FEDERAL COURT OF AUSTRALIA PRACTICE AND PROCEDURE - transfer of proceeding - whether proceeding should be transferred from New South Wales District Registry to Victorian District Registry - application based on alleged contravention of the Trade Practices Act 1974 s 46 (1) and breach of contract - exploitation of market power - termination of supply agreement - market in Victoria - conduct complained of occurring in Victoria - Victorian law proper law of the contract - parties' contractual consent to litigation being conducted in "Victorian Courts" - witnesses residing in both New South Wales and Victoria - applicants' solicitors in Sydney, experienced in the industry concerned - exercise of discretion - case management - individual docket system. Federal Court of Australia Act 1976 s 48 Federal Court Rules O 10 r 1(2)(f), O 30 r 6 Byrne & Davidson Engineering Pty Ltd v PMC Engineering Pty Ltd, 2 October 1980 (David Hunt J) CL 11418/80, Ritchie's Supreme Court Practice, Vol 2 [13021], referred to National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155, applied Squires v Stephenson (1981) 53 FLR 164 at 177, referred to PJE Pty Ltd v Dame Pty Ltd, unreported, FCA/North J, 13 June 1997, referred to Australian Co-operative Foods Limited and Midland Milk Pty Limited v NATIONAL FOODS MILK LIMITED NG 222 of 1998 LINDGREN J SYDNEY 2 APRIL 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 222 of 1998 BETWEEN: Australian Co-operative Foods Limited First Applicant Midland Milk Pty Limited Second Applicant AND: National Foods Milk Limited Respondent JUDGE: LINDGREN J DATE OF ORDER: 2 APRIL 1998 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The proceeding be transferred to the Victorian District Registry of the Court. 2. The respondent's costs of the motion be part of the respondent's costs of 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 NG 222 of 1998 BETWEEN: Australian Co-operative Foods Limited First Applicant Midland Milk Pty Limited Second Applicant AND: National Foods Milk Limited Respondent JUDGE: LINDGREN J DATE: 2 APRIL 1998 PLACE: SYDNEY REASONS FOR JUDGMENT (ex tempore) INTRODUCTION By notice of motion filed 25 March 1998, the respondent ("National Foods") seeks an order expressed to be pursuant to O 10, r 1 (2) (f) of the Federal Court Rules and s 48 of the Federal Court of Australia Act 1976 that the proceeding be conducted and continued in Victoria and be transferred from the New South Wales District Registry to the Victorian District Registry of the Court. As well, it seeks an order that the applicants pay National Foods' costs of the motion. Section 48 of the Federal Court of Australia Act 1976 provides: "48 The Court or a Judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Court or Judge imposes." Order 10, r 1 (2) (f) of the Federal Court Rules provides: "(2) ... the Court may: .... (f) direct that [a] proceeding be transferred to a place at which there is a Registry other than the then proper place. Where the proceeding is so transferred, the Registrar at the proper place from which the proceeding is transferred shall transmit all documents in his charge relating to the proceeding to the Registrar at the proper place to which the proceeding is transferred; ..." In order that this provision be properly understood it is necessary to refer to the definition of "proper place" in O 1 r 4. That rule provides that unless a contrary intention appears, the expression "proper place" in relation to any proceeding means (a) where there has been no transfer, the place at which the proceeding was commenced, and (b) where there has been a transfer, the place to which the proceeding was transferred. Finally, I should note O 30 r 6, which deals with the venue for the trial of proceedings in the Court: "6. (1)Subject to subrule (2), the place of trial of a proceeding is to be the proper place. (2) On the application of a party or of its own motion, the Court may direct that the trial, or part of the trial, of a proceeding be held at a place other than the proper place." There is an obvious distinction between "place of proceedings" and "place of trial". Questions of a change of the place for trial of a proceeding arise in any system, whether the court in question has one or more than one registry. The view has been expressed that a plaintiff has an "entitlement" to choose the place of trial, and that the onus rests upon a party applying for a change to displace that "entitlement" by establishing, variously, a "manifest preponderance of convenience" or a mere "balance of convenience" in favour of the change; many cases might be referred to, but cf Byrne & Engineering Pty Ltd v PMC Engineering Pty Ltd,, 2 October 1980 (David Hunt J) CL 11418/80 Ritchie's Supreme Court Practice, Vol 2 [13021]. Such questions of change of venue, without a transfer of the proceeding itself from one registry to another, can arise in this Court, and are the subject of O 30 r 6 set out above. But because of the Court's multiple registries, its