consultants shall be deemed the authors and Clients of their respective Instruments of Service and shall retain all common law, statutory and other reserved rights, including copyrights. Durie Design grants to the Client a non-exclusive license to reproduce Durie Designs Instruments of Service solely for purposes of constructing, using and maintaining the Project, provided that the Client shall comply with all obligations, including prompt payment of all sums when due, under the Agreement. Durie Design shall obtain similar non-exclusive licenses from their consultants consistent with the Agreement. Except for the licenses granted in this paragraph, no other license or right shall be deemed granted or implied under the Agreement. The Client shall not assign, delegate, sublicense, pledge or otherwise transfer any license granted herein to another party without the prior written agreement from Durie Design. The Client shall not use the Instruments of Service for future additions or alterations to this Project or for other projects, unless the Client obtains the prior written agreement from Durie Design and their consultants. Any unauthorized use of the Instruments of Service, or use after termination of the Agreement, shall be at the Client's sole risk and without liability to the Durie Design and their consultants.
It is not in dispute that, under the PSA, Durie Design was contracted by Chiodo to provide the Services (as defined). The first stage of the Services were described as "Phase 1 - Concept Review and Revitalisation", as set out in section 1.0 "Scope of Services" of Annexure C but limited to Architectural Concepts and Landscape Architecture Concepts and were to be provided for a contract sum of $1.065 million plus GST (PSA, Annexures A and C). The Phase 1 Services essentially involved the preparation of the concept designs for the Project.
It is also not in dispute that Durie Design has provided some design information and documentation to Chiodo as part of the Phase 1 Services.
Mr Durie's evidence is that the Phase 1 Services work has been completed by Durie Design. His affidavit exhibits document transmittals with a date range of 18 October 2019 to 11 May 2020 recording what Mr Durie contends to be a list of the Intellectual Property, concept design documents and Instruments of Service which Durie Design has prepared and provided to Chiodo as part of the Phase 1 Services, and form part of the Amended Materials. (The date range of the document transmittals that form part of the Amended Materials listings is 18 February 2020 to 11 May 2020).
Mr Chiodo's evidence is that, to the extent that some design documentation has been provided by Durie Design to Chiodo, it was for a conceptual bespoke design based on Chiodo and Accor's requirements. He asserts that the vast majority of the documentation provided by Durie Design did not meet Chiodo or Accor's requirements, was of very little value and required amendments.
Mr Chiodo also gives evidence that Durie Design has refused to provide any further documentation to Chiodo beyond that provided on 10 April 2020 and that, in the time available since being served with these proceedings, he has not been able to identify which of the asserted "materials" listed in Annexure A to the technology and construction list statement (Materials) are in Chiodo's possession: Affidavit, Paul Chiodo, 12 July 2020 at [17], [21].
It is not possible to resolve any factual dispute as to what, if any, documentation or materials were provided by Durie Design to Chiodo before or after 10 April 2020 on these applications. The documents, video presentations and plans referred to in the document transmittals, and listed in the Amended Materials, are not in evidence. The document transmittals in evidence refer to documents, video presentations and plans and suggest that those materials had been provided or presented by Durie Design to Chiodo or to third parties (such as Chiodo's Project Manager, Pure Projects Pty Ltd, and the Port Douglas Shire Council).
There is a document transmittal in evidence dated 11 May 2020 which refers to a "Video Presentation to Chiodo at 2 pm 23rd June 2020". The evidence does not identify whether the "pages" referred to on that document transmittal were, in fact, sent to Chiodo or presented to it by video only and whether a copy of the video was provided to Chiodo.
Durie Design has issued seven invoices to Chiodo claiming payment for the Phase 1 Services, totalling $1,175,506.57 including GST.
Chiodo has paid the first three invoices in full, part paid the fourth invoice ($120,000 paid in respect of an invoice for $216,920 issued on 25 February 2020) and has not paid any of the amounts claimed in respect of the three invoices issued on 25 March, 25 April and 25 May 2020.
There is evidence that, between 24 March 2020 and 28 April 2020, Mr Chiodo represented to Mr Durie that he would pay outstanding invoices, the last of which was by a text sent on 28 April 2020 which states "just made a part payment to you. I had to get it from my personal account if $120k the rest will come soon".
Chiodo accepts that it has not made any further payments since that time, that the total amount unpaid in respect of the invoices is $905,374.17, but does not accept that it is liable to pay that amount to Durie Design. Mr Chiodo's evidence asserts that Durie Design's claim for payment is more than the amount to which it is contractually entitled.
On 26 May 2020, Chiodo issued Durie Design with a notice of dispute under cl 11.1 of the PSA giving notice that it considered that Durie Design had committed performance defaults (Notice of Dispute). The performance defaults referred to in the Notice of Dispute relevantly include that Durie Design had failed to provide copies of documents in a timely manner, failed to give effect to directions regarding amendments to partially completed documents supplied in April 2020, breached the contract warranty by failing to obtain all necessary authorities to carry out the work, and failed to carry out the works within 12 weeks of the execution of the PSA.
Durie Design responded to the Notice to Dispute by letter dated 1 June 2020. That letter is not in evidence.
On 1 June 2020, Durie Design issued a notice of revocation of licence dated 1 June 2020 purporting to rely on cl 10.3 and 19.4 of Annexure C, Conditions of Engagement to revoke Chiodo's licence to use the "drawings and other Instruments of Services" prepared by Durie Design for the Project and provided to Chiodo to date (Notice of Revocation).
The Notice of Revocation asserted that Chiodo had breached cl 5 of the PSA and cl 4 of the Conditions of Engagement by failing to make progress payments of the contract sum invoiced in February, March, April and May 2020 totalling $905,374.18 and sought to exercise Durie Design's right to revoke the licence under cl 10.4 of the Conditions of Engagement. It demanded that Chiodo immediately return all documents provided pursuant to the PSA, cease using the documents and direct its employees, agents, consultants, subcontractors and other persons to also cease using the documents.
By letter dated 16 June 2020, Chiodo's solicitor notified Durie Design's solicitor that Chiodo considered the Notice of Revocation to constitute a repudiation of the PSA, which Chiodo accepted. The letter also stated that Durie Design's purported revocation of licence impaired Chiodo business dealings with Buchan Group Pty Ltd, another service provider to Chiodo. Mr Chiodo's evidence is that the Buchan Group was engaged to take the conceptual design provided by Durie Design to "working documents" for use in obtaining planning approval for the Project.
Durie Design's solicitor responded by letter dated 18 June 2020. They denied that the PSA had come to an end, asserted that Chiodo was required to comply with the Notice of Revocation and cease using the documents, and reserved Durie Design's rights to seek urgent interlocutory relief.

