FEDERAL COURT OF AUSTRALIA

Auschem Pacific Group Pty Ltd v Tismor Health & Wellness Pty Limited [2019] FCA 1216

ORDERS

THE COURT ORDERS THAT:

1.    The Respondent/Cross-Claimant’s interlocutory application dated 21 May 2019 (Interlocutory Application) be dismissed.

2.    The Respondent/Cross-Claimant shall pay the Applicant/Cross-Respondent’s costs of responding to the Interlocutory Application on a standard basis, at an amount to be agreed or in the absence of the agreement to be taxed forthwith.

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

REASONS FOR JUDGMENT

ANDERSON J:

Introduction and summary

1    This proceeding was initiated by Auschem Pacific Group Pty Ltd (applicant) in the Victoria District Registry of this Court. The respondent and cross-claimant in this proceeding, Tismor Health & Wellness Pty Ltd (respondent), seeks an order that the proceeding be transferred from the Victoria District Registry to the New South Wales District Registry of this Court.

2    Yesterday, on 6 August 2019, I refused the transfer of the proceeding. Although there are factors favouring the transfer to the New South Wales District Registry, my ultimate view, having regard to all the relevant circumstances of the case, including the overarching purpose of the civil practice and procedure provisions governing this Court, is that there is not sufficient justification to change the status quo. The result is that this proceeding will continue in the Victoria District Registry.

3    These are my reasons for reaching that decision.

The substantive allegations

4    The applicant commenced proceedings against the respondent by way of originating application and statement of claim dated 4 April 2019. The applicant claims the sum of $840,027.17, together with interest and costs, being the amount it alleges is due and owing as a result of a contract to deliver to the respondent eucalyptus oil which it alleges the respondent, in breach of the contract, has failed and refused to pay for.

5    The respondent by its defence dated 16 May 2019, admits receipt of the eucalyptus oil but alleges that the oil was non-compliant with the required specification. As such, the respondent denies any indebtedness to the applicant and filed a notice of cross-claim dated 16 May 2019 alleging that the applicant has breached their contract. The respondent says it has suffered loss and damage in the sum of $1,510,364.22 as a result of the applicant’s breaches. The applicant has filed a defence to the cross-claim denying any liability.

Respondent’s interlocutory application

6    By interlocutory application dated 21 May 2019, the respondent sought an order pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) (Act) that the proceeding be transferred from the Victoria District Registry of the Court to the New South Wales District Registry of the Court.

7    In support of the interlocutory application, the respondent filed an affidavit of the respondent’s Chief Executive Officer, Antonino Siracusa, sworn on 21 May 2019 together with exhibits. Relevant to this application, Mr Siracusa deposed to the connection between the facts in the proceeding and the State of New South Wales. Mr Siracusa deposed to:

(a)    the eucalyptus oil being delivered by a manufacturer in China (on behalf of the applicant) directly to the respondent’s warehouse in Kingsgrove, New South Wales;

(b)    the applicant’s registered office and principal place of business being in Kingsgrove, New South Wales; and

(c)    the eucalyptus oil, the subject of the dispute, was tested for adulteration at the Southern Cross Plant Science, Analytical Research Laboratory located in Lismore, New South Wales.

8    Mr Siracusa also deposed to the location of witnesses who will give evidence on behalf of the respondent. Mr Siracusa deposed:

(a)    that all 10 witnesses who would be called to give evidence on behalf of the respondent were located in New South Wales; and

(b)    to the importance of some of those witnesses to the management and operation of the respondent’s business.

9    Mr Siracusa also deposed to the additional costs which he alleged would be incurred if the proceedings were to be heard out of the Victoria District Registry rather than the New South Wales District Registry.

10    In opposition to the interlocutory application, the applicant relied upon the affidavit of Ferdinand Zito, the applicant’s solicitor, affirmed on 26 June 2019. Mr Zito deposed to the issues he alleged are in dispute between the parties. In particular, he noted that a key issue in dispute is whether the eucalyptus oil was contaminated or adulterated after it had been delivered to the respondent by the manner in which the respondent repackaged the eucalyptus oil for supply to the supermarket chain, Aldi.

11    Mr Zito deposed to the connection between the facts in the proceeding and the State of Victoria. He deposed:

(a)    that the applicant was a company headquartered in Victoria;

(b)    the eucalyptus oil, the subject of the dispute, was distributed and sold by Aldi stores around Australia; and

(c)    the question whether there has been a “recall” is a question that concerns events in all States and Territories of Australia.

12    Mr Zito also deposed to the location of the applicant’s witnesses. The applicant has five witnesses, four of them based in Victoria and one based in China. In addition, Mr Zito deposed to the additional expense he alleges would be incurred by the applicant if the proceeding is transferred to the New South Wales District Registry.

Relevant principles

13    Section 48 of the Act confers on the Court the power to transfer a proceeding commenced in one Registry of the Court to another Registry. Section 48 of the Act relevantly provides as follows:

Change of venue

(1)     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.

…

14    The principles relevant to the exercise of the Court’s discretion under s 48(1) of the Act have been discussed in a number of recent decisions of this Court: see Australasian Jet Pty Ltd v Air Affairs (Australia) Pty Ltd [2017] FCA 452 at [5]-[8] per Markovic J; Custance v SC Admin Pty Ltd [2017] FCA 511 at [3]-[6] per Besanko J; Plankton Australia Pty Limited v Rainstorm Dust Control Pty Limited [2017] FCA 1616 (Plankton) at [9]-[11] per Lee J; TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronic Pty Ltd, in the matter of TCL Airconditioner (Zhongshan) Co Ltd [2017] FCA 1015 at [5]-[6] per McKerracher J; Walsh, Liquidator of D&R Community Services Pty Ltd (Receivers & Managers Appointed) (In Liq) v Commissioner of Taxation [2018] FCA 1739 at [48] per Greenwood J.

