Pasminco Cockle Creek Smelter Pty Ltd (Administrators Appointed) v Bunderra Holdings Pty Ltd
[2017] VSC 558
•22 September 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2017 00108
| BETWEEN: | |
| PASMINCO COCKLE CREEK SMELTER PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ADMINISTRATORS APPOINTED) (ACN 000 083 670) | Plaintiff |
| AND | |
| BUNDERRA HOLDINGS PTY LTD (ACN 169 042 433) | First Defendant |
| STEVENS HOLDINGS PTY LTD (ACN 002 386 450) | Second Defendant |
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JUDGE: | Kennedy J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 September 2017 |
DATE OF JUDGMENT: | 22 September 2017 |
CASE MAY BE CITED AS: | Pasminco Cockle Creek Smelter Pty Ltd (Administrators Appointed) v Bunderra Holdings Pty Ltd & Ors |
MEDIUM NEUTRAL CITATION: | [2017] VSC 558 |
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PRACTICE AND PROCEDURE – Application to transfer and/or stay proceedings – Whether in the interests of justice to transfer proceedings from the Supreme Court of Victoria to the Supreme Court of New South Wales – Where only connecting factor with Victoria was location of plaintiff administrators and legal team – Proceeding transferred – Inappropriate to consider stay application – Jurisdiction of Courts (Cross-vesting) Act 1987 (Vic), s 5(2)(b)(iii)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N J O’Bryan AM SC Ms J Collins | Arnold Bloch Leibler |
| For the Defendants | Mr R G Craig | Spark Helmore |
HER HONOUR:
This is the return of a summons brought by the defendants seeking an order that the proceeding be transferred to the Supreme Court of New South Wales and/or an order that the proceeding be stayed pending determination of the first defendant’s appeal in the New South Wales Court of Appeal proceeding 2017/8668 (LEC proceeding).
Accordingly, the issue is whether the proceeding should be transferred or stayed.
Background
The proceeding concerns a contract of sale of land at Boolaroo, New South Wales (near Newcastle) between the plaintiff (Pasminco) as vendor, and the first defendant (Bunderra) as the buyer, and second defendant (Stevens) as the guarantor (Contract).
The land is referred to in the pleadings as the ‘TriPad Site’. Bunderra is seeking to develop the TriPad Site. Pasminco had retained adjacent land referred to in the pleadings as the ‘Superlot Site’ and is seeking to develop the Superlot Site.
Immediately prior to the entry into the Contract, Pasminco operated a smelter at Boolaroo. Since 2001, Pasminco has been operating under voluntary administration.
The first and second defendants are part of the Stevens group of companies and are based in the Central Coast of New South Wales.
Prior to entry into the Contract, Pasminco lodged a development application with the Lake Macquarie City Council (NSW Council) in respect of the TriPad Site.
The Contract to sell the TriPad Site was entered into on 17 April 2014. The sale price was $2,900,000 and, pursuant to cl 39.1, completion was conditional on the grant of a development consent by the NSW Council (Consent) on conditions satisfactory to the purchaser acting reasonably. Pursuant to cl 47, Stevens also provided a guarantee and indemnity.
There is (uncontested) evidence from the defendants that the Contract was made in New South Wales.[1] Senior Counsel for Pasminco also accepted that the Contract was subject to the laws of New South Wales, although the Contract contains no clause prescribing any particular jurisdiction for the resolution of disputes. The Contract further stipulates that solicitors for both the plaintiff and the defendants were located in New South Wales.
[1]Affidavit of Lachlan Wilson, sworn 29 June 2017, [13(a)].
By consent dated 2 September 2014, the NSW Council granted a development consent subject to conditions. Pasminco alleges that these conditions included a requirement to construct a main road pipe (Main Road Pipe). This pipe was to deal with the risk of flooding from stormwater flows originating from the Pasminco land and travelling onto the TriPad Site across Main Road. Bunderra, however, alleges that this was not required as part of the Consent.
Pasminco alleges that the Contract contained an implied term that Bunderra was required to perform, at its own cost, all of the requirements of the development consent given by the NSW Council (contained in paragraph 6(g) of the Statement of Claim) (Development Consent Term). This is denied by Bunderra.
