Whyalla Refiners Pty Ltd v Grant Thornton (A Firm)

[2001] WASC 49

WHYALLA REFINERS PTY LTD -v- GRANT THORNTON (A FIRM) & ANOR [2001] WASC 49

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 49
Case No:	CIV:1397/1999	Heard:	13 FEBRUARY 2001
Coram:	MILLER J	Delivered:	6/03/01
No of pages:	13	Judgment Part:	1 of 1
Result:	Application dismissed
PDF Version

Parties:	WHYALLA REFINERS PTY LTD (ACN 063 271 625) GRANT THORNTON (A FIRM) SOUTHERN CROSS PETROLEUM SALES (SA) PTY LTD (IN LIQ)
Catchwords:	Cross-vesting Jurisdiction of Courts (Cross-Vesting) Act, s 5(2) Interests of justice Relevance of rules of private international law Right of plaintiff to require court to exercise jurisdiction Onus of proof
Legislation:	Fair Trading Act 1987 (WA), s 10 Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA), s 5(2) Jurisdiction of Courts (Cross-Vesting) Bill 1986 (Cth) Trade Practices Act 1974 (Cth), s 52
Case References:	Baffsky v John Fairfax & Sons Ltd (1990) 97 ACTR 1 Bailey (By his next friend The Public Trustee) v Climaze Holdings Pty Ltd, unreported; SCt of WA; Library No 980455; 12 August 1998 BankInvest AG v Seabrook (1988) 14 NSWLR 711 Bond v Larobe Pty Ltd, unreported; Library No 920057; 31 December 1991 Chapman v Jansen (1990) 100 FLR 66 Dawson v Baker (1994) 120 ACTR 11 Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd [1990] 1 WAR 531 Platz v Lambert (1994) 12 WAR 319 Waterhouse v Australian Broadcasting Corporation (1989) 86 ACTR 1 Interceramics Australia Pty Ltd v Quadric Pty Ltd, unreported; Library No 970610; 14 November 1997 Van der Sluys v Anaconda Nickel Ltd [2000] NSWSC 719

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : WHYALLA REFINERS PTY LTD -v- GRANT THORNTON (A FIRM) & ANOR [2001] WASC 49 CORAM : MILLER J HEARD : 13 FEBRUARY 2001 DELIVERED : 6 MARCH 2001 FILE NO/S : CIV 1397 of 1999 BETWEEN : WHYALLA REFINERS PTY LTD (ACN 063 271 625)

Plaintiff

AND

GRANT THORNTON (A FIRM)
First Defendant

SOUTHERN CROSS PETROLEUM SALES (SA) PTY LTD (IN LIQ)
Second Defendant

Catchwords:

Cross-vesting - Jurisdiction of Courts (Cross-Vesting) Act, s 5(2) - Interests of justice - Relevance of rules of private international law - Right of plaintiff to require court to exercise jurisdiction - Onus of proof

Legislation:

Fair Trading Act 1987 (WA), s 10

Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA), s 5(2)
Jurisdiction of Courts (Cross-Vesting) Bill 1986 (Cth)


(Page 2)

Trade Practices Act 1974 (Cth), s 52

Result:

Application dismissed

Representation:

Counsel:

Plaintiff : Mr C G Colvin
First Defendant : Mr P C Doherty
Second Defendant : Mr P C Doherty

Solicitors:

Plaintiff : Arthur Robinson & Hedderwicks
First Defendant : Minter Ellison
Second Defendant : Minter Ellison

Case(s) referred to in judgment(s):

Baffsky v John Fairfax & Sons Ltd (1990) 97 ACTR 1
Bailey (By his next friend The Public Trustee) v Climaze Holdings Pty Ltd, unreported; SCt of WA; Library No 980455; 12 August 1998
BankInvest AG v Seabrook (1988) 14 NSWLR 711
Bond v Larobe Pty Ltd, unreported; Library No 920057; 31 December 1991
Chapman v Jansen (1990) 100 FLR 66
Dawson v Baker (1994) 120 ACTR 11
Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd [1990] 1 WAR 531
Platz v Lambert (1994) 12 WAR 319
Waterhouse v Australian Broadcasting Corporation (1989) 86 ACTR 1

Case(s) also cited:

Interceramics Australia Pty Ltd v Quadric Pty Ltd, unreported; Library No 970610; 14 November 1997
Van der Sluys v Anaconda Nickel Ltd [2000] NSWSC 719

(Page 3)

1 MILLER J: The plaintiff commenced proceedings against the defendants in the Supreme Court of Western Australia seeking damages for negligent misrepresentation, misleading conduct under s 52 of the Trade Practices Act 1974 (Cth) and in the alternative, damages under s 10 of the Fair Trading Act 1987 (WA). A statement of claim was filed in relation to the first defendant alone, the essence of the plaintiff's claim against the first defendant being that it represented that the second defendant's financial position was much better than it in fact was, thereby causing the plaintiff to make a loan to the second defendant and to allow the second defendant to incur further credit with the plaintiff in respect of motor fuel purchases from various outlets.

