L&H Group v Edwards
[2018] VCC 23
•1 February 2018
IN THE COUNTY COURT OF VICTORIA Revised
AT MELBOURNE Not Restricted
COMMERCIAL DIVISION Suitable for Publication
GENERAL LIST
Case No. CI-17-00752
| L & H GROUP (A LIMITED PARTNERSHIP) (ABN 19 730 781 473) | Plaintiff |
| v | |
| ADAM BRETT EDWARDS & ANOR | Defendants |
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JUDGE: | HER HONOUR JUDGE MARKS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2 August 2017; further written submissions filed on 5, 14 and 21 December 2017 | |
DATE OF RULING: | 1 February 2018 | |
CASE MAY BE CITED AS: | L&H Group v Edwards | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 23 | |
REASONS FOR RULING
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Catchwords: PRACTICE AND PROCEDURE – stay of proceedings sought – appropriate forum for dispute to be litigated – section 20 Service and Execution of Process Act 1992 (Cth) – proceeding stayed
Cases Cited:St George Bank Limited v McTaggart [2003] QCA 59; Brodie-Tucker v Hulme [2007] SADC 108; Burnan Pty Ltd & Anor v Bolton & Anor [2008] QDC 32
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Ms L Davis | Davies Moloney |
| For the first defendant | Mr A Edwards (in person) | |
| For the second defendant | Mr R Cockram (in person) |
COUNTY COURT OF VICTORIA -1
250 William Street, Melbourne
HER HONOUR:
Application to stay proceeding
The defendants have applied to stay the proceeding under section 20 of the Service and Execution of Process Act 1992 (Cth). They want the case against them dealt with in Western Australia, where they live, not Victoria.
For the reasons that follow, I will grant that application.
Proceeding history
On 24 February 2017 L&H Group filed the writ in this proceeding. It sues Adam Brett Edwards and Russell William Cockram. It alleges that on or about 13 June 2014 it entered an agreement with MCO Services Pty Ltd (MCO) to supply electrical goods to it, and that same day Mr Edwards and Mr Cockram, who were directors of MCO, agreed to guarantee MCO’s debts to L&H Group under the loan agreement. It says that following supply of those goods, MCO owes it $204,488.46, that it demanded payment from the defendants on 25 January 2017, and that they have failed to pay the sum demanded.
The defendants filed a summons on 7 April 2017 seeking to set aside service under R7.05 of the County Court Civil Procedure Rules 2008, and filed supporting affidavits.
The defendants’ reliance on Rule 7.05 was misconceived. On 25 May 2017 the matter came before his Honour Judge Woodward. His Honour’s orders noted in ‘Other Matters’ that:
Having regard to the form and content of the defendants’ summons dated 7 April 2017 and the supporting affidavits filed to date, the Court will be treating the defendants’ application as one seeking a stay of the proceeding pursuant to s20 of the Service and Execution of Process Act 1992 (Cth).
His Honour ordered that further affidavits, and submissions, be filed, that the defendants have leave to appear at the hearing of the application by video link, and that the application be heard on 2 August 2017.
The matter came on for hearing before me on 2 August 2017 with the defendants appearing by video link. Ms Davis of Counsel appeared for the plaintiff. The defendants and Ms Davis each made oral submissions, as well as relying on previously filed written submissions.
Although Ms Davis of Counsel appeared at the hearing, all the written submissions relied on by the plaintiff, both before and after the hearing, were drafted by Mr M Lapirow of Counsel.
It became apparent in the course of the hearing that it was not yet clear to the parties or the Court what matters would need to be determined at the trial. No defence had been filed. Although it is not necessary for defendants to have filed a defence at the time of making an application for a stay, it is necessary for the Court to be able to identify the matters in issue in the case in order to decide the application. This can be done by affidavit: see St George Bank Limited v McTaggart [2003] QCA 59 at
[9].
I made orders giving leave to the parties to file further affidavits to clarify the issues in dispute, and to file further written submissions.
