Aqua Max Water Filtration Solutions Pty Ltd v Hurtado - [2017] SASC 165

SUPREME COURT OF SOUTH AUSTRALIA
(Appeals to a Single Judge: Civil)
AQUA MAX WATER FILTRATION SOLUTIONS PTY LTD v HURTADO
[2017] SASC 165
Judgment of The Honourable Justice Blue
15 November 2017
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
PROCEDURE - COURTS AND JUDGES GENERALLY - COURTS - CONCURRENT JURISDICTION OF DIFFERENT COURTS - CASES OTHER THAN UNDER CROSS-VESTING LEGISLATION
Appeal against dismissal by a Magistrate of application for stay of proceedings.
The appellant distributes water filtration products Australia-wide from its base in New South Wales.
In September 2016 the appellant’s directors and the respondent had discussions in Adelaide concerning the appointment by the appellant of the respondent as a distributor of its products in South Australia. The respondent transferred $55,000 into the appellant’s bank account. There is a dispute in the action whether this was for the payment of goods sold and delivered (according to the appellant) or a refundable deposit conditional on the parties entering into a distribution agreement (according to the respondent). There is also a dispute whether the parties entered into a legally binding distribution agreement. There were subsequent meetings in Adelaide between the parties later in September and in October 2016 and email communications between them. However ultimately agreement was not reached on the terms of a written distribution agreement and the respondent requested repayment of the sum of $55,000.
The respondent instituted an action in the Magistrates Court against the appellant for recovery of $55,000. The appellant applied pursuant to s 20 of the Service and Execution of Process Act 1992 (Cth) for a stay of proceedings, contending that the District Court of New South Wales is the appropriate court to determine the issues between the parties. A Magistrate dismissed the application.
Held dismissing the appeal:
1. The Magistrate did not make the specific error asserted by the appellant, namely to take into account the fact that the proceeding was commenced in the Magistrates Court in South Australia (at [46]-[48]).
2. The appellant has not demonstrated an outcome error, namely that the Magistrate’s refusal of a stay was unreasonable or plainly unjust. On the contrary, the Magistrate’s exercise of discretion was correct (at [57]).
3. On a notional fresh application for a stay based on new evidence that the appellant has now instituted in the District Court of New South Wales an action against the respondent for $150,000 plus GST being the price of the sale of the exclusive distributorship rights, the appellant has not demonstrated that the District Court of New South Wales is the appropriate court to hear the disputes between the parties (at [66]).
4. Appeal dismissed (at [69]).
Service and Execution of Process Act 1992 (Cth) ss 9, 10, 15, 16, 17, 18, 19, 20 and 21, referred to.
House v The King (1936) 55 CLR 499, applied.
Fertico v Murray River Corn [2002] SADC 89, not followed.

AQUA MAX WATER FILTRATION SOLUTIONS PTY LTD v HURTADO
[2017] SASC 165
Magistrates Appeal:
BLUE J:

This is an appeal against a decision by a Magistrate dismissing an application for a stay of proceedings under section 20 of the Service and Execution of Process Act 1992 (Cth) (the Act).
Background
The facts set out below are based on the pleadings and affidavits filed by each party in the Magistrates Court insofar as they state facts not contested by the opposite party. Obviously the evidence adduced at trial will be more extensive and the facts found may differ from the facts set out below.
Aqua Max Water Filtration Solutions Pty Ltd (Aqua Max) carries on business distributing and exhibition marketing water filtration products from its base at Homebush West New South Wales. Its shareholders and directors are Ashok Kumar Dograr (Ash Dogra) and Pankaj Kumar Dogra (Kumar Dogra). The Dogras travel around Australia (with the exception of the Northern Territory) to attend exhibitions at which they market Aqua Max’s products.
Mr Hurtado carries on businesses engaged in residential and commercial building, renovation, maintenance and security.
In September 2016 the Dogras established a display stall at the Royal Adelaide Show at Wayville South Australia which they attended throughout the Show between 2 and 11 September 2016.
Mr Hurtado attended at his own display stall at the Royal Adelaide Show and had several conversations with the Dogras over the course of the Show. They told him that they were importers, distributors and wholesalers of water filtration products and were looking to appoint a distributor in South Australia. There were discussions about Mr Hurtado becoming Aqua Max’s South Australian distributor. It was agreed that the Dogras would provide to Mr Hurtado a draft distribution agreement. There is a dispute about the detail of the discussions. However it appears to be common ground that a figure of $150,000 plus GST as a payment for a distributorship was discussed.
