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The proceedings 8The proceedings were commenced with the filing of a statement of claim on 25 November 2011. The relief claimed was described as "damages for breach of contract". 9Ignoring presently irrelevant trust arrangements, the plaintiff had land at Lambells Lagoon in the Northern Territory which was used to conduct an intensive horticultural enterprise by a business trading under the name "The Sweet Life". The defendants (the applicant in these proceedings) conducted a business, trading under the name of "Territory Tree Nursery", that produced seedlings including seedlings of horticultural plants. 10An agreement was made in April 2011 for the plaintiff to purchase, and the defendants to supply, watermelon seedlings for transplanting on the plaintiff's Northern Territory land to grow commercial crops of watermelons ("the agreement"). Invoking s 19 of the Sales of Goods Act 1923, it is pleaded that the defendants supplied seedlings which were neither fit for the purpose for which they were acquired nor of merchantable quality. In particular, the seedlings were infected with a disease known as fusarium wilt. 11The plaintiff contends that due to the infection, the plants did not produce the fruit they would otherwise have; the plaintiff's land was quarantined by government authorities and has been rendered unfit for the foreseeable future; the plaintiff had been put to expense in dealing with these situations; and the plaintiff was unable to plant all of the commercial crops of watermelon it had intended to in 2011. As a consequence, the plaintiff has suffered loss and damage. 12A defence was filed on 21 February 2012. The defendants contend that the agreement was a propagation agreement, whereby the plaintiff undertook to supply watermelon seed to the defendants for germination, which the defendants undertook to do for reward and undertook to provide the plaintiff with the germinated seedlings. The contract was not a contract for the sale of goods but a contract for services. Therefore, the Sale of Goods Act did not apply. 13The defendants further contend that the proper law of the contract is not the law of New South Wales; the contract had its closest and most real connection with the Northern Territory. This is because the seed was supplied by a person who was a grower associated with or engaged by the plaintiff and whose property was situated in the Northern Territory, and the contract was to be wholly performed in the Northern Territory. 14The defendants do not admit that the seedlings were infected with fusarium wilt. Alternatively, they assert that the source of the infection was the seeds supplied by the plaintiff ("the allegation").

The application 15The defendants filed a notice of motion on 28 February 2012 in which they sought the transfer order referred to above. They relied upon two affidavits sworn by Mr Ronald Hope on 22 February and 8 March 2012. In response, the plaintiffs relied upon an affidavit of Mr Andrew Munro, sworn on 8 March 2012, together with a letter from solicitors for the defendants to solicitors for the plaintiff of 7 March 2012. In the following paragraphs I will not refer to all of the evidence, but only that which was referred to in submissions.

The applicants/defendants' evidence 16Mr Hope is the solicitor for the defendants. He deposed in his affidavits that his instructions are that if the matter were to proceed to trial, it would be necessary to call seven witnesses. Four are people who are, or were, involved in the operation of the Territory Tree Nursery business; and three are employees of the Northern Territory Department of Resources. Two of the seven are residents of Western Australia and the balance usually reside in the Northern Territory. 17Mr Hope asserts that the agreement that is the subject of the proceedings was performed wholly within the Northern Territory. His instructions are that the seedlings were propagated on property in the Northern Territory and were supplied to the plaintiff's farm about 30 kilometres away. 18Annexed to Mr Hope's first affidavit are letters from a Perth firm of solicitors written in September 2011. They complain of two more watermelon growing operations apparently having received contaminated seedlings from the defendants. The letters include a request that the solicitors be provided with certain documentation and threaten that if the documents were not provided, "our client will seek discovery of the relevant documentation in an application for pre-action discovery to the Supreme Court of Western Australia". 19Mr Hope also deposed that the alleged breach of contract with the plaintiff involves liability for which the defendants will be seeking indemnity by set-off or counterclaim. He has instructions to apply to the Court to amend the defence accordingly.