I also listed the matter for a judicial resolution conference on 30 November 2017.
The matter did not resolve at that conference.
More affidavits were filed both by the defendants and the plaintiff, and more submissions, culminating in the defendants’ second written submissions filed 14 December 2017, and the plaintiff’s third written submissions filed 20 December 2017.
In deciding this application, I have considered the oral submissions made at the hearing and all the written submissions filed both before and after it. I have also considered the affidavits of: Mr Cockram of 7 April 2017, 28 April 2017, 5 May 2017, 19 June 2017, 27 June 2017, and 6 September 2017; Mr Edwards of 19 June 2017 and 6 September 2017; Ms Lynda Moir of 19 June 2017; Mr Andrew Soos of 19 May 2017, 13 July 2017 and 27 September 2017; Mr Coleman Moloney of 24 July 2017; and Mr Ryan Veitch of 4 September 2017 and 5 October 2017.
What the case is about
One of the factors to be considered in deciding this application is what witnesses will be needed, and where they live. To decide that, it is first necessary to understand the issues.
In their initial material, the defendants advanced an argument that a clause of the credit application relating to jurisdiction had been altered by Mr Cockram so that it now provided that Western Australia was the appropriate jurisdiction for any dispute about it. He said he had amended clause 12 to read ‘WA only not Victoria’ before he signed it. However, at the hearing before me, Mr Cockram advised that he had been persuaded by the evidence provided by the plaintiff that he must have been mistaken. He said the defendants would no longer seek to run that defence. This has the effect of limiting the issues in dispute and the number of people required to give evidence about them, as the plaintiff’s witnesses regarding chain of custody of the credit application are not required to give evidence about that.
It appears from the material filed that the trial will involve deciding the following issues.
The extent to which the defendants understood what they were signing in signing the guarantee, and how that affects their liability. The defendants’ submissions filed 14 December 2017 at [7] state:
the defendants did not understand their different identities… as directors of the company for the loan agreement and their personal liabilities as guarantors…
Mr Cockram’s 6 September 2017 affidavit states at [9]-[12]:
9.The Defendants were not advised by the Plaintiff that the Application for Credit, if accepted, created a personal guarantee.
10.The Defendants were electricians with no experience in legal matters.
11.The Defendants have never received legal advice in relation to any aspect of personal guarantees.
12.The Defendants were at no time advised by the Plaintiff to seek legal advice as to the terms and conditions being agreed upon in the credit agreement or the alleged guarantee. This was unfairly detrimental to the defendants.
Mr Edwards’ 6 September 2017 affidavit contains the same comments at [8]-[11].
The guarantee is contained on page two of a two page ‘Application for Credit’. The signing clause is below that paragraph. There is no separate signing clause for the applicant for credit, MCO.
Whilst the defendants’ affidavits do not go so far as to state that they did not understand they were signing guarantees when they signed the relevant documentation, it seems possible from their submissions and from what they have said in their affidavits that this is a defence they want to raise. If they knew they were signing a guarantee it would not matter that they were not advised of this fact. The defendant will need to give evidence about this. There may also be witnesses for the plaintiff on this issue.
The amount owing pursuant to the contract between the plaintiff and MCO. Although the defendants have said in submissions and at the hearing that they do not dispute the amount MCO owes, their latest affidavits appear to dispute precisely that. They dispute that goods supplied to MCO after 15 January 2015 were supplied by the entity which MCO entered into the loan agreement with.
Mr Cockram’s 6 September 2017 affidavit at [13]-[17] states:
13.All invoices from the plaintiff, prior to the date of 15th January 2015 show the company details as L&H Group (ABN 19 730 781 473), a limited partnership and TEG B.V (ARBN 094 126 477) a limited liability company incorporated in the Netherlands. As per copy of invoice 56106. Now produced and shown to me marked as "RWC-3" is a true copy of the said invoice 56106.
