FEDERAL COURT OF AUSTRALIA

Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2010] FCA 1415

THE COURT ORDERS THAT:

1.    The proceeding be transferred to the South Australian District Registry.

2.    The costs of all parties of and incidental to the motion on notice dated 1 October 2010, including the costs of the hearing on 19 November 2010, be costs in the cause.

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    There is before the Court a motion on notice dated 1 October 2010 by the first respondent, Quasar Resources Pty Ltd (“Quasar”) for an order that the remainder of this proceeding be conducted in the South Australian District Registry of the Court pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”).

2    The proceeding was commenced on 12 July 2010 by the applicant, Alliance Craton Explorer Pty Ltd (“Alliance”) filing in the Victorian Registry of the Court an application and statement of claim.

3    The litigation arises out of a joint venture between Alliance and Quasar to exploit the Four Mile Uranium Project which is in the Arkaroola Region adjacent to the Northern Flinders Ranges in South Australia. After the formation of that joint venture, Alliance became the registered holder of successively, Exploration Licences 2874 and 3666 in respect of a prospect also located near Arkaroola. On 30 August 2002, Alliance entered into another joint venture agreement with the second respondent, Heathgate Resources Pty Ltd (“Heathgate”) under which Heathgate agreed to pay the costs of exploration for at least two years of Exploration Licence 2874, amounting to not less than $300,000 and would have the opportunity of acquiring a 75% interest in that licence. At all relevant times, Heathgate has been the owner and operator of the Beverley Uranium Mine which is located on Mining Lease No 6321 adjacent to the prospect which was the subject of Exploration Licence 2874. By cl 13.5 of the Joint Venture Agreement between Alliance and Heathgate it was provided that the agreement should be governed by and construed in accordance with the laws of South Australia.

4    On 17 December 2002, Heathgate assigned to Quasar its rights and obligations under the joint venture agreement with Alliance. Thereafter, on 29 September 2004, that joint venture agreement was varied in various respects including an extension for one year of the “earn-in” period in return for Quasar increasing its expenditure commitment to $450,000. Alliance alleges that, at the time of obtaining that extension, Quasar and Heathgate did not disclose to it that Quasar was planning an exploratory drilling program pursuant to Exploration Licence 3666 (“the Tenement”) searching for sedimentary-hosted uranium mineralisation. Nor, it alleged, did Quasar or Heathgate disclose to Alliance that, as a result of exploratory activity undertaken, the Tenement was regarded as prospective for sedimentary-hosted uranium mineralisation. However, on 29 April 2005, Quasar wrote to the Department of Primary Industry and Resources of South Australia (“PIRSA”) reporting that uranium mineralisation had been intersected in areas of the Tenement now known as “Four Mile”.

5    Despite the assignment noted at [4] above, Heathgate performed some of Quasar’s functions and exercised some of its powers as manager of the Tenement on behalf of the Joint Venture. Heathgate charged Quasar the cost of that work and Quasar submitted to Alliance accounts for the amounts so charged in support of its claim to have expended the amount necessary to qualify for its “earn-in” right.

6    After the extension of the “earn-in” period, Quasar, in April 2005, drilled three exploratory holes in the Four Mile East area and one in the Four Mile West area of the Tenement. Then, on 25 June 2005, Quasar informed Alliance that it had expended $650,811.11 in relation to the Tenement and sought a transfer to it of a 75% interest in Exploration Licence No 3666. That transfer occurred on 13 September 2005 and Quasar was registered as transferee in the Mining Register on 18 October 2005.

7    Alliance alleges that on 5 August 2004 it agreed to the proposed extension of Quasar’s “earn-in” period and says that when it did so it was unaware that Quasar had caused to be carried out ground-based surveys in the area of the Paralana Plains, and that the results of those surveys and other information possessed by Quasar had been available to Quasar but not disclosed to Alliance when it agreed on 5 August 2004 to extend the “earn-in” period.

8    Alliance also contends that, before 5 August 2004, Quasar had formulated a proposal for an extensive drilling program to be undertaken on Paralana Plains for which it had identified the location of some 18 drillholes. However, it is alleged, neither the formulation of this proposal nor the preparatory work which had been undertaken was disclosed to Alliance by 5 August 2004.

9    Further preparatory work, including the lodging with PIRSA of an application for approval to undertake an exploratory drilling program on the Paralana Plains and the obtaining of Aboriginal heritage clearance for the location of the drillholes, including the 18 noted at [8] above, is said to have been carried out between 20 August and 12 September 2004. However, according to Alliance, none of these matters had been disclosed to it by 13 October 2004 when it executed the agreement extending Quasar’s “earn-in” period to 30 October 2005. That agreement recites that it is to be governed by, and construed in accordance with, the laws of South Australia.

