Plantagenet Wines Pty Limited v Lion Nathan Wine Group Australia Limited

REASONS FOR JUDGMENT 1 On 16 December 2005, the applicant ('Plantagenent') filed an application in the Western Australia District Registry of this Court. By a notice of motion filed on 27 January 2006, the respondent to the application ('Lion Nathan') sought the stay of the application pursuant to the exercise of the inherent jurisdiction of the Court, or O 20 r 2(1)(c) of the Federal Court Rules ('the Rules') or alternatively under s 20(3) of the Service and Execution of Process Act 1992 (Cth) ('SEP Act'). At the hearing of the motion I gave leave to Lion Nathan to amend the notice of motion to include a claim for the transfer of the proceedings to the Supreme Court of New South Wales under s 5(4) of the Jurisdiction of Courts (Cross‑Vesting) Act 1987 (Cth) ('the Cross‑Vesting Act'). 2 I also gave leave to both of the parties to file additional written submissions to deal with the matters raised by the amendment. Both parties availed themselves of the opportunity to file additional submissions. I note that thereafter Plantagenet filed further submissions and that Lion Nathan objected to the filing of those submissions. I have not considered those submissions. 3 Lion Nathan relies upon the affidavits of Ms Julie Kathryn Ward sworn 27 January 2006 and 15 February 2006. Ms Ward is a partner of Mallesons Stephen Jaques, Lion Nathan's solicitors, who is resident in Sydney. Plantagenet relies upon the affidavit of Mr Ian Murray Mayo sworn 13 February 2006 and affidavits of Ms Leanne Allison sworn 14 February 2006 and 17 February 2006. Mr Mayo is the Managing Director of Plantagenet and Ms Allison is a solicitor with the Perth firm of solicitors, Williams and Hughes, Plantagenet's solicitors. 4 For the reasons set out below, I am of the view that the notice of motion should be dismissed. Background 5 Plantagenet is a private company which owns and operates a vineyard and wine making business which is located near Mount Barker in Western Australia, some 350 kms south of Perth. The winery employs 20 persons. 6 Lion Nathan is one of a number of companies in a group which are related to a publicly listed corporation. These companies carry on business in Australia and overseas in the wine and liquor industry. Lion Nathan's principal place of business is in Sydney, New South Wales. 7 On 8 March 2005, Lion Nathan and Plantagenet entered into a distribution agreement, pursuant to which Lion Nathan was appointed exclusively to distribute Plantagenet wines in all States and Territories of Australia other than Western Australia. 8 Clause 24.7 of the distribution agreement provides: 'Governing Law: This Agreement and the transactions contemplated by this [sic] are governed by the law of New South Wales, Australia and each party submits to the non exclusive jurisdiction of the courts of that state.' 9 On 15 December 2005 Plantagenet wrote a letter to the Managing Director of Lion Nathan, stating that it was terminating the distribution agreement. Plantagenet said that it was doing so because it had been induced to enter into the distribution agreement by the misleading and deceptive conduct of Lion Nathan. The letter also said Plantagenet accepted the repudiation of that agreement by Lion Nathan. The grounds relied upon by Plantagenet for the allegation that Lion Nathan had repudiated the distribution agreement were that Lion Nathan had without the consent of Plantagenet performed the obligations under the distribution agreement by a joint venture, called 'Fine Wine Partners', with a company, Tucker Seabrook (Aust) Pty Ltd ('Tucker Seabrook'), that Lion Nathan had failed to achieve its performance level obligations under the distribution agreement, and it had breached the confidentiality provisions of the distribution agreement. 10 On 16 December 2005, Mr Peter Cowan on behalf of Lion Nathan responded to the letter saying that he had provided copies of Plantagenet's letter to his legal counsel and that Lion Nathan reserved all of its rights under the distribution agreement including 'our rights to seek substantial damages for wrongful termination'. 11 On 16 December 2005, Plantagenet's solicitors wrote a letter to Mr Ian Morden, legal counsel of Lion Nathan, which included the following statements: 'It appears that the issues in relation to the distribution of Plantagenet Wines by Fine Wine Partners will not be resolved commercially. For that reason we have been instructed to institute proceedings in the Federal Court of Australia. We assume that you have instructions to accept service on behalf of Lion Nathan. Would you please confirm.' 12 By an email dated 16 December 2005 in response, Mr Morden stated that he would accept service 'for now'. 13 As already mentioned, on 16 December 2005, Plantagenet filed an application in the Western Australia District Registry of the Federal Court ('the Federal Court proceedings'). Pursuant to that application Plantagenet claimed damages under s 82 of the Trade Practices Act 1974 (Cth) ('the TP Act'), an order pursuant to s 87 of the TP Act and also damages for breach of contract. The application was given the number WAD 389 of 2005 by the Western Australia District Registry of this Court. 14 On 20 December 2005, Plantagenet appointed Casama Group Pty Ltd ('Casama') as exclusive distributor of its wines. 