Re Haben Corporation Ltd v Price Waterhouse (A Partnership) [1989] FCA 139 (28 April 1989)

FEDERAL COURT OF AUSTRALIA

Re: HABEN CORPORATION LTD
And: PRICE WATERHOUSE (a partnership)
No. G 1404 of 1988
FED No. 176
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.(1)

CATCHWORDS

Practice and Procedure - claim for damages for breach of contract - Application to transfer proceeding to Supreme Court of Western Australia under cross-vesting legislation - Requirements of rules of court.

Jurisdiction of Courts (Cross-vesting) Act 1987 (WA), s.4

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), ss.5(4), 9(2)

HEARING

CANBERRA
28:4:1989

Counsel for Haben Corporation Ltd Mr S.J. Motbey

Solicitors for Haben Corporation Ltd Phillips Fox

Counsel for Price Waterhouse Mr D.E. Ryan

Solicitors for Price Waterhouse Freehill, Hollingdale & Page

ORDER

Pursuant to the provisions of sub-s.5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), the proceeding pending in this Court in which Haben Corporation Ltd is the applicant and the members of the firm Price Waterhouse are the respondents and which is numbered G 1404 of 1988 be transferred to the Supreme Court of Western Australia.

The costs of the motion herein be costs in the cause.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is a motion on notice by the members of the firm Price Waterhouse ("the respondents") for an order pursuant to sub-s.5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) that a certain proceeding pending in this Court be transferred to the Supreme Court of Western Australia or, alternatively, for an order pursuant to s.48 of the Federal Court of Australia Act 1976 (Cth) and Order 10, rule 1(2)(f) of the Federal Court Rules that the proceeding be transferred to the Western Australia Registry of the Court.

2. The proceeding sought to be transferred was instituted in the New South Wales District Registry of this Court by Haben Corporation Limited ("the company") against the members of the firm of chartered accountants carrying on practice under the name and style of Price Waterhouse. By the application filed on its behalf on 7 December 1988 the company claims damages, interest and costs "on the grounds appearing in the accompanying Statement of Claim".

3. The statement of claim refers to the incorporation of the company under the laws of the State of New South Wales and states that at all material times it carried on business principally in Perth, Western Australia, providing specialist technological services and know-how to persons seeking to develop new technology. The company is alleged to have owned in its own right the intellectual property in an invention known as Continuously Variable Transmission ("CVT") which was ready to be further improved and developed. It is further alleged that in or about March and April 1988 negotiations took place between the company and the respondents "with a view to the engagement of the Respondents, for award (sic), to formulate a contractual scheme or arrangement ('the Section 73B package') whereby the Applicant (the company) could exploit or dispose of its CVT rights in such a way as to attract investors who would receive substantial taxation advantages by virtue of the special deductibility provisions under Section 73B of the Income Tax Assessment Act 1936 (Commonwealth)".

4. Those negotiations are said to have led to the company engaging the respondents to formulate and complete "the Section 73B package". It is pleaded that it was an essential term of the contract of engagement that "the Section 73B package" be completed and available to be taken up by investors before 30 June 1988. It is alleged that the respondents, in breach of the contract, failed to complete "the Section 73B package" prior to 30 June 1988 whereby the company suffered loss and damage. The particulars given of the loss and damage said to have been suffered are as follows:

"(a) The Applicant was forced to expend
substantial sums of money in the
expectation that the Section 73B package
would be in place and these expenses are
lost and rendered useless.
(b) The Applicant lost gross income
anticipated from the investors of
$2,500,000.00.
(c) The Applicant devoted its staff and
other resources to the Section 73B
package in anticipation of the income it
would generate to no useful end."

5. No defence has been filed on behalf of the respondents even though the time prescribed by the rules of court for doing so has expired. An appearance has been entered on their behalf but they have taken no steps in the proceeding other than giving notice of the motion at present before the Court. The Court was, however, informed by counsel appearing on their behalf that it was proposed that a defence be filed denying the existence of the agreement as alleged, denying any breach on the part of Price Waterhouse of any agreement between the parties and disputing that the company is entitled to the damages claimed.

6. The motion is supported by the affidavit of Gregory John Nairn sworn 16 January 1989 and the affidavit of Carolyn June Morrison sworn 3 February 1989. The company relies on the affidavit of Michael Berg sworn 22 February 1989.

