Patrick Badges Pty Ltd v Commonwealth of Australia

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20330/01 PATRICK BADGES PTY LTD v COMMONWEALTH OF AUSTRALIA

JUDGMENT 1 HIS HONOUR: The plaintiff has commenced proceedings by Statement of Claim for damages arising from what is said to be the breach of a contract entered into with the defendant relating to the promotion of events in connection with the 75th anniversary year of the Royal Australian Air Force (RAAF) in 1996. The defendant by Notice of Motion seeks an order staying the proceedings or, in the alternative, an order that the proceedings be transferred to the Supreme Court of the Australian Capital Territory (the ACT) pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987. The former of those orders was not pressed before me, and there is authority that the common law power to stay the proceedings in the circumstances arising in the present case no longer exists because of the cross-vesting provisions: World Firefighters Games Brisbane v World Firefighters Games Western Australia Incorporated [2001] 161 FLR 355. 2 The parties have agreed that the relevant subsection under which this application should be determined is s 5(2)(b)(iii). That provision is relevantly as follows:

5. (2) Where: (a)… (b) it appears to the court that: (i) (ii) (iii) 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 subsection requires this Court to decide which is the more appropriate court to determine the proceedings brought by the plaintiff: Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 714E, 727B; James Hardie & Coy P/L v Barry (2000) 50 NSWLR 357 at 379. A court will be more appropriate than another if in that court the case may be "tried more suitably for the interests of all the parties and the ends of justice": Spiliada Maritime Corporation v Cansulex Limited [1987] AC 460 at 476 applied in James Hardie at 378. It has been held that a broad view is to be taken as to what are the interests of justice in this respect including both procedural and substantive law questions as well as the convenience of the parties. It has been suggested that there is strictly no burden or onus upon either party to persuade the Court either to transfer the proceedings or not to take that course: Bankinvest at 727C. However, as the defendant has brought this application, it has to persuade the Court to make the order it seeks: James Hardie at 380 par [100]. 4 In James Hardie at 379 par [95] reference was made to what was described as "a useful checklist" in deciding an application for a transfer of the proceedings and which is contained in the decision of Higgins J in Dawson v Baker (1994) 120 ACTR 11 at 22. It is as follows: · application of substantive law · forensic advantage or detriment conferred by procedural law · the choice made by the plaintiff of the forum and the reasons for that choice · balance of convenience to parties and witnesses; and · convenience to the court system. 5 For the purposes of determining the issue raised by the Notice of Motion, and not otherwise, the parties have helpfully prepared a statement of facts. In addition, the agreement and some relevant correspondence between the solicitors of the parties have been placed in evidence before me. 6 In summary the agreement entered into by the parties was that the plaintiff was to be the exclusive promoter of events connected with the RAAF's anniversary celebrations and as such would provide services on behalf of the defendant including manufacturing and merchandising souvenirs, sponsoring and promoting events, catering at events and publishing promotional material. The plaintiff was to receive royalties based upon receipts from sales and catering at the events at a rate specified in the agreement. These events were to take place throughout Australia between February and October 1996. However, there were a number of events, set out in a schedule to the agreement, in respect of which the plaintiff was not to be involved in any way. 7 The agreement contains the following clause: 66 Applicable Law 66.1 This Deed shall be governed by and construed in accordance with the laws of the Australian Capital Territory and the Parties agree, subject to this Deed that the Courts of that Territory shall have jurisdiction to entertain any action in respect of, or arising out of, this Deed. 8 From the agreed facts tendered in evidence before me it appears that inconvenience will be occasioned to those in the plaintiff's camp if the matter is transferred to the ACT. In particular, the principals of the plaintiff company reside in Sydney with their young children. The plaintiff's business is operated from Sydney and there are concerns that the business will be adversely affected if the principals are required to be in the ACT in connection with the hearing for any length of time. The plaintiff's solicitor and counsel operate solely from Sydney. 