15 On 20 December 2005, Lion Nathan's solicitors wrote a letter to Plantagenet's solicitors. By that letter, Lion Nathan's solicitors sought an undertaking from Plantagenet that it would continue to perform its obligations under the distribution agreement, failing which Lion Nathan would seek urgent interlocutory relief. The terms of the undertaking sought were that: '…pending a resolution of the current dispute (whether by a Court or otherwise), your client will take no steps to appoint or use the services of an alternative distributor for its products and will continue to supply products in accordance with the terms of the Distribution Agreement.' 16 On 21 December 2005, Plantagenet's solicitors replied to that letter by facsimile. The heading of that letter read as follows: 'Plantagenet Wines Pty Ltd v Lion Nathan Wine Group Australia Limited Federal Court Action WAD 389 of 2005'. By that letter, the solicitors for Plantagenet advised that their client would not give the undertaking requested. The Federal Court proceedings referred to in the heading to the letter had not been served on Lion Nathan at the time that Lion Nathan's solicitors received that letter. 17 On 22 December 2005, Lion Nathan commenced proceedings in the Supreme Court of New South Wales seeking urgent interlocutory relief against Plantagenet. Lion Nathan sought orders restraining Plantagenet from acting upon any purported termination of the distribution agreement; and from performing its new contract with Casama. 18 The papers comprising the application for the urgent injunction were faxed by the solicitors for Lion Nathan to the solicitors for Plantagenet after midnight (WST) on 22 December 2005 and Plantagenet's solicitors first became aware of the institution of the New South Wales proceedings at 6.45 am (WST) when the solicitor with the conduct of the file arrived for work in Perth on 22 December 2005. The solicitor then faxed a copy of the pleadings in the Federal Court proceedings to Lion Nathan's solicitors. Prior to the receipt of this facsimile the injunction application had already been mentioned before the vacation duty judge in the New South Wales Supreme Court. The application was then stood over to that afternoon, and then to the following day. Plantagenet was represented by counsel at these two appearances. 19 At the Supreme Court appearance, on 23 December 2005, there was no contested hearing of the injunction application. Plantagenet gave undertakings to supply 573 cases of wine, the subject of existing purchase orders and 576 cases of wine, the subject of a purchase order made that day. 20 There was a further appearance in the New South Wales Supreme Court before McDougall J on 4 January 2006 where McDougall J made orders in the form of a minute of consent. The minute of consent orders runs to four pages and contains 14 paragraphs and a definitional section. It is plain that the consent orders represent the outcome of negotiations between the parties. Pursuant to the consent orders Plantagenet agreed to supply further wines to Lion Nathan. 21 On 24 January 2006, the solicitors for Lion Nathan wrote to Plantagenet's solicitors stating that they had been instructed to seek a stay of the Federal Court proceedings and proposing a draft minute of orders for the progress of the Supreme Court proceedings which Lion Nathan intended to ask the Supreme Court to make at the directions hearing which was listed for 10 February 2006. 22 The draft minute of orders proposed a timetable for the pleadings, discovery and evidence. The first draft order in the proposed timetable was for Lion Nathan to file and serve a statement of claim on or before Friday, 24 February 2006. 23 On 27 January 2006, Lion Nathan filed a notice of appearance in the Federal Court proceedings and also, as previously mentioned, filed its notice of motion seeking a stay of these proceedings. This Court listed the motion for 10 February 2006. 24 On 31 January 2006, Plantagenet's solicitors made a proposal to Lion Nathan's solicitors that the directions hearing listed for 10 February 2006 in the New South Wales Supreme Court be stood over by consent for seven days pending the determination of the stay application in the Federal Court. On 8 February 2006, Lion Nathan's solicitors responded to Plantagenet's solicitors advising that their client did not consent to the adjournment of the directions hearing listed on 10 February 2006 in the New South Wales Supreme Court proceedings pending the determination of the stay application in the Federal Court proceedings. The solicitors also said that they had been instructed to press for the procedural directions in the New South Wales Supreme Court proceedings in accordance with the timetable in the draft minute of orders provided on 24 January 2006. 25 On 9 February 2006, Lion Nathan's solicitors sent a facsimile to Plantagenet's solicitors enclosing a copy of the statement of claim which they said Lion Nathan would be filing in the Supreme Court proceedings. Lion Nathan's solicitors also advised that they would be amending the proposed minute of orders accelerating the date for the filing of the statement of claim to 10 February 2006 with consequential acceleration to the other dates in the proposed minute of orders. 