Callander v Ladang Jalong (Australia) Pty Ltd - [2000] WASC 127

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CALLANDER -v- LADANG JALONG (AUSTRALIA) PTY LTD & ORS [2000] WASC 127

CORAM: MASTER BREDMEYER

HEARD: 12 MAY 2000

DELIVERED : 16 MAY 2000

FILE NO/S: CIV 1037 of 2000

BETWEEN: WILLIAM JOHN CALLANDER
Plaintiff
AND
LADANG JALONG (AUSTRALIA) PTY LTD
First Defendant
ZAINAL ABIDIN BIN MOHAMED ISA
Second Defendant
AHMED TERMIZI KASSIM
Third Defendant
BODIN ISMAIL SHAH
Fourth Defendant
JALONG AUSTRALIA GOATS PTY LTD
Fifth Defendant
PAUL GREGORY HARRISON
Sixth Defendant
MALAYSIA AUSTRALIA BUSINESS & TRADE DEVELOPMENT PTY LTD
Seventh Defendant
CHEW TEN TOH
Eighth Defendant

Catchwords:

Application for a stay - Turns on own facts

Legislation:

Commercial Arbitration Act 1985 (WA), s 53(1)

Corporations Law, s 471B, s 500(2)

Result:

Application dismissed

Representation:

Counsel:

Plaintiff:     Ms P M Edward
First Defendant             :     No appearance
Second Defendant         :     Mr R W H Tan
Third Defendant           :     Mr R W H Tan
Fourth Defendant          :     Mr R W H Tan
Fifth Defendant            :     No appearance
Sixth Defendant            :     No appearance
Seventh Defendant        :     No appearance
Eighth Defendant          :     Mr R W H Tan

Solicitors:

Plaintiff:     Murie & Edward
First Defendant             :     No appearance
Second Defendant         :     Tan & Tan
Third Defendant           :     Tan & Tan
Fourth Defendant          :     Tan & Tan
Fifth Defendant            :     Stables Scott
Sixth Defendant            :     Stables Scott
Seventh Defendant        :     No appearance
Eighth Defendant          :     Tan & Tan

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Stevens v Trewin [1968] Qd R 411
Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194
Willesford v Watson [1873] 8 Ch App 473

MASTER BREDMEYER: In an application dated 26 April, the second, third and fourth defendants have applied for a stay of this action. In an application dated 11 May, the eighth defendant has also applied for a stay of the action. The second, third, fourth and eighth defendants are represented by the same solicitors.
The main basis of the application is that the plaintiff should comply with cl 19 of the shareholders' deed of 1 March 1998. I am told that 80 per cent of the plaintiff's claim against the second, third, fourth and eighth defendants arises out of the shareholders' deed.
The stay is sought under s 53 of the Commercial Arbitration Act 1985 (WA), subs (1) of which reads:
"53. (1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied -
(a)that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(b)that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration,
may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit."
"Arbitration agreement" is defined in s 4 of the Act to mean an agreement in writing to refer present or future disputes to arbitration.
Clause 19.2 to cl 19.5 of the shareholders' deed reads as follows:
"19 Dispute resolution
19.1A shareholder will not start arbitration or court proceedings (except proceedings seeking interlocutory relief) in respect of a dispute arising out of this agreement ('dispute') unless it has complied with this clause.
19.2A shareholder claiming that a dispute has arisen must notify the other shareholders, giving details of the dispute.
19.3During the twenty one (21) day period after a notice is given under clause 19.2 (or longer period agreed in writing by the parties to the dispute) ('initial period') each party to the dispute ('disputant') must use its best efforts to resolve the dispute.
19.4If the disputants are unable to resolve the dispute within the initial period each disputant agrees that the dispute must be referred for mediation in accordance with the mediation rules of the Law Society of Western Australia at the request of any disputant to:
(a)a mediator agreed on by the disputants; or
(b)if the disputants are unable to agree on a mediator within seven (7) days after the end of the initial period a mediator nominated by the then current President of the Law Society of Western Australia.
19.5The role of any mediator is to assist in negotiating a resolution of the dispute. A mediator may not make a decision that is binding on a disputant unless that disputant has so agreed in writing.
19.6…"
Clause 19 is not an arbitration agreement. It does not require the parties to refer any dispute to arbitration. On the contrary, it is a clause about giving notice of a dispute to the other party, the parties using their best efforts to resolve the dispute, failing which it is to be referred to mediation. The mediator can only assist in negotiating a resolution of a dispute. The mediator cannot make a decision which is binding on them. I consider that s 53 of the Act does not apply and that the application for a stay under it must be dismissed.
The court undoubtedly has power in its inherent jurisdiction to stay an action if it considers that the action is an abuse of process. The fact that the plaintiff has filed a proof of debt for unpaid wages (which is a big part of his claim in this action) with the liquidator of the fifth defendant, does not make this action an abuse of process. The liquidator may not have any funds. The plaintiff will need leave to proceed against the fifth defendant because it is in liquidation. That leave needs to be obtained under s 471B or s 500(2) of the Corporations Law. The fact that the plaintiff has an action against a company does not preclude it suing the directors of this company for incurring the debts while the company was insolvent.
It was also said that the action is an abuse of process because the plaintiff has sued the fifth defendant in the Industrial Relations Commission for unpaid wages, which constitutes a large part of the plaintiff's claim in the present action. It is clear from a letter produced from the Industrial Relations Commission, dated 8 May 2000, and from comments of Mrs Edward, for the plaintiff, that this action will be discontinued.
Should the action be stayed anyway pending the plaintiff's compliance with the dispute resolution cl 19 of the shareholders' deed? I do not consider that that would be fair. The parties to the shareholders' deed are the plaintiff, the first defendant and the seventh defendant. The plaintiff has brought this action, ignoring the terms of cl 19. It is only the other two parties to the deed who can object to that course. However, those two parties, namely, the first and seventh defendants, have not joined in this application and have filed defences to the plaintiff's statement of claim. Presumably, they are content that this dispute be tried in this court. I do not consider it is open for the second, third, fourth and eighth defendants to obtain a stay while the plaintiff negotiates with the first and seventh defendants. The plaintiff is entitled to proceed against all defendants for the different causes of action in the same action. If the claims against the various defendants arise out of the same, or substantially the same, circumstances, then it is fair for all claims be determined in the one action.
I propose to dismiss this application and order the second, third, fourth and eighth defendants to pay the plaintiff's costs of this application, including any reserved costs, in any event.
Having said that the present applicants do not have a right to insist on mediation under cl 19, nor a right to a stay under s 53 of the Commercial Arbitration Act, or on the ground of abuse of process, mediation of this dispute at some stage under our Rules of Court remains open. Any application for that should be served on all the parties. My present orders do not preclude such an application being brought at a later time.