The plaintiff, Ms Jacqueline Reeves, commenced these proceedings seeking to recover the sum of $384.82 from the defendant, Mr David Burrell. The claim involves a breach of an implied warranty that certain goods supplied by the defendant, being a quantity of leather swatches, failed to correspond with earlier samples provided.
The defendant resides and operates a business in South Australia ("SA"). The defendant's legal representative has filed a motion seeking a stay of proceedings on the basis that the Local Court of New South Wales ("NSW") is not the appropriate court to deal with the claim. The defendant has filed this motion relying on ss 20(2) to (4) of the Service and Execution of Process Act 1992 (Cth) ("the Act"), which provides:
"20 Stay of proceedings
...
(2) The person served may apply to the court of issue for an order staying the proceeding.
(3) The court may order that the proceeding be stayed if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters.
(4) The matters that the court is to take into account in determining whether that court of another State is the appropriate court for the proceeding include:
(a) the places of residence of the parties and of the witnesses likely to be called in the proceeding; and
(b) the place where the subject matter of the proceeding is situated; and
(c) the financial circumstances of the parties, so far as the court is aware of them; and
(d) any agreement between the parties about the court or place in which the proceeding should be instituted; and
(e) the law that would be most appropriate to apply in the proceeding; and
(f) whether a related or similar proceeding has been commenced against the person served or another person;
but do not include the fact that the proceeding was commenced in the place of issue."
The defendant submits that the contract for the sale of the goods arose in SA. The defendant estimates that it would cost $750 to arrange an attendance in Sydney.
The plaintiff opposes the motion. The plaintiff resides in Sydney and submits that the purchase order for the goods was created in Sydney. The plaintiff submits that the defendant's legal representative has an office in Sydney and would be able to attend without additional cost. The plaintiff states that she would suffer financial hardship in travelling to SA to prosecute the claim.
The Court has elected to deal with the motion in chambers based on affidavits filed by both parties given the small amount in dispute.
The proper approach to determine an application made under s 20 of the Act was outlined by the Court of Appeal in Queensland Rail v Irving & Others (2004) 1 DDCR 578 at [4] following an earlier decision in Julia Farr Services Inc v Hayes (2003) NSWCCR 138:
"We consider that there is a general discretion under s 20(3) of the Service and Execution of Process Act. The factors enumerated in s 20(4) first have to be taken into account when deciding whether a Court of another State is the appropriate Court for the proceedings. Once that decision has been made, the discretion under s 20(3) is activated and all relevant matters can then be considered in the balancing exercise."
Accordingly, it is first necessary for the Court to consider the matters outlined in s 20(4) of the Act to the extent that they are relevant. In the present case, the considerations contained in ss 20(4)(a) and (c) are neutral. The plaintiff witnesses reside in NSW and the defendant witnesses reside in SA. Although it is unlikely that witnesses would be required to attend Court in NSW, presumably the Minor Claims division of the Magistrates Court in South Australia is similarly capable of dealing with matters in a way that would avoid the cost of witnesses attending in person. The issue of financial circumstances is also a neutral factor given that very limited information is provided by the parties regarding their financial circumstances. No doubt, given the small amount in dispute, it is uneconomic for either party to travel interstate to deal with the matters of this dispute.
Consideration of factors contained in ss 20(4)(d) and (f) are irrelevant as there is no related proceeding on foot and no contractual agreement was entered into addressing the appropriate forum for hearing a dispute. Section 20(4)(e) is also of no relevance as there is no substantive difference between the laws of NSW and SA. A claim for breach of an implied guarantee relating to the supply of goods by description or sample under s 57 of the Australian Consumer Law, Sch 2 to the Competition and Consumer Act 2010 (Cth), applies equally in SA.
The most relevant issue in the present case is consideration of the place where the subject matter of the dispute is located in s 20(4)(b) of the Act.
The cause of action arises from a contract for sale of goods. Ms Reeves disputes that there was a contract, however, it is clear that her claim is based on a breach of an implied term of the agreement.
The contract was formed in SA. The plaintiff forwarded a purchase order to the defendant by email. On the available evidence, that purchase order constituted an acceptance of the defendant's offer to supply goods. It is a principle of contract law that, except where the postal acceptance rule arises, the contract is formed at the place where communication of the acceptance is received (per Callinan J in Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520 at 549). The postal acceptance rule does not apply to modes of instantaneous communication such as emails (see Schib Packaging Srl v Emrich Industries Pty Ltd [2005] VSCA 236: (2005) VR 268 at 271).
The phrase, "the place where the subject matter of the dispute is located" involves a broader enquiry than simply determining where the contract was formed. It requires a consideration of whether the dispute in broader terms has a connection with NSW.
In Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366, the Court was required to determine a question of the proper law of a contract for sale of goods between a purchaser in Sydney and a seller in the United States. The claim related to an alleged breach of the implied term that the goods would be of merchantable quality. The issue was determined by considering the law of the place that had the "closest and most real connection" to the dispute: at 368F. In determining that question, the Court had regard to the fact that any alleged breach regarding the obligations of the seller occurred in the United States, the payment was made to an account in the United States, the goods emanated from the United States and the contract had formed in the United States. The Court held that, "The fact that delivery was made in Sydney was not an essential incident of the contract between the parties": at 371C.
The factual circumstances of the present case are similar. The obligations of the seller arose in SA. The contract was formed in SA. Any alleged breach of an implied term relating to quality occurred in SA where the goods were manufactured. Payment was made to the defendant in SA. The dispute in these proceedings is overwhelmingly connected with SA. While the goods were delivered to NSW, that is not a material aspect of the claim.
In balancing the relevant considerations, it is apparent that the only material factor in favour of a court of SA being the appropriate court to determine the matter, is the connection with the subject matter in dispute. The location of the subject matter in disputes is, in the present case, a matter which carries significant weight given the limitation contained in s 34 of the Local Court Act 2007 (NSW). That section imposes a geographic limitation on the jurisdiction of the Local Court of NSW to hear and determine matters. For the Local Court of NSW to hear and determine proceedings with respect to a cause of action, it is necessary that either the whole or a material part of the cause of action arose in NSW. In view of the decision in Mendelson-Zeller Co Inc v T & C Providores Pty Ltd (supra) it is arguable that no material part of the claim arose in NSW and that the Local Court of NSW does not have jurisdiction to hear and determine the claim.
The subject matter of this dispute is overwhelmingly connected with SA to the extent that it appears that no material part of the claim is connected with NSW. The Court is satisfied that the appropriate court to hear and determine the claim is a court of SA.
The motion is granted. The proceedings are stayed.
Assessor Olischlager
[2]
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Decision last updated: 24 July 2015