Fokas v Halik Corporation Pty Limited

Judgment 1The plaintiff, Mr George Fokas, pursues a claim that he is owed over $1 million under an oral agreement which he made with the first defendant, Halik Corporation Pty Ltd ('the company'). Damages under the Trade Practices Act 1974 (Cth) are also sought. Defences have not yet been filed, but by notice of motion filed in November 2011, the defendants sought orders under the Jurisdiction of Courts (Cross Vesting) Ac t 1987 (NSW), transferring the proceedings to the Federal Court, where they have commenced proceedings against Mr Fokas. In the alternative, orders striking out the statement of claim under Rule 14.28 of the Uniform Civil Procedure Rules 2005 were sought. 2Certain of the criticisms of the statement of claim filed in August were accepted by Mr Fokas, with the result that an amended statement of claim has been prepared. The transfer order was still opposed. 3The second defendant, Mr Nik Halik gave evidence that the company's operations and staff are based in Melbourne. Mr Fokas had claimed payment for approximately one year's services in May or June 2011. The claim was being reconciled, in accordance with the company's usual practices, but further information was required to be provided by Mr Fokas. Mr Fokas had a history of poor record keeping and late lodgement of invoices, which made his claims difficult to reconcile. At best, it was assessed that not more than $200,000 was owed him. 4Mr Halik gave an account of the circumstances in which a deed of confidentiality and restraint relied on in the Federal Court proceedings were agreed and executed in 2010. He explained his concern, after Mr Fokas' resignation in 2011, that Mr Fokas was in breach of that agreement and the steps taken to pursue that breach in the proceedings taken in the Federal Court, as well as in relation to Mr Fokas' appropriation of confidential information used to approach the company's clients, to offer the same services; and breach of copyright. 5Mr Fokas' evidence was that he ceased his association with the company in June 2011, because of the amounts that he was owed. He lives in Sydney with his wife and three young children. He is building his own business there and has three employees who require his daily direction. He opposed the transfer of these proceedings, because he would be prejudiced by having to travel interstate for the proceedings and to inspect the defendants' voluminous documents. He also claims that the main witness for the defendants is Mr Halik, who lives in the United States and would not be prejudiced by a hearing in Sydney. 6Mr Fokas said that he has no recollection of signing three agreements which are in dispute in the Federal Court proceedings and that the signatures on those documents are not his. He claims that the terms of the first oral agreement which he relies on, were struck at various cities throughout the world, primarily London, and the second oral agreement at his home in Lakemba. He provided most of has services to the company in London. 7Mr Fokas said that he preferred to have these proceedings dealt with in this Court and the other proceedings to remain in the Victorian Registry of the Federal Court. 8The Federal Court proceedings were commenced some 10 days after these proceedings, in the Victorian Registry of the Federal Court. Victoria is where the corporate defendant has its head office. While at one stage Mr Fokas suggested that he would make an application to have those proceedings transferred to the Sydney Registry of the Federal Court, now he prefers that they remain in Victoria. 9From the evidence and submissions, it is apparent that the two sets of proceedings ought preferably to be heard together. The defendants deny the oral agreements on which Mr Fokas' claim rests. Both the defence of Mr Fokas' claim and the claim which they advance in the Federal Court appear to rest on the terms of various written agreements. One of them, a deed of confidentiality and restraint of 13 October 2010, Mr Fokas admits having signed, but the other three, a heads of agreement, a confidentiality agreement and a consultancy agreement of 11 March 2005, are all denied. 10It seems to me that in the circumstances, what Mr Fokas seeks is not a rational use of court resources. 11The operation of the Act was considered in BHP Billiton Ltd v Schultz [2004] HCA 61; 221 CLR 400. There, a reference was made to what was discussed by Street CJ in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 713 - 714 said: "The cross-vesting legislation passed by the Commonwealth, the States and the Territories both conferred on each of the ten courts Australia-wide jurisdiction and set up the mechanism regulating the transferring of proceedings from one of these ten courts to another. In relation to transfer, the common policy reflected in each of the individual enactments is that there must be a judicial determination by the court in which proceedings are commenced either to transfer or not to transfer the proceedings to one of the other nine based, broadly speaking, upon consideration of the interests of justice ... It calls for what I might describe as a 'nuts and bolts' management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute." 12At [19] it was observed: "In many cases, there will be such a preponderance of connecting factors with one forum that it can readily be identified as the most appropriate, or natural, forum. In other cases, there might be significant connecting factors with each of two different forums. Some of the factors might cancel each other out. If the action is between two individuals, and the plaintiff resides in one law area and the defendant in another, there may be no reason to treat the residence of either party as determinative, although, as already noted, it will ordinarily be the residence of the defendant that is important to establish jurisdiction. Weighing considerations of cost, expense, and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-vesting applications. 13At [77] Gummow J observed: "The phrase "otherwise in the interests of justice" in sub-par (iii) of s 5(2)(b) of the Cross-vesting Act requires the Supreme Court to determine a transfer application by identifying the more appropriate forum without any specific emphasis in favour of the choice of forum made by the plaintiff." 