Commonwealth of Australia v Saratti Mills

[2004] NSWSC 1042

CITATION:	Commonwealth of Australia v Saratti Mills & Anor [2004] NSWSC 1042
HEARING DATE(S):	13/10/04, 14/10/04
JUDGMENT DATE:	10 November 2004
JURISDICTION:	Common Law
JUDGMENT OF:	M W Campbell AJ
DECISION:	1. The appeal is allowed in part; 2. The answer to Q1 if confirmed; 3. The answer to Q4 is quashed, insofar as it relates to the contractual claim. In lieu thereof the following answer is given: The law of Cambodia should be applied to the issues of liability and quantum.
CATCHWORDS:	Private International Law - Choice of Law - Contracts - Proper law of contract.
LEGISLATION CITED:	Supreme Court Act 1970 Supreme Court Rules Part 31 r 2
CASES CITED:	Pettit v Dunkley [1971] 1 NSWLR 376 Soulemezis v Dudley (Holdings) Pty Ltd [1987] NSWLR 247 Bonython v Commonwealth of Australia [1959] AC 201 at 219 United Railways of the Havana and Regla Warehouses Ltd [1960] 1 Ch 52 John Kaldor & Fabricmakers Pty Ltd v Mitchell Cotts Freight (Aust) Pty Ltd (1989) 18 NSWLR 172
PARTIES :	Commonwealth of Australia - Appellant Saratti Mills - 1st Respondent William Jon Mills - 2nd Respondent
FILE NUMBER(S):	SC 2000/20075
COUNSEL:	Mr P Jones - Appellant Mr M Condon - Respondents
SOLICITORS:	Australian Government Solicitor (Mr Kathner) - Appellant Gibsons Lawyers - Respondents

LOWER COURTJURISDICTION:	Supreme Court (Master)
LOWER COURT FILE NUMBER(S):	2000/20075
LOWER COURT JUDICIAL OFFICER :	Master Malpass

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

M W CAMPBELL AJ

Wednesday 10 November 2004

2000/20075 COMMONWEALTH of AUSTRALIA v Saratti MILLS & ANOR

JUDGMENT

1 M W CAMPBELL AJ: This is an appeal from the answers given by Master Malpass to certain questions put to him pursuant to an order under Pt 31 r 2.

Background

2 The background of the action appears sufficiently from what was said to be an agreed statement of facts tendered before the Master. It provides as follows:

“1. The First Plaintiff was born on 27 July 1969.
2. The First Plaintiff was at all material times a Cambodian National.
3. The Second Plaintiff was born on 27 June 1947.
4. The Second Plaintiff was at all material times an Australian National.
5. The First Plaintiff is the mother of David Eric Mills, (hereinafter referred to as ‘the deceased’), who was born in Phnom Penh on 30 August 1995. The deceased was an Australian citizen.
6. The Defendant maintained an Embassy in Phnom Penh, which, inter alia was staffed by an Australian doctor (Dr Dubow).
7. Dr Dubow, in carrying out his duties operated an Embassy Clinic which was situated in the residence occupied by Dr Dubow. At all relevant times Dr Dubow was a Diplomatic Agent for the Commonwealth.
7A. The document marked “A” was published in or about February 1996 by the defendant in an English language newspaper circulating in Phnom Penh. Subsequently the second plaintiff caused a letter to be forwarded to the defendant 22.2.96 which is marked ‘B’.
8. On 18 August 1996, the deceased fell ill and was admitted to a Cambodian hospital in Phnom Penh.
9. On 22 August 1996, the First Plaintiff was advised by a Cambodian doctor that that hospital could not determine the nature of David Eric Mills condition.
10. The Plaintiffs allege that the Second Plaintiff requested Dr Dubow to examine the deceased and to make a diagnosis of his condition. It is further alleged that Dr Dubow refused this request.
11. On 23 August 1996 the deceased was discharged from the hospital with arrangements for a follow up examination to take place on 28 August 1996.
12. On 28 August 1996 the First Plaintiff took the deceased back to the hospital where some blood was taken from the deceased who shortly thereafter died.
13. It is alleged by the Plaintiffs that following the death of the deceased the First Plaintiff at approximately 12.30pm on 28 August 1996 took the deceased home, washed him and returned to the Australian Embassy and requested assistance from Dr Dubow. It is alleged that Dr Dubow refused to see the First Plaintiff. These allegations are denied by the Defendant.
14. It is alleged that a family friend Mr Newman also sought Dr Dubow’s assistance in this matter on 28 August 1996 and again this assistance was refused.
15. It is alleged by the Plaintiffs that the inaction of Dr Dubow, caused the Plaintiffs to suffer nervous shock.
16. The Plaintiffs initially commenced proceedings in the District Court of New South Wales on 27 August 1999 seeking damages for nervous shock, clinical depression along with aggravated, exemplary and punitive damages.
17. The Plaintiffs moved to Australia from Cambodia in 1997.
18. Dr Dubow is currently a resident of Australia.”

