Autotrop Sdn Bhd v Powercrank Batteries Pty Ltd
[2006] VSC 401
•31 October 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6283 of 2005
BETWEEN
| AUTOTROP SDN. BHD. | Plaintiff |
| and | |
| POWERCRANK BATTERIES PTY LIMITED (ABN 68 092 577 412) | Defendant |
and
| POWERCRANK BATTERIES PTY LIMITED (ABN 68 092 577 412) | Plaintiff by Counterclaim |
| and | |
| AUTOTROP SDN. BHD. | First Defendant by Counterclaim |
| and | |
| AMALGAMATED BATTERIES MFG (SARAWAK) SDN. BHD. | Second Defendant by Counterclaim |
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JUDGE: | WHELAN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 October 2006 | |
DATE OF RULING: | 31 October 2006 | |
CASE MAY BE CITED AS: | Autotrop SDN BHD v Powercrank Batteries Pty Limited | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 401 | |
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PRIVATE INTERNATIONAL LAW – stay of proceedings – whether inability to enforce judgment in foreign jurisdiction makes a proceeding futile – position where judgment for a money sum is sought.
Anglo Australian Foods Ltd v Von Planta (1988) 20 FCR 34
Pertsch v PT John Holland Constructions Indonesia [2001] QSC 127
CONTRACT – interpretation of provision whereby contracting parties “irrevocably submit” to jurisdiction – whether exclusive jurisdiction provision.
FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 117
Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 WLR 588; [1994] 2 All ER 540
PROCEDURE – stay of proceeding – whether Victoria a clearly inappropriate forum.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P.A. Norris | Read & Ley |
| For the Defendant | Mr J. Nixon | Pearce Webster Dugdales |
HIS HONOUR:
By a writ issued on 27 May 2005 the plaintiff (“Autotrop”) sued the defendant (“Powercrank”) for the price of batteries sold and delivered pursuant to what is alleged to be “a series of agreements between the parties between 3 October 2003 and 23 April 2004”. The sum allegedly owing is $333,399.29. Autotrop is a company incorporated in Malaysia. Powercrank is incorporated in Australia.
Powercrank has defended Autotrop’s claim and has instituted a counterclaim. It alleges that the relevant agreement to supply the batteries was an agreement not with Autotrop, but with another Malaysian company, the second defendant by counterclaim (“ABM”). Powercrank alleges that the batteries were supplied pursuant to an agreement “made in about August 2001” between Powercrank and ABM. The counterclaim then alleges that that agreement was breached in that the batteries supplied were, in substance, not in conformity with the contract and defective. In the alternative it is alleged that in about December 2001 ABM “unilaterally substituted Autotrop as its agent” to supply the batteries, or, as a further alternative, that the agreement was varied so as to substitute Autotrop for ABM. Powercrank seeks relief by way of damages and a declaration it is entitled to set off those damages against Autotrop’s claim.
ABM’s defence to the counterclaim pleads a written agreement between Powercrank and ABM dated 13 September 2001 pursuant to which it is said that ABM agreed to supply batteries to Powercrank. Terms of the written agreement are pleaded, and in particular a term dealing with governing law and jurisdiction, which I will set out in full subsequently, and a term providing for the limitation of liability. ABM then alleges that “ABM and Powercrank agreed to novate the 13 September 2001 agreement”. It is said that this occurred on or about 13 December 2001. The particulars of this allegation assert that the novation is constituted by a letter dated 13 December 2001 and by the conduct of the parties thereafter. In the alternative it is alleged that on or about 13 December 2001 ABM and Powercrank agreed to terminate the 13 September 2001 agreement.
As ABM’s defence to the counterclaim relies upon what it alleges to have been the novation or termination of the written agreement of 13 September 2001, it maintains as its primary case that it is not relevantly a contracting party.
The issues of what is the relevant agreement and whether the relevant contracting party with Powercrank is Autotrop or ABM are central to both Autotrop’s claim against Powercrank and to Powercrank’s counterclaim against Autotrop and ABM.
