FEDERAL COURT OF AUSTRALIA

Moussa v Eski Export Pty Ltd [2000] FCA 1670

ARBITRATION - submission to arbitration as ground for stay of proceedings - personal respondents not party to agreement between second applicant and first respondent containing an arbitration clause - risk of multiplicity of proceedings

PRACTICE AND PROCEDURE - application for transfer of proceeding - consideration of factors weighing for and against transfer

Trade Practices Act 1974 (Cth) s52

Commercial Arbitration Act 1986 (Tas) s53(1)

Thomas v Star Maid International Pty Ltd [1999] FCA 911 followed

Australian Workers’ Union v BHP Iron Ore Pty Ltd [2000] FCA 39 followed

MARIO MOUSSA AND MCM SERVICES PTY LTD (ACN 007 001 872) -v- ESKI EXPORT PTY LTD (ACN 053 096 610), JOHN GALL, BYRON GALL AND PETER HARDING

V 787 OF 2000

MARSHALL J

MELBOURNE

17 NOVEMBER 2000

THE COURT ORDERS THAT:

1.         Paragraph 1 of the respondents’ Notice of Motion of 13 November 2000 be adjourned to 2.15 pm on 4 December 2000.

2.         The directions hearing listed for 10.15 am on 4 December 2000 be       relisted to 2.15 pm on 4 December 2000, with arrangements being made to conduct it by video-link.

3.         That paragraph 2 of the respondents’ motion be dismissed.

4.         That the applicants’ costs of the motion be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The substantive proceeding in this matter is an application pursuant to s52 of the Trade Practices Act 1974 (Cth) (“the Act”) in which the applicants make an alternative claim for breach of contract in the accrued jurisdiction of the Court. The breach of contract is said to arise from the first respondent's breach of two agreements entered into between it and the second applicant.

2                     By notice of motion filed on 13 November 2000, the respondents sought an order that the proceedings be stayed “pending arbitration by the parties in accordance with the terms of the contracts”. The two relevant agreements each contain an arbitration clause in the following form:

“All questions or differences whatsoever that may at any time hereafter arise between the parties hereto or their respective representatives with respect to this agreement or the subject matter thereof or arising out of or in relation there to and whether as to construction or otherwise shall be referred to a single arbitrator in case the parties can agree upon one otherwise to two arbitrators (one to be appointed by each party to the difference whether consisting of one individual or not) or to their umpire in accordance with and subject to the provisions governing arbitration pursuant to the Commercial Arbitration Act 1986.”

Clause 24 of each agreement provided that:

“This Agreement shall be construed in accordance with the law applicable in the State of Tasmania from time to time and the parties subscribe to the exclusive jurisdiction of the courts of that State.”

3                     Section 53(1) of the Commercial Arbitration Act 1986 (Tas) provides that:

“If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied -

(a)       that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and

(b)       that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration,

may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit.”

4                     The respondents contended that the Court should stay further proceedings in this matter to allow such arbitration to occur. One fundamental difficulty lies in the path of the respondents in their stay application. It was an issue dealt with by Weinberg J in Thomas v Star Maid International Pty Ltd (1999) FCA 911. As in Thomas, the personal respondents in this matter were not parties to the agreements which each contained an arbitration clause. At [7] in Thomas, his Honour said:

“Neither the second nor the third respondent, each of whom was at all material times an employee, and for some time a director, of the first respondent, was a party to any of the agreements relied upon in this proceeding, and therefore a party to the arbitration clauses.  They cannot be compelled to participate in an arbitration and would not be bound by any directions or award made by the arbitrator.  Accordingly, there is no basis for the Court to order that the proceeding brought against the second and third respondents be stayed pursuant to s 53(1) of the Act.”

5                     His Honour then proceeded to deal with the submission that the proceedings should be stayed as against the first respondent.  His Honour rejected that course as it contained a risk that there would be “a multiplicity of proceedings”  (see Thomas at [10]).

6                     I agree, with respect, with his Honour’s approach and see no basis upon which the respondents’ stay application should succeed. The respondents also applied for a transfer of the proceeding to the Tasmania District Registry.  They relied on the following matters:

      the registered office of the first respondent is in Hobart;

      the personal respondents reside in Hobart;

      the negotiations that led to the relevant agreements were held in Hobart;

      the law of Tasmania is the applicable law for the purposes of the agreement; and

      external testing of the products, the subject of the agreements, was conducted in Hobart.

7                     In response, the first applicant relied upon the following matters:

      he resides in Victoria;

      the second applicant is registered in Victoria;

      the first agreement gave the applicants distribution rights in Victoria;

      the second agreement gave the applicants distribution rights Australia wide, except in Tasmania; and

      the applicants intend to call about 12 witnesses who reside in Victoria.

8                     In my view, the application for a change of venue is premature. The issues are yet to be defined by pleadings. The extent of the oral evidence that will be relied upon on both sides of the record is not known and will not be known until all relevant affidavits to be relied upon at trial have been filed and an indication is given by the opposite party with respect to whether deponents are required for cross-examination.

9                     It is possible that the Court may decide to sit in Melbourne and Hobart in due course to suit the convenience of persons who will be required to be cross-examined on their affidavits, having regard to the usual course in this Court that trials are conducted by affidavit, in the sense that affidavits ordinarily constitute the evidence-in-chief of any witness, subject to the right to ask additional questions in - chief by leave.  Any interlocutory issues can be dealt with by video-link, other than where substantial cross-examination may be necessary. Similar considerations and others were taken into account by Gray J in declining a motion for transfer in the Australian Workers’ Union v BHP Iron Ore Pty Ltd [2000] FCA 39 at [65] and [66].

10                  At this stage of the proceeding, I am not satisfied that the proceeding can be conducted or continued more suitably in Tasmania. Rather than dismiss that part of the motion, I will adjourn it to another date so that it may be reconsidered in light of any changed circumstances. It may be that the applicants will consent to the change of venue, given that they will be able to achieve an earlier trial in Hobart than would occur in Melbourne, or at least I should say an earlier trial managed from the Hobart District Registry than that managed from Melbourne. In saying that, I don't want to foreclose the possibility that if the matter is transferred to Hobart, Heerey J may or may not consider the possibility of having some evidence taken in Melbourne.

11                  Accordingly, I will order as follows:

1.         Paragraph 1 of the respondents’ Notice of Motion of 13 November 2000 be adjourned to 2.15 pm on 4 December 2000.

2.         The directions hearing listed for 10.15 am on 4 December 2000 be       relisted to 2.15 pm on 4 December 2000, with arrangements being made to conduct it by video-link.

3.         That paragraph 2 of the respondents’ motion be dismissed.

4.                  That the applicants’ costs of the motion be reserved.

Associate:

Dated:              20 November 2000