Bogart Lingerie Limited v Steadmark Pty Ltd
[2013] VSC 212
•8 May 2013
| Send for Reporting | ||
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2011 6162
| BOGART LINGERIE LIMITED | Plaintiff |
| - and - | |
| STEADMARK PTY LTD (ACN 007 320 461) (trading as The Lingerie Company of Australia) | Defendant |
| AND BETWEEN | |
| STEADMARK PTY LTD (ACN 007 320 461) (trading as The Lingerie Company of Australia) | Plaintiff by counterclaim |
| - and - | |
| BOGART LINGERIE LIMITED | Defendant by counterclaim |
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JUDGE: | DALY AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 and 26 March 2013 |
DATE OF JUDGMENT: | 8 May 2013 |
CASE MAY BE CITED AS: | Bogart Lingerie Limited v Steadmark Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2013] VSC 212 |
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JUDGMENT
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PRACTICE AND PROCEDURE – Application to stay proceedings – Exclusive jurisdiction clause – When incorporated into sales contracts – Election, waiver and estoppel – Forum non conveniens – Whether Victoria a clearly inappropriate forum - Whether defendant entitled to a temporary or permanent stay pending the hearing and determination of a related proceeding overseas
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr P. Vout | Hunt & Hunt Lawyers |
| For the Defendant | Mr C. Truong | Alan Sheppet & Associates |
HER HONOUR:
The plaintiff, Bogart Lingerie Ltd (“Bogart”) is a Hong Kong based manufacturer of women’s lingerie. In a writ and statement of claim filed 16 November 2011, it seeks to recover approximately $400,000 from the defendant, Steadmark Pty Ltd (“LCA”) said to be owing to it by way of goods shipped in August 2011 by Bogart in Hong Kong to LCA in Melbourne pursuant to three contracts (“sales contracts”). In its amended defence and counterclaim filed on 23 March 2012, LCA denies any obligation to make payment for the goods under the sales contracts by reason of defects in the quality of the goods. Further, LCA claims that it has suffered loss and damage by reason of the defects in the goods, namely, expenses it incurred in shipping and processing the goods, the loss of profits it would have made on the sale of the goods, and damages for “loss of reputation”.
The sales contracts were negotiated between Bogart and LCA’s parent, the French based Simone Perele Company (“Simone Perele”). The goods are marketed and sold under the “Simone Perele” brand name through LCA owned stores and David Jones department stores. In 2010, Simone Perele contracted with Bogart to manufacture products from the “Aura” line of lingerie to specifications prepared by Simone Perele, and all negotiations took place between Simone Perele staff in France and Bogart staff in Hong Kong. The bulk of the Aura line goods (“goods”) were to be shipped by Bogart to Simone Perele’s headquarters in France, presumably for distribution to its stockists in France and elsewhere, and Bogart was to invoice Simone Perele directly. The contractual relationship between Bogart and Simone Perele was governed by a document entitled “Specifications for Finished Products Simone Perele Suppliers”(“Specifications”).
However, the contractual position and shipping arrangements for the goods destined for the Australian market was different. At Simone Perele’s request, Bogart was to ship these goods directly to Australia, and to invoice LCA, not Simone Perele. The terms of payment were also slightly different. However, there was limited direct communication between Bogart personnel and LCA personnel in Australia.
According to the Simone Perele and LCA personnel who swore affidavits for the purposes of this application, and the documents tendered during the course of the hearing of this application, the manufacturing of the products in the Aura line was beset with problems regarding quality and delay. Simone Perele engaged a Hong Kong based consultant to identify and rectify quality control issues. Ultimately, the relationship between Simone Perele and Bogart broke down, and Simone Perele discontinued the Aura line and terminated its contract with Bogart in October 2011. Consistently with the conduct of its parent, LCA refused to pay Bogart’s invoices citing quality problems as the basis of its refusal to pay.[1]
[1]See exhibits “MR-31” and “MR-32” to the affidavit of Michael Rosenfield sworn 1 November 2012.
Bogart’s claim in this court proceeded unremarkably during the course of 2012. Consent directions were made “on the papers”. Both parties made discovery, and a demand by LCA that Bogart provide security for costs was resolved by correspondence between solicitors rather than by an application to this Court. However, in October 2012, Simone Perele issued its own proceeding against Bogart in France (“French proceeding”),[2] claiming among other things, compensation for loss of profits upon the goods shipped by Bogart to Simone Perele in France, the cost of processing faulty goods returned by customers, marketing expenses, damage to the Simone Perele’s image and reputation, and other contractual and statutory penalties. While the claim document makes reference to the dispute between LCA and Bogart regarding the goods shipped to Australia, and to this proceeding, Simone Perele makes no claim against Bogart in respect of those goods, either on its own behalf, or otherwise.
[2]See exhibit “MR-27”.
Shortly after the issue of the French proceeding, LCA’s solicitors wrote to Bogart’s solicitors indicating that LCA’s position was that this proceeding should be stayed, and that all outstanding issues between Simone Perele, Bogart, and LCA, including the claims made by both Bogart and LCA in this proceeding, be litigated in the French proceeding. Bogart disagreed and, since that time, nothing has been done in this proceeding save for the making and hearing of this application.
