Alstom Power Ltd v Yokogawa Australia P/L - [2006] SASC 74

Supreme Court of South Australia
(Civil: Application)
ALSTOM POWER LTD v YOKOGAWA AUSTRALIA P/L & ORS
Reasons for Decision of The Honourable Justice Debelle (ex tempore)
9 March 2006
PROCEDURE - COURTS AND JUDGES GENERALLY - COURTS - CONCURRENT JURISDICTION OF DIFFERENT COURTS - TRANSFER OF PROCEEDINGS UNDER CROSS-VESTING LEGISLATION - WHERE APPROPRIATE AND IN INTERESTS OF JUSTICE
Cross-vesting - application to transfer proceedings to Supreme Court of New South Wales - building contract for substantial works in South Australia - contractual choice of law and submission to jurisdiction - relevant factors - application dismissed.
Trade Practices Act 1974 (Cth) s 51A, s 51AA, s 52; Jurisdiction of Courts (Cross-vesting) Act 1987 (SA) s 5, referred to.
Australian Rail Track Corporation Ltd v Mineral Commodities Ltd [2006] SASC 27; BHP Billiton v Schultz (2004) 79 ALJR 348, applied.
Bankinvest AG v Seabrook (1988) 14 NSWLR 711; Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, considered.

ALSTOM POWER LTD v YOKOGAWA AUSTRALIA P/L & ORS
[2006] SASC 74

DEBELLE J. This is an application by the first, third and fourth defendants to transfer this action to the Supreme Court of New South Wales. The application is made pursuant to s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross‑vesting) Act1987 (“the Cross‑vesting Act”).
It will have been noticed that the second defendant has not joined in the application. There is a dispute as to service on the second defendant. The second defendant has not filed an address for service. It has not participated in the application in any respect. Given that this application is made by the first, third and fourth defendants, I believe it is proper to proceed in the absence of the second defendant.
The action stems from contractual arrangements made between the parties to this action. Those contractual arrangements form part of substantial works associated with the refurbishment of the Playford B Power Station at Port Augusta. The contract sum for the main works is said to be some $148.5 million. The plaintiff is the contractor which carried out that refurbishment work, that is to say, it was the head contractor.
The plaintiff has its base in New South Wales but, given the nature of its business, it has offices in other parts of Australia. At all relevant times it had an office in New South Wales and in South Australia and it still maintains an office in both States.
The first defendant is a company incorporated in Australia. Its office is in Sydney. The second defendant is a corporation incorporated in Japan. It is the ultimate parent company of the first defendant.
The third defendant is a company incorporated in Australia. It carries on its business in New South Wales and its offices are in Sydney. The fourth defendant is a company incorporated in Australia. It is the ultimate parent company of the third defendant. Its offices too are in Sydney.
The first and third defendants carried on business in a joint venture known as YDRML Augusta Joint Venture. For convenience, I will refer to it as “the joint venture”.
In 2002, the plaintiff and the joint venture entered into what, in the pleadings, is called the EC&I sub-contract. For convenience, I will call it “the sub-contract”. There is a dispute as to the date upon which the parties entered into the sub‑contract but that issue is not relevant for present purposes. The contract price for the works to be performed under the sub-contract amounted to some $34 million. The work was a significant part of the overall refurbishment of the Port Augusta power station. It related to what was called electrical and control and instrumentation works. Hence the description of the contract as the EC&I sub-contract.
It is common ground that it was a condition precedent to the sub-contract coming into operation that guarantees would be executed by the parent company of each of the parties to the joint venture, that is to say, by the second and fourth defendants. The guarantees were to guarantee the obligations of the joint venture and the payment of moneys on any breach of the obligation of the parties to the joint venture. In addition, the sub-contract required the joint venture to provide what the contractors described as Performance Security and Retainage Security.
In this action, the plaintiff seeks to enforce the obligations of the joint venture parties to deliver to it the guarantees provided for in the sub-contract. In that respect, it brings this action against all four defendants. In the alternative, it seeks a variety of orders to enforce the guarantees. The plaintiff also seeks to enforce the obligations of the parties to the joint venture to provide the Performance Security and Retainage Security.