9 On the other hand there will clearly be inconvenience to the defendant if the matter is heard in Sydney. The persons who will be giving instructions on behalf of the defendant and those who were involved in the contract negotiations and performance of the contract are resident and work in the ACT a short distance from Canberra. The Canberra office of the defendant's solicitor is handling the case. 10 The factual basis of the litigation reveals that there are connections with both the ACT and NSW. The agreement was executed in Parramatta but negotiations in respect of it took place in both the ACT and NSW. The plaintiff carried out its work under the agreement mainly in NSW but persons in the ACT carried out the administration of the contract. Meetings between the parties that took place after the execution of the agreement but before its termination occurred in both the ACT and NSW. However, as I have already noted, the events, which were the subject of the agreement, took place in various parts of Australia and representatives of the plaintiff company travelled to those events in purported fulfilment of the agreement. 11 Applying the "checklist" referred to above, the following appears to be the case: · There is nothing before me to indicate that, by reason of the applicable substantive law or procedure applying in the ACT or in this Court, it is more appropriate for proceedings to be heard in one jurisdiction than the other; · It cannot be said that there is any more connection with one jurisdiction than the other so far as the making of the agreement or its performance was concerned; · It seems reasonably clear that the plaintiff has chosen to commence proceedings in this Court for its own convenience and to defray the costs associated with conducting the litigation in a court outside its home state. 12 Generally speaking the parties agree that there is little to choose between the two jurisdictions in determining which is the more appropriate forum. However, each contends that there is one matter that tips the balance in its favour. The defendant relies upon the existence of clause 66.1 and submits that the plaintiff should be bound by that term of the agreement that it entered. The plaintiff, on the other hand, contends that the clause should be given little or no weight, particularly having regard to what it submits is the decisive matter, being the disparity between the size and strength of the two parties and the consequential disparity in the inconvenience caused to each by a hearing in an interstate jurisdiction. 13 The defendant contends that clause 66.1 should be construed as an exclusive jurisdiction clause notwithstanding the absence of any words or phrase conferring exclusivity of jurisdiction upon the courts of the ACT. The plaintiff argues that the clause does not purport to confer jurisdiction of any kind on the ACT courts but, even if it did, the existence of such a provision is not decisive of the question as to the appropriate court to hear this particular dispute. 14 I doubt that it is necessary under the cross-vesting legislation to determine whether such a clause is an exclusive jurisdiction clause or not. Provided that the clause can be construed as being a substantive term of the agreement between the parties as to the likely jurisdiction for the determination of disputes under the agreement, it should be given weight in the determination of where the "interests of justice" lie. It would be a factor, possibly of significance when consideration is given to the weight to be accorded to the inconvenience of a particular party, that the party entered into an agreement under which dispute resolution would, prima facie at least, take place in a particular and possibly inconvenient jurisdiction. But it may be that, if the clause is construed as being an exclusive jurisdiction clause, more weight should be given to it in determining the appropriate jurisdiction and less to the inconvenience and expense of a party having to proceed in that jurisdiction in accordance with the agreement it entered. 15 The significance of the existence of an exclusive jurisdiction clause in the context of cross-vesting legislation was considered in World Firefighters Games Brisbane where Philippides J examined decisions in different Australian jurisdictions including both those where the NSW approach to the legislation, laid down in Bankinvest and James Hardie, had been adopted and those where an approach more consistent with the common law had been followed. Her Honour concluded at [38]: "The authorities favour the view that under the cross-vesting legislation, the exclusive jurisdiction clause remains a relevant consideration, on the basis that the 'interests of justice' require that due acknowledgment be accorded to such a clause as representing the bargain between the parties and that a proper regard be given to the need to hold the parties to their bargain. Nevertheless, in my opinion, in considering the weight to be given under the legislation to such a clause, one should not start from the position that such clauses should be viewed with the 'strong bias' in their favour previously accorded to them at common law. The weight to be given to such clauses will vary depending on the other surrounding and countervailing circumstances."