LCA contends that the proceeding should be permanently stayed on the following grounds:
(a)it relies upon an exclusive jurisdiction clause in the Specifications, which it alleges were incorporated into the sales contracts, submitting that the Court should give effect to the exclusive jurisdiction clause unless Bogart can show good cause to the contrary;
(b)it relies upon the doctrine of “forum non conveniens”, and submits that Victoria is a clearly inappropriate forum, in that:
(i) most of LCA’s witnesses will be employees of Simone Perele in France, and who speak limited English; and
(ii)there is a substantial, if not complete overlap between the issues in this proceeding and the French proceeding, given that the goods in the Aura line were all manufactured to the same specifications and on the same production line, and the quality issues were the same, regardless of whether the goods had been dispatched to Simone Perele in France, or to LCA in Australia; and
(c)LCA’s conduct of this proceeding could not, for various reasons, amount to either an election, waiver or estoppel which would bind it to continue litigating its dispute with Bogart in this proceeding. Any prejudice to Bogart caused by staying this proceeding can be met by LCA paying Bogart’s costs thrown away, releasing the moneys paid into court by Bogart by way of security for costs, and paying (at least in the first instance) for the shipment of the goods to France. In any event, any election, waiver or estoppel binding LCA could not fetter this Court’s discretion to order that the proceeding be stayed if it is otherwise in the interests of justice to do so.
Further, LCA submitted, if I was not minded to order a permanent stay, I should exercise my discretion to temporarily stay or “stand out of the list” this proceeding pending the hearing and determination of the French proceeding, on the grounds that the determination of the French proceeding might either partly or fully determine, in a practical sense, the issues in this proceeding, and the authorities stress the importance, if possible, of avoiding the risk that courts may make conflicting findings of fact.
In response, Bogart resisted the application for a permanent or temporary stay on the following grounds:
(a)there is some doubt whether clause 10.2 of the Specifications is truly an exclusive jurisdiction clause (this submission was only faintly pressed);
(b)there are material differences between the terms of the Specifications and the terms of the sales contracts, such that LCA has not established that the exclusive jurisdiction clause had been incorporated into the sales contracts;
(c)in any event, even if the exclusive jurisdiction clause has been incorporated into the sales contracts, LCA has, by its conduct in this proceeding, lost its rights to rely upon it, by reason of the doctrines of election, waiver and estoppel; and
(d)there is no basis for either permanently or temporarily staying the proceeding based upon the principles of “forum non conveniens”, as Victoria is not a “clearly inappropriate forum”, or on other discretionary grounds, such as avoiding a multiplicity of proceedings.
Both parties relied upon extensive affidavit evidence in support of their respective positions. Much of this evidence went primarily to the merits of the dispute between them and, as such, was not particularly relevant to the matters for determination in this application. Further, I was referred to voluminous and helpful authorities, but there was not any great dispute regarding the applicable legal principles; rather, the issue is how they should be applied to this particular situation.
LCA relied upon the following evidence:
(a)two affidavits affirmed by Michael Rosenfield, the managing director of LCA, on 1 November 2012 and 21 January 2013;
(b)an affidavit of Alan Sheppet, LCA’s solicitor, sworn 29 November 2012 exhibiting an expert report prepared by a French qualified lawyer, Pierre-Jean Bardahandy;
(c)an affidavit sworn by Veronique Gheza, a Paris based employee of Simone Perele on 29 January 2013; and
(d)an affidavit sworn by Philippe Grodner, the CEO and part owner of Simone Perele.
Bogart relied upon an affidavit sworn by Jose Manuel Sevilla, the Executive Director of Bogart, and an affidavit sworn by Andreas Roschmann, the chairman of Bogart, both on 5 December 2012.
The primary affidavit relied upon by LCA was the first affidavit of Mr Rosenfield sworn on 1 November 2012. Mr Rosenfield deposed, in summary, to the following matters:
(a)the business and corporate structure of Simone Perele and its subsidiaries;
(b)the process of outsourcing the production of the Aura line to Bogart, including the issue of technical specifications and other tender documents;
(c)the provision of the Specifications[3] on around 18 December 2009. The Specifications included the following clause:
[3]Exhibit “MR-5”.
10.4 Disputes
According to our Conditions of Purchase, the District Court of Nanterre (FRANCE) shall be solely competent to settle disputes.
(d)the Specifications were signed on behalf of Bogart on 31 August 2010, although the document returned to Simone Perele[4] included a two page annexure purporting to vary some of the terms of the Specifications (with no reference to clause 10.4);
(e)on 14 September 2010 Simone Perele and Bogart personnel corresponded regarding goods to be shipped to Australia;
(f)on or about 17 September 2010, it was agreed between Simone Perele and Bogart that Bogart would invoice LCA directly for good shipped to Australia;
(g)quality issues in relation to the Aura line, the correspondence between Simone Perele and Bogart staff regarding these quality issues in 2010 and 2011, and Simone Perele’s engagement of a Hong Kong based quality control consultant to address these issues;
(h)the placing of orders with Bogart for goods to be delivered to LCA, the delivery of the goods in September 2011, and quality issues associated with the good shipped to LCA;
(i)the cessation of the production and distribution of the Aura line, and Bogart’s demands to Simone Perele and LCA for payment of outstanding invoices;
(j)the issue of the Simone Perele French proceeding in late August 2012,[5] a summary of developments in that proceeding up to 1 November 2012, and a summary of advice provided by Simone Perele’s French lawyers of the likely procedure to be adopted in the French proceeding;[6] and
(k)the steps taken by the parties in this proceeding up to 1 November 2012.
[4]Exhibit “MR-8”.
[5]Exhibit “MR-27”.
[6]Exhibit “MR-29”.
