Crestline Pty Ltd v Graham
[2004] WASC 183
CRESTLINE PTY LTD -v- GRAHAM [2004] WASC 183
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 183 | |
| Case No: | CIV:1424/2003 | 29 JULY 2004 | |
| Coram: | MASTER NEWNES | 20/08/04 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Injunction refused | ||
| B | |||
| PDF Version |
| Parties: | CRESTLINE PTY LTD (ACN 096 697 415) DONALD MONTROSE GRAHAM |
Catchwords: | Practice and procedure Anti-suit injunction to stay foreign proceedings until local proceedings completed Relevant principles Turns on own facts |
Legislation: | Employment Relations Act 2000 (NZ), s 611(e) Fair Trading Act 1987 (WA), s 10 Trade Practices Act 1974 (Cth), s 52 |
Case References: | CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 Jackson v Sterling Industries Ltd (1987) 162 CLR 612 Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65 Barclays Bank PRC v Homan [1992] BCC 757 Busst v Lotsirp Nominees Pty Ltd [2002] QCA 296. Calipa Pty Ltd v Perry (1994) 15 ACSR 526 Continental Bank NA v Aekos Compania Naveria SA [1994] 1 WLR 588 CSR Ltd v New Zealand Insurance Co Ltd (1994) 36 NSWLR 138 Fink v Fink (1946) 74 CLR 127 Gau Shan Co Ltd v Bankers Trust Co 956 F 2d 1349 Henry v Henry (1996) 185 CLR 571 Mason v Murray's Charter Coaches & Travel Services Pty Ltd (1999) 159 ALR 45. McHenry v Lewis (1882) 22 Ch D 397 Midland Bank Plc v Laker Airways [1986] QB 689 National Mutual Holdings Pty Ltd v Sentry Corp (1989) 87 ALR 539 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 Peruvian Guano Co v Bockwoldt (1883) 23 Ch D 225 Savage v Digital Equipment Corp (Australia) Pty Ltd (1999) 120 IR 363. Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 Union Steamship Co of New Zealand Ltd v The Ship Carradale (1937) 56 CLR 277 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
DONALD MONTROSE GRAHAM
Defendant
Catchwords:
Practice and procedure - Anti-suit injunction to stay foreign proceedings until local proceedings completed - Relevant principles - Turns on own facts
Legislation:
Employment Relations Act 2000 (NZ), s 611(e)
Fair Trading Act 1987 (WA), s 10
Trade Practices Act 1974 (Cth), s 52
Result:
Injunction refused
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M N Solomon
Defendant : Dr J O'Donovan & Mr J G M Fiocco
Solicitors:
Plaintiff : Gadens Lawyers
Defendant : Fiocco's Lawyers
Case(s) referred to in judgment(s):
CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345
Jackson v Sterling Industries Ltd (1987) 162 CLR 612
Case(s) also cited:
Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65
Barclays Bank PRC v Homan [1992] BCC 757
Busst v Lotsirp Nominees Pty Ltd [2002] QCA 296.
Calipa Pty Ltd v Perry (1994) 15 ACSR 526
Continental Bank NA v Aekos Compania Naveria SA [1994] 1 WLR 588
CSR Ltd v New Zealand Insurance Co Ltd (1994) 36 NSWLR 138
Fink v Fink (1946) 74 CLR 127
Gau Shan Co Ltd v Bankers Trust Co 956 F 2d 1349
Henry v Henry (1996) 185 CLR 571
Mason v Murray's Charter Coaches & Travel Services Pty Ltd (1999) 159 ALR 45.
McHenry v Lewis (1882) 22 Ch D 397
Midland Bank Plc v Laker Airways [1986] QB 689
National Mutual Holdings Pty Ltd v Sentry Corp (1989) 87 ALR 539
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197
Peruvian Guano Co v Bockwoldt (1883) 23 Ch D 225
Savage v Digital Equipment Corp (Australia) Pty Ltd (1999) 120 IR 363.