The defendants deny liability on a number of grounds. It is unnecessary to canvass them all. For present purposes, it is sufficient to note the following which constitute the main elements of the defence.
The defendants - that is to say, the first, third and fourth defendants - plead that the plaintiff undertook in the sub-contract to act honestly, fairly and impartially as superintendent of the works to be performed under the sub‑contract. They also plead that the plaintiff was to procure the services of an independent engineer to certify works under the sub-contract. It is alleged that the plaintiff has acted in breach of both obligations. The defendants allege that there were delays in the refurbishment work and that those delays prevented the joint venture from completing its obligations under the sub-contract by the dates nominated in the contract. They plead that the plaintiff wrongfully refused the joint venture extensions of time for the delays of others.
The first, third and fourth defendants allege that the plaintiff is estopped from proceeding on the footing that article 1 of the sub-contract had not been met. The defendants also defend the claim on the guarantees in equity alleging unconscionable conduct on the part of the plaintiff.
The joint venture seeks to set off against the plaintiff’s claim a claim for amounts which they claim they are entitled to receive under the sub‑contract. The defendants allege the joint venture is entitled to money for extension of time claims and that those moneys exceed the alleged entitlement of the plaintiff and for losses incurred by the joint venture in taking steps to accelerate the performance of the obligations of the joint venture under the sub-contract. The joint venture seeks to set off both the moneys to which it is said it is entitled and its claim for damages against the claim made by the plaintiff. In the alternative, the defendants counterclaim for those moneys.
The defendants also claim that misrepresentations were made by the plaintiff. They claim damages under s 52 of the Trade Practices Act 1974 (Cth), relying upon s 51A of that Act to the extent that those misrepresentations concern future events. They also claim damages under s 51AA of the Act for what is alleged to be unconscionable conduct on the part of the plaintiff.
The principles governing applications to transfer proceedings pursuant to s 5(2)(b)(iii) of the Cross-Vesting Act are well established. The principles were examined by the High Court in BHP Billiton v Schultz (2004) 79 ALJR 348. Iadopt the summary of the relevant principles in Australian Rail Track Corporation Ltd v Mineral Commodities Ltd [2006] SASC 27 at [19] to [22]. It is unnecessary to repeat them as the parties are familiar with them. For present purposes, I emphasise the following principles.
1.The task for the court to determine is what is the more appropriate forum.
2.If the court is satisfied that it is in the interests of justice that the proceedings be transferred to the Supreme Court of New South Wales, as the more appropriate court, this Court has no alternative but to transfer the proceedings.
3.When considering what is the more appropriate forum, no weight is to be attached to the fact that the plaintiff has instituted this action in this Court. In other words, the fact that the plaintiff has instituted this action in this Court is a neutral factor.
4.The defendants’ application will be determined by having regard to the interests of justice.
5.The interests of justice require, among other things, that regard be had to the connecting factors identified by Lord Goff in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 478. Expressed another way, regard should be had to what has been called the nuts and bolts management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute: Bankinvest AG v Seabrook (1988) 14 NSWLR 711 per Street CJ at 713-714.
When considering the connecting factors or nuts and bolts issues, regard is to be had, among other things, to the law to be applied, the parties’ choice of forum and the relative convenience of parties and witnesses.
An examination of the convenience to the parties and witnesses might disclose advantages and disadvantages to each party. As Gleeson CJ, McHugh and Heydon JJ said in BHP Billiton v Schultz at [16]:
On the other hand, there may be conflicting interests of such a kind that justice would not attribute greater weight to one than the other. The advantage which a plaintiff might obtain from proceeding in one court might be matched by a corresponding and commensurate disadvantage to a defendant. The reason why a plaintiff commenced proceedings in one court might be the same reason as the reason why the defendant seeks to have them transferred to another court. In such a case, justice may not dictate a preference for the interests of either party.
As Callinan J said in that case, one person’s legitimate advantage is another person’s disadvantage.