14.All invoices from the plaintiff after the date of 15th January 2015 show the company details as L&H Group (ABN 19 730 781473), a Limited Partnership carried on by Lawrence & Hanson Group Pty Ltd (ABN 69 080 350 812) and Sonepar Asia Pacific Limited (ARBN 161 722041), a company incorporated in Hong Kong. As per copy of invoice 58060 Now produced and shown lo me marked as "RWC-4" is a true copy of the said invoice 58060.
15.All invoices forming part of the claim from the plaintiff show the company details as L&H Group (ABN 19 730 781 473), a Limited Partnership carried on by Lawrence & Hanson Group Pty Ltd (ABN 69 080 350 812) and Sonepar Asia Pacific Limited (ARBN 161 722041), a company incorporated in Hong Kong,
16.No Application for Credit document exists naming the company as party to a credit application or contract in any other form with L&H Group (ABN 19 730 781 473), a Limited Partnership carried on by Lawrence & Hanson Group Pty Ltd (ABN 69 080 350 812) and Sonepar Asia Pacific Limited (ARBN 161 722041), a company incorporated in Hong Kong.
17.The Plaintiff traded with the company after the 15th Januaray [sic] 2015 as an unsecured creditor due to its change of legal entity without the replacment [sic] or amendment of the credit account facility with the company or any advice of such change. As such the Defendants have no liability to the plaintiff as guarantors under any agreement what so ever.
Mr Edwards’ 6 September 2017 affidavit raises the same issues at [12]-[16].
The plaintiff says that this is a legal issue, which has already been determined in various cases:
In the case of this particular Plaintiff defences seeking to rely upon the variation between the identity of the limited partner in the Credit Application and the Plaintiff (being a limited partnership with a different limited partner) have been considered by the County Court (per Judge Anderson) L&H Group (a Limited Partnership) v. Antonia D'Assisi 2 September 2016- Cl15-04759; by the Supreme Court (per AsJ Daly sitting as a judge of the trial division) L&H Group (A Limited Partnership) v. Clyde Peter White and David Charles Quin - 26 April 2017 SC I 2016 1841 and by the Court of Appeal (Redlich and Kyrou, JJA and Keogh AJA) Lawrence & Hanson Group Pty. Ltd. v. John Stanley Young and Mary Anne Young 30 June 2017 - S APCI 2015 0059).
In each case the form of the Credit Application / Guarantee was upheld as entitling the Plaintiff (being the same Plaintiff in all matters) to enforce the debt and to enforce the guarantee and indemnity.
The plaintiff has not indicated that it needs to call any witnesses to answer this defence.
The effect of credit limit increases granted to MCO after the initial $10,000 limit of agreed credit; whether MCO was notified in writing of further increases to its agreed limit; and whether the defendants knew of those increases, or needed to know. The defendants seek to raise a defence that failure to notify them of the increases is unconscionable conduct in a business transaction under s12CC(1) of the Australian Securities and Investments Commission Act 2001, and that the guarantee will be declared void or unenforceable as a result. The plaintiff submits that s12CC does not apply to the sale of goods on credit.
Service and Execution of Process Act
Section 20(3) of the Act provides:
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.
The defendants say this matter should be determined in the District Court of Western Australia.
That Court has jurisdiction to deal with this matter. The limit of its civil jurisdiction is $750,000: ss 6 and 50, District Court of Western Australia Act 1969.
Section 20(4) of the Act provides:
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.
I take the following legal principles into account in considering the application (see St George Bank Limited v McTaggart [2003] QCA 59, particularly at [9], [10], [11] and [17]).
• The defendants, as applicants, have the onus of satisfying the Court on the balance of probabilities that the proceeding should be stayed.
• The defendants 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’.
• The factors set out in section 20(4) of the Act do not constitute a code, and other factors can properly be taken into account in exercising the Court’s discretion.
• The Court must decide which court is the one with which the action has the most real and substantial connection.
I deal below with each relevant element of s20(4) in the light of the facts of this case.
