FEDERAL COURT OF AUSTRALIA

TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd, in the matter of TCL Airconditioner (Zhongshan) Co Ltd [2017] FCA 1015

ORDERS

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    The defendant pay the costs of the plaintiff, to be assessed if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MCKERRACHER J:

1    In these proceedings TCL Airconditioner (Zhongshan) Co Ltd applies, in effect, to set aside a statutory demand on the basis that it is not a Pt 5.7 body pursuant to the Corporations Act 2001 (Cth) and that the demand issued is invalid and has not been validly served.

2    I will assume for present purposes only, that the demand was properly served by Castel Electronics Pty Ltd ACN 074 561 087.

3    By interlocutory process, Castel seeks to transfer the proceedings from the Western Australian District Registry to the Victorian District Registry. Each of the parties relies on a number of affidavits in support. It is unnecessary for present purposes to go into detail as to the content of the affidavits.

4    The short issue is the practical question of where it will be most convenient for the proceedings to be conducted, considering the interests of justice, the parties and the Court’s efficient administration.

THE PRINCIPLES

5    The application is brought pursuant to r 2.02 of the Federal Court Rules 2011 (Cth) and s 48(1) of the Federal Court of Australia Act 1976 (Cth). By s 48(1) of the Act, a judge may at any stage of the proceeding direct that the proceeding or part of the proceeding be conducted or continued at a place specified, subject to any conditions that may be imposed. Rule 2.02 of the Rules provides that a party may apply at the ‘proper place’ for an order that the proceeding be transferred to another place. The proper place is defined in the dictionary to the Rules as being the place where the proceeding was started.

6    As Castel contends, the Court must be satisfied, taking account of relevant factors, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. In National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155 Bowen CJ, Woodward and Lockhart JJ) said (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.

7    Subsequent cases have led to additional guidelines to those principles.

8    In Mortimer v Opes Prime Stockbroking Limited (in liq) [2009] FCA 227 at [15]-[17], I collated some of the observations from those cases as follows:

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 Company 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.

CASTEL

9    Castel relies on the following factors in support of its application:

(a)    Castel is registered in Victoria and carries on business from there;

(b)    Castel was the previous Australian distributor of TCL products in Australia;

(c)    TCL is incorporated in China and has no real connection with Western Australia apart from its lawyers having an office there;

(d)    Castel and TCL have previously arbitrated and litigated issues arising out of their relationship in arbitration in Victoria and in the courts in Victoria save for a constitutional challenge brought by TCL in the High Court of Australia;

(e)    Castel and TCL are currently engaged in a proceeding in the Supreme Court of Victoria which arises out of matters collateral to the matters in the arbitration proceeding;

(f)    this proceeding is at an early stage and as such there is no relevant issue of case management that would be disrupted by a change of venue;

(g)    counsel for Castel and TCL in the foregoing proceedings (other than TCL's counsel in the High Court) practise in Victoria and are based in Victoria;

(h)    the subject matter of the proceeding is a claim based on a judgment against TCL in the Victorian District Registry of the Federal Court;

(i)    Castel's main witness is a resident in Victoria;

(j)    TCL's main witness in support of its application in the proceeding Wang Yong is resident in China;

(k)    TCL's other witness, Mr Nicholas Robert White, is a lawyer resident in Perth who has provided an affidavit with respect to matters of a formal nature as to copies of correspondence, Australian Securities and Investments Commission (ASIC) searches and documents. It is unlikely that Mr White would be cross examined on his affidavit;

(l)    the only factor relevant to the proceeding being conducted in Western Australia is that a branch of TCL's lawyers’ firm is located in Perth; and

(m)    on the question of costs there appears to be no relevant prejudice to TCL if the proceeding were to be conducted in Victoria.

10    Castel contends that the strong inference to be drawn from the proceeding being commenced in the Western Australian District Registry is that it is to suit the convenience of TCL’s solicitors, rather than any other reason. However TCL’s solicitors are a national firm with offices in Melbourne as well as Perth. Having regard to the matters listed above, Castel contends that the closest connection with the proceedings is Victoria and the balance of convenience favours a transfer of the matter to the Victorian District Registry.

