Judgment - EX TEMPORE
Revised from transcript; issued 21 May 2021
Before the Court is an interlocutory application by way of notice of motion. The defendant moves to transfer the proceedings to the Supreme Court of Victoria pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s 5(2)(b)(iii).
The plaintiff, Gregory William Francis Lewis, is a solicitor who specialises in litigation. Until the events which are the subject of the proceedings, he practised with the legal firm currently known as HWL Ebsworth ("HWLE"). HWLE is a national firm with offices in all State capitals.
HWLE has a partnership structure. Its operation is governed by a written partnership deed. The firm's administrative headquarters are in Melbourne.
The defendant, Juan Martinez, is the managing partner of the firm. He is based in Melbourne. The firm's office which has the greatest number of partners is in Sydney. That is where Mr Lewis was based.
Full partners of the firm are described in the partnership deed as Capital Partners. At the relevant time there were 182 Capital Partners, including Mr Lewis and, of course, Mr Martinez.
The dispute in the proceedings concerns two resolutions passed in the second half of last year by the Capital Partners. The first of those resolutions was passed on 11 August 2020. It concerned a proposal which then existed for the operations of the firm to be transferred to a company to be floated on the Australian Stock Exchange. The effect of the resolution was to exclude Mr Lewis from any ownership of the company to be floated, and thus from any ongoing ownership interest in the practice. Mr Lewis contends that in substance this resolution deprived him of his status as a partner of the partnership.
The second resolution was passed on 8 November 2020. It purported, under the terms of the partnership deed, to expel Mr Lewis as a Capital Partner. Since that resolution was passed, or shortly afterwards, Mr Lewis has not worked with HWLE.
Mr Lewis challenges the validity of the resolutions on procedural grounds which include denial of natural justice. He also challenges the resolutions on substantive grounds. He contends that the requirements for a valid exclusion, or expulsion, were not met. He claims substantial damages from the firm.
Mr Lewis' statement of claim was filed on 10 February this year. The notice of motion with which I am concerned was filed on 8 March. It was filed without an appearance having been entered on behalf of Mr Martinez as defendant, but no point is taken about this and an appearance has now been entered.
The authorities establish that, in general, a transfer application under the Cross-Vesting Act should be made promptly. The parties agree that this requirement has been satisfied.
The principles on which the Court acts in such an application were not in dispute. The question for the Court is whether the "interests of justice" require that the proceedings be transferred to the Supreme Court of Victoria as the more appropriate forum.
Strictly speaking, the exercise is not discretionary and if the Court is satisfied that the Supreme Court of Victoria is the more appropriate forum, then it has no choice but to make a transfer order. But the parties accept that in determining whether the interests of justice require the proceedings to be transferred, it is necessary to have regard to, and balance, the various connecting factors with the rival jurisdictions (often referred to as the Spiliada factors): see Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 727-728.
In the present case, counsel for Mr Martinez identified three connecting factors which she submitted pointed to the Supreme Court of Victoria as being the appropriate forum for the litigation. I will deal with those factors in turn.
The first factor was the applicable law. The partnership deed contains an express provision that it is governed by the laws of Victoria. It is accepted on behalf of Mr Lewis that the deed will be construed in accordance with the law of Victoria and to the extent that the partnership legislation is relevant, it will be the Victorian legislation (Partnership Act 1958 (Vic)) which applies, rather than the New South Wales legislation (Partnership Act 1892 (NSW)).
Counsel for Mr Martinez pointed out that, in general, the fact that a dispute is governed by the law of a particular State is a factor in favour of transferring the proceedings to be heard in that State. There is no dispute about that, but the weight of such a factor varies from case to case.
The principles that govern the construction of contracts are generally governed by the common law of Australia, which would be the same in New South Wales or Victoria. There was no suggestion that there is any relevant Victorian statutory provision which would affect such disputes as might arise as to the construction of the partnership deed.
While the Victorian Partnership Act is undoubtedly applicable, the relevant differences between the Victorian legislation and the New South Wales legislation are so slight as to be almost imperceptible. The text of the relevant sections differs only as to matters of punctuation, gender neutral language and the inclusion of reference to limited partnerships in the New South Wales legislation. It was not suggested that any issue in these proceedings was likely to be affected by any of these textual differences.
It is true, as counsel for Mr Martinez pointed out, that as a matter of comity, the Court would be guided by Victorian decisions in applying the law of Victoria. At the same time, however, because of the principle in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, the likelihood of any gap having opened up in the interpretation of the two Partnership Acts which could have a result on the outcome of this case is extremely low.
In reality, the law of partnership is very similar across all Australian jurisdictions. Should a question of construction of the legislation arise, and should reference to decided cases be required, it is far more likely that the weight of any authority will depend on the degree to which its facts and circumstances are applicable to the present case than on the particular jurisdiction under which it was decided. In short, there is no sign whatever in this case that the dispute will require consideration of any distinctively Victorian jurisprudence.
