Australian Foreman Stevedores Association v Crone

[1989] FCA 14

Re: NATIONAL MUTUAL HOLDINGS PTY. LIMITED; ACC HOLDINGS LIMITED; ACC FINANCIAL
MANAGEMENT LIMITED; ACC LIFE LIMITED; ACC GENERAL INSURANCE LIMITED;
AUSTRALIAN CASUALTY COMPANY LIMITED (Applicants); THE SENTRY CORP PEAT MARWICK
MITCHELL & CO. (A FIRM); SENTRY ASSURANCE INTERNATIONAL LIMITED; ACC HOLDINGS
LIMITED; ACC FINANCIAL MANAGEMENT LIMITED; ACC LIFE LIMITED; ACC GENERAL
INSURANCE LIMITED; AUSTRALIAN CASUALTY COMPANY LIMITED; WILLIAM CLARKE O'KANE
(Cross-applicants)
And: THE SENTRY CORPORATION AND PEAT MARWICK MITCHELL & CO. (A FIRM);
(Respondents); ACC HOLDINGS LTD.; ACC FINANCIAL MANAGEMENT LTD; ACC LIFE LTD.;
ACC GENERAL INSURANCE LTD.; AUSTRALIAN CASUALTY CO. LTD.; SENTRY ASSURANCE
INTERNATIONAL LTD.; AND PEAT MARWICK MITCHELL & CO. (A FIRM); THE SENTRY
CORPORATION; ANDREW THOMAS GREGORY; WILLIAM CLARKE O'KANE; ACC HOLDINGS
LIMITED; ACC FINANCIAL MANAGEMENT LIMITED; ACC LIFE LIMITED; ACC GENERAL
INSURANCE LIMITED; AUSTRALIAN CASUALTY COMPANY LIMITED; THE SENTRY
CORPORATION; AMERICAL HOME ASSURANCE LIMITED (Cross-Respondents)
No. VG173 of 1987
Federal Court of Australia

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Sweeney J.(1)

CATCHWORDS

Federal Court of Australia - National character of Court - Practice and procedure - Change of venue - "Proper Place" of proceeding for purpose of Federal Court Rules - test to be applied - scope of power conferred on the Court or judge by s.48 of the Federal Court Act and s.79 of Judiciary Act.

Federal Court of Australia Act 1976 (Cth): ss.48, 51A

Federal Court Rules: O.30 r.6

Judiciary Act 1903 (Cth): s.79

Supreme Court Rules 1970 (NSW): Part 6.10

Wrongs Act 1958 (Vic): s.23B

Centrepoint Freeholds Pty. Ltd. v. T.N. Lucas Pty. Ltd. 6 FCR 133

Pozniak v. Smith 151 CLR 38

State Bank of New South Wales v. Commonwealth Savings Bank of Australia
154 CLR 579

State Bank of New South Wales v. Commonwealth Savings Bank of Australia 67 ALR 123

HEARING

MELBOURNE

#DATE 31:1:1989

Counsel for the Applicants Mr. A.C. Archibald Q.C. with
and the Cross Respondent, Mr. C.M. Scerri
Sentry Assurance International Limited

Solicitors for the Applicants Mallesons Stephen Jaques
and the Cross Respondent,
Sentry Assurance International Limited

Counsel for the First-named Mr. J.H. Karkar Q.C. with
Respondent: Ms. M. Sloss

Solicitors for the First-named Phillips Fox
Respondent:

Counsel for the Second-named Mr. R.J. Ellicott Q.C. with
Respondent: Mr. P.E. Anastassiou

Solicitors for the Second-named Arthur Robinson & Hedderwicks
Respondent: (as agents for Allen Allen &

Hemsley)

Counsel for the Cross Applicant, Ms. M. Unsworth (Solicitor)
William Clarke O'Kane:

Solicitors for the Cross Applicant, Minter Ellison
William Clarke O'Kane:

Counsel for the Cross Respondent, Mr. J.R.P. Lewisohn
American Home Assurance Limited:

Solicitors for the Cross Respondent, Madden Butler Elder & Graham
American Home Assurance Limited:

ORDER

That the motion of PMM dated 7 March 1988 be dismissed with costs, including the costs of the hearing before Jenkinson J.

