Bendigo and Adelaide Bank Ltd v Quine
[2018] VSC 272
•1 June 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2016 05010
| BENDIGO AND ADELAIDE BANK LTD (ACN 068 049 178) | Plaintiff |
| v | |
| PETER CROXTON QUINE | Defendant |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers (by written submissions of 6 March, 26 April and 17 May 2018) |
DATE OF JUDGMENT: | 1 June 2018 |
CASE MAY BE CITED AS: | Bendigo and Adelaide Bank Ltd v Quine |
MEDIUM NEUTRAL CITATION: | [2018] VSC 272 |
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PRACTICE AND PROCEDURE – Application for the Court to decline to exercise jurisdiction – Nature of the residual discretion of the Court under rule 7.04(1) of the Supreme Court Rules 2015 – Whether the Civil Procedure Act 2010 requires the Court to have regard to enforceability of the judgment in a jurisdiction in which the Defendant has assets – Whether judgment of this Court would be enforceable in England – Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491 – Agar v Hyde (2000) 201 CLR 552 – Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27 – Netglory Pty Ltd v Caratti [2013] WASC 364 – Administration of Justice Act 1920 (UK) – Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) ss 4, 6, 7 – Civil, Jurisdiction and Judgments Act 1982 (UK) s 33 – Civil Procedure Act 2010 ss 7, 8 – Reciprocal Enforcement of Foreign Judgments (Australia) Order 1994 (UK) – Supreme Court (General Civil Procedure) Rules 2015 rr 7.02, 7.04, 8.08.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | D C Gration | K&L Gates |
| For the Defendant | — | Foot Anstey LLP |
HIS HONOUR:
This is an application by the Defendant under rule 7.04 of the Supreme Court (General Civil Procedure) Rules 2015 (“the Rules”) for this Court to decline to exercise jurisdiction in respect of the claim brought by the Plaintiff, which is in essence an attempt by the Plaintiff to recover $120,000 of principal and significant interest in relation to a 2007 loan to the Defendant to facilitate the Defendant’s investment in the Great Southern Organic Olive Grove Scheme. Though there are a significant number of proceedings on foot which are subject to the settlement approved by this Court in Clarke (as trustee of the Clarke Family Trust) & Ors v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) & Ors,[1] this is not such a proceeding as the relevant loan was not subject to any of the group proceedings. For the reasons which follow, this Court will not exercise jurisdiction in respect of the claim brought by the Plaintiff because it is clear that any judgment against the Defendant would be unenforceable in the only jurisdiction in which the Defendant has assets. Were this not the case, the Court would exercise jurisdiction—notwithstanding that this would, unfortunately, aggravate the significant stress the claim may cause the Defendant—because the claim is essentially Australian.
[1][2014] VSC 516.
Before turning to the substance of the application, it is appropriate to indicate why an application of this kind has been determined on the papers. As is set out in greater detail in the reasons which follow, the Defendant is elderly, resident in England, of limited means and suffering from significant ongoing health issues. Further, the Defendant requested that the application be determined on the papers, or if an oral hearing was required, to be excused from attendance.[2] The Plaintiff did not take issue with this course. In these circumstances, and having regard to the endorsement of the majority of the High Court in Voth v Manildra Flour Mills of a relatively summary approach to applications of this kind,[3] it is proper for this jurisdictional question to be determined without an oral hearing.
[2]Letter from Peter Croxton Quine to the Court (6 March 2018), [1.3].
[3]Voth v Manildra Flour Mills (1990) 171 CLR 538 at 565.
The Rules set out the circumstances in which the Court may decline to exercise jurisdiction over a dispute where the originating process has been served out of Australia:[4]
[4]Supreme Court (General Civil Procedure) Rules 2015 rr 7.04–5, 8.09.
7.04 Court’s discretion whether to assume jurisdiction
(1)On application by a person on whom an originating process has been served out of Australia, the Court may by order set aside the originating process or its service on the person or dismiss or stay the proceeding.
(2)Without limiting paragraph (1), the Court may make an order under this Rule if satisfied—
(a)that service out of Australia of the originating process is not authorised by these Rules; or
(b)that the Court is an inappropriate forum for the trial of the proceeding; or
(c)that the claim has insufficient prospects of success to warrant putting the person served out of Australia to the time, expense and trouble of defending the claim.
As is apparent from a plain reading of r 7.04, the Court may make an Order under r 7.04(1) if satisfied of one of the matters in r 7.04(2)(a)–(c) or if the Court otherwise finds that it ought not to exercise jurisdiction. For the reasons which follow, I accept the submission of the Plaintiff that there is no basis upon which the Court might be satisfied of any of the matters in r 7.04(2)(a)–(c).
Permissibility of service outside of Australia — r 7.04(2)(a)
Turning first to the service requirement under r 7.04(2)(a), as the Plaintiff submits, the Defendant does not appear to contend that the service of the originating process on him outside of Australia was not authorised by the Rules. Indeed, given that the proceeding is to enforce a contract that was made and to be performed in Australia and was governed by Australian law,[5] the service of this originating process outside of Australia is plainly authorised by r 7.02(b) of the Rules:
[5]See Loan Deed, cl 25, as set out in page 56 of the exhibits to the Second Affidavit of Peter Croxton Quine (6 March 2018).
7.02 When allowed without leave
An originating process may be served out of Australia without leave in the following cases—
…
(b)when the claim is for the enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract which—
(i)was made or entered into in Australia; or
(ii)was made by or through an agent trading or residing within Australia; or
(iii)was to be wholly or in part performed in Australia; or
(iv)was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court;
…
Appropriateness of the forum — r 7.04(2)(b)
The essential submission of the Defendant in respect of the appropriateness of Victoria as a forum is that his personal circumstances entail that the determination of this matter in Victoria would be oppressive. The Defendant makes extensive reference to his personal circumstances, which are relevant both to determining whether this Court is an inappropriate forum, and also for the exercise of the residual discretion under r 7.04(1). Before turning to these circumstances, it is helpful to examine the precise meaning of “inappropriate forum”.
