Petersville Ltd v Peters (W.A) Ltd
[1997] FCA 543
•3 JUNE 1997
CATCHWORDS
Arbitration - submission and reference - stay of proceedings to enable arbitration - grounds - complex legal and factual questions - whether suitable for arbitration
Federal Court - practice and procedure in original jurisdiction - change of venue - where can proceedings be conducted most suitably
Commercial Arbitration Act (1985) (WA): s 53
Federal Court Rules: O 10 r 1(2)(f)
PETERSVILLE LTD and PETERS FOODS AUSTRALIA PTY LIMITED v PETERS (W.A.) LIMITED
NG 910 of 1996
LOCKHART J
SYDNEY
3 JUNE 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG910 of 1996
)
GENERAL DIVISION )
BETWEEN:PETERSVILLE LTD and PETERS FOODS AUSTRALIA PTY LIMITED
Applicant
AND: PETERS (W.A.) LIMITED
Respondent
CORAM: LOCKHART J
DATE: 3 JUNE 1997
PLACE: SYDNEY
MINUTE OF ORDER
THE COURT ORDERS THAT:
This proceeding be transferred to the Western Australian Registry of this Court.
The costs of Peters (W.A.) Limited of the motion filed on 29 January 1997 be its costs in the proceeding.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG910 of 1996
)
GENERAL DIVISION )
BETWEEN:PETERSVILLE LTD and PETERS FOODS AUSTRALIA PTY LIMITED
Applicant
AND: PETERS (W.A.) LIMITED
Respondent
3 JUNE 1997
REASONS FOR JUDGMENT
LOCKHART J.
The respondent, Peters (W.A.) Limited (‘Peters (WA)’) seeks a stay of this proceeding; in the alternative an order that the proceeding be transferred from the New South Wales District Registry of this Court to its Western Australian Registry. The stay is based upon an agreement made on 15 February 1983 (‘the Agreement’) which contains an arbitration clause. The agreement is between the first applicant, Petersville Limited (‘Petersville’), Q.U.F. Industries Limited (‘Q.U.F.’) and Peters (W.A.). Q.U.F. and Petersville carried on an ice cream business in Western Australia and elsewhere throughout Australia as partners under the name ‘Australian United Foods’ (‘AUF’).
On or about 15 February 1983 Petersville and Q.U.F. sold the ice cream business of AUF in Western Australia to Peters (W.A.) together with the land on which the business is carried on, the improvements on the land, and the stock in trade and goodwill of the business. Petersville and Q.U.F. also agreed with Peters (W.A.) to grant or procure the grant in its favour of the sole and exclusive right and licence to use certain trademarks, product names, symbols and logo types associated with those marks for the period ending 31 December 1997 with options for renewal extending to the year 2013.
The second applicant, Peters Foods Australia Pty Limited (‘Peters Foods’), acquired all of Q.U.F.’s share and interest in the assets of the partnership business in 1988/1989.
Petersville and Peters Foods sue Peters (W.A.) seeking declarations that a clause (7.1) of the Agreement is unenforceable under the common law doctrine of restraint of trade or, in the alternative, because it is said to contravene ss 45(2)(b) and 47(4) of the Trade Practices Act 1974 (‘the Trade Practices Act’).
Peters (W.A.) disputes each of the claims by Petersville and Peters Foods.
Clause 7.1 of the agreement provides as follows:
'Each of QUF and PL covenants and agrees with and for the benefit of PWA solely for the protection of PWA in respect of the goodwill of the ice cream business but subject to the due performance by PWA of its obligations hereunder and except as herein permitted that they and each of them will not:-
(a)sell, supply or distribute to any person in Western Australia ice cream or frozen confections manufactured or distributed by them or either of them;
(b)sell, supply or distribute to any person anywhere ice cream or frozen confections manufactured or distributed by them or either of them where such ice cream or frozen confections are to the knowledge of QUF and PL or either of them ultimately intended for sale supply or distribution in Western Australia whether by the first-mentioned person or another person;
(c)carry on in Western Australia directly or indirectly and whether as principal or agent the business of manufacturer, distributor (or either of them) of ice cream or frozen confections; or
(d)permit any subsidiary or related company (within the meaning of those expressions under the Companies (Western Australia) Code) of them or either of them directly or indirectly and whether as principal or agent to carry on the business of manufacturer, distributor (or either of them) of ice cream or frozen confections in Western Australia;
during the period of the licensing .'
Peters (W.A.) contends that this Court’s source of power for the grant of the stay is s 53 of the Commercial Arbitration Act (1985) (WA) (‘the Commercial Arbitration Act’) which provides as follows:
'53(1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to sub-section (2), apply to that court to stay the proceedings and that court, if satisfied -
(a)that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(b)that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration,
may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit.
