FEDERAL COURT OF AUSTRALIA Neville's Bus Service Pty Ltd v Pitcher Partners Consulting Pty Ltd [2016] FCA 859 File number: NSD 830 of 2016 Judge: GLEESON J Date of judgment: 25 July 2016 Catchwords: PRACTICE AND PROCEDURE – application for transfer of proceeding to Victorian District Registry – exclusive jurisdiction clause – whether exclusive jurisdiction clause so ambiguous as to be ineffective – whether Victorian District Registry of this Court a Court of Victoria – proceeding transferred Legislation: Federal Court of Australia Act 1976 (Cth) Federal Court Rules 2011 Cases cited: Alstom Limited & Ors v Sirakas (No. 2) [2012] NSWSC 64 Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 Australia Country Cinemas Pty Ltd v BYA Pty Ltd (unreported, Heerey J, 5 June 1998); [1998] FCA 714 (Austlii); BC9802621 Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239 Australian Co-Operative Foods Ltd v National Foods Milk Ltd (unreported, Lindgren J, 2 April 1998); [1998] FCA 376 (Austlii); BC9801293 British Aerospace Plc v Dee Howard Co [1993] 1 Lloyds Rep 368 Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531), In the matter of Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531) [2009] FCA 1323 JLV Industries Pty Ltd v MacDonald [2006] FCA 721 KC Park Safe SA Pty Ltd v Adelaide Terrace Investments Pty Ltd (unreported, Finkelstein J, 15 May 1998); [1998] FCA 601 (Austlii); BC9802178 Lamb v Hog's Breath Company Pty Ltd (No 1) [2007] FCA 49 Mulhern v Pearce [2013] FCA 1138 National Dairies WA Ltd v Wesfarmers Ltd (unreported, Tamberlin J, 22 July 1996); [1996] FCA 1634 (Austlii); BC9603177 National Mutual at 162, Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 S. & W. Berisford PLC and NGI International Precious Metals Inc. v New Hampshire Insurance Co [1990] 1 Lloyd's Rep. 454 The Council of the Upper Hunter County District v Australian Chilling and Freezing Co. Limited [1968] HCA 8; (1968) 118 CLR 429 Todber Pty Ltd v Glendale RV Syndication Pty Ltd [2004] FCA 1328; (2004) 211 ALR 390 Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 World Firefighters Games Brisbane v World Firefighters Games Western Australia Inc [2001] QSC 164; (2001) 161 FLR 355 York Civil Ltd v BHP Billiton Mitsui Coal Pty Ltd [2014] FCA 1422 Date of hearing: 25 July 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 27 Counsel for the Applicant: Mr ARR Vincent Solicitor for the Applicant: HWL Ebsworths Counsel for the Respondents: Mr D Mitchell with Mr P Mann Solicitor for the Respondents: Moray & Agnew ORDERS NSD 830 of 2016 BETWEEN: NEVILLE'S BUS SERVICE PTY LTD (ACN 000 193 653) Applicant AND: PITCHER PARTNERS CONSULTING PTY LTD (ACN 106 840 493) First Respondent THE PERSONS TRADING AS THE PARTNERSHIP KNOWN AS PITCHER PARTNERS Second Respondent IAN STEWART Third Respondent JUDGE: GLEESON J DATE OF ORDER: 25 JULY 2016 THE COURT ORDERS THAT: 1. The proceeding be transferred to the Victorian District Registry of the Court. 2. The case management hearing listed on 25 July 2016 be vacated. 3. The costs of the interlocutory application dated 14 July 2016 be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GLEESON J: 1 The respondents (collectively "Pitcher Partners") seek an order that the proceeding be transferred to the Victorian District Registry of the Court pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) ("Act") and r 2.02 of the Federal Court Rules 2011. 2 Section 48 provides that 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. 3 Rule 2.02 provides that a party may apply at the proper place for an order that the proceeding be transferred to another place. In this case, the proper place is the place where the proceeding was started. Principles governing application 4 The relevant principles are not in dispute. As stated by Robertson J in Mulhern v Pearce [2013] FCA 1138 at [14], based on the decision in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 ("National Mutual"): (1) There must be sound reason to direct that the proceeding be conducted or continued elsewhere. If the party commencing the proceeding chose the 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. What needs to be ascertained is where the case can be conducted or continued most suitably bearing in mind the interests of the parties, the ends of justice and determination of the issues between them, and the most efficient administration of the Court: National Mutual at 162. (2) The location of parties and witnesses, the place where the cause of action arose and the convenience of the Court are all relevant factors: National Mutual at 162, Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 at [21], Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 ("Aquila") at [27]-[34] and [42]-[43]. (3) Typically there is no factor that is determinative but rather it is necessary to weigh all the relevant factors that might connect the proceeding to one jurisdiction or the other: Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 at [19]. (4) The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and the receipt of submissions is relevant: Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239. (5) The question of which District Registry should conduct the proceedings does not raise matters of high principle. Essentially it is a matter of case management and proper recognition of the legitimate interests of each of the parties reflected in the balance of convenience as between them and the convenience of the Court and any economies and efficiencies which may attach to one choice or the other: Lamb v Hog's Breath Company Pty Ltd (No 1) [2007] FCA 49 ("Hog's Breath"). (6) There may be flexibility – one Registry could conduct pre-trial management while allocating the trial to a judge in another Registry: Hog's Breath at [10]. (7) There is no burden of proof governing the exercise of the discretion in s 48 of the Act: National Mutual at 162. 