Act and Rules also provide for transfer of proceedings as a whole as between registries; see s 48 of the Act and O 10 r 1 (2) (f) also set out above. Here, the applicants move at a very early stage for an order, not merely that the trial of the proceeding be held in Victoria rather than in New South Wales, but that the proceeding itself be transferred. Such an order, if made, will have the effect that Victoria will become the "proper place" in relation to the proceeding; that in the absence of an order under O 30 r 6 (2), Victoria will be the place of trial of the proceeding; and, importantly, that the management of the proceeding will take place within the Victorian District Registry, interlocutory hearings will take place in Victoria, and, under the Court's "individual docket system", judicial management of the proceeding as well as the final hearing will be within the docket of a judge of the Court based in Melbourne. Clearly, in a particular case, the considerations relevant to the exercise of the Court's discretion under s 48 and O 10 r 1 (2) (f) may range more widely than those which will be relevant to an exercise of its discretion under O 30 r 6 (2). It is common ground that the leading authority which should govern my approach to the present application is National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155 (FCA/FC). In that case, the proceeding was commenced in the Victorian District Registry of the Court where, over a period of some months, directions hearings had taken place and pleadings and affidavits had been filed. The second respondent moved for orders that the trial be fixed at Sydney and that Sydney be the "proper place" for the purpose of O 30 r 6. The Full Court considered several first instance decisions on both applications for change of place of trial and applications for change of place of proceeding. Without distinguishing between the two classes of case, it rejected the manifest preponderance of convenience test in general terms, and said, in an important passage (at 162): "The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: where can the case be conducted or continued most suitably, bearing in mind the interest of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the court? It cannot and should not, in our opinion, be defined more closely or precisely." The passage which I have just set out from the Sentry Corporation case has been frequently followed. NATURE OF APPLICANTS' CLAIM FOR RELIEF Before I outline the nature of the applicants' case, I will refer briefly to the history of the proceeding. The application and supporting affidavit were filed before me as Duty Judge on 20 March 1998 and the application was made returnable on 26 March. There was an abridgment of the time for service. The form of application sought interlocutory as well as final relief. On 25 March, the day before the return date, National Foods filed its present notice of motion. The motion came before the Court the following day, 26 March, on the return date of the application itself. On that day, a timetable was established for the filing of affidavits in regard to the applicants' claim for interlocutory relief. The timetable will expire on 17 April. Apparently, the applicants have been hoping for a hearing of their application for interlocutory relief in the following week commencing 20 April. The first applicant ("ACF") is the parent of the second applicant ("Midland"). The application makes it clear that two broad causes of action are propounded (there is no statement of claim yet): a contravention by National Foods of s 46 (1) of the Trade Practices Act 1974, and breach of contract by way of a premature termination of two distributorship agreements. Paragraph 1 of the application seeks: "1. A declaration that, by refusing to supply the applicants, and each of them, with "Light Start" brand milk product intended for distribution by the applicants in the State of Victoria, the respondent has taken advantage of its substantial degree of power in the market in Victoria for the distribution of fresh milk for the purpose of either eliminating or substantially damaging the applicants, and each of them, in that market, or alternatively, for the purpose of deterring or preventing the applicants, and each of them, from engaging in competitive conduct in that market, in contravention of subsection 46(1) of the Trade Practices Act, 1974." Paragraph 2 of the application seeks a declaration in substantially the same terms, except that the market is defined as being the market in Victoria for the distribution of modified milk, rather than fresh milk. Paragraphs 3 and 4 seek declarations similar to, respectively, pars 1 and 2, except that the brand name is "PhysiCAL", par 3 relating to the market in Victoria for the distribution of fresh milk, and par 4 relating to the market in Victoria for the distribution of modified milk. Paragraph 5 seeks an injunction restraining National Foods from refusing to supply to the applicants and each of