TR Pty Ltd v VDM CCE Pty Ltd

[2010] VCC 71

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-09-05872

TR PTY LTD	Plaintiff
v
VDM CCE PTY LTD	Defendant

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JUDGE:	HIS HONOUR JUDGE GINNANE
WHERE HELD:	Melbourne
DATE OF HEARING:	18 February 2010
DATE OF JUDGMENT:	24 February 2010
CASE MAY BE CITED AS:	TR Pty Ltd v VDM CCE Pty Ltd
MEDIUM NEUTRAL CITATION:	[2010] VCC 0071

REASONS FOR JUDGMENT

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Catchwords: JURISDICTION – County Court – action on contract – whether material part of cause of action arose in Victoria – exclusive jurisdiction clause – stay of proceedings – arbitration clause – County Court Act 1958, s.36 – Service and Execution of Process Act 1992, s.30.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Terziovski	Rothwell Lawyers
For the Defendant	Dr C Button	Minter Ellison
HIS HONOUR:

1          The plaintiff sues the defendant by a Writ filed in December 2009. Under a Contract made in February 2009, the plaintiff alleges that it contracted with the defendant to supply and install an IPTV system at Moorvale Station Accommodation Village in the Nebo Shire of Queensland. That agreement is said to be in writing and dated 12 January 2009 and executed on or about 25 February 2009. The plaintiff sues for monies owing under that Contract in the sum of $238,165.39.

2          The plaintiff is based in North Blackburn; the defendant in Osborne Park, Western Australia. The defendant was formerly known as Civnec Construction & Engineering Pty Ltd. The defendant has entered a conditional appearance.

3          The defendant, by a Summons dated 4 February 2010, seeks an order that the proceeding be permanently stayed or, alternatively, dismissed. That application is supported by three affidavits of Anna Ellen Ryan, the solicitor for the defendant. The Summons is opposed and the defendant relies on an affidavit by Michael Johnson, who is the general manager at TR Telecom, a wholly-owned subsidiary of the plaintiff.

4          The defendant raises four grounds in support of its application to stay the proceedings.

5          The arguments put by the defendant turns on the extent of the jurisdiction of this Court, the alleged exclusive jurisdiction clause in the contract between the parties, the power of the Court under s.20 of the Service and Execution of Process Act 1992 to stay proceedings and the arbitration clause that is said to occur in the Contract.

6          The position of the parties seeking to sue in a court was described in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, where, at page 241, Sir William Deane stated:

“A party who has regularly invoked the jurisdiction of a competent court has a prima facie right to insist upon its exercise and to have his claim heard and determined. ”

7          In another relevant passage in that case, at page 224, Sir Gerard Brennan stated:

“Where the parties to a contract agree that the courts of a foreign country shall have exclusive jurisdiction to decide disputes arising under the contract or out of its performance, the courts of this country regard that agreement as a submission of such disputes to arbitration and will, in the absence of countervailing reasons, stay proceedings brought here to decide those disputes. … .”

8          The issue in this case is, first, whether the jurisdiction has been regularly invoked.

Section 36 of the County Court Act 1958

9 The jurisdiction of this Court is fixed by statute, in particular, s.36 of the County Court Act 1958, which requires that a material part of the cause of action has arisen within the State of Victoria.

10        The argument in respect of the first ground relied on by the defendant turned on where the contract between the parties was formed. There is evidence on this question in Mr Johnson’s affidavit, at paragraphs 24 and following. In particular, paragraph 24 states that the plaintiff’s head office is based in Melbourne, Victoria, and that the sub-contract was accepted in Melbourne by it being signed by Mr A Beck, the plaintiff’s then Chief Executive Officer. There is also some evidence on this issue in the third affidavit of Ms Ryan, who, in reference to paragraph 24, exhibited an email dated 31 January 2009 from Mr Mark Pemmelaar who, at that time, was a project manager for the defendant, to Mr Johnson, with its attachment. At paragraph 5 of her third affidavit, Ms Ryan states:

“I am informed by Gavin Cason, signatory of the Subcontract on behalf of the Defendant and believe that Mr Cason cannot specifically recall the circumstances surrounding his execution of the Subcontract. However, Mr Cason’s usual practice is to execute a Contract after the other party has done so.”

11        It is not clear from the material before me where the communication of the acceptance of the Contract by Mr Beck occurred.

12         The defendant relied on the Court of Appeal decision in Schib Packaging Srl v Emrich Industries Pty Ltd (2005) 12 VR 268, where Charles JA, in paragraph 11, said:

“When a contractual offer (or counter offer) has been accepted by non- instantaneous means of communication, the postal acceptance rule applies and the contract is made at the place of acceptance. Both parties in this Court, however, accept that when a contractual offer (or counter offer) has been accepted by instantaneous means of communication, as in this case where the parties corresponded by facsimile, the postal acceptance rule does not apply and the contract is made at the place where the acceptance is received by the offeror. …”

13        It is not clear from the material how, or where, Mr Beck communicated his acceptance to the defendant. It may have been by email,it may have been by post. It is not established.

14        The onus of proof is on the plaintiff in a case such as this where as I noted earlier a conditional appearance has bee entered see WA Dewhurst & Co Pty Ltd v Cawrse [1960] VR 278, at 280-281.

15 I am not satisfied on the evidence that the contract was formed in Victoria, or accepted in Victoria. I am not satisfied that a material part of the cause of action arose in Victoria within the terms of s.36 of the County Court Act 1958. I do not consider, to paraphrase the language of Sir William Deane, the action has been regularly brought in this Court.