On 11 September 2016 the Dogras produced to Mr Hurtado a non-circumvention/non-disclosure agreement (the non-disclosure agreement) under which Mr Hurtado agreed to keep information to be supplied to him confidential and use it only for the purpose of enabling Aqua Max to negotiate and discuss with him financial and business matters relating to Aqua Max including future strategic business plans. Although described as an “agreement”, the document only showed Mr Hurtado as a party and only provided for execution by him. Mr Hurtado executed the agreement.
On 11 September 2016 Mr Hurtado transferred $55,990 into Aqua Max’s bank account. This amount comprised $50,000 plus GST of $5,000 plus $990 being 1.8 per cent said to cover Aqua Max’s bank transfer credit card fee. There is a dispute whether this money was paid as a refundable deposit conditional on the parties entering into a distribution agreement (according to Mr Hurtado) or for the purchase of stock (according to Aqua Max).
On 11 September 2016 Mr Hurtado took possession of the remaining stock that Aqua Max had brought to Adelaide for the Royal Adelaide Show. There is a dispute whether the purpose of Mr Hurtado taking possession was to store the stock for Aqua Max until the next exhibition in Adelaide to be attended by the Dogras (according to Mr Hurtado) or was delivered to Mr Hurtado by way of sale of the stock (according to Aqua Max).
On 14 September 2016 Mr Hurtado sent an email to Ash Dogra which attached a draft heads of agreement, but the heads of agreement was not exhibited to Mr Hurtado’s affidavit. The email referred to a due diligence investigation Mr Hurtado’s accountant and lawyer had advised him to undertake. The emails sought various information before a meeting scheduled for 24 September 2016.
On 24 September 2016 the Dogras flew to Adelaide to participate in discussions with Mr Hurtado. Mr Hurtado’s staff members Jonathon and Bianca were present during the discussions at Mr Hurtado’s Lonsdale office. The Dogras produced to Mr Hurtado a draft distribution agreement that they had drafted themselves (the first draft distribution agreement). There is a dispute about the detail of the discussions on that day.
On 27 September 2016 Mr Hurtado sent an email to the Dogras identifying several “hold points”, forwarding the 14 September email and requesting information set out in both emails. The email attached sample distribution agreements but they were not exhibited to Mr Hurtado’s affidavit.
On 29 September 2016 Kumar Dogra responded to Mr Hurtado’s email and said that the Dogras would have the agreement sent once approved by their lawyer on their return from a country trip.
On 18 October 2016 Ash Dogra sent an email to Mr Hurtado referring to a telephone discussion, confirming their attendance at the SA 4WD show that weekend and confirming a request for Mr Hurtado to organise for a few boxes to be delivered to the showgrounds containing stock listed in an attachment to the email.
On 21 to 23 October 2016 Ash Dogra attended a display stall at the Adelaide 4WD & Adventure Show at Wayville South Australia. He had further discussions with Mr Hurtado. Mr Dogra produced to Mr Hurtado a draft distribution agreement which had been prepared by Aqua Max’s solicitors (the second draft distribution agreement).
On 8 November 2016 the Dogras provided some documents to Mr Hurtado. The documents and the covering correspondence were not exhibited to the affidavits filed in the Magistrates Court.
At some point the discussions between the parties broke down and Mr Hurtado requested repayment of the sum of $55,000.
On 7 March 2017 Mr Hurtado issued a claim in the Magistrates Court against Aqua Max seeking payment of $55,000. Mr Hurtado pleaded that it was agreed on 11 September 2016 when he paid the deposit that it was paid to secure the opportunity to become Aqua Max’s sole South Australian distributor and was refundable if the parties did not ultimately agree on a South Australian distributorship.
On 11 April 2017 Aqua Max filed a defence in which it pleaded that the payment of $55,000 was for the purchase of goods and not a security deposit in respect of a potential distributorship. Aqua Max also pleaded that the parties agreed in principle to enter into a sole distributorship for South Australia and Mr Hurtado’s withdrawal was in breach of that agreement.
