Irrigear Stores Ltd v Watertek Pty Ltd
[2015] VCC 1114
•20 August 2015
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
COMMERCIAL DIVISION
GENERAL CASES LIST
Case No.CI-15-03130
| IRRIGEAR STORES LTD | Plaintiff |
| v | |
| WATERTEK PTY LTD | Defendant |
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JUDGE: | His Honour Judge Cosgrave | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 August 2015 | |
DATE OF RULING: | 20 August 2015 | |
CASE MAY BE CITED AS: | Irrigear Stores Ltd v Watertek Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 1114 | |
REASONS FOR RULING
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Subject: PRACTICE AND PROCEDURE
Catchwords: Stay of proceedings – jurisdiction of County Court – District Court of New South Wales “the appropriate court”
Legislation Cited: County Court Act 1958 (Vic); Service and Execution of Process Act 1992 (Cth); District Court Act 1973 (NSW)
Cases Cited:St George Bank Limited v McTaggart [2003] QCA 59; Valkama v Jamieson (1994) 11SR (WA) 246
Ruling: Defendant’s application to stay the further hearing is dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C Northrop | William Winter |
| For the Defendant | Mr J Paterson | Wilmoth Field Warne |
HIS HONOUR:
Application
1 By summons filed 30 July 2015, the defendant applied for orders that:
(a) the proceedings be struck out for want of jurisdiction pursuant to section 55 of the County Court Act 1958 (Vic)
(b) the proceedings be stayed pursuant to section 20 of the Service and Execution of Process Act 1992 (Cth) (“the Act”).
2 At the commencement of the hearing, the defendant’s counsel informed the court that order (a) in the summons was no longer sought. Hence, the sole focus of the application was the defendant’s wish to stay the further hearing of the County Court proceedings in reliance upon section 20 of the Act.
3 The defendant relied upon the affidavits of Joe Catanzariti sworn 30 July and 11 August 2015, together with the affidavit of James Knox sworn 30 July 2015. The plaintiff relied upon the affidavit of Simon Treptow, its company secretary and general manager, sworn 12 August 2015.
Outline of the nature of the proceeding
4 According to the plaintiff’s statement of claim the dispute arose in the following context. At all material times the plaintiff had provided a centralised payment system service (“CPS service”) for the payment of goods ordered by member stores from participating suppliers of irrigation equipment. Between about 2007 and 31 October 2014, the defendant used the CPS service as a member store pursuant to a contract with the plaintiff. On 30 September and 31 October 2014, the plaintiff issued invoices to the defendant in respect of invoices issued by suppliers for goods acquired by the defendant from the suppliers during September and October 2014. The invoices totalled approximately $162,000. The defendant, which carries on business at Griffith in New South Wales, did not pay the amount claimed under the plaintiff’s invoices. After October 2014, the plaintiff issued two further invoices to the defendant and allowed the defendant a credit on another invoice. The plaintiff claims the amount said to be owing and unpaid by the defendant, which amount includes ongoing charges.
5 The defendant in its affidavit material does not take issue with the basic factual allegations made by the plaintiff. Nor does the affidavit set out any basis upon which it seeks to defend the claim.
6 In his affidavit, Mr Treptow said that the plaintiff was established to provide a network of small businesses involved in retailing water products. The CPS service for members of the plaintiff was established from 2008. The members of the plaintiff were independent store operators which conduct retail irrigation supply businesses. There are currently 67 stores trading as members of the plaintiff throughout Australia. When a company or individual wishes to become a member of the plaintiff, they are required to complete a membership application. Members are entitled to purchase shares in Irrigear Ltd. Only members can own shares in this company.
7 The CPS system is operated from Victoria. It operates by member stores ordering goods from approved suppliers. These suppliers have agreed trading terms with the plaintiff. The plaintiff negotiates discounts, rebates, bonuses or incentives with suppliers. The incentive for suppliers to provide such things to members of the plaintiff is based on two key benefits to the supplier. First, because there are 67 member stores, members buy a significant volume of goods from the selected suppliers. Second, the plaintiff pays suppliers within a short time of receiving the supplier’s monthly statements for goods supplied to member stores. Prompt payment is useful to suppliers and the plaintiff assumes responsibility for paying suppliers, so the risk to suppliers of non-payment or incurring bad debts with members of the plaintiff is eliminated.
8 After the plaintiff pays the suppliers, the plaintiff then generates invoices and statements to the member store. The plaintiff charges the member store the amount invoiced by the supplier. Members generally pay the plaintiff on the invoice it sends within 30 days.