Is cl 2.1(b) an exclusive forum clause?

The first issue raised by Chiodo's motion is whether cl 2.1(b) of the PSA is an exclusive forum clause that covers the claims made by Durie Design in these proceedings.
Chiodo contends that, in addition to expressing the law applicable to the PSA being the law of Victoria, cl 2.1(b) expresses the agreed forum location on an exclusive basis as being the Courts of Victoria and covers all disputes between the parties which arise out of or in connection with the PSA.
In support of that submission, Chiodo relies on the definition of "Dispute" in cl 1.1(h) of the PSA which provides that: "Dispute" means any dispute or difference which is in any way connected with, or arises out of or in relation to this Contract (including the interpretation or termination of this Contract) or the Services or any whether [sic] that dispute arises before or after the ending of this Contract.
Durie Design submits that cl 2.1(b) is not sufficiently certain and complete to be an exclusive jurisdiction clause as it does not identify the nature or character of "any dispute" which is to be determined in the Victorian Courts. In essence, Durie Design's submission is that, as cl 2.1(b) does not specify that it applies to disputes relating to or concerned with the PSA, the clause is incomplete, superfluous and unenforceable.
In support of this submission, Durie Design contrasts the terms of cl. 2.1(b) of the PSA with exclusive jurisdiction clauses considered by the Court of Appeal in Global Partners Fund Limited v Babcock & Brown Limited (In Liq) (2010) 79 ACSR 383; [2010] NSWCA 196 (Global Partners Fund) and Australian Health & Nutrition Association Limited v Hive Marketing Group Pty Limited (2019) 99 NSWLR 419; [2019] NSWCA 61 (Australian Health), and by White J in Jardine Lloyd Thompson Pty Ltd v Puri [2016] NSWSC 150 (Jardine v Puri). It submits that, unlike cl 2.1(b), each of the exclusive jurisdiction clauses considered in those cases specify that the disputes to which the clauses relate are those that may arise, arising out of, pursuant to or in connection with the relevant agreements.
A jurisdiction or forum clause in a commercial contract, such as cl 2.1(b) in the present case, is to be construed in accordance with ordinary principles of construction that apply to commercial contracts: FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 117 at 126-127 (FAI General Insurance); Parnell Manufacturing Pty Ltd v Lonza Ltd [2017] NSWSC 562 at [22] (Parnell Manufacturing).
Such a clause is to be construed objectively by reference to what a reasonable business person would have understood it to mean having regard to the commercial purpose sought to be achieved. The Court is entitled to approach the task of construing cl 2.1(b) on the basis that the parties intended to produce a commercial result and one which makes commercial sense: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at 656-657, [35].
A jurisdiction clause should be given a liberal interpretation, as the Court will generally not readily infer that the parties intended their disputes arising from the contractual relationship to be resolved by more than one court: Global Partners Fund at [60].
Adopting those principles, in my opinion, there can be no doubt what is intended by cl 2.1(b). It represents an agreement between Durie Design and Chiodo that the Courts of Victoria should determine any disputes between them, on an exclusive basis.
The absence of words referring to the nature or type of disputes to which the clause relates does not, in my view, render the clause uncertain and incomplete, as Durie Design submits. The location of the clause in the PSA is a strong indicator that it relates to disputes arising under or in connection with the PSA and the Services provided under the PSA. This interpretation is supported by the introductory words of the clause which refer to "this document", namely the PSA: FAI General Insurance at 126-127. It is also supported by the definition of Dispute in cl 1.1(h), although I accept that "dispute" in cl 2.1(b) does not use the defined term.
To adopt the construction contended by Durie Design would leave the part of cl 2.1(b) that relates to the choice of forum with no work to do, which does not make commercial sense. Nor does it give meaning and purpose to the clause, which on a plain reading is to provide for the PSA to be governed by the law of Victoria and for its Courts to be the exclusive forum for any disputes between the parties, including those that arise out of or in connection with the PSA. It is difficult to understand what other commercial purpose cl 2.1(b) could have.
I am also unpersuaded that the exclusive jurisdiction clauses considered in Global Partners Fund, Australian Health and Jardine v Puri are indicative of cl 2.1(b) being uncertain or incomplete. Suffice to say that there are many cases that have considered and upheld a range of exclusive jurisdiction and forum clauses, including some that do not identify the nature or character of dispute which is to be determined, similar to cl 2.1(b) of the PSA: see for example, FAI General Insurance; Wholesome Bake Pty Limited v Sweetoz Pty Limited [2001] NSWSC 248 (Wholesome Bake); World Firefighters Games Brisbane v World Firefighters Games Western Australia [2001] QSC 164 (World Firefighters Games); Helen M Sedman & Associates Pty Ltd v Morgan Stanley Wealth Management Australia Pty Ltd [2013] VSC 549 (Sedman); Parnell Manufacturing.
In its written submissions, Durie Design also contends that the governing law of the PSA is New South Wales law, relying on cl. 23.1 of Annexure C, Conditions of Engagement, of the PSA.
There are two answers to that submission. First, cl. 23.1 is a choice of law clause rather than a clause dealing with the exclusive and agreed forum for disputes in the Courts of one State over another. As Chiodo submits, for that reason alone, the choice of exclusive forum in cl 2.1(b) is to be applied. Second, to the extent Durie Design relies on cl 23.1, it is arguably inconsistent with and gives rise to an ambiguity with the terms of cl. 2.1(b). Having regard to cl. 2.1(k) of the PSA, cl. 2.1(b) takes precedence over cl. 23.1.
The agreement in cl 2.1(b) provides for the Courts in Victoria to be the exclusive forum in respect of "any dispute". As I have found, any dispute includes all disputes arising out of or in connection with the PSA. In my view, the claims advanced by Durie Design in these proceedings for interim and final relief are such disputes. I note that no submission was advanced to the contrary.
By its interim relief, Durie Designs seeks to enforce the terms of the asserted revocation of licence relying on the terms of cl 10.3 and 19.4 of Annexure C, Conditions of Engagement which form part of the PSA. The final relief sought is in similar terms and also seeks payment for unpaid invoices issued in respect of work asserted to be carried out by Durie Design under the PSA in respect of the Phase 1 Services.
It follows that, for the purposes of these applications, I accept the submissions of Chiodo that cl 2.1(b) of the PSA is an exclusive forum clause which is of sufficient certainty and breadth to cover the disputes raised in these proceedings and represents an agreement between the parties that the Courts in Victoria are the exclusive forum for those disputes.