Under the heading “Connecting Factors, Evidence, and Witnesses”, Mr Rosenfield deposed as follows:
95.Simone Perele is based in Paris, France. LCA is based in Melbourne, Australia. Bogart and Obsidian are each companies based in Hong Kong.
96.Bogart has solicitors in each of Hong Kong, France and Australia. I have seen correspondence from Bogart’s solicitors in each of these jurisdictions relating to this proceeding and to the French proceedings. Bogart is represented by lawyers Cabinet Jobard Chemal & Partners, located in Paris and registered with the Paris Bar.
97.Simone Perele in France is represented by Kahn Partners, based in Paris, France. LCA is represented by Alan Sheppet & Associates, based in Melbourne, Australia.
98.In this proceeding, most of the conduct in question occurred in Hong Kong and France and most of the relevant communications were sent and received in these jurisdictions. Further, much of the correspondence originated in France and Hong Kong and the originals of these documents are likely to be held in files or computers kept in these countries.
99.The vast majority of the documents discovered by LCA in this proceeding were in the possession of the Simone Perele.
100.In this proceeding, the defendant may call the following witnesses:
(a)a number of witnesses from Simone Perele, each of whom are based in Paris, France;
(b)a number of witnesses from LCA, each of whom are based in Melbourne, Australia;
(c)at least one witness from Obsidian, who is based in Hong Kong.
Under the heading “A Stay of these proceedings”, Mr Rosenfield deposed as follows:
101.This proceeding is factually complex and involves many thousands of documents and correspondence. The parties each took longer than anticipated to file relevant pleadings.
102.Until late August 2012, there were no proceedings in France. Since the French proceedings were issued, I believed it was more cost effective and efficient to have all the disputes between all relevant parties including Bogart, LCA and Simone Perele heard and determined in the one Court in France.
Finally, under the heading “Bringing Claims in French proceedings”, and based upon advice from Simone Perele’s French lawyers,[7] Mr Rosenfield deposed as follows:
[7]Exhibit “MR-37”.
106.LCA will be able to file a claim in France against Bogart as soon as this proceeding is stayed.
107.A judge in the French proceedings may apply French law or another law such as Australian law in reaching his or her decision.
108.As France is a signatory to the Vienna Convention, LCA could bring the same or similar claims alleged in its counterclaim in France.
109.Presently, there are limitations under the Trade Practices Act and the Australian Consumer Law for bringing claims for misleading conduct in respect of conduct which occurs overseas. As most of the conduct occurred overseas, LCA has decided not to pursue a claim for misleading conduct in this proceeding so far.
110.There is an equivalent claim to misleading conduct under French law. These claims concern “practices that are misleading in commerce”.
111.I am unaware of any issue with Bogart pursuing its debt claim against LCA in France.
112.Further, I am authorised to offer to consent to the release of the payment by Bogart into the Senior Master’s Fund by way of security for this proceeding.
Mr Grodner deposed, in summary, as follows:
(a)that the matters set out in Mr Rosenfield’s affidavit concerning Simone Perele, Simone Perele’s dealings with Bogart, and the issue of the French proceeding are true and correct;
(b)as to the corporate profile and history of Simone Perele, and the development of what became the Aura line;
(c)he confirmed that Simone Perele’s dealings with Bogart, including the requirement that Bogart executed the Specifications, was consistent with Simone Perele’s dealings with all of its suppliers;
(d)that Simone Perele’s standard terms and conditions always incorporated the exclusive jurisdiction clause;
(e)that there is a dispute between Simone Perele and Bogart as to whether the originating process in the French proceeding was properly served upon Bogart;
(f)he set out the likely next steps in the French proceeding; and
(g)that Simone Perele wishes to avoid having to deal with concurrent litigation in different jurisdictions and wishes to avoid potentially inconsistent outcomes.
Ms Gheza’s affidavit essentially confirmed the matters deposed to by Messrs Rosenfield and Grodner, her dealings with Bogart employees regarding the Specifications, and the arrangements for the shipment of the goods to Australia.
In his affidavit sworn 21 January 2013, Mr Rosenfield largely deposed, in response to the affidavits sworn by Mr Sevilla and Mr Roschmann, as to the certain steps taken by LCA in this proceeding, steps likely to be taken in the French proceeding, and, relevantly, in regard to the prejudice which Bogart asserted would be caused to it if the proceeding were stayed, he deposed:
26.LCA offers to pay Bogart’s reasonable costs thrown away to be taxed in default of agreement by reason of the late application for stay, being the costs incurred by Bogart from March 2012 when the amended defence and counterclaim was filed.
27.LCA also offers to provide a reasonable security for Bogart’s costs of prosecuting its Australian claims in France. Such security will be by agreement and in default of agreement be an amount equivalent to the amount offered by Bogart in the Australian proceeding.
…
29.In relation to paragraph 72 of the Sevilla affidavit, should it be necessary, LCA is prepared to pay for the costs, in the first instance, of shipping the disputed goods back to France. LCA is already bearing the holding costs of storing the disputed goods in its warehouse which it has done since August 2011.
Bogart relied primarily upon the affidavit of Mr Sevilla sworn on 5 December 2012. Much of this affidavit, like the affidavits relied upon by LCA, concerned the merits of the respective parties’ positions in relation to the substantive dispute between them. However, in relation to the issue of the incorporation of the exclusive jurisdiction clause into the sales contracts, and the ability of Bogart to enforce the terms of the sales contracts, Mr Sevilla deposed, as follows:
16.I am informed by Joe Liu and believe that although he initially insisted that Simone Perele France be invoiced for orders for LCA, Bogart subsequently agreed that it would invoice LCA directly. Further, the terms of payment for the LCA orders were ‘DA [Documents Against Acceptance] 30 days’, meaning that payment was due from LCA by the 30th day from the date LCA accepted the shipment documents (invoice, airway bill etc): see letter from LCA’s bank, ANZ, to LCA dated 29 August 2011 (“Tenor: USA 208, 163.50 by acceptance 30 days after sight”) and Bogart’s Commercial Invoice dated 15 July 2011 in exhibit MR-30 of Rosenfield’s affidavit.