Legal principles
9 It is clear from the case law that the applicable principles can be summarised as follows:
a) an applicant has the onus of satisfying the court on the balance of probabilities that the proceeding should be stayed.[1]
[1]See St George Bank Limited v McTaggart [2003] QCA 59 at [17]
b) the applicant must show that there is another State court, with jurisdiction to determine all matters in issue, which is “the appropriate court to determine those matters”.[2]
c) the factors in section 20(4) of the Act do not constitute a code and are not exhaustive of the factors which may properly be taken into account in exercising the court’s discretion.[3]
d) the court must decide which court is the one with which the action has the most real and substantial connection.[4]
[2]Ibid at [9]
[3]Ibid at [11]
[4]Ibid at [10] applying Valkama v Jamieson (1994) 11SR (WA) 246, 250.
10 The material parts of section 20 of the Act are in the following terms:
“(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 does not include the fact that the proceeding was commenced in the place of issue”.
Section 20(3) of the Act
11 I note that the defendant has chosen not to file a defence before making this application. The Queensland Court of Appeal in St George Bank Ltd v McTaggart rejected the argument that where the defendant had failed to file a defence at the time of the application, it was not possible to identify “all the matters in issue”. The court said that identifying the matters in issue was a prerequisite to deciding the appropriate court[5] and could be done provided the affidavit or other material demonstrated the issues.
[5]Ibid at [9]
12 Because the defendant did not in its affidavit material address the merits of the case, the court was not informed of “all the matters in issue”. For example, on the affidavit material, the court cannot determine whether the defendant says, for example, that it did not receive the goods for which the supplier invoiced the plaintiff; or the goods received were defective or unsatisfactory in some way; or the supplier of the goods and/or the plaintiff has made an arithmetical error in the amount claimed. The defendant’s failure to grapple with this question is significant. Not only is the identification of all the matters in issue a requirement of the Act but it also has a consequential effect when the court considers, as it must, the identity and residence of witnesses likely to be called in the proceeding.
13 On the material before me, I cannot identify all the matters in issue between the parties. This being so, how am I to be satisfied that there is a court of another State that has jurisdiction to determine all the matters in dispute between the parties and is the appropriate court to determine those matters?
14 Further, I note that in its statement of claim, the plaintiff seeks as one of the forms of relief an order for equitable compensation or damages (as an alternative to damages for breach of contract). The defendant in its submissions referred the court to the District Court Act 1973 (NSW). Under section 4, the jurisdictional limit of the court means $750,000. Section 9 of that Act states that the court shall have a civil jurisdiction consisting of its jurisdiction conferred by Part 3 of the Act. Section 44 of the District Court Act provides that subject to that Act, the court has jurisdiction to hear and dispose of actions, including (relevantly) any action of a kind which, if brought in the Supreme Court would be assigned to the Common Law Division of that Court. It was also necessary that the amount claimed in the action did not exceed the court’s jurisdictional limit.
15 The plaintiff drew the court’s attention to the relief claimed in its statement of claim and submitted the court could not be satisfied that the District Court had jurisdiction to give such equitable relief.
16 After the conclusion of argument in court, my Associate received an email which said that the parties agreed that my attention could be drawn to section 134(1)(h) of the District Court Act. This provides as follows:
“The court shall have the same jurisdiction as the Supreme Court and may exercise all the powers and authority of the Supreme Court in proceedings for;
…
(h) any equitable claim or demand for recovery of money or damages whether liquidated or unliquidated (not being a claim or demand of a kind to which any other paragraph of this subsection applies) in an amount not exceeding the court’s jurisdictional limit. “
17 Having considered that provision, I am satisfied the District Court has jurisdiction to award equitable compensation or damages up to $750,000.
18 However, I do not know what criteria govern the assignment of a proceeding to the Common Law Division of the Supreme Court of New South Wales. Nor do I know whether this proceeding would satisfy those criteria.
19 Accordingly, because of the defendant’s failure both to assist with the identification of all the matters in dispute and to establish that the District Court of New South Wales has jurisdiction to deal with this case, I find that the defendant’s application should be dismissed.
Section 20(4)
20 In case I am wrong in my view of section 20(3) of the Act, I shall consider the factors in sections 20(4).
21 The parties agreed, in effect, that:
· There was no agreement between them regarding the court or place in which the proceeding should be instituted.
· The law to be applied in the proceeding was the common law. This was the same whether the case was litigated in Victoria or New South Wales.
· There was no related or similar proceeding commenced against the defendant or another person.
Accordingly, subsections 20(4)(d), (e) and (f) were, subject to one proviso, not relevant to the application. The proviso was that, as contended by the plaintiff, the court could note that there was no evidence to suggest that the defendant had initiated any action against the plaintiff or any supplier in respect of any goods sold and delivered to it. This emphasised the court’s lack of knowledge about the basis of any defence and the issues which would be in dispute.
