FEDERAL COURT OF AUSTRALIA

Australian Drilling Services Pty Ltd v Buru Energy Limited [2010] FCA 933

THE COURT ORDERS THAT:

1.                  Pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth), Application VID 489 of 2010 be transferred to the Western Australia District Registry of the Federal Court of Australia.

2.                  That the applicant pay the respondent’s costs of and incidental to the notice of motion, to be taxed if not agreed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     By notice of motion dated 5 August 2010, the respondent, Buru Energy Ltd (“Buru”), seeks the following orders:

1.                  That pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) (“the Act”), Application VID 489 of 2010 be transferred to the Western Australia District Registry of the Federal Court of Australia (“the transfer application”).

2.                  That the applicant, Australian Drilling Services Pty Ltd (“Australian Drilling”), pay the respondent’s costs of and incidental to this notice of motion, to be taxed if not agreed.

2                     Buru relies upon the following affidavits in support of the transfer application:

(a)        the affidavit of Thomas Charles Streitberg affirmed on 4 August 2010;

(b)        the affidavit of Timothy Riley Brower sworn on 24 August 2010;

(c)        the affidavit of Kai Francis affirmed on 26 August 2010.

3                     The application is opposed by Australian Drilling.  The affidavit of Wallace Westman sworn on 20 August 2010 was filed in opposition.

Law applicable to transfer application

4                     Section 48 of the Act provides:

The Court or a Judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Court or Judge imposes.

5                     Order 10, rule 1 of the Federal Court Rules provides that the Court may:

Direct that the proceeding be transferred to a place at which there is a Registry other than the then proper place. Where the proceeding is so transferred the Registrar of the proper place from which the proceeding is transferred shall transmit all documents in his charge relating to the proceeding to the Registrar at the proper place to which the proceeding is transferred.

6                     Order 30, rule 6 of the Federal Court Rules provides:

(1)        Subject to subrule (2), the place of trial of a proceeding is to be the proper place.

(2)        The Court may direct that the trial, or part of the trial, of a proceeding be held at a place other than the proper place.

7                     Section 48 confers an unfettered discretion on the Court, which should be exercised flexibly having regard to the circumstances of the particular case.

8                     In National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155, the Full Federal Court set out a general exposition of the “proper principles” relevant to s 48 of the Act.  The Full Court observed (at 162):

The power conferred on the court or a judge by s 48 is in terms wholly unfettered. It should be exercised flexibly having regard to the circumstances of the particular case. It would be regrettable and unwise if the court were to circumscribe the general power conferred by s 48 with inflexible rules or impose inelastic constraints upon its exercise. As the power may be exercised subject to conditions, the court or a judge is in a position to mould orders under the section to take account of the many and varied circumstances that arise in particular cases.

The power conferred by s 48 recognises the national character of this court. The factors which the court is entitled to take into account in considering whether one city is more appropriate than another for interlocutory hearings or for the trial itself are numerous. The court must weigh those factors in each case. Residence of parties and of witnesses, expense to parties, the place where the cause of action arose and the convenience of the court itself are some of the factors that may be relevant in particular circumstances.

The balance of convenience will generally be a relevant consideration, but not necessarily determinative of each case. A party commences a proceeding by filing an application in a particular registry of the court. If that party or another party wishes to have the proceeding conducted or continued in another place he may apply to the court for an order under s 48 or O 10, r 1(2)(f) or O 30, r 6 as the case may be. There is no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere. It should be noted that the court may exercise its powers under O 30, r 6 either on the application of a party or of its own motion. The court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the court to such matters before directing that the proceeding should continue at a different place.

The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: where can the case be conducted or continued most suitably, bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the court? It cannot and should not, in our opinion, be defined more closely or precisely.

9                     In Mortimer v Opes Prime Stockbroking Limited (administrators appointed) (in liquidation) [2009] FCA 227, McKerracher J set out the following non‑exhaustive summary of relevant principles:

[15] The appropriate principles arising in this motion are not controversial. The relevant principles presently arising, in my view are these:

• There must be sound reason to direct that the proceeding be conducted or continued elsewhere. If the party commencing the proceeding chose the place capriciously the Court would be justified in giving no weight to the choice of place. The balance of convenience is important but its weight must vary from case to case. What needs to be ascertained is where the case can be conducted or continued most suitably bearing in mind the interests of the parties, the ends of justice and determination of the issues between them, and the most efficient administration of the Court (National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 162).

