Ha Ha Jing Pty Limited v My Queen Pty Limited

Applicable Legal Principles

1. The s.140 transfer application is made to facilitate a cross-vesting order, if such an order is to be made. If the Court declines to transfer the proceedings to Victoria, then there is no utility in making a s.140 order.
2. Section 5(2)(b)(iii) Cross-Vesting Act relevantly provides: "Where ... it appears to the first court that ... it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory, the first court shall transfer the relevant proceeding to that other Supreme Court."
3. The principles to be applied on this application are not in doubt.
4. As Gleeson CJ, McHugh and Heydon JJ said in BHP Billiton Limited v Schulz [2004] HCA 61; 221 CLR 400 at 424 [22], supported by Kirby J at 463-464 [161]-[162], the approach stated in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 and James Hardie & Co Pty Ltd v Barry [2000] NSWCA 353; 50 NSWLR 357 should be followed.
5. There is no judicial discretion involved under s.5(2)(b)(iii) - if the Court determines that a transfer of the proceedings is in the interests of justice, then it shall transfer the proceedings: BHP Billiton Limited v Schulz at 421 [14], 434-435 [62]-[63], 481 [222].
6. No weight is to be given to the fact that My Queen has regularly invoked the jurisdiction of the District Court of New South Wales where the proceedings were commenced: BHP Billiton Limited v Schulz at 425 [25], 437-439 [72]-[77], 492 [258].
7. What the Court is required to do is to endeavour to predict, on the available material, which of the District Court of New South Wales and the County Court of Victoria appears to be the more appropriate forum, having regard to the interests of justice - what is required is 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: Bankinvest AG v Seabrook at 714.
8. It is not necessary that it should appear that the District Court of New South Wales is a "clearly inappropriate" forum. It is both necessary and sufficient that, in the interests of justice, the Victorian Court is more appropriate: BHP Billiton Limited v Schulz at 421 [14].
9. Ha Ha Jing bears the persuasive onus of showing that transfer to Victoria is appropriate in all the circumstances: James Hardie & Co Pty Ltd v Barry at 380 [100].

Evidence on the Present Application

1. A Court book (Exhibit A) provided the evidentiary foundation for this application. That volume contained affidavits relied upon by Ha Ha Jing (affidavits of Dawei Gao affirmed on 27 March 2017 and 2 May 2017) and My Queen (affidavit of Hayden Carlisle Fox sworn 26 April 2017 and affidavit of Jiani (Jenny) Ding affirmed on 26 April 2017).
2. Although it is clear that there are areas of dispute arising from this material (which was, of course, untested by cross-examination), the material provided the foundation for the present application to be considered.

The Parties to the Proceedings

1. According to the Statement of Claim and the affidavits before the Court, My Queen is a company incorporated in New South Wales, which operates a business from New South Wales importing various food products made in the People's Republic of China and distributing them on a wholesale basis within Australia. The business has been operational since April 2015.
2. Ha Ha Jing is a company incorporated in Victoria, which carries on business in Victoria selling or supplying to others for sale processed food items made in the People's Republic of China.