17.So in contrast with the contract with Simone Perele, Bogart’s contract with LCA involved:
(a)original invoices being sent to LCA in Australia and not to Simone Perele in France;
(b)payment terms of 30 days instead of 15 days;
(c)payment by LCA and not by Simone Perele; and
(d)the goods being shipped to Australia instead of France.
Further, at paragraph 56 of his affidavit, Mr Sevilla deposed as follows:
56.In late October 2011 I instructed Robertsons to engage solicitors in Australia to commencing proceedings against LCA for payment of the invoices. I did so without any contemplation that clause 10.4 of the Specifications had been incorporated into the agreement between Bogart and LCA because: Bogart was contracting with an Australian company and not Simone Perele in France; the goods were to be shipped to Australia and not to France; the invoices were to be sent to Australia and not to France; and because other terms of the agreement with LCA, such as terms of payment, were different to the terms in the Specification so that such provisions of the Specifications were not relevant or included. Not until cl. 10.4 of the Specifications was raised for the first time in this application did I have any reason to consider that clause in the context of Bogart’s contracts with LCA.
In relation to the question of Bogart’s reliance upon LCA’s apparent acceptance of the jurisdiction of this court, Mr Sevilla deposed as follows:
67.On the assumption that the Supreme Court of Victoria was an appropriate place to have the dispute resolved, an assumption strengthened by LCA’s unconditional appearance in this Court, the filing of its defences and counterclaims and its failure for almost a year to object to the jurisdiction of this Court, and relying on that conduct by LCA, I directed that Bogart incur the expense and convenience of (respectively):
(a)reviewing LCA’s Defence and Counterclaim and advising LCA of its deficiencies;
(b)reviewing LCA’s Amended Defence and Counterclaim and filing a Reply and Defence to Counterclaim;
(c)providing security for LCA’s costs at its demand in the sum of $60,000;
(d)providing discovery; and
(e)considering and consenting to Orders to be made by this honourable Court.
68.Since the filing of LCA’s unconditional appearance (30 November 2011) until the date it first sought to have this proceeding stayed (10 October 2012), Bogart has incurred legal expenses in Australia of approximately $40,000.00 plus the costs of Bogart’s Hong Kong solicitors (who are working with the Australian lawyers) of approximately $15,000.
69.Further, in order to provide instructions to Bogart’s Australian lawyers and to assist with the preparation of pleadings and the making of discovery, I have made 2 return trips from Hong Kong to Australia and incurred travel and accommodation expenses in the process of about AUD$4,000.00.
70.If LCA is granted a permanent stay of this proceeding, it is likely that all of these costs, not to mention the time and inconvenience to many members of Bogart’s will be thrown away.
71.Further, if a stay of the present proceedings is granted, Bogart would have to start from scratch in the French court. If the French court determines that the governing law of the contracts between Bogart and LCA is Hong Kong or Australian law, there will be the added expense of engaging experts in Hong Kong or Australian law to give evidence in France.
Finally, in response to Mr Rosenfield’s evidence/submissions regarding the appropriate forum for the dispute between Bogart and LCA and the relevant connecting factors, Mr Sevilla deposed as follows:
78.I refer to paragraphs 95 to 100 of Rosenfield’s affidavit. Weighing against the statements made there I observe that:
(a)the contracts are between an Australian company and a Hong Kong company;
(b)both companies can instruct their lawyers in Victoria in relation to the conduct of the proceeding with little or no time difference;
(c)the goods are in Australia;
(d)the invoices were rendered in Australia;
(e)the law of the contract is more likely to be Australian or Hong Kong law then French law;
(f)the emails and other documents regarding the orders, quality control tolerances and inspection reports and acceptance of the goods all speak for themselves;
(g)almost all the emails and other documents regarding the orders, quality control tolerances and inspection reports and acceptance of the goods in connection with the dispute are in English whilst proceedings in France are likely to require translation of all the correspondence;
(h)the majority of witnesses will come from Australia and Hong Kong rather than France; and
(i)interpreters will be required for the non‑French speaking witnesses in the French court whilst it appears from the correspondence that the French witnesses all write and, presumable, (sic) speak English.
Bogart also relied upon the affidavit of Andreas Roschmann, a director of Bogart, who deposed, in summary, as follows:
(a)he confirmed the matters set out in the affidavit of Mr Sevilla;
(b)as to the corporate profile and history of Bogart; and
(c)as to the dispute between Bogart and Simone Perele regarding the service of the originating process in the French proceeding.
LCA also relied upon an expert witness statement prepared by an Australian based, French qualified lawyer, Dr Pierre‑Jean Bordahandy, regarding:
(a)the meaning of clause 10.4;
(b)the proper law of the contract; and
(c)the response to the question:
“Are the plaintiff and the defendant able to bring the claims in the Victorian proceeding or are equivalent claims able to be heard, determined and enforced in the District Court of Nanterne? If so, what procedure will the plaintiff and the defendant have to follow in the District Court of Nanterne? How are judgments in the District Court of Nanterne enforced in France and Australia?”
