SARAH CIVIL PTY LTD v STORK ICM PTY LTD (Applicant) No. SCGRG-98-2448 Judgment No. 6713 Number of Pages - 8 Procedure - Cross Vesting

[1998] SASC 6713

SARAH CIVIL PTY LTD V STORK ICM AUSTRALIA PTY LTD

Civil

LANDER J

On 20 February 1998 the plaintiff issued a summons with a statement of claim annexed claiming damages for breach of contract against the defendant in the sum of $3,115,658.85.

It is alleged in the statement of claim that the plaintiff and defendant entered into a contract on 17 January 1996 the terms of which required the plaintiff to carry out certain building works being earthworks and civil building works at Ballera in the State of Queensland.  All of the work was carried out in Queensland.

It is claimed that work commenced on the site in March 1996 and continued until, I think, January 1997.

The plaintiff claims that the defendant has failed to make a number of payments which the defendant was obliged to make under the contract.  The claims are for payments for Schedule of Rates; Day Works; Extra Works; Back Charges; Wages and On Costs Claims; and Insurance Claims.

On 18 March 1998 the defendant filed an application seeking orders that these proceedings be stayed until further order or that the proceedings be removed or transferred from this Court to the Supreme Court of Queensland pursuant to the provisions of the Jurisdiction Of Courts (Cross Vesting) Act 1987.

It is with that application that I am presently concerned.

A number of affidavits have been filed by both the defendant in support of its application and the plaintiff in answer to the application.

I shall set out the relevant facts.

The plaintiff is incorporated in this State and carries on its business from this State.  The defendant is incorporated in Victoria and its administration centre is in that State.  Both parties’ connection with Queensland arises out of the head contract and the sub contract.

The defendant entered into a head contract with Santos Limited on 21 November 1995 pursuant to which the defendant agreed to design and construct a gas treatment facility in South West Queensland at Ballera, which is about 1,000 kilometres west of Brisbane.  It entered into a sub contract with the plaintiff pursuant to which the plaintiff was to carry out earthworks and civil works.  The sub contract sum was $5,082,748.07 which sum was based on a Schedule of Rates and Estimated Quantities set out in a Bill of Quantities which was attached to the sub contract.

On the same day as the defendant issued this application it also issued proceedings in the Supreme Court of Queensland against the plaintiff.  A week later it filed its statement of claim in those proceedings.

The claim brought by the defendant in the Supreme Court of Queensland could have been brought in the proceedings in this State by way of counterclaim.  That was frankly admitted by Mr Manly who appeared for the defendant on this application.

The claim is for the sum of $861,468 together with interest.  The claim is made under four heads.  The sum of $168,848 is claimed for moneys paid pursuant to a mistake of fact.  $7,020 is claimed for back charges.  $435,600 is claimed for camp services and $250,000 is claimed by way of liquidated damages.  Like the plaintiff’s claim in this State, the defendant’s claim is pursuant to the contract.

In an application to cross vest a proceeding from this Court to the Supreme Court of another State, the applicant must establish that it is in the interests of justice that the proceeding be determined by the Supreme Court of that other State.

There is no doubt in this case that the proceedings in this State and the proceedings in the Supreme Court of Queensland are related proceedings. 

The question in this case is simply whether or not it is in the interests of justice that the matter be cross vested to the Supreme Court of Queensland.

Most of the evidence was directed to documents and witnesses.  The defendant claims that the majority of its documents relating to these contracts are situated in Queensland in three twenty foot sea containers.  Its main operations office is situated in Queensland and eight of its witnesses reside and work in Queensland.  A further eleven witnesses, which it might call in any proceedings, are employed by a fellow contractor and the principal, Santos Limited.  A further nine witnesses are resident and work in Victoria.  A further eight potential witnesses are working in Western Australia.

All of the plaintiff’s documents are in this State.  The plaintiff’s witnesses are all resident and working in South Australia.  It is said that there are thirteen witnesses that the plaintiff might call, all of whom are resident and working in this State.