Pasminco also relies on a series of communications which it says led to a variation of the Contract. These were conducted by solicitors on both sides based in New South Wales (albeit on instructions from the administrators in Melbourne, in the case of Pasminco). Pasminco alleges that, if the Contract did not contain the Development Consent Term ab initio, that by reason of these negotiations, the parties varied the Contract to require Bunderra to construct the Main Road Pipe (pleaded as the Second Variation in paragraph 29 of the Statement of Claim).
On 31 October 2017, Bunderra’s purchase of the TriPad Site reached completion.
After completion, Bunderra pursued the development of the TriPad Site and applied for the issue of a subdivision certificate.
On 24 May 2016, Pasminco filed a Summons in the New South Wales Land and Environment Court (LEC) seeking to restrain the NSW Council from issuing a subdivision certificate to Bunderra in circumstances where the Main Road Pipe had not been constructed. It sought orders concerning the proper construction of the Consent conditions and alleged, inter alia, that Bunderra, as the owner of the land, was required to construct the Main Road Pipe.
By decision of 21 December 2016, Robson J of the LEC found that Bunderra, as the developer of the TriPad Site, was required by the terms of the Consent to construct the Main Road Pipe before a subdivision certificate could be issued.
On 16 March 2017, Bunderra filed a Notice of Appeal with the Supreme Court of New South Wales Court of Appeal, being the LEC proceeding.
On 28 April 2017, Pasminco issued this proceeding in this Court.
In its Statement of Claim, Pasminco alleges that in breach of the Development Consent Term; alternatively the Second Variation, Bunderra has failed to construct the Main Road Pipe. It seeks an order that Bunderra construct the Main Road Pipe; alternatively, it seeks damages constituted by the cost of constructing the Main Road Pipe estimated at approximately $400,000.
As indicated already, the defendants deny the terms alleged and also allege that the Contract was varied to include a term that Pasminco would construct the Main Road Pipe.
Thus, in their Defence and Counterclaim, the defendants allege that Mr Wayne Woodward of Pasminco made an oral statement at a meeting on site attended by Mr David Burgin, amongst others, to the effect that Pasminco would have to build the Main Road Pipe if required. On the basis of this statement, it is alleged that the Contract was varied such that, if the Main Road Pipe was required to be constructed as a condition of the issue of a subdivision certificate, Pasminco would construct it (the Pipe Construction Term).
The defendants also allege that the Contract was varied to include a term that Pasminco would register a positive covenant in respect of the Superlot Site to satisfy the relevant condition of the Consent (Covenant Term) and, further, to include an undertaking that Pasminco would not take steps that would delay or frustrate the issue of a subdivision certificate (implied negative undertaking).
They allege that, if it is held on the appeal that the issue of a subdivision certificate is conditional on the construction of the Main Road Pipe, that Pasminco has breached the Pipe Construction Term. Alternatively, if it is held to be non-conditional, that Pasminco has breached the implied negative undertaking and the Covenant Term.
In its Reply and Counterclaim, Pasminco in turn alleges that certain representations were made by Bunderra to the effect that Pasminco was not obliged to construct the Main Road Pipe. Although they appear to be based on writing, Pasminco also pleads that the alleged representations were relied upon, such that Bunderra and Stevens are estopped from denying that Bunderra is obliged to construct the Main Road Pipe. Pasminco further denies the existence of the Covenant Term and says that the relevant positive covenant was not required to be registered until after the construction of the Main Road Pipe. In so saying, they rely on an agreement made during oral discussions with a solicitor acting on behalf of the NSW Council.
The LEC appeal was heard on 31 August 2017 with the Court reserving its judgment. The evidence of Mr Mengolian, solicitor for Pasminco, is that, based on his experience, a judgment is likely to be delivered in about 3 or 4 months after the hearing date.
Both Counsel accepted that the resolution of the LEC proceeding would substantially narrow the issues in dispute in this proceeding. Thus, if it is held on the appeal that the requirements of the Consent do not involve the construction of the Main Road Pipe, Pasminco’s allegation as to the implied term (in paragraph 6(g) of the Statement of Claim) would disappear. Further, the allegation in the Counterclaim based on the alleged breach of the Pipe Construction Term would also disappear.