The respondent/plaintiff's evidence 20Mr Munro is a solicitor for the plaintiff. With reference to documents annexed to his affidavit, he deposed that the plaintiff's registered office and principal place of business are in Griffith, New South Wales. The Sweet Life is a registered business name. Its principal place of business is in the Northern Territory. 21Mr Hope explained that the plaintiff is a corporate vehicle by which members of the Amaro family, horticulturalists of Griffith, and the Logozzo family, fruit and vegetable wholesalers of Flemington Markets, both in New South Wales, conduct a joint venture to grow and supply fruit and vegetables. The produce was grown on a farm in the Northern Territory and was primarily delivered to Flemington Markets where it was sold. 22The registered offices and principal places of business of both the first and second defendants are in Western Australia. Territory Tree Nursery is a registered business name with a principal place of business in the Northern Territory. 23The agreement that is at the heart of the present proceedings is said to have come about from negotiations between Mr Joseph Logozzo on behalf of the plaintiff and an unnamed representative of the defendants. It was confirmed by a document sent from Territory Tree Nursery to Mr Logozzo's office at Flemington Markets. 24In relation to the allegation that it was the plaintiff's seed that was infected with fusarium wilt, Mr Munro's instructions are that the seed was purchased by the plaintiff from a company in Griffith, who in turn had purchased it from a company in West Gosford. 25The plaintiff's solicitors sought further particulars as to who had advised the defendants that tests had shown the presence of fusarium bacteria in the plaintiff's seeds. The defendants' solicitors replied that the source of this advice was an expert in plant pathology at the Northern Territory Department of Resources, Mr Barry Conde. 26In a letter of 29 February 2012, the plaintiff's solicitors invited the defendants to amend their defence to delete the allegation. This was the result of the plaintiff having come into possession of an email from Mr Conde dated 27 July 2011 in which it appears to be said that the plaintiff's seeds he had tested were not contaminated. 27The defendants' solicitors responded by letter on 7 March 2012. They were not previously aware of the abovementioned email from Mr Conde. With reference to that email; it was said that: "It raises several crucial issues that require further investigation before the pleadings and indeed the parties to this litigation can be determined." 28The defendants' solicitors advised that a subpoena had been issued to the Department of Resources seeking all material relating to the testing of the seed. They had retained a specialist microbiologist, Professor Brett Neilan, to provide an expert opinion in relation to the testing of the seed by the Department of Resources.

Submissions for the applicant/defendants 29Mr Purdy submitted that a number of factors supported the overall proposition that it was "in the interests of justice" that the proceedings be transferred to the Northern Territory Supreme Court. 30The relevant businesses of the parties were in the Northern Territory. 31The performance of the contract took place overwhelmingly in the Northern Territory. This was so regardless of whether the contract was characterised as a contract for the sale of goods (per the plaintiff) or a contract for the provision of services (per the defendants). 32The issues between the parties concern the nature and terms of the contract (sale of goods or provision of services). Witnesses in respect of those issues from the defendants' side will be operational managers of the defendants' farm in the Northern Territory. 33As to the allegation that it was the seeds supplied by the plaintiff that were contaminated, expert evidence would be required. Mr Conde, and another employee of the Northern Territory Department of Resources, would likely be called. 34The letters of demand from the Perth solicitors indicated the possibility of further similar claims being made against the defendants. A "factor of convenience" was that all such claims should be litigated in the one Supreme Court, i.e. that of the Northern Territory. There would be no basis for the potential Western Australian plaintiffs to bring their litigation in the New South Wales Supreme Court. 35Finally, it was submitted that as the contract between the parties had its closest and most immediate connection with the Northern Territory, the law of that Territory would be the proper law of the contract. It was, however, conceded that with uniformity of Sale of Goods legislation, this was not a matter of great weight. This, of course, is in the event that the contract is found to be one concerned with the sale of goods rather than the provision of services.

