FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 Practice and procedure –application for the transfer of proceedings to the Victorian District Registry – whether transfer appropriate in the circumstances of the case Federal Court of Australia Act 1976 (Cth) – s 48 National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155 – applied Cycles & Wheelman Pty Ltd v Beltech Corporation Ltd (1988) 80 ALR 279 – considered AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v FILA SPORT OCEANIA PTY LTD (ACN 078 405 802) N926 of 2002 HILL J 8 MAY 2003 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N926 OF 2002 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: FILA SPORT OCEANIA PTY LTD (ACN 078 405 802) FIRST RESPONDENT DAVID ROBERT CARNEY SECOND RESPONDENT CRAIG JAMES REIDY THIRD RESPONDENT JUDGE: HILL J DATE OF ORDER: 8 MAY 2003 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The motion be allowed. 2. Proceeding N926 of 2002 be transferred to the Victorian District Registry of the Federal Court of Australia and continued there save for the motion listed before registrar Hedge to set aside a subpoena. 3. The applicant pay the first and third respondents' costs of the motion. 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 N926 OF 2002 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: FILA SPORT OCEANIA PTY LTD (ACN 078 405 802) FIRST RESPONDENT DAVID ROBERT CARNEY SECOND RESPONDENT CRAIG JAMES REIDY THIRD RESPONDENT JUDGE: HILL J DATE: 8 MAY 2003 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Before the Court is a motion of which notice has been brought by the first and third respondents to remove the present proceedings to the Victorian District Registry of this Court. 2 The proceedings were brought by the Australian Competition and Consumer Commission ("the ACCC") against the first respondent Fila Sport Oceania Pty Ltd (ACN 078 405 802) ("Fila") together with the second and third respondents who were, at the relevant time, directors of Fila. It was alleged that Fila had breached ss 46 and 47 of the Trade Practices Act 1974 ("the Act") in that it is alleged Fila took advantage of a substantial degree of market power in a market or markets relating to the sale of certain Australian Football League (ACN 004 155 211) ("AFL") team apparel for the purpose or purposes of deterring or preventing retailers or wholesalers engaging in competitive conduct or eliminating or substantially damaging a competitor or competitors of Fila. 3 It is not in dispute that Fila sponsored five football teams in the competition run by the AFL, four of which were in Victoria and one of which was in South Australia. In connection with the sponsorship Fila had an exclusive licence from the AFL from 1 November 1999 to manufacture, distribute and sell field apparel of the clubs it sponsored. 4 The impugned conduct of Fila involved, it is alleged, the implementation of a selective distribution policy in relation to the supply to retailers of AFL Licensed Apparel (being apparel associated with the sponsored teams that compete in the AFL and produced under licence from the AFL). The ACCC also alleges that the second and third respondents, Messrs Carney and Reidy, were knowingly concerned in, or counselled or procured, the alleged contraventions of the Act by Fila. The ACCC seeks declarations of contravention, injunctive orders and pecuniary penalties against the respondents. 5 The present motion was filed in 2002 but by agreement between the parties was stood over for hearing at the end of April 2003 without prejudice to the position of Fila. It was agreed that the ACCC would not seek to argue that the motion had been brought too late in the proceedings. 6 There is no dispute among the parties concerning the relevant factual matters appropriate to be considered on the motion. 7 Proceedings were instituted as a result of a complaint lodged with the ACCC at its Sydney office. At this stage it does not seem that the complainant itself will give evidence, although that possibility can not be entirely foreclosed. That complaint was investigated in NSW and the investigations led, it is said, to the present proceedings. 8 The ACCC is presently represented by the Sydney office of the Australian Government Solicitor and the litigation is presently conducted by two solicitors from the Sydney office with experience in Trade Practices litigation. The Australian Government Solicitor has a national office. The place of residence of a solicitor for the parties has some but not great significance. 9 The AFL football competition is a national competition and it can be accepted that the conduct of Fila, if proven, involves conduct throughout Australia (including both New South Wales and Victoria). The proceedings were commenced in the NSW District Registry of the Court and it is not suggested that there was anything improper in the ACCC commencing those proceedings in that registry. 10 The present state of the proceedings is that the ACCC was ordered to file and serve all lay evidence upon which it proposed to rely on or before 31 March 2003. It has substantially complied with this order and has filed some twenty-two affidavits. Apparently two further affidavits are to be filed, one of which is from a deponent in NSW, being a retailer in this State. Sixteen of the deponents to affidavits reside in Victoria and only one of the affidavits presently filed is from a deponent in NSW. Other witnesses are either from South Australia or Western Australia. A decision has not been yet taken by Fila whether it will file affidavit evidence. However, I am told that if such evidence is to be filed it would be from Mr Reidy and other employees or ex-employees of Fila residing in Melbourne. It is not presently contemplated that any witness for Fila would be domiciled outside Victoria. 