While the present form of r 7.04 of the Rules came into force on 1 October 2016, the expression “inappropriate forum” has a well-established meaning. In Regie National des Usines Renault SA v Zhang,[6] the High Court considered the meaning of the expression “inappropriate forum” in the context of the rules of the Supreme Court of New South Wales:[7]
[6](2002) 210 CLR 491.
[7](2002) 210 CLR 491 at 503–4 [24]–[25].
“Inappropriate forum”?
24.The expression “inappropriate forum” in par (b) of Pt 10, r 6A(2) is less emphatic than the expression “clearly inappropriate forum”, the latter being the term adopted in Voth to determine whether an Australian court should decline to exercise its jurisdiction. The formulation in Voth, as Spigelman CJ pointed out in James Hardie Industries Pty Ltd v Grigor,[8] was adopted in preference to the “clearly more appropriate forum” test favoured in the United Kingdom. Thus, it should at once be noted that a court is not an inappropriate forum merely because another is more appropriate.
25.Because a court’s power to stay proceedings is an aspect of its inherent or implied power to prevent its own processes being used to bring about injustice, the same concepts and considerations necessarily inform the test of “inappropriate forum” in par (b) of Pt 10, r 6A(2) as inform the “clearly inappropriate forum” test adopted in Voth. And because the ultimate consideration is the prevention of injustice, they inform it in the same way. Thus, it is appropriate to note what was said by Dawson, Gaudron, McHugh and Gummow JJ in Henry v Henry.[9] Their Honours said:[10]
In Voth v Manildra Flour Mills Pty Ltd,[11] this Court confirmed its rejection, in Oceanic Sun Line Special Shipping Co Inc v Fay,[12] of the forum non conveniens principle as stated by the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd.[13] The Spiliada principle allows that a court may stay proceedings which are pending before it if that court is not the natural forum and there is another available forum which is clearly or distinctly more appropriate.[14] The result is that, in the United Kingdom, a stay will be granted in favour of a clearly more appropriate forum or, which is much the same thing in practice, the natural forum,[15] that being the forum “with which the action [has] the most real and substantial connection”[16] …
In Voth,[17] this Court adopted for Australia the test propounded by Deane J in Oceanic Sun, namely, that a stay should be granted if the local court is a clearly inappropriate forum, which will be the case if continuation of the proceedings in that court would be oppressive, in the sense of “seriously and unfairly burdensome, prejudicial or damaging”, or, vexatious, in the sense of “productive of serious and unjustified trouble and harassment”.[18] It was also held in Voth that, in determining whether the local court is a clearly inappropriate forum, “the discussion by Lord Goff in Spiliada[19] of relevant ‘connecting factors’ and ‘a legitimate personal or juridical advantage provides valuable assistance’.[20] In this last regard, Lord Goff of Chieveley expressed the view that legitimate personal or juridical advantage is a relevant but not decisive consideration, the fundamental question being “where the case may be tried ‘suitably for the interests of all the parties and for the ends of justice’”.[21]
[8](1998) 45 NSWLR 20 at 28.
[9](1996) 185 CLR 571.
[10]Henry (1996) 185 CLR 571 at 586–587.
[11](1990) 171 CLR 538.
[12](1988) 165 CLR 197.
[13][1987] AC 460.
[14]Spiliada [1987] AC 460 at 478, per Lord Goff of Chieveley.
[15]Spiliada [1987] AC 460 at 477. See also Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 557 where it is observed that in the “Spiliada formulation … the ‘natural forum’ and ‘more appropriate forum’ are treated as interchangeable expressions”.
[16]Spiliada [1987] AC 460 at 478, quoting The "Abidin Daver" [1984] AC 398 at 415.
[17](1990) 171 CLR 538 at 564–565.
[18]Oceanic Sun (1988) 165 CLR 197 at 247.
[19][1987] AC 460 at 477–478, 482–484.
[20]Voth (1990) 171 CLR 538 at 564–565.
[21]Spiliada [1987] AC 460 at 482, quoting Sim vRobinow (1892) 19 R 665 at 668, per Lord Kinnear.
The Defendant made extensive reference to the decision of Brereton J in McGregor v Potts,[22] which is said to establish that the primary concern is the effect of the continuation of proceedings in the “local court”. That judgment does not detract from the position set out by the High Court in Regie National des Usines Renault SA v Zhang,[23] indeed, Brereton J stated:[24]
43.… The Voth principles do not require proof of actual vexation or oppression; what they require is proof of a sufficient imbalance of the “connecting factors” that it can be said that the local forum is a “clearly inappropriate”, as distinct from “less appropriate”, one. Once that is established, the law presumes vexation and oppression will be occasioned to the foreign party by requiring it to litigate in a clearly inappropriate forum, without requiring proof of actual vexation or oppression.
[22](2005) 68 NSWLR 109 at 119–22 [42]–[51].
[23](2002) 210 CLR 491 at 503–4 [24]–[25].
[24]McGregor v Potts (2005) 68 NSWLR 109 at 119 [43].
The Defendant is English and lives in England, though between 2005 and 2013, he lived with his wife in the United Kingdom, France, and Australia.[25] He is 84 years old and has significant ongoing health issues, including high blood pressure and problems consequent upon having suffered a heart attack in late 2012.[26] His wife also appears to suffer from serious health issues.
[25]Affidavit of Peter Croxton Quine (5 June 2017), [3].
[26]Affidavit of Peter Croxton Quine (5 June 2017), [3].