Place of residence of parties and witnesses
The defendants live in Western Australia. They will obviously give evidence.
Ms Lynda Moir, who was then working for MCO, seems likely to be called. She lives in Western Australia. She has sworn an affidavit for the defendants. She deposes
to being involved in getting Mr Cockram to sign the guarantee and as to the fact the credit application was in the form of an A3 page with printing on both sides when he signed the guarantee. Mr Andrew Soos of the plaintiff deposes (in his affidavit of 27 September 2017 at [21]) that Ms Moir sent a letter dated 31 March 2016 saying the defendants wished to retain the current credit limit.
Mr Ryan Veitch is another likely witness who lives in Western Australia. He is the manager of the plaintiff’s Osborne Park branch. He has sworn that he dealt with the defendants regularly, and deposed to communications with them about credit limits.
The plaintiff’s chief office is in Victoria, and this is where MCO’s credit application was principally processed. It appears from the affidavit of Mr Soos of 19 May 2017 that up to four Victorian witnesses from its credit department may be required. Less may be required now that the chain of custody of the credit application is no longer in dispute. The plaintiff has not made submissions as to which of these witnesses may be required, given the changes in what matters the defendants want to raise by way of defence.
Place where subject matter of proceeding is situated
The plaintiff concedes that the goods supplied to MCO were supplied in Western Australia. However, the claim involves a written agreement which it says was made in Victoria and breached in Victoria.
The defendants submit that all aspects of the dealings between the plaintiff and MCO, including issuing invoices, occurred in Western Australia, except that the original application for credit document is held by the plaintiff’s lawyers in Victoria.
Financial circumstances of the parties
The plaintiff concedes it has the financial ability to pay the costs of dealing with its claim in Western Australia if necessary. It says however that this will involve it in further costs which it will not be able to recover from the defendants.
Both defendants have deposed that they have very little money. Neither is briefing counsel for the hearing. They submit at [23] of their submissions filed 19 July 2017 that they are unable to fund professional legal representation and travel to Victoria.
The defendants say that they have both suffered substantial financial loss from the failure of their business and liquidation of MCO. In their submissions dated 19 July 2017 at [13]-[14] they state that:
Mr Cockram is unemployed, unemployable and entirely dependent financially on others due to a serious life threatening medical condition. He has no means to travel to Victoria or to employ professional legal representation.
After 5 months without income, Mr Edwards’ obligation to support his young family preclude him from obtaining professional legal representation. The defendants admit that requiring him to travel to Victoria would be an unnecessary burden on Mr Edwards and his family when the issues can be dealt with in the District Court of Western Australia, in the city where he resides.
Any agreement between the parties about the court or place in which the proceeding should be instituted
Clause 12 of the loan agreement between the plaintiff and MCO states that it is:
governed by the laws of Victoria and the applicant submits to the jurisdiction of the courts of Victoria.
The defendants submit that the guarantee does not contain such a clause and any legal action concerning the guarantee is not limited by agreement to the jurisdiction of the Victorian courts.
The guarantee is part of the same two page document as the Application for Credit. Clause 12 appears on the preceding page. It could have stated that ‘the guarantors and applicant’ submit to the jurisdiction of the courts of Victoria. It does not, and I am not satisfied the guarantors did submit to that jurisdiction.
They say that even if the Court were to find that as guarantors they had agreed to submit to the jurisdiction of Victoria, it is unreasonable for the plaintiff to hold Mr
Cockram to that agreement after the subsequent development of his medical condition which makes interstate travel life-threatening for him.
The law that would be most appropriate to apply in the proceeding
The defendants say that the agreement between the plaintiff and the defendants was based on the application for credit by MCO dated 13 June 2014, which the plaintiff responded to with an offer of credit on 9 July 2014. They say that offer of credit was accepted by MCO when MCO continued to trade with the plaintiff after it was made. They say the act of acceptance created the legal relationship, and this occurred in Western Australia.