5 The following principles concern the parties' contractual stipulation of a venue for resolution of their disputes: (1) It is a relevant factor that the parties' agreement refers to a choice of governing law, even though there may not be any relevant difference between the law of the competing locations: cf. Aquila at [36]. (2) The existence of a non-exclusive jurisdiction clause is not determinative of an application for transfer and does not preclude the exercise of the Court's discretion pursuant to s 48 if the preponderance of factors favours the exercise of discretion in that way: Aquila at [39]; Australian Co-Operative Foods Ltd v National Foods Milk Ltd (unreported, Lindgren J, 2 April 1998); [1998] FCA 376 (Austlii); BC9801293 ("Australian Co-Operative Foods") at 9. (3) A court can and should require parties to abide by their choice of a forum unless there is some good reason why that should not be done: KC Park Safe SA Pty Ltd v Adelaide Terrace Investments Pty Ltd (unreported, Finkelstein J, 15 May 1998); [1998] FCA 601 (Austlii); BC9802178 at 7; Aquila at [41]. 6 In Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531), In the matter of Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531) [2009] FCA 1323, in the course of considering an application to transfer proceedings pursuant to s 1337H of the Corporations Act 2001 (Cth) and the effect of a non-exclusive jurisdiction clause, Gordon J referred to the following passage from the reasons of Philippides J in World Firefighters Games Brisbane v World Firefighters Games Western Australia Inc [2001] QSC 164; (2001) 161 FLR 355 ("World Firefighters Games") at [38]: The authorities favour the view that under the cross-vesting legislation, the exclusive jurisdiction clause remains a relevant consideration, on the basis that the "interests of justice" require that due acknowledgment be accorded to such a clause as representing the bargain between the parties and that proper regard be given to the need to hold parties to their bargain. Nevertheless … one should not start from the position that such clauses should be viewed with the "strong bias" in their favour previously accorded to them at common law. The weight to be given to such clauses will vary depending on the other surrounding and countervailing circumstances. 7 Her Honour concluded at [24]: Put simply, the significance of the existence of a jurisdiction clause is to be determined in the particular circumstances of the case having regard first and foremost to the interests of justice. Factual background 8 The applicant carries on a bus transport business in New South Wales trading as Busabout ("Busabout"). In early 2013, the NSW Government, by its agency Transport for NSW, was seeking tenders for the provision of Sydney metropolitan bus services in various regions of the city. Busabout had regularly utilised the services of Pitcher Partners from about 2003 and Busabout again sought their assistance in preparing and lodging tenders for Sydney metropolitan bus services in early 2013. 9 Busabout alleges that, on or about 19 March 2013, it entered into an agreement with the first or second respondent ("first agreement") whereby one or more of the respondents performed consulting services, advisory services, accounting services and other services relating to the preparation and submission of Busabout's tender bid for Sydney metropolitan bus services in Region 15 ("the Region 15 tender"). On or about 17 February 2014, following Busabout's successful tender for the Region 15 bus services, which culminated in Busabout entering into a contract with Transport for NSW ("the Region 15 contract"). Busabout entered into a second agreement with the first or second respondent for the provisions of financial modelling, forecasting and consulting services, advisory services, accounting services and other services relating to the Region 15 contract ("second agreement"). 10 The present proceeding arises primarily from the alleged failure of the respondents, in preparing and calculating the tender bid and costings, to correctly amortise the cost of a bus that was a "Transfer In Contract Bus", being a bus that was transferred to Busabout from the previous operator, Busways, and was not a new bus. The respondents allegedly incorrectly amortised the "Transfer In Contract Bus" over a full period of 180 months, which was the period of amortisation of the cost of a new bus, whereas the amortisation period for each bus that was a "Transfer In Contract Bus" ought to have been shorter, reflecting the age of the bus. As a consequence, according to Busabout, the respondents undervalued (sic) the capital value of each bus that was a "Transfer In Contract Bus" and the costs actually incurred by Busabout in performance of the Region 15 contract were, and remain, significantly higher than the costs calculated by the respondents as incorporated in the Region 15 tender and upon which the Region 15 contract price was agreed. The respondents allegedly compounded this error by making it again while performing services under the second agreement including forecasting and modelling services. 