One shortcoming of this report was an erroneous assumption on the part of Dr Bordahandy that:
there is no separate contract between Bogart and LCA/Steadmark and that all actions are based on the contract drafted and signed with Simone Perele France.
Dr Bordahandy concluded as follows:
(a)a better English translation of clause 10.4 would be as follows:
“Pursuant to our purchase terms, the Tribunal de Grande Instance de Nanterre (France) shall have sole jurisdiction to settle disputes.”
(b)that clause 10.4 is an exclusive jurisdiction clause;
(c)Bogart is in breach of its contractual obligations by bringing proceedings against LCA in Australia;
(d)French law does not recognise the doctrine of “forum non conveniens”, and as such, any proceeding brought in France pursuant to an exclusive jurisdiction clause would not be stayed even if it was otherwise more appropriate for a dispute to be heard in a foreign jurisdiction;
(e)he was not, strictly speaking, qualified to address the question of the proper law of the contract, but drew attention to the connecting factors with France;
(f)he has limited expertise regarding the enforcement of foreign judgments in Australia;
(g)a French court would stay any proceeding concerning the issues in this proceeding while this proceeding was on foot; and
(h)if there was a proceeding between Bogart and LCA issued in France, it is likely that it would be joined to the French proceeding.
Accordingly, the issues for determination in this application are as follows:
(a)whether clause 10.4 of the Specifications is an exclusive jurisdiction clause;
(b)if so, whether clause 10.4 has been incorporated into the sales contracts;
(c)if yes to (a) and (b) above, whether LCA’s conduct in participating in this proceeding to date now precludes it from relying upon the exclusive jurisdiction clause; and
(d)if yes to (c) above, whether in any event, LCA is entitled to have this proceeding stayed (either permanently or temporarily) upon the basis that Victoria is a clearly inappropriate forum, or upon some other discretionary grounds.
In relation to the question of whether clause 10.4 is an exclusive jurisdiction clause, in my view, there is little doubt that it is. Clause 10.4 is almost identical in terms to the clause under consideration in Lewis Constructions Co Pty Ltd v M Tichaeser Societe Anonyme.[8] While, as noted by counsel for Bogart in his submissions, the Court did not actually deal with the question of whether the equivalent to clause 10.4 was an exclusive jurisdiction clause, that was probably because the question was considered to be beyond doubt.
[8][1996] VR 341.
The question of whether the exclusive jurisdiction clause has been incorporated into the sales contracts is more complicated. I agree with counsel for LCA that it is not necessary that there be an express reference to the exclusive jurisdiction clause in order for it to be incorporated into the sales contracts, and that mere references to the terms and conditions of the sales contracts being the same as the terms and conditions of the Specifications may well be sufficient to incorporate the exclusive jurisdiction clause into the sales contracts. This is consistent with the Australian authorities,[9] which have diverged from the English approach, which insists upon an express reference being made to an exclusive jurisdiction or arbitration clause in order to incorporate such a clause into another contract. However, I agree with counsel for Bogart that it must be clear, from an objective analysis of the documents constituting the sales contracts, that the parties intended that the exclusive jurisdiction clause be incorporated into the sales contracts.
[9]see Carob Industries Pty Ltd (in liq) v Simto Pty Ltd (1997) 18 WAR 1; Lief Investments Pty Ltd v Conagra International Fertiliser Co (Court of Appeal (NSW)) 16 July 1998, unreported.
On 14 September 2010 Ms Veronique Gheza of Simone Perele sent an email to Mr Joe Liu of Bogart,[10] which stated, in part:
[10]Exhibit “MR-9”.
LCA orders (our subsidiary in Australia):
-As you know, for this customer, we will send you a separately (sic) order
-The delivery address will be in Australia directly
-The forwarder is Clasquin
-The products are the same that (sic) for Simone Perele France except for
→you don’t have to put the hang tag on the products
→you have to put on all the products “Made in China”
→you will have to charge directly LCA in Australia (Invoice): the price and purchasing conditions are the same: FCA Hong Kong.
Mr Liu’s response was as follows:
We should accept their separate PO, but we need the invoice direct to Simone Perele France. We can’t accept the charge direct to LCA. Thank you.
Despite the above response by Mr Liu, it is common ground that ultimately Bogart agreed to invoice LCA directly.
There are good arguments on both sides as to whether the exclusive jurisdiction clause has been incorporated into the sales contracts. LCA’s position that the words of the relevant email means what they say, that is, apart from the invoicing, delivery arrangements, and the time for payment, the terms and conditions were otherwise the same as the Specifications, has a great deal of force. Also, that communication is against the background of all negotiations and communications being through Simone Perele’s staff in France and Bogart’s staff in Hong Kong, and there is some commercial sense in all disputes between Simone Perele and its subsidiaries and its suppliers being litigated in the same place.
On the other hand, there is some merit in the arguments advanced on behalf of Bogart that it is by no means clear that the parties to the sales contracts (as opposed to the Specifications) intended to be bound to have any disputes between them heard and determined in France in circumstances where:
(a)the goods were shipped directly to Australia;
(b)the invoices were shipped to Australia and LCA, not Simone Perele, was liable to pay Bogart, at Simone Perele’s insistence; and
(c)all transportation and trade finance dealings in relation to the subject matter of the sales contracts were between Australia and Hong Kong.