• The location of parties and witnesses, the place where the cause of action arose and the convenience of the Court are all factors (National Mutual 19 FCR 155 at 162), Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 at [21], Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 at [27]–[34] and [42]–[43].

• Typically there is no factor that is determinative but rather it is necessary to weigh all the relevant factors that might connect the proceedings to one jurisdiction or the other (Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 at [19]).

• The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and the receipt of submissions is relevant. (Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239).

• The question of which District Registry should conduct the proceedings does not raise matters of high principle. Essentially it is a matter of case management and proper recognition of the legitimate interests of each of the parties reflected in the balance of convenience as between them and the convenience of the Court and any economies and efficiencies which may attach to one choice or the other (Lamb v Hog's Breath Co Pty Ltd (No 1) [2007] FCA 49).

• There may be flexibility — one Registry could conduct pre-trial management while allocating the trial to a judge in another Registry (Hog’s Breath at [10]).

• There is no burden of proof governing the exercise of the discretion in s 48 of the Act (National Mutual 19 FCR 155 at 162).

• The existence of related proceedings which may be case managed jointly may be important (Wyllie Group Pty Ltd [2000] FCA 1382 at [14]–[19]).

[16] Factors which may be relevant for consideration include:

• the residence of the parties, the residence of the witnesses, the expense and prejudice likely to the respective parties, the likelihood of delay being a significant consideration, whether there is, in respect of the competing suggestions as to venue, any possibility of an interference with a fair trial of the hearing, the balance of convenience in regard to all considerations (Jacobs v Claudius Enterprises Pty Ltd [1985] ATPR 40-511).

[17] To these points I would add, perhaps an obvious point, that a judge to whom management of a case has been allocated will be reluctant to transfer that duty to another judge unless there is good reason to do so.

10                  In its written submissions, Buru usefully summarised the factors relevant to the exercise of the discretion as follows:

1.                  the place where the cause of action arose (National Mutual at 162);

2.                  the location of parties and witnesses (Jacobs v Claudius Enterprises Pty Ltd (1985) ATPR 40-511 at 46,078 (“Jacobs”));

3.                  the expense and prejudice likely to the respective parties (Jacobs at 46,078);

4.                  the stage of the proceedings (National Mutual at 162 and Maxipoint Cultivation Technologies Pty Ltd v Points Direct Pty Ltd [2009] FCA 393 at [4]);

5.                  the governing law of the transactions (Aquila Resources Limited v Pasminco Limited [2004] FCA 39 at [36]);

6.                  the existence of related proceedings which may be case managed jointly (Wyllie Group Pty Ltd v ANZ Securities Ltd [2000] FCA 1382 at [14]- [19]);

7.                  the convenience of the court (Garrett v Macks [2009] FCA 253 at [4]); and

8.                  the balance of convenience (Jacobs at 46,078).

The Evidence

11                  Thomas Streitberg, the company secretary of Buru, deposed that Buru is a public company listed on the ASX with registered offices in Western Australia. Buru operates solely in the Canning Basin in Western Australia, exploring and developing petroleum resources in the Kimberley.  Buru has no offices or operations in any other Australian State or Territory, and all of its directors and company directors, save for Mr Streitberg himself, reside in Western Australia.

12                  Mr Streitberg referred to Australian Drilling’s allegations in its statement of claim that Australian Drilling and Buru entered an agreement for Australian Drilling to provide transport and drilling and support services at Buru’s proposed Canning Basin drilling site, comprising a letter of intent, a document entitled “Drilling Contract” between New Standard Energy Ltd and Australian Drilling, and emails between Australian Drilling and Buru between about May to June 2008.

13                  Mr Streitberg referred to Australian Drilling’s letter of demand dated 31 July 2009 for $1,447,696 for loss and damage it allegedly suffered in reliance on Buru’s representations.  He deposed that Buru, in its letter in reply dated 14 August 2009, asserted that any legal proceedings should be commenced in Western Australia, as all discussions between the parties took place there, the subject matter was within the jurisdiction of the Western Australian courts and the applicable law was that of Western Australia.