By a summons filed 7 December 2005 ABM sought orders setting aside service upon it of the counterclaim on three grounds. The first two concerned the applicable provisions of the laws of Malaysia and the Supreme Court Rules concerning service. The third sought to set aside service because “in any event, by reason of the facts of the case the proper forum for any claim that the plaintiff by counterclaim may wish to bring against ABM is Malaysia and not the Supreme Court of Victoria”. The summons in so far as it sought to set aside service on the first two grounds was dismissed on 21 April 2006. It was suggested in the course of argument before me that at some point the summons in so far as it sought to set aside service on the ground concerning forum was amended so as to seek a stay of the counterclaim on that ground. I could not find a record of this on the file but the parties conducted the proceeding before me on that basis.
The proceeding before me is an appeal pursuant to a notice dated 9 August 2006 from an order of Master Efthim made 2 August 2006 in which he dismissed what remained of the summons filed 7 December 2005 and ordered that ABM pay Powercrank’s costs.
ABM seeks a stay of Powercrank’s counterclaim on three grounds. First, it is said that as it will be impossible for any judgment to be executed in Malaysia the counterclaim is futile and its pursuit is accordingly oppressive. Second, the written agreement of 13 September 2001 contains what ABM maintains is an exclusive jurisdiction clause requiring the parties to litigate in Malaysia. Finally, as an alternative to the first two contentions, it is said that Victoria is a clearly inappropriate forum.
It is a remarkable feature of this litigation that none of the litigating parties relies upon the written agreement of 13 September 2001 as part of its primary case. Neither Autotrop nor Powercrank plead the written agreement. ABM relies on the terms of the written agreement only as an alternative in the event that its plea that that agreement was novated or terminated is rejected.
The written agreement names the parties as ABM and “Wholesale Battery Services”, which was a business name registered by Powercrank at the relevant time. The agreement is signed on behalf of “Wholesale Battery Services” by Powercrank’s sole director, Mr Tas Samlidis, and by his sister Ms Faye Samlidis. Ms Faye Samlidis was at all relevant times the Melbourne manager of Powercrank.
The written agreement of 13 September 2001 refers to Powercrank’s wish to buy from ABM various types of batteries in provisions which appear under the heading “Recitals”. There are detailed provisions concerning payment terms. There is a provision excluding liability for consequential loss. For the purposes of this appeal, the most significant provision is clause 4 which is headed “Governing law and jurisdiction” and which reads as follows:
“(A)This agreement shall be governed by and construed in accordance with the laws that are applicable in Sarawak, Malaysia.
(B)In relation to any legal action or proceedings arising out of or in connection with this agreement (‘proceedings’), the Manufacturer and the Purchaser hereby irrevocably submit to the jurisdiction of the High Court in Sabah and Sarawak (in particular at Kuching) and waives any objection to proceedings in any such courts within the jurisdiction of the High Court in Sabah and Sarawak on the grounds of venue or on the grounds that the proceedings have been brought in an inconvenient forum or any similar grounds and the Purchaser agrees that any writ, summons, order, judgment or other document shall be deemed duly and sufficiently served if addressed to the Purchaser and left at or sent by post to the address of the Purchaser last known to the Manufacturer”.
When briefly reviewing the pleadings I referred to a letter of 13 December 2001, which forms an important part of the basis for the claim made by ABM that the written agreement was novated or terminated. The letter dated 13 December 2001 is on the letterhead of ABM and is addressed to Mr Tas Samlidis at Wholesale Battery Services. Powercrank’s position in the litigation is that this letter was never received, or that there is no record of it being received and no relevant officer at Powercrank recalls it being received. Relevantly for present purposes the letter reads as follows:
“May I bring to your kind information that due to some internal control practices, all your transaction as of 1st of January 2002 will be taken care of by a different company. We would like to confirm that all the products you received will still be from the original source and the change is purely an internal control practices related move.
Therefore, AUTOTROP SDN. BHD. at Lot 7036, Ground Floor, Section 64, Japan Pending, Kuching, will be the company dealing with you from the above-mentioned date. All payments can still be made payable to the account that you have been paying, and all correspondence can still be send to the same fax number you utilized … .”
I will address the three grounds relied upon by ABM separately.
Futility of the proceeding
ABM maintained and Powercrank accepted that any judgment obtained in the Supreme Court of Victoria could not be registered or enforced in Malaysia.