10    The acts and omissions alleged against Quasar as detailed above are claimed by Alliance to have occurred in breach of fiduciary obligations owed to it, and in breach of an equitable obligation not to use information acquired in the course of effecting the Joint Venture in Quasar’s own interests or not contrary to the interests of Alliance. Alliance also seeks to erect on the same factual allegations causes of action against Quasar for breach of contract and contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the TPA”) and s 9 of the Fair Trading Act 1999 (Vic) (“the FTA”) and against Heathgate for involvement in or assisting, Quasar’s breaches of duty, breach of contract or contraventions of the TPA and the FTA.

Submissions on behalf of Quasar and Heathgate

11    Counsel for Quasar had contended, in support of its motion, that the closer connection of the litigation with South Australia and the convenience of most of the parties and legal practitioners engaged in it militate strongly in favour of a transfer of the proceedings to the South Australian Registry of the Court. As well, Quasar relies on the fact that three other actions have been commenced against it by Alliance in relation to the same Joint Venture, two of them in the Supreme Court of South Australia, and the other in the South Australian Registry of this Court. Allied to that consideration are the stipulations noted at [3] and [9] above that the Joint Venture agreement and the extension agreement are to be governed by, and construed in accordance with, the laws of South Australia.

12    It has also been contended on behalf of Quasar that a very large majority of the non-party entities and individuals who are likely to be called on each side to give evidence at the trial of the action are resident in South Australia or have a closer connection with that State than with Victoria. Greater weight, it is said, should be given, in the exercise of the Court’s discretion, to the convenience of non-party witnesses than to that of witnesses connected with a party who have a correspondingly closer interest in the outcome of the proceedings. Similar considerations weighing in favour of Quasar’s application were related to the likely need for a view of the Tenement at or before trial and the probability that evidence would be called from participants in the Aboriginal cultural heritage inspection in August 2004, including the Adnyamathanha Native Title claimants.

13    Counsel for Quasar also instanced the likelihood that the outcome of these proceedings would have a significant impact on the future undertaking of the Joint Venture project with a consequent generation of local public interest making hearings in South Australia more appropriate. In a related way, it was urged that, to perfect the orders sought by Alliance that Quasar’s 75% interest in the Tenement be transferred to Alliance would require the consent of the South Australian Minister for Mineral Resources Development or an order requiring that Minister or an officer of PIRSA to amend the South Australian Mining Register.

14    Ms Day of Counsel for Heathgate contended that Heathgate’s community of interest with Quasar in resisting the substantive relief sought by Alliance made it unnecessary for it to adduce its own separate evidence in support of Quasar’s application.

Submissions on behalf of Alliance

15    Counsel for Alliance emphasised that a direction under s 48 of the Federal Court Act that a proceeding be conducted or continued at a specified place other than the Registry in which the proceeding has been instituted will effect a change in the “proper place” for the orderly and efficient conduct of the Court’s business. Such a direction is not the same as that under O 30 r 6(2) of the Rules of the Court that a trial or part of a trial of a proceeding be held at a place other than the proper place.

16    Six substantive issues were identified as having been raised by the pleadings in this litigation in their present form. They included the nature and extent of the information about the prospectivity of the Paralana Plains which had been revealed by Quasar’s exploration activities or was otherwise possessed by Quasar when it obtained Alliance’s consent to the extension of the “earn-in” period. A related issue was said to be the significance and extent of the plans which had been formulated by Quasar, as at 29 September 2004, to undertake exploratory drilling on the Paralana Plains for sedimentary-hosted uranium mineralisation. The remaining substantive issues identified on behalf of Alliance go to whether the conduct imputed to Quasar and Heathgate amounted to a breach of fiduciary or equitable duty owed to Alliance, a breach of Quasar’s contractual duty to furnish quarterly reports to Alliance or misleading or deceptive conduct in contravention of s 52 of the TPA or s 9 of the FTA.

17    However the breaches of duty alleged against Quasar and Heathgate be characterised, Counsel for Alliance contended, they all occurred in Victoria since the relevant information had to be communicated to Alliance in Melbourne where it gave its consent to the extension of the “earn-in” period. The applicable legal and equitable principles, it was said, are part of the common or general law of Australia which is the same in Victoria and South Australia. Counsel also noted that, although the Joint Venture agreement contained a choice of law clause, it had no provision conferring exclusive jurisdiction on a South Australian court. The location of the Tenement in South Australia and the fact that the exploration licence had been granted under the Mining Act of that State would have no bearing on the resolution of the matters which, according to Counsel for Alliance, would arise for determination in this case.