In this way, the Defendant submits that having regard to his inability to travel to Australia due to his health and the need to care for his wife,[27] the time difference between England and Australia, his difficulty in following matters of this kind as a result of his age,[28] and the consequent need to instruct lawyers in both Australia and England, it would be prohibitively expensive for him to defend the proceeding in Australia.[29]
[27]Affidavit of Peter Croxton Quine (5 June 2017), [3], [19]; Second Affidavit of Peter Croxton Quine (6 March 2018), [7].
[28]Affidavit of Peter Croxton Quine (5 June 2017), [16].
[29]Affidavit of Peter Croxton Quine (5 June 2017), [16].
While the determination of the claim in Victoria would clearly impose significant hardship on the Defendant, this is does not detract from the fact that save for the nationality and current place of residence of the Defendant, the claim is entirely Australian. The Plaintiff submits:[30]
[30]Submissions Opposing Defendant’s Application under Rule 7.04 (26 April 2018), [11].
The Supreme Court of Victoria is an appropriate forum for the trial of the proceeding:
(a) The plaintiff is seeking to recover a loan that was:
(i) made in Australia;
(ii) to a borrower then resident in Australia;
(iii) governed by Australian law;
(iv)to finance an investment in an Australian managed investment scheme.
(b)The Court has significant experience in and familiarity with the issues arising out of the collapse of the Great Southern group of companies, both through the Great Southern group proceedings and in numerous individual proceedings.
(c) The Court has experience in and familiarity with Australian law, including the law of Western Australia.
(d) The plaintiff and its legal advisers are located in Victoria.
(e) Modern electronic communications mean that the defendant can easily and inexpensively attend Court and communicate with his legal advisers in Australia without the need to travel to Australia.
(f)The likely defences raised at paragraph 2.8 of the 6 March 2018 letter do not turn on evidence to be given by or on behalf of the defendant. It seems unlikely he would need to travel to Australia for the trial. The plaintiff would consent to the defendant giving evidence by video-link if asked to do so.
[citations omitted]
While I accept that the matters referred to in (a)–(d) are sufficient to establish that the Supreme Court of Victoria is not an “inappropriate forum”, the suggestion implicit in (e) that an 84 year old person with significant health issues and caring responsibilities may “easily and inexpensively” instruct legal practitioners to defend litigation from a significantly different time zone must be rejected.[31] Indeed, if this Court were to exercise jurisdiction in respect of this dispute, full consideration would be given to after-hours sittings or other arrangements so as to ensure that procedural fairness would be afforded to the Defendant. Further, though it is true that the references in (a) to Australia are properly to be understood as references to Western Australia, this does not detract from the position that the Supreme Court of Victoria is relatively well placed to interpret and apply Western Australian law directly.[32]
[31]The standard time for a morning hearing to commence in the Supreme Court of Victoria is 10:00am, being 1:00am London time.
[32]See Regie Nationale Renault v Zhang (2002) 210 CLR 491 at 563 [192].
In respect of (f), the Defendant is correct to note that the following statement of Brereton J is apposite:[33]
51.…if the local forum would be a “clearly inappropriate” one for a trial of all issues, it does not cease to be so just because there is a prospect that some of those issues may fall away, or even that the whole case might be settled. The “clearly inappropriate” forum test contemplates a trial on all issues extant at the time that the forum question is determined, and does not speculate that the case may narrow as it progresses. In an application of this type, the Court proceeds on the assumption that the case will run to trial on all issues, and evaluates the relative convenience of each forum on that assumption. It is, therefore, erroneous to discount as “conjecture” the difficulties which, on that assumption, may be occasioned to the foreign party, just because the extent of the vexation might be reduced if issues fall away or the case settles.
The Defendant is not bound to raise only those defences which it has foreshadowed in correspondence with the Plaintiff, and on this basis all issues pleaded by the Plaintiff remain extant. Accordingly, little if anything can turn on the scope of the issues which have been agitated to date, and against this background, references to the location of witnesses who may be called are speculative at best.[34]
[33]McGregor v Potts (2005) 68 NSWLR 109 at 121–2 [51]; Defendant’s Reply Submissions (17 May 2018), [7].
[34]Cf. Defendant’s Reply Submissions (17 May 2018), [11(b)]; Submissions Opposing Defendant’s Application under Rule 7.04 (26 April 2018), [11(d)].
Critically, while the Defendant identifies significant hardship which would arise from the determination of this matter in Victoria, it is plain that this hardship is not “seriously and unfairly burdensome, prejudicial or damaging”.[35] Finally, it bears noting that litigation of this kind is understandably stressful and unpleasant for the Defendant, who stands to lose much and gain little. Yet such stress would also be present—though perhaps to a different degree—were this claim to proceed before an English court, and thus the stress of the litigation can only have a limited effect on the appropriateness of the Supreme Court of Victoria as a forum. For the preceding reasons, it is clear in my view that this Court is not an inappropriate forum.
[35]Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 247 (emphasis added).
What is more, this Court cannot accept the submission of the Defendant that England is a convenient forum for the determination of the claim. There would be substantial expense and delay involved in the Plaintiff recommencing the proceeding in England, adducing expert evidence of relevant Australian law and familiarising the English court with the circumstances surrounding the collapse of the Great Southern group of companies. If the Defendant is impecunious,[36] the Plaintiff may well be unable to recover these expenses in the event that its claim succeeds.
[36]Second Affidavit of Peter Croxton Quine (6 March 2018), [14].
Prospects of Success — r 7.04(2)(c)
The Defendant submits that the claim brought by the Plaintiff has insufficient prospects of success to justify requiring the Defendant to defend the claim. In Agar v Hyde,[37] a majority of the High Court concluded that in deciding whether a claim in a proceeding served outside Australia should not proceed because of its poor prospects of success, the same test should be applied as in determining an application for summary judgment by a defendant served locally.[38] For the reasons which follow I am of the opinion that were the Defendant’s submissions to be treated as something in the nature of a summary judgment application, the application would fail as I am of the opinion that the Plaintiff’s claim must be regarded as one which has a “real chance of success” in the relevant sense.