On 26 June 2017 Aqua Max filed an interlocutory application seeking a stay of proceedings supported by an affidavit sworn by Ash Dogra on 30 May 2017. On 6 July 2017 Mr Hurtado filed an answering affidavit and on 25 July 2017 Aqua Max filed a responding affidavit by Ash Dogra.
On 26 July 2017 the Magistrate heard and determined the application, delivering ex tempore reasons.
On 16 August 2017 Aqua Max filed a notice of appeal against the Magistrate’s judgment.
On 12 October 2017 Aqua Max instituted in the District Court of New South Wales an action against Mr Hurtado for $150,000 plus GST being the price of the sale of the exclusive distributor rights for Aqua Max’s products in South Australia.
On 13 October 2017 the appeal came on for hearing. It was adjourned on the application of Aqua Max. On 3 November 2017 the appeal was heard.
The statutory regime
Subsection 15(1) of the Act provides that an initiating process issued in a State may be served in another State. An initiating process is a process by which a proceeding is commenced or by reference to which a person becomes a party to a proceeding.[1]
[1] Service and Execution of Process Act 1992 (Cth) s 3(1), definition of “initiating process”.
Subsections 15(2) to (5) and sections 9, 10 and 16 prescribe the manner in which service of such process is to be made. Section 17 prescribes the time for a person served under the Act to enter an appearance and section 18 prescribes requirements for appearances. Section 19 empowers the court of issue on the application of a person served under the Act to order security for costs of the proceeding.
Section 20 empowers the court of issue (other than the Supreme Court) on the application of a person served under the Act to stay the proceeding. Section 21 precludes any court other than the court of issue from restraining a party from taking a step in the proceeding on the ground that the place of issue is not the appropriate forum for the proceeding. The combined effect of sections 20 and 21 is to vest in the court of issue the jurisdiction to determine an issue as to the appropriate forum for the proceeding.
Section 20 relevantly provides:
20 Stay of proceedings
(1)This section does not apply in relation to a proceeding in which the Supreme Court of a State is the court of issue.
(2)The person served may apply to the court of issue for an order staying the proceeding.
(3)The court may order that the proceeding be stayed if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters.
(4)The matters that the court is to take into account in determining whether that court of another State is the appropriate court for the proceeding include:
(a)     the places of residence of the parties and of the witnesses likely to be called in the proceeding; and
(b)     the place where the subject matter of the proceeding is situated; and
(c)     the financial circumstances of the parties, so far as the court is aware of them; and
(d)     any agreement between the parties about the court or place in which the proceeding should be instituted; and
(e)     the law that would be most appropriate to apply in the proceeding; and
(f)    whether a related or similar proceeding has been commenced against the person served or another person;
but do not include the fact that the proceeding was commenced in the place of   issue.
(5)The court’s order may be made subject to such conditions as the court considers just and appropriate in order to facilitate determination of the matter in issue without delay or undue expense.
…
(9)This section does not affect the court’s power to stay a proceeding on a ground other than the ground mentioned in subsection (3).
(10)    This section does not affect the operation of:
(a)     the Jurisdiction of Courts (Cross‑vesting) Act 1987; or
        (b)     a corresponding law of a State.
The purpose of the concluding words of subsection 20(4) is to negate the common law approach to forum non conveniens which required a defendant to demonstrate that the chosen forum was clearly inappropriate[2] and ensure that a plaintiff does not obtain a “home ground” advantage merely because the plaintiff chose the court of issue.[3]
[2] Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 558 per Mason CJ, Deane, Dawson and Gaudron JJ.
[3] Rochfort v Habashy [2005] QCA 197 at [25] per Jerrard JA (with whom McMurdo P and Philippides J agreed).
The overriding test is set out in subsection 20(3), namely whether a court of another State is the appropriate court to determine all the matters in issue between the parties. While subsection 20(4) identifies six relevant matters to be taken into account in determining that question, those matters are manifestly non-exhaustive.[4]
[4] St George Bank Ltd v McTaggart [2003] QCA 584 at [11] per MacPherson JA (with whom Davies JA and Philippides J agreed)
The test whether a court of another State is the appropriate court to determine all the matters in issue involves a consideration of with which court the action has the most real and substantial connection.[5]
[5] St George Bank Ltd v McTaggart [2003] QCA 584 at [10] per MacPherson JA (with whom Davies JA and Philippides J agreed)
The Magistrate’s reasons
The Magistrate delivered ex tempore reasons.