26 At the hearing before Bergin J on 10 February 2006 Lion Nathan pressed the Court to make the directions in accordance with the proposed minute of orders but Bergin J refused to make the directions, save for the delivery of a statement of claim on 17 February 2006, pending the outcome of this motion in the Federal Court. The proceedings in each of the Courts 27 In the statement of claim filed with its application in the Federal Court, Plantagenet alleges that Lion Nathan engaged in misleading and deceptive conduct in breach of s 52 of the TP Act. The conduct relied upon comprises the making of misleading representations by Lion Nathan prior to the completion of the distribution agreement. Plantagenet alleges that Lion Nathan represented that it would perform its obligations under the distribution agreement by its then sales staff and sales organisation; that it had no plans on foot to make major changes in its sales staff and sales organisation, to change its trading name or to enter into a joint venture with another wine distributor to sell Plantagenet wines together with or in partnership with that other distributor. 28 Plantagenet also alleges that Lion Nathan represented that it would use reasonable endeavours to meet sales volume targets for each of the years. In addition to relying upon positive representations, Plantagenet also pleads that it had a reasonable expectation that if Lion Nathan was not going to give effect to the facts and matters contained in those representations, it would advise Plantagenet. Plantagenet pleads that Lion Nathan subsequently made major changes to its sales staff and sales organisation, entered into a partnership arrangement with Tucker Seabrook to distribute Plantagenet wines under the trade name 'Fine Wine Partners' and that since October 2005, Fine Wine Partners has marketed and made sales of Plantagenet wines. 29 Plantagenet claims that it has suffered loss and damage because, as a consequence of relying upon the representations, Plantagenet entered into the distribution agreement, and did not make an agreement with a different party which it would otherwise have done. 30 Further, Plantagenet also pleads a claim at common law for breach of the distribution agreement by Lion Nathan. Plantagenet claims that Lion Nathan breached the terms of the distribution agreement by entering into the Fine Wine Partners partnership with Tucker Seabrook and by permitting Plantagenet wines to be marketed and sold by that partnership; and by disclosing information to Tucker Seabrook and its employees and agents. Further, it alleges that Lion Nathan did not use reasonable endeavours to sell and distribute the products. It is alleged that the breaches amounted to repudiation by Lion Nathan of the distribution agreement and by an email dated 15 December 2005 from Mr Richard Erskine, a director of Plantagenet, to Mr Peter Cowan, of Lion Nathan, Plantagenet accepted the repudiation of the distribution agreement. It is also pleaded that by reason of Lion Nathan's breach of the distribution agreement, Plantagenet has suffered loss and damage. 31 In the statement of claim in the New South Wales proceedings Lion Nathan pleads that on or about 15 December 2005 Plantagenet purported to terminate the distribution agreement and that Plantagenet was not entitled to terminate the distribution agreement on any of the grounds on which it purported to do so. Lion Nathan pleads further that in purporting to terminate the distribution agreement Plantagenet repudiated the distribution agreement; and that in further repudiation of the distribution agreement from about 15 December 2005 Plantagenet refused to supply Lion Nathan with wines in accordance with orders placed by Lion Nathan save for the supply of wines made in accordance with the New South Wales Supreme Court orders. 32 Lion Nathan also pleads that the appointment by Plantangent of Casama as exclusive distributor in the territory which was the subject of the distribution agreement, was a further repudiation of the agreement. It alleges that Lion Nathan has refused to accept the repudiation and Lion Nathan seeks a declaration that the distribution agreement is on foot, an injunction restraining Plantagenet from performing its obligations under the Casama agreement; and alternatively damages for breach of contract and for wrongful repudiation of the distribution agreement. The application for a stay under O 20 r 2 of the Rules or the inherent jurisdiction 33 Counsel for Lion Nathan submitted that the application for the stay should be considered by reference to the principles stated in the case of Sterling Pharmaceuticals Pty Ltd v Boots Company (Australia) Pty Ltd (1992) 34 FCR 287 ('Sterling Pharmaceuticals'). 34 Counsel did not submit that the proceedings in this Court should be stayed on the basis that the proceedings were otherwise an abuse of process or because they were vexatious or frivolous. 35 Counsel for Plantagenet submitted that the case of Sterling Pharmaceuticals was distinguishable because that case was concerned with two sets of proceedings one of which was in Australia and the other in New Zealand, and therefore beyond the scope of the cross‑vesting scheme. Counsel for Plantagenet submitted that, in cases where the parties were amenable to the jurisdiction of the legislation comprising the national cross‑vesting scheme, the scheme had ousted the common law principles on whether a court would stay its own proceedings on the basis of forum non conveniens. Counsel relied upon observations made by Ormiston JA in Schmidt v Won [1998] 3 VR 435 ('Schmidt'). 36 Counsel submitted that Lion Nathan's application for a stay should therefore be addressed, not by reference to the common law jurisdiction in respect of stays on the grounds of forum non conveniens, but in accordance with the principles applicable under the cross‑vesting scheme. 