Accordingly, the position is more finely balanced than that contended for on behalf of LCA. On balance though, I consider that the language of the email was sufficiently clear and unambiguous to signify an intention that, other than delivery and payment arrangements, the terms of the Specifications and the sales contracts were to be the same. As such, given that the authorities emphasise that primary weight must be given to enforcing the bargain of the parties as to such matters as jurisdiction, in the same manner as the courts will tend to enforce terms requiring submission to arbitration, there must be a very good reason for a court to refuse to enforce an exclusive jurisdiction clause.[11]
[11]see Lewis Constructions, Akai Pty Ltd v The People’s Insurance Co Ltd (1995) 8 ANZ Ins Cas 61-254 (NSWCA).
However, even if I am wrong about the question of whether the exclusive jurisdiction clause was incorporated into the sales contracts, that makes no difference to the ultimate result. In my view, LCA has, by bringing a counterclaim against Bogart in this proceeding, made a binding election between its rights under the exclusive jurisdiction clause and its rights to pursue its claims against Bogart in this proceeding, and, in any event, has waived its rights to rely upon the exclusive jurisdiction clause. Further, I am not otherwise persuaded that this proceeding should be stayed, either temporarily or permanently, on the basis that Victoria is a clearly inappropriate forum, or upon any other discretionary grounds.
I do not propose to extensively canvass the parties’ submissions and the authorities referred to by the parties, and reviewed by me in the course of preparing these reasons, as the parties’ submissions do not fundamentally differ as to the applicable principles, merely as to their application to the current case. Counsel for Bogart submitted that in the present case, if the exclusive jurisdiction clause was, as contended for by LCA, incorporated into the sales contracts, LCA had a right to insist upon the dispute between it and Bogart being litigated in the District Court of Nanterre. However, inconsistently with, and mutually exclusive with that right, it could acquiesce to the conduct, hearing, and determination of this proceeding, and, by filing an unconditional appearance, or, alternatively, by issuing its counterclaim, it abandoned its right to insist upon adjudication of the issues in this dispute in France.
In the written submissions filed on behalf of Bogart, counsel put the position as follows:
Bogart made such an election when it filed an unconditional appearance. But if Bogart is wrong in this because the Court concludes it is legally possible for LCA to submit to the jurisdiction of this Court whilst preserving its right to insist upon the exclusive jurisdiction of the court in Nanterre, then Bogart submits in the alternative that LCA’s election occurred when it filed its counterclaim. It is inconceivable that in law LCA could insist upon the exclusive jurisdiction of the French Court and at the same time commence its own proceeding in this Court. It cannot approbate and reprobate in this way. The only possible conclusion is that LCA foreclosed its right to insist on adjudication in Nanterre when it filed and served its counterclaim.
In relation to the question of waiver, counsel for Bogart relied upon the plurality of the High Court in Agricultural & Rural Finance Pty Ltd v Gardiner,[12] which cited, with apparent approval, the statement of Gaudron J in Commonwealth v Verwayen[13] that:
a party to litigation will be held to a position previously taken (that position having been intentionally taken with knowledge) if, as a result of that earlier position, the relationship of the parties has changed.
[12](2008) 238 CLR 570, 589-590.
[13](1990) 170 CLR 394.
The plurality in Gardiner observed that Gaudron J had identified the roots of the above principle as the need for
fair dealing in the conduct of litigation [and] promoting the finality of litigation.
Applying Gaudron J’s statement in Verwayen to the current case, counsel for Bogart submitted that it could not be seriously contended that, as at the time that LCA filed and served its Notice of Appearance, or at the time it filed its defence and counterclaims, that LCA was not aware of the exclusive jurisdiction clause. Indeed, the defence and counterclaim makes express reference to the Specifications, and pleads that the Specifications, along with other documents, form part of the sales contracts. As such, as counsel for Bogart submitted, LCA must be taken to have made a conscious decision not to rely upon the exclusive jurisdiction clause, causing Bogart to assume, for nearly a year, that it was entitled to prosecute its claim, and defend LCA’s claims, in this Court.
In response, counsel for LCA contended that it is not bound, by either the doctrine of election or waiver, to continue to conduct its dispute with Bogart in this proceeding. Counsel submitted that issuing or continuing proceedings in a particular forum in the face of an agreement providing for exclusive jurisdiction elsewhere does not amount to an election between inconsistent rights. He relied upon the statement of Allsop J in Comandale Marine v Pan Australia Shipping[14] that:
a litigant who has bound itself to arbitrate and commences to do so and who files court proceedings as well may be acting oppressively or abusively and may be in breach of contract, but has not elected between inconsistent rights.
[14](2006) 57 FCR 34, 64.
Similarly, in ACD Tridon Inc v Tridon Australia,[15] Austin J stated as follows:
In the present case the defendants had a choice to insist upon arbitration or to allow their disputes with Tridon to be determined curially. The making of that choice would not involve election between inconsistent rights. it would simply involve selecting one or two procedures for the adjudication of the dispute.
[15][2002] NSWSC 896 at [58].
Austin J went on to consider the (separate) remarks made by Brennan, Toohey, Gaudron and Dawson JJ in Verwayen regarding the doctrine of waiver, and observed that a right can be waived even though there is no alternative right inconsistent with it. Austin J distinguished between “waiver in the weaker sense”, where a party has not insisted upon a right either by choice or default, which would be a matter going to the Court’s discretion rather than being binding upon that party, and “waiver in the stronger sense”, being where a party, having deliberately chosen not to take a point, or fails to take a point when it comes to notice, may be taken to have irrevocably abandoned that point.
