JLV Industries Pty Ltd v MacDonald

Federal Court of Australia|2006-06-09|Before: Bowen CJ, Lockhart JJ, Nicholson J

REASONS FOR JUDGMENT 1 The respondents bring a notice of motion seeking the transfer of the proceeding to the Queensland District Registry of the Court. This seeks the exercise by the Court of the power to transfer provided for in s 48 of the Federal Court of Australia Act 1976 (Cth) and O 10 r 1(2)(f) of the Federal Court Rules. 2 It is not in dispute that the approach which the Court should take to the issue of transfer is set out in the reasoning of the Full Court (Bowen CJ, Woodward and Lockhart JJ) in National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 83 ALR 434 at 442 where it was stated: 'Ultimately the test is: where can the case be conducted or continued most suitably, bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the court? It cannot and should not, in our opinion, be defined more closely or precisely.' The Full Court prefaced the statement by saying: 'There is no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere. … The court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere.' 3 The respondents support their motion by the affidavits of Mr Arthur, solicitor, sworn on 16 May 2006 and 5 June 2006. The applicant relies on the affidavit of Mr Forgie, director of the applicant, sworn on 26 May 2006 and of Mr Carmady, solicitor, sworn on 6 June 2006.

residence of witnesses 14 The respondents contend that the employees (whether JLV's or C-Mak's) who allegedly provided the labour are all presently resident in Mackay, as are all the respondents and the controllers of the corporate respondents. It is these whom the respondents say will be necessary witnesses. 15 Additionally, the respondents contend that nothing in Mr Forgie's affidavit suggests any substantial controversial evidence from any witness located in Western Australia. At the most, it is said, certain paragraphs identify three controversial conversations 'of very limited scope'. The first of those conversations is referred to in [13] of Mr Forgie's affidavit. There he deposes to having been informed by a Mr Johnson, one of JLV's directors, that Mr MacDonald had proposed to him that he was prepared to and wished to manufacture the shafts for assembly at JLV's Mackay facility on a subcontract basis while retaining his position in charge of JLV's Mackay facility. Mr Johnson had, in effect, said no to this and that, if the proposal was carried into effect, it would place Mr MacDonald in a position of conflict of interest. In [14] a telephone conversation with Mr Forgie on 14 December 2004 is referred to during which Mr MacDonald proposed he would act as a contractor to JLV. He was informed in or about late December 2004 by Mr Forgie that JLV was not interested in his proposal. It is apparent that such evidence is important evidence and would go to the allegations of contravention of s 182 of the Corporations Act and breach of fiduciary duties. 16 The other paragraph of relevance is [21] of Mr Forgie's affidavit. It addresses a visit by Mr Forgie on 23 February 2006 to the workshop premises of the fourth respondent, EDM. Mr Forgie's evidence is that he asked one of EDM's employees whether they would be able to manufacture shafts in accordance with JLV drawings. The alleged response was that EDM was already manufacturing such shafts. Again, this is seemingly significant evidence in connection with the central allegation of JLV that Mr MacDonald breached s 182 of the Corporations Act and his fiduciary duties. 17 Consequently, it cannot be accepted the evidence of the conversations will not result in the calling of the relevant witnesses. The evidence of Mr Forgie was that the solicitor for JLV anticipates that it will call evidence from himself, Mr Johnson, a Mr Thomas and a Mr Sealey at the hearing of the application; that is, four witnesses in total. Therefore JLV contends that there is no warrant for the proposition that the Western Australian witnesses will be out numbered, or greatly out numbered, by Queensland witnesses. 18 In these circumstances, even without the abandonment by JLV of its claim which would necessitate evidence from the labourers, the position is that each party will need to call a number of witnesses. However, unless the claim relating to the labourers does not go to trial, it is likely more witnesses will be from Mackay than Perth.

location of documents 19 The respondents contend that the documents put in issue by the pleadings are largely located in Mackay, Queensland. 20 JLV submits that the location of documents is not critical because it is usual in the course of prior preparation for either party to work from copies. In the case of JLV its documents are located at Myaree in Western Australia, JLV having its head office and registered office in Western Australia. 21 It is apparent that the nature of Mr MacDonald's obligations will require evidence to be brought from records in Western Australia. Evidence of Mr MacDonald's conduct will require documents to be put into evidence from sources most likely in Queensland. I accept the preponderance of documentation at issue in the trial will be found to be located in Queensland rather than Western Australia.