Submissions for the respondent/plaintiff 36Mr Scruby submitted that the requirement in UCPR r 44.5 for a party to apply for a transfer order "on or as soon as practicable after commencement of the proceedings" only arises when a party "intends to contend" that such an order should be made. In this case, it was premature for the applicants/defendants to form such an intention. 37It was submitted that there were really only two issues for determination in the proceedings: the source of the contamination and damage. 38The present status of the allegation that the contamination came from the plaintiff's seed is still being investigated by the defendants. The letter from the defendants' solicitors of 7 March 2012 indicates that a subpoena has been issued to the Northern Territory Department of Resources and an expert, Professor Neilan, was being retained to provide an opinion. So, at this point in time, whether the defendants can maintain the allegation is unknown. 39If the allegation disappeared, the only substantive issue of fact would be quantum and, perhaps, causation in terms of what effect the provision of contaminated seedlings by the defendants had upon the plaintiff's business. Mr Scruby submitted that in relation to those issues, all of the evidence was likely to be documentary and the people in the plaintiff's business who may be required during such proceedings lived in New South Wales. 40If the allegation was to be maintained, Mr Munro's instructions were to seek leave to join Yenda Producers' Co-Operative Ltd of Griffith as a third defendant. It would be alleged that it entered into an agreement with the plaintiff in New South Wales to supply seed to the plaintiff, and there was a breach of such agreement in New South Wales by the provision of what the defendants contend was contaminated seed. 41In relation to the further potential claims against the defendants referred to in the letters from the Perth solicitors, reference was made to the assertion of a proposed action for preliminary discovery in the Supreme Court of Western Australia. It was submitted that this undermined the proposition that it was appropriate to send the present proceedings to the Northern Territory. It also supported the proposition of prematurity in that those claims were yet to materialise. 42A further reason why the current application was premature was that it was asserted in Mr Hope's first affidavit that he had instructions to apply to the Court to amend the defence in relation to a proposed set-off or counterclaim. That has yet to be done and the plaintiff does not know the form of the amendment proposed. 43Mr Scruby's submissions otherwise addressed the merits of the application. Reference was made to where potential witnesses for each party live; most of the plaintiff's witnesses live in New South Wales whilst it was acknowledged that most of the defendants' witnesses live in the Northern Territory. 44The principal place of business of the plaintiff was Griffith, New South Wales. That was said to be more significant than The Sweet Life having a principal place of business in the Northern Territory, particularly given the anticipated main issue in the proceedings being quantum. 45At the conclusion of his submissions, Mr Scruby reiterated that the primary point sought to be made by the plaintiff was that it was premature to consider an application for transfer of the proceedings at this time. He accepted that when more was known about the nature of the issues and the evidence, it would be open to the defendants to make another application if that was felt to be appropriate.

Submissions in reply 46Mr Purdy acknowledged that the parties carried on other businesses, but submitted that the relevant businesses, watermelon growing on the plaintiff's part and seed propagation on the defendants' part, were carried on in the Northern Territory. 47If the defendants' characterisation of the contract as being one concerned with the provision of services, rather than sale of goods, was correct, questions of negligence would arise that would require extensive evidence to be adduced relating to land and farm management, and the manner in which the defendants carried out their activities. 48Mr Purdy accepted the embryonic nature of the issues at this point. He also accepted that there may well be a number of witness who will become involved in relation to the source of the fusarium wilt whose identities and locations are presently unknown. However, it remained the case that the essential character of the proceedings was to do with the defendants' management of its Northern Territory operations. 49The Northern Territory was the appropriate forum for this, and all other potential claims arising out of the same, or similar events.

Resolution 50There is a fine balance between the factors which connect the proceedings to one jurisdiction or the other. One of those factors, however, the location of witnesses, is difficult to assess whilst it remains unclear what issues will ultimately fall for determination. 51The major issue in the proceedings at the moment is the defendants' allegation that the source of the contamination of the seedlings had nothing to do with the defendants' operations but was already within the seeds supplied by, or on behalf of, the plaintiff. In making the allegation, the defendants relied upon advice from Mr Conde of the Northern Territory Department of Resources. However, there is significant uncertainty as to whether in fact Mr Conde will provide an opinion that will support the defendants. The letter from the defendants' solicitors of 7 March 2012 serves to highlight that they are presently unable to determine whether the allegation has any merit at all. 52The suggestion of further potential proceedings being instituted is, to my mind, immaterial. If such proceedings are commenced it seems likely that they would be instituted in Western Australia. The submissions for the applicants/defendants seem to assume that if the present proceedings are transferred to the Northern Territory, so too would any similar proceedings. That is entirely speculative. This aspect has no weight in this application. I accept the submission for the respondent/plaintiff that this issue simply provides a further illustration of the application being premature. 53The prospect of the plaintiff joining a New South Wales entity as a third defendant if the allegation is maintained, and of the defendants applying for leave to amend the defence in an as yet unspecified form, further highlights the difficulty of determining the application at this point in time. 54There are so many issues that are still to be resolved before it is clear what this litigation will entail. It is not possible to say at this point in time that it is in the interests of justice that the proceedings be transferred to the Supreme Court of the Northern Territory. 55This application has concerned an issue that is a discreet and separately identifiable aspect of the proceedings, unrelated to the substantive issues. It is appropriate that a costs order be made against the unsuccessful defendants/applicants pursuant to UCPR r 42.7(1). Counsel for the plaintiff/respondent did not suggest that if the outcome was as I have indicated, I should exercise the power in UCPR 42.7(2) to order that such costs to be payable forthwith and I will not do so.

Orders 56I make the following orders: 1The application for the proceedings to be transferred to the Supreme Court of the Northern Territory is refused. 2The defendants are to pay the plaintiff's costs with respect to the motion as agreed or assessed.

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: 05 April 2012