That the motion of Sentry dated 6 December 1988 be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

In the motions presently before the Court two of the parties seek a change of venue in these proceedings from Melbourne to Sydney.

1. The first applicant, National Mutual Holdings Pty. Limited ("National Mutual"), acquired from the first respondent, The Sentry Corporation ("Sentry"), all the issued shares in the capital of the second applicant, A.G.C. Holdings Limited ("A.G.C."), which has at all material times owned all the shares in the remaining four applicants. The applicants allege that this acquisition by National Mutual was induced by misleading statements by Sentry as to the pre-acquisition financial records of the other applicants which had been audited by the second respondent, Peat Marwick Mitchell & Co. ("PMM"), a firm of chartered accountants. The applicants allege several causes of action, based upon alleged misrepresentations and warranties by Sentry which induced National Mutual to purchase the shares.

2. The claim made by National Mutual against PMM is set out in paragraphs 25 to 46 of the Amended Statement of Claim which read as follows:
   (PARAGRAPHS 25 TO 46 OF THE AMENDED STATEMENT OF CLAIM OMITTED)

3. In addition to the application, six cross claims have been issued in these proceedings.

4. The first cross claim is that of Sentry, filed 22 February 1988, alleging misleading conduct and negligence against seven cross-respondents, being the second to sixth applicants, Sentry Assurance International Limited ("SAIL") and PMM.

5. The second cross claim is that of PMM, filed 16 February 1988, alleging misleading conduct and negligence against eight cross-respondents, being Sentry, Andrew Thomas Gregory, a public accountant, William Clarke O'Kane, the managing director and chief executive of the second applicant, ACC Holdings Limited, and the second to sixth applicants. Mr. O'Kane is one of the persons said to have conducted the negotiations on behalf of Sentry which led to the sale by it of shares to National Mutual.

6. The third cross claim is that of SAIL, filed 18 May 1988, against Sentry, seeking specific performance of an assumption agreement between these parties and National Mutual Hong Kong Limited, dated 26 June 1986.

7. The fourth cross claim is made by SAIL, filed 18 May 1988, against PMM, containing allegations of misleading conduct and negligence.

8. The fifth cross claim is that of each of the applicants except National Mutual, filed 12 April 1988, seeking indemnity or contribution from PMM.

9. The sixth cross claim, filed 30 June 1988, is that of William Clarke O'Kane claiming indemnity from American Home Assurance Limited pursuant to a policy of insurance which, it was claimed, indemnified directors and officers of National Mutual and National Mutual Royal Bank Limited and their subsidiaries from claims including that made against him in the cross-application of PMM.

10. A motion by PMM was heard by Jenkinson J. on 31 March 1988, for orders:
    

1. That the trial of these proceedings be fixed at Sydney.

2. That Sydney be the proper place of these proceedings for the purposes of Order 30 Rule 6.

1. On 29 March 1988, the solicitors for the second cross-respondent, Andrew Thomas Gregory ("Gregory") wrote to the solicitors for PMM consenting to the proposed change of venue. In a judgment delivered on 26 April 1988, Jenkinson J. dismissed the motion. His Honour applied the test which had been adopted by a number of single judges of the Court that there should be a change of venue only where there was a manifest preponderance of convenience in trying the cause at the proposed new venue.

2. His Honour concluded his reasons by saying:
   

"On the evidence adduced and the submissions advanced on the hearing of this motion I would be inclined to think, but not without doubt, that the proceeding and the cross-claim may be tried in Sydney more suitably for the interests of all the parties and the ends of justice than in Melbourne. But I certainly cannot find a manifest preponderance of convenience in trying those causes in Sydney. Accordingly the motion for change of the venue of the trial will be dismissed. There is no advantage in transferring the proceeding or the cross-claim to the New South Wales Registry if the trial is to be in Melbourne. That motion will also be dismissed.".