2 The first defendant was at all material times a firm of accountants carrying on business in South Australia and the second defendant a retailer of motor fuel from various sites within the State of South Australia. The plaintiff's cause of action against the first defendant is based primarily upon the preparation by the first defendant of a profit and loss report for the nine month period ending 31 March 1996 and a balance sheet as at 31 March 1996 for the second defendant. The plaintiff claims that the first defendant engaged in misleading and deceptive conduct or conduct that was likely to mislead or deceive in that the profit and loss report and balance sheet created a false impression as to the solvency of the second defendant and caused the plaintiff in relying upon the truth and accuracy of the documents to advance moneys to the second defendant and to allow the second defendant further credit in consequence of which the plaintiff suffered loss and damage. The plea in the alternative based on negligent misrepresentation asserts that the first defendant well knew that the documentation would lead the plaintiff to advance funds or extend credit to the second defendant in reliance upon the accuracy of the profit and loss report and/or balance sheet and that there was a duty on the part of the first defendant to the plaintiff to take reasonable care in the preparation of those documents which duty it had breached.

3 The first defendant conducts business in the State of South Australia and preparation of all relevant documentation took place in that State. The fuel purchases which are the subject of an agreement between the plaintiff and second defendant were all made in South Australia. The registered office of the second defendant is also in South Australia. The registered office of the plaintiff was between 25 January 1994 and 15 June 1997 located in South Australia, but is now in the State of Western Australia. The profit and loss report and balance sheet which are the subject of the litigation were provided by the second defendant to the plaintiff in the State of Western Australia. The plaintiff contends that it

(Page 4)

relied upon the accuracy of those documents in Western Australia. All relevant books and records of the plaintiff are currently located in Western Australia. The plaintiff's only current director is and has since January 1994 been resident in Western Australia where the company secretary public officer and sole shareholder are also located.

4 The first defendant seeks pursuant to the provisions of s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA) to have the proceedings transferred to the State of South Australia. The application is based upon the provisions of s 5(2)(a) and s 5(2)(b)(iii) which are in the following terms:

"5(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 -


(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of another State or of a Territory and it is more appropriate that the relevant proceeding be determined by that other Supreme Court;

(ii) having regard to -


(A) whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of another State or Territory;

(B) the extent to which, in the opinion of the first Court the matters for determination in the relevant proceedings are matters arising under or

(Page 5)

involving questions as to the application, interpretation or validity of a law of a State or Territory referred to in sub-subparagraph (A) and not within the jurisdiction of the first court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting jurisdiction; and

(C) the interest of justice -

it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or

(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."

The requirement of s 5(2)(a) is clearly met. The question is whether in terms of s 5(2)(b)(iii) "it is otherwise in the interests of justice" that the proceeding be determined in the State of South Australia.

5 In Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd [1990] 1 WAR 531 Ipp J concluded that the Jurisdiction of Courts (Cross-Vesting) Act forms part of a scheme of cross-vesting legislation implemented by the enactment in each State and the Northern Territory of reciprocal legislation in relation to which the explanatory memorandum to the Jurisdiction of Courts (Cross-Vesting) Bill 1986 (Cth) provided an important indicator. That explanatory memorandum stated:

"The primary objective of the cross-vesting scheme is to overcome these problems … so that no action will fail in a court through lack of jurisdiction and that as far as possible no court will have to determine the boundaries between Federal, State and Territory jurisdictions.

The provisions relating to cross-vesting will need to be applied only in those exceptional cases where there are jurisdictional

(Page 6)

uncertainties and where there is a real need to have matters tried together in the one court."

In Mullins Investments (supra) (at 536) Ipp J said:

"I have recently expressed the opinion that the purpose of the Act is to alleviate the difficulties referred to in the explanatory memorandum: Bond Brewing Holdings Ltd v Crawford (1990) 1 WAR 517.

