Plaintiff v Defendants

2 The proceeding by the plaintiff finance company was brought on a deed of a guarantee and indemnity said to have been executed by the defendants in May 2006 in New South Wales ("the Guarantee"). It was alleged that the defendants thereby guaranteed the liability of their company, Menzies Haulage Pty Ltd ("Menzies Haulage") to the plaintiff in respect of loans to it for the purchase of Kenworth Trucks.

3 There are four deeds of loan and charge documents said to have been executed by the defendants in their capacity as directors of Menzies Haulage Pty Ltd in May 2006 and four amending deeds dated 12 November 2006. Each of those eight deeds was accepted by an officer of the plaintiff in Victoria. Each of them stated that the governing law of the contract between the plaintiff and Menzies Haulage was Victorian law and each of them contained a non-exclusive submission to the jurisdiction of the courts in Victoria.

4 On the other hand, the Guarantee stated that its governing law was that of the place in which it was executed.

5 The principal dispute in this proceeding is whether the documents were properly executed by the defendants. They have deposed that following negotiations with a representative of the plaintiff, a Mr Jeff Penter, at their place of residence in Wyong, New South Wales, all that they signed were three or four loose sheets and not any of the deeds to which I have referred above. The defendants allege that the loose sheets that they signed were subsequently attached to the documents on which the plaintiff relies.

6 The relevant section of the Act that I referred to above, s.5(2)(b)(iii), sets out that:

Where ... 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.

In other words, if I am of the view that it is in the interests of justice that this proceeding be determined by the Supreme Court of New South Wales rather than the Supreme Court of Victoria I must transfer the relevant proceeding to the Supreme Court of New South Wales.

7 In Ross Mollison Group Pty Ltd v The Really Useful Company (Australia) Pty Ltd[1] Warren J, as her Honour then was, stated as follows:

In determining whether to order a transfer under s.5(2) of the Jurisdiction of Courts (Cross-Vesting) Act the court must be satisfied as to which is the "more appropriate forum" for the hearing and determination of the dispute: Bankinvest AG v Seabrook (1988) 14 NSWLR 711, 714, 730_; Schmidt v Won_ (1988) 3 VR 435, 450_._ The courts have held that the "more appropriate forum" is the forum with the "most real and substantial connection" with the subject matter of the proceeding: Bankinvest, supra, 728; Spiliada Maritime Corporation v Cansulex Ltd (1987) AC 460, 478. Relevant factors to be taken into account in determining the more appropriate forum have included three factors. Firstly, the governing law of any agreement in dispute. Secondly, the connection between the alleged conduct and the jurisdiction. Thirdly, the cost and inconvenience for the parties as to the forum selected: Bankinvest, supra, 729.

Similar views were expressed by her Honour in the subsequent cases of Toll (FHL) Limited v Finemore[2] and Rogan v Rushton (Qld) Pty Ltd.[3]

8 In James Hardie & Co Pty Ltd v Barry[4], Mason P, with whom Spigelman CJ and Priestley JA relevantly agreed, approved the "useful checklist of factors relevant to the decision to order a transfer of category (iii) cases" contained in the judgment of Higgins J in Dawson v Baker.[5] The factors in that checklist were as follows:

(a) application of substantive law;

(b) forensic advantage or detriment conferred by procedural law;

(c) the choice made by a plaintiff for the forum and the reasons for that choice;

(d) substantive connections with the forum;

(e) balance of convenience to parties and witnesses; and

(f) convenience to the court system.

9 In McKee v Van Haften[6] Gillard J agreed that the listed matters were relevant, but emphasised that "the list is not exhaustive and the weight to be attached to each relevant matter depends on the circumstances".

10 Since the decision of the High Court in BHP Billiton v Schultz[7] it is no longer appropriate to give any weight to the choice made by a plaintiff of the forum and the reasons for that choice.

11 Nothing has been advanced to me today that is relevant to the convenience to the court system and equally no argument has been advanced about the heading of forensic advantage or detriment conferred by procedural law. I turn then to the various factors relevant to decision to order a transfer, to be gleaned from those cases that I have referred above.

12 First, with respect to the governing law of the agreement, Mr Davies, who appeared on behalf of the plaintiff, placed weight on the fact that the governing law of the eight deeds, relating to the contractual relationship between the plaintiff and Menzies Haulage, was Victorian.

13 Mr McInnis of counsel, who appeared for the defendants, emphasised that the governing law of the Guarantee was, if it was executed in New South Wales as alleged by the plaintiff, the law of New South Wales.

14 Mr Davies and I engaged in a semantic dispute as to which was the principal deed on which the plaintiff's claim was based. He submitted that without the eight deeds giving rise to the liability which was the subject of the Guarantee there would be no claim. Equally, as I put to him, without the Guarantee there would be no case against these defendants. It is, perhaps, unnecessary to resolve this point because I accept the submission that whether the governing law that one should give emphasis to is Victoria because of the eight deeds with Menzies Haulage or New South Wales because of the Guarantee, the law has not been shown to be any different between Victoria and New South Wales.