11 I have been told that the ACCC presently contemplates that evidence will be given by Miss Rhonda Smith, an expert witness who lives and works in Melbourne. To the extent that expert evidence will be given on behalf of Fila it is said that it would likewise be from an expert in Victoria. 12 Fila and the two individual respondents are all resident in Victoria. Fila itself has no office in any other state. It seems that Fila sold its business to a Victorian company SM Brands Pty Ltd which has taken over the employees of Fila and is a licensee from Fila. Mr Reidy is currently the Managing Director of SM Brands Pty Ltd with day to day responsibility for its activities. Mr Carney, who was unrepresented in the present motion and who no longer is associated with Fila, works on a contract basis in Melbourne (his place of residence) for a shoe company. He says that he is unable to afford legal representation and would have to appear for himself, although with the aid of his daughter who apparently is a solicitor in Victoria. Clearly both Mr Carney and Mr Reidy would be inconvenienced in their business life if the proceedings were to be heard in Sydney. On the other hand, it can be said that modern communications are such that Mr Carney and Mr Reidy could keep contact with their business obligations using modern facilities, electronic or otherwise, even if required to be in Sydney for the trial. 13 The AFL is an organisation which itself is headquartered in Victoria, notwithstanding that it runs a national competition. Its officers reside there and its records are there. 14 No doubt each of the five teams sponsored by Fila would, because the AFL competition is national, have some supporters in New South Wales. Historically the competition was centred in Melbourne and NSW adherents in any number are a relatively modern phenomenon. The evidence discloses that the majority of retail sales of Fila's AFL licensed apparel was made in Victoria (approximately 75%) and only a minor percentage of those sales were in NSW (approximately 3%). This probably bears some relationship to the percentage of NSW supporters of the respective teams, if not the competition itself. 15 The respondents are represented by a national firm of solicitors through the Melbourne office of that firm. It is said that the firm had acted for Fila for some six years and has represented Fila in relation to the present matter since the initial investigations commenced. This is likewise not of great significance for present purposes. Fila would expect to be represented by counsel from Melbourne and the ACCC by counsel from Sydney. 16 The business records of Fila are, as already indicated, all kept in Melbourne and, while no doubt records can be moved from one place to another, that is generally not a desirable course in that records can become lost the more often they are moved. In so far as it matters, the decisions made by Fila relevant to the present proceedings appear all to have been made in Melbourne. 17 There is no dispute between the parties as to the power of the Court to direct that proceedings be conducted or continued at a registry other than the registry in which the proceedings were commenced. Nor is there a dispute concerning the principles appropriate to making such a direction. Thus s 48 of Federal Court of Australia Act 1976 (Cth) provides: "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." 18 The relevant tests to be considered are set out in the decision of the Full Court of this Court in National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155. At 162 Bowen CJ, Woodward and Lockhart JJ said: "The Court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed?…if the party who commenced the proceeding chose that place capriciously the court would be justified in giving no weight to the choice of place … 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 interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the court?" 19 A starting point is that the proceedings were commenced in NSW, that being a "proper place" for the proceedings to be commenced. In looking at whether the location of the proceedings should be changed and in circumstances where the initial commencement of the proceedings was in a registry not chosen capriciously, it is necessary to weight the various matters that might connect the proceedings to one jurisdiction or the other. There can, in a case like the present, be no one factor which is determinative. Rather it is necessary to weigh all relevant factors to determine whether there is a sound reason for directing that the proceedings be conducted in a place other than that in which the proceedings were commenced. 20 The Court is a national court and can sit in any place in Australia. There will be circumstances, where, although the proceedings have been commenced in one State, witnesses may be heard in another or other States. With modern technology, it is also possible for the evidence of witnesses to be taken by video link. However, it will generally be undesirable for evidence to be taken by video link where issues of credit arise. It is said, at least on behalf of Fila, that the present is a case where issues of credit could arise and senior counsel for the ACCC properly accepted that view. The alternative of some evidence being heard by video link is one that I accordingly put to one side. It would be not only be expensive but undesirable. 