The second connecting factor identified by counsel for Mr Martinez was the location of documents and other records relevant to the resolution of the proceedings. Counsel submitted, and I accept, that it is likely, given that the administrative centre of the firm is in Melbourne, that that is where the records will be located (or at least that those within the firm's administration who are responsible for its records are likely to be in Melbourne). But it seems to me that this is a factor of very limited weight.
All of the evidence suggests that HWLE operates as, and indeed trades on being, a national partnership which is capable of operating seamlessly across the country. In those circumstances, the overwhelming likelihood is that for the purpose of obtaining documents for the conduct of these proceedings, it will make no real difference whether the servers on which those documents are located, or are managed by staff, in Sydney or Melbourne.
The third factor is the location of witnesses and others whose instructions may be required to conduct the proceedings. Of course, because this application is being made at an early point even before Mr Martinez has filed his defence, it is difficult to predict what course the trial will take and who will be required to give evidence.
As I have mentioned, Mr Lewis was at all relevant times based in Sydney, and he remains here. And in his affidavit, the solicitor for Mr Lewis suggested that, in addition to Mr Lewis himself, there might need to be evidence from other partners of the Sydney office. In particular, Mr Lewis' solicitor referred to the possible need to lead evidence from partners, staff and clients about "challenging behaviour" of one of the Sydney litigation partners.
On the defence side, counsel for Mr Martinez submitted that to allow the proceedings to continue in Sydney would impose a significant burden on him. The suggestion was that Mr Martinez, and possibly others in the Melbourne administration of the firm, will need to travel to Sydney for the purposes of the proceedings, both to give instructions and (possibly) to give evidence.
I must say, it was not clear to me why others in the administration of the firm apart from Mr Martinez would need to travel for the litigation. The dispute seems to me, on the information currently available, likely to be a dispute between individual partners. Questions of what notice were given to partners, and other administrative and business matters which would be the subject of the firm's senior non-legal management, seem to me to be likely to prove to be matters of record.
In any event, because of the national structure of the firm, it seems to me that this factor is of very limited weight. There are two reasons for that: first, because the firm has a national structure, it can be expected that its procedures and facilities have been designed so as to facilitate interstate communication without the necessity for physical travel; and second, to the extent that travel remains necessary, it is an inevitable consequence of such a national structure.
Mr Lewis' solicitor gave evidence on information and belief, which was not disputed, that in the past Mr Martinez has frequently travelled to Sydney on the firm's business and that is what one would expect of the managing partner of a national firm. I add that the chairman of partners, Mr Mitch Artus, who is likely to be consulted about the proceedings, at least so far as the giving of instructions are concerned, is based in Perth. It has not been suggested that there is any difficulty on this score which is relevant for the purposes of the present application.
Having said all of this, I think it should be acknowledged that questions of travel are now, following the increased use of video coverage and audio conferencing consequential on the COVID-19 crisis, of less significance than they used to be. In particular, I respectfully adopt the observations of Harrison J in Rowe v Queensland [2021] NSWSC 133 at [17]:
Having regard to the experience of this Court since early 2020 in the conduct of litigation by video link or other remote connection, it can no longer be accepted without question that, with the possible exception of a criminal trial before a jury, evidence given from a screen is any less forceful or reliable than evidence given from a chair in the courtroom.
None of the factors that I have discussed are therefore of great weight, but of those factors, I think that it is the location of the witnesses which has the greatest significance. On the evidence currently available, it cannot be said that there is any preponderance in favour of Melbourne. It seems to me, at the moment, most likely that the preponderance of witnesses will come from Sydney. Other factors on which counsel for Mr Martinez relied, such as the application of Victorian law and the fact that the administration of the firm and its documents are controlled from Melbourne, seem to me to be so slight as to be negligible.
The parties agree that the plaintiff's choice to commence these proceedings in Sydney is a neutral factor: see BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at 421. Nor does Mr Martinez, as the applicant for an order for transfer, bear any legal onus. But Mr Martinez does bear the practical onus of persuading the Court to make the order which he seeks: see James Hardie & Co Pty Ltd v Barry (2000) 50 NSWLR 357 at 380 [100].
In finely balanced cases, that practical onus may be significant. The court may not be inclined to engage in a minute examination of the various connecting factors so as to identify a feather-weight preponderance in favour of one jurisdiction rather than another: see Perpetual Trustee Company Ltd v Batt [2014] NSWSC 1211 at [45]; Massive Solar Pty Ltd v Woods [2017] NSWSC 924 at [34]. That is especially so when, as here, the connecting factors depend on predictions about the future conduct of the proceedings which may or may not come to pass.
In my view, at present, there are insufficient connecting factors to establish that it is in the interests of justice that the proceedings be transferred to the Supreme Court of Victoria. Rather, the preponderance of factors favours the continuation of the proceedings, at least for the time being, in this Court. Mr Martinez's transfer application fails and must be dismissed.
The orders of the Court on the notice of motion filed 8 March 2021 are as follows:
1. Order that the motion be dismissed.
2. Order that the defendant pay the plaintiff's costs of the motion.
[2]
Amendments
21 May 2021 - Amend front page
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Decision last updated: 21 May 2021