15 I turn then to the question of the connection between the alleged conduct and each jurisdiction. In support of the defendants' submissions, the connection with New South Wales is as follows - the documents, if they were signed in their proper form, were signed in New South Wales; the place of residence of the defendants was New South Wales; the place where they carried on the business of running their trucking operation was New South Wales; and, as Mr McInnis put to me, if the trucks were to be repossessed they would be repossessed in New South Wales.

16 On the other hand, the connection with Victoria is that the plaintiff has its registered office in Victoria and carries on its commercial operations or at least most of its administrative operations in Victoria; the eight deeds were accepted by an officer of the plaintiff signing those documents in Victoria and the default on the part of Menzies Haulage and the defendants, if there was a default, in not paying pursuant to the demands, has occurred in Victoria, it seems to me, because a debtor is required to make payment to the creditor where the creditor is situated.

17 In terms of the balance of convenience to parties and witnesses, again there are competing considerations each way. The plaintiff, not surprisingly, with its office in Victoria has chosen to issue its proceedings in Victoria. The plaintiff's solicitors practise predominantly in Victoria, and whilst they have an office in Sydney, it is said to be staffed on a part time basis. However, as I understand the way in which practice is carried these days, on a national basis, there is no impediment to the plaintiff's solicitors still continuing to act for the plaintiff in the proceeding, should it be transferred to New South Wales. The defendants in this proceeding have been for the most part acting for themselves.

18 If the trial is held in Victoria it is said on behalf of the plaintiff that there will be a number of witnesses called, the plaintiff's present or former employees, who either reside in Victoria, or the belief is that they still reside in Victoria. The critical witness as to the execution of the documents, Mr Penter is no longer employed by the plaintiff and lives in South Australia. It is said that he has expressed a preference that the proceedings be in Victoria rather than New South Wales, presumably because it is a shorter trip for him to undertake.

19 Mr Holdsworth, the managing director of the plaintiff company and Ms Harvey, the operations manager of the plaintiff, who swore an affidavit in opposition to the application, are also potential witnesses for the plaintiff. Both of them reside in Victoria.

20 There is also a possible witness on the plaintiff's side, a Mr Connolly, who was apparently present during a conversation, between the defendants and Mr Holdsworth, in which the alleged defaults by the defendants were discussed. Mr Connolly is now living in the United States, and if he is a necessary witness, he will have to come to Australia. As Mr Connolly would be coming from the United States it really is a matter of no difference to him, one would think, whether he had to fly to Sydney or Melbourne. And, as Mr McInnis said, it might even be the case that it is easier for a traveller from the United States to travel to Sydney rather than to Melbourne.

21 The plaintiff was not able to be more precise as to what evidence each of the listed potential witnesses would give. However, it was obvious that some of those included as witnesses by the plaintiff, were those named by the defendants in their self-drawn defence and counterclaim, as being parties with whom alleged agreements were made with respect to bringing arrears up to date, or making payments and thereby avoiding the defendants' company being regarded as being in arrears. That defence and counterclaim having subsequently been struck out, some of those potential witnesses may no longer be relevant to the proceeding.

22 The critical witness would appear to be Mr Penter, as he is the one who is said to have been present when the documents were signed and who either presented these documents in their full form or as one isolated page, as alleged by the defendants.

23 On the defendants' side, a number of witnesses were identified by Mr Menzies in one of his affidavits. I have some difficulty in understanding the relevance of some of the suggested witnesses, such as their local member of parliament, but certainly Mr and Mrs Menzies will be giving evidence and they live in northern New South Wales, in Kempsey, some 420 kilometres or approximately five hours drive from Sydney. Insofar as any other witnesses on the list put forward by Mr Menzies are relevant witnesses, then, because they all appear to live in the area in which the defendants live, they will be put to inconvenience if they are required to travel to Melbourne to give evidence.

24 Further, with respect to the question of the balance of convenience to the parties and witnesses, there is the question of the costs of accommodation and travel. Mr Davies submitted that if a number of the plaintiff's witnesses have to travel to Sydney to give evidence, then there is added costs to the plaintiff. Equally, if defendants' witnesses have to come to Melbourne, there is added costs to the defendants. It is said on behalf of the plaintiff that requiring their witnesses to travel to New South Wales will be "highly disruptive" of the plaintiff's business. Insofar as any of the plaintiff's witnesses are current employees, it seems to me that that is part and parcel of carrying on a business and litigating claims arising in that business. Obviously, insofar as the submission relates to witnesses who no longer are employed by the plaintiff, of whom Mr Penter is the most important, it is a matter of some significance but, as I have said, he has to travel from South Australia in any event and the difference in time between travelling to Melbourne as against Sydney is not that great in terms of disruption to his current employment.