Is Chiodo entitled to an order for a stay or dismissal or is it in the interests of justice to transfer the proceedings to the Supreme Court of Victoria?

Chiodo submits that, if cl 2.1(b) is found to be an exclusive forum clause, the Court should adopt what it described as the "orthodox" and proper approach and enforce cl 2.1(b) by setting aside service of Durie Design's summons and making an order permanently staying or dismissing the proceedings. Chiodo submits that this is consistent with the approach and reasoning of Spigelman CJ in Global Partners Fund and Bell P in Australian Health, with whom Bathurst CJ and Leeming JA agreed.
In Australian Health, Bell P, at [77], stated as follows: Where a commercial dispute only involves contracting parties, respect for party autonomy and holding parties to their bargain … will usually result in courts giving effect to exclusive jurisdiction agreements either by staying or restraining (by anti-suit injunction) proceedings commenced in a forum other than that nominated in the exclusive jurisdiction clause or agreement …
As was pointed out during oral submissions, Australian Health and Global Partners Fund involved contracts that contained clauses that sought to invoke the exclusive jurisdiction of foreign courts and in respect of which there was a risk of multiplicity of proceedings in different jurisdictions and a risk of inconsistent findings.
I accept that the existence of an exclusive jurisdiction clause is a powerful argument in support of making orders for a stay or restraint of proceedings where the clause invokes the jurisdiction of the courts of another country. But I am not persuaded by Chiodo's submissions that granting a stay or dismissing the proceedings is the proper or orthodox approach in a case such as this. The proceedings have been commenced in New South Wales, the agreement between the parties is for the exclusive forum for disputes to be the courts in another State in Australia, and the Cross-vesting Act provides a regime for dealing with which Australian Court is the appropriate forum for determining the dispute.
At the hearing, I raised the impact of the Cross-vesting Act on Chiodo's application with its Senior Counsel. I referred him to cases which have considered exclusive jurisdiction or forum clauses in the context of applications similar to that raised by Chiodo, each of which approached the issues, not by reference to the principles established where the Court is asked to stay proceedings, but by reference to principles under the Cross-vesting Act: see for example, Wholesome Bake; World Firefighters Games; Patrick Badges Pty Limited v Commonwealth of Australia [2002] NSWSC 221; Sedman; Jardine v Puri; Tasmanian Land Company Ltd v Van Dairy Group Pty Limited [2018] VSC 618 (Tasmanian Land Company).
While these cases are first instance decisions and not binding on me, they suggest that the discretion to stay proceedings brought in breach of an exclusive jurisdiction or forum clause in the domestic Australian context is rarely exercised as the Courts give preference to the cross-vesting regime. They also recognise that a stay is not necessary in order to enforce an exclusive jurisdiction clause within Australia and the existence of such a clause is a relevant, and can be a powerful, factor when determining where the interests of justice lie: Jardine v Puri at [9], [19]; World Firefighters Games at [38], [76]; Tasmanian Land Company at [23], [39].
At the hearing, I invited Chiodo's Senior Counsel to identify any recent authority where the Court had granted a permanent stay or dismissed an application solely on a domestic exclusive jurisdiction or forum clause. Rather than identifying any such case, he contended that Australian Health and Global Partners Fund provided support for his submission that it remained appropriate in this case for the Court to seek to enforce cl 2.1(b) by setting aside service of the summons and granting a stay. He also stated that Chiodo would not object if Durie Design made an application to cross-vest the proceedings to the Supreme Court of Victoria or for the Court to do so on its own motion if that was the most efficient way to deal with the dispute, as to do so would also enforce the exclusive forum clause (T19:40-44; T20:35-37).
While Durie Design did not make any application to transfer the proceedings to the Supreme Court of Victoria, in written and oral submissions, it referred to the Cross-vesting Act and contended that, if so inclined, the Court should give effect to cl 2.1(b) by ordering a transfer rather than granting a stay: Jardine v Puri at [19].
In light of the above, I have concluded that the appropriate approach in this case is to consider the issues raised by Chiodo's application and its reliance on cl 2.1(b), not by reference to the principles established where the Court is asked to stay proceedings because the parties have entered into an agreement containing an exclusive jurisdiction clause favouring the Courts of another country, but by reference to the Cross-vesting Act. This approach is consistent with the authorities referred to above and one which, ultimately, neither party objected to at the hearing. In my view, it is also an approach which recognises that Durie Design is entitled to pursue its claim, that this Court, as well as the Supreme Court of Victoria, has jurisdiction to hear the dispute, and that there was no submission made that bringing proceedings in this Court involved an abuse of process on the part of Durie Design.