ABM submitted that as a consequence the counterclaim was futile and oppressive and should be stayed. Reliance was placed in this respect upon a statement in Halsbury to the effect that where proceedings could be brought in another jurisdiction the court may in its discretion stay a proceeding on the ground that the proceeding is vexatious and oppressive, or because “the order sought will not effectively be enforced in the country where enforcement must be obtained”.
The issue of enforcement can be a matter of significance where what is sought is to compel or restrain the act of a foreign person. That is not this case. The counterclaim seeks damages and a declaration. In this respect it seems to me that the observations of Lee J in Anglo Australian Foods Ltd v Von Planta[1] are applicable. His Honour said:
“There is an obvious distinction between a personal judgment in a money sum and an order or decree for performance of acts or orders of restraint. The latter may be patently futile at the time of pronouncement. Mixed judgments containing judgments for sums of money or solely money judgments are not necessarily futile. The lack of prospect of recovery on a money judgment can be no more a cause for declining to exercise jurisdiction where an applicant seeks judgment against a foreign resident than it would be where both parties were domiciled within the jurisdiction of the Court.”
[1](1988) 20 FCR 34 at 44-45.
A similar submission to the submission made on behalf of ABM here was made to Cullinane J in the Supreme Court of Queensland in Pertsch v PT John Holland Constructions Indonesia[2]. After quoting a passage from the judgment of Brennan J (as he then was) in Oceanic Sunline Shipping Co v Fay[3] his Honour said:[4]
“It would seem to me that this statement is a statement of a general principle and that being so, the difficulty which the Plaintiff might have in enforcing any action in Indonesia that he might obtain in Queensland is not something which ought to be regarded as a matter of significance here.”
[2][2001] QSC 127.
[3](1988) 165 CLR 197.
[4][2001] QSC 127 at [48].
The difficulty or impossibility of enforcement in Malaysia is not a factor which, in itself, justifies the stay which is sought.
The governing law and jurisdiction clause
Powercrank submitted that the written agreement of 13 September 2001 does not govern the relevant dispute between the parties. I will return to that issue. Within this specific context, I will proceed on the basis that it does.
ABM submitted that the governing law and jurisdiction clause constituted an exclusive jurisdiction clause and that the parties’ bargain should be enforced.
ABM faced an initial conceptual difficulty in relation to this contention, in that it does not itself maintain as its primary case that the written agreement of 13 September 2001 governs the relationship between these parties. It does contend that if there is any contract between them, which it denies, then it is constituted by the written agreement of 13 September 2001.
I was referred to a number of authorities concerning construction of jurisdiction clauses. Counsel for ABM accepted the accuracy of the summary of the authorities set out by Giles CJ Comm D, in FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association[5]. Relevantly, his Honour observed that the issue is an issue of construction. The use of the word “exclusive” is not determinative and a clause may be an exclusive jurisdiction clause notwithstanding the absence of that word. Mutuality is consistent with no more than submission to the jurisdiction. Lack of mutuality is likely to tell against exclusive jurisdiction, but in that respect his Honour also cited Continental Bank NA v Aeakos Compania Naviera SA,[6] an authority to which I will return. Other language in the clause, or the nature of the contract, may point towards the contractual contention. If the Courts of the relevant jurisdiction would have jurisdiction in the absence of the clause that may indicate that the clause was intended to confer exclusive jurisdiction, but that will not always be so as the clause may be intended to put the matter beyond doubt or be an unthinking inclusion.
[5](1997) 41 NSWLR 117 at 126-7.
[6][1994] 1 WLR 588; [1994] 2 All ER 540. (“Continental Bank”).
Counsel for ABM particularly relied upon Continental Bank. Counsel for ABM submitted that this case was a powerful guide to construction here as, it was submitted, the words used in the clause in issue there are similar to those used in the clause in issue here.
It is true that one part of the clause which was the subject of consideration in Continental Bank is very similar to the clause here. The clause in Continental Bank, like the clause here, contained a provision whereby each party “irrevocably” submitted to the jurisdiction of the specified Court. The clause in Continental Bank, however, went on to provide:
“… but the bank reserves the right to proceed under this agreement in the courts of any other country claiming or having jurisdiction in respect thereof.”