(2) An application under subsection (1) shall not, except with the leave of the court in which the proceedings have been commenced, be made after the applicant has delivered pleadings or taken any other step in the proceedings other than the entry of an appearance.
(3) Notwithstanding any rule of law to the contrary, a party to an arbitration agreement shall not be entitled to recover damages in any court from another party to the agreement by reason that that other party takes proceedings in a court in respect of the matter agreed to be referred to arbitration by the arbitration agreement.’
Peters (W.A.) contends that the agreement is an arbitration agreement within the meaning of s 53 of the Commercial Arbitration Act because ‘arbitration agreement’ is defined in s 4 of that Act to mean ‘an agreement in writing to refer present or future disputes to arbitration’.
The Agreement contains clause 8.3 which provides as follows:
'Any dispute or difference of opinion between the parties touching the obligations of each to the other or others or the meaning hereof shall be referred to arbitration under the provisions of the law of Western Australia relating to arbitration and in force for the time being and any arbitral award arising from any such reference shall be final and binding upon the parties.'
Clause 8.5 of the agreement provides that the parties agree that the law of the agreement is the law of Western Australia. The clause reads as follows:
'The law relating to this Agreement shall be the law of Western Australia and for any purposes arising out of this Agreement the parties agree to submit to the laws of that State.'
Petersville is a party to the agreement and Peters Foods claims to be a ‘party’ to the agreement within the extended definition of that term in s 4 of the Commercial Arbitration Act, which provides that ‘party’ in relation to an arbitration agreement ‘includes any person claiming through or under a party to the arbitration agreement’. Peters Foods claims ‘through’ or ‘under’ Q.U.F. because it acquired all of its shares and interest in the assets of the partnership business. In my view this is correct.
Counsel for Petersville and Peters Foods contends that the present proceeding is not within the scope of the arbitration clause because:
the word ‘obligations’ in clause 8.3 is not capable of extending to all obligations howsoever arising, whether related to the agreement or not;
properly construed the word ‘obligations’ refers to things which one or other party is required to do under or by virtue of the contract;
there is no dispute in this case about what the contract requires to be done. The dispute is whether the contractual stipulation is contrary to the general law and the Trade Practices Act;
clause 8.3 is confined to disputes about the meaning or effect of contractual provisions. It does not extend to disputes about whether a contractual requirement whose meaning and effect is clear is contrary to law.
Counsel for Petersville and Peters Foods also argued that, so far as the present proceeding is based on Part IV of the Trade Practices Act, it is not within the scope of the arbitration clause because:
the law relating to the agreement is that of Western Australia;
the Trade Practices Act, s 86, does not confer federal jurisdiction upon Western Australian courts in matters arising under Part IV;
matters arising under Part IV are ‘special federal matters’ within the meaning of the Jurisdiction of Courts (Cross Vesting) Act 1987;
the additional jurisdiction given by s 4 of the Cross Vesting Act is, in relation to matters which arise under Part IV of the Trade Practices Act, confined to the Supreme Court and may only be exercised if the Supreme Court makes a determination under s 6(3);
it would be inconsistent with the special statutory regime relating to Part IV matters to treat the arbitration clause as extending to such matters; and reliance was placed upon IBM Australia v National Distribution Services (1991) 22 NSWLR 466 and Francis Travel v Virgin Atlantic Airways (1996) 39 NSWLR 160.
It was argued by counsel for Peters (W.A.) that in this case there is a dispute or difference of opinion between the parties ‘touching the obligations of each to the other or others’ within the meaning of the arbitration clause because, as a matter of construction, the phrase ‘touching this agreement’ is at least as comprehensive as the phrase ‘arising out of the agreement’ and is fulfilled in the event that it is necessary to have recourse to the agreement to settle the dispute that has arisen. Reliance was placed upon a number of cases including Plummer v Delaforce [1964] NSWR 1550 per Asprey J at 1554; also Francis Travel.
It was argued on behalf of Peters (W.A.) that in this case the agreement is about the agreement itself, in particular the restraint clause and whether that restraint is enforceable. It was argued, that in order to resolve each of the issues of restraint under the common law and the Trade Practices Act it is necessary to have recourse to the restraint clause, its interpretation and application.
I do not find it necessary to determine the question of whether the present proceeding is within the scope of the arbitration clause; or the question whether, in so far as the proceeding is based on Part IV of the Trade Practices Act, it is or is not within the scope of the arbitration clause.
In my opinion, even if the answer to these questions is favourable to Peters (W.A.) (I have no view one way or the other), I would not as a matter of discretion order a stay under the Commercial Arbitration Act.