This then leads to the issue of whether it appears to this Court that it is otherwise in the interests of justice that these proceedings be determined by the Supreme Court of Victoria: Cross-vesting Act, s 5(2)(b)(iii). That section does not confer a discretion but requires this Court to transfer the proceedings to another Supreme Court if it appears to be in the interests of justice to do so: Opes Prime Stockbroking Ltd (in Liq) v Stevens [2014] NSWSC 659 at [22]; BHP Billiton Ltd v Schultz (2004) 221 CLR 400; [2004] HCA 61 at [14] (Gleeson CJ, McHugh and Heydon JJ), [62][63] (Gummow J) (BHP Billiton).
The interests of justice are not the same as the interests of one party. They include matters relevant to both parties, such as the costs and efficient management of the proceedings, and a consideration of the connecting factors with one forum which might make it the most appropriate or natural forum for the dispute: BHP Billiton at [15], [18], [19] (Gleeson CJ, McHugh and Heydon JJ).
A useful checklist of factors to consider as to whether it is in interests of justice that proceedings be transferred under the Cross-vesting Act was set out by Mason P in James Hardie & Coy Pty Limited v Barry (2000) 50 NSWLR 357; [2000] NSWCA 353 at [95], and includes; (a) the application of substantive law; (b) any forensic advantage or detriment conferred by procedural law; (c) the choice made by the plaintiff of a forum and the reasons for that choice; (d) the balance of convenience to parties and witnesses; and (e) the convenience to the Court system.
The issues raised in these proceedings do not raise any substantive legal issues that make one forum more appropriate than the other and there is no apparent forensic advantage or detriment conferred by the procedural law of either jurisdiction which makes New South Wales or Victoria the more natural forum.
The convenience to parties and witnesses seems to me to be finely balanced in this case. The location of Durie Design and Chiodo and their legal advisers are in New South Wales and Victoria respectively.
Durie Design submits that most, if not all, of the work was undertaken in New South Wales, although, in my view, the evidence does not necessarily make good that submission. Mr Durie's affidavit refers to the Services under the PSA being completed by Durie Design's combined team of 17 but does not identify where the team members were physically located or where the work was undertaken. The Project is in Queensland and there is evidence to suggest that Materials and work was presented to Chiodo and other third parties but does not identify where.
The evidence does not enable me to identify how many witnesses from New South Wales, Victoria or Queensland are likely to be called in this case. In any event, having regard to the current COVID-19 pandemic and the use of virtual courtroom facilities by both the New South Wales and Victorian Supreme Courts, it seems to me that some of the inconvenience from the location of witnesses and legal teams may be ameliorated to a degree and render that inconvenience and the costs associated with the requirement of parties, witnesses and their legal advisors to travel to be less of a factor than in other cases. I note that this hearing was conducted by virtual courtroom facilities with all counsel and solicitors appearing remotely.
As to the convenience to the Court system, the Supreme Court of Victoria has a Commercial Court and a Technology, Engineering and Construction List, which is a suitably specialised forum that has jurisdiction to hear Durie Design's claims and any cross-claim brought by Chiodo, similar to the Technology and Construction List in this Court.
Durie Design's written submissions also contend, as relevant, that Chiodo has submitted to the jurisdiction of the Supreme Court of New South Wales by filing its motion and appearing on an unconditional basis. Leaving to one side that r 12.11(4) of the UCPR provides that making an application to set aside service under r 12.11(1) does not constitute submission to the jurisdiction of this Court, I do not consider that taking such steps is significant to the determination of whether it is otherwise in the interests of justice for these proceedings to be determined by the Victorian Supreme Court.
That leaves the remaining factor, being the choice of forum and the effect of the exclusive forum clause in cl 2.1(b) of the PSA.
There was no evidence led as to the reasons for that choice, although I would infer that Victoria was included as the exclusive forum because it is the domicile of Chiodo and might reflect, in the words of Chiodo's Senior Counsel, that the PSA is a form of agreement "more favourable to the principal".
That said, in my view, the existence of cl 2.1(b) as an exclusive forum clause carries weight in this case. The parties to the PSA are commercial entities who entered into a commercial contract. In the absence of any evidence to suggest otherwise, the Court can proceed on the basis that the PSA and cl 2.1(b) were read and understood by representatives of Durie Design at around the time it entered into the PSA, which was on 9 December 2019.
In this case, where there is a lack of preponderance of connecting factors to New South Wales as compared to Victoria, there is no apparent reason why Durie Design should not be held to the terms of the contract on which it sues. That contract provides for the Courts of Victoria as the exclusive forum for any disputes. The existence of that exclusive forum clause in the PSA is, therefore, a critical and decisive factor in this case.
For these reasons, I have concluded that, notwithstanding that Durie Design and Chiodo have not themselves made any application to transfer the proceedings, it is in the interests of justice in this case for the Court to make an order of its own motion under s 5(7) of the Cross-vesting Act that the proceedings be transferred to the Supreme Court of Victoria.

