ERG Transit Systems Ltd v Keane Australia Micropayment Consortium Pty Ltd; ERG Transit Systems Ltd v Keane Australia Micropayment Consortium Pty Limited

[2009] NSWSC 1296

CITATION:	ERG Transit Systems Ltd v Keane Australia Micropayment Consortium Pty Ltd; ERG Transit Systems Ltd v Keane Australia Micropayment Consortium Pty Limited [2009] NSWSC 1296
HEARING DATE(S):	20/11/09
JUDGMENT DATE :	27 November 2009
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	See paragraph 24.
CATCHWORDS:	Jurisdiction of Courts (Cross Vesting) Act 1987 - Principles
LEGISLATION CITED:	Jurisdiction of Courts (Cross-Vesting) Act 1987
CATEGORY:	Procedural and other rulings
CASES CITED:	Bankinvest AG v Seabrook & Ors (1988) 90 ALR 407 BHP Billiton Limited v Schultz (2004) 221 CLR 400 James Hardie & Coy Pty Limited v Barry (2000) 50 NSWLR 357 Valceski v Valceski (2007) 70 NSWLR 36
PARTIES:	ERG Transit Systems Ltd (Plaintiff) Keane Australia Micropayment Consortium Pty Limited (Defendant)
FILE NUMBER(S):	SC 50160/09; 50161/09
COUNSEL:	Mr B Coles QC, Mr Walsh (Plaintiff) Mr I Pike (Defendant)
SOLICITORS:	Church & Grace (Plaintiff) Mallesons Stephen Jaques (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Friday 27 November 2009

50160/09 ERG Transit Systems Ltd v Keane Australia Micropayment Consortium Pty Ltd
50161/09 ERG Transit Systems Ltd v Keane Australia Micropayment Consortium Pty Ltd

JUDGMENT

The notices of motion

1 Pursuant to s5(2)(b)(iii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987, the defendant (“Kamco”) seeks an order in each of proceedings 50160 of 2009 and 50161 of 2009, that the proceedings be transferred to the Supreme Court of Victoria.

The subject matter of the proceedings

2 Both of the proceedings concern disputes arising out of commercial arrangements between Kamco and the plaintiff (“ERG Transit”) in relation to the installation and maintenance of a new ticketing system for the public transport system in Victoria.

3 On or about 26 July 2006, Kamco and the State Government of Victoria’s Public Transport Ticketing Body, entered into an agreement for the design and installation of an automated ticketing system for the public transport system in Victoria. The new ticketing system was to be installed on trains, trams and buses operated by the State Government of Victoria in Melbourne and regional Victoria.

4 On or about 25 August 2006, Kamco, ERG Transit and ERG Limited, entered into an agreement titled “New Ticketing Solution Subcontract Agreement” (“NTS Subcontract”). Under the NTS Subcontract, Kamco engaged ERG Transit to install and maintain the new ticketing equipment on the Victorian Government’s public transport system in Melbourne and Regional Victoria.

5 In proceedings 50160 of 2009, ERG Transit alleges that it entered into an agreement with Kamco to settle certain disputes concerning work performed by ERG Transit under the NTS Subcontract. Kamco denies that any settlement was reached.

6 In proceedings 50161 of 2009, ERG Transit seeks damages for the alleged wrongful termination, and/or repudiation, of the NTS Subcontract by Kamco. Kamco denies that its conduct was wrongful and/or a repudiation. By its Cross-Claim, Kamco alleges that ERG Transit breached clause 45.3 of the NTS Subcontract when it was subject to a change in control without Kamco’s consent. Kamco seeks damages for the additional costs over and above what Kamco would have paid ERG Transit to complete the work under the NTS Subcontract. In addition, in its Cross-Claim, Kamco also alleges that ERG Transit has refused to return Kamco owned parts that were supplied to ERG Transit under the NTS Subcontract.