This Court has special expertise in Part IV matters arising under the Trade Practices Act and associated common law restraint trade issues. Plainly enough the questions which arise here are not the types of questions which were within the contemplation of the parties for the purposes of private arbitration, even assuming that the literal terms of the arbitration clause can embrace the present dispute.
Cases under Part IV of the Trade Practices Act involve complex legal and factual questions. The matters pleaded in the statement of claim show that the issues of the kind that normally arise in Part IV cases (in particular, questions of market definition, competition within relevant markets and anti-competitive behaviour) are better dealt with by a court having appropriate jurisdiction, rather than an arbitrator. I accept that where parties have agreed upon an arbitration clause as a means of settling their disputes, curial proceedings will ordinarily be stayed, but this does not apply to the present case which involves the issues which I have described.
That leaves the question whether the alternative order sought by Peters (W.A.) should be granted, namely, the transfer of the proceeding from the New South Wales District Registry to the Western Australian District Registry of this Court.
The case has reached the point where the application and statement of claim have been filed; an appearance has been entered by Peters (W.A.); but no defence has yet been filed.
This Court’s power to transfer proceedings is, of course, well established (see s 48 of the Federal Court of Australia Act 1976 and O 10 r 1(2)(f) of the Court’s Rules).
The guiding principles are also well established, namely, where can the proceedings be conducted or continued most suitably, bearing in mind the interests of all parties, the ends of justice in the determination of the issues between the parties, and the most efficient administration of the Court.
I agree with the submission made by counsel for Peters (W.A.) that the principal issues in the case appear to be as follows:
(a)whether the Restraint and each of the provisions within it is wider than is necessary to protect the interests of Peters (W.A.) in relation to the goodwill of the ice cream business and each of the licences which had been granted to Peters (W.A.) under the terms of the licensing arrangements since the inception of the agreement;
(b)whether there is a market for the supply, distribution and sale of any, and if so what, ice cream products to outlets in Western Australia;
(c)whether there is a market for ice cream comprising substantially the whole of Australia;
(d)whether the Western Australian market may be divided into sub-markets in that State; and, if so, what are their characteristics;
(e)questions of competition;
(f)whether the purpose of the restraint was solely to protect Peters (W.A.) in respect of the goodwill of the ice cream business;
(g)whether there is a proscribed purpose under the relevant provisions of the Trade Practices Act;
(h)whether entry by Peters (W.A.) into the licensing arrangements has the purpose or is likely to have the effect of substantially lessening competition in the relevant markets or sub-markets and constitutes a contravention of s 47(4) of the Trade Practices Act.
The subject matter of the dispute plainly has its most real and substantial connection with Western Australia.
The issues will require careful consideration of the relevant ice cream market in Western Australia, with particular reference to the business activities of Peters (W.A.) in that State and of other participants in the business of selling ice cream and other frozen foods in that State.
The evidence to be obtained for the purpose of the hearing will probably include market research evidence concerning markets and sub-markets in Western Australia. The evidence of the negotiations for and the purpose and effect of the agreement, will come primarily from Western Australia.
Petersville and Peters Foods are holding companies with nation wide operations. It does not seem to me that there will be any adverse consequences suffered by them if the proceeding is heard in Western Australia rather than New South Wales.
If Peters (W.A.) is forced to defend the case in New South Wales it will, I think, be put to disproportionate trouble and expense. Nor is it premature to transfer the proceedings to Western Australia at this stage.
An alternative course, which is sometimes adopted by the Court, is not to transfer a proceeding from one registry to another but rather to await the development of the case as it proceeds at the interlocutory stages; and, if necessary, sit in another city for the purpose of hearing the whole or part of the case.
However, in my opinion the present case is more appropriately dealt with by transferring the proceeding at this stage to the State with which it has the most real and substantial connection, namely, Western Australia.
Accordingly, the Court orders that this proceeding be transferred to the Western Australian registry of this Court.
So far as costs of the motion are concerned, Peters (W.A.) has been successful on the issue of transfer, but has not succeeded in relation to the stay. The proper order for costs is that the costs of Peters (W.A.) of the motion filed on 29 January 1997 be its costs in the proceeding.
I hereby certify that this and
the preceding fourteen (14)
pages are a true copy of the
reasons for judgment herein of
the Honourable Justice Lockhart.Associate
Dated: 3 June 1997
Counsel for the Applicant: Mr P G Hely QC
Solicitors for the Applicant: Minter Ellison
Counsel for the Respondent: Mr J Kelly SC
Solicitors for the Respondent: Freehill Hollingdale & Page
Date of Hearing: 7 February 1997
Date of Judgment: 3 June 1997
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