(Page 3)
Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871
Union Steamship Co of New Zealand Ltd v The Ship Carradale (1937) 56 CLR 277
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538
(Page 4)
1 MASTER NEWNES: This is an application by the plaintiff for an anti-suit injunction by which it is sought to compel the defendant to seek and/or consent to, as soon as reasonably practicable, a stay of the proceedings brought by the defendant against the plaintiff in the Employment Relations Authority of New Zealand until further order of this Court, failing which the defendant's defence in this action be set aside and the plaintiff entitled to judgment. In essence, the plaintiff seeks to restrain the defendant from prosecuting proceedings for unjustified dismissal in the Authority pending the determination of this action.
2 In this action the plaintiff says that it carried on the business of personnel recruitment in Australia and the defendant was engaged in the business of personnel recruitment in New Zealand, including as a director and shareholder of Management Recruiters New Zealand Ltd ("Recruiters"). Between about January 2002 and April 2002 the defendant entered into negotiations with the plaintiff regarding the possibility of the plaintiff acquiring or investing in a personnel recruitment business in New Zealand. The plaintiff alleges that, in the course of those negotiations, the defendant made certain representations to the plaintiff about the earnings and profitability of Recruiters.
3 It is pleaded that, in reliance on those representations, the plaintiff acquired a dormant New Zealand company, the name of which was changed to Search Australasia Ltd ("Search"), and then procured Search to acquire the business assets of Recruiters. As part of that arrangement the plaintiff entered into a shareholder's agreement by which it agreed to issue to the defendant 25,000 shares in the plaintiff on the basis that the value of those shares was equivalent to the value of the assets acquired by Search. Those shares were subsequently issued.
4 The plaintiff also procured Search, on or about 16 June 2002, to enter into a written employment agreement with the defendant by which the defendant was appointed as managing director of Search. It was a term of that agreement that it would be construed and take effect as a contract made in New Zealand and would be governed by New Zealand law.
5 The plaintiff pleads that the business of Search was unprofitable and following continued losses the plaintiff caused a liquidator to be appointed to wind up Search in January 2003. The liquidator has advised the plaintiff, among other things, that it is unlikely to recover any amount in respect of a loan of some $64,000 made by the plaintiff to Search.
(Page 5)
6 The plaintiff commenced this action against the defendant on 15 April 2003. The plaintiff alleges that the representations made by Recruiters were misleading or deceptive or likely to mislead or deceive contrary to s 10 of the Fair Trading Act 1987 (WA) and s 52 of the Trade Practices Act 1974 (Cth). The plaintiff pleads that, by making the representations on behalf of Recruiters, the defendant was involved in the conduct of Recruiters, in that he aided and abetted, counselled or procured it to engage in the conduct or was directly or indirectly knowingly concerned in the conduct.
7 The plaintiff says that, by reason of the misleading and deceptive conduct, it has suffered loss and damage. It seeks a declaration that the plaintiff was entitled to terminate the shareholders' agreement with the defendant, as it did, including the cancellation of the shares the plaintiff issued to the defendant, and to damages pursuant to the Fair Trading Act and the Trade Practices Act and at common law.
8 The defendant has filed a defence which consists largely of non-admissions and denials of the matters pleaded by the plaintiff. The non-admissions include a non-admission that the defendant was employed by Search.
9 On 16 December 2003 the defendant commenced proceedings under the New Zealand Employment Relations Act, 2000 (the "Act") against the plaintiff in the Authority for unjustified dismissal. In those proceedings, the defendant alleges that in April 2002 he entered into a contract of employment with the plaintiff (rather than Search) for a period of two years, and that he was unjustifiably dismissed in February 2003. The defendant seeks, amongst other things, a finding that he was unjustifiably dismissed by the plaintiff; compensation of $50,000 under the Act for hurt feelings, humiliation and loss of dignity; reimbursement of $207,450 for lost remuneration; damages of $20,000 for breach of the employment agreement; a penalty of $10,000 for breaches of the employment agreement and good faith obligations under the Act, and an amount for accrued annual leave. In his initial application, the defendant had sought compensation for the loss of his shares in the plaintiff, but on 6 April 2004, after the plaintiff had filed this application, the defendant filed an amended application in the Authority in which the claim for the loss of the shareholding in the plaintiff was omitted.