[37](2000) 201 CLR 552.
[38](2000) 201 CLR 552 at 576 [60].
Section 63(1) of the Civil Procedure Act 2010 (“the CPA”) provides that the Court may give summary judgment in any civil proceeding if satisfied that a claim, or part of the claim, has no real prospect of success. Section 63(1) was intended to reform the law by liberalising the test for summary judgment.[39] The Court of Appeal has held:[40]
[39]Civil Procedure Act 2010 s 1(2)(e); Explanatory Memorandum to the Civil Procedure Bill 2010, 24; Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27 at 28–9 [3], 38 [25], 38 [26], 42 [41].
[40]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27 at 39 [29], 40 [35].
(a) the test under s 63 should be construed as whether the respondent to the application for summary judgment has a “real” as opposed to a “fanciful” chance of success;
(b) the “real chance of success” test is to some degree a more liberal test than the “hopeless” or “bound to fail” test;[41]
(c) the “real chance of success” test permits the possibility that there may be cases in which it appears that, although the respondent’s case is not “hopeless” or “bound to fail”, it does not have a real prospect of succeeding; and
(d) the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried.
[41]That being the traditional test as set out in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
In his letter to the Court of 6 March 2018, the Defendant summarises his defences in the following terms, noting that they are set out in greater detail in correspondence with the solicitors for the Plaintiff that is exhibited to his affidavit of 6 March 2018:[42]
[42]Letter from Peter Quine to the Court (6 March 2018), [2.8].
(a)The claim is time barred. The claim is time barred because it is a claim in respect of a debt repayable on demand and more than six years have elapsed since demand was made (see page 60 – 61 of PQ2). In its response to Foot Anstey’s letter (pages 62 – 64) the Bank asserted that limitation was not an issue because the Limitation Act being referred to in Foot Anstey’s letter was the wrong act. I do not accept this. While it is true that the Netglory case is relevantly directed to the earlier legislation, the analysis does not differ. In particular, at [250], Edelman J referred to why the Limitation Act 2005 (WA) would not apply. The analysis at [250] directed attention to s 59 of the 2005 Act which provides that “A cause of action for the repayment of a debt repayable on demand accrues when there is a failure to comply with a demand for repayment”. The analysis in [255] to [259], while ostensibly directed to the operation of the 1935 Act, presumably applies equally to the question of whether an action demanding payment of a liquidated sum on a deed after the commencement of the 2005 Act is an action of covenant or a common law action of debt. It appears that the Bank wishes to read s 18 of the 2005 Act which refers to “a cause of action founded on a deed” as somehow converting a common law action of debt into a different cause of action. I submit that it is unlikely that it was intended by the legislature to interfere with the operation of the common law through the passage of the legislation. This view would seem to accord with [250].
(b)The Attorneys overstepped their powers. Based on the contemporaneous documentation (see pages 16 – 42 and pages 49 – 52 of PQ2), it appears that the Attorneys who executed the loan deed ostensibly on my behalf overstepped their powers by entering into a loan deed that was materially worse for me than that envisaged by the application completed by my financial advisor in terms of the applicable interest rates and duration (amongst other things) and they did not have authority to do this. In these circumstances, the deed is not binding. To the extent the Bank seeks to claim on a restitutionary basis it would be time barred.
(c)The Bank is the wrong claimant. Based on the documentation provided by the Bank I do not accept that there has been a valid assignment or sale of the purported underlying debt to the Bank and submit that it is therefore the wrong claimant.
(d)Other defences. In addition to the above I have the following other defences; there was no loan advanced (I would put the Bank to strict proof on this); the condition precedents under the Loan Deed were not fulfilled; and the Loan Deed was improperly executed.
These defences are put before the Court with a view to establishing that the Plaintiff has insufficient prospects of success to justify requiring the Defendant to defend the claim.
The Plaintiff submits that these defences merely put the Plaintiff to proof of its claim, and that they do not show the Plaintiff’s claim as pleaded has no real prospect of success.[43] It says that the defendant admits that he invested $120,000 in the 2007 Great Southern Organic Olive Scheme, that he applied for a loan from ABL Nominees Pty Ltd for that purpose, and that he made repayments in respect of that loan.[44] Apart from in respect of the relevance of the enforceability of any judgment of this Court overseas, the Plaintiff does not otherwise address whether its claim has real prospects of success, despite acknowledging that the reliance by the Defendant on this ground amounts to a de facto application for summary judgment.[45] However, the Defendant has exhibited to his affidavit a letter from the Plaintiff setting out the reasons for which the Plaintiff rejects the defences set out above,[46] and it is upon this that the Court must rely in ascertaining whether the Plaintiff has real prospects of success.
[43]Submissions opposing defendant’s application under rule 7.04 (26 April 2018), [15], [17].
[44]Submissions opposing defendant’s application under rule 7.04 (26 April 2018), [14], referring to the Affidavit of Peter Croxton Quine (5 June 2017), [8], [10].
[45]Submissions opposing defendant’s application under rule 7.04 (26 April 2018), [9], [13]–[17].
[46]Exhibits to the Second Affidavit of Peter Croxton Quine (6 March 2018) at 62–4.
Statute of Limitations
The relevant loan deed was entered into on 15 June 2007 and ultimately assigned to the Plaintiff. The Plaintiff sent Mr Quine a formal demand on 20 October 2009 seeking to accelerate the loan and demanding repayment in full. However, it was not until 7 December 2016 that the Plaintiff issued proceedings against the Defendant. The critical question is whether the claim for the amount owing under the loan deed is “[a]n action on a cause of action founded on a deed” within the meaning of s 18 of the Limitation Act 2005 (WA) (“the 2005 Act”), and therefore subject to a 12 year limitation period, rather than the six year limitation period which would otherwise apply.