Durie Design's application for urgent interim relief

Chiodo submits that, if the Court determines that the proceedings should be transferred, it should not entertain any further consideration of Durie Design's claim for interim relief because all of the disputes between the parties should be determined in a coherent manner by a single jurisdiction according to the contractual obligations agreed by the parties. It submits that this approach is consistent with that adopted by White J in Jardine v Puri. In that case, His Honour declined to determine the plaintiff's claim for interlocutory relief in circumstances where the parties had contracted for the dispute to be heard in Victoria and an order was made to transfer the proceedings under the Cross-vesting Act.
Durie Design submits that, irrespective of whether the Court grants relief that has the effect of enforcing the exclusive jurisdiction clause, it should nonetheless deal with its application for interim relief as, to do so, would be consistent with the s 56 of the Civil Procedure Act 2005 (NSW).
In this respect, I agree with Durie Design.
As an application for urgent interim relief, Durie Design's claim involves a discrete application that does not require determination at the same time or by the same Court as the claims made for final relief.
Unlike the position in Jardine v Puri, the issues raised by Durie Design's application for interim relief have been fully ventilated before this Court. Both parties have read affidavits and exchanged written submissions. They also made oral submissions at the hearing on the issues raised.
In those circumstances, it seems to me more consistent with case management principles for this Court to deal with Durie Design's application for interim relief in a substantive way, rather than transfer the proceedings and have the issues raised by the application re-litigated in Victoria with the attendant cost and delay to both parties.