In my view the expression 'the interest of justice' in s 5(2)(b)(iii) has to be construed so as to give effect to the purpose of the Act.

Preamble (c) to the Act records that it is desirable 'if a proceeding is instituted in a court that is not the appropriate court, to provide a system under which the proceeding will be transferred to the appropriate court.'

There is nothing in the preamble which supports the view that the Act is intended to wipe the slate clean of those rules of the common law which would otherwise be relevant to the decision as to what is an 'appropriate' court.

An exclusion of the common law rules would, in my view, result in the success of an application for transfer being usually dependent upon the balance of convenience - or inconvenience. This would encourage a multitude of such applications, and a form of forum shopping. The consequences would be undesirable, in my view, and a stark contrast to the cross-vesting legislation being applied only in the 'exceptional cases' referred to in the explanatory memorandum, and, also, to the purpose of the Act.

It seems to me that from a construction of the Act itself, it appears that the concept of 'interests of justice' in s 5(2)(b)(iii) is used in a somewhat limited sense.

The expression 'interests of justice' is used twice in s 5(2), that is, in s 5(2)(b)(ii)(C) and s 5(2)(b)(iii). In terms of s 5(2)(b)(ii)(C) the court which has been requested to transfer the proceedings (the first court) is required to take into account three things in determining whether the proceedings should be transferred to another court. First whether the first court has jurisdiction solely by virtue of the cross-vesting legislation (and

(Page 7)

whether the other court has jurisdiction in any event). Secondly, the extent to which the proceeding involves questions concerning the law of the other State or Territory. Thirdly, 'the interests of justice'. Thus, under s 5(2)(b)(ii)(C) 'interests of justice' appears in juxtaposition with other factors. In s 5(2)(b)(iii) the expression 'it is otherwise in the interests of justice' stands alone. Section 5(2)(b)(iii) seems to mean that even if the requirements of s 5(2)(b)(ii) are not met, the 'interests of justice' (within the meaning of s 5(2)(b)(iii)) may nevertheless be such as to render it more appropriate that the proceeding be determined by another court.

Accordingly, there appears to be a difference between the 'interests of justice' in s 5(2)(b)(ii)(C) and the 'interests of justice' in s 5(2)(b)(iii). If it had been intended that there should be no distinction between the requirements of the 'interests of justice' in s 5(2)(b)(ii)(C) and the 'interests of justice' in s 5(2)(b)(iii), there would have been no need to provide for the specific matters in subpars (A) and (B) of s 5(2)(b)(ii) to which regard must be had. Indeed there would have been no need to distinguish between s 5(2)(b)(ii) on the one hand and s 5(2)(b)(iii) on the other. There would have simply been the single criterion, that is, the interests of justice.

It seems to me that the requirement that regard should be had to the particular matters set out in subpars (A) and (B) of s 5(2)(b)(ii) has the effect that the 'interests of justice' under s 5(2)(b)(iii).

This, in itself, indicates that the expression 'interests of justice' under s 5(2)(b)(iii) is not meant to be interpreted without limitation."

6 Ipp J declined to follow BankInvest AG v Seabrook (1988) 14 NSWLR 711 where the Full Court of New South Wales took the view that "interests of justice" called for considerations of a more general kind than the established rules of forum non conveniens. His Honour also concluded that the applicant under s 5 of the cross-vesting legislation bears an onus. His Honour followed in this respect the judgment of Kelly J in Waterhouse v Australian Broadcasting Corporation (1989) 86 ACTR 1.
(Page 8)

7 In Mullins Investments v Elliott Exploration Pty Ltd, Ipp J pointed out that the balance of convenience as between the parties was "rather finely poised" if one ignored questions of onus and the prima facie right of the plaintiffs, who had regularly invoked the jurisdiction of the Supreme Court of Western Australia. This was principally because the property which was the subject matter of the litigation was in Queensland and the balance could be said to be "slightly tilted in favour of Queensland being the more convenient forum". However, his Honour considered that on the basis of the approach which he had adopted, the defendants had not discharged the onus upon them. His Honour said (at 539):

"The mere balance of convenience, or inconvenience, even if it be marginally in the defendants' favour, is in my view insufficient to displace the plaintiffs, prima facie right to require this Court to exercise the jurisdiction which it has. The interests of justice, in the circumstances, are not such that it is more appropriate that the proceedings be determined by the Supreme Court of Queensland."