In the sub-contract, the parties provided that any dispute should be governed and interpreted in accordance with the laws of South Australia and went on to provide that each party submitted to the non-exclusive jurisdiction of the courts of South Australia. In the guarantees, the parties provided that any dispute should be governed and interpreted in accordance with the laws of New South Wales and submitted to the non-exclusive jurisdiction of the courts of New South Wales. To the extent to which the choice of law and the nomination of a preferred forum is relevant, these contrasting provisions in the sub-contract and in the guarantees might be said to cancel one another out. It is also relevant to have regard to the fact that, for all intents and purposes, at least for the purpose of determining the issues in these proceedings, the law of South Australia and the law of New South Wales are the same. Furthermore, to the extent that the defendant relies on the provisions of the Trade Practices Act, that is obviously Commonwealth legislation which applies with equal force in both South Australia and New South Wales. All of those factors tend to point to the conclusion that, so far as the choice of law and nominated forum are concerned, little assistance is to be gained from them when determining what is the more appropriate forum.
However, it is also relevant to put into the balance the fact that all of the issues in these proceedings stem, ultimately, from the terms of the sub-contract and all issues in the set-off and the counterclaim stem from the sub-contract. In that latter respect, it is to be emphasised that all of the issues concerning the plaintiff’s performance of its obligations under the sub-contract, the completion of the works involved in the sub-contract, as well as issues of delay and extensions of time are all issues which will require reference to the terms of the sub-contract.
The issues in this action concern, first, the contractual obligations in respect of the guarantees and the Performance Security and Retainage Security and, secondly, the performance by the parties of their obligations under the sub-contract which formed part of the refurbishment of the power station at Port Augusta. The counterclaim raises issues as to the due performance by the plaintiff of its obligations under the sub-contract.
The defendants have provided little by way of particulars of the manner in which the plaintiff is alleged not to have performed its obligations under the sub‑contract. In this respect, I refer particularly to para 79 of the defence and counterclaim. That is not said by way of criticism of the defendants but, rather, simply to note the fact. However, it is reasonable to infer from the particulars in para 78 of the defence and counterclaim that the particulars of para 79 will demonstrate a closer link with South Australia than with New South Wales. The reason lies in the fact that the work was carried out in this State and the obligations of the parties to one another were to be performed in this State.
It is reasonable to infer also that a view of the power station will, in all likelihood, be necessary. The view will be necessary for the purpose of gaining, among other things, an understanding of the scope and nature of the work. It will also assist in enabling the trial judge to have a better understanding of the evidence of the witnesses who will be called by each party as to their respective performance of their obligations under the contract, as well as to any expert evidence which might be led.
I turn to the question of the convenience of parties and witnesses. As already mentioned, the plaintiff’s operations extend to different parts of Australia. Its head office is in Sydney. The offices of the first, third and fourth defendants are in Sydney. The joint venture had an office in Adelaide whilst it was carrying out its obligations under the sub-contract. It has completed the work under the sub-contract and the office in Adelaide has been closed.
Both parties assert that they will be calling a relatively large number of witnesses who are at the upper levels of management of each of the respective companies. The plaintiff asserts that it might be calling seven witnesses who could be categorised as being middle to upper management and the defendants assert they will be calling 12 such witnesses. All of those witnesses are based in New South Wales. In addition, the plaintiff points to the fact that it will be calling witnesses from other parts of Australia. At the time of the trial, one will be based in Adelaide, three will probably be in the Northern Territory, one may be in Western Australia and seven could be in Queensland or Victoria or New South Wales.
It is not surprising that the intended witnesses come from different parts of Australia. In a substantial construction contract of this kind, it is unlikely that all the witnesses would be located in the same State as the court in which the proceedings have been brought. It is commonplace, in actions arising out of substantial contracts of this kind, for witnesses to come from different parts of Australia.
It is asserted that expert witnesses in relation to the programming of the project will come from Sydney. Whilst that may be so, there may well be other experts from other parts of the country.
This issue really requires what Mr Wells quite accurately called the balancing of the inconvenience of witnesses, as opposed to the more usual task of the balancing of convenience. It is an instance of one party’s legitimate advantage being another party’s disadvantage.
I note that both parties will be calling a large number of witnesses from New South Wales. That will plainly cause inconvenience to those witnesses. It appears the plaintiff is not concerned with the inconvenience to its witnesses.