That approach is consistent with that taken by courts in this State, see West's Process Engineering Pty Ltd (Administrator Appointed) v Westralian Sands Ltd (NSWSC, Rolfe J, 6 August 1997) and Wholesome Bake Pty Ltd v Sweetoz Pty Ltd (NSWSC, Bryson J, 5 April 2001). 16 To the extent that it is necessary to make a determination about the nature of clause 66.1, I have come to the view that it does purport to give exclusive jurisdiction to the ACT courts to determine disputes in relation to or arising under the agreement. I start my consideration on the basis that the clause should be construed as having some work to do in the agreement between the parties simply from the fact that it is there. It was accepted by both parties that there was nothing otherwise in the terms of the agreement that would in any way affect the operation of the clause and that the words "subject to this Deed" could be considered as surplusage. 17 The Plaintiff relied both on the fact that these words appeared in the clause and that the courts of the ACT would have jurisdiction independently from the existence of the clause to found a submission that the presence of the clause was merely an oversight arising from the use of a standard form of agreement and it should not be given any weight in determining the appropriate court to hear the plaintiff's action. In effect it was submitted that the existence of the clause should be considered as no more than an "unthinking inclusion", quoting the words of Justice Giles as Chief Judge of the Commercial Division in FAI General Insurance v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 117 at 127. 18 In that case, which concerned insurance contracts, his Honour was called upon to determine whether a clause in a particular contract should be construed as an exclusive jurisdiction clause. His Honour, having referred to a number of authorities on the issue, determined to approach the matter on the following principles (at 126-127): "(a) Whether a jurisdiction clause is an exclusive jurisdiction clause is a construction of the particular contract, with such regard to the circumstances surrounding the entry into the contract as is permissible. (b) The word 'exclusive' is not determinative, and a clause may be held to be an exclusive jurisdiction clause notwithstanding the absence of that or a similar word or phrase: as it was said in Continental Bank NA v Aeakos Compania Naviera SA (at 594) it would be a surrender to formalism to require a jurisdiction clause to provide in express terms that the chosen court is to be the exclusive forum. (c) Although mutuality, in the sense that both parties agree to a relevant jurisdiction, has been thought to point to exclusive jurisdiction, I have some difficulty seeing why that should be so. Lack of mutuality is likely to tell against exclusive jurisdiction ( Continental Bank NA v Aeakos Compania Naviera SA ), but mutuality is consistent with no more than submission to the jurisdiction. However, when taken with other matters mutuality may assist in finding a contractual intention that disputes shall be submitted only to the courts of the relevant jurisdiction: British Aerospace Plc v Dee Howard Co ; Austrian Lloyd Steamship Co v Gresham Life Assurance Society Ltd . (d) Other language in the clause or the nature of the contract may point towards that contractual intention, for example 'under the jurisdiction of the English courts' and the assumed desire for certainty in Sohio Supply Co v Gatoil (USA) Inc ; or the use of transitive language as in Austrian Lloyd Steamship Co v Gresham Life Assurance Society Ltd , British Aerospace Plc v Dee Howard Co and Continental Bank NA v Aeakos Compania Naviera SA , (e) If the courts of the relevant jurisdiction would have jurisdiction in the absence of the clause, that may indicate that the clause was intended to confer exclusive jurisdiction: Sohio Supply Co v Gatoil (USA) Inc ; Gem Plastics Pty Ltd v Satrex Maritime (Pty) Ltd . It will not always be so, as the clause may have been intended only to put beyond doubt the existing jurisdiction ( S & W Berisford Plc v New Hampshire Insurance Co ), or be an unthinking inclusion." 19 I have been taken to some of the decisions that Justice Giles considered and to which he referred in the quote above. As his Honour found, they have limited value when considering a particular clause, especially when one has regard to the subject matter of the particular agreement being construed and the circumstances in which the agreement was made. One of the relevant matters in that regard will be the nature of the parties entering into the agreement, so that in Sohio Supply Co v Gatoil (USA) Inc [1989] 1 Lloyd's Rep 588, a non-insurance case, it was held to be a relevant consideration that the clause was contained in an agreement made between "sophisticated businessmen" who had carefully chosen their words as to the relevant jurisdiction for the resolution of disputes under the contract. 