The plaintiff disputes the defendant’s claim that it will have to call a number of witnesses presently resident in Queensland.  It says that the ambit of this dispute in relation to its claim and in relation to the Queensland proceedings is such that a number of witnesses which the defendant claims it will need to call will not in fact need to be called.

I cannot resolve that on this application.  I will proceed on the basis that the parties have made an appropriate assessment of the witnesses who might be called and the parties presently honestly believe that all of those persons are likely to have to give evidence in relation to some aspect of the disputes which have arisen.

In Bourke v State Bank of New South Wales (1988) 85 ALR 61 at 77 Wilcox J said:

“Under that rubric, as it seems to me, the court is entitled to consider not only the ability of a particular court to deal with all aspects of a matter, and to make and to enforce all the orders to which a party may be entitled, but also adjectival matters such as the availability of particular evidence, the procedures to be adopted, the desirable venue for trial and the likely hearing date.  It is not in “the interests of justice” to adopt a course, in relation to those matters, which places unnecessary burdens and delays upon the parties to the litigation.”

He went on to say at 78:

“I take this to be a charter for the court to take the course which appears to it to be more just, interpreting that word widely.  However, for the applicant’s choice of forum to be overridden, there must be some objective factor which makes it possible to say that the interests of justice will be better served by transfer than by non transfer.  Where, as here, it is impossible to identify any such factor, the sub paragraph has no application.”

Mr Manly submitted that there were a number of objective factors which would support the making of the order. 

The first objective factor he submitted was the contract itself.  In that regard he relied upon clause two of the contract. 

The sub contract had annexed to it General Conditions.  Clauses 2.1 and 2.2 provided:

“2.1  Law

........................... The sub contract shall be governed by and construed with reference to all the laws for the time being in force in the State of Queensland and the parties hereby agree to submit to the jurisdiction of the Courts of that State and all courts of appeal therefrom.

2.2Currency

.................. All prices and sums of money and all payments made under the Subcontract shall be expressed, calculated and paid in units of Australian currency and payments shall be made at Brisbane in the State of Queensland or at such other place as may be agreed by the parties and evidenced in writing, such payments to be made by way of cheque drawn by the Main Contractor upon its bankers or such other mode as the Main Contractor may reasonably require.”

A similar term to clause 2.1 was considered in Nilsen Electric (WA) Pty Ltd v Jovista Pty Ltd (Unreported, Supreme Court Victoria no. 4173 of 1995, 8 March 1995).  In that case Byrne J said:

“The contractual choice of law and of forum provision which I have referred to was much pressed by Nilsen as an important consideration against transfer.

Two things about this should be noted.  First, it is not an exclusive jurisdiction clause.  Second, the considerations applicable to the effect of parties’ decision to submit to the law of a truly foreign jurisdiction are not comparable to those applicable to the like decision to submit to another jurisdiction in a federation such as ours.  It is a matter of significance, but in the context of the present contractual arrangements I do not place great weight on it.”

In Power and Water Authority v MacMahon Contractors Pty Ltd & Ors (Unreported Supreme Court of the Northern Territory, no. 101/1995, per Angel J), Angel J said of a similar clause that it was indicative but not determinative of an application of this kind.  In National Dairies WA Ltd & Ors v Wesfarmers Ltd (Unreported, Federal Court of Australia, NG 509 of 1996, per Tamberlin J) in considering a clause again similar to the clause in this matter said that the agreement of the parties as to the governing law was a matter of significance.

I think a clause of this kind is significant.  It demonstrates that the parties have applied their mind to the possibility of a contractual dispute and where that dispute ought to be resolved.  Because of that a clause of this kind must be given significant weight in the determination of the application, but it cannot be, as Angel J said, determinative itself of the application.  To make it determinative of the application would be to rewrite the Act of Parliament on which the application is based.