When considering these issues of inconvenience, it is proper, I think, to bear in mind that, in these days of quick and efficient transport and communication, questions of convenience have less force than hitherto. The speed and facility of both electronic and telephonic communication enables ready contact while a person is interstate. The ready availability of air transport reduces the inconvenience of interstate travel. Arguments as to convenience have, therefore, less force than hitherto. In addition, having regard to the fact that a number of witnesses will come from parts of Australia other than Sydney, I do not believe that there is any material advantage of the Supreme Court of New South Wales over this Court, in terms of convenience.
To a large extent, I believe, therefore, that a comparison of advantages and disadvantages to each party cancel one another out. To the extent that it does not, I think a very material consideration is the fact that both the parties are engaged in the construction industry and it is clear that their activities are conducted in various parts of Australia. To the extent that inconvenience is caused to senior management by being absent from their base, they are used to that inconvenience and, obviously, the business of both the plaintiff and the defendant companies is readily carried on notwithstanding that inconvenience. It is reasonable to infer also that most of the expert witnesses will be persons engaged in the construction industry, where like considerations will apply.
For all of these reasons, I do not believe that the question of convenience to the parties and witnesses indicates that the Supreme Court of New South Wales is a more appropriate forum than this Court.
It is necessary to refer to three other matters which were relied on by the defendants in support of this application.
It was said that the documents relating to the contract and the performance of the parties of their obligations under that contract are all located in Sydney. I do not believe that to be a material consideration. It will be necessary, in any event, for the documents to be collated and taken to a place for the purposes of discovery and, ultimately, for the purposes of preparing books of documents to be tendered. It will be as convenient for the parties to have them collated in one place as in another. All that is involved in bringing them to Adelaide will be to place them in the necessary receptacles for that purpose. It was apparent that the gravamen of this ground was that, although the work pursuant to the sub-contract had been completed, not all documents were spent; that is to say, there were certain documents to which it will be necessary to refer from time to time. Plainly, any need to refer to such documents can be met by photocopying such documents. The need to refer to documents is not a factor which points to the New South Wales Supreme Court being a more appropriate forum than this Court.
The parties have recently participated in a mediation. That mediation was held in Sydney. The defendants rely on that fact as indicating a preference by the parties for Sydney, as opposed to Adelaide. I do not think that the place where the mediation has been held has any relevance. There might have been any number of factors which caused the mediation to have been held in Sydney. The issue I have to determine is simply which is the more appropriate forum - this Court or the Supreme Court of New South Wales - and the place where the mediation was conducted has no bearing on that issue.
Finally, the defendants submitted that the Supreme Court of New South Wales and, in particular, the Commercial Division of that court, has a degree of expertise and experience in the disposition of litigation arising out of substantial building contracts of this kind. Reference was made to the Technology and Construction List of the Commercial Division and the rules of that court which enable issues to be referred to a referee, which include a specialised expert witness procedure, and enables the use of electronic technology.

I acknowledge the unquestioned expertise of the Commercial Division of the Supreme Court of New South Wales in this respect. However, this Court has like means of enabling the ready disposition of litigation concerning substantial building contracts of this kind. It has Rules of Court which provide for issues to be referred to referees for determination, as well as an expert witness procedure. The court is readily familiar with the use of electronic technology and frequently utilises such technology. There are judges in this Court who have expertise in the handling and disposition of substantial litigation concerning major building contracts.
Ultimately, this last submission was to the effect that the wheels of the Commercial Division are so well oiled that it is the more appropriate forum. Reference was also made to the fact that the Commercial Division has a panel of experienced referees available to it. With all respect to the well-oiled expertise of the Commercial Division, this Court is as capable of dealing with the litigation. In addition, this Court can use the panel of experienced referees which is available to the Supreme Court of New South Wales. The parties can either select an appropriate referee from that panel or, if not, this Court can make an appointment from the panel. While I unhesitatingly acknowledge the experience and expertise of the Commercial Division of the Supreme Court of New South Wales in relation to its technical and construction list, this Court is as able to handle litigation of this kind as that court.
For all of these reasons, I am not satisfied that the Supreme Court of New South Wales is a more appropriate forum than this Court to hear and determine this action. I am not satisfied that it is in the interests of justice to transfer the action to the Supreme Court of New South Wales. The interests of justice point to the desirability of the issues arising out of the sub‑contract which involved the performance of building work in this State being heard and determined in this Court. For all of these reasons, I dismiss the application.