10 The Authority is a specialist tribunal established in New Zealand to hear and determine employment disputes and claims between employees and employers. Under s 161(1)(e) of the Act the Authority is given
(Page 6)
- exclusive jurisdiction to make determinations about employment relations problems generally. A claim for wrongful dismissal can only be brought in the Authority. Such a claim cannot be brought in any civil court. Equally, the Authority has no jurisdiction to hear and determine any dispute of a commercial nature, such as that which is now the subject of this action.
11 One of the objectives of the Authority is to deliver speedy, informal and practical justice to parties to proceedings before it. Section 157 of the Act provides that the Authority is "an investigative body that has the role of resolving employment relationship problems by establishing the facts and making a determination according to the substantial merits of the case, without regard to technicality". The Authority must comply with the principles of natural justice and act in equity and good conscience. The procedure of the Authority was said in the evidence to have a high degree of informality. The members of the Authority may be, but are not necessarily, legally trained and many are not, although a member will have substantial experience in employment relations problems.
12 Under the Act, the Authority has jurisdiction to grant remedies which include lost remuneration, compensation for hurt feelings, humiliation and loss of dignity, damages for breach of the employment agreement or for breach of the good faith obligation an employer owes an employee under the Act, compensation for other losses, interest and costs.
13 The defendant's application to the Authority has been set down for hearing on 18 to 21 October 2004. It is clear that the plaintiff's claim in this action will not be heard and determined before that time.
14 The plaintiff acknowledged that, viewed in broad terms, the two proceedings are quite different. The central issues in this action are whether the defendant misled or deceived the plaintiff in respect of the value and economic potential of Recruiters and whether the plaintiff is entitled to remedies under the Fair Trading Act and Trade Practices Act. The issues in the proceedings in the Authority are whether the defendant was employed by the plaintiff and, if so, whether the plaintiff wrongfully dismissed the defendant and whether the defendant is entitled to various contractual and statutory remedies, those remedies being within the exclusive jurisdiction of the Authority. It was common ground that the two proceedings can only be heard in the respective jurisdictions in which they have been instituted.
(Page 7)
15 It was, however, submitted on behalf of the plaintiff that there was a significant overlapping substratum of facts and issues which required that this action should be determined before the defendant's proceedings in the Authority. In particular, it was submitted that the issue of defendant's alleged misleading and deceptive conduct is not only central to this action but is directly relevant to questions in the Authority proceedings as to the plaintiff's good faith and whether the defendant's dismissal was fair. It is also a central issue in the Authority proceedings whether the plaintiff or Search was the defendant's employer. Although this is not directly central to this action, it is part of the substratum of fact.
16 The principles to be applied in an application for an anti-suit injunction were considered by the High Court in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345. In that case, an Australian company and its United States subsidiary instituted proceedings against their insurers and the United States parent company of an Australian lead insurer in the United States District Court of New Jersey, claiming declarations that they were entitled to indemnities with respect to certain American asbestos claims. The lead insurer, the parent company and other insurers subsequently instituted proceedings against the Australian company and the United States subsidiary in the Supreme Court of New South Wales for a declaration that they were not liable to indemnify the Australian company or the United States subsidiary in respect of asbestos claims made in the United States or Australia. They also applied for an interlocutory anti-suit injunction restraining the Australian company and the United States subsidiary from taking any further step in the United States proceedings. At first instance an anti-suit injunction was granted. That decision was upheld on appeal to the New South Wales Court of Appeal but reversed by the High Court.
17 The principles applicable to a claim for an anti-suit injunction were considered by the High Court. It held that a court has an inherent power to protect the integrity of its processes and in an appropriate case that will authorise the grant of an anti-suit injunction. The power to do so is not restricted to defined and closed categories: (supra) at 392 (see also Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 639). It is to be exercised when necessary for the protection of the court's own proceedings or processes.