Steyn LJ, who delivered the judgment of the Court of Appeal in Continental Bank, analysed that clause as follows:[7]
“The juxtaposition of a submission by the appellants to the jurisdiction of the English courts and the option reserved in favour of the bank to sue elsewhere brings into play the expressio unius exclusio alterius canon of construction. It suggests that a similar option in favour of the appellants was deliberately omitted. In our judgment the language … evinces a clear intention that the appellants, but not the bank, would be obliged to submit disputes in connection with the loan facility to the English courts.”
[7][1994] 2 All ER 540 at 547.
The clause under consideration in Continental Bank was not relevantly similar to the clause here. There is no reservation in favour of one party in the clause under consideration here as there was in Continental Bank.
It seems to me that the clause here is an irrevocable submission to the jurisdiction of the courts of Malaysia. The words used do not relevantly go beyond that. It is not an exclusive jurisdiction clause. I reject the ground for a stay on that basis.
Clearly inappropriate forum
Before me the parties accepted that on the final ground upon which a stay is sought ABM bears the burden of establishing that Victoria is a clearly inappropriate forum.[8]
[8]Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538.
I was addressed at some length on a number of matters said to be relevant to this issue, but it seems to me that counsel for ABM succinctly and accurately stated the position when he said that all of the various matters as to location of witnesses, place of the transaction, place of the subject matter, availability of relief and so on were, for present purposes, evenly balanced save for what he contended were two matters strongly in favour of a finding that Victoria was a clearly inappropriate forum, and one matter against.
The two matters in favour are the choice of law provision in paragraph A of the governing law and jurisdiction clause and the submission to jurisdiction provision in paragraph B of that clause. The matter against is the evidence suggesting a close association between Autotrop and ABM, the intertwined character of the claim Autotrop makes against Powercrank and the claim Powercrank makes against ABM, and the fact that Autotrop has chosen to litigate in Victoria and intends to continue doing so. I gave counsel for ABM the opportunity to seek to involve Autotrop in this application and in particular to address the issue of whether the entire proceeding ought to be stayed on the basis that it should be litigated in Malaysia. Counsel for ABM did not take up that opportunity.
The material filed on behalf of Powercrank establishes in my view that there is a close association between Autotrop and ABM. The conclusion is suggested by ABM’s letter of 13 December 2001 itself, the relevant passage of which I have previously quoted. In that letter the introduction of Autotrop was explained to Powercrank by ABM as being “purely an internal control practices related move”. The material before me suggests that Powercrank continued to make payments to bank accounts of ABM, including bank accounts in Australia, after the introduction of Autotrop. All of the shareholders of Autotrop are also shareholders in ABM. Two of the current directors of Autotrop are also directors of ABM. Both companies have a close association with Tay Rah Chin, also referred to as Dato Tay, and members of his immediate family. All of Autotrop’s directors are members of Dato Tay’s immediate family. Autotrop’s shareholders are Dato Tay himself and four other members of his immediate family. Dato Tay was until recently a director of ABM and he and his immediate family own more than 50% of the shares in ABM.
In the absence of Autotrop’s claim, and the evidence of the association between Autotrop and ABM, the provisions of the governing law and jurisdiction clause would be a powerful factor militating towards a conclusion that Victoria is a clearly inappropriate forum. Powercrank maintains that that contract does not apply. It is not desirable that I express any conclusion on that contention. But whether the written contract governs the specific relevant dealings or not, the fact that the parties have specifically addressed the question of the law that is to apply and the place where litigation is to occur in relation to transactions, which, on any view, are not unrelated to the matters in dispute in the proceeding, is a very relevant consideration.
Here, there is another factor which outweighs that consideration. Autotrop has chosen to sue in Victoria. Autotrop is a company having a close association with ABM. The dealings between Autotrop and Powercrank and between Powercrank and ABM are inextricably intertwined. One of the central issues on both Autotrop’s claim and on the counterclaim against AMB is who is the relevant contracting party with Powercrank. It seems to me that it would be most undesirable for that issue to be litigated in one forum with one of the potential contracting parties and in a different forum with the other.
In all the circumstances my conclusion is that ABM has failed to establish that Victoria is a clearly inappropriate forum. The appeal will be dismissed.
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