The Defendant says that as the claim is a common law action in debt, it is not a cause of action founded on a deed and is therefore subject to the six year limitation period in s 13 of the 2005 Act. He makes reference to Netglory Pty Ltd v Caratti which concerned sub-s 38(1)(e)(i) of the Limitation Act 1935 (WA), which provided:
38 Limitation of time for commencing other actions and suits
(1) Subject to the preceding sections of this Act and as hereinafter provided, actions, suits, or other proceedings as herein set out shall and may be commenced within the time herein expressed after the cause of such actions, suits, or other proceedings respectively:—
…
(e)(i) … actions of covenant or of debt upon any bond or other specialty; and
…
20 years.
Edelman J found as follows with respect to that provision:[47]
[47]Netglory Pty Ltd v Caratti [2013] WASC 364, [252]–[259], [271]–[273].
7.2 The limitation period for a specialty does not apply
252.If the Loan Agreement and the Guarantee were deeds binding the Hocking Land Company and Mr Caratti then there was dispute between the parties concerning whether the limitation period of 20 years would apply to the action on the deeds. That limitation period applies if an action is an ‘action of covenant or of debt upon any bond or other specialty’.[48]
253. There are three requirements in this provision: (i) the action must be an action of covenant or of debt; (ii) the relevant instrument must be a bond or specialty; and (iii) the action must be upon a bond or specialty.
254.For the reasons explained below, this limitation period does not apply because the Loan Agreement and Guarantee are not deeds of the defendants. Further, even if they were deeds, the action would not be upon them as specialties.
7.2.1 Netglory’s action is in debt
255.As to (i), in closing written submissions Netglory submitted that its action, demanding payment of a liquidated sum, was an action of covenant. This is incorrect.
256. E M Heenan J has recently explained that an action of covenant ‘was the form of action sought to remedy the breach of an agreement, other than for payment of money, contained in a deed. The claim was for damages for the non-fulfilment of the covenant’.[49] With great respect, this is entirely correct. As Professor Ibbetson observed, ‘[i]n covenant the plaintiff had to plead that the defendant was in breach’.[50]
257. Netglory’s submission that specific performance could be sought in an action of covenant has not been the law since the Year Books. By 1364, with the exception of a lessee who brought covenant to recover his unexpired term,[51] there were already cases which insisted that, in the words of Professor Simpson, ‘the action can only lead to the recovery of damages, and not specific performance’.[52]
258. The action brought by Netglory was for payment of a liquidated sum. No breach was alleged. No damages were particularised or claimed.
259. Netglory’s claim can only be a common law action of debt.
[48]Limitation Act 1935 (WA) s 38(1)(e)(i).
[49]Atwell & Atwell v Roberts (No 3) [2009] WASC 96 [152].
[50]Ibbetson D, A Historical Introduction to the Law of Obligations (1999) 29.
[51]Simpson AWB, A History of the Common Law of Contract (1975) 13 - 14.
[52]Simpson AWB, A History of the Common Law of Contract (1975) 15.
…
7.2.3 The action is not ‘upon’ the Loan Agreement and Guarantee even if they were specialties.
271.In ReCompania de Electricidad de la Provincia de Buenos Aires Ltd,[53] Slade J said the following in relation to the identical words of earlier limitation legislation in England, particularly the word ‘upon’:
[53]Re Compania de Electricidad de la Provincia de Buenos Aires Ltd [1980] Ch 146, 186.
The reference in that section to ‘actions of covenant or debt upon any ... specialty’ ... can in my judgment only refer to an action to enforce an obligation created or secured by a specialty; on the natural and proper construction of the two sections, such references cannot possibly extend to actions to enforce obligations which are merely acknowledged or evidenced by an instrument under seal.
272.Even if Netglory were correct that the Loan Agreement and Guarantee were deeds, the limitation period for a deed would still not apply. The reason for this is that Netglory’s case was that the Loan Agreement and Guarantee acknowledged an earlier agreement by which the Hocking Land Company was said to have become bound to pay $800,000 to Netglory. In other words, Netglory’s case was that the Hocking Land Company was already obliged to ‘repay’ $800,000 with interest to Netglory and the Loan Agreement evidenced this.
273.Even if Netglory’s case were accepted, and even if the Loan Agreement were properly in the form of a deed which, as Netglory claimed, evidenced an antecedent obligation to repay, then the limitation period would be six years.[54]
On this basis, the Defendant submits that the action brought by the defendant is a common law action for debt, and not founded on a deed because the cause of action is entirely distinct from the relevant deed.
[54]Iven v Elwes [1854] EngR 1018; (1854) 3 Drew 25, 38; [1854] EngR 1018; 61 ER 810, 815 (Sir Richard Kindersley VC); Re Art Reproduction Co Ltd [1951] 2 All ER 984, 985 - 986 (Wynn-Parry J); Handford P, Limitation of Actions: The Laws of Australia (3rd ed 2009) 91 [5.10.710].
The position of the Plaintiff is that the above reasoning of Edelman J has no application to the construction of s 18 of the 2005 Act as that provision is in different terms.[55] Section 18 of the 2005 Act provides:
[55]See Letter from K&L Gates to Foot Anstey (5 February 2018), [3] as exhibited to the Second Affidavit of Peter Croxton Quine (6 March 2018) at pages 62–4.
18. Deeds — 12 years
An action on a cause of action founded on a deed cannot be commenced if 12 years have elapsed since the cause of action accrued.
Implicitly, the position of the Plaintiff is that their cause of action is founded on a deed—the loan deed—as that is the critical document, and therefore that the 12 year limit is applicable. Moreover, it should be observed that the Loan Deed does purport to be a deed, both in terms of its language and execution provisions—though, of course, this may not ultimately be decisive. In any event these are matters for trial.