Section 20(a)
22 In his affidavit sworn 30 July, Joe Catanzariti said that the witnesses likely to be called in the proceeding for the defendant were the financial controller, James Knox, Nick Cullen and himself. He went on to say that if the proceeding were heard and determined in the County Court of Victoria, it would have a detrimental impact upon the business and income of the defendant given its three main decision makers and directors would be required to travel interstate and thereby, become unable to perform their day to day duties and responsibilities. If the proceeding were removed to the District Court in New South Wales, it is not clear to me based on the assertions in the affidavit material how the defendant would be better off with a case in Sydney than a case in Melbourne. In either event, the witnesses Mr Catanzariti refers to would be absent from Griffith and, I would infer, equally unable to perform their day to day duties and responsibilities.
23 Mr Treptow in his affidavit said that he was the only general manager of the plaintiff and conducted the day to day operations of the plaintiff supported by two administration staff. He said that those staff were not authorised to conduct financial transfers or to make payments to suppliers without his authorisation. Due to the quantum of payments required to be made in his absence if the hearing were conducted in New South Wales, such a move would interfere with the operations of the plaintiff. Given the nature of the plaintiff’s business and the number of its members, I can appreciate that there would be some difficulty in the plaintiff carrying out its normal work in a timely manner if Treptow were interstate.
Section 20(b)
24 The defendant set out in its detailed written submissions the evidence which it submitted the court should have regard to in exercising its discretion. The gist of the evidence was that the defendant, its customers and suppliers were located wholly or substantially in New South Wales and the defendant’s accounts and accounting system were also located there. In relation to the plaintiff, it was said that it sent the contract documents to the defendant in New South Wales and the defendant’s alleged conduct constituting a breach of the agreement with the plaintiff occurred in operating the defendant’s business in Griffith. The defendant also dealt with the relevant paperwork and payments in Griffith.
25 For its part, the plaintiff referred to other evidence. First, the plaintiff noted that it was located at Mornington in Victoria. This was the plaintiff’s registered office and principal place of business. Although the plaintiff, to ensure that members of all States are represented, has appointed six directors who reside in the various States of Australia, it generally conducts board meetings in Victoria. Further, all the trade and business of the plaintiff is conducted from the Mornington office including the processing of all accounts and invoicing and processing of payments to suppliers. The three employees of the plaintiff are all located in Victoria at the registered office.
26 Secondly, there was evidence of the defendant dealing with suppliers in Queensland, South Australia and Victoria and obtaining goods from them. The suppliers’ invoices had a shipping address at the defendant’s premises in Griffith but a billing address at the plaintiff’s premises in Mornington. The invoices from the plaintiff to the defendant were sent from Victoria to New South Wales and required payment in Victoria.
27 Thirdly, the plaintiff contended that the contract with the defendant in relation to the CPS service was made in Victoria. The plaintiff referred to a revised credit policy document dated June 2009 which was sent to the defendant and which the defendant signed and faxed back to the plaintiff on 8 July 2009. The plaintiff referred to the decision of the New South Wales Court of Appeal in Reese Brothers Plastics Ltd v Hamon-Sobelco Australia Pty Ltd[6] as authority for the proposition that a contract made instantaneously by telex or facsimile sent to a particular place is made where the telex or facsimile is received – in this case Victoria. This did not appear to be disputed by the defendant. Certainly, the signature of Mr Catanzarriti on the credit policy document appears to be the same as his signature on his affidavits.
[6]Unreported 23 December 1988
28 Fourthly, the plaintiff contended that because it invoiced the defendant from Victoria and required payment of invoices in Victoria, to the extent that the defendant failed to pay the plaintiff, that failure and the resultant breach of contract took place in Victoria. This position is supported by Shallay Holdings Pty Ltd v Griffith Co-Operative Society Ltd.[7]
Section 20(c)
[7][1983] VR 700
29 Other than an unsupported assertion by the defendant that the plaintiff had a greater financial capacity, there was no or no admissible evidence about the financial circumstances of either the plaintiff or the defendant. Accordingly, I am not in a position to draw any conclusions or make any inferences about the relative financial resources available to the parties.
30 Given:
(a) the defendant’s failure to identify the issues in dispute
(b) the defendant’s failure to explain who would give evidence about which issues
(c) the defendant’s unsatisfactory evidence regarding how the absence of three staff from Griffith would necessarily diminish the revenue of the defendant’s business
(d) the likelihood that the agreement between the parties was both made in Victoria and breached in Victoria
(e) the otherwise equivocal nature of the evidence regarding the place where the subject matter of the claim is located
I am not satisfied that the defendant has discharged its onus to justify the stay.
Conclusion
31 In view of my conclusions regarding section 20(3) and section 20(4) of the Act, I consider the defendant’s application should be dismissed.