In Platz v Lambert (1994) 12 WAR 319 Malcolm CJ (at 323 -4), followed the views of Ipp J in Mullins Investments Pty Ltd v Elliott Exploration Pty Ltd, adding that in Chapman v Jansen (1990) 100 FLR 66 the majority of the Full Court of the Family Court of Australia had held that the discretion under s 5 should be exercised with regard to the overall legislative scheme revealed by the preamble to the Act, which refers to the establishment of a system of cross-vesting in the context of inconvenience and expense caused to litigants by jurisdictional limitations without detracting from the existing jurisdiction of any court (see particularly Malcolm CJ at 324).

8 In Bond v Larobe Pty Ltd, unreported; Library No 920057; 31 December 1991, Owen J also followed the decision of Ipp J in Mullins Investments Pty Ltd v Elliott Exploration Pty Ltd. His Honour (at 10 - 11) set out the following principles which he considered could be extracted from the decision in Mullins Investments Pty Ltd v Elliott Exploration Pty Ltd and Baffsky v John Fairfax & Sons Ltd (1990) 97 ACTR 1:

"(a) The question whether it is 'otherwise in the interests of justice' to transfer an action under s 5(2)(b)(iii) is different to the question whether in 'the interests of justice' it is 'more appropriate' for the action to be dealt with in the transferee court.

(Page 9)

(b) The latter test is more easily satisfied than is the former.

(c) The cross vesting legislation does not exclude the ordinary rules of private international law and to the extent that Bank Invest AG v Seabrook (1988) 14 NSWLR 711 suggests to the contrary, it would not be followed.

(d) It is appropriate when considering the interests of justice to take into account, among other things, principles extracted from private international law.

(e) A plaintiff invoking the jurisdiction of a court as of right is entitled to have that choice given due weight.

(f) A party seeking to upset the plaintiff's choice of a venue which was lawfully open, bears the onus of showing that that party will suffer real injustice unless the transfer is made and that the plaintiff will not suffer injustice as a result of the transfer."

His Honour then added (at 11 - 12):

"The question to be posed is disarmingly simple: what do the interests of justice dictate? The answer is far from simple. It requires the exercise of a discretion which involves among other things, considerations akin to the forum non conveniens principles of private international law.

Following Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 and Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 539, the principle which is relevant to this case is not the appropriateness or comparative appropriateness of the transferee court but rather whether the local court is clearly inappropriate.

…

Due weight must be given to the plaintiff's choice of venue. The two decisions to which I have referred illustrate this principle. In Mullins Investments Pty Ltd v Elliott Exploration Co Pty Ltd (supra), the plaintiff's choice of venue was sustained even though 'the balance of convenience between the parties was slightly tilted' towards the transferee court. In Baffsky v John Fairfax & Sons Ltd (supra) a Sydney solicitor sued a

(Page 10)

Sydney daily newspaper in the Supreme Court of the Australian Capital Territory. The writ claimed damages for defamation arising from a report which was closely connected with Sydney but not with Canberra. All relevant witnesses resided in or near Sydney. Again, the plaintiff's choice of venue was sustained."

9 In Bailey (By his next friend The Public Trustee) v Climaze Holdings Pty Ltd, unreported; SCt of WA; Library No 980455; 12 August 1998, Murray J appears to have taken a somewhat different view, based upon Dawson v Baker (1994) 120 ACTR 11, a case which his Honour observed had not been cited to Malcolm CJ in Platz v Lambert. Murray J (at 9 - 10) said:

"Decided only shortly before Platz v Lambert and therefore not cited to Malcolm CJ in that case; was the decision of the Full Court of the ACT in Dawson v Baker (1994) 120 ACTR 11. It was held there that the applicant for a transfer carries the onus to persuade the court that the interests of justice require a transfer, but as Miles CJ said at 14:

'... the decision whether a transfer is or is not in the interests of justice is in the nature of a value judgment. Once the value judgment is made there is no discretion as to whether or not an order should be made. The court must order the transfer or refuse to order the transfer in accordance with the decision whether to do so is in the interests of justice.'
His Honour thought the process would not be helped by 'an encrustation of judge-made pronouncements of principles to be applied when considering making a transfer order.' His Honour thought that what was required was a 'nuts and bolts management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute.'