25 Mr McInnis, in response to the suggestion that the plaintiff would have to call the officers who accepted, what might be called, the offer by the directors of Menzies Haulage to borrow money on the terms and conditions put forward by the plaintiff, suggested that this was not in issue and would be readily admitted, which would obviate the necessity to call those witnesses. That may mean that those witnesses are not necessary to be called, but in the circumstances where the dispute is about the form of what was signed by the defendants, it may be that the plaintiffs will want, in any event, to call the officers who accepted the offer on behalf of the plaintiff company. However, one would think that, in all likelihood, by the time the documents in question reached any of those potential witnesses whatever might have happened beforehand, they were in their current form, that each is 22 pages long, stapled and bound with blue tape.

26 It is also common ground, and this is a matter that again, like many of the other points that I have mentioned above, goes each way, that some of the more formal or technical evidence such as the quantum of the amount outstanding or evidence of payments or calculations of interest, could be given by videolink without the necessity for each witness to travel interstate. However, I do not consider that that would apply to the defendants giving their evidence. Equally, I would not have thought that either party would be happy with Mr Penter giving his evidence by videolink.

27 Mr McInnis submitted that as the plaintiff was a company which carried on business throughout Australia there really was no relevant hardship for it, if required, to litigate in a state in which the negotiations and signing up of its contracting party had occurred. In my opinion that is a valid submission.

28 Another matter to be weighed in considering the balance of convenience, is the fact that, as deposed to by Mr Menzies, he was involved in an accident in which he fell from his truck and broke his neck. It seems to me that it was that accident that led to the events that have resulted in the default by Menzies Haulage and the placing of that company in liquidation. Mr Menzies deposes to the fact that he is unable to work and in receipt of pension payments and that some of the family assets have been realised in an attempt to make payments to the plaintiff and to enable them to meet their ongoing day to day expenses. Thus, until recently, they had not been able to engage the services of any lawyers, other than on a pro bono basis.

29 Needless to say, the need for Mr and Mrs Menzies to travel from Kempsey to Melbourne is a lengthy and onerous journey. It is a difficult task. It may be that when the matter proceeds after today, if it remains in this Court, that personal appearances are no longer necessary, but I cannot be assured that that is the case. Therefore, what I intend to concentrate on is what may be regarded as the once only event of the trial. In their particular financial situation, the travel to Victoria, the need to stay here for however long the trial may last and the cost of that travel and accommodation is a severe imposition on the defendants.

30 The question that I consider I have to answer is whether that cost, inconvenience and difficulty for the defendants outweighs the cost and inconvenience to the plaintiff in having to litigate in New South Wales rather than in Victoria. I have recited the various connections between the facts and each jurisdiction without drawing any conclusion. It seems to me that the critical events, namely the signing up of the defendants in their capacity as directors of Menzies Haulage and in their personal capacity as guarantors and the negotiations that preceded those events, mean that there is a closer connection with the State of New South Wales than with the State of Victoria. As both counsel emphasised in the course of their submissions, the task that the Court has to undertake in an application such this is a balancing exercise. As I have said, with many of the factors that one has to take into account there are arguments to be put on both sides. But for the reasons that I have expressed above, I have come to the view that there is a closer connection with the State of New South Wales.

31 I have therefore reached the conclusion that it is in the interests of justice that this proceeding be determined by the Supreme Court of New South Wales rather than this Court. In those circumstances, as was emphasised by the members of the High Court in BHP Billiton Ltd v Schultz[8], I have no discretion and the statute requires that I must transfer the proceeding to that other court.

32 Whether the matter remains in Sydney, or is subsequently referred to a registry closer to where the defendants live, in New South Wales, is not a matter on which I should express a view. That is a matter entirely for the Supreme Court of New South Wales when the proceeding comes within its control.

33 In terms of the costs of the defendants' appeal on 13 November 2009, that application was in my view, doomed to failure. It would have been dismissed, but I allowed it to be used as a vehicle to bring forward the application under the cross-vesting legislation. Therefore, the costs of the plaintiff associated with that appearance were thrown away. Whilst I am not prepared to allow all the costs sought, it seems to me that, for the reasons that I have said, an amount of $4,000 is a rough and ready figure that the defendants should pay the plaintiff. However, I will order that those costs not be paid until the outcome of the final hearing of this matter.

34 In terms of the costs of today, I do regard an application such as this as one that is part and parcel of the interlocutory steps of the proceeding. Mr McInnis urged that it was a discrete proceeding, and that costs should follow the event. In my view, the costs of this application should be allocated in accordance with the final determination of the proceeding. I will order that the costs of and incidental to today's hearing be costs in the cause.

[1] [2000] VSC 256, [12].

[2] [2001] VSC 467, [9].

[3] [2002] VSC 375, [16].

[4] [2000] NSWCA 353; (2000) 50 NSWLR 357, 379.

[6] [2001] VSC 251, [26].

[7] [2004] HCA 61.

[8] [2004] HCA 61.