33 The Magistrate correctly observed that the test was set out in subsection 20(3), the matters set out in subsection 20(4) are not exhaustive and that one of the matters not to be taken into account is the fact that the proceeding has been commenced in the place of issue. In respect of the latter matter, the Magistrate said:
Section 20(4) provides that one of the matters not to be taken into account is the fact that the proceedings have been commenced in the place of issue, in this case in the Adelaide Registry of the Magistrates Court of South Australia.
The Magistrate considered each of the six factors set out in subsection 20(4). In this respect the Magistrate said:
Turning to consider the factors in s 20(4), para. (a) concerns ‘the places of residence of the parties and of the witnesses likely to be called in the proceeding’. In this matter, it appears that the likely witnesses will be the two directors of the defendant company and they reside in New South Wales, and the plaintiff will be a witness and he resides in South Australia. I note that the company is registered in New South Wales and its place of business is in New South Wales.
Section 20(4)(b) concerns ‘the place where the subject matter of the proceeding is situated’. I note that the meetings and negotiations between the parties took place in South Australia. I note that discussions were held between the parties during the Royal Adelaide Show between 2 and 11 September and on a further occasion the directors of the defendant company came back to South Australia for further discussions. On that occasion, they brought with them the document marked ‘RH-2’. I note that the non-disclosure agreement marked ‘RH-1’ is the only agreement that has been signed and that was signed on 11 September 2016.
I have no information in relation to para. (c) ‘the financial circumstances of the parties’. I consider that para. (d) is a neutral factor in that there has been no agreement between the parties about the court or the place in which the proceeding should be instituted, or the law that would be most appropriate to apply in the proceeding. I note that the confidentiality agreement did provide that ‘the agreement shall be constructed and applied in accordance with the laws of New South Wales’, however the dispute is not in relation to the confidentiality agreement.
Turning to para. (f) ‘whether a related or similar proceeding has been commenced against the person served or another person’, counsel for the defendant has submitted that instructions have been given for proceedings to be issued in the District Court of New South Wales. However he was not able to advise that such proceedings have been commenced at this time. It also appears that a possible alternative is that a counterclaim could be lodged in relation to the present proceeding. I note that the proposed counterclaim would be in the sum of $150,000 which would mean that the proceeding would be outside the jurisdiction of the Magistrates Court and the proceeding would need to be transferred to the District Court.
The Magistrate weighed the relevant factors and was not satisfied that the District Court of New South Wales was the appropriate court to determine the matters in dispute between the parties. The Magistrate concluded:
After considering the affidavit material placed before me, the respective submissions of counsel, and balancing the relevant factors, I’m not convinced that there is any reason to stay the proceeding.
The arguments on appeal
Aqua Max accepts that the Magistrate’s decision involved a discretion and that the principles in House v The King[6] apply to an appeal against the exercise of that discretion.
[6] (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ.
Aqua Max contends that the Magistrate made a process error and also made an outcome error. Aqua Max contends that by the last sentence of the passage extracted at [34] above the Magistrate took into account an impermissible consideration, namely the fact that the proceeding had been instituted in the Magistrates Court and would need to be transferred to the District Court if a counterclaim were filed. Aqua Max contends that in any event the Magistrate made an outcome error because the result of the exercise of the discretion is “unreasonable or plainly unjust”.[7] Mr Hurtado takes issue with both contentions.
[7] House v The King (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ.
Aqua Max seeks to adduce new evidence on appeal, namely that on 12 October 2017 it instituted an action in the District Court of New South Wales against Mr Hurtado for $150,000 plus GST pursuant to an agreement made on about 11 September 2016. Mr Hurtado opposes reception of the new evidence and submits that it does not meet the criteria for fresh evidence on appeal. Mr Hurtado submits that in any event the institution of that action and the attempted reliance on it on appeal is an abuse of process.