Principles applicable to claims for interim relief

The legal principles applicable to determining whether to grant interim relief of the type sought by Durie Design are well known. The Court must determine whether Durie Design has shown that there is a serious question to be tried, that damages will not be adequate remedy and that the balance of convenience favours the granting of an injunction: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at 68 (Gleeson CJ and Crennan J) and 81 to 84 (Gummow and Hayne JJ) (ABC v O'Neill).
Durie Design must establish that its claim for final relief raises a serious question to be tried in the sense that, if the evidence remains as it is, there is a probability that at the trial of the action it will be entitled to the relief claimed: ABC v O'Neill at 82.
As to the balance of convenience, the Court considers the risks of doing injustice according to whether the injunction is granted or refused. It considers what would be the loss and inconvenience to Durie Design if the injunction is not granted, compared to the loss to Chiodo if it is granted, and whether damages for Durie Design's loss would be an adequate remedy: Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148; [1986] HCA 58 at 155; Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 at 622-623.
The purpose of an interim injunction is to preserve the status quo until the rights of the parties can be determined at a final hearing of the proceeding: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [62] (Gaudron J), [64] (Gummow and Hayne JJ), at [162] (Kirby J).
As noted above, by way of interim injunctive relief, Durie Design seek an order that Chiodo be restrained from using, altering, copying or providing to any person the materials identified in the Amended Materials. The Amended Materials are a sub-set of the Materials, being all the Intellectual Property, concept design documents and Instruments of Service which Durie Design claims to have prepared and provided to Chiodo in connection with the Project and are referred to in document transmittal documents dated from 18 February 2020 to 11 May 2020.
In addition, Durie Design also seeks mandatory interim injunctive relief as it seeks the return of hard copies of the Amended Materials and for electronic versions to be destroyed.
Mandatory interlocutory injunctions have been referred to as "comparatively rare" and "particularly unusual". This is "partly because [they are] usually more onerous for a defendant to comply with than a prohibitory [injunction]… [and] partly because the usual purpose of an [interim] injunction is to preserve the status quo, a consideration inapplicable to mandatory injunctions". That said, the tests to be applied by the Court on an application for an interlocutory mandatory injunction are no different than those for an application for an ordinary prohibitive injunction: J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) at [21-395].
In terms of final relief, Durie Design seeks a declaration that a licence granted to Chiodo by Durie Design was validly revoked on 1 June 2020 because of Chiodo's failure to pay amounts due under the PSA. It also seeks permanent injunctions restraining Chiodo from using altering, copying or providing to any other person any of the Materials, for it to deliver up the Materials contained in hard copy documents, and destroy all Materials stored electronically. That is, it seeks permanent injunctions in terms similar to those sought by Durie Design by way of interim relief. It also seeks damages for breach of contract in the sum of $905,374.18 including GST, plus interest and costs.

Serious question to be tried

At the hearing, Chiodo's Senior Counsel conceded that there is a serious question to be tried as to whether cl 10.3 and 19.4 of Annexure C, Conditions of Engagement provide for a licence from Durie Design to Chiodo in respect of the Amended Materials and whether cl 10.4 entitles Durie Design to revoke the asserted licence if payment has not been made by Chiodo in accordance with the terms of the PSA.
However, Chiodo submits that Durie Design's case for final relief is not strong in respect of the asserted licence and entitlement to revoke. It argues that there is no licence at all as the terms of the PSA, when considered as a whole, provide for Durie Design to provide the Services (which includes the provision of conceptual design documentation) to Chiodo in exchange for the agreed contract sum, rather than the provision of Materials subject to some licence arrangement. Chiodo submits that any licence would be a condition on the Services to be provided by Durie Design and is inconsistent with the PSA, particularly with cl 4.4, which provides Chiodo with a right to terminate for convenience and the only corresponding obligation being to pay Durie Design for any work done to date.
Chiodo also takes issue with the breadth of the licence contended for by Durie Design, arguing that the terms of cl 10.3 and 19.4 make clear that the purpose of the licence is to stop Chiodo using the Materials on other unrelated projects. Chiodo also takes issue that it is in breach of the PSA for non-payment. It relies on Mr Chiodo's evidence that Chiodo intends to bring a cross-claim against Durie Design for overpayments and associated losses due to Durie Design's breaches of contract. It also submits that the text messages and emails sent by Mr Chiodo are the type of communications that are sent before a party appreciates there is a problem and do no more than indicate that there is a factual dispute between the parties as to whether Durie Design's work was in accordance with its obligations under the PSA, which is not capable of being resolved, even on a provisional basis, at the hearing.
Pausing here, I agree that it is not possible to make any assessment of the strength of what Chiodo may advance by way of defence or cross-claim in response to Durie Design's claim that it is entitled to payment of the outstanding invoices. Apart from there being no pleading, the Materials themselves are not in evidence and, as noted above, there is a factual dispute as to what Materials have in fact been provided to Chiodo.
Notwithstanding that Chiodo may have a defence and cross-claim to advance, based on the evidence on this application, I am satisfied that there is a triable issue that Chiodo is in breach of the PSA for failing to pay amounts due in accordance with its terms. There is evidence that Materials and services were provided by Durie Design to Chiodo and the total of the invoices issued by Durie Design reflect the PSA contract sum of $1.065 million plus GST. There is also no dispute that Chiodo has refused to pay what Durie Designs claims to be owed.
For the purposes of this application, the terms of cl 10.3, 10.4 and 19.4 Annexure C, Conditions of Engagement, which forms part of the PSA, are also sufficient for me to conclude that there is also a triable issue in respect of the existence of the asserted licence. On the face of it, those clauses provide for a licence to Chiodo in respect of all Materials prepared by Durie Design and provided to Chiodo in connection with the Project, and an entitlement on the part of Durie Design to revoke the licence if Chiodo is in breach of any obligation to make a payment under the PSA.
While I have some difficulty in understanding why the existence of such a licence is necessarily inconsistent with the other terms of the PSA, as contended by Senior Counsel for Chiodo, I agree with Chiodo that the existence of the licence of the nature asserted by Durie Design is at odds with a contract for the provision of Services on the terms of the PSA. I also agree that any such licence is unlikely to be as broad as that claimed by Durie Design and would be unlikely to entitle Durie Design, in the event of any non-payment by Chiodo, to the return of all Materials provided to Chiodo in respect of the Project.
For these reasons, while accepting there is a serious question to be tried, I would not assess Durie Design's case for final relief in respect of its claims relating to the asserted licence and entitlement to the return of all the Amended Materials to be strong.