The proper construction of s 18 of the 2005 Act is far from clear. However, on the basis of the foregoing I am satisfied that the Plaintiff has sufficient prospects of success in relation to this issue to justify the Defendant being put to the trouble of defending the proceeding. Although these reasons may seem superficial in this respect, regard must be had to the significant consequences of the construction of s 18 of the 2005 Act to parties to similar litigation, and to the limited material on this issue presently before the Court.
Ultra vires conduct of attorneys, the Bank as the proper claimant and other defences
The issues raised in this respect are clearly matters for trial and submissions on factual and legal matters. Having regard to the material now before the Court it could not be said that the Plaintiff does not have a real chance of success in relation to any of these issues in the relevant sense.
Residual discretion — r 7.04(1)
The Defendant submits that as a judgment entered against him in Australia would be unenforceable in England, and all his assets are in England,[56] the Court ought to decline to exercise jurisdiction over the Plaintiff’s claim. In this respect, reference is made by the Defendant to the overarching purpose of the Civil Procedure Act 2010, being the facilitation of the “the just, efficient, timely and cost‑effective resolution of the real issues in dispute”.[57] Under sub-s 8(1) of the CPA, the Court must seek to give effect to the overarching purpose in the exercise of any of its powers, and it should be noted that by virtue of sub-s 8(2), sub-s 8(1) of the CPA has effect despite any other Act or law to the contrary.[58] The Plaintiff submits that “the proposed difficulty of enforcing an Australian judgment against the Defendant in England is not relevant to the Plaintiff’s prospects of success in the proceeding”, and while this is true, it does not address the residual discretion of this Court, being a residual discretion that must be guided by the overarching purpose.
[56]Second Affidavit of Peter Croxton Quine (6 March 2018), [13], the Defendant has deposed that “all of [his] assets are located in England” and the Plaintiff has not suggested this is not true.
[57]Civil Procedure Act 2010 s 7.
[58]Other than the Charter of Human Rights and Responsibilities Act 2006.
If the “real issue in dispute” is whether the Defendant must pay the amount allegedly loaned plus interest to the Plaintiff and an Australian judgment would be unenforceable in England, which is the only jurisdiction in which the Defendant has assets,[59] a determination by this Court that it will seize jurisdiction would not facilitate the resolution of the real issues in dispute at all. The contrary position would be that the “real issue in dispute” is whether the Plaintiff is entitled to the sum claimed, with the effect that the Court does not have to consider issues of enforceability. Yet this would not accord with the purpose of the Civil Procedure Act 2010, which has as its focus the resolution of controversies between parties rather than legal procedure. Accordingly, it must be that where a Defendant applies for this Court to decline to exercise jurisdiction in respect of a dispute and prima facie establishes that:
[59]Second Affidavit of Peter Croxton Quine (6 March 2018), [13].
(a) the Defendant does not have assets in Australia; and
(b) a judgment of this Court would not be enforceable in any jurisdiction in which the Defendant has assets;
the Plaintiff must satisfy the Court that, having regard to the overarching purpose of the CPA, the Court ought to exercise jurisdiction in respect of the dispute.
I reach this conclusion with some concern that while it is required by the CPA as it may reduce unnecessary costs in the present case, it adds another layer of complexity to the question of whether the Court ought to exercise jurisdiction in respect of a claim. Ordinarily, of course, parties do not commence proceedings seeking monetary relief where success in the proceeding will not result in recovery of at least part of the sum claimed. Indeed, it is not unusual for a defendant not to appear, even to contest jurisdiction, in respect of a claim where the defendant is of the view that the ultimate relief sought by the plaintiff in the proceeding will not be obtainable because the resulting judgment will be unenforceable. However, in the present case, it seems clear that, on the material presently before the Court, the judgment sought by the Plaintiff would not be enforceable in England.
Enforceability in England
The Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) (“the 1933 Act”) makes provision for the enforcement in England of judgments given in certain foreign countries that accord reciprocal treatment to judgments given in the United Kingdom. Pursuant to the Reciprocal Enforcement of Foreign Judgments (Australia) Order 1994 (UK), Part I of the 1933 Act extends to judgments of the Supreme Court of Victoria.[60] The statutory scheme established by the 1933 Act is exclusive, in the sense that a judgment of this Court can only be registered and enforced under that Act and not under another statute or the common law. Specifically, as a result of the application of the 1933 Act to Australia by the Reciprocal Enforcement of Foreign Judgments (Australia) Order 1994 (UK), the Administration of Justice Act 1920 (UK) ceases to apply to the enforcement of Australian judgments in England:[61]
[60]See also Dicey, Morris & Collins, The Conflict of Laws (Sweet & Maxwell, 15th ed, 2012) [14–184]; Jackson, Civil Procedure (Sweet & Maxwell, 2017) [74.6.6]; Adrian Briggs, Civil Jurisdiction and Judgments (Routledge, 6th ed, 2015) [7.02].
[61]Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) s 7(1)–(2); see also Adrian Briggs, Civil Jurisdiction and Judgments (Routledge, 6th ed, 2015) [7.86].
7Power to apply Part I of Act to British dominions, protectorates and mandated territories.
(1)His Majesty may by Order in Council direct that this Part of this Act shall apply to His Majesty’s dominions outside the United Kingdom and to judgments obtained in the courts of the said dominions as it applies to foreign countries and judgments obtained in the courts of foreign countries, and, in the event of His Majesty so directing, this Act shall have effect accordingly and Part II of the Administration of Justice Act 1920, shall cease to have effect except in relation to those parts of the said dominions to which it extends at the date of the Order.
