Reece Pty Ltd v Southwell
[2010] VCC 86
•1 March 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-05439
| REECE PTY LTD | Plaintiff |
| (ACN 004 097 090) | |
| v | |
| MATTHEW SOUTHWELL | First Defendant |
| and | |
| PAUL JEREMY CHAPMAN | Second Defendant |
| and | |
| JODY ANN PYMBLE | Third Defendant |
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| JUDGE: | HIS HONOUR JUDGE GINNANE |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 22 February 2010 |
| DATE OF JUDGMENT: | 1 March 2010 |
| CASE MAY BE CITED AS: | Reece Pty Ltd v Southwell & Ors. |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0086 |
REASONS FOR JUDGMENT
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Catchwords: Contract - Application to stay proceedings – Appropriate Court to hear proceeding - Jurisdiction clause – Proper law clause – Place of residence of witnesses and parties – Financial circumstances of parties - Service and Execution of Process Act 1992 (Cth) s.20
Jurisdiction – County Court – Whether material part of cause of action arose in Victoria-
Exclusive jurisdiction clause- Proper law clause - County Court Act 1958 s.36
| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Shaw | Harrick Lawyers Pty Ltd |
| For the Defendants | Mr D Guidolin | Thompson Norrie Solicitors |
| HIS HONOUR: |
1 The plaintiff is a national plumbing and building supplier with its headquarters in Burwood, Melbourne. The third defendant lives in East Maitland in New South Wales. The plaintiff sued in this Court on 16 November 2009 for the sum of $113,416.47 for plumbing and bathroom products alleged to have been supplied between June and August 2009 to Capital Homes, a partnership of which the defendants, at least at some point, were members.
2 The third defendant filed a conditional appearance on 16 December 2009.
3 By summons dated 15 December 2009, the third defendant applied pursuant to s.20 of the Service and Execution of Process Act 1992 (Cth), to stay the proceedings on the grounds set forth in an affidavit of the third defendant, Jody Ann Pymble.
4 Section 20(3) 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.”
5 Section 20(4) states:
“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;
(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 issued; and
(e) the law that would be most appropriate to apply in the
proceeding;
(f) whether a related or similar proceeding has been commenced
against person served or another person;
but do not include the fact that the proceeding was commenced in the
place of issue.”
6 The defences, which it is said will be relied on by the third defendant, include first, that a guarantee given by one partner of a partnership debt is not an enforceable guarantee. Second, that in February 2007, the business conducted by the partnership, Capital Homes, was transferred to a company, from which the third defendant resigned as a shareholder and director in or about April 2007 and as a result thereafter was not liable for its debts.
7 The relationship between the parties was governed by an Agreement to Guarantee and Indemnify and Terms and Conditions of Trade. Clause 6 of the Agreement to Guarantee and Indemnify stated:
“6 Proper Law: We agree that this Agreement and any claim or dispute between Reece, the Customer and/or any of us shall be governed by the law applicable in the State nominated by Reece and we agree to submit to the jurisdiction of the appropriate Court nominated by Reece in the capital city of that State. If no State is nominated than Victoria shall be deemed to be the nominated State.”
8 Clause 13 of the Terms and Conditions of Trade stated:
“ Jurisdiction: The Customer agrees that all contracts made with Reece shall be deemed to be made in the State nominated by Reece and the Customer agrees to submit to the jurisdiction of the appropriate Court nominated by Reece in the capital city of that State. If no State is nominated then Victoria shall be deemed to be the nominated State.
9 The third defendant accepted that she bears the onus on the balance of probabilities of making out the grounds for a stay and that whether the courts of New South Wales are more appropriate to determine all the matters in issue falls to be resolved by a balancing of the factors identified in s.20(4).
10 Based on her two affidavits, the third defendant argued that the contract between the plaintiff and the defendants had been formed in New South Wales and that the place of residence of the parties and witnesses was mostly in Maitland. The subject matter of the proceeding was said to be also situated in Maitland. The third defendant argued that her financial circumstances favoured a stay of the proceeding because she was a full-time employee and the main wage earner for her family, with three children of school age. She argued that she may have to call the first and second defendants, who were said to be bankrupt, as witnesses in the proceeding. The lawyers who prepared the Deed of Agreement and Heads of Agreement are in New South Wales and they may have to be called as witnesses in the proceeding.