20 The present agreement is one executed in a commercial setting. There is nothing to suggest that the parties were not in an equal position in determining the terms of the agreement. There is no indication from the terms and conditions of the agreement that it was a standard form used by the defendant in which inappropriate or irrelevant clauses might appear and which would have been disregarded by the parties. It may be, although there is no evidence of it, that clause 66 is a standard clause used by the defendant in its contracts and this may explain the use of the words "subject to this Deed". But that does not mean that the parties did not intend the clause to operate according to its terms or that it was an "unthinking inclusion". It is not difficult to understand why the defendant would want such a clause in the contract particularly where the plaintiff did not conduct business within the ACT, where the defendant operates from the ACT, where the work to be performed by the plaintiff under the contract would be performed to a large extent outside the ACT and where there were to be events, the subject of the contract, in various states and territories throughout Australia. 21 The fact that the ACT court would have jurisdiction despite the clause does not detract from the construction that it is an exclusive jurisdiction clause. I have already expressed my view that the clause does not find its way into the agreement as an oversight. Nor do I believe that it was intended simply to confirm or declare the jurisdiction of the ACT courts. Unlike the situation found to exist in S & W Berisford Plc v New Hampshire Insurance Co [1990] 1 Lloyd's Rep 454, I can see no reason why the parties would acknowledge the jurisdiction of the ACT courts unless that jurisdiction was preferred by them. 22 The present clause is very similar to that considered in British Aerospace Plc v Dee Howard and Co [1993] 1 Lloyd's Rep 368 and all the indicia which were found to give rise to a construction that the clause in that case was an exclusive jurisdiction clause are present in clause 66.1. Of course that is not a binding decision upon me and the clause in this agreement is to be construed within the agreement itself as entered into by these particular parties. But applying the approach adopted by Justice Giles set out above, I conclude that it was intended to confer exclusive jurisdiction for the resolution of any, that is all, disputes arising in respect of or under the agreement. 23 I accept that such a conclusion is not decisive and I doubt that it was truly necessary in order to determine the present application. However, the clause should be given weight in determining the appropriate forum on the basis that it was a term of the bargain between the parties that litigation arising out of the agreement they entered into would be resolved in accordance with the laws of the ACT and by the courts within that jurisdiction. The existence of that clause at the very least displaces the prima facie right of the plaintiff to determine the appropriate jurisdiction in which to commence proceedings. But it is also a matter of some importance when evaluating the inconvenience and cost to a party of being required to conduct proceedings in a particular jurisdiction. 24 I am prepared to find, although there is no direct evidence of it, that the defendant is more able to cope with the costs and inconvenience of a hearing outside the jurisdiction in which it primarily operates than is the plaintiff. It does not seem to me to be irrelevant in that regard that the defendant is the Commonwealth of Australia and the plaintiff is a business operated in NSW by two private persons. The apparent disparity in the resources available to the parties might have been of critical importance were there no other matters tending to indicate one jurisdiction in preference to the other and had the plaintiff been entitled to choose the jurisdiction unimpeded by the agreement. 25 But there is nothing to indicate that it would be unjust for the plaintiff to be bound by the term of the agreement as to the appropriate jurisdiction notwithstanding that it will be inconvenienced as a result. That inconvenience was foreseeable at the time the plaintiff entered into the agreement. It is relevant that the jurisdiction determined by the agreement is the most proximate to that preferred by the plaintiff and there is no reason why it should not be assumed that this was a matter taken into account by the plaintiff when it agreed to be bound by clause 66. 26 I order that pursuant to s 5(7) of the Act the proceedings be transferred to the Supreme Court of the Australian Capital Territory. I will hear the parties as to the order I should make in relation to costs. **********

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