The Nature of the Proceedings Sought to be Cross-Vested

1. The only pleading or draft pleading so far in these proceedings is the Statement of Claim filed by My Queen on 7 February 2017. Ha Ha Jing has not filed a Defence or a Statement of Cross Claim. Nor was a draft Defence or draft Statement of Cross Claim placed before the Court on the hearing of the transfer application.
2. It has been necessary to examine the affidavits in conjunction with written and oral submission for the parties, for the purpose of considering what appear to be the real issues in dispute in the proceedings. As will be seen, this process is unsatisfactory for a number of reasons.
3. By its Statement of Claim, My Queen alleges that, between about October 2015 and October 2016, Ha Ha Jing "orally and expressly requested" My Queen to supply to it, by way of sale, certain specified goods being packaged food items. The Statement of Claim asserts that it was agreed that My Queen would supply on an ongoing basis for the period of one year products which My Queen distributed non-exclusively in Australia, including products for certain specified manufacturers. The Statement of Claim alleges that it was originally agreed that the suppliers would be paid upon invoice, but that the payment terms were varied in about March 2016 to allow Ha Ha Jing to pay only for goods they had sold on a monthly basis.
4. It is alleged that Ha Ha Jing was required to supply the products to Asian grocery stores in Victoria at prices fixed by My Queen. It is alleged that Ha Ha Jing was and continued to be required to return any goods that were past their expiry date to My Queen.
5. The Statement of Claim asserted some additional matters and then alleged that, in accordance with the agreement, My Queen delivered goods to Ha Ha Jing between April and October 2016 in 31 specified shipments totalling $241,727.16. The Statement of Claim asserted that, with respect to each shipment, unless otherwise expressly agreed between the parties, the goods supplied by My Queen would have a limited period of three months between the date of supply and the recommended "guaranteed" date as stated by the Chinese manufacturer and/or four months between the supply date and the "best before" date on the English label.
6. The Statement of Claim indicates that Ha Ha Jing has repaid to My Queen the sum of $81,386.57, so that the net sum claimed from the total of $241,727.16 is the amount sued for, $160,340.59, which has not been paid.
7. As mentioned earlier, there is no filed or draft Defence or Statement of Cross Claim to which the Court can look to see the pleaded response of Ha Ha Jing to the claim.
8. Mr Lim's oral and written submissions, and the affidavits of Dawei Gao, indicate the following: 1. Ha Ha Jing says that the goods were delivered to it on a consignment basis and that My Queen tampered with the "use by dates" of most of the goods supplied since about April 2016 by replacing them with extended and false "best before" dates (Lim, written submissions, paragraph 12); 2. from April 2016, Ha Ha Jing says that it received complaints from its retail customers of some expired goods having tampered with "use by dates" and started to return these expired goods and, from about June 2016, most of the goods supplied by My Queen to Ha Ha Jing were expired goods "use by dates" which had been with tampered with (Lim, written submissions, paragraph 18); 3. many goods have been returned by Ha Ha Jing's 16 retail customers because they were expired goods - some goods have been returned to My Queen, and there have been WeChat communications between the principals of My Queen and Ha Ha Jing over this issue (Lim, written submissions, paragraphs 18-21); 4. Ha Ha Jing denies owing My Queen $160,340.59 or any other amount - Ha Ha Jing says that My Queen owes it $4,933.11 (as at 1 December 2016) together with a sum for loss of profit said to arise from Ha Ha Jing's loss of business of retail customers as a result of My Queen's conduct, said to be about $3,000.00 per week from 15 July 2016 and continuing (Lim, written submissions, paragraph 17).
9. None of these matters are in pleaded form, nor are there any statements or affidavits (or drafts thereof) of the 16 Victorian retail customers which outline the evidence which they would seek to give in the proceedings.

Submissions of the Parties on the Cross-Vesting Application