11 The third defendant submitted that clause 6 of the Guarantee and Indemnity merely nominated Victoria as the governing law and that the existence of a non-exclusive jurisdictional clause was a relevant, but not conclusive, factor, in determining whether a stay should be granted. Reference was made to the judgment of Gordon J in the Federal Court of Australia in Huntingdale
Village Pty Ltd ( Receiver and Manager Appointed), In the matter of
Huntingdale Village Pty Ltd ( Receiver and Manager) Appointed [2009] FCA
1323, particularly at paragraph 21, where her Honour stated:“There are a number of points to be made. First, the jurisdiction clause in issue here … is non exclusive. Each of the authorities referred to by the plaintiffs concerned an exclusive jurisdiction clause. There is no doubt a stronger basis in those circumstances to hold the parties to their bargain.”
12 So far as the appropriate law to apply is concerned, it was put that Victorian and New South Wales law was the same, but that this Court could not order the New South Wales Registrar- General to remove caveats which had been placed by the plaintiff over two properties, either owned by the third defendant, or the third defendant and her husband, despite the fact that she was no longer involved in the partnership with the other defendants.
13 In the alternative, the third defendant argued that no material part of the cause of action arose in Victoria and therefore the Court did not have jurisdiction under s.36 of the County Court Act 1958 to hear the proceeding.
14 In response, the plaintiff emphasised particularly that the relevant issues for the Court’s consideration were those raised by the case as it now was and not the issues, which might be raised at trial, nor whether orders might be required directing the Registrar- General of New South Wales to remove caveats.
15 The plaintiff submitted that issues said to arise regarding a Deed of Agreement between the defendants about the dissolution of their partnership were not relevant and that it could not have been expected to know what inter partes arrangements had been agreed. It pointed to a search of business records in New South Wales which suggested that the third defendant had not been removed as a proprietor of the relevant business name.
16 The plaintiff placed particular reliance on clauses 6 and 13, which are set out above and submitted that on their proper construction, the contract was entered into in Victoria, that the parties had agreed to submit to the jurisdiction of the Victorian Courts and that this was sufficient for the Court to hold that the third defendant had not discharged the onus to obtain a stay.
17 The plaintiff argued that the effect of clauses 6 and 13 was that the contract had been made in Victoria and the jurisdiction of the Court thereby attracted.
18 I accept, first, that the onus is on the third defendant to make out the grounds for a stay.
19 Second, all the material events relating to the performance of the contract occurred in Maitland and, so far as appears, all the likely witnesses to be called by the plaintiff and by the third defendant reside in New South Wales.
20 Third, although there was no detailed financial evidence put before the Court, I take into account that the third defendant is an employee supporting school age children and that the other two defendants are said to be bankrupt. Therefore, if the proceeding is heard in Victoria, there is likely to be expense to the third defendant, greater than the ordinary run of expenses that an individual might anticipate if engaged in litigation. Those expenses are likely to be considerably less if the proceeding is heard in New South Wales. It was not suggested that there would be additional financial expense for the plaintiff if that course was followed.
21 I must have regard under s.20(3) of the Act to the determination of all matters in issue between the parties. That latter phrase encompasses arguments that the third defendant may wish to make and the orders that the third defendant may wish to seek at the conclusion of the proceedings, including orders for the removal of the caveats.
22 I accept that this Court would not have the power to direct the New South Wales Registrar – General to remove the caveats.
23 Weighing against the grant of a stay are clauses 6 and 13 set out above - the proper law of the contract and the jurisdiction of Courts agreed to by the parties. The third defendant put various arguments about how those clauses might be construed, but for the purposes of this decision, I act on the basis that they require the Court to apply Victorian law in the absence of the nomination of another State.
24 However, I do not consider clauses 6 and 13 to be decisive considerations when weighed against the other matters to which I have referred.
25 In my opinion, the decisive consideration is that the events associated with the performance of this contract occurred substantially in Maitland and that most, if not all of the witnesses reside in Maitland or in New South Wales.
26 I am satisfied that the Courts of New South Wales would have jurisdiction to determine all the matters in issue between the parties.
27 I accept, because of the effect of clauses 6 and 13, that this Court, too, has jurisdiction under s.36 of the County Court Act. However for the reasons that I have given, I consider that New South Wales Courts are the appropriate courts to determine all the matters in issue between the parties.
28 I therefore propose to make an order under paragraph 1 of the summons that the proceedings be stayed in accordance with s.20 of the Service and Execution of Process Act 1992.
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