National Mutual Holdings Pty Ltd v Sentry Corporation

The first applicant and the respondent are incorporated in Western Australia. The second applicant is incorporated in New South Wales. The third applicant is incorporated in Victoria. The Statement of Claim alleges a series of breaches of warranty. These relate to forecasts of sales of milk and involve, issues as to good faith and knowledge. There are said to include breaches of disclosure warranties; breaches of business record warranties; and breaches of warranty as to accounts. A number of breaches of warranties concerning the environmental laws of Western Australia are also alleged. The allegations of breaches are set out in clauses 21 through 24. In addition, there are alleged to be breaches of plant and equipment warranties. The trade practices' allegation are comprised in paragraphs 37 through 54 and some cover the same ground as the breaches of warranties. There are also said to have been misrepresentations and false forecasts as to sales and earnings. Evidence and Contentions The evidence in support of the motion is that by written contacts of 8 April 1994 the respondent contracted to sell certain assets to the applicants. These assets included land, plant and equipment situated in Western Australia. There was also a share sale agreement. Under that agreement, the purchase price was $54,704,337. Of this sum, all except $6,500,000 has now been paid. This amount fell due and payable in July 1996. Each of the agreements contains a Governing Law Clause, to the effect set out below: "GOVERNING LAW This Agreement is governed by and shall be construed in accordance with the laws of Western Australia and each party irrevocably and unconditionally submits to the exclusive jurisdiction of the Courts of Western Australia and the Courts of Appeal from them ." (Emphasis added) The clause does not purport to govern matters of jurisdiction, venue, or applicable law in relation to the trade practices claims. It only relates to the contractual claims. Under the agreements, the respondent gave warranties in connection with the subject matter of the sales. The alleged breaches of warranty are extensive and there are about 20 such warranties in question. In relation to the warranty claims the respondent anticipates that it will be necessary to join as third parties in the proceedings three companies carrying on business in Western Australia, and one in Victoria. All the respondent's files and records in relation to the agreements are in Western Australia and it is said that the contracts were negotiated between the applicants and the respondent in Western Australia. The properties, plant and equipment in question are situated in Western Australia. The respondent says, in respect to witnesses on the warranty claims that there are in the order of eleven resident in Western Australia and one in Victoria. There are said to be seven expert consulting firms, who may be engaged in relation to technical design, manufacture, fabrication and valuation issues concerning plant and equipment. All of these are located in Western Australia. In addition, there are five expert consulting firms, who will provide evidence in relation to asbestos removal, replacement of waste water and dangerous goods. All of these are located in Western Australia. There will be evidence from representatives of manufacturers or suppliers of equipment, the subject of the warranties claims. Three of these are resident in Western Australia, two in Victoria and one in New South Wales. There will be witnesses and records called or produced from the Western Australian Environmental Protection Authority, the Western Australian Department of Occupational Health, Safety and Welfare, the Dairy Industry Authority of Western Australia, the Western Australian Water Corporation, the Western Australian Department of Minerals and Energy and the Department of Primary Industry of Western Australia. In addition, the respondent believes that five possible witnesses for the applicants are based in Sydney, two in Perth and seven of the technical consultants employed by the applicants are based or resident of Western Australia, with one in Victoria and one in New South Wales. The respondent apprehends that if it is forced to defend the proceedings in New South Wales it will be put to disproportionate trouble and expense, given the location of the property and assets the subject of the contracts and the claims set out in the Statement of Claim. Reliance is placed on the consideration that plant equipment and premises are located in Western Australia and therefore all inspections and assessments in relation to liability must be made there. Moreover the respondent anticipates that it will in the near future, institute proceedings for recovery of the last instalment of the purchase price which is $6.5 million. It suggests that this proceeding is in the nature of a pre-emptive strike in anticipation of the respondent's claim for the balance of the purchase price. The applicants resist the move to transfer or cross-vest and raise a number of matters. The first is that the application is premature because the pleadings have not been closed or the issues determined so that the full effect of the above factors cannot be considered. It is said that compliance with directions for filing and pleadings and interlocutory proceedings in New South Wales will not cause any substantial additional expense or difficulty for the respondent. Moreover, the trade practices claims are said not to be subsidiary to the contractual claims, at least in relation to the milk sales projection claim, which it is said is the major claim. The applicants say that the claim for the balance of the purchase price can be dealt with by way of cross-claim if it remains in New South Wales. They contend that it was appropriate to institute the proceedings in the Sydney Registry of the Federal Court. The Issues The Notice of Motion raises three questions. These are as follows:

"48. The Court or a Judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Court or Judge imposes." See also Order 10, rule 2 of the Federal Court Rules. In National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155, at 162, the Full Federal Court (Bowen CJ, Woodward and Lockhart JJ) said: "Ultimately the test is: where can the case be conducted or continued most suitably bearing in mind the interest 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, ... be defined more closely or precisely." In the present case, having regard to the above matters, the evidence before me and the nature of the specific allegations in the Statement of Claim, I am of the view that the proceedings ought to be heard in Western Australia. In reaching this conclusion, I consider that the governing law clause is important as it records the intention and agreement of the parties as to venue and forum. In addition, the location of witnesses, the location of the property, and the location of documentary material likely to be relevant all incline in favour of a hearing in Western Australia. Although the contractual clause as to the governing law and jurisdiction does not cover the trade practices claims, I consider that the parties ought to be held to the substance of their bargain in relation to litigation arising from the agreements and this is that such disputes should be heard in Western Australia. Cross-vesting The second question arises under s5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) and is whether "in the interests of justice," and in the light of consideration spelt out in that subsection it is more appropriate that the proceedings be determined in the Supreme Court of Western Australia. In this proceeding, both the Federal and State Courts have concurrent jurisdiction to hear the trade practices claims. See s86 of the Act. The Statement of Claim is largely founded on the breach of warranty claims. The contractual claims by themselves are not capable of being instituted in this Court, but are capable of being instituted in the Supreme Court of Western Australia. However, in the present case they could be heard by this Court under its pendent jurisdiction. Nevertheless they are essentially claims arising under State law. Further, the likely questions for determination in the proceeding will involve the application and interpretation of Western Australian regulatory statutes. A task best suited to a State Court. These include the Environmental Protection Act 1986 of Western Australia, the Dangerous Goods Regulations Act 1992 of Western Australia and the Occupational Health Safety and Welfare Regulations 1988 of Western Australia. In considering whether the Supreme Court is the more "appropriate" forum I bear in mind the principles set out in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 per Rogers A-JA (with whom Street CJ and Kirby P agreed), at 723-726. These principles indicate that consideration should be given to such matters as the place with which the proceeding has the most real and substantial connection; convenience or expense (such as the availability of witnesses), the laws governing the relevant transaction and the places where the parties reside or carry on business. The particular factors in any particular case are "legion" and cannot be closely defined. (Bankinvest (supra) at 728-729) In deciding which Court is the appropriate forum the agreement of the parties as to the governing law is very significant. While the provision as to the governing law does not refer to the Federal Court, on a broad construction, this Court could possibly come within the description of "Courts of Western Australia". However, the clause conveys to me a preference for determination of the contractual issues exclusively by the Courts of the State of Western Australia. This is understandable given the extensive references in the agreement to Western Australian regulatory laws. There is in the present case no suggestion that there will be any undue or unreasonable delay in hearing the matter if its is vested in the Western Australian Court. In all the circumstances, it is my conclusion that the "interests of justice" clearly require that the proceeding should be cross-vested in the Western Australian Supreme Court. Cf Bourke v State Bank of New South Wales (1988) 22 FCR 378 at 394 per Wilcox J. Premature An argument was raised that at this early stage, it is premature to determine the question as to the appropriate forum. In my view, this is not so. It is important to bear in mind, when considering a suggestion of prematurity, the importance of having the matter consistently case-managed from an early stage, under the direction and control of a single judge or court so far as possible. This is in the interests of the efficient administration of justice.

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