It is accepted by both parties that if the appeal is dismissed Aqua Max could make a fresh application in the Magistrates Court for a stay in reliance on the institution of the action in the District Court of New South Wales. It is agreed by both parties that, to avoid the time and expense involved in a fresh application, I should proceed in a similar manner to that in which I proceeded in Cosenza v Origin Energy Limited,[8] namely that if I were otherwise to decide that the appeal should be dismissed I should determine a fresh application by Aqua Max for a stay on the merits having regard to the institution of the action in the District Court of New South Wales.
Construction of section 20
Subject to only one exception, there is no contest between the parties on appeal as to the construction of section 20 of the Act and the principles set out at [25]-[31] above are common ground.
The exception is that Mr Hurtado contends that on the proper construction of section 20(4)(f) the reference to a related or similar proceeding having been “commenced against the person served or another person” does not encompass a proceeding commenced by the person served against the plaintiff, citing the decision of Judge Kitchen in Fertico v Murray River Corn.[9]
42 In Fertico v Murray River Corn,[10] Judge Kitchen said:
Concerning the proceedings which the defendant has recently issued in New South Wales the relevant criterion is subsection (4)(f). They are not a proceeding issued against the defendant so the question in this case is this - is the plaintiff included in the expression "or another person" in subsection (4)(f). Where, as here, there is a claim made by A in proceedings issued in South Australia against B and what is in substance a cross claim made by B in proceedings issued in another State against A it would appear to me that the cross claim is an irrelevant consideration for the purposes of subsection (4)(f). The subsection itself refers to "the person served", "the parties" and "or another person" from which in my opinion "another person" should be construed to mean a person other than the parties to the proceeding the subject of the application pursuant to Section 20. If that were not the case then where A and B had each issued proceedings against the other in different States, each would be entitled to apply in the issuing State for a stay pursuant to Section 20, subsection (4) would require the issuing court to take no account "of the fact that the proceeding was commenced in the place of issue" but incongruously would be required to take into account the proceeding issued in the court of the other State.[11]
[8] [2017] SASC 145 at [80].
[9] [2002] SADC 89.
[10] [2002] SADC 89.
[11] At [35].
There is no doubt that section 20(4)(f) encompasses a case in which a plaintiff commences a related or similar proceeding against the person served. This may occur if A commences proceedings in two different courts in two different States against B and each court has jurisdiction to hear both matters, although it is unlikely to be common and may well amount to an abuse of process.
A more common situation likely to have been foreseen by the legislature was A commencing a proceeding against B in a court of one state (the first court) and B commencing a proceeding against A in a court of a different state (the second court). Read literally the reference to “another person” is capable of encompassing the plaintiff in his, her or its capacity as a defendant in the court of the other State, although the drafting is a little clumsy. The reason given by Judge Kitchen for reading down is unpersuasive. If stay applications were brought in the first court, the court would be obliged to ignore the mere fact that A had chosen to bring that proceeding in the first court (rather than the second court). However, I consider that the first court would also be obliged to ignore the mere fact that B had chosen to bring the other proceeding in the second court. On the other hand the first court would be entitled (and indeed required) to have regard to the fact that each party was pursuing a claim against the other party as a relevant factor and to the fact that there were two proceedings on foot between the parties in two courts in circumstances in which each court had jurisdiction to determine all of the disputes between the parties. I see no reason why the first court could not also have regard in the general exercise of its discretion to the relative timing of the commencement of the two sets of proceedings if there were a significant difference but it is not necessary to decide that question for the purpose of the appeal.
Error by the Magistrate?
Specific error
Aqua Max contends that the Magistrate made a process error evidenced by the last sentence of the passage extracted at [34] above, namely the Magistrate took into account an impermissible consideration, namely the fact that the proceeding had been instituted in the Magistrates Court and would need to be transferred to the District Court if a counterclaim were filed.
I reject this contention. If the Magistrate’s reasons are read as a whole it is clear that the Magistrate did not take into account this impermissible consideration. First the Magistrate said expressly in the passage extracted at [33] above that subsection 20(4) provided that one of the matters not to be taken into account is the fact that the proceedings have been commenced in the place of issue. There is no reason to read the last sentence of the passage extracted at [34] above as contravening this precept.