The relevant principles

7 Section 5(2)(b)(iii) relevantly provides that if it appears to the Supreme Court of New South Wales that it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory, then the Supreme Court of New South Wales shall transfer the relevant proceeding to that other Supreme Court.

8 This requires a “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”: see Bankinvest AG v Seabrook & Ors (1988) 90 ALR 407 at 409, James Hardie & Coy Pty Limited v Barry (2000) 50 NSWLR 357 at [87] per Mason P, BHP Billiton Limited v Schultz (2004) 221 CLR 400 at 421 [14], 434 [63].

9 An applicant for a transfer bears no burden of persuasion or onus of proof: BHP v Schultz (supra) at 437 [71]; and no particular significance attends the plaintiff’s original choice of forum: see BHP v Schultz (supra) at 425 [26]-[27], 439 [77].

10 The interests of justice concern those of both parties, and rather than the selection of the most advantageous, or least disadvantageous, forum for one of them, the “interests of justice” are to be judged by more objective factors, such as to facilitate identification of the “natural forum”, in which objectively judged it might be expected that the dispute would fall to be resolved, with its concomitant juridical advantages and disadvantages for each party, whatever they may be: see Valceski v Valceski (2007) 70 NSWLR 36 at 60 [69] per Brereton J.

11 In James Hardie & Coy Pty Limited v Barry (2000) 50 NSWLR 357, Mason P at [95] endorsed the following useful checklist of factors, namely:-

application of substantive law;
forensic advantage or detriment conferred by procedural law;
the choice made by a plaintiff or a forum and the reasons for that choice;
substantive connections with the forum;
balance of convenience to parties and witnesses; and
convenience to the Court system.

12 In light of the decision of the High Court in BHP v Schultz, care must be taken in relation to the third bullet point. No particular significance is now attached to the original choice of forum.

The defendant's submissions

13 The defendant's submissions are broadly as follows:

i. The more appropriate forum for the resolution of the disputes the subject of the two proceedings is the Supreme Court of Victoria. All the usual factors weigh strongly, if not exclusively, in favour of the Supreme Court of Victoria. Apart from the fact that ERG Transit has commenced these proceedings in the Supreme Court of New South Wales (which is no longer of any significance in the present application), there are no factors connecting the dispute to New South Wales.

ii. There are no procedural advantages to either party in litigating in Victoria as opposed to New South Wales. The transfer question is thus resolved by an analysis of the nuts and bolts practical factors. These factors point one way only – Victoria.

iii. The relevant factors are as follows:-


i. the work performed by ERG Transit under the NTS Subcontract was performed wholly in Victoria: (Gatto [18]);

ii. the NTS Subcontract is governed by and construed according to the laws of Victoria (Gatto [19]);

iii. the parties have submitted to the non-exclusive jurisdiction of the Courts of Victoria with respect to any proceedings which may be brought at any time relating to the NTS Subcontract (Gatto [20]);

iv. the parties’ representatives under the NTS Subcontract, and the address for services of notices under the Subcontract, were in Victoria (Gatto [22]-[31]);

v. the alleged Settlement Agreement in proceedings 50160 of 2009 is alleged to have occurred after a series of meetings which were held in Victoria, by virtue of correspondence sent between the parties’ respective Victorian addresses (Gatto [32]-[35]);

vi. the work performed by ERG Transit under the NTS Subcontract, was performed wholly in Victoria (Gatto [18]);

vii. the parts the subject of the refusal to return allegation in the Cross-Claim in proceedings 50161 of 2009, were delivered by Kamco to ERG Transit at ERG Transit’s Victorian office, and it is believed that those parts remain in Victoria (Gatto [47]-[49]);

viii. Kamco will likely call seven witnesses in the two proceedings. All seven work at Kamco’s Victorian office, six of the seven live in Victoria, with the remaining witness (Mr Fleming) living in Victoria during the week and in Sydney on weekends (Gatto at [50]-[58]);

ix. although ERG Transit has yet to indicate the witnesses it proposes to call in these proceedings, having regard to the persons who had dealings with Kamco that are relevant to the issues in the proceedings, it is anticipated that ERG Transit will call two witnesses, both of whom live and work in Melbourne (Gatto at [59]-[64]); and

x. all of the documents in relation to the dispute are located in Victoria (Gatto [66]-[67]).