18 The Court also held that, quite apart from that inherent power, a court in the exercise of its equitable jurisdiction may make orders in restraint of unconscionable conduct or the unconscientious exercise of legal rights. If the bringing of legal proceedings involves unconscionable
(Page 8)
- conduct or the unconscientious exercise of a legal right, an injunction may be granted by a court in the exercise of its equitable jurisdiction in restraint of those proceedings no matter where they are brought: (supra) at 392. A well-established category of cases in which an injunction may be granted in the exercise of equitable jurisdiction is that involving proceedings in another court, including a foreign court, which are, according to the principles of equity, vexatious or oppressive. Thus, where there is pending litigation in a court in which complete relief may be obtained and a party to the action institutes proceedings abroad, that act will generally be considered a vexatious harassing of the opposite party and will be restrained: (supra) at 393.
19 But the mere co-existence of proceedings in different countries does not constitute vexation or oppression. Double litigation which has no other element of oppression than that an action is going on simultaneously abroad which will give other or additional remedies beyond those available in the domestic action does not amount to vexation or oppression. That is, foreign proceedings are to be viewed as vexatious or oppressive only if there is nothing which can be gained by them over and above what may be gained in local proceedings. They will, on the other hand, be vexatious or oppressive if there is a complete correspondence between the proceedings or if complete relief is available in the local proceedings.
20 Accordingly, the institution of foreign proceedings is not of itself vexatious or oppressive. Similarly, proceedings in a foreign jurisdiction do not become vexatious or oppressive simply because the party against whom they have been brought later commences proceedings with respect to the same subject matter in this country.
21 The majority observed (at 396) that the power to grant injunctions in restraint of foreign proceedings should be exercised with caution, whether the injunction is sought in the exercise of the court's inherent or equitable jurisdiction.
22 In Cigna Insurance, the majority in the High Court considered that the fact that CSR sought treble damages under the Sherman Act in the United States proceedings - relief which was not available in the New South Wales proceedings - was sufficient to take the United States proceedings outside the category of cases in which the co-existence of foreign proceedings is properly to be viewed as vexatious or oppressive for the purposes of equity.
(Page 9)
23 It was not in issue on this application that the Authority has exclusive jurisdiction in respect of the defendant's claim and, in any event, that not all of the relief which the defendant seeks in the Authority would be available in this jurisdiction. The plaintiff, however, contended that an injunction was warranted both within the inherent and equitable jurisdictions of the court because first, there was a substantial overlap of issues and that the determination of the overlapping issues in separate proceedings was inherently undesirable and productive of serious prejudice; secondly that the defendant had inexcusably delayed these proceedings while prosecuting in a timely fashion the proceedings in the Authority with the object of obtaining a trial date there well in advance of any trial date likely to be obtained in this action; and thirdly, that issues central to this action would otherwise be ventilated in the Authority in an informal forum without regard to the rules of evidence and without cross-examination, and possibly by a member of the Authority who is not legally qualified. On the other hand, it was argued, if the injunction is granted the defendant's rights in the Authority will be preserved but this action will proceed to completion first with due regard to legal processes appropriate to the determination of the facts relevant to it.
24 It is significant that the issue on this application is not the forum in which a dispute between the parties is to be determined but rather which action should proceed first. As I have said, it is not contended by the plaintiff that the defendant's claim in the Authority is within the jurisdiction of this court. The plaintiff accepts that that claim can only be heard and determined in the Authority. It was common ground that the two sets of proceedings involved different claims and different relief and that they cannot be heard in the one proceeding. It was not suggested that so far as this action was concerned, any question of issue estoppel would arise as a result of findings made in the proceedings in the Authority and I understood counsel for the plaintiff to acknowledge that findings in the Authority would have no legal consequences in this action.
25 As was made clear in Cigna, caution must be exercised in issuing an anti-suit injunction. Whilst such an injunction is not directed against a foreign court, but rather against the party who seeks to invoke the court's jurisdiction, nevertheless, the practical effect of such an injunction is to preclude, or in this case to interfere in, the ordinary exercise by the foreign court of its jurisdiction. In this case it would preclude a resident of New Zealand from prosecuting a claim in the normal way in a statutory tribunal of that country which has been specifically established to resolve, in a speedy, informal and cost effective way, claims of the nature which he wishes to prosecute.