Secondly at the hearing of the application counsel for Aqua Max had informed the Magistrate that Aqua Max had instructed its solicitors in New South Wales to commence proceedings in the District Court of New South Wales against Mr Hurtado for the recovery of $150,000 and if the matter stayed in South Australia there would either be competing proceedings involving the same subject matter in two different States or alternatively there would be a counterclaim by Aqua Max in the Magistrates Court which due to its jurisdictional limit would need to be transferred to the District Court. In the first three sentences of the last paragraph of the passage extracted at [34] above the Magistrate accurately recited this submission. In the last sentence the Magistrate accurately observed that, if a counterclaim were brought by Aqua Max in the Magistrates Court, it would need to be transferred to the District Court. There is nothing in this observation which suggests that the Magistrate was giving weight in favour of Mr Hurtado to the fact that proceedings have been commenced in South Australia and on the contrary the Magistrate was merely qualifying the previous sentence in the interests of strict accuracy and reflecting the submission made to her by counsel for Aqua Max.
Thirdly the last paragraph of the passage extracted at [34] above was in the context of addressing the sixth mandatory factor rather than addressing the different topic of weight being given in favour of Mr Hurtado to the fact that proceedings had been commenced in South Australia.
General error
Aqua Max contends that the Magistrate made an outcome error and the Magistrate must have given insufficient weight to the factors pointing in favour of New South Wales. Aqua Max rightly acknowledges that merely giving insufficient weight to a relevant factor is not a process error. Aqua Max acknowledges that under this ground of appeal it must demonstrate that the result of the exercise of the discretion is “unreasonable or plainly unjust”.[12]
[12] House v The King (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ.
First Aqua Max points to the connections between the disputes between the parties and New South Wales, including that Aqua Max has its principal place of business, storage/distribution facility, exhibition marketing base and banking branch and its directors reside in New South Wales; it supplies its products throughout Australia (and intended to supply its products to Mr Hurtado) from New South Wales; it conducted email communications with Mr Hurtado from New South Wales.
Mr Hurtado in response points to corresponding connections between the disputes between the parties and South Australia, including that he has his businesses, facilities, base and banking branch in South Australia; the products intended to be supplied under the proposed distribution agreement were to be supplied and distributed in South Australia; and he conducted email communications with Aqua Max from South Australia.
In respect of these considerations, the position is equally balanced and they do not favour either New South Wales or South Australia as the more appropriate forum.
Secondly Aqua Max points to the fact that the non-disclosure agreement contained a clause that it was to be “constructed and applied in accordance with the laws of the State of New South Wales.” This does not point in favour of New South Wales for two reasons. First the non-disclosure agreement is confined to the topic of the disclosure and confidentiality of information: it does not address either a distribution agreement (the subject of Mr Hurtado’s case) or the sale of products (the subject of Aqua Max’s primary case). Secondly on the cases of both parties the agreement or agreements the subject of the disputes were oral and were made on 11 September 2016 in South Australia. Accordingly, if the factor of the law that would be most appropriate to apply in the proceeding (section 20(4)(e)) had any significant weight in the exercise of the discretion, it would point in favour of South Australia. However the pleadings and affidavits all indicate that the law applicable to the disputes is the common law which is uniform across Australia. This factor therefore has no weight in favour of New South Wales.
Thirdly Aqua Max points to the fact that the second draft distribution agreement contained a similar clause in respect to the laws of New South Wales as well as providing that the parties “submit to the non-exclusive jurisdiction of the New South Wales courts in relation to any dispute arising from or in connection with this Agreement”. However the second draft distribution agreement, which was not proffered by Aqua Max until the period from 21 to 23 October 2016, was never executed and its terms were never agreed by Mr Hurtado. It is noteworthy also that the first draft distribution agreement did not contain any proper law or jurisdiction clause. As observed above, on any view the agreement between the parties was made on 11 September 2016 in South Australia. The second draft distribution agreement did not in any event require proceedings to be instituted in New South Wales.
Fourthly Aqua Max points to the fact that it has two principals (Ash and Kumar Dogra) who would be witnesses at trial whereas Mr Hurtado is a single principal who would be a witness at trial. Even if this assessment of the number of witnesses on each side were accurate, while it would be a factor in favour of New South Wales, it would not overwhelm other factors considered below. The trial of the proceedings will be relatively short (one or two days) and interstate travel is a regular part of the lives of the Dogras. In any event, on the affidavit material it may be expected that Mr Hurtado will call his staff members Jonathon and Bianca to give evidence about the discussions between the parties on 24 September 2016.