Transfer application
Relevant principles
The defendants placed reliance on s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) which provides as follows:
(2) Where—
(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court (in this subsection referred to as the first court); and
(b) it appears to the first court that—
…
(iii) 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—
the first court shall transfer the relevant proceeding to that other Supreme Court.
Accordingly, the issue is whether it is in the ‘interests of justice’ that the relevant proceeding be determined by the Supreme Court of New South Wales.
In the High Court case of BHP Billiton Ltd v Schultz (Schultz),[2] the Court highlighted that the cross-vesting legislation requires a court to ensure that cases are heard in the forum dictated by the interests of justice.[3] No question of discretion arises.[4] Rather, the court is required to consider which forum is the ‘natural forum’ on the basis of a consideration of relevant ‘connecting factors’,[5] which do not include the plaintiff’s choice of forum.
[2](2004) 221 CLR 400.
[3]Ibid 421 [14] (Gleeson CJ, McHugh and Heydon JJ), 439 [77] (Gummow J, Hayne J agreeing).
[4]Ibid 434-5 [62]-[63] (Gummow J, Hayne J agreeing).
[5]Ibid 422-3 [18] (Gleeson CJ, McHugh and Heydon JJ).
In Irwin v State of Queensland (Irwin),[6] a decision of Robson J of the Supreme Court of Victoria, His Honour considered the decision of Schultz as well as a decision of Gillard J in Ewins v BHP Billiton Ltd.[7] His Honour then helpfully set out the relevant principles, which include:[8]
[6][2011] VSC 291.
[7][2005] VSC 4.
[8]Irwin [2011] VSC 291, [14] (citations omitted).
(a)The Act requires that the [first] court should exercise the power of transfer whenever “it appears” that it is in the interests of justice that it should be exercised.
(b)It is not necessary that it should appear that the first court is a “clearly inappropriate” forum. It is both necessary and sufficient that it appears that, in the interests of justice, the second court is more appropriate than the first court.
(c)The Court is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the Court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice.
(d)The interests of justice are not the same as the interests of one party, and there may be interests wider than those of either party to be considered. Even so the interests of the respective parties, which might in some respects be common (as for example cost and efficiency) and in other respects conflicting, arise for consideration.
(e)The power to exercise the jurisdiction is not a discretionary power but a mandatory obligation. No question of discretion arises.
(f)It is inapt to speak of an applicant for an order for transfer as bearing a burden of persuasion analogous to an onus of proof. Rather the jurisdiction must be exercised when “it appears” to the court that “it is in the interests of justice” that the proceeding be determined in the Supreme Court of another State or Territory rather than the court of where the proceeding has been issued. Unless it so appears, the court does not have power under the Act to transfer the proceedings. To that extent it may be said that an applicant assumes some onus of persuasion.
(g)The court should adopt what has been described as a “nuts and bolts” management decision as to which court, in the pursuit of the interests of justice, is more appropriate to hear and determine the substantive dispute.
(h)The appropriate court is the natural forum as determined by connecting factors to that forum.
(i)Relevant connecting factors include matters of convenience and expense such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law covering the relevant transaction.
(j)In many cases there will be a preponderance of connecting factors with one forum so that it can readily be identified as the most appropriate of natural forum. In other cases, there might be significant connecting factors with each of the two different forums. Some of the factors might cancel each other out.
…
(o)The plaintiff’s choice of forum by itself is not a relevant connecting factor.
(p)Each case depends on its own particular facts.
…
Submissions
The defendants submitted that the current proceeding lacks any real connecting factor to the Supreme Court of Victoria, citing inter alia that:
· the TriPad Site is in New South Wales;
· the vast majority of the relevant witnesses are based in New South Wales. In oral submissions, Counsel identified 7 witnesses (from both sides) and also suggested that the case would take 5 days, having regard to the various oral discussions pleaded;
· given the quantum of the damages is allegedly measured by the cost of constructing the Main Road Pipe, expert evidence will need to be given, which will involve an inspection of the TriPad Site;
· that regard will need to be given to a number of New South Wales statutory provisions; and
· that the plaintiff’s solicitors have offices in Sydney and Melbourne.