14                  Mr Streitberg deposed that Australian Drilling did not respond to Buru’s letter, but on 23 June 2010, commenced proceedings in the Victorian District Registry of the Federal Court.

15                  Mr Streitberg deposed that Buru’s solicitors are located in Western Australia (and were first engaged to act on its behalf in August 2009), Buru’s records and other potentially discoverable documents are maintained at its Western Australian premises and all matters complained of in the statement of claim occurred in Western Australia.

16                  Mr Streitberg deposed that a transfer of the proceeding to Victoria would cause Buru substantial expense and inconvenience, particularly if the hearing took place there, as counsel, solicitors and all Buru’s principal witnesses would have to travel.  The principal witnesses included Adrian Cook (the former Managing Director), Tim Brower, the former Drilling Superintendent, and Eric Streitberg, all of whom reside in Western Australia.

17                  Kai Francis, of Buru’s solicitors, confirmed that her searches revealed that Mr Cook’s residential address was in Western Australia and that he was employed as General Manager by Carnarvon Petroleum Ltd, which had head offices in Perth and interests in Western Australia and Perth.

18                  Mr Brower deposed that he is based in Perth (rather than in the Bowen Basin in Queensland as Mr Westman deposed).  Mr Brower travels from time to time, but always returns to his home in Perth between jobs.  Over the past 18 months he has performed half his work in Perth and in the Simpson Desert, and half in various other locations.  Contrary to Mr Westman’s assertions, Mr Brower deposed that it would be inconvenient for him to attend a Melbourne hearing and he would prefer Perth.

19                  Mr Brower also deposed that throughout May to June 2008, he met Mr Westman at least twice in Perth, emailed him and had telephone conversations with him, while Mr Westman was also present in Western Australia based at a regional drilling location for a substantial part of 2007 and 2008.

20                  In opposition to the application for transfer, Wallace Westman, a director of Australian Drilling, deposed that:

1.                  Australian Drilling’s registered office and principal place of business are in Victoria.

2.                  Australian Drilling has no offices in any other State.

3.                  Both of Australian Drilling’s directors and its solicitors are based in Victoria and its records and documents are maintained at its premises in Sale, Victoria.

21                  Mr Westman deposed that he will be a witness for Australian Drilling and a hearing in Melbourne would be much more convenient to him, given his commitment to a long term drilling contract commencing soon, which will run well into 2011.  It will involve his frequent physical presence on site in Queensland, as he is the operations representative monitoring the drilling process.

22                  Mr Westman deposed that Australian Drilling’s accountant, who is based in Sale, Victoria, is also a likely witness for Australian Drilling.

23                  Mr Westman deposed that numerous relevant communications relevant to the alleged agreement were received in Victoria and payments by Buru should have been received there.

The parties’ submissions

24                  Australian Drilling submitted that there was no basis on which to determine the “proper place” and insufficient grounds on which to determine the balance of convenience.

25                  The subject matter of the alleged contract (the transport of the drilling rig and provision of drilling services) occurred or was located in the Canning Basin, not Perth, and the Court would not need to conduct investigations of the sites.  Rather, the dispute concerned the construction of an alleged agreement and existence and reliance on alleged representations, and no advantage would be gained by a hearing in Perth.  Although Buru contended that its case would rely, inter alia, on Western Australian legislation and regulatory provisions, it had not yet filed a defence incorporating those matters so a transfer on that basis would, at this stage, be premature.  The inconvenience of a transfer to Australian Drilling outweighed the inconvenience posed to Buru by a Melbourne location.  In Australian Drilling’s submission, the competing factors, as the matter currently stood, resulted in “a draw”.

26                  Buru submitted that the cause of action arose in Western Australia.  The alleged representations relate to the performance of drilling services in the Canning Basin.  The proceeding was at an early stage and Buru’s notice that the proceeding should be held in Western Australia had been disregarded, which was a relevant factor.