Higgins J, with whom Gallop J agreed, at 25 summarised a number of matters which his Honour thought would be of significance in determining whether it was in the interests of justice to order a transfer. He referred to the question of the application of substantive law, particularly where the law to be applied was peculiar to the transferee jurisdiction. His Honour thought it would be of assistance to consider whether there was a proper forensic advantage conferred by procedural law which

(Page 11)

a party might gain or lose by a transfer. Weight might be accorded to the plaintiff's choice of forum if there were cogent reasons for that choice, and the court would wish to consider substantive connections with the forum, such as residence, domicile, the place of occurrence of the matter giving rise to the cause of action and choice of law questions. The balance of convenience to parties and witnesses would be considered, including comparative cost and delay, particularly delay resulting from the transfer itself, although the court would generally not have regard to the asserted incapacity of one jurisdiction to deal as fairly and expeditiously with the matter in question as would the other. I would respectfully agree with the approach taken in the last mentioned decision. In particular, the court asked to make the transfer should, in a pragmatic way, endeavour to weigh the factors which bear upon the question which is the most appropriate jurisdiction having regard to the interests of justice generally. Little more can or need be said about matters of relevant law."

10 Counsel for the plaintiff has rightly pointed out that in Dawson v Baker the Full Court of the Supreme Court of the Australian Capital Territory followed Bank Invest AG v Seabrook (supra), with which Ipp J had expressly disagreed in Mullins Investments Pty Ltd v Elliott Exploration Pty Ltd. As Malcolm CJ in Platz v Lambert expressly agreed with Ipp J in this respect, I am of the view that the wider or "pragmatic" approach suggested by Murray J in Bailey v Climaze Holdings Pty Ltd should not be followed.

11 The first defendant contends that it is in the interests of justice that the proceeding be transferred to South Australia because the nexus of matters in issue is more closely linked to South Australia than Western Australia. It instances the conduct of the first defendant's business in South Australia; the presence of representatives of the first defendant in South Australia; the inconvenience and expense for those witnesses to have to travel to Western Australia; the provision of the fuel to the second defendant having taken place in South Australia; the representation since 1998 by the first defendant of South Australian solicitors; the additional legal costs which would be incurred if the proceedings continued in Western Australia; the registered office of the second defendant being located in South Australia at all relevant times; the registered office of the plaintiff between January 1994 and June 1997 being located in South Australia; a request by the second defendant of a loan of $300,000 in April 1996, from the plaintiff, being made in South Australia and the

(Page 12)

request for provision of copies of the profit and loss report and balance sheet having also been made in South Australia. The question where these requests were made is in dispute.

12 Counsel for the first defendant concedes that the nexus with Western Australia includes the plaintiff's registered office now being in this State; all relevant books and records of the plaintiff being located in Western Australia; the plaintiff's only director residing in Western Australia; other company officers (who are not proposed to be witnesses) residing in Western Australia; the plaintiff's shareholders residing in Western Australia; the financial reports which are at the heart of the action being provided to the plaintiff in Western Australia; the plaintiff's communications with the first and second defendants being made from Western Australia; witnesses who may be required being usually resident in Western Australia and the plaintiff having briefed Perth solicitors since 1997.

13 It can be seen that from a forensic viewpoint the balance of convenience as to where the action should be heard is evenly poised. There is no factor which appears to suggest that the proceedings would be more conveniently heard in Western Australia or in South Australia. The plaintiff would suffer additional expense by reason of the proceedings being transferred to South Australia, but the first defendant will suffer additional expense by reason of having to come to Western Australia for the hearing. In these circumstances it seems to me that the governing factor is that identified by Ipp J in Mullins Investments v Elliott Exploration. That is, with the forensic considerations rather equally poised, consideration must be given to the prima facie right of the plaintiff to require the Supreme Court of Western Australia to exercise the jurisdiction which it has. An order for transfer should only be made if having made all due allowance for the plaintiff's right to bring its action in the Supreme Court of Western Australia (with such forensic advantages as may attend on that course) the expense and inconvenience which would fall upon the first defendant would result in real injustice to it: Waterhouse v Australian Broadcasting Corporation (supra) per Kelly J at 17.

14 In my view the first defendant has failed to discharge the onus cast upon it of establishing any such injustice. Indeed, I am of the view that the forensic considerations are finely, if not evenly balanced, and therefore there is no balance of convenience (or inconvenience) which would be sufficient to displace the plaintiff's prima facie right to require

(Page 13)

the Supreme Court of Western Australia to exercise the jurisdiction which it has. For these reasons I dismiss the application.