them "Light Start" brand milk and "PhysiCAL" brand milk, for distribution by the applicants and each of them in Victoria in contravention of subs 46 (1) of the Trade Practices Act 1974 (Cth). Paragraphs 6-11 seek relief founded on alleged breaches of contract. Two contracts are referred to. One is a supply agreement made in or about 1993 for the supply by National Foods to the applicants of "Light Start" brand milk for distribution by the applicants and each of them in Victoria. Pars 6, 7 and 8 relate to that "Light Start Agreement", as it is called. Paragraph 9 addresses an agreement made on or about 15 September 1997 for the supply by National Foods to the applicants of "PhysiCAL" brand milk for distribution by the applicants in Victoria ("the PhysiCAL Agreement"). Paragraphs 10 and 11 seek consequential relief in relation to the PhysiCAL Agreement. What is alleged in relation to both the Light Start Agreement and the PhysiCAL Agreement, is that National Foods, by giving a notice on 25 February 1998 purportedly terminating the respective supply agreements on 4 March 1998, breached terms of the respective agreements which permitted termination only by the giving of "reasonable notice". The remaining paragraphs of the application, pars 12-17, seek damages and other relief. Clearly, the causes of action to be relied upon relate to alleged conduct by National Foods in Victoria. GROUNDS OF MOTION FOR TRANSFER The grounds on which National Foods seeks a transfer are as follows: (a) The relevant operations and parties' locations are in Victoria; (b) The conduct complained of occurred in Victoria; (c) The relief sought relates to matters in Victoria; (d) Many, if not all, witnesses (including expert witnesses) reside in Victoria; (e) Most, if not all, documents of National Foods, at least, are in Victoria; (f) The terms of supply contain a "submission to jurisdiction" clause which favours Victoria; (g) The "docket system" of the Court favours a transfer of the entire proceeding, as distinct from a mere change of the place for trial. It would be possible to deal with these submissions at some length. I do not think that that is necessary. It is conceded, as it must be, on behalf of ACF and Midland, that there is a strong connection with Victoria in terms of the cause of action and the relief sought. National Foods has seized upon numerous pertinent references to Victoria. In fact, Timothy John Sanson, Operations Manager Victoria for ACF, commenced his affidavit in support of the substantive application as follows: "On 18 March 1998, I, Timothy John Sanson of 38 Hailes Street, Greensborough, Victoria, 3088, Operations Manager Victoria say on oath: 1. I am the Operations Manager Victoria for Australian Co-operative Foods limited ("ACF"). 2. I commenced working in the Victorian dairy industry in 1985 and was a milk vendor and contract distributor from 1987 to 1989. I commenced employment with Midland Milk Pty Limited ("Midland Mil") in July 1989. Midland Milk became a subsidiary of ACF in 1993. I was the Victorian Sales Manager for Midland Milk from 1991 until December 1993 and thereafter was the Victorian Sales Manager for ACF until September 1994. In September 1994 I became the Victorian Business Manager Route for ACF until February 1996. In February 1996 I became the Operations Manager, Victoria, based at 356 Settlement Road, Thomastown. 3. In my position of Operations Manager Victoria, I am responsible for all aspects of raw milk supply, manufacturing and distribution of Dairy Farmers' products in Victoria. This includes responsibility for the Shepparton factory and the distribution centres in Thomastown and Dandenong. 4. During the course of my career I have become very familiar with the operation of the market for the supply of milk in Victoria. From 1991 to 1996 I was responsible for the management and development of Dairy Farmers' and its predecessor's Victorian market including supervision of field sales staff. I have had direct contact with Dairy Farmers' customers. I am responsible for the supervision of one hundred and ten (110) staff. The nature of Dairy Farmers' business in Victoria, is that I have regular contact with Dairy Farmers' area business managers who are responsible for maintaining and growing the customer base in Victoria. These area business managers provide me with regular updates about conditions in the Victorian marketplace." (emphasis supplied) Alan James Mitchell, the solicitor for National Foods, has elaborated in his affidavit on the various grounds of the motion to which I have referred. It appears that although the head office of ACF is at North Sydney, its particular operations with which the present case is concerned are in Victoria. There has been some confusion in relation to the result of a search carried out by or on behalf of National Foods in relation to ACF. This is dealt with in an affidavit of the applicants' solicitor, Anthony Campbell Addison, sworn 31 March 1998. He has explained that the details recorded