Balance of convenience and adequacy of damages

Chiodo contends that the lack of any hardship to Durie Design if interim injunctive relief is refused, the adequacy of damages in the event that Durie Design succeeds at final hearing, the need for Chiodo to continue to make use of the Amended Materials in connection with the litigation and the lack of substance behind Durie Design's proposed undertaking, are all factors which weigh against the grant of interim relief in the terms sought.
As to hardship and the balance of convenience, unlike many cases in which urgent relief of this nature is sought, Durie Design has not adduced evidence that it would suffer harm or be inconvenienced if interim relief was refused. Mr Durie's affidavit is silent on the consequences for Durie Design of Chiodo failing to comply with the Notice of Revocation and the impact, if any, on its business if Chiodo retains the Amended Materials or uses them in the period to final hearing.
During oral submissions, Durie Design's Counsel contended that the harm is the risk that the Amened Materials will be used by Chiodo in the absence of any undertaking from it not to use them. He also submitted that Durie Design's legal right to have the Amended Materials returned should be enforced by way of interim injunctive relief as damages are not an adequate remedy in respect of that right.
Chiodo disputes this. It contends that any harm Durie Design may have suffered or continues to suffer from being unable to rely on the revocation of the asserted licence (which damage it does not accept) is compensable by an award of damages that could be determined by reference to the PSA. In my view, there is force to that submission. The PSA specifies the amount to be paid to Durie Design for the provision of the Services (which include the provision of the Amended Materials) and there is no evidence of harm being suffered by Durie Design from any ongoing use by Chiodo of the Amended Materials or its failure to return them. In that context, it seems to me seriously arguable that any loss suffered by Durie Design as a consequence of its asserted right to the return of the Amended Materials being infringed between now and any final hearing is likely to be minimal and could be adequately compensated by a monetary award of damages.
As to the risk of ongoing use, Mr Chiodo's evidence is that Chiodo does not have any further use of the Materials themselves other than needing to use them for the purposes of defending the claims made in these proceedings and prosecuting the claim it intends to bring against Durie Design. His evidence is that some of the Materials were used in the past, but on a minimal basis as part of the creation of other documents by other consultants which will continue to be used in the process of obtaining planning approvals for the Project.
Durie Design submits that, as the evidence discloses that the Materials have been used on a minimal basis and Chiodo does not have any further use save to prosecute its current claim, there is no inconvenience to Chiodo in the relevant sense from any injunction requiring it not to use the Amended Materials for the Project or requiring them to be destroyed or returned. It also submits that, at this point in time, the Court should order Chiodo to return the Amended Materials as, in the litigation, Chiodo should be able to demonstrate that Durie Design's work has not been of the requisite quality without reference to the Amended Materials. It also submits that, if necessary, the Amended Materials could be produced under supervision of the Court's usual process in terms of discovery and subpoena in the future.
I am not persuaded by that submission. It seems to me to be inevitable that Chiodo will require ongoing access to the Amended Materials for the purpose of defending the current claims made against it, as well as prosecuting a cross-claim that might be expected to assert failures on the part of Durie Design to make amendments to partially completed documents supplied in April 2020 (as referred to in the Notice of Dispute). At the least, it can be expected that Chiodo will need to retain and use the Amended Materials in order to properly respond to the assertion in paragraph 6 under heading "C. Plaintiff's contentions" of the technology and construction list statement that Durie Design carried out the Services described in Annexure A of the PSA and provided Chiodo with all of the Materials listed.
The evidence also indicates that Chiodo might suffer some inconvenience or hardship from the imposition of injunctive relief given it has a continuing need to use some of the design information that was contained in the Amended Materials to the extent it was extracted and forms part of other documents and plans prepared by Chiodo's consultants which continue to be used as part of the approval process for the Project. According to Mr Chiodo, that approval process is ongoing and must be completed within the next six months in order to meet the Project timeline.
I also accept Chiodo's submission the evidence adduced by Chiodo casts doubt as to the value of Durie Design's proffered undertaking as to damages, which is a relevant factor to take into account on this application. The evidence discloses that Durie Design has declared paid up capital of only $100.00, appears to have no real property in New South Wales or Victoria and its bank accounts and other property, with no exceptions, is secured in favour of two lenders, one of whom promotes itself as a lender for businesses "who need [support] most" and have been declined by other lenders. Relevantly, Mr Durie has not provided a personal guarantee in support of the undertaking.
Durie Design also sought to cast doubt on Chiodo's financial position, pointing to its failure to pay the outstanding invoices and Mr Chiodo having made part of payment from his personal account. It contended that this was a relevant factor in assessing whether damages are an adequate remedy in this case.
Chiodo's Senior Counsel submitted that adequacy of damages is not about recoverability. I disagree. The likelihood of Chiodo being able to satisfy an order to pay damages is relevant to assessing whether an award of damages will be an adequate remedy: GE Capital Asset Services & Trading Asia Pacific Pty Limited v Rocks Excavations & Plant Hire Pty Limited [2003] NSWSC 99 at [61] (Young CJ in Eq). That said, I am not persuaded that the evidence on this application casts doubt on the solvency of Chiodo in the way Durie Design contends. In my view, it is open to conclude from the evidence that the reason Chiodo has not paid Durie Design relates to issues of work performance, rather than any inability to pay.