1. Mr Lim submitted that the interests of justice required the proceedings be transferred to Victoria for a number of reasons (Lim, written submissions, paragraph 29): 1. the oral agreement between the parties for the supply of goods was (he contended) made in Victoria; 2. the breaches occurred in Victoria by the supply of out-of-date items to Ha Ha Jing's customers, whose evidence will be material to the determination of the proceedings; 3. there was no exclusive jurisdiction clause forming part of the agreement between My Queen and Ha Ha Jing; 4. the dispute concerned goods supplied by My Queen to Ha Ha Jing in Victoria between 1 April 2016 and 29 November 2016 - these goods were sold and delivered by Ha Ha Jing on behalf of My Queen for a service fee of 10% to 15%; 5. the alleged breaches of contract by My Queen and Ha Ha Jing, which gave rise to the dispute or causes of action or defences, occurred in Victoria: 6. (i) Ha Ha Jing had refused to pay My Queen for goods delivered to Victoria; 7. (ii) although My Queen's alleged conduct in replacing the "use by date" allegedly occurred in New South Wales, the problems arising from this conduct occurred in Victoria, 8. (iii) the return of My Queen's goods to Ha Ha Jing's retail customers occurred in Victoria, 9. Ha Ha Jing is a company incorporated in Victoria, which carries on business in Victoria; 10. Ha Ha Jing's 16 retail witnesses operate and reside in Victoria; 11. Ha Ha Jing's witnesses speak Mandarin and will require a Mandarin interpreter, which will affect the appropriateness of evidence being given by audio-visual link; 12. Ha Ha Jing will have to engage a forensic accountant to prepare a report on the loss of profit it suffered as a result of losing some retail customers because of My Queen's conduct, and this will be a Melbourne accountant; 13. Ha Ha Jing still has in its possession samples of many types of My Queen's returned goods at its West Footscray warehouse, in which (it is said) the "use by date" had been replaced; 14. the only connection with New South Wales is that My Queen has a place of business in New South Wales, although it sells goods throughout Australia and its two directors reside in New South Wales; 15. what is relevant is whether the goods supplied by My Queen to Ha Ha Jing were goods that had passed their "use by date" and, if they were, what was returned and what was destroyed with My Queen's express approval.
2. Ms Ensor relied upon a number of matters in opposing the transfer application: 1. Ha Ha Jing had not filed, or provided in draft form, a Defence or Statement of Cross Claim - in considering the transfer application, the Court must consider the pleaded claim before the District Court of New South Wales and not a prospective defence or cause of action - it is necessary for the Court to determine whether the existing "proceeding", as it currently stands, should be transferred; 2. My Queen resides and carries on business in New South Wales; 3. the subject matter of the dispute is the contract between My Queen and Ha Ha Jing, which was formed in New South Wales - the last offer was made by My Queen in New South Wales on 13 November 2015 and was accepted by Ha Ha Jing the following day; 4. the breach of contract pleaded by My Queen is a failure to pay for goods which were sold and delivered to Ha Ha Jing under an agreement between the parties - Ha Ha Jing was required to pay money to one of two bank accounts held respectively at Wynyard and Edgecliff in Sydney, and thus the breach of Ha Ha Jing occurred in New South Wales; 5. no Victorian Court would be better equipped than the District Court of New South Wales to resolve the legal and factual issues in the proceedings; 6. the only witnesses (who can speak to whether or not there was a breach of contract) are persons who can give evidence on behalf of My Queen and Ha Ha Jing, namely, their directors or certain high level employees - My Queen persons in this category are based and reside in New South Wales; 7. if (contrary to My Queen's primary submission), the Court was prepared to have regard to Ha Ha Jing's unpleaded prospective cause of action as constituting part of the "proceeding", the Court is left to guess as to the cause of action or defence, which might be raised, this being a somewhat abstract process - Ha Ha Jing relies upon unsupported contentions by a lay person (Dawei Gao) as to the existence of a cause of action or defence - there is no certified pleadings or draft pleading; 8. even if the Court was prepared to consider Ha Ha Jing's material on the transfer application, the Court would not order a transfer because: 9. (i) the only parties would continue to be My Queen and Ha Ha Jing - it was understood that Ha Ha Jing would not seek to join any other party to the proceedings; 10. (ii) it is not clear what cause of action Ha Ha Jing may assert in any prospective Cross Claim; 11. (iii) it is not at all clear that Ha Ha Jing's Victorian customers can give relevant and admissible evidence in any proceedings - there are no statements or affidavits indicating what their proposed evidence would be - they could not give opinion evidence and their evidence (if admissible at all) could not rise above identification of the products, a process which may be established by other means - those persons cannot give evidence concerning the terms of the contract between My Queen and Ha Ha Jing or any loss suffered by either party as a result of any alleged breach of contract; 12. if expert witnesses are to be called in the proceedings, there are competent expert witnesses in New South Wales who could be retained; 13. even if lay witnesses could give relevant evidence (which is not presently known) there are facilities for evidence to be given by audio-visual link.