37 Although counsel for Lion Nathan responded to Plantagenet's submissions by applying to amend the notice of motion to include a claim to transfer the Federal Court proceedings to the Supreme Court of New South Wales under the Cross‑Vesting Act, counsel said that she continued to press the claim for the stay. 38 In the case of Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 438 ('Bankinvest') Rogers AJA rejected a submission of counsel in that case that the common law principles of forum non conveniens continued to exist concurrently with the cross‑vesting legislation, and observed that 'the former has clearly been subsumed by s 5(2)(b)(iii) [of the Cross‑Vesting Act].' 39 In Schmidt, Ormiston JA made the following observations at 453‑454: 'Subject always to the power of the Court to stay frivolous, vexatious oppressive proceedings or any which amount to an abuse of process (the categories for which can never be closed), the Voth principle should be considered as having no continued practical application so far as the exercise of jurisdiction as between the several State Supreme Courts. So the ordinary remedy of parties, who are served in Australia with process issued out of the Supreme Courts of States or Territories other than that in which they reside and who wish to complain that the Supreme Court of that other State or Territory is not the appropriate forum in which the litigation should be heard, is to seek transfer pursuant to the provisions of s 5(2) of one of the State Cross‑Vesting Acts. In the light of the complex and sophisticated scheme now in operation in this country, a stay of the kind contemplated by Voth must be seen as an inappropriately heavy‑handed means of ensuring that issues are determined in the proper forum, ie in the court within Australia most appropriate to hear the action and most convenient to the parties for that purpose. Transfer under the Cross‑Vesting legislation should be seen as now providing the necessary and appropriate weapon to achieve the same end by transferring litigation to a more appropriate jurisdiction within Australia.' 40 Ormiston JA at 454 approved the following observations by Underwood J (as he then was) in McEntee v Connor (1994) 4 Tas R 18 at 24: 'With respect to causes of action that arise wholly within Australia, it seems to me that in a practical sense, Cross‑Vesting legislation has ousted the operation of the common law. In such cases it is difficult to conceive of a situation where an Australian forum will be clearly inappropriate, and the choice of that forum will be governed by the principles governing the exercise of the statutory discretion conferred by the Cross‑Vesting legislation.' 41 Further, at 455 Ormiston JA said: 'The Voth principle was and [is] applicable where persons were served within the jurisdiction and so was not confined to cases where there was a statutory extension of personal jurisdiction. Nevertheless the Cross‑Vesting Act is of general application and the procedure for transfer should be seen as making the Voth principle redundant for disputes within Australia, save in the most exceptional circumstances where the prevention of an abuse of process is the predominant consideration…' 42 Although the observations of Rogers AJA and Ormiston JA were made in the context of concurrent proceedings pending in the Supreme Courts of two different States, in my view, the observations are equally applicable when one of the concurrent proceedings is pending in the Federal Court, and the other is pending in a State Supreme Court. The same rationale for the cross‑vesting scheme of avoiding the wasteful consequences of concurrent proceedings, applies whether the concurrent proceedings exist in the Supreme Courts of two different States or in the Supreme Court of a State and in the Federal Court. 43 Thus, although the Court retains a jurisdiction to stay its own proceedings on forum non conveniens grounds, the question of whether to exercise that jurisdiction will be informed by whether it is open to a party seeking the stay to seek relief under the cross‑vesting scheme. 44 In this case the parties were amenable to the cross‑vesting scheme, and so it was open to Lion Nathan to have brought an application to transfer the Federal Court proceedings under the Cross‑Vesting Act rather than to apply for a stay. The transfer application has now been made by the amendment to the notice of motion. As I have already mentioned, Lion Nathan does not seek a stay of the proceedings on the basis of an abuse of process by Plantagenet, and so this application does not fall into the exceptional circumstances category referred to by Ormiston JA in Schmidt in the observations set out above. In my view, therefore, it is appropriate that I decline to exercise the Court's jurisdiction to stay the proceedings. It is appropriate that the question of the destiny of the Federal Court proceedings be considered by reference to Lion Nathan's transfer application now before the Court. 45 In the event that I am wrong in the views that I have expressed, I would decline to stay the Federal Court proceedings. This is because the appropriate test to apply in the circumstances is the test in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 and not in Sterling Pharmaceuticals (see BHP Billiton Ltd v Schultz (2004) 211 ALR 523 ('BHP Billiton'), the observations of Ormiston JA in Schmidt referred to above and Transport Workers' Union of Australia v Bentley (2001) 112 FCR 580). On the application of that test, it could not be said that the Western Australia District Registry of the Federal Court is a clearly inappropriate forum for Plantagenet to commence the Federal Court proceedings. Plantagenet's principal place of business is in Western Australia, the alleged breaches of the TP Act occurred in Western Australia and the alleged losses were suffered in Western Australia.