21 Estimates as to the duration of the case can not at this stage be accurate. The respondents estimate that the case could take between four or six weeks, based on the present number of witnesses. That estimate could increase if the respondents were to lead evidence. Although cost is not a sole factor, it could be a very expensive alternative if all witnesses from Melbourne were required to give evidence personally in Sydney and obviously would be more expensive in terms of fares for witnesses from Western Australia and South Australia to fly to Sydney than it would be if they were flown to Melbourne. On the other hand, I note that so far as witnesses to be called by the ACCC are concerned, the ACCC will, in the first instance, pay the costs of those witnesses to travel, whether to Sydney or Melbourne as the case may be. Since the present situation with witnesses of Fila is unclear, I can not take into account what costs the respondent may incur if it were to call witnesses at a hearing in Sydney. 22 It is true that the Court could, if necessary, conduct the hearing partly in Sydney and partly in Melbourne. However, the majority of the evidence would need to be taken in Melbourne and the Court itself would be put to considerable cost and inconvenience in a Sydney Judge being required to be accommodated in Melbourne for a hearing that could proceed for a month or more. 23 As I have already indicated, there would be considerable inconvenience for the individual respondents if the proceedings were to be heard outside Melbourne. As already noted, if either of the individual respondents wished to be present throughout the litigation, that respondent would not be available to attend to the day to day affairs, at least in court hours, of the company which employs him. On the other hand, each could, if the proceedings were held in Melbourne, at least attend to the affairs of their employers outside of court hours and if necessary could attend, more readily, to matters within court hours in the case of emergency. 24 I accept that there is some inconvenience to the ACCC in having the matter heard in Melbourne when those who have so far participated in the investigation are in Sydney. On the other hand, the ACCC is a national organisation and can choose whether to be represented by others at a hearing in Melbourne or to send its officers involved in the investigation to Melbourne for the duration of the hearing. 25 As already indicated the residence of the legal advisors is a matter of little significance. The case could be made ready for hearing in Melbourne or Sydney whichever registry is adopted. One or other firm of solicitors must of necessity be inconvenienced. 26 Senior counsel for the ACCC submitted in accordance with comments of Gummow J in Cycles & Wheelman Pty Ltd v Beltech Corporation Ltd (1988) 80 ALR 279 that the balance of convenience was not really the test to be applied. He submitted, indeed, that particular emphasis should be placed upon what he referred to as the national nature of the conduct said to be engaged in by Fila. He submitted also that ultimately the question was whether Melbourne or Sydney would constitute the most suitable place for hearing in circumstances where there would always be some inconvenience to one side or the other. 27 It may be accepted that the Court is a national court and that the conduct with which the present case is concerned is to some extent national. However, it seems to me in the present case that there is very little connection between the facts of the present case and NSW and very considerable connection between those facts and Victoria. In my mind the present is a case where the proceedings can more suitably be continued in Victoria. It is obvious, having regard to the various factors I have set out, that such connections with NSW as there are, being essentially that the complaint which led to the proceedings was made in NSW and investigated there by the ACCC and that a relatively insubstantial percentage of sales of AFL apparel was made in NSW, are far outweighed by the fact that a substantial proportion of witnesses are in Victoria, that relevant documentation will be in Victoria and that there will be considerable inconvenience and almost hardship to Mr Carney at least should the proceedings continue in NSW. As a pecuniary penalty appears to be sought against him as well as declaratory relief he has a real interest in defending the proceedings. 28 On balance and having regard to the various matters I have set out I am of the view that the proceedings should be transferred to the Victorian Registry and heard in that State. In these circumstances I propose to direct that the proceedings hereafter be conducted or continued in the District Registry of the Court in Victoria at Melbourne. The transfer should be deferred, however, until certain interlocutory matters presently being dealt with by a Registrar in Sydney have been determined. 29 There is an issue between the parties also on the question of costs. The ACCC submits that costs should be costs in the proceedings. The first and third respondents, not surprisingly, submit that they should be entitled to the costs of the motion. I have looked at reports of a number of cases. Cost orders sometimes proceed on the basis that the successful party is awarded costs and sometimes on the basis that costs will be costs in the proceedings. Not surprisingly, the question of costs will depend on the particular circumstances of the case. Here, however, the motion has been hotly contested and in circumstances where the factors point almost overwhelmingly towards the matter being removed to the Victorian registry. It seems to me that in these circumstances costs of the motion should follow the event and I would accordingly order the ACCC to pay the respondents' costs of the motion. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill. Associate: Dated: 8 May 2003 Counsel for the Applicant: N Hutley SC with P Renehan Solicitor for the Applicant: Australian Government Solicitor Counsel for the First and Third Respondent: M O'Bryan Solicitor for the First and Third Respondent: Freehills Counsel for the Second Respondent: The Second Respondent appeared in person via telephone Date of Hearing: 28 April 2003 Date of Judgment: 8 May 2003