The plaintiff says that the loan agreement was made in Victoria and Victorian law applies.
Neither party submits there is any difference between Victorian and Western Australian laws relating to guarantees relevant to this dispute, or any other issue in dispute.
Whether a related or similar proceeding has been commenced against the person served or another person
No related or similar proceeding has been commenced.
Other relevant circumstances
Mr Cockram is suffering from leukaemia. The defendants submit at [21] of their submissions dated 19 July 2017:
Mr Cockram is suffering from leukaemia and is currently recovering from side effects of a lengthy course of intensive chemotherapy which failed to produce a remission of his disease. Mr Cockram's treating doctor, Dr Bradley Augustson, has provided a detailed current appraisal of Mr Cockram's condition and the health risks he faces in daily life. The defendants submit that:
a. Mr Cockram's meaningful participation in the proceeding would be substantially compromised by the proceeding being held in Victoria due to his being unable to travel safely more than 2 hours from the medical team responsible for his treatment; and
b. Requiring Mr Cockram to travel to Victoria for proceedings would put Mr Cockram's life at unacceptable risk due to his vulnerability to infections which may be life threatening for him. The remedy sought by the plaintiff is enforcement of a debt allegedly arising from a guarantee and an indemnity, not Mr Cockram's life or what health he retains.
Mr Cockram’s treating doctor, Dr Bradley Augustson, has stated in a letter dated 9 June 2017, exhibited to an affidavit of Mr Cockram, sworn 27 June 2017:
I write to inform the court of the medical condition of Mr. Russell Cockram.
Mr. Cockram has been a patient of myself sine the 13th June 2016 with a diagnosis of Chronic Lymphocytic Leukemia (CLL).
Under my supervision Mr Cockram underwent six cycles of FCR chemotherapy; June - November 2016 and is continuing to receive treatment.
Mr Cockram currently has a reduced immune system function, creating a risk of infection, debilitating fatigue, lack of energy, muscle stiffness and lack of ability to concentrate.
Testing in March 2017 showed that the chemotherapy failed to provide remission from the disease and minimal residual disease (MRD) is present in the bone marrow.
The ongoing side effects from treatment for CLL, and the risk of infection for Mr Cockram means he is not able to undertake employment.
Mr Cockram has been accepted into the Lenalidomide Trial, being conducted at Sir Charles Gairdner Hospital, under my supervision. Lenalidomide is being trialed to test its effectiveness in extending the time that CLL remains under control and prolong the time until other treatment options need to be explored. Mr. Cockram is currently attending the Cancer Clinic at Sir Charles Gairdner Hospital on a week by week basis, due to very low neutrophils.
Mr Cockram has not worked since the 13 June 2016. Return to work is not possible due to MRD, side effects of treatment and expectation of relapse of CLL and continuing medical care.
The risk of infection makes travel by air and spending time in public places inadvisable for Mr. Cockram, due to the risk of infection. Mr. Cockram has a suppressed immune systems that can result in hospitalization at very short notice.
I have also referred Mr Cockram to a gastroenterologist and a neurologist to gain a greater understanding of the symptoms and test results Mr Cockram is exhibiting. I recommend that Mr. Cockram remain in Perth and not more than 2 hours from the emergency department at Sir Charles Gairdner Hospital.
The plaintiff says that the doctor has not been put on oath, and that no further information has been given since June 2017 updating the situation.
The plaintiff submits that in any event, the matter should be heard in Victoria. If Mr Cockram appears in person in Western Australia he will be in a public place, just as much as he would be in appearing in court in Victoria. In any event, it submits that he can appear by video link.
It is true that the doctor was not put on oath, and that a later letter has not been provided, but I take into account that the defendants are self-represented and did not realise that it would assist to have him swear on affidavit. The nature of its contents does not lead me to infer the situation regarding the possibility of infection is likely to have altered significantly since. The letter’s date is sufficiently close to the 2 August 2017 hearing for me to take it into account. I consider the illness of Mr Cockram to be an important factor to take into consideration in exercising my discretion as to whether to stay the proceeding. If he is in Western Australia defending the matter he will be close to his treating doctor in hospital. That is not the case if he comes to Victoria.