There are three significant factors that favour South Australia as the more appropriate forum. First the agreement (whatever its nature and terms) was made in South Australia on 11 September 2016 and all meetings (as opposed to remote dealings by phone and email) occurred in South Australia, namely on 11 and 24 September and 21 to 23 October 2016. Secondly the subject matter of the proceedings, namely a South Australian distributorship, is located in South Australia. Thirdly it is an inherent characteristic of Aqua Max’s business that its directors travel around Australia to attend exhibitions at which they market its products. In a commercial (as well as a literal) sense Aqua Max came to South Australia, Mr Hurtado did not go to New South Wales.
Aqua Max has not demonstrated that the outcome, namely the Magistrate’s dismissal of the stay application, was unreasonable or plainly unjust. On the contrary I agree with the outcome.
Subject to determining Aqua Max’s notional fresh application for a stay based on the new evidence of the proceeding recently commenced in the District Court of New South Wales, the appeal should be dismissed.
Fresh consideration on new material
I turn to consider whether considered afresh and taking into account the existence of the proceeding in the District Court of New South Wales a stay should be granted under section 20 on the merits.
As noted above, on 12 October 2017 Aqua Max instituted in the District Court of New South Wales an action against Mr Hurtado for $150,000 plus GST being the price of the sale of the exclusive distributor rights for Aqua Max’s products in South Australia.
By paragraph 5 of its pleading, Aqua Max pleads that an agreement was made between the parties on about 11 September 2016 whereby “the plaintiff agreed to sell to the defendant and the defendant agreed to purchase immediately from the plaintiff the sole and exclusive distributor rights for the plaintiff’s product in the state of South Australia for the sum of $150,000.00 plus GST”.
Aqua Max pleads that the agreement was made in the non-disclosure agreement. This is not a tenable plea because the non-disclosure agreement does not contain any term for the sale or purchase of a distributorship. Aqua Max pleads that the agreement was also made “orally and by the conduct of the parties on or about the said date”. This must be a reference to discussions between the parties at the Royal Adelaide Show on 11 September 2016.
The fact that Aqua Max has now instituted the proceeding in the District Court of New South Wales which its counsel told the Magistrate in July was to be instituted does not make a significant difference to the exercise of the discretion. The choice to be made is between the present action in South Australia together with a counterclaim to be brought by Aqua Max proceeding to trial in South Australia on the one hand and the present action in New South Wales together with a counterclaim to be brought by Mr Hurtado proceeding to trial in New South Wales. Clearly it would be untenable for two separate proceedings raising common issues to proceed in two different courts with the possibility of inconsistent results.
The factors identified above that point in favour of South Australia as the more appropriate forum apply equally whether Aqua Max prosecutes a claim against Mr Hurtado or whether Mr Hurtado is the only one prosecuting a claim against Aqua Max.
On an overall assessment, there are several factors which are neutral either because matters are equally balanced or because the factor has no weight. In addition there are several factors that favour South Australia as the more appropriate forum. They are the three factors identified at [56] above. In addition, there is a slight preponderance of witnesses in favour of South Australia (three witnesses for Mr Hurtado and two witnesses for Aqua Max) but this is only to be given relatively slight weight.
On a fresh assessment, I am not satisfied that the District Court of New South Wales is the appropriate court to determine all the matters in issue between the parties. On the contrary those matters should be determined in the Magistrates Court or if necessary in the District Court of South Australia.
As noted above, Mr Hurtado contends that institution of the action in New South Wales is an abuse of process. However, on the hearing of the appeal counsel for Aqua Max informed the Court that, if the appeal is dismissed, Aqua Max would bring a counterclaim in the existing action in South Australia. In those circumstances, I do not consider that a question of abuse of process arises.
At the hearing of the appeal, Mr Hurtado informed the Court that he agreed to waive the jurisdictional limit of the Magistrates Court so as to permit Aqua Max to bring a counterclaim for $150,000 plus GST. Aqua Max reserved its position on that question. Accordingly, if Aqua Max also waives the jurisdictional limit, the action and a counterclaim can proceed to trial in the Magistrates Court. If not, upon the filing of the counterclaim, the matter will need to be transferred to the District Court.
Conclusion
I dismiss the appeal. I will hear the parties as to consequential or other orders.