(2)If at any time after His Majesty has directed as aforesaid an Order in Council is made under section one of this Act extending Part I of this Act to any part of His Majesty’s dominions to which the said Part II extends as aforesaid, the said Part II shall cease to have effect in relation to that part of His Majesty’s dominions.
…
Further, the common law principles applicable to the enforcement of foreign judgments in England do not apply either:[62]
[62]Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) s 6; see also Dicey, Morris & Collins, The Conflict of Laws (Sweet & Maxwell, 15th ed, 2012) [14–051].
6Foreign judgments which can be registered not to be enforceable otherwise.
No proceedings for the recovery of a sum payable under a foreign judgment, being a judgment to which this Part of this Act applies, other than proceedings by way of registration of the judgment, shall be entertained by any court in the United Kingdom.
Accordingly, s 4 of the 1933 Act sets out the circumstances in which the registration of a judgment of this Court in England must be set aside:[63]
[63]See Rubin & Anor v Eurofinance SA & Ors [2013] 1 AC 236 at 250 [6], 251 [10], 282–4 [157]–[167]; cf. Adrian Briggs, Civil Jurisdiction and Judgments (Routledge, 6th ed, 2015) [7.02].
4 Cases in which registered judgments must, or may, be set aside.
(1)On an application in that behalf duly made by any party against whom a registered judgment may be enforced, the registration of the judgment—
(a)shall be set aside if the registering court is satisfied—
…
(ii)that the courts of the country of the original court had no jurisdiction in the circumstances of the case;
…
(2)For the purposes of this section the courts of the country of the original court shall, subject to the provisions of subsection (3) of this section, be deemed to have had jurisdiction—
(a)in the case of a judgment given in an action in personam—
(i)if the judgment debtor, being a defendant in the original court, submitted to the jurisdiction of that court by voluntarily appearing in the proceedings; or
(ii)if the judgment debtor was plaintiff in, or counter-claimed in, the proceedings in the original court; or
(iii)if the judgment debtor, being a defendant in the original court, had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that court or of the courts of the country of that court; or
(iv)if the judgment debtor, being a defendant in the original court, was at the time when the proceedings were instituted resident in, or being a body corporate had its principal place of business in, the country of that court; or
(v)if the judgment debtor, being a defendant in the original court, had an office or place of business in the country of that court and the proceedings in that court were in respect of a transaction effected through or at that office or place;
…
…
The grounds set out in sub-ss 4(2)(a)(i)–(v) are exclusive, in that the registration of a judgment under the 1933 Act cannot be maintained unless one of these grounds is established. As Widgery J found in Societe Co-operative Sidmetal v Titan International Ltd:[64]
… [O]n a proper view of section 4, the provisions of subsection (2) do contain all the judgments which are properly registrable under the Act and that no judgment which cannot be brought within the terms of subsection (2) is a judgment which ought to be registered because it is a judgment of a court which had no jurisdiction in the circumstances of the case for the purposes of this Act.
On the basis of the material with which the Court has been provided, it appears clear that an English Court would find none of the grounds in sub-sections 4(2)(a)(i)–(v) could be established.
[64][1966] 1 QB 828 at 849; see also S A Consortium General Textiles v Sun & Sand Agencies Ltd [1978] 1 QB 279 at 298–9; Jackson, Civil Procedure (Sweet & Maxwell, 2017) [74.7.1]; Peter Nygh, ‘Towards a Global Judgments Convention: the Proposed New Hague Convention on the Recognition and Enforcement of Judgments in Civil and Commercial Matters’ (1997) 7 Australian International Law Journal 96, 99–100.
Submission to jurisdiction — s 4(2)(a)(i) of the 1933 Act
Though the Plaintiff did not provide detailed submissions on the jurisdiction of this Court from the perspective of the English courts,[65] reference was made to the Supreme Court (General Civil Procedure) Rules 2015, under which a conditional appearance has effect for all purposes as an unconditional appearance unless, on application by the Defendant, the Court otherwise orders.[66] Further, it was noted that an application by the Defendant must be made by summons within 14 days of the filing of the conditional appearance. Nonetheless, I am satisfied that even if this Court declined to grant the application of the Defendant and the conditional appearance took effect as an unconditional appearance, an English court would find that this does not amount to a submission to the jurisdiction of this Court within the meaning of s 4(2)(a)(i) of the 1933 Act for either of the following two reasons.
[65]As to the primacy of the perspective of English courts, see Adrian Briggs, Civil Jurisdiction and Judgments (Routledge, 6th ed 2015) [7.47].
[66]Submissions Opposing Defendant’s Application under Rule 7.04 (26 April 2018), fn 10.
First, s 33(1) of the Civil, Jurisdiction and Judgments Act 1982 (UK) specifically provides that an appearance, whether conditional or otherwise, by a Defendant for the sole purpose of contesting jurisdiction, will not amount to a submission to jurisdiction:[67]
[67]See also Dicey, Morris & Collins, The Conflict of Laws (Sweet & Maxwell, 15th ed, 2012) [14-095(11–13)]; Jackson, Civil Procedure (Sweet & Maxwell, 2017) [74.6.15]; Adrian Briggs, Civil Jurisdiction and Judgments (Routledge, 6th ed, 2015) [7.55]; Nicholas Edwards and Robert G Lee, ‘Recognition and Enforcement in English Law of Money Judgments from Outside the UK’ (1994) 12(10) International Banking and Financial Law 1, 4.
For the purposes of determining whether a judgment given by a court of an overseas country should be recognised or enforced in England and Wales or Northern Ireland, the person against whom the judgment was given shall not be regarded as having submitted to the jurisdiction of the court by reason only of the fact that he appeared (conditionally or otherwise) in the proceedings for all or any one or more of the following purposes, namely—
(a) to contest the jurisdiction of the Court;
…
On this basis, it is quite clear that the Defendant has not submitted to the jurisdiction of this Court within the meaning of s 4(2)(a)(i) of the 1933 Act.