Pasminco in turn submitted that neither jurisdiction emerged as more compatible, with the relevant factors cancelling one another out, such that the case was ‘net neutral’. Pasminco further produced three authorities at the hearing: Ross Mollison Group Pty Ltd v Really Useful Co (Aust) Pty Ltd (Ross Mollison Group),[9] Reed-Union Corp v Sabra International Pty Ltd (Reed-Union),[10] and TAJ Productions Pty Ltd v White (TAJ Productions).[11]
[9][2000] VSC 256.
[10][2002] NSWSC 1170.
[11](2005) 56 ACSR 114.
In particular, Pasminco highlighted:
· That the location of the TriPad Site was not relevant to any central issue. Further, that the TriPad Site was in New South Wales rather than Sydney. This was said to be significant since it was alleged to be just as convenient to travel from Newcastle to Sydney as from Newcastle to Melbourne. This was based on evidence that it would take 1 hour and 50 minutes to drive from Newcastle to the Supreme Court in Sydney; and about 1 hour and 30 minutes to fly from Newcastle Airport to Melbourne Airport with a 25 minute drive to the Supreme Court of Victoria.
· That in terms of witnesses, the proceeding was at an early stage. However, in oral submissions, Senior Counsel accepted that almost every witness was in New South Wales (apart from the administrators). However, he emphasised that the case was almost entirely based on written documentation and would be short (of 2 days); that video-link might be utilised; and again highlighted that the convenience factor in relation to travel was effectively ‘net neutral’, having regard to the evidence already cited.
· That in terms of the cost of building the Main Road Pipe, the $400,000 involved was not ‘sheep stations’ and that a view was unlikely to be required.
· That, although New South Wales law governs the Contract, any relevant New South Wales provisions were straightforward provisions and could be readily construed by a Victorian court.
· That the administrators and legal teams retained in this matter are in Melbourne.
Senior Counsel ultimately submitted that costs would be minimised by ‘getting on with this case’ and that it was a ‘finely balanced case’ with sufficient connections with this Court. However, when asked to identify precisely what the connections with Victoria were, he was only able to identify the location of the administrators and their legal practitioners (as well as the availability of practitioners for the defendants).
Resolution
I accept that the administrators are (and were) based in Melbourne, and further that, although both solicitors have offices in both cities, the current legal team for Pasminco is based in Melbourne.
However, consistent with the appropriate concession of Senior Counsel, all other factors support a connection with New South Wales. This also reflects the submission of the defendants that the dispute arose after the administrators ‘went to New South Wales to sell a parcel of land’. Although some factors may be less significant than others, they suggest, in culmination, that the natural forum is the Supreme Court of New South Wales.
At times, it appeared that Pasminco was opposing the application on the basis that it was simply easier to leave the case in Victoria, given that it was already here and that it was a relatively short case. However, as cited above, the plaintiff’s choice of forum is not a relevant connecting factor. Given the oral discussions pleaded, I also consider that the defendants’ 5-day estimate is more realistic. In any event, regardless of the length, the Court needs to consider which court is appropriate in the interests of justice – which is not a matter of discretion.
As highlighted already, the defendants are based in New South Wales. The solicitor with the day-to-day conduct of the matter for the defendants, Mr Lachlan Wilson, is also based in Newcastle. Further, although Victorian Counsel were retained, the Court was informed that this was solely for the purposes of the application herein.
The Contract itself was said to be made in New South Wales and subject to New South Wales law. Such factors may not be highly significant. Thus, I accept that the New South Wales statutory provisions identified appear to be relatively straightforward.[12] Nevertheless, the connection is still with New South Wales.
[12]Counsel for the defendants highlighted certain provisions of the Environmental Planning and Assessment Act 1979 (NSW) referred to in the LEC decision at paragraphs 33 and 34.
What is more significant is that the negotiations towards the critical alleged variations were conducted by solicitors based in New South Wales. It is consistent with this (and the pleaded cases) that most of the witnesses are expected to be located in New South Wales. Although the proceeding is at an early stage, the pleadings are well particularised. They also suggest that the matter will not be solely based on written communications. Thus, by way of example, the alleged ‘Pipe Construction Term’ can be expected to be the subject of oral evidence. Similarly, the estoppel claim of Pasminco. Such matters suggest that credit issues are also likely to arise, such that the use of a video-link would be inappropriate.