in respect of ACF under the Corporations Law were not up to date. Annexed to his affidavit is evidence that the registered office of ACF is, in fact, at Level 12, 168 Walker Street, North Sydney. The evidence shows that the applicants have an operations office in Victoria and although ACF trades throughout Australia and in other parts of the world, it has a substantial presence in Victoria. Mr Sanson, the Operations Manager Victoria of ACF, apparently attends at the head office of ACF in Sydney once a week, and, although he resides in Victoria and spends most of his time there, he would be able to give evidence in Sydney. I think it clear that the operations of both parties which have featured in the underlying facts, can fairly be described as being in Victoria. The conduct complained of is undoubtedly conduct which occurred in Victoria and the relief sought relates to matters in Victoria. On the question of witnesses, the position is not quite so clear. Mr Addison's affidavit points out that the applicants' senior management, Mr Peter Herd, Mr Calvin Boyle and Mr L W Robinson, are in Sydney. According to the affidavit, it is likely, in the course of the hearing of the applicants' application for interlocutory relief, that evidence will have to be led from Mr Herd, Arthur Aroney, and Maida Beale, all three of whom reside in Sydney. Finally, Mr Addison deposes that in the conduct of the proceeding it will be necessary for one or more of Messrs Herd, Boyle and Robinson to be present in Court to give instructions. They all reside in Sydney. He says that, depending on the time to be occupied by the hearing, it may be necessary to rotate their presence at Court so that they can attend to other commitments. I have referred previously to Mr Sanson's position. All in all, from the applicants' viewpoint, it may be that the preponderance of convenience in terms of witnesses would favour a trial in Sydney. However, National Foods' witnesses are in Victoria. It is, perhaps, as Mr Yates SC for the applicants says, too early to know where expert witnesses will come from. If I had to resolve that question, I would think that since we are concerned with a market in Victoria, perhaps it is probable that the experts will come from Victoria, or, at least, that any data which they may need would be located in Victoria. On the other hand, it must be acknowledged that experts are usually able to give evidence relating to matters "located" at a distance from their place of residence. In relation to documents, the evidence is that National Foods' documents are entirely or mostly in Victoria. I turn to the question of the terms of supply. The relevant term is clause 13 of "Terms and Conditions", a copy of which is annexed to Mr Mitchell's affidavit. The term is as follows: "These terms and conditions and all matters concerning the business relationship between the Purchaser and NFB shall be governed by the law of the State of Victoria, Australia, and the parties what HEREBY CONSENT to any litigation being conducted in Victorian Courts in Australia." (emphasis supplied) I need not discuss the reference to "NFB". The Terms and Conditions relate to the supply of all goods by National Foods. Various observations can be made about this "consent to jurisdiction" clause. First, it does not purport to be an agreement that litigation is not to be conducted elsewhere than in Victoria. Second, it can be said that the clause has no relevance to the present case because the Federal Court cannot be described as a "Victorian Court". Third, it could, perhaps, be suggested that the consent to jurisdiction was intended to operate only in relation to a cause of action governed by Victorian law, as referred to in the earlier part of the clause, and has no scope for application to a cause of action under s 46 of the Trade Practices Act 1974. It seems to me, however, that the clause is relevant to my exercise of the present discretion, because it shows, in my view, a preference of the contracting parties for litigation to be conducted in courts sitting in Victoria, as distinct from courts in the Victorian State system of judicature. Of course, the clause is not conclusive, even when so construed, but it is a consideration favouring a transfer of the present proceeding to the Victorian District Registry. Mr Addison in his affidavit introduces a new element in par 10 which is as follows: "10. Addisons is a small commercial law firm which does not have national offices and is not affiliated with any law firm in Victoria. Addisons has been acting for the first applicant for thirty four (34) years and for the second applicant for five (5) years. The structure and operation of the milk market in Victoria is complex, involving an interplay of government organisations and competing milk processors. Over the years that I and Addisons have acted for the applicants, Addisons has developed an understanding of many relevant aspects of the milk market in Victoria and in Australia at large. If the