Decision

1. I will move now to apply the principles set out earlier in this judgment to the present application.
2. The "proceeding" (for the purpose of s.5(2)(b)(iii) Cross-Vesting Act) is that commenced by the filing of a Statement of Claim by My Queen in the District Court of New South Wales on 7 February 2017. There is no filed Defence or Statement of Cross Claim, nor any draft Defence or Statement of Cross Claim to which the Court can look to ascertain the issues in the proceedings.
3. It is helpful to keep in mind the purposes of pleadings. In McGuirk v University of New South Wales [2009] NSWSC 1424, I said at [21]-[24]: "21 The function of pleadings is to state with sufficient clarity the case that must be met by a defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her: Banque Commerciale SA En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 286, 296, 302-3. The issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible at trial upon the ground of relevance: Dare v Pulham [1982] 148 CLR 658 at 664; Banque Commerciale at 296. 22 In Perpetual Trustees Victoria Limited v Dunlop [2009] VSC 331, Forrest J observed at [24] that the rules of pleading are 'the servants of the interests of justice', with those interests demanding that a party have every opportunity to plead out an arguable case against other parties, but that those other parties have, at an early point in the proceedings, the opportunity to be properly appraised of the case against them. 23 Pleadings provide the structure upon which interlocutory processes, such as discovery, are governed and they constitute the record of the matters which the Court has resolved and become relevant if, in any subsequent proceedings, any party claims issue estoppel or res judicata: Australian Competition and Consumer Commission v Fox Symes & Associates Pty Limited [2005] FCA 1071 at [100]-[103]. 24 Proper pleading is of fundamental importance in assisting Courts to achieve the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings: s.56 Civil Procedure Act 2005."
4. Although these statements were made in the context of a challenge to the adequacy of a pleaded Statement of Claim, they have wider application in understanding the importance of pleadings in civil litigation. Pleadings inform the opposing party and the Court of the issues and provide a structure for interlocutory processes.
5. Ha Ha Jing has not prepared even a draft Defence or draft Statement of Cross Claim. Although the District Court proceedings were stayed on 24 March 2017 pending the hearing and determination of this application, it is a reasonable expectation of the Court on an application such as this that draft pleadings (at least) be furnished to allow the Court to form a view with respect to the scope of the "proceeding" which is sought to be transferred. Without this, the Court is left to work its way through affidavits (with lengthy annexures) with a view to attempting to identify what the potential defence or cross claim may be.
6. I accept that the submissions of Mr Lim are of assistance in this case. However, they are no substitute for pleadings or draft pleadings to assist the Court to understand what is being raised, keeping in mind the overriding purpose in this State of a Court in civil proceedings to facilitate the just, quick and cheap resolution of the real issues in dispute: s.56 Civil Procedure Act 2005. I note that there is a similar provision in s.7 Civil Procedure Act 2010 (Vic), which provides that the overriding purpose of that Act and the rules of Court, in relation to civil proceedings, is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.
7. In the context of contemporary civil litigation, where a cross-vesting application is made, it is important that the applicant place the Court (and the opposing party) in a position where a reasonably clear understanding can be reached as to what the issues in the proceedings are. In a case such as this, this purpose is served most effectively by the preparation of (at least) draft pleadings.
8. Although this is a difficulty for Ha Ha Jing on the present application, I do not consider that the absence of draft pleadings is necessarily fatal to the application. The Court is still in the position to make a type of "nuts and bolts" management decision about the apparent parameters of the possible litigation. However, that process continues to present difficulties for Ha Ha Jing.
9. I make the following observations concerning the current state of these proceedings.
10. There are clear connections in the proceedings to both New South Wales and Victoria. The principals of both My Queen and Ha Ha Jing will likely be required to give evidence at the hearing of the matter, so that there will be a level of practical inconvenience for those who have to travel from one State to another for this purpose.
11. On the face of it, the contract was formed in New South Wales and the failure by Ha Ha Jing to pay money to My Queen, which is the alleged breach, occurred in New South Wales.
12. What Ha Ha Jing complains of is what is said to have been the vintage of the products supplied, and what appeared on the packets (and the labels on those packets) by the time they reached Victoria. It might be thought that the packets still in the custody of Ha Ha Jing may have some evidentiary significance subject to evidence about their provenance and storage and (if necessary) any admissible opinion about them.
13. In the absence of statements or affidavits from Ha Ha Jing's Victorian customers, it is difficult to make any reliable prediction that these persons will be able to give admissible evidence in these proceedings. It is not for the Court to attempt to speculate or guess as to what that evidence may be. Nor is it open to the Court to reach a considered view about a possible cross claim on the limited material available.
14. A further issue here is the role of cl 2.3 of the "Strategic Cooperation Agreement" between Ha Ha Jing and My Queen (Exhibit A, page 176), which appears to entitle Ha Ha Jing to return goods to My Queen if it "identifies the packaging issues or the quality issues of the goods" after receiving the goods, with My Queen being obliged "to accept the exchange or refund or the goods unconditionally". Submissions were made by reference to this clause by Ms Ensor, counsel for My Queen. It would seem significant to know how Ha Ha Jing dealt with this term (and any other relevant clauses) in its Defence or in any Statement of Cross Claim. This aspect tends to support the view that much in these proceedings may turn upon the contractual terms, with that contract having been formed in New South Wales.
15. I note that there is a facility for evidence to be given by audio-visual link from another State in civil proceedings. However, in the absence of any clear understanding that there will be customers of Ha Ha Jing who can give admissible evidence in these proceedings, it difficult to reach any informed conclusion as to whether that procedure may be utilised in this case.
16. I have considered the submissions of the parties and the evidence placed before the Court on the hearing of this application. I have kept in mind the principles to be applied by the Court on a cross-vesting application. Having done so, I am not satisfied that the transfer of the proceedings to Victoria is in the interests of justice. It has not been demonstrated that a Victorian Court is a more appropriate forum in this case.
17. Based upon the material placed before the Court on this application, I decline to make orders for transfer as sought by Ha Ha Jing.
18. Before concluding this judgment, I wish to make some further observations. The amount in dispute in these proceedings is not especially large in the experience of the Courts. Business persons are involved on both sides, who should all be cautious about involvement in protracted court proceedings. Legal costs will mount quickly, as they have no doubt already done so. There will be a winner and a loser in contested proceedings which go to a final hearing. If required to do so, our civil courts will take steps to facilitate the just, quick and cheap resolution of the real issues in dispute. However, the parties may wish to give careful thought to the future of this litigation before it progresses to a point where the legal costs involved exceed the sum in dispute.

Conclusion and Orders

1. I decline the application by Ha Ha Jing under s.140 Civil Procedure Act 2005 and under s.5(2)(b)(iii) of the Cross-Vesting Act.
2. The Summons filed on 27 March 2017 is dismissed.
3. I order Ha Ha Jing to pay My Queen's costs of the Summons.

Amendments 16 May 2017 - Amendment to date of orders on coversheet. 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: 16 May 2017