18    Counsel for Alliance contended that the decision to institute the proceedings in the Victorian Registry of the Court had not been made capriciously. They pointed out that the majority of Alliance’s officers who would be required to give evidence, or provide instructions for the conduct of the litigation and Alliance’s collection of relevant documents are all located in Melbourne as are its Counsel and solicitors. (Its chairman of directors lives in North Queensland.) Although both Quasar and Heathgate share the same registered office in Adelaide and Quasar has retained Adelaide Counsel and solicitors, Heathgate has chosen to retain solicitors from the Sydney office of Freehills and Melbourne Senior Counsel and Sydney Junior Counsel. Substantial interlocutory steps have been taken, without apparent inconvenience to any party, while the matter has remained in the Victorian Registry. Counsel for Alliance have pointed out that the parties have agreed to give electronic discovery of documents and contended that it is unlikely that the location of documents “will impact on the ability of, or cost to the respondents of completing interlocutory steps or conducting the trial.”

Consideration

19    I accept that in a case like the present the Court has to be persuaded that, on a balance of all relevant considerations, it is preferable for the management of the litigation to occur, or continue, in a Registry other than that in which the applicant has chosen to file. There is, in the strict sense, no onus of proof on a respondent seeking transfer; see National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155, at 162.

20    The present case is unusual in that many of the factors indicated in National Mutual v Sentry Corporation and subsequent authorities explaining how the discretion conferred by s 48 of the Federal Court Act should be exercised are neutral or have no operation on the balance to be struck. The conduct alleged against Quasar and Heathgate does not have any particular geographic impact but I accept that, when regard is had to the evidence likely to be adduced on each side, the connection with South Australia is stronger than with Victoria.

21    I do not regard as significant for present purposes the fact, that if Alliance is successful in obtaining part of the relief it seeks, an amendment would have to be made to the Register maintained under the Mining Act of South Australia. Because the proceedings have been instituted in this Court which, as has often been said, is a national Court, the ability of the Court to give directions necessary to bring about an adjustment of the South Australian Mining Register will not be enhanced or diminished according to whether the management of the litigation is reposed in the Victorian or the South Australian Registry of the Court. Similar considerations apply to the presence in the Joint Venture contractual documents of provisions that they are to be governed by, and construed in accordance with, the laws of South Australia. It has not been demonstrated that the law made applicable by those provisions differs in any material respect from the relevant law of Victoria. In any event, because the proceeding will remain in a court other than a South Australian Court of competent jurisdiction, it cannot be assumed that any judge or judges who may be involved in determining it will have, or lack, particular familiarity with the laws of South Australia.

22    I have not regarded as significant the convenience or inconvenience which will be occasioned to one or other of the parties or their legal practitioners if the remaining interlocutory stages of the proceeding are managed in one Registry as against the other. Modern means of electronic transmission of documents and communication, including videolink facilities for hearing parties and practitioners in more than one location, can be used to minimise inconvenience and expense wherever the docket judge may be located.

23    I accept that the place of trial will eventually be a matter for directions under O 30 r 6(2) and those directions may reflect the need to accommodate the convenience of witnesses, or a group of witnesses from whom evidence is to be taken. However, the likelihood that such a direction will require the taking of a substantial body of evidence in South Australia is not irrelevant to the exercise of the discretion under s 48 of the Federal Court Act. That likelihood I regard as extremely high in the present case and, since the other factors bearing on the exercise of the discretion are evenly balanced or have no operation, it has proved, in conjunction with another consideration, decisive.

24    That other consideration is the respective capacity of the Victorian and South Australian Registries of the Court to furnish the judicial resources necessary to manage and supervise the proceeding in its remaining interlocutory stages and to conduct a trial. The number of Judges presently attached to the Victorian Registry has declined by one from the 13 resident Judges (excluding the Chief Justice) who held office before Heerey J retired on 15 February 2009. One of the present Victorian Judges, Finkelstein J, is heavily engaged in discharging the duties of President of the Australian Competition Tribunal. In the same period, the number of Judges attached to the South Australian Registry of the Court has remained constant at four. When account is taken of my own impending retirement in the middle of next year, my impression, confirmed by enquiries of the relevant Registrars, is that the transfer of these proceedings is more likely to conduce to the more efficient administration of the Court and the expeditious conduct of the litigation itself. Similar considerations were indicated by the Full Court in National Mutual v Sentry Corporation (supra) to be relevant to the exercise of the discretion when it observed, at 162:

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.

[Emphasis added]

Conclusion

25    For the reasons outlined above, I am persuaded that the proceeding should now be transferred to the South Australian District Registry. The costs of all parties of and incidental to the motion on notice dated 1 October 2010, including the costs of the hearing on 19 November 2010, will be costs in the cause.

Associate:

Dated:    16 December 2010