The second objective factor were the documents which have been generated under the head contract and the sub contract.  He pointed out that there were three shipping containers of documents all situated in Queensland.  This was also said to be the case with Santos’ documents.  He also pointed out that CMPS & F, who acted as superintending engineers for the project, was based in Queensland and their documents were in that State.  He said that the superintending engineers’ documents would become relevant because the engineers had made a number of complaints to the head contractor (the defendant in relation to this project).

On the other hand the plaintiff says that all its documents are in this State.  It says it had no communications with the superintending engineers and those documents would not be relevant, at least to its claims against the defendant, and the documents should not be relevant to the defendant’s claim as plaintiff in the Supreme Court of Queensland.

It also says that if the defendant’s documents are presently contained in three containers it would be easy enough for them to be transferred to this State for the purpose of proceedings in this State.

I note that the solicitors in South Australia are acting on the instructions of a solicitor in Victoria.  The solicitors who issued the proceedings in the Supreme Court of Queensland are also acting as agents for the same solicitor in Victoria.  I think it can be inferred that the proceedings, wherever they will be conducted, will be managed by a Victorian solicitor.

In those circumstances it does not seem to me to matter much that the defendant’s documents are presently in Queensland.  They can be moved to Adelaide.  It appears to me that the management of the documents will be conducted from Victoria, more particularly Melbourne, and so it does not matter much to the defendant to move the documents to this State.

The third objective matter relied upon by counsel for the defendant was the very claims themselves.  He said that the claims were complex claims involving significant amounts of money.  There has already been a failed mediation in respect of the plaintiff’s claim. A mediation took place in Melbourne with a Melbourne Queen’s Counsel acting as mediator.  Apparently it was not so important from the defendant’s point of view that the mediation take place in Queensland.

I do not think that these are particularly complex claims.  They are the usual claims which arise out of building and construction contracts and involve an assessment of fact with the assistance of some experts.  Often, and I suppose this is one of those cases, the facts might be complex but only by reason of the number of facts.  However, the litigation itself is not complex and it does not give rise to any complex matters of law.  It is, to over simplify the litigation, simply a building construction argument. 

The fourth objective fact relied upon was that the defendant had brought its proceedings in Queensland.  I think there is nothing in that point. The coincidence and timing establishes that the defendant brought its proceedings in Queensland to strengthen its case for the purpose of this application. 

As I have already said, Mr Manly conceded that the case brought in Queensland could have been easily enough brought by way of counter claim in the proceedings in this State.

Mr Manly, however, developed the submission by pointing out the defendant’s solicitors in Queensland have written to the case flow management officer in the Supreme Court of Queensland seeking to have the matter put in the supervised case list.  Apparently that means that the case will be judge managed and it will move at a faster rate through that Court than in the normal course and if the matter had been simply left in what is called the “cause list”.  He said that with supervised case management the matter would be likely to reach trial quicker in Queensland than in this State.

The parties would be entitled to have the matter managed by a Judge in this State.  The parties simply need to make application to the Chief Justice and, if the Chief Justice is satisfied that the matter is long or complex, he will assign both a master and a judge for the purpose of managing the litigation. 

I do not think that there are any advantages, at least as I understand them, available in judge management in Queensland which are not available in this State. 

As far as an expeditious hearing in concerned the state of the lists in this State would allow this matter to be heard at the earliest available opportunity.  It can be heard almost as soon as the interlocutory processes are completed and the parties are ready.  I do not know the waiting time for the hearing of matters commenced in the Supreme Court of Queensland but I would be surprised if a matter could come to trial quicker in that State than in this State.

The fifth objective fact are the number of witnesses in Queensland and the cost to the defendant if the matter was to proceed to trial in this State.  There would be added costs in proofing those witnesses and in bringing the witnesses to this State for the purpose of the trial.

There are a number of witnesses in Queensland.  I am not able to be sure how many of them will in fact be called at trial but I have assumed, as I have already said, the accuracy of the assertions made by each of the parties in relation to the number of witnesses likely to be called.