1. In a judgment delivered on 26 July 1988 a Full Court consisting of Bowen C.J., Woodward & Lockhart JJ. gave leave to appeal from this order, allowed the appeal, set aside the orders of Jenkinson J. and remitted the motion of PMM to him or to another single judge for further hearing and determination. In respect of costs it made the following orders:
   

"The costs of the motion for leave to appeal and of the appeal be the second respondent's costs in the cause. Otherwise there be no order as to the costs of any other party to the appeal; The costs of the motion of which notice was filed on 8 March 1988 including the hearing before Jenkinson J. and any further costs of the motion be determined by the judge who hears the motion hereby remitted.".

1. The motion of PMM remitted by the Full Court has been further argued before me, together with a motion by Sentry pursuant to notice dated 6 December 1988 seeking similar orders. I was informed by counsel for Sentry that, at the hearing of PMM's motion by Jenkinson J., it supported the application for a change of venue but took "a neutral attitude" to the question as to what was the proper test to be applied, and that before the Full Court it submitted to whatever judgment the Court might make.

2. In its reasons for judgment the Full Court rejected the test which had been adopted at first instance. Their Honours referred to the power conferred upon the Court or a Judge by s.48 of the Federal Court Act "at any stage of a proceeding in the Court" to "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.".

3. The Court went on to say:
   

"The power conferred on the Court or a judge by s.48 is in terms wholly unfettered. It should be exercised flexibly having regard to the circumstances of the particular case. It would be regrettable and unwise if the Court were to circumscribe the general power conferred by s.48 with inflexible rules or impose inelastic constraints upon its exercise. As the power may be exercised subject to conditions, the Court or a judge is in a position to mould orders under the section to take account of the many and varied circumstances that arise in particular cases. The power conferred by s.48 recognises the national character of this Court. The factors which the Court is entitled to take into account in considering whether one city is more appropriate than another for interlocutory hearings or for the trial itself are numerous. The Court must weigh those factors in each case. Residence of parties and of witnesses, expense to parties, the place where the cause of action arose and the convenience of the Court itself are some of the factors that may be relevant in particular circumstances. The balance of convenience will generally be a relevant consideration, but not necessarily determinative of each case. A party commences a proceeding by filing an application in a particular registry of the Court. If that party or another party wishes to have the proceeding conducted or continued in another place he may apply to the Court for an order under s.48 or O.10 r.1(2)(f) or O.30 r.6 as the case may be. There is no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere. It should be noted that the Court may exercise its powers under O.30 r.6 either on the application of a party or of its own motion. The Court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the Court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the Court to such matters before directing that the proceeding should continue at a different place.

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.".

1. In the present case it is common ground that the choice of venue by the applicants was not capricious.

2. The parties have agreed upon a Chronology of Events and a Statement of Material Facts which usefully summarizes the history of the case. It reads as follows:
   (CHRONOLOGY OF EVENTS AND STATEMENT OF MATERIAL FACTS OMITTED)

3. In addition to the two motions seeking a change of venue, there were also before the Court on 8 December 1988 the following:
   

1. a notice of motion dated 21 November 1988 by American Home Assurance Limited seeking leave to interrogate;

2. a notice of motion dated 16 August 1988 by National Mutual seeking orders restraining Sentry from disclosing or making available to any party transcripts of statements of witnesses, computer diskettes and from seeking to admit them into evidence;

3. pursuant to the order of Jenkinson J. made 6 October 1988, leave was sought by National Mutual to amend its Application and Statement of Claim;

4. pursuant to that order leave was sought by Sentry to require National Mutual and PMM to provide further and better discovery; and

5. the directions hearing in the application generally.

1. The parties agreed that these additional matters should be adjourned to 10 February 1989 for mention and this was ordered.

2. Section 79 of the Judiciary Act 1903 provides as follows:
   

"The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable".