7. Mr Nairn, a member of Price Waterhouse, states in his affidavit that all the negotiations which led to Price Waterhouse carrying out work for the company took place in Perth. Mr Nairn further states that the members of Price Waterhouse who took part in the negotiations were from the Perth office of that firm; that the four directors of the company who were involved in the negotiations, namely Mr C. Bregenhoj, Mr D. Wheeler, Mr R. Wheeler and Mr R. Gubbay, were directors who carry on the company's business from its Western Australian office; and that all work carried out by Price Waterhouse for the company was carried out in Western Australia, the only involvement from any person outside that State being some minor involvement from the Canberra office of Price Waterhouse in regard to dealings with the Australian Taxation Office. Mr Nairn asserts that all relevant potential witnesses (with the possible exception of one partner in the Canberra office of Price Waterhouse) reside in Western Australia.

8. Miss Morrison, a solicitor acting for the respondents, states in her affidavit that of the five persons who, on behalf of Price Waterhouse, were involved in the negotiations with the company, four reside in Western Australia, the fifth being now resident in South Africa. She further states that three other persons resident in Western Australia, not being employees of Price Waterhouse, may be called as witnesses on behalf of the respondents. The affidavit refers to the inconvenience and additional expense which will result to the respondents and to their witnesses if the matter proceeds elsewhere than in Western Australia.

9. It is apparent that there is some inconsistency between what is said by Mr Nairn and what is said by Miss Morrison concerning the respondents' witnesses. It is, however, unnecessary to resolve such inconsistency for present purposes.

10. Mr Berg, a solicitor acting for the company, in his affidavit disputes the assertion made by Mr Nairn that the involvement of the Canberra office of Price Waterhouse was "minor". He says that the company's representatives in Western Australia had direct communications with Mr P.F. Baxter of that office in relation to the matter in May and June 1988. He further states that he has been informed by Mr Richard Gubbay, a director of the company, that the principal witnesses for the company will be Mr Gubbay and Mr Chris Bregenhoj, also a director of the company; that Mr Gubbay "intends and expects to be resident in Sydney in the next few months, and not be returning to Perth"; and that Mr Bregenhoj "intends and expects to be resident in Brisbane in the next few months and not be returning to Perth". Mr Berg also states that he has been informed by Mr Gubbay that "the majority of potential investors in the scheme the subject of those proceedings, who may be witnesses on the subject of quantum, were from the Eastern States of Australia".

11. In his affidavit Mr Berg also comments upon the procedures adopted in the Supreme Court of Western Australia, comparing them in some respects with the procedures followed in this Court. It is not, however suggested that, by reason of those differences, the Supreme Court of Western Australia is not an appropriate forum for determination of the issues in dispute between the parties.

12. It is common ground that the case which the company seeks to make would not fall within the jurisdiction of this Court but for the provisions of s.4 of the Jurisdiction of Courts (Cross-vesting) Act 1987 of the State of Western Australia and s.9(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 of the Commonwealth. Section 4 of the State Act provides that the Federal Court has and may exercise original jurisdiction with respect to State matters, an expression defined in sub-s.3(1) to mean a matter in which the Supreme Court of Western Australia has jurisdiction otherwise than by reason of a law of the Commonwealth or of another State. Sub-section 9(2) of the Commonwealth Act provides that the Federal Court may exercise jurisdiction conferred on it by a provision of a law of a State relating to cross-vesting of jurisdiction.

13. The provision under which the respondents move is sub-s.5(4) of the Commonwealth Act which relevantly provides:

"(4) Where -
(a) a proceeding (in this sub-section
referred to as the 'relevant
proceeding') is pending in the Federal
Court or the Family Court (in this
sub-section referred to as the 'first
court'); and
(b) it appears to the first court that -
(i) ....
(ii) having regard to
(A) whether, in the opinion of the
first court, apart from this
Act and any law of a 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 a State or
Territory;
(B) the extent to which, in the
opinion of the first court,
the matters for determination
in the relevant proceeding are
matters arising under or
involving questions as to the
application, interpretation or
validity of a law of the State
or Territory referred to in
sub-sub-paragraph (A) and not
within the jurisdiction of the
first court apart from this
Act and any law of a State
relating to cross-vesting of
jurisdiction; and
(C) the interests of justice,
it is more appropriate that the
relevant proceeding be determined
by that Supreme Court; or
(iii) ....
the first court shall transfer the relevant
proceeding to that Supreme Court."