3 The document marked A reads as follows:

“PUBLIC NOTICE
The Australian Embassy wishes to advise that, with the growth of the private health care sector, the Embassy Staff Clinic will be restricting access to the clinic.

The clinic exists to profide medical services to diplomatic staff and those organizations who have a specific agreement with the Australian Government. Below is a list of those organizations who have such agreements.
The clinic was happy to be able to assist in the recent shortage of Western style medical services but with the increase in the number of clinics in Phnom Penh, it is now time to return to the purpose for which the clinic was initially proposed.
Australian and Canadian NGOs and other groups who would like to have access to the clinic should apply in writing to the Senior Administrative Officer, Australian Embassy, Phnom Penh.
1. Australian/Canadian Embassy.

· Home based staff and their accompanying families

· Visiting Government Officials

· Locally engaged staff and their nuclear families.

2. British, German, Singaporean and American Embassies. Home based officer and their families and visiting government officials.
3. Rumanian and Dutch CMAC Officials and their families. ”

4 The document marked “B” reads as follows:

“SEACON
CONSTRUCTION
The Senior Administrative Officer
Australian Embassy
Phnom Penh

Dear Sir/Madam Australian Medical Clinic
With reference to your recent advertisement in the Cambodia Daily, I am writing to request your authorization for continued access to the Clinic for my expatriate staff here.
At present, the company is undertaking for the Australian Army stage 4 of the construction of the Counter Insurgence School in Kompong Speu Province. For this, there are two Canadians and one Australian here.
I am also requesting authorization for continued access for my family. We have all received treatment at the clinic in the past. For myself, I am receiving care for an on-going complaint.
Yours Faithfully,

Jon Mills”

5 It is convenient to note that the first plaintiff has now died and that special letters of administration of her estate have been granted to the second plaintiff limited to the prosecution of these proceedings. It was agreed at the hearing that it was appropriate to continue with the matter with Short Minutes of Order to be prepared dealing with the necessary formal steps.

6 The questions submitted to the Master were as follows:

“1. Are the plaintiffs’ causes of action maintainable in the Supreme Court of New South Wales regardless of whether they would be maintainable in Cambodia?
2. If the answer to question 1 is in the negative, then are the Plaintiffs’ causes of action maintainable in Cambodia?
3. If the answer to question 2 is in the negative, then should the Plaintiffs’ causes of action be struck out?
4. If the answers to question 1 or 2 are in the affirmative, then should the law of Cambodia, or Australia, be applied with respect to the issues of:
(i) liability; and
(ii) quantum?
5. If the answer to questions 1 or 2 is in the affirmative is the Supreme Court of New South Wales an appropriate forum to hear the Plaintiffs’ claims?”

7 After hearing evidence and submissions the Master answered the questions so far as could be done on the material before him.

8 It is convenient to note that evidence was taken from two witnesses put forward by the respective sides as experts in Cambodian Law. For present purposes I need only note that they agreed that since 1988 contract law in Cambodia has been governed principally by the Degree-Law No 38 “Law and Contract and Other Liabilities”. It is also appropriate to note the Law on Organisation and Activities of Courts in the State of Cambodia (1993).

9 The present appeal deals only with certain questions and answers. The Notice of Appeal provides, in part, as follows:

“The appellant appeals to the Court constituted by a Judge from the following part of the decision of the Master:
“Q1. Are the plaintiffs’ causes of action maintainable in the Supreme Court of New South Wales regardless of whether they would be maintainable in Cambodia?
A. .…There is dispute concerning the contractual claim. The plaintiffs say that in respect of that claim the answer is yes. Despite the dispute, this aspect of the question excited little by way of submissions. Nothing was said on behalf of the defendant in support of its opposition on this part of the question. In my view, the answer to that part of it is ‘yes’.
Q4. If the answer to questions 1 or 2 are in the affirmative, then should the law of Cambodia, or Australia, be applied with respect to the issues:
(i) liability; and
(ii) quantum.
….In the circumstances, I consider that the closest and most real association is with the legal system in Australia. I consider that the law as applied in this State is the proper law.”