14 Kamco further contends that all of the relevant dealings thus occurred in Victoria, all of the documents are there and all of the likely witnesses are there.

15 Hence it contends that:

i. there is no reason why the proceedings should remain in the Supreme Court of New South Wales.

ii. The proceedings should be transferred to the Supreme Court of Victoria.

iii. That forum is clearly the more appropriate forum for the resolution of the disputes.

The plaintiff’s submissions

16 ERG sought to focus attention upon what was said to be the critical area for determination. Their contention was that the critical element concerned the change in control provision of the subcontract agreement between the parties. Erg’s contention is that there is no substance in the Kamco contention that as a result of a restructure of the ERG Group of companies, ERG Transit had been subject to a change in control within the meaning of clause 45.3 of the subject New Ticketing Solution Subcontract.

17 As already mentioned:

i. in proceedings 50161 of 2009, ERG Transit seeks damages for the alleged wrongful termination, and/or repudiation, of the NTS Subcontract by Kamco.

ii. Kamco denies that its conduct was wrongful and/or a repudiation.

iii. By its Cross-Claim, Kamco alleges that ERG Transit breached clause 45.3 of the NTS Subcontract when it was subject to a change in control without Kamco’s consent.

18 ERG generally sought to minimise the significance of the many aspects of the proceedings pointed to by Kamco as having 'nuts and bolts' connections with witnesses to be called from Victoria and similar.

19 ERG submitted that a realistic approach to the crucial issue was to regard the litigation as driven by the cross contentions concerning the alleged change in control provision. Essentially it was submitted by ERG that the change in control controversy was so significant that if necessary a separate question regime could be ordered. This it was suggested might put an end to much of the litigation depending upon whom succeeded in the exercise.

20 ERG's submissions unfortunately did not take into account the proposition upheld by Marks v Helliar (1990) 14 Fam LR 276 a decision of Hodgson J. Decision is authority for the proposition that the Cross-vesting Act does not authorise the transfer of part of proceedings. This was because there is no definition of "Proceedings" and the reference in subsection 5 of that Act to "a specific part of the relevant Proceedings" suggested strongly that the power to transfer did not extend to a power to transfer only part of the relevant proceedings.

21 Whilst Hodgson J in Marks was able to circumvent this problem [by utilising the equivalent of Part 6 rule22 of the Uniform Civil Proceedings Rules 2005 which permitted the court should be considered that the joinder of parties or causes of action in any proceedings may embarrass, inconvenience or delay the conduct of the proceedings, to order separate trials or to make such other order as it thought fit] no such route is open to the plaintiff presently.

Decision

22 Applying the principles earlier set out in these reasons I have reached the clear conclusion that the interests of justice dictate that both sets of proceedings be determined by the Supreme Court of Victoria.

23 Whilst the ERG submission as to the critical significance of the change in control provision controversy was superficially attractive, standing back from the entirety of the litigation and particularly bearing in mind the above described ruling in Marks, it seems clear that the notion of a particular separate question being first heard in New South Wales [ and arguably thereafter if ERG failed to succeed on that issue, the matter being transferred to Victoria] is misconceived

Orders

24 The Court makes the following orders:

1 Order pursuant to s 5 (2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 that proceedings 50161 of 2009 be transferred to the Supreme Court of Victoria

2 Order pursuant s 5 (2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 that proceedings 50160 of 2009 be transferred to the Supreme Court of Victoria

3 The Court reserves the question of costs. The parties are directed on or before Tuesday 1 December 2009 to exchange and furnish to my association submissions with regard to costs.

****************