There can be no doubt that there will be an added cost and greater inconvenience to the defendant if this matter was to proceed in South Australia rather than Queensland.  I have already pointed out, however, the case seems to be being managed from Victoria.  There will be a cost to the defendant in any event.

However, there will also be an added cost and greater inconvenience to the plaintiff if the proceedings are heard in Queensland.  All of its witnesses are resident and work in this State.  Some but not all of the defendant’s witnesses are resident and work in Queensland. 

I think it is much of a muchness in relation to the added cost and inconvenience in relation to the witnesses.  I do not think, in the end result, that much can be made by either side of the additional burden of cost and inconvenience of having witnesses out of the State in which the matter is to be heard.

Mr Manly said, in relation to the sixth objective fact, that the court hearing the matter at some stage would have to take a view of the site.  I asked him if that would involve much more cost if the proceedings were heard in this State rather than in Queensland and he said he thought not.  That submission was not pressed.

For the seventh fact he relied upon clause 2.2 of the contract.  He pointed out that the contract provided for payment in Queensland.  The evidence, however, suggests that whilst cheques were drawn on a Queensland bank the payments were actually made administratively from Melbourne.  I do not think there is any support for the defendant’s application in that submission. 

He next pointed to the expense of inconvenience of the hearing of the matter in South Australia.  It seems to me that that really is no more than a restatement of the submission relating to documents and witnesses.

Mr Manly frankly conceded that given that Adelaide and Brisbane and about equally distant from Ballera there was little support for the application simply for the fact that Ballera is in Queensland.

The ninth objective fact he relied upon was that the plaintiff’s connection with South Australia is limited to three matters.  It is incorporated here, it carries on business here and some of its witnesses come from South Australia.

All of that is right, I think, but I am not sure where that takes the defendant.  That seems to give the plaintiff a substantial connection with the State.  The fact of the matter is that the plaintiff is a South Australian company which carries on business in and out of this State.  It is mainly connected with this State.  By the same token the defendant is a company incorporated in Victoria and which is administered in Victoria, but like the plaintiff carries on business in and out of the State of Victoria. 

Both companies would probably prefer to have the proceedings heard in their home State.  Of course the defendant would find it almost impossible to mount an argument that the matter ought to proceed to Victoria.  The defendant, therefore, is seeking what I might call a second best position.  It seeks to have the matter transferred to Queensland.

The tenth fact relied upon was that the proceedings had commenced in South Australia only because the plaintiff had made a “pre-emptive strike”.

I am not sure if that is right.  When the matter went to mediation last year the subject of the mediation was the plaintiff’s claim.  During that mediation the defendant announced that it had a claim against the plaintiff for the first time.  The plaintiff had never been informed of any claim by the defendant prior to that time.  The mediation failed in February 1998.  I do not think commencing proceedings three or four months later could be called a pre-emptive strike.

There is no doubt that the defendant will suffer inconvenience if these proceedings are allowed to continue in South Australia and are not cross vested to Queensland.  I think, however, if the matter was cross vested to Queensland the defendant would continue to suffer inconvenience because the defendant will administer the action from Victoria.  It is the fact, because of the defendant’s domicile, if this matter continues outside the State of Victoria it will be inconvenient to the defendant.

The plaintiff, on the other hand, will suffer little or no inconvenience if the matter proceeds in this State.  It will suffer substantial inconvenience if the matter is cross vested to Queensland because it has no connection with that State except that it performed its obligations under the sub contract in that State.  To transfer the proceedings to Queensland will cause the plaintiff inconvenience and substantially increase its costs.

In my opinion the defendant has not been able to establish that it would be in the interests of justice for this matter to be continued and heard in the Supreme Court of Queensland.  The plaintiff chose this jurisdiction.  The matter is justiciable in this jurisdiction.  It is not in the interests of justice to require the plaintiff to continue the proceedings in Queensland.  It would certainly be in the defendant’s interests but that is not the criterion for the making of an order under this Act. 

In my opinion the application should be dismissed.