Austin J considered that mere submission to jurisdiction does not, of itself, amount to an irrevocable abandonment of the right to seek a stay pending arbitration, but that committing to a final hearing would amount to an irrevocable commitment to curial rather than arbitral determination.
Counsel submitted that LCA’s conduct in the current proceeding here fell short of what would amount to “waiver in the stronger sense”. The proceeding is still in its early interlocutory stages, with only pleadings and discovery completed. There has been no commitment to a final hearing, and the security sum agreed between the parties was only intended to provide security for LCA’s costs up to and including mediation, not trial. As such, the proceeding has not reached the point that it could be said that LCA has irrevocably abandoned its right to apply for a stay relying upon the exclusive jurisdiction clause. In any event, any waiver on the part of LCA could not prevent the Court from exercising its discretion to stay this proceeding if the circumstances warrant a stay.
In my view, LCA’s conduct in bringing its counterclaim against Bogart amounted to waiver in the stronger sense. It may well be that if LCA’s conduct in this proceeding was merely defensive, it may not have been taken to have waived its rights to rely upon the exclusive jurisdiction clause at this stage of the proceeding. However, by filing a counterclaim in this proceeding, which relies upon the Specifications containing the exclusive jurisdiction clause as the basis of its entitlement to seek relief, and seeks damages in an amount which is four to five times the amount claimed by Bogart, LCA could now arguably be considered to be the real commercial aggressor in this dispute. It could have chosen to issue proceedings in France, either alone, or in tandem with Simone Perele, but for whatever reason, chose not to do so. There is no evidence that representatives of Simone Perele and/or LCA did not know of or forgot about the exclusive jurisdiction clause: indeed, the evidence of Mr Grodner is to the contrary.
While it is correct that LCA has not committed to a final hearing, in that no trial date has been allocated, in ACD Tridon Inc., Austin J did note that:[16]
lesser conduct might also amount to an irrevocable abandonment of the right to arbitration.
[16]at [90].
In La Donna Pty Ltd v Wolford,[17] Whelan J found that making an application for security for costs was conduct which amounted to an unequivocal abandonment of that party’s right to seek a stay based upon an arbitration clause. In that case, security had been sought up to and including the trial, and as such was said by Whelan J to be
based on the explicit premise that the litigation would proceed to trial in the absence of a settlement, and that the matters the subject of the proceeding would be determined by the Court.
[17][2005] VSC 359, [25].
That is not the case here. But it is illustrative of the fact that it is not necessarily the case that a party can only be taken to have abandoned its right to seek a stay if it formally commits to a trial. In my view, the issue of a counterclaim is such a step.
For completeness, it should be noted that the factual circumstances in the Comandante and ACD Tridon cases are materially different from the current case. In Comandante, the plaintiff had issued proceedings in rem to arrest a ship in an Australian port almost immediately after the defendant had provided notice that it intended to refer disputes between the parties pursuant to a charter party agreement to arbitration in London. In effect, the purpose of bringing the in rem action was to obtain security for the plaintiff’s claims in the forthcoming arbitration. In ACD Tridon, while the party seeking to enforce an arbitration clause had taken some steps in a proceeding, such as entering an appearance, consenting to directions, giving undertakings in order to forestall threatened injunctive proceedings, and consenting to the joinder of related proceedings, these were very much preliminary matters, and the relevant party had frequently and expressly made reference to its intention to refer the disputes between the parties to arbitration, both in correspondence between the parties and in court.
Finally, while I agree with counsel for LCA that the fact that a party may have waived its rights to rely upon an exclusive jurisdiction clause does not prevent the Court from exercising its discretion to stay the proceeding if there are good reasons to do so, it seems to me that, given the forceful statements of Gaudron J in Verwayen, and the policy reasons behind them, there would have to be a very good reason to do so. For example, if it was apparent that Victoria was a clearly inappropriate forum, then the question of whether a party had otherwise waived its rights to seek a stay may assume less relevance. But that is not the case here.
Given my conclusion that LCA has, by its conduct, waived its rights to rely upon the exclusive jurisdiction clause, it is not necessary for me to consider the question of whether LCA is estopped from relying upon it. However, it is necessary to address the question of whether the proceeding should be permanently or temporarily stayed on the basis that Victoria is a clearly inappropriate forum, or some other discretionary grounds.
Alternatively, counsel for LCA submitted that, even if I did not find that Victoria was a clearly inappropriate forum, I should, for reasons of practicality as well as principle, stay this proceeding pending the hearing and determination of the French proceeding. Counsel pointed to a number of examples of proceedings which had been stayed or “stood out of the list” because proceedings in foreign jurisdictions were on foot on similar issues between the same or related parties.[18] In some cases, this has been to avoid conflicting findings of fact: in others, in the hope that the issues between the parties in the Australian proceeding could be narrowed.
[18]see, in particular, Henry v Henry [1995] 185 CLR 571; Raveh v Official Receiver of the State of Israel [2002] WASCA 27; Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287; Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd [1978] 35 FCR 346; DA Technology Australia Pty Ltd v Discreet Logic Inc [1994] FCA 958; Telesto Investments Ltd v UBS AG [2012] NSWSC 44; and Re Point of Pay Pty Ltd [2012] VSC 380.