16        It is strictly necessary for me to express views on the defendant’s other arguments, but I will briefly do so.

Exclusive Jurisdiction Clause

17        The defendant relied on an exclusive jurisdiction clause which is contained in Clause 28.12 of the contract between the parties. It states, under the heading ‘Governing Law’:

“This subcontract is governed by laws applicable in Western Australia and the parties submit to the exclusive jurisdiction of the Courts in Western Australia.”

18        The authorities establish that where a contract contains an exclusive jurisdiction clause, the Court has a discretion that should be exercised in favour of granting a stay unless the plaintiff can show a strong case for not doing so. The defendant relied on a number of authorities, including the Oceanic Sun Line Case and also Justice Davies’ judgment in 1144 Nepean Highway Pty Ltd v Leigh Mardon Australasia Pty Ltd [2009] VSC 226.

19        In this case, the countervailing factors advanced by the plaintiff are summarised in Mr Johnson’s affidavit, at paragraphs 24 to 26, which largely deal with the location of staff, who were involved in the installation of the project in Queensland and presumably may be required to give evidence in the proceeding. I will not repeat, but refer to the lengthy paragraph 26, where Mr Johnson identifies the relevant staff and their location. It is clear from that paragraph that the balance of the staff reside in Melbourne. As I have indicated, the plaintiff is based in North Blackburn. The defendant company is located in Western Australia. Mr Casen of the plaintiff seems to reside in Western Australia. It is not clear how many other witnesses the defendant may need to call or where they reside.

20        I readily accept that there will be inconvenience and additional expense if this proceeding is heard either by a court or an arbitrator in Western Australia, However in a commercial contract where parties have agreed to an exclusive jurisdiction clause in the terms contained in the contract between the plaintiff and the defendant, inconvenience thereby caused is not sufficient reason to overcome the effect of the clause. Accordingly, even if I had found this Court had jurisdiction, following the approach of Sir Gerard Brennan and Justice Gaudron in the Oceanic Sun Line Case, I would still have ordered that a stay be granted.

Service and Execution of Process Act

21        I would also have granted a stay under s.20 of the Service and Execution of Process Act 1992.

22         I consider that applying the criteria set out in s.20(4) of that Act, that it is appropriate to grant the stay, substantially for the same reasons as I have given in respect of the exclusive jurisdiction clause. Under s.20(4), the place of residence of witnesses and the financial circumstances of the parties are relevant, but so also is any agreement between the parties about the Court or the place in which the proceedings should be instituted.

23        There is no evidence of a financial inability of the plaintiff to conduct the litigation in Western Australia.

Arbitration Clause

24 The final issue relied on by the defendant was what was said to be an arbitration clause, Clause 27, of the contract between the parties. That Clause is headed ‘Dispute Resolution’. It is a long clause and I will not take the time now to read it. It envisages that, subject to the procedures of the Construction Contracts Act 2004 (WA), then a dispute covered by Clause 27 will be referred to arbitration in accordance with the Commercial Arbitration Act 1985 of Western Australia.

25 There are two issues about Clause 27. First, subclause (i) states:

“Nothing herein shall prejudice the right of a party to institute proceedings to enforce progress payments due and owing under this subcontract or to seek injunctive or urgent declaratory relief.”

26 It is not clear from the material before me whether the plaintiff sues for progress payments. Clause 18 of the Contract deals with progress claims and payments. However, Clause 18.17 deals with final payment claims. Clause 27(i) does not refer to final payment claims.

27         I do not have before me the document referred to in the progress claims item in Schedule 1 of the sub-contract. In that Schedule there is an item 9 entitled “Progress Claims (GC clause 18.1)” the text of which has been deleted and a handwritten annotation added stating “refer Appendix H”. Appendix H is not before the Court. Thus the full contractual provisions dealing with progress claims are not before the Court.

28 In the absence of that Appendix and, in view of the distinction in Clause 18 between progress payments and final payments, I would have formed the view that the subject matter of the present came within Clause 27.

29        The other matter that was argued against sending the matter to arbitration was that there were possibly going to be proceedings against Ruckus Wireless Incorporated, a United States company, which apparently advised as to a wireless television network solution for the project. Mr Johnson in paragraph 19 of his affidavit, states:

“In the event the defendant files a defence and counterclaim against the plaintiff, the plaintiff will see to join Ruckus as a third party in its defence to counterclaim.”

30        In my opinion, that statement by itself, even when read with paragraphs 14 to 18 of Mr Johnson’s affidavit, is insufficient to justify a refusal to stay the proceeding. The intention expressed in paragraph 19 is conditional upon the defendant filing not just a defence but a counterclaim.

31 Ms Ryan, in paragraph 12 of her first and second affidavits, states that the defendant was willing to follow the dispute resolution procedure, including the arbitration procedure set out in clause 27.

Conclusion

32 In summary, I have decided the summons on the ground that the Court has no jurisdiction under s.36 of the County Court Act 1958 to hear the proceeding.

33         It seems to me to be a matter that is within the jurisdiction of the courts of Western Australia, whether the District Court or the Supreme Court of Western Australia.

34        I consider the appropriate order is that the proceeding be dismissed, and subject to anything that is said by counsel, that the plaintiff pay the defendant’s costs of the proceeding, including this application.

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