1. In State Bank of New South Wales v Commonwealth Savings Bank of Australia (154 CLR 579 at 585-6) Gibbs C.J. said:
   

"Secondly, it was submitted by all parties that s.94 of the Supreme Court Act 1970 (NSW), as amended, which gives the Supreme Court power to award interest, would have no application to the proceedings if they remained in this Court or if they were remitted to the Federal Court and that the Supreme Court would therefore have a statutory power to award interest which this Court and the Federal Court lack. Counsel for the plaintiff submitted that a statutory power to award interest is regarded as a necessary adjunct of judicial power in almost every jurisdiction in Australia and that it would be unjust to remit the proceedings to a court that lacked such a power. On the other hand counsel for the defendant submitted that the matter should not be remitted to a court which would be called on to apply a law materially different from that which would be applicable if the matter were heard in this Court. In Australian National Airlines Commission v. The Commonwealth (10), Mason J. expressed the view that s.79 of the Judiciary Act does not render s.94 of the Supreme Court Act applicable to proceedings in the High Court. If that view is correct, of course s.79 equally does not render s.94 applicable in the Federal Court. The expression of opinion made by Mason J. was unnecessary for his decision, since the action in that case was not commenced until after the Supreme Court Act had come into operation and s.16(1) of that Act made it clear that s.94 was not intended to apply to proceedings already commenced, with certain exceptions which Mason J. held inapplicable. The operation of s.79 of the Judiciary Act in a case such as this raises very difficult questions, as the differences of opinion manifested in John Robertson & Co. Ltd. v. Ferguson Transformers Pty. Ltd. (11) reveal. Without having heard full argument I would not express any concluded opinion on the question whether s.79 does render s.94 applicable to proceedings in this Court or in the Federal Court. However it is clear that s.94 would be applicable if these proceedings were remitted to the Supreme Court. In Pozniak v. Smith (12) the majority of the justices who sat to hear that case cited with approval the observation of Brennan J. in Robinson v. Shirley (13) that the power of remitter 'is intended to facilitate the course of litigation rather than to enhance or diminish a plaintiff's rights or correspondingly alter a defendant's obligations'.".

1. Counsel drew attention to two differences between the law of Victoria and that of New South Wales, relating to interest and to contribution.

2. Some of the causes of action relied upon by National Mutual arose before the commencement of s.51A of the Federal Court Act which now empowers the Court, amongst other things, to award interest calculated from the date when the cause of action arose.

3. In Centrepoint Freeholds Pty. Ltd. v T.N. Lucas Pty. Ltd., (6 FCR 133) it was held by a Full Court of this Court that s.79 of the Judiciary Act 1903 picked up the effect of s.79A(1) of the Supreme Court Act (Vic) 1958 which permitted the trial judge sitting in Melbourne to award damages in the nature of interest from the date of the commencement of the action until the date of the entry of judgment.

4. In State Bank of New South Wales v Commonwealth Savings Bank of Australia (67 ALR 123) Lockhart J. held that the language of s.94 of the Supreme Court Act 1970 (NSW) was not wide enough to empower the Federal Court sitting in Sydney to award pre-judgment interest.

5. The New South Wales legislation dealing with contribution (Part 6.10 of the Supreme Court Rules 1970 (NSW)) is limited to contribution between joint tortfeasors, whereas the Victorian legislation (s.23 of the Wrongs Act 1958 (Vic)) is not so limited, and applies in respect of damage irrespective of the legal basis of liability. Section 23B(1) of the Wrongs Act 1958 (Vic) provides that "a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise)".

6. By letter dated 16 August 1988 the solicitors for PMM made the following offer to National Mutual:
   

"We refer to the judgment of the Full Court delivered on July 26, 1988.