11 Busabout commenced the proceeding in the New South Wales District Registry of the Court to recover damages to compensate for losses allegedly suffered arising from the respondents' conduct in failing to perform the services under each of the first and second agreements accurately and correctly and in respect of the third respondent, in alleged breach of his fiduciary obligations to Busabout. "Exclusive jurisdiction" clause 12 The terms of each of the first and second agreement include terms set out in a document entitled "Terms of Engagement". Clause 11.1 of that document provides: 11.1 Applicable Law This Contract shall be governed by and interpreted in accordance with the laws of the State of Victoria and the Courts of that State have exclusive jurisdiction in relation to any claim, dispute or difference concerning the Contract and any matter arising from it. The parties irrevocably waive any right they may have to object to any action being brought in those Courts, to claim that the action has been brought to an inconvenient forum or to claim that those Courts do not have jurisdiction. 13 On behalf of Busabout, Mr Vincent submitted that cl 11.1 was so ambiguous as to be ineffective as an exclusive jurisdiction clause. He argued that the first sentence was a mere assertion as to exclusive jurisdiction, without any agreement only to commence proceedings in that jurisdiction. 14 In British Aerospace Plc v Dee Howard Co [1993] 1 Lloyds Rep 368, Waller J considered the following clause: This agreement shall be governed by and be construed and take effect according to English law and the parties hereto agree that the courts of law in England shall have jurisdiction to entertain any action in respect hereof and that in the event of such proceedings being commenced each party shall forthwith notify to the other an address in England for the service of documents. 15 That clause was held to be an exclusive jurisdiction clause. In reaching this conclusion, Waller J referred to the decision in S. & W. Berisford PLC and NGI International Precious Metals Inc. v New Hampshire Insurance Co [1990] 1 Lloyd's Rep 454 in which the simple words "subject to English jurisdiction" in a contract were not found to be deprived of significance merely because they were declaratory. In the latter case, the words were construed as "a statement to the assured, who may be foreign, that the rights that he has under the policy are capable of enforcement in the English courts". 16 Similarly, in Alstom Limited & Ors v Sirakas (No. 2) [2012] NSWSC 64, White J held that a clause providing that "[i]n the event of dispute the courts of Australia shall have exclusive jurisdiction" was effective. In my view, these examples support a conclusion that the first sentence of cl 11.1 should be construed to mean that the parties agreed that "the Courts of [Victoria]" were to be the exclusive venue for the determination of matters falling within the scope of cl 11.1: cf. The Council of the Upper Hunter County District v Australian Chilling and Freezing Co. Limited [1968] HCA 8; (1968) 118 CLR 429 at 436. 17 On behalf of Pitcher Partners, Mr Mitchell of counsel contended that the reference to "the Courts of that State" in cl 11.1 includes a reference to the Federal Court sitting in Victoria. A similar construction was adopted by Heerey J in Australia Country Cinemas Pty Ltd v BYA Pty Ltd (unreported, Heerey J, 5 June 1998); [1998] FCA 714 (Austlii); BC9802621 ("Australian Country Cinemas") at 2 and by Nicholson J in JLV Industries Pty Ltd v MacDonald [2006] FCA 721 at [22]. In National Dairies WA Ltd v Wesfarmers Ltd (unreported, Tamberlin J, 22 July 1996); [1996] FCA 1634 (Austlii); BC9603177, Tamberlin J acknowledged that the Federal Court could possibly fall within the words "Courts of Western Australia" on a broad construction of the relevant exclusive jurisdiction clause, but concluded that, in the relevant contract, the clause conveyed "a preference for determination of the contractual issues exclusively by the Courts of the State of Western Australia". 18 In contrast, in Australian Co-Operative Foods at 9, Lindgren J held that the Federal Court could not be described as a "Victorian Court" in construing an agreement by which the parties consented "to any litigation being conducted in Victorian Courts". However, his Honour considered that the clause was relevant to the exercise of the discretion to transfer the proceeding from the New South Wales to the Victorian District Registry because it showed "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". 19 Similarly, in Todber Pty Ltd v Glendale RV Syndication Pty Ltd [2004] FCA 1328; (2004) 211 ALR 390 at [29], Selway J acknowledged the possibility that an exclusive jurisdiction clause by which the parties "submit[ted] themselves to the exclusive jurisdiction of the courts of Victoria" could be relevant to the question whether the proceeding should be transferred to the Victorian District Registry from the South Australian District Registry. More recently, in York Civil Ltd v BHP Billiton Mitsui Coal Pty Ltd [2014] FCA 1422 at [38], Besanko J referred to the fact that the parties had nominated the Courts of Queensland as the appropriate courts for the resolution of their dispute as relevant to a conclusion that the proceedings should be transferred to the Queensland District Registry. 