11    In oral submissions, Castel also contended that the choice to file in Perth was capricious, an outcome which might be inferred objectively from the factors outlined. This is particularly so where TCL is based in China and contends that it has not traded in Australia and where there has been no attempt by TCL to justify the commencement of the proceedings in Perth. However, Castel does not and cannot suggest that the filing was deliberately capricious.

TCL

12    TCL argues that the Court should not be satisfied there is sound reason to direct that the proceedings should be conducted in a location other than where they were commenced because:

(a)    the proceedings concern uniform national law being the Corporations Act;

(b)    the proceedings are about whether TCL relevantly ‘carries on business in Australia’ so as to be a Pt 5.7 body under the Corporations Act (by reference to the s 9 definition of a Pt 5.7 body and s 21 and s 583);

(c)    only if there is a finding that TCL relevantly ‘carries on business in Australia’ does the next question arise as to whether the place the demand was left at was TCL’s ‘principal place of business’ in Australia pursuant to s 585 of the Corporations Act;

(d)    the issue of ‘carries on business in Australia’ involves the application of a non-exhaustive definition under s 21(3) of the Corporations Act and the general law concept as to whether TCL conducted some form of commercial enterprise in Australia systematically and regularly with a view to profit: see the discussion in Gebo Investments (Labuan) Ltd v Signatory Investments Pty Ltd [2005] NSWSC 544 (at [35]-[41]);

(e)    as to the contingent second issue, namely, whether the demand was left at TCL’s ‘principal place of business’ in Australia, TCL relies on an affidavit of Wang Yong, on behalf of TCL, dated 26 April 2017. That evidence is to the effect that TCL never had a place of business at 194 New Cleveland Road, Tingalpa, Queensland where the demand was purportedly left. That address, it is said, appeared on a website not operated by TCL, but rather, by a former Australian distributor of products of TCL;

(f)    the issues of whether TCL ‘carries on business in Australia’ and, if so, whether the demand was left at TCL’s ‘principal place of business’ in Australia are likely to be resolved by uncontroversial documentary evidence. They are unlikely to involve questions of credibility of witnesses requiring cross-examination in person, rather than video-link, if there is to be any cross-examination at all;

(g)    as to the historical factors pointed to by Castel in its submissions, they are either irrelevant, neutral or of little weight. The only substantive point being that if cross-examination is necessary (which it does not accept), the main witness for Castel resides in Victoria;

(h)    Castel has not identified the nature of the evidence intended to be given by that witness, resident in Victoria, so as to enable any assessment to be made by the Court as to its relevance or by TCL as to whether it would cross-examine that witness;

(i)    Castel has not provided any evidence of what the costs would be for that witness to travel from Victoria to Perth should that witness ultimately be required to attend in person for cross-examination; and

(j)    the Court is a national court with video conferencing facilities, in any event, and having regard to the issues arising in the application, whatever the evidence sought to be adduced will be, it must be of a brief compass.

CONSIDERATION

Application premature

13    It is not apparent from any of the material filed by Castel what detriment would arise to Castel if there is to be any cross-examination, if required to be given, by video-conferencing facilities. There has been no indication at all on this application as to the nature, quantity and cost of providing evidence on that topic.

14    I accept the arguments for TCL that, while a transfer may be necessary at a later date when the detail of the case is more clearly understood, there is insufficient information at present to form a view as to whether the most efficient location for the actual hearing would be in a place other than the place chosen by TCL for commencement of its proceedings. I do not consider that the selection of the Western Australia District Registry in the circumstances of this case, when it is still unclear that any witnesses will be required, let alone where they reside, was or is capricious.

15    Ultimately, it may well be that the Victoria District Registry is a preferable location. But at this stage, in the absence of any information as to what evidence will be given on the key question of whether TCL has traded in Australia within the meaning of the authorities, I am not satisfied that a transfer is justified.

CONCLUSION

16    For those reasons, I would dismiss the application for transfer. Counsel have accepted that costs should follow the event.

Associate:

Dated:    30 August 2017