We are instructed that our client will agree to the Court imposing conditions on the transfer of the proceedings to, or the hearing of the matter in, Sydney that the law of Victoria apply in respect of pre-judgment interest and contribution under the Wrongs Act 1958 (Vic). That is, our client will accept that the 2 matters raised by the Applicants in the hearing before the Full Court be determined according to the law of Victoria if the substantive hearing be moved to Sydney (subject to our clients' right to argue (if it chooses) that the authorities relied on, or the view of Victorian law advanced, by the Applicants are wrong - a right it would have even if the proceedings were left in Melbourne).".

1. Counsel for PMM renewed this offer in relation to interest and made it without qualification. He did not renew the offer in relation to contribution, but submitted that since the judgment of the High Court in Breavington v. Godleman (1988) 62 ALJR 447, s.79 of the Judiciary Act would have no application to this case, as the Court wherever it sat would apply the lex loci delicti. He stated that it was difficult to ascertain the ratio of Breavington.

2. Counsel for Sentry relied upon a citation from Dicey and Morris on the Conflict of Laws (10th Edition). The learned authors said at pp 967-8:
   

"Contribution and indemnity. There does not appear to be any English authority on the question what law governs the right of one tortfeasor to claim contribution or indemnity from another. If the right to contribution is statutory, as it is in English domestic law, it is submitted (contrary to the submission in earlier editions of this book) that an English court would characterise it as quasi-contractual and not as delictual and would apply the proper law of the obligation in accordance with Rule 170 and not a combination of the lex fori and the lex loci in accordance with Rule 172. For if A is injured by the joint negligence of B and C, and recovers judgment against B, B and C have each committed a tort against A, but C has not committed a tort against B. Hence B's right of contribution from C cannot be delictual. It must surely be either quasi-contractual or sui generis. In such a case the proper law of the obligation will prima facie be the lex loci delicti, unless perhaps the joint tortfeasors are both resident in another country and there is some special relationship between them, e.g. that of employer and employee or bailor and bailee, which is centred in that country. If however one tortfeasor can claim an indemnity or contribution from another by virtue of a contract express or implied, his right to do so would be determined by the proper law of the contract. That law will determine, e.g. the scope and effect of a warranty given by an author to his publisher that his work contains no libellous material, or of an implied undertaking given by an employee to his employer to use reasonable care and skill.".

Counsel further relied upon the cross-vesting legislation of the Commonwealth and the States of Victoria and New South Wales as solutions to the problem of interest which were dealt with by Lockhart J. in the State Bank of New South Wales case.

1. The Full Court in the present case (at p 16) referred to the question of differences in the relevant law between States as follows:
   

"Difficult questions arise where the relevant law in more than one State or Territory of Australia differs in its effect on the rights of the parties. The weight to be given to this factor in determining motions to continue a proceeding at a different place will be considerable where the differences between the laws of the two States or Territories are material and affect significantly the rights of the parties. In some cases, however, it will be difficult for the Court to assess at an early stage of a proceeding whether the differences between the two laws will affect the rights of the parties. The effect of differences between the applicable laws may depend, for example, upon the exercise of discretions by the Court at the trial. It may be that the facts upon which any differences in law will operate will be known only in general terms, for example as pleaded, at the time the Court is asked to change the place at which the proceeding is to be heard. These are matters which the Court must consider in each case when it becomes relevant to do so.".

1. The applicants have alleged that the negotiations leading up to the Sale Agreement occurred in the manner set out in the agreed Statement of Material Facts (See p 29 above), but the respondents do not admit those allegations.

2. It appears that the Sale Agreement was made either in Victoria or in Wisconsin but no admission has been made and the facts remain to be found.

3. Difficult questions arise in respect of the relationship between s.79 of the Judiciary Act, the State laws dealing with contribution and interest, the offer to agree to the Court applying Victorian law while sitting in New South Wales, the cross vesting legislation, the effect of Breavington's case upon the question of the law to be applied by the Court when the facts have been found and any discretions have been exercised. The citation from Dicey and Morris makes it clear that the question of the choice of law in relation to contribution and indemnity is one on which there are no authorities, only opinions.