contractual considerations 22 Mr Forgie's affidavit brings into evidence the letter of offer of employment made by JLV to Mr MacDonald on 28 December 1999. He was offered the position of mechanical engineer, although the contract reserved the right to assign him to other duties. The offer contained a confidentiality provision to the effect that he would not breach the confidence of JLV. Additionally, it stated that in the event of his acceptance of the offer of employment he would be required to sign a deed of confidentiality and restrictive covenant. He did so on 8 February 2000. By cl 3 of that deed, he covenanted not to 'cause, procure, suffer or permit the unauthorised use by any third party of any of the Information and will take all steps as may be necessary from time to time to prevent any such use'. Further, it was provided in cl 12.7 that the deed was governed by the law in force in Western Australia and that each party irrevocably and unconditionally submitted to the non-exclusive jurisdiction of the courts of Western Australia. JLV therefore relies on the fact that there was agreement between it and Mr MacDonald to submit disputes arising from the deed of confidentiality to the courts sitting within Western Australia and that such courts include this Court. In support they rely on Aquila Resources Limited v Pasminco Limited [2004] FCA 39 at [37]-[41]; Australia Country Cinemas Pty Ltd v BYA Pty Ltd [1998] FCA 714at 2; see also KC Park Safe (SA) Pty Ltd v Adelaide Terrace Investments Pty Ltd [1998] FCA 601. In the light of those authorities I do not consider it can be contended here as the respondents submit that because the proceeding has been instituted within the Federal Court of Australia, it has not been instituted within the jurisdiction of 'the courts of Western Australia', as provided for in the submission to jurisdiction clause. 23 JLV relies on the fact that the contract of employment was formed within Western Australia at a time when Mr MacDonald was resident there and that the initial years of the employment contract were performed in Western Australia. The respondents assert that this is of no weight because it is not alleged that any breach occurred in Western Australia. 24 The respondents contend that there is limited scope of the claims that parties have agreed to submit to the non-exclusive jurisdiction of the courts of Western Australia and that therefore the Court should not attach much weight to the non-exclusive jurisdiction clause: cf Plantagenet Wines Pty Limited v Lion Nathan Wine Group Australia Limited [2006] FCA 247. They contend that the three express particular breaches pleaded in [10] and [11] of the amended statement of claim relate to the actions of Mr MacDonald. However, they say all other respondents are parties to each breach so that the scope of the claim is well outside the scope of the non-exclusive jurisdiction claim. Here, however, it cannot be said that the breach of the confidentiality requirement constitutes a limited part of the claims that the parties have agreed to submit to the non-exclusive jurisdiction. As has been explained in delineating the nature of the proceeding, it goes to the heart of the allegations under s 182 of the Corporations Act and the alleged breach of fiduciary duties: RP Meagher, JD Heydon, MJ Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 4th edn, Butterworths Australia 2002, 206, at [5-255]. The liability of Mr MacDonald is at the foundation of the liability of the other respondents. Therefore I consider that weight is to be accorded here to the non-exclusive jurisdiction clause.

video conferencing facilities 25 JLV accepts that interlocutory appearances may be made by video link without disadvantage to the party appearing that way: eg, Australian Competition & Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239 at [18]. However, JLV distinguishes the present circumstances on the basis that the respondents and their solicitors are located in Mackay, which is itself remote from the nearest office of the Queensland Registry in Townsville: see Mr Arthur's earlier affidavit at [11]. Therefore, JLV submits that the respondents can use video conferencing facilities available in Mackay to appear in the court in Perth as readily as they can in Townsville so that the transfer of the application to Townsville is of no tangible advantage to the respondents in this respect. Given that the status quo is that JLV can and will appear before the Court in person in Perth, it is submitted this factor is accordingly marginally against transfer. I agree.

disparity of resources 26 In his second affidavit Mr Arthur gives evidence as to the means of each of the respondents. The effect of it is that: (a) the respondents claim to have an aggregate net income of, in the region of, $450 000 per annum; and (b) EDM produces a net income, for Mr and Mrs MacDonald of, in the order of, $366 000 per annum. JLV points to the fact that the respondents have not chosen to exhibit their financial statements, nor management profit and loss accounts and balance sheets. Further, they have not deposed that their existing solicitors and counsel cannot continue to fulfil their roles unless the application for transfer succeeds. The respondents do not seek to assert they cannot attend at Court in Perth, only that they have more limited resources to engage in the litigation than does JVL. 27 JVL has not put into evidence particulars of its financial position. I infer from the information on it in evidence that it is a significant company sustaining its business in Australia and overseas. 28 I accept therefore that there is a disparity in resources favouring the respondents.

trial option 29 A further issue is raised by JLV that should the application for the transfer be refused, the option remains for the Court to order a trial in Townsville or partly in Perth and partly in Townsville because of the significant number of witnesses residing at, or about, those two centres. Such an approach was foreshadowed in Burdekin Pacific Limited v Communitee Pty Limited [2003] FCA 777.

conclusion 30 When the respondents brought their motion for change of venue to Queensland they were, as their written submissions disclosed, of the view that the heart of the claims against them was that Mr MacDonald had used his position to gratuitously supply the services of JLV's employees to C-Mak. At the hearing of it became apparent that the first claim, being the greatest in monetary value, was the principal allegation. Further, as the amended statement of claim alleges, each of the claims is based on a breach of Mr MacDonald's obligations arising from the nature of his employment in Western Australia. It is against that perspective that the application to change venue must be viewed. 31 The factors arguably supporting transfer are the present likelihood of more witnesses and documents being located in Mackay than Perth; and the disparity in resources of the parties. The factors arguably against transfer are that nevertheless a significant number of witnesses and documents will be located in Perth; Mr MacDonald has submitted to jurisdiction in Western Australia; and video links from Mackay to Perth may be as convenient to the respondents as video links from Townsville to Perth. The factors are fairly evenly balanced. 32 The test which I must apply was stated at the outset, that is, where can the case be conducted or continued most suitably. I must look for a sound reason to direct that the proceeding be conducted or continued elsewhere. 33 Save for one issue, I consider the proceeding can be most suitably conducted or continued as at present. That one issue is if the evidence of the labourers is required for trial, it would be necessary for them to travel to Perth. That issue, however, can be addressed by directions made concerning the locations at which witnesses are to be heard and the trial conducted. 34 Accordingly I have reached the view that the respondents' motion should be dismissed but without prejudice to the right of the respondents to bring an application in the future concerning the location or locations of the trial. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.

Solicitor for the Respondent: S.R. Wallace & Wallace

Corporations Act 2001(Cth)s 182, 1317H

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