20 In my view, cl 11.1 is relevantly similar to the clause construed by Heerey J in Australian Country Cinemas and I am satisfied that cl 11.1 should be construed so that "the Courts of" Victoria include the Victorian District Registry of this Court. That construction is consistent with the broader intention reflected in cl 11.1 (including the second sentence of cl 11.1) that the parties agreed to litigate any disputes arising out of the agreements in Victoria, being the location in which Pitcher Partners is based, albeit that the respondents are a part of a national association of independent firms marketed under the name "Pitcher Partners". Such a construction does not deny the jurisdiction which the Federal Court would otherwise have in connection with claims arising out of the subject matter of the contract and falling within the scope of the Court's statutory jurisdiction. 21 Busabouts did not suggest that the claims in the proceeding do not fall within the scope of cl 11.1, although Mr Vincent noted that the third respondent was not a party to the first or second agreements. Application of principles in this case 22 Recognising that the question of which District Registry should conduct the proceeding does not raise matters of high principle, in my view, the following matters are relevant in this case: (1) Busabout did not choose the New South Wales District Registry of the Court capriciously as the place to commence the proceeding. The business of Busabout is located in NSW and the subject matter of the first and second agreements, being the Region 15 Sydney metropolitan bus services, is located in NSW. The loss and damage allegedly suffered by Busabout occurred in NSW. (2) Although the proceeding is at any early stage, it is fairly clear that the convenience of Busabout would be favoured by continuing the proceeding in the New South Wales District Registry, while the convenience of Pitcher Partners would be favoured by a transfer to the Victorian District Registry. Busabout, its currently anticipated witnesses and lawyers are located in Sydney. Pitcher Partners, its currently anticipated witnesses and its current lawyers are located in Melbourne. (3) It is not suggested that any different law would be applied depending upon whether the proceeding is conducted in the New South Wales or the Victorian District Registry. Busabout appeared to accept that the proper law of the contract is the law of Victoria, pursuant to cl 11.1, noting that this is not relevant to its claims under the Australian Consumer Law. (4) Neither party suggests that the convenience of the Court favours either the New South Wales or the Victorian District Registry over the other. (5) There is a factual dispute about where the work giving rise to the claims in the proceeding was conducted. Pitcher Partners claims that its work was largely done in Victoria. To Busabout, it appeared that the work was largely done in NSW. Services were performed in NSW under the first and second agreements in circumstances where the respondents would travel to NSW to meet with representative of Busabout at their offices and at the Liverpool Catholic Club between April and May 2013, with many of these meetings occurring over the course of a number of days. No meetings were ever held in Victoria. 23 As noted above, there was evidence to the effect that Pitcher Partners is a national association of independent firms with offices in Sydney. Considering the relevant principles set out earlier in my discussion, I am not persuaded that this is a factor weighing, or weighing significantly, in favour of retaining the proceeding in the New South Wales District Registry. 24 On behalf of Busabout, Mr Vincent submitted that it was relevant that Pitcher Partners were not seeking to enforce cl 11.1, for example, by seeking a stay of the proceeding. I do not accept that this is a matter affecting the weight of cl 11.1 as a basis for the transfer application. 25 Taking the matters set out above into account, I was satisfied that cl 11.1 provides a sound reason to transfer the proceeding to the Victorian District Registry. It was not disputed that the claims in the proceeding (which are primarily claims for damages for breach of contract) do not fall within the scope of cl 11.1. Accepting that cl 11.1 applies to the claims (or the primary claims), in my view Busabout should be held to its agreement that the Courts of Victoria were to be the exclusive venue for the determination of such claims, in the absence of a good reason to the contrary. I do not accept that close connection of the subject matter of the proceedings with NSW affords such a good reason, particularly where the location of the subject matter was known to the parties at the time the agreements were made: cf. World Firefighters Games at [64]. Nor do I accept that the fact that costs may be wasted by Busabout as a result of the commencement of the proceeding in NSW if the proceeding is now transferred to Victoria, affords such a good reason. Busabout commenced the proceeding knowing the terms of the agreements, and can be taken to have accepted the risk that the proceeding would be transferred to Victoria. In any event, I am not persuaded that those costs will be significant. 26 On behalf of Busabout, evidence was given that the terms of the agreements were not the subject of negotiation and Busabout was not legally represented in its dealings with Pitcher Partners. Accepting this evidence, it was not suggested that Busabout was not bound by the agreements. I am not satisfied that these matters raised by Busabout significantly affect the weight to be given to cl 11.1 as an exclusive jurisdiction clause, or otherwise warrant a conclusion that the proceeding should remain in the New South Wales District Registry. Conclusion 27 The proceeding will be transferred to the Victorian District Registry. I will reserve the question of costs. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 3 August 2016