Counsel for Bogart submitted that it could not seriously be contended that Victoria is a clearly inappropriate forum for the determination of the dispute, and that the convenience to Simone Perele, a non-party, of having this proceeding heard and determined in France, is no basis for concluding that Victoria is a clearly inappropriate forum. While it would be no doubt inconvenient for Simone Perele’s French staff to travel to Melbourne for the hearing, in any event a number of witnesses are located in Hong Kong and Melbourne. While a number of documents were originally held by Simone Perele’s employees in France, they have now been provided to LCA and discovered in this proceeding. It is apparent from the documents produced in the course of this application that the communications between Simone Perele and Bogart were in English. The goods which are the subject of this proceeding are in Victoria, not in France. Importantly, while similar issues may arise regarding the quality of the Aura line goods delivered to LCA in Australia and the Aura line goods delivered to Simone Perele in France, they are not the same goods. LCA’s claims regarding the quality and merchantability of the goods have to be tested with reference to the goods actually delivered here, not “the Aura line” generally.
It was accepted by counsel for LCA that establishing that Victoria was a “clearly inappropriate forum” was a high hurdle to clear. However, counsel for LCA did submit that the proceeding should be stayed on such a ground, by reason of the close relationship between the parties and the issues in this proceeding, and the parties and issues in the French proceeding. Counsel for LCA submitted that the dispute between Bogart and LCA regarding the goods shipped to Australia was a mere “subset” of the broader dispute between Simone Perele and Bogart regarding the alleged defects in the Aura line of goods. The goods shipped to Australia were manufactured to specifications developed by Simone Perele in France, on the same production line as the rest of the Aura line, pursuant to sales contracts negotiated between Simone Perele staff in France and Bogart personnel in Hong Kong. The same issues arose with respect to quality and delay, and many of the witnesses in this proceeding will also be witnesses in the French proceeding. If this proceeding is not stayed, there is a real risk that there will be inconsistent findings by different courts, which the authorities emphasise is highly undesirable. Further, a number of LCA’s witnesses will be Simone Perele staff, who speak French and are based in France.
Counsel for Bogart submitted that the authorities relied upon by LCA can generally be distinguished on the basis that in those cases, the foreign proceeding had been commenced first. He agreed that it would have been vexatious and oppressive for Bogart to have commenced proceedings against LCA here if a proceeding in which LCA and Bogart made claims against each other in relation to the goods shipped to LCA in Australia had been already underway in France. However, this proceeding was commenced many months before the French proceeding, and relates only to the goods shipped to Victoria.
I agree that there are insufficient grounds for this proceeding to be stayed either permanently or temporarily. Rather than Victoria being a clearly inappropriate forum, there are connecting factors between this dispute and both Victoria and France (and, for that matter, Hong Kong). Indeed, given the nature and the scope of the damages claimed by LCA in its counterclaim[19] (damages for loss of profit, and damages for the alleged injury to the Simone Perele brand in the Australian market), which may presumably require evidence from David Jones personnel and Australian based experts, it may be that the balance would tip in favour of Victoria as being the appropriate forum.
[19]see Annexures B and C to the amended defence and counterclaim.
I also agree that it is significant that this proceeding was issued first in time. This, among other things, distinguishes the current case from the authorities relied upon by counsel for LCA in support of its application for a stay.[20]
[20]see the authorities referred to in foot note [18].
A useful summary of the principles governing the discretion of the Court to either permanently or temporarily stay a proceeding on the grounds of forum non conveniens or other like considerations is to be found in the judgment of Robson J in Re Points of Pay Pty Ltd,[21] as follows (omitting footnotes):
[21][2012] VSC 380, at [31].
(a) The court may stay proceedings commenced in the court on inappropriate forum grounds where the court is a clearly inappropriate forum, which will be the case if continuation or the proceedings in that court would be oppressive in the sense of seriously and unfairly burdensome or prejudicial, or vexatious in the sense of productive of serious and unjustifiable trouble and harassment.
(b) The rationale for the exercise of the power to stay is the avoidance of injustice between parties in a particular case.
(c) The power of the court to stay proceedings is discretionary in the sense that it involves balancing various factors and assessing the weight to be given to the various factors.
(d) Relevant factors include:
(i) whether each country will recognise the others orders and decrees;
(ii) which forum can provide more effectively for the complete resolution of the matters involved in the parties’ controversy;
(iii) the order in which the proceedings were instituted, the stage which have reached and the cost that the parties have incurred;
(iv) the connection of the parties and the subject matter of the dispute each of the jurisdictions and to have regard to the issues on which relief might depend in those jurisdictions;
(v) the ability of the parties to participate in the respective proceedings on an equal footing;
(vi) the true nature and full extent of the issues involved in the controversy between the parties;
(vii) whether the local proceeding offers a juridical advantage over the proceedings in the other forum.
(e) Prima facie, it is vexatious and oppressive (in the strict sense of those terms) to commence second or subsequent actions in the courts of Australia if an action is already pending with respect to the matter in issue.
(f) It may sometimes be appropriate to grant a temporary stay of the local proceeding to allow the factual issues to be determined in another jurisdiction.
(g) Proceedings brought for the dominant purpose of preventing another party from pursuing remedies available in another country and not available in this country are oppressive and vexatious in the Voth sense of those words.
Applying the factors referred to at (d) above to the current application, there is no compelling reason why the issues in dispute should be litigated in France. There is no issue regarding the recognition of judgments and orders, or the ability of the parties to participate in the proceedings on an equal footing. As already indicated, some connecting factors are in favour of France, others are in favour of Victoria. However, significantly, this proceeding was commenced first in time, and the goods are here. As counsel for Bogart emphasised, it is the quality of the goods here that is in issue, not the quality of the Aura line.
Accordingly, I will dismiss LCA’s application by way of its further amended summons filed 12 March 2013. I will hear from counsel upon the question of costs, and further directions for the conduct of the proceeding.
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