10 It is to be noted that in relation to Q4, whilst worded generally, the appeal was limited to the decision as it related to the contractual claim. The Master had dealt in the relevant part of his judgment with the contractual claim, as opposed to the tortious claim, quite briefly. He said:

“There is dispute concerning the contractual claim. The plaintiffs say that in respect of that claim the answer is yes. Despite the dispute, this aspect of the question excited little by way of submissions. Nothing was said on behalf of the defendant in support of its opposition on this part of the question. In my view, the answer to that part of it is ‘yes’.”

11 The oral submissions were not recorded, however, each side had submitted written submissions prepared after the conclusion of the evidence and before oral submissions. It was agreed that there had been no retreat from those written submissions.

12 The first ground of appeal asserts that the Master erred in finding that the appellant made no submissions with respect to the question of whether the alleged contractual cause of actions were maintainable in the Supreme Court of New South Wales, regardless of whether they were maintainable in Cambodia.

13 The written submissions of the defendant rather set the matter of contract aside when it was said:

“The case alleged on behalf of the plaintiffs appears to be couched in tort although there is a reference to contract.”

14 Perhaps this passing reference influenced the learned Master, however, later in the submissions there was more material relating to the contract aspect. In particular:

“16. In the Statement of Claim it is alleged on behalf of the Plaintiffs that there is a contract between the Defendant and the Plaintiffs.
17. This allegation seems to be based upon very flimsy grounds, namely a Public Notice in a local paper notifying entities that should they desire to have access to the clinic, application should be made in writing.
18. Thereafter a letter is alleged to be forwarded to the Australian Embassy requesting continuing access to the clinic for ‘ expatriate staff’ .
19. There is also access requested ‘ for my family’ . No response is tendered before the Court to that correspondence.”

15 Later paragraphs dealt with the proposition that Australian Embassies overseas are not part of Australian sovereign territory but part of the territory of the receiving state.

16 It would appear that the Master did overlook this material or, if he did not, did not deal with it in his reasons. (Pettit v Dunkley [1971] 1 NSWLR 376; Soulemezis v Dudley (Holdings) Pty Ltd [1987] 10 NSWLR 247.)

17 I do not need to reach a concluded view on this point for, if error be assumed, I would, as the parties have requested, reach my own view. That view, on all the available material, is the same as the Master’s in that I would answer the question “Yes”.

18 The submissions appear to address, as did at times, the oral submissions before me, the question whether there was a contract rather than dealing with the matter raised in the Part 31 order.

19 The issue as to whether there was a contract at all is one for the trial and not to be determined upon the hearing of the quite different questions the Master was called upon to determine.

20 I should observe that Mr Jones of Counsel, who appeared for the appellant, submitted that the tendering of the so called statement of facts, including its amendment to include documents A and B, was an indication of the intention of the plaintiffs that the existence of the contract be determined in these proceedings. I do not think that to be so. Even had the parties so intended I do not consider that the procedure would have been an appropriate one for the resolution of such an issue. Amongst other things the document described as a statement of facts refers to disputed allegations.

21 Despite par 16 of the written submissions of the defendant before the Master, Mr Jones also put to me that the Statement of Claim did not raise a claim in contract. I consider the material in the Statement of Claim sufficient for the expression “plaintiffs’ causes of action” in question 1 to include a claim in contract.

22 On the assumption, for present purposes only, that a contract was entered into, the defendant has submitted to the jurisdiction of this Court and, as was put in the written submission of the respondent before me, “that is the end of the matter”.

23 I turn now to the choice of law question.

24 In his judgment the Master said:

“There is dispute as to the applicable law in the case of the contractual claim. The plaintiffs say that it should be the law of Australia and the defendant says that it should be the law of Cambodia.
There is no express or implied choice of law. Accordingly it is common ground that the test of the closest and most real connection should be applied to determine the proper law. This test requires the court to look at the circumstances as they existed at the time of the formation of the contract.
If there be a contract, it was made in Cambodia. It was also the place of performance. What is complained of involves a responsibility of the Australian Government and took place in a context of services which are provided by its Embassy. The services of the Embassy Staff Clinic were restricted inter alia to those having a specific agreement with the Australian Government. Access was available to inter alia Australians and the function of the clinic was to provide Western style medical services. The Australian Government was a party to the alleged agreement. The clinic had an Australian doctor. One of the plaintiffs is an Australian. The other is his wife. It was their child (an Australian citizen) that was to be the subject of the services. Indisputably, Australia has the most settled and stable legal system.
In the circumstances, I consider that the closest and most real connection is with the legal system in Australia. I consider that the law as applied in this State is the proper law.”

25 In Bonython v Commonwealth of Australia ([1959] AC 201) it was said at 219:

“In consideration of the latter question: what is the proper law of the contract, and therefore what is the substance of the obligation created by it, it is a factor, and sometimes a decisive one, that a particular place is chosen for performance.”