15    A useful summary of the relevant principles was provided by McKerracher J in Mortimer v Opes Prime Stockbroking Ltd (ACN 086 294 028) (Administrators Appointed) (in liq) [2009] FCA 227 (Mortimer) at [15]-[16]:

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 …

•     The location of parties and witnesses, the place where the cause of action arose and the convenience of the Court are all factors …

•     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 …

•     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. …

•     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 …

•     There may be flexibility – one Registry could conduct pre-trial management while allocating the trial to a judge in another Registry …

•     There is no burden of proof governing the exercise of the discretion in s 48 of the Act …

•     The existence of related proceedings which may be case managed jointly may be important …

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 …

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.

(Citations omitted.)

16    As alluded to in the first dot point set out in this passage, the ultimate test under s 48(1) of the Act was expressed by Bowen CJ, Woodward and Lockhart JJ in National Mutual Holdings Pty Ltd v The Sentry Corporation [1988] FCA 133; 19 FCR 155 (Sentry Corporation) at 162 as follows:

[W]here 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.

17    Section 48(1) of the Act must now be applied in a way that best promotes the overarching purpose of the civil practice and procedure provisions governing this Court. This was explained by Lee J in Plankton at [10] and [11]:

It was said in Sentry Corporation (at 162) that the “power conferred on the Court or a judge by s 48 is in terms wholly unfettered”. This is not now strictly accurate by reason of legislative changes since the decision in Sentry Corporation was delivered. In particular, s 37M(3) of the [Act] provides that any civil practice and procedure provisions must be interpreted and applied, and any power conferred by them must be exercised or carried out, in a way that best promotes the overarching purpose. In accordance with the dictates of s 37M(1) of the [Act], the overarching purpose is, of course, the facilitation of the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

This is a national Court. It is not a collection of federated courts. The National Court Framework was a fundamental reform of how the Court operates, its key purpose being to facilitate the Court operating “as a truly national and international Court”. As is now well known, the Court’s workload is now organised by reference to National Practice Areas and matters are allocated nationally, focusing on responding to the needs of the case and the parties. Considerations which loomed large in earlier transfer cases (decided at an earlier stage of the Court’s evolution) now need to be assessed by reference to these significant changes. Apart from the introduction of Part VB of the [Act] and the changes wrought by the National Court Framework, in exercising the broad discretion conferred by s 48 of the [Act], relevant considerations in transferring cases include the increasing ability of commercial parties to have access to economical airfares, and the increasingly national character of the legal profession.

18    Ultimately, the balance of convenience as to the proper Registry for the conduct of the proceeding must be sufficiently pronounced to warrant positive action to change the status quo: Cycles & Wheelman Pty Ltd & Ors v Beltech Corporation Ltd (1988) 80 ALR 279 at 281 per Gummow J, quoted in, amongst other decisions, Australian Competition and Consumer Commission v Pauls Ltd [2002] FCA 71 at [17] per O’Loughlin J and Wepar Nominees Pty Ltd v Schofield [2013] FCA 920 at [10] per Besanko J. Generally, there must be a sound reason to direct a proceeding to be conducted or continued elsewhere: Sentry Corporation at 162, cited in Mortimer at [15] per McKerracher J.

Consideration

19    Having considered the matters detailed in the affidavits of Mr Siracusa and Mr Zito, I am particularly cognisant of the following matters:

(a)    whilst the respondent, as presently advised, proposes to call ten witnesses based in New South Wales as opposed to the applicant’s four witnesses based in Victoria, the inconvenience and cost to the respondent can in large measure be ameliorated by the Court ordering that their evidence-in-chief be by way of affidavit or witness statement and that the giving of their evidence be via video-link, if appropriate: see Australian Competition & Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239 at [18] and [20] per French J;

(b)    although there is a clear connection between the importation and testing of the eucalyptus oil and the State of New South Wales, the contract between the parties appears, at least on a preliminary view (without deciding), to have been formed in Victoria;

(c)    the witnesses to be called by each party are involved in the day-to-day operations of the businesses operated by the applicant and the respondent. Both parties will be inconvenienced by their employees having to spend time preparing to give evidence and then giving evidence at the trial of this proceeding; and

(d)    Mr Siracusa has deposed to the additional costs that he alleges will be incurred if the proceeding is to remain in the Victoria District Registry. The applicant’s solicitor, Mr Zito, has also deposed to the additional cost which will be incurred by the applicant if the proceeding is transferred to the New South Wales District Registry of the Court. This factor is evenly balanced between the parties and does not point decisively in favour of one party over the other.

20    Even though there is no onus on the respondent as such in bringing this interlocutory application, it is necessary for the Court to identify a good reason for ordering the transfer of the proceeding: Inverness Medical Switzerland GMBH v Advanced Clinical Systems Pty Limited [2002] FCA 1261 at [7] per Stone J. Weighing all the relevant factors, there is little difference in the present case between the inconvenience that each party will experience if the proceedings are not continued in each party’s preferred venue. The weighing exercise is finely balanced.

21    I am ultimately not satisfied that the facilitation of the just resolution of the dispute between the parties according to law, as quickly, inexpensively and efficiently as possible, requires the positive action of changing the status quo. In my view, the determination of the issues between the parties, and the most efficient administration of the Court, taking into account the overarching purpose of the civil practice and procedure provisions governing this Court, is best met by the proceeding remaining in the Victoria District Registry.

22    For these reasons, the respondent’s interlocutory application will be dismissed. The respondent is to pay the applicant’s costs of and incidental to the application.

Associate:

Dated:        7 August 2019