Conclusion

Having considered all the factors, and while finely balanced, I have come to the conclusion that the balance of justice is best served by exercising my discretion to not grant interim injunctive relief in this case.
This is primarily for the reason that I am not satisfied that the balance of convenience favours the grant of interim relief in the terms sought by Durie Design.
While neither party has demonstrated any significant hardship or irreparable prejudice to them if I was to refuse or grant injunctive relief, in my view, the inconvenience to Chiodo if the Amended Materials had to be returned and destroyed in the context of the current dispute and the possible risk to the ongoing approval process if a restraint in the terms proposed was ordered outweighs any hardship that might be caused to Durie Design from refusing to grant interim relief.
I am also unpersuaded that damages would not be an adequate remedy in the event I have wrongly refused to grant interim relief or that Chiodo is of sufficient impecuniosity to raise doubts about that matter.
While I am satisfied that there is a serious question to be tried, the material before the Court indicates that there are some legitimate issues to be debated, including factual disputes as to what Materials have in fact been provided to Chiodo and issues relating to the construction of the clauses which are said to support the licence in the context of the PSA as a whole.
In my view, it is also relevant that granting interim relief in this case would have the effect of interfering with, rather than preserving, the current status quo and would result in the imposition of rights which are the subject of contest. As Gummow J stated in Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 at 503: … it has long been the case that [interim] mandatory injunctions would be more likely to issue where the defendant was compelled, not to embark upon a fresh course of conduct, but… to revert to a course of conduct pursued before the occurrence of the acts or omissions that provoked the litigation.
Finally, to the extent that Durie Design will lose the benefit of what it contends to be its contractual rights for the return of the materials, Chiodo has undertaken to not oppose any application for expedition in the Supreme Court of Victoria of Durie Design's claims as expressed in these proceedings, which may assist in having the issues resolved quickly.

Costs and orders

The parties did not address the issue of costs and so the orders I propose to make are provisional only.
In response to the issues raised by Chiodo's motion, the Court has decided to order that the proceedings be transferred to the Victorian Supreme Court. This order has the practical effect of enforcing the exclusive forum clause Chiodo advanced. While not in the form of the orders sought by Chiodo's motion, it seems to me appropriate to recognise that Chiodo has had some success in respect of the issues that were contested by Durie Design. I, therefore, propose to order that Durie Design pay Chiodo's costs of the Chiodo motion.
As to Durie Design's application for interim relief, the usual approach on interlocutory applications for an injunction is that an unsuccessful plaintiff should pay costs. Where a plaintiff has shown an arguable case and a serious question to be tried but an injunction is declined on the balance of convenience, it may be appropriate to order that costs be costs in the cause: Westpoint Finance Pty Limited v Chocolate Factory Apartments Limited [2002] NSWCA 287 at [66] and [68]; Ausino International Pty Limited v Apex Sports Pty Limited [2006] NSWSC 1119 at [55]; Singtel Optus Pty Ltd v Vodafone Pty Ltd (No 2) [2011] FCA 260 at [3].
As noted above, the primary reasons for declining to grant interim relief were for discretionary and balance of convenience reasons. In those circumstances, my view is that the appropriate order is for the costs of Durie Design's application for interim relief to be costs in the cause.
I will defer entry of the costs orders referred to above for seven days to enable the parties to consider these reasons and whether they wish to contend for any different costs orders. If they do, they are to confer with the other party and, by 4.30 pm on 31 July 2020, make an application for some other costs order by notification to my Associate. The party seeking the other cost order should also provide an agreed timetable for short written submissions and advise whether the parties are content for the issue to be determined on the papers.
For these reasons, I make the following orders: 1. Dismiss the plaintiff's application for interim relief in the terms of paragraph 5 of its summons filed on 8 July 2020. 2. Pursuant to s 5(7) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW), order that these proceedings be transferred to the Supreme Court of Victoria, and otherwise dismiss the defendant's notice of motion filed on 13 July 2020. 3. Unless either party makes an application for a different costs order within seven days, the costs of the plaintiff's application for interim relief in the terms of paragraph 5 of its summons be costs in the cause. 4. Unless either party makes an application for a different costs order within seven days, the plaintiff to pay the defendant's costs of the defendant's notice of motion filed on 13 July 2020. 5. Note the undertaking of the defendant through its Senior Counsel to not oppose any application for expedition in the Supreme Court of Victoria of the plaintiff's claims as expressed in these proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 July 2020

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