Further, although it might be the case that modern airline travel means that travel from Newcastle is less inconvenient, the estimate given appears to take no account of the expense and delay associated with plane travel. In any event, the fact that most of the witnesses live in New South Wales gives the Supreme Court of New South Wales the advantage of proximity.[13]
[13]Schultz (2004) 221 CLR 400, 492 [256].
In terms of the TriPad Site’s location, I do not accept that it is not relevant to any important issue.
First, it is highly significant that the alleged breach (constituted by the failure to construct the Main Road Pipe) occurred in New South Wales.
Second, the damage itself also allegedly occurred in New South Wales. Thus, Pasminco is seeking the costs of constructing the Main Road Pipe. The quantum of such loss ($400,000) is currently denied. If the allegation remains denied, it will necessitate expert evidence and the inspection of the TriPad Site in New South Wales.
The relevant development Consent was also given by a Council in New South Wales. As accepted by both Counsel, this may have a potential effect on the issues in this proceeding. The Defence to Counterclaim also suggests that it is likely that evidence will be given by a solicitor acting for the NSW Council.
In terms of the cases cited, they turn on their own facts.
The Reed-Union case concerned an application to transfer a proceeding from New South Wales to Victoria.[14] Although the case was said to be ‘evenly balanced’, there were a number of connecting factors beyond the fact that one of the parties was based in the relevant jurisdiction (as is the case here). In particular, it was found that the subject matter of the proceeding had a connection with New South Wales because of the distribution of goods into New South Wales under the relevant agreement.[15]
[14][2002] NSWSC 1170.
[15]See ibid [3], [9].
The case of Ross Mollison Group concerned the refusal of an application to transfer a proceeding to New South Wales, which alleged a breach of an agreement and a breach of copyright.[16] Warren J (as Her Honour then was) ultimately formed the impression that the case did not reveal a sufficiently strong nexus with New South Wales. In so doing, Her Honour highlighted two matters which do not arise in the present case. Thus, Her Honour found that the relevant conduct the subject of the proceeding was scattered across Australia. Her Honour also found that the convenience issue was ‘finely balanced both ways’, given no definitive view could be formed about the calling of witnesses.[17] Her Honour also appears to have given weight to the plaintiff’s choice of forum.[18] However, this appears to have been done in the context of a consideration of the underlying reasons for that choice. Moreover, the subsequent High Court decision of Schultz makes it clear that the choice of forum is not a relevant connecting factor.
[16][2000] VSC 256.
[17]Ibid [17].
[18]Ibid [22].
The case of TAJ Productions does not assist Pasminco at all.[19] In that case, the liquidators applied to transfer a proceeding to the Supreme Court of Victoria (from New South Wales). Although the application was finely balanced (with witnesses in Sydney and Melbourne), the application was refused. However, the ‘telling consideration’ was that the Melbourne-based liquidators had the professional resources to be able to deal with the sort of litigation wherever it occurred.[20] This might also be said of the administrators in this case.
[19](2005) 56 ACSR 114.
[20]Ibid 117 [21].
Virtually all factors (other than the location of the administrators and Pasminco’s current legal team) point to a New South Wales connection. In so saying, I have considered all the factors cited above, cumulatively. However, those factors particularly include the location of the solicitors conducting the contractual negotiations; the location of virtually all of the witnesses; the location where the alleged breach occurred; and also the location where the alleged loss was sustained.
I am therefore satisfied that it is in the interests of justice to transfer this proceeding to the Supreme Court of New South Wales.
Stay application
In the light of the above finding, it is inappropriate to consider whether or not the application for a stay ought to be granted.
In exchanges with Counsel, I explored the possibility of directions up to, and including, the discovery stage with further directions in February 2018 (by which stage the LEC proceeding might be finalised).
However, given the matter is to be transferred to the Supreme Court of New South Wales, the stay application ought to be left for the consideration of that Court.
Conclusion
The proceeding will be transferred to the Supreme Court of New South Wales.
Given that both parties accepted that costs should follow the event, I will also order that the plaintiff pay the defendants’ costs of and incidental to the application to transfer the proceeding.
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