27                  Buru, while denying the alleged agreement, submitted that the drilling contract it allegedly incorporated provided that the laws of Western Australia would apply and that Western Australian courts would have non‑exclusive jurisdiction.  The reference to a choice of governing law was, Buru submitted, a relevant matter, even if there were no material difference between the law of the jurisdictions in issue.  The alleged contract for drilling services would nevertheless require consideration in the context of Western Australian legislation, namely, the Petroleum and Geothermal Energy Resources Act 1967 (WA), which imposes a safety management system.  Australian Drilling’s solicitors’ letter dated 31 July 2009 referred to critical spares.  Buru would allege in its defence that Australian Drilling failed to obtain critical spares within the required timeframe.  The Western Australian regulatory regime was thus potentially relevant to whether Australian Drilling was capable of performing the alleged agreement.

28                  Buru further submitted that Australian Drilling was engaged for a substantial period in 2007 and 2008 in drilling work in Western Australia with a mobile rig, inconsistently with its assertions that a Perth hearing would cause inconvenience.

29                  Buru’s directors, officers, solicitors and records were all Perth based and up to five witnesses (Messrs Cook, Brower and Streitberg and, probably, expert witnesses in respect of high pressure drilling and mining safety regulations) would be based in Perth.

Discussion

30                  As the authorities recognise, a transfer application typically involves case management rather than “high principle”.

31                  A number of factors relevant to the exercise of the discretion in determining where the present case can be most suitably conducted are neutral.  Each party’s registered office, premises, company offices, solicitors, records and documents are located in different States and the consequent inconveniences are counterbalanced.

32                  Moreover, much of the practical inconvenience occasioned to either party by such matters may be ameliorated through electronic filing and discovery, attendance at interlocutory or other hearings by video link (albeit that involves cost and time differences between States) and the capacity of counsel to appear in different states.

33                  Australian Drilling initiated the proceeding in Victoria.  There is nothing to indicate that its choice was capricious, but it did so in the face of Buru’s prompt assertion that any proceeding should be conducted in Western Australia.  The applicant for transfer bears no onus of proof, but there must be some reason to change, which goes to the ultimate test of the most suitable venue for the conduct of the case, in the interests of the parties, for the ends of justice and for the most efficient administration of the Court.

34                  In the present case, there is no single highly compelling factor such as, for example, the existence of related proceedings or proceedings with substantial common issues.  There are, however, several factors which together, in my view, constitute good reason why the proceeding should be transferred to Western Australia.

35                  First, there is the position of witnesses.  Each party has witnesses or potential witnesses who, it is said, will be inconvenienced by a hearing outside their home State.  Australian Drilling has one identified witness, Mr Westman (who deposed in detail to the inconvenience he would suffer were the proceeding transferred to Perth) and one other possible witness based in Victoria.  Buru has identified three witnesses and two possible additional witnesses who will suffer inconvenience if the proceeding remains in the Victorian District Registry.  Two of Buru’s principal witnesses, Messrs Cook and Brower, are no longer its employees and may be regarded as third parties, the burden of whose attendance will fall on their current employers.

36                  While Mr Westman testified to particular inconvenience likely to spring from travel between Perth and his proposed worksite in Queensland, he would otherwise have to travel between Queensland and Victoria.  Further, his presence would probably be required only for the trial, during which travel back and forth would be unlikely.  In summary, Buru has the greater number of identified witnesses, including non‑employees, who will suffer inconvenience if the transfer is not granted.

37                  Secondly, the cause of action appears to have arisen in Western Australia.  Thirdly, the subject matter principally involves events in Western Australia where Australian Drilling had a physical presence and commercial activities for significant periods.  Fourthly, a drilling contract incorporated into the alleged agreement (and equivalent terms of which were, by the letter of intent, to be used as the basis of the drilling contract between Buru and Australian Drilling) stated that the law of Western Australia would apply.  Buru has foreshadowed reliance on Western Australian legislation and the associated regulatory regime.

38                  Australian Drilling submitted that it would be premature to transfer the proceeding, because Buru’s arguments relating to Western Australian law were not yet pleaded.  Insistence on formal pleading could, however, expose the applicant for transfer to a complaint of delay.

39                  The proceeding is currently at an early stage and Buru gave notice at the outset that it considered Western Australia the appropriate place.

40                  In the circumstances, weighing all potential connecting factors, in my view, by a fine but clear margin, the case would be most suitably conducted in Western Australia.  Accordingly, the application should be granted.

Associate:

Dated:         1 September 2010