Mr Cockram does not want to run his case by video link. He submits this will put him at a disadvantage in presenting his case. Referring to the stay application before me at which the defendants appeared by video link, he states in his submissions dated 14 December 2017 that:
From these experiences it is clear that the ability of the defendants to properly state and articulate their arguments is restricted and disadvantaged. They have also been restricted by lack of access to nuances of the court room and at times have been unable to hear the court room proceedings. This can only be overcome by being present in the actual room.
In Brodie-Tucker v Hulme [2007] SADC 108 at [28] his Honour Chief Judge Worthington said:
In the course of submissions it was put by both counsel that video
conference facilities would be available to take the evidence of witnesses who are at a location remote from whichever court is conducting the trial. That is true but it is of limited value. It cannot be assumed that the trial judge will necessarily agree that the evidence of a particular witness is suited to being given by video. Issues such as credibility, access to documents, the need for an expert witness to have access to a plaintiff, etc., can result in the refusal of a request for evidence to be given by video link.
In Burnan Pty Ltd & Anor v Bolton & Anor [2008] QDC 32 at [22] Nase DCJ discussed the difficulties faced by a defendant whose son was seriously unwell in the context of a jurisdiction dispute:
Mr and Mrs Bolton’s youngest child has suffered from chronic renal failure, and at the date of the stay application required catheterisation every four hours. The magistrate was informed that in the next six to eight months he will require a kidney transplant. The Magistrate took this circumstance into account in determining the appropriate jurisdiction for the proceedings. I think it is a matter that does add to the difficulties faced by the Boltons in commencing the proceedings in Western Australia, and I do not agree with the submission to me that it is irrelevant. The personal circumstances of the parties may be relevant in any particular case. In this case the personal circumstances of Mr and Mrs Bolton are subordinate to the exclusive jurisdiction clause since the agreement to submit any dispute to the Western Australian courts was presumably made with knowledge of their personal circumstances.
Unlike the circumstances of Burnan, there was no agreement by the defendants to submit any dispute to the Victorian courts. Even if I were wrong about that, and they had agreed, that agreement was made before Mr Cockram fell ill with leukaemia.
Conclusion
I am satisfied that in the circumstances the District Court of Western Australia is the appropriate court to hear the trial.
At least two relevant witnesses and both defendants reside in Western Australia.
There may be up to four Victorian witnesses. The plaintiff can afford to send any Victorian witnesses to Western Australia and conduct the case there. Mr Cockram is seriously ill and should not unnecessarily be exposed to the infection risks of travelling to Victoria. The defendants are self-represented and cannot afford to be represented, and do not want the disadvantage of presenting their case by video link. It has not been submitted that there is any relevant difference in the law in Western Australia and Victoria. Even if there has been an agreement by the defendants to submit to the Victorian courts’ jurisdiction (which I am not satisfied of) then the fact that Mr Cockram subsequently became seriously ill is a relevant supervening event.
I will order a stay of the proceeding pursuant to s20 of the Service and Execution of Process Act 1992 (Cth).
The usual order as to costs where an application for a stay under s20 of the Service and Execution of Process Act is successful is that the plaintiff pay the defendants costs, to be assessed by the Costs Court in default of agreement. The fact that the defendants are self-represented will mean it is likely that only their outgoings are recoverable (such as the cost of the video link for the hearing before me).
I direct the parties to consider the costs orders that should be made as a result of this ruling and provide to me consent orders by 12pm on 8 February 2018. If the parties cannot agree, a costs hearing will be listed.
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Certificate
I certify that these 15 pages are a true copy of the reasons for ruling of her Honour Judge Marks, delivered on 1 February 2018.
Dated: 1 February 2018
Samantha Marinic
Associate to Her Honour Judge Marks
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