Secondly, reference should be made to the nature of the conditional appearance presently on the Court file. It was not filed by the Defendant, but instead was placed on the file on the Court’s own motion to prevent judgment being granted in default of appearance.[68] Annexed to and indeed forming part of this unusual conditional appearance is correspondence to the Court from the solicitors for the Defendant, which formed the basis for the unusual genesis of this conditional appearance and which, omitting formalities, is as follows:[69]
[68]See Conditional Appearance (7 June 2017); see also Google Inc v Trkulja (aka Trkulja) (2016) 342 ALR 504 at 506 [2].
[69]Letter from the Defendant to the Court (6 June 2017).
Bendigo and Adelaide Bank Limited v Peter Croxton Quine — Writ CI 2016 5010
We act for the Defendant in the above named proceedings, Mr Peter Quine. The above mentioned Writ has been served upon him in England and he wishes to make an application pursuant to rule 7.04 of the Supreme Court (General Civil Procedure) Rule 2015 (Vic) to invite the Court to decline jurisdiction in respect of it. The grounds for the application are that the hearing and determination of the Writ in Australia will be oppressive to Mr Quine.
We enclose with this letter a draft summons together with an affidavit in support, neither of which have yet been filed at the Supreme Court of Victoria. We understand that for an application under rule 7.04 a summons is ordinarily required to be issued under the Commercial Court Practice Note, and that a return date must be obtained before any summons can be issued. We write to respectfully ask whether, in the circumstances set out below, the application can be made without the issuance of a summons and be determined on the papers.
Mr Quine is English and lives in the UK. He is 83 years old. Both he and his wife have significant health issues as explained in the enclosed affidavit. Mr Quine has not submitted to the jurisdiction of the Supreme Court of Victoria. As Mr Quine lives in England it will be difficult for him to file the requisite papers himself. We are only a national English firm of solicitors and do not have offices in Australia. Mr Quine wishes to limit the costs of this matter if at all possible. In particular, he would like to avoid having to instruct an Australian firm of solicitors to file a formal application to contest jurisdiction on his behalf. He therefore respectfully enquires whether the application can be made without a formal summons and determined on the papers. If the Court would be assisted by written submissions, we would respectfully request an opportunity to file a written submission on Mr Quine’s behalf.
The Claimant has agreed an extension to the 9 June 2017 to the date by which our client must file a notice of appearance. We understand that the deadline for filing an application to contest jurisdiction would therefore be 9 June 2017 and we would therefore be most grateful if our letter could be placed before the Honourable Justice Croft for his consideration at the first convenient moment.
On 7 June 2017, the Court indicated to the parties inter alia that it would treat the material provided by the Defendant as a conditional appearance,[70] and the Defendant never gave a substantive response to this indication by the Court. Further, the Defendant has not subsequently made a positive indication that he appears, even conditionally,[71] nor has he appeared at any hearings, filed any documents, or communicated with the Court at all other than by email via his solicitors. On this basis, it seems open to an English court to conclude that, even if the filing of a conditional appearance which subsequently becomes an unconditional appearance as a result of the operation of the Rules amounts to a submission to jurisdiction, the Defendant has not submitted to the jurisdiction of this Court.
[70]See also Order made by the Honourable Justice Croft (11 July 2017).
[71]See Affidavit of Peter Croxton Quine (5 June 2017), [1], [17]; Second Affidavit of Peter Croxton Quine (6 March 2018), [1], [3], [12].
Other bases for jurisdiction – s 4(2)(a)(ii)–(v) of the 1933 Act
The Defendant has not counterclaimed in these proceedings,[72] nor was the Defendant resident in Australia at the time the proceedings were instituted.[73] While the Defendant did agree that the loan deed was to be “govern[ed] by, and interpreted in accordance with the laws of Western Australia and where applicable the laws of the Commonwealth of Australia”,[74] there does not appear to be any choice of court agreement.[75] Finally, there is no suggestion that the Defendant has an office or place of business in Australia through which the transaction was effected.[76]
[72]Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) s 4(2)(a)(ii).
[73]Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) s 4(2)(a)(iv); see Affidavit of Peter Croxton Quine (5 June 2017), [3].
[74]Loan Deed, cl 25.
[75]Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) s 4(2)(a)(iii); see also Vizcaya Partners Limited v Picard (Gibraltar) [2016] UKPC 5, [58], [61], [70]–[71], and note that neither Western Australian nor English law would imply a choice of court agreement; Adrian Briggs, Civil Jurisdiction and Judgments (Routledge, 6th ed, 2015) [7.57], [7.59].
[76]Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) s 4(2)(a)(v).
Accordingly, the Court is prima facie satisfied that the Defendant does not have assets in any jurisdiction in which a judgment of this Court would be enforceable, and therefore that the overarching purpose of the Civil Procedure Act 2010 compels this Court to exercise its residual discretion under r 7.04 of the Rules to stay the proceeding. This finding is without prejudice to the Plaintiff’s right to seek to establish that there is utility in this proceeding notwithstanding the foregoing.
Costs
Having regard to the preceding reasons and that the Defendant has not submitted to the jurisdiction of this Court, it is inappropriate to contemplate any Order as to costs.
Conclusion
For the preceding reasons, the proceeding is stayed, subject to the Plaintiff having liberty to apply for the stay to be lifted on the basis that it can establish that this proceeding has utility.
Orders as follows:
(a) The proceeding be stayed.
(b) The Plaintiff has liberty to apply, subject to these reasons, for the stay to be lifted.
(c) No order as to costs.
Key Legal Topics
Areas of Law
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Civil Litigation & Procedure
Legal Concepts
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Jurisdiction
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Enforceability of Judgments
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Res Judicata
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