14Kirby J observed: [166] I therefore agree with the remarks of Spigelman CJ in James Hardie & Coy Pty Ltd v Barry [(2000) 50 NSWLR 357 at 361 [7]; see also at 386 [126] per Priestley JA; James Hardie and Co Pty Ltd v Hall as Administrator of Estate of Putt (1998) 43 NSWLR 554 at 576-577; James Hardie Industries Pty Ltd v Grigor (1998) 45 NSWLR 20 at 35-37.]: "To determine which court is, in the interests of justice, the appropriate court, it is necessary to inquire, in the case of a tort, as to what is the place of the tort. Indeed, in the context of administering the co-operative national scheme in the Jurisdiction of Courts (Cross-vesting) Act, where the place of the tort and the residence of the parties coincide, this will generally be determinative of the issue of 'appropriate court', although other factors may need to be assessed in the process of determining where the interests of justice lie." [167] Where, as here, the first respondent's claim is also framed in terms of breach of contract and of statutory duties, no different result would flow where the allegation is that the contract (of employment) was made and breached in South Australia and that the relevant statutory duties that were breached were those imposed on South Australian employers by the Parliament of that State [Industrial Code 1920 (SA); Industrial Code 1967 (SA ); Industrial Safety Health and Welfare Act 1972 (SA)]. [168] The postulate of equal justice: Against the background of the foregoing analysis, the error of Sully J in exercising the powers of the Supreme Court under the Cross-vesting Act can be seen in sharp relief. It is, with respect, the same error as informed his Honour's earlier decision in Zunic [(2001) 22 NSWCCR 92.]. It appears most clearly in his statement that the claimant's "own choice of forum ought not lightly to be overridden."[ Zunic (2001) 22 NSWCCR 92 at 98 [18].] [169] I consider that this element unduly weighed the scales against the appellant's application before the Supreme Court. By hypothesis, where an application for transfer is made under a cross-vesting Act, one party has validly invoked the jurisdiction of a particular State court. In the disposition of the application, that fact must therefore be neutral. It cannot predominate in the evaluation of the "connecting factors" to be given weight on both sides of the ledger in ascertaining which of the competing fora "is more appropriate" having regard to "the interests of justice"[ NSW Cross-vesting Act, s 5(2)(b)(ii)(C).]. That point remains to be decided. [170] Whether the case falls within the more particular provisions of s 5(2)(b)(ii) of the NSW Cross-vesting Act or the more general provisions of s 5(2)(b)(iii) of that Act, in each instance the competition of potential fora is a given. In each case, "the interests of justice" must be taken into account, as a general consideration. In each case, if the criteria are established, the court in which the proceeding is pending is required ("shall") to transfer it to the other Supreme Court. The "interests of justice" necessarily include justice to all parties. It would be incompatible with our notions of justice to apply the NSW Cross-vesting Act in a way that favoured the rights of one party to litigation over others, rewarding the party selecting the initial venue with significant substantive (as distinct from purely procedural) advantages for doing so [The International Covenant on Civil and Political Rights, done at New York on 19 December 1966, [1980] Australian Treaty Series No 23 provides in Art 14.1: "All persons shall be equal before the courts and tribunals." Australia is a party to the Covenant and to the First Optional Protocol referred to in Art 41.1. The influence of such provisions on the statements of Australian law has been acknowledged by this Court: Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42.]." 15The question which has arisen must be determined having regard to what the interests of justice require. The parties have each commenced proceedings in a logical place, in Mr Fokas' case in New South Wales where he lives and in the defendants' case, in Victoria, where it has its head office. Neither proceedings are particularly advanced and neither place has a particular connection with the issues lying between the parties. Mr Halik will have to travel wherever the proceedings are heard. Sydney is certainly more convenient for Mr Fokas, but he prefers that the Federal Court proceedings remain in Victoria. 16The defendants have not filed any defence in these proceedings, but Mr Fokas has accepted the criticism of his statement of claim, which is to be amended. In the Federal Court, Mr Fokas has not filed a defence, because he is awaiting answers to particulars from the defendants, which are overdue. There was no adequate explanation given for the failure to provide those particulars. Failure to provide them promptly might jeopardise a mediation due to be conducted in the Federal Court in Victoria in February. It would clearly be useful to the parties if that mediation proceeded and the mediator was empowered to deal with both matters. Mr Fokas has indicated his preparedness to travel to Melbourne for the mediation and the defendants have assured the Court that particulars will be produced in sufficient time, to allow Mr Fokas to file his defence, prior to that mediation, so that there will be no delay. 17The question of an appropriate forum for the litigation has been the subject of ongoing discussion between the parties' lawyers, but without agreement. The notion that there are not matters in common in the two proceedings may not be accepted. A factor also said to be relevant for the defendants, is that at least the written contract of 13 October 2010, the authenticity of which is not disputed and which it is claimed has been breached, has a clause providing not only that it is to be governed by and interpreted in accordance with the law of the State of Victoria, but also that the Courts in that State are to have exclusive jurisdiction to hear all disputes arising out of that contract. That is clearly not a determinative factor, given what was discussed in BHP , but it is a matter to be considered. Whether the Federal Court is a 'Court in that State' is another question, of course. Certainly there are proceedings on foot before the Federal Court in that State. That is where the mediation is due to take place. 18In this case the answer is not an obvious one, but on balance, it seems to me that the various factors arising to be considered favour the making of the orders sought. That Mr Fokas commenced the proceedings in the state where he resides cannot be determinative. Given the other matters mentioned, his desire to have the proceedings dealt with separately in the two states cannot be accommodated, if the interests of justice are to be served. The fact that he prefers to have the Federal Court proceedings remain in Victoria, is the factor which sways the balance to the transfer of these proceedings to the Federal Court, so that they can both be dealt with together there.