14. For the company it was submitted that the motion should be adjourned until the issues between the parties had been defined by the furnishing, if requested, of particulars of the matters alleged in the statement of claim and the filing of a defence. I was, at first, attracted to this proposition but, having given the matter further consideration, I do not propose to accede to it. Reference has already been made to the outline of the defence proposed to be filed on behalf of the respondents. Nothing in that outline suggests that the respondents will raise by way of defence, or by way of cross-claim, any matter as to which this Court would have jurisdiction otherwise than by virtue of the operation of the legislation relating to the cross-vesting of jurisdiction to which reference has already been made. Had there been a suggestion that such a matter would be raised, it may have been desirable to postpone consideration of the question of the transfer of the proceeding to the Supreme Court of Western Australia until the issues were clarified.

15. The provisions of sub-s.5(4)(a) of the Commonwealth Act are satisfied. The question is whether it appears to this Court that, having regard to the matters referred to in sub-sub-pars (A), (B) and (C) of sub-s.5(4)(b)(ii) of the Commonwealth Act, it is more appropriate that the proceeding be determined by the Supreme Court of that State. If it so appears to this Court, the legislation requires that the proceeding be so transferred.

16. As to sub-sub-pars (A) and (B), it is clear that, apart from the legislation relating to the cross-vesting of jurisdiction, the proceeding would have been incapable of being instituted in this Court and capable of being instituted in the Supreme Court of Western Australia. The basis for concluding that it would have been capable of being instituted in the Supreme Court is that, on the evidence before the Court, the negotiations which resulted in the respondents undertaking certain work on behalf of the company, whatever be the nature of that work or the terms and conditions upon which it was undertaken, took place in Western Australia. The contract relied upon was, therefore, made in that State. It also required performance there. Counsel for the company did not contend otherwise. Nor did he contend that the proper law of the contract was other than the law of that State.

17. As to sub-sub-par.(C), it is evident from what has already been said that Western Australia is the jurisdiction with which the proceeding has the most real and substantial connection. The parties, a number of witnesses and, so far as one can tell, substantially the whole of the relevant documentation are to be found in that State. If the proceeding is to be heard and determined in Western Australia, Messrs Gubbay and Bregenhoj and some other unidentified witnesses may have to travel to Perth to give evidence on behalf of the company. But, wherever the matter is heard, it would seem to be inevitable that some witnesses may need to travel long distances to give their evidence. In support of an argument that the interests of justice would best be served by allowing the proceeding to be determined in this Court, counsel for the company placed reliance on the national character of the Court which he suggested would facilitate the taking of evidence in different parts of the Commonwealth. In a case where the jurisdiction of this Court arises under the cross-vesting legislation and not otherwise, that circumstance, whatever its validity, does not, in my opinion, provide a sufficient justification for retaining the matter in this Court.

18. On the material before the Court, it appears to me that, having regard to the matters set out in sub-sub-pars (A), (B) and (C) of sub-s.5(4)(b)(ii) of the Commonwealth Act, it is more appropriate that the proceeding be determined by the Supreme Court of Western Australia. So to conclude accords with the purpose of the legislation as expressed in the preamble to the Commonwealth and State Acts that a proceeding concerning matters which, apart from the legislative scheme embodied in those Acts for the cross-vesting of jurisdiction, would be entirely within the jurisdiction of the Supreme Court of a State is to be determined in that Court.

19. I, therefore, order that the proceeding be transferred to the Supreme Court of Western Australia. I further order that the costs of the motion be costs in the cause.

20. Before parting with the matter, I should draw attention to the circumstance that the company failed to comply with the provisions of Order 10A, rule 5(1) of the Federal Court Rules. That rule relevantly provides:

"5.(1) If a party to a proceeding proposes
to invoke a jurisdiction arising under a
cross-vesting law ....
(a) the statement of claim .... accompanying
the application .... shall include a
statement of the provision on which the
party relies, of the claim in relation
to which the party relies on it and of
the grounds on which the party relies on
it; and
(b) the party shall seek directions as soon
as possible on whether the proceeding
should be transferred under the Act."

"Cross-vesting law" includes a law of a State relating to the cross-vesting of jurisdiction: "the Act" means the Jurisdiction of Courts (Cross-vesting) Act 1987 of the Commonwealth (see Order 10A, rule 1). It is important that the provisions of that rule be strictly adhered to by a party commencing in this Court a proceeding of the kind to which the rule relates.