proceedings were transferred to the Victorian District Registry of the Federal Court, it would be necessary for the applicants to obtain new instructing solicitors and new counsel to conduct these proceedings. This would entail additional delay to allow adequate time for the applicants' new advisers to be ready to proceed with the proceedings. My firm does not have the resources to conduct these proceedings via an agent in Melbourne and would not do so." I accept that this is evidence, for the purpose of the present motion, that the applicants themselves would be inconvenienced by a transfer to Victoria. I accept that, in fact, they would be, at least to some extent. It should, perhaps, be noted that National Foods is represented by Corrs Chambers Westgarth, a firm which has offices in both Melbourne and Sydney. I think that there is some merit in the applicants' present submission, but in the end, I do not think that it can be allowed to carry the day. For what it is worth, it did not do so in two other cases to which I have been referred: Squires v Stephenson (1981) 53 FLR 164 at 177; PJE Pty Ltd v Dame Pty Ltd, unreported, FCA/North J, 13 June 1997. Moreover, I am not persuaded that the inconvenience and additional cost to the applicants would be as great as Mr Addison's affidavit would suggest: certain legal services will have to be provided in the applicants' interest, whether they be provided all by the one firm, or some by one firm and the others by another firm. I hope that a way may be found for the applicants to continue to have the benefit of Addisons' expertise in the proceeding. I presume that although some additional cost would be involved in their having to engage Melbourne solicitors, the applicants would, if they think the expertise of Addisons warrants it, be able to fund, no doubt progressively, both Addisons and a Melbourne firm. In sum, I accept that the applicants would suffer some element of inconvenience and additional cost, but I do not think it is as weighty a factor against transfer as the affidavit would suggest. CONCLUSION All things considered, I think that the proceeding can be continued more suitably in Victoria. I will therefore order that the proceeding be transferred to the Victorian District Registry of the Court. COSTS I find the question of costs difficult. In a matter which relates to the proper manner of the Court's conducting its business in the form of the administration of the proceedings before it, it is not always satisfactory simply to proceed on the common assumption that an unsuccessful party should be ordered to pay the successful party's costs. In the present case, the making of the usual order is supported by the fact that National Foods properly sought a consent to transfer and it was not forthcoming. On the other hand, although National Foods has succeeded in its contention that the proceeding is one appropriate to be transferred to Victoria, it was not improper for it to have been commenced in the New South Wales District Registry. Another matter is that, appropriately, National Foods was prompt in seeking consent to transfer and in filing its notice of motion. The hearing of the motion has been brought on expeditiously. It is conceivable that with more time for consideration, the applicants may have consented to a transfer. Against this is the fact that there were some few days between the time when the motion was set down for hearing and the actual hearing yesterday in which they could have reviewed their position. At least some of National Foods' costs might be seen to be attributed at least to the early period when the request was made and not immediately consented to. Moreover, even if the applicants had consented, National Foods would have had to incur the costs of moving for an order for transfer supported by affidavit. Of course, those costs would have been only a fraction of the costs that National Foods has now in fact incurred. I think that the appropriate costs order is that National Foods' costs of the motion be part of National Foods' costs of the proceeding. DIRECTIONS I extend the time for the applicants to file and serve their affidavits to next Monday, 6 April. I extend the time for the respondent to file and serve its defence and affidavits to Thursday 16 April. I extend the time for the applicants to file and serve their reply, if any, and any affidavits in reply, to Tuesday 21 April. It is desirable that the matter come before a judge in the Victorian District Registry without much delay for the purpose of the fixing of a date for the hearing of the application for interlocutory relief. I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren Associate: Dated: 17 April 1998 Counsel for the Applicant: Mr D M Yates SC with Mr S C G Burley of Counsel Solicitor for the Applicant: Addisons Counsel for the Respondent: Mr N J Young QC with Mr P Collinson of Counsel Solicitor for the Respondent: Corrs Chambers Westgarth Date of Hearing: 1 April 1998 Date of Judgment: 2 April 1998