4. In my opinion, one should not attempt to reach a concluded view upon these questions in determining an application such as this. One thing can be said with confidence and that is that if the venue remains as the applicants have chosen it, they will have the right to argue that s.79 entitles them to the benefit of the Victorian statutes dealing with interest and contribution, without the necessity of overcoming the difficulties which may well arise if they are driven to rely upon the alternative arguments recommended to them by their opponents, if the venue be changed. Those difficulties would include the question whether the acceptance by the applicants of the offer of PMM that the Court, sitting in Sydney, should apply Victorian Law, would be effective to confer jurisdiction on the Court to do so.

5. Counsel for National Mutual referred to Pozniak v Smith 151 CLR 38 in which Mason J., as he then was, said at p 55:
   

"In conclusion I should express my rejection of the submission that the Court could, if it remitted to the Supreme Court of New South Wales, direct that court to apply the law of Queensland. The clause 'subject to any directions of the High Court', which appears in s.44 and is the foundation for the submission, governs 'further proceedings in the matter' in the receiving court which, subject to this Court's directions, 'shall be as directed' by that Court. It is apparent that the clause empowers this Court to give direction as to pre-trial and trial procedures. It does not arm this Court with a power to instruct the Supreme Court of one State that it shall ignore the law of that State and apply instead the law of another State.".

1. As the Full Court (at p 15) said, the starting point in a case such as the present, where the choice of venue by the applicants is not capricious, is that "the proceeding has been commenced at a particular place. Why should it be changed?".

2. The present proceedings were commenced in the Victorian Registry on 3 July 1987. It is true that in their letter of 8 August 1987 seeking further and better particulars of the Statement of Claim, the solicitors for PMM noted that their request was "without prejudice to our right to have the venue of the proceedings changed to Sydney". However, it was not until 4 March 1988 that the notice of motion by PMM seeking the change was filed. In the meantime the steps set out in the agreed chronology were taken by the parties. It is in my opinion, appropriate to consider the motion of PMM in the light of the circumstances of the case as they stood at 4 March 1988.

3. The motion by Sentry should be considered in the light of the circumstances prevailing on 6 December 1988, the date of its issue. Between March and December 1988, there were no changes in those circumstances favourable to a change of venue. Indeed, in my opinion, the case for change was weakened by reason of the facts that some Sydney documents had been brought to Melbourne and inspected there, and inspection by PMM of the applicant's documents had taken place in Melbourne.

4. I have taken into account the residence of the parties and witnesses, so far as the latter could be identified, and the question of expense to the parties. It is, of course, to be borne in mind that, while the cause of action against Sentry did not arise in New South Wales, the audits by PMM were carried out in Sydney by their Sydney office, for New South Wales clients. However the claim against PMM is intertwined with that against Sentry and with the various cross-applications.

5. It has not been possible to identify the witnesses to be called but it is clear that some will be from Melbourne, some from Sydney and the remainder from the United States. Their port of arrival in Australia will be Sydney. It is necessary to bear in mind the national character of this Court, to which the Full Court referred (at p 14), the discretion of the trial Judge to conduct parts of the trial in different cities as circumstances may suggest, and the difficulty of predicting what may in the end, after the exchange of expert opinions and reports, turn out to be the issues of fact which will occupy most time at trial. There is no discernible balance of convenience which favours a change of venue.

6. As the Full Court said (at p 16:)
   

"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".

1. It is not, of course, practicable to attempt to decide a matter such as this by seeking to allot points under the various headings and so to reach a conclusion mathematically. It remains a question of impression in the light of the circumstances generally. That impression must be formed at a stage when the final shape of the trial cannot be precisely determined.

2. Bearing in mind the principles which the Full Court has laid down, I am left with the clear impression that this case can be continued most suitably in Melbourne.

3. The Court orders:
   

1. that the motion of PMM dated 7 March 1988 be dismissed with costs, including the costs of the hearing before Jenkinson J.

2. that the motion of Sentry dated 6 December 1988 be dismissed with costs.