26 In United Railways of the Havana and Regla Warehouses Ltd ([1960] 1 Ch 52) Jenkins LJ, with whom Ramer LJ agreed, said at 91:

“In an inquiry as to what is the proper law of a contract in which the parties have not expressed their own selection of the law to be applied, many matters have to be taken into consideration. Of these, the principal are the place of contracting, the place of performance, the places of residence or business of the parties respectively, and the nature and subject-matter of the contract (Dicey, pp 719, 720, citing Falconbridge, Selected Essays on The Conflict of Laws, 2nd ed., p378). But, as the editor points out, the most satisfactory formulation is that the proper law is the one ‘with which the transaction has its closest and most real connection’ (per Viscount Simmonds in Bonython v Commonwealth of Australia , [1951] AC 201 at 219). ‘The country in which [the contract’s] elements are most densely grouped will represent its natural seat and the law to which in consequence it belongs. It may have factual links with several countries, each of which has some claim to be considered . . . . In most cases, however, an examination of these connecting ties will disclose without undue difficulty the country with which the contract is in fact most closely connected and in which it has its natural seat and centre of gravity.’ (Cheshire’s Private International Law, 5th ed., p207.)”

27 Mr Jones has submitted that the Master has fallen into error in taking the following factors into account:

(a) That the medical service to be provided was western style medicine.

(b) That the subject of the service was the child David, and

(c) That Australia has the most settled and stable legal system.

28 I think the nature of the service provided to be a relevant factor and consider it open to the Master to take it into consideration.

29 However, with respect, I do not consider that it was open to the Master to take the other two matters into account and that he fell into error in so doing.

30 The appropriate time to be considered, as the Master pointed out, was the time of entry into the contract.

31 If it is assumed that a contract was entered into it was for “my family”. So far as appears that meant one Cambodian and two Australians living in Cambodia. I do not think the fact that some months later service was required in respect of one Australian member of the family could be a relevant factor to a determination of the proper law of the contract.

32 That Australia had a more stable and settled legal system might have been relevant if the test was of inferred intention (see Dicey & Morris The Conflict of Laws 13 ed., 1197), however, that was not the test used before the Master.

33 Further, having regard to the common ground as to the appropriate test in this case, I do not need to consider the question whether one comes to that test only after determining that an intention as to the proper law cannot be inferred. (See, John Kaldor & Fabricmaker Pty Ltd v Mitchell Cotts Freight (Aust) Pty Ltd (1989) 18 NSWLR 172 per Brownie J at 180 et seq.)

34 It may be that the parties accepted that no intention could be inferred, however, it is unnecessary to pursue this question.

35 I should observe that the advertisement refers to “organisations who have a specific agreement with the Australian Government”. It would seem probable that such agreements would either provide expressly for the law to be applied or contain material from which an appropriate inference could be drawn.

36 There is in this case no formal agreement which could provide assistance in this way.

37 What the position would be if Cambodia had no relevant law or legal system is not something which I need to consider. As it is I, with respect, do not think it was open to the Master to have regard to this factor.

38 Error of law having been demonstrated it is for me, as the parties have requested, to reach my own conclusion.

39 It is my view that a consideration of the competing factors leads to the conclusion that the proper law of the contract is the law of Cambodia.

40 On the assumption that there was a contract it was made in Cambodia for the rendition of services in Cambodia. One of the contracting parties was Cambodian. What was arranged was not some extensive commercial or financial agreement but an agreement for the provision of medical services to one family.

41 The plaintiffs resided in Cambodia as did their son and Dr Dubow. The Embassy was in Cambodia and the provision of medical services to a family such as that of the plaintiffs would appear to be a local undertaking, albeit approved by the Australian Government.

42 Whilst I have concluded that the provision of western style medicine is a factor it does not seem to me to be one of much weight. I note that the clinic was at the residence of Dr Dubow, not that of the Embassy.

43 I consider that the factors relied upon by the Master as supporting his conclusion, apart from those I have held not to be available, are outweighed by those to which I have referred.

44 With respect I consider that the proper answer to question 4, in so far as it relates to the contractual claim, is that the law of Cambodia should be applied to the issues of liability and quantum.

ORDERS

45 I make the following orders:

1. The appeal is allowed in part.

2. The answer to Q1 is confirmed.

3. The answer to Q4 is quashed, insofar as it relates to the contractual claim. In lieu thereof the following answer is given: The law of Cambodia should be applied to the issues of liability and quantum.

46 I shall hear the parties as to costs.

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Last Modified: 11/18/2004