(Page 10)
26 It is, of course, the position, as submitted by the plaintiff's counsel, that in the present circumstances the injunction is not sought to preclude the defendant from prosecuting his claim at all, but only to delay it until this action is concluded. It is nevertheless, in my view, a substantial step to intervene in that way so as effectively to interfere with the disposition by a foreign tribunal of a claim within its jurisdiction according to it normal procedures and timetable and consistently with its objectives.
27 In my view, the extent and nature of the common issues of fact in the two proceedings are not sufficient to justify the restraint sought. Such a restraint is not necessary to protect the proceedings or processes of this Court in respect of this action. Nor can the proceedings in the Authority properly be described as vexatious or oppressive. There is no suggestion that the proceedings in the Authority have been commenced in bad faith or to frustrate or obstruct the action in this Court. The remedies the defendant seeks are not available in this Court and while there is some overlap in the issues of fact in the two proceedings the overlap is very far from complete. Indeed, the primary issues of fact in each case are significantly different. Whilst it may well be more convenient, economical or otherwise advantageous to the plaintiff for this action to proceed to finality first that, of course, is not to the point.
28 I do not accept that, to the extent it is relevant, there has been unconscionable conduct on the part of the defendant such as would justify restraining the defendant from prosecuting the proceedings in the Authority.
29 This action was commenced on 15 April 2003 and the writ was served on 29 April 2003. An appearance was entered on 13 May 2003. The statement of claim was not filed on behalf of the plaintiff until 30 June 2003, the date of a status conference in the action. At that status conference, the defendant's defence was ordered to be filed by 11 August, but by a subsequent agreement between the parties that time limit was extended to 25 August. The defence was filed on 26 August. The plaintiff filed its reply on 17 November 2003. That was again the date of a status conference in the action. At that status conference the parties were ordered to give discovery by 15 December 2003 and inspection was to take place by 16 January 2004. The plaintiff gave discovery on 15 December 2003 but the defendant failed to do so. At a status conference on 23 February 2004 the defendant was ordered to give discovery by 22 March 2004. It did not in fact give discovery until 21 April 2004. There then arose a dispute between the parties about the adequacy of the defendant's discovery. That dispute is still to be resolved.
(Page 11)
30 The defendant says his intention to commence proceedings for unjustified dismissal was notified to the plaintiff orally a few days after his dismissal on 9 February 2003 and to the plaintiff's solicitors by letters of 25 April 2003 and 9 May 2003. The defendant says that the reason for the delay in instituting proceedings in the Authority for unjustified dismissal was his lack of income as a result of the termination of his employment.
31 It is clear that there has been significant delay by the defendant in complying with necessary steps in this action. The delays by the defendant must, however, be viewed in the context of the diligence with which plaintiff has appeared to prosecute the action. In that respect, it is notable that the statement of claim was almost five weeks late and was filed on the day of a status conference. The reply was more than two months out of time and again was filed on the day of a further status conference. There were specific reasons for the latter delay, relating to the availability of the particular solicitors handling the matter on behalf of the plaintiff, but the fact remains that the matter effectively remained dormant between the filing of the defence on 26 August and 17 November when a status conference was listed. Since the institution of proceedings in the Authority the plaintiff has been more assiduous in the pursuit of this action but overall the plaintiff does not appear to have exhibited an anxiety to press the action with especial expedition.
32 On the material before me, I would not be prepared to draw the inference that the defendant has been deliberately dragging his feet so as to ensure that the proceedings in the Authority were determined first and I do not consider the delays that have occurred amount to unconscionable conduct by the defendant. I might add there is nothing to suggest that, absent such delays by the defendant, it is likely the action in this Court would have been heard first. Given the objects of the Authority and the informal nature of its proceedings there is, on the contrary, very good reason to think that those proceedings would have been heard first in any event. It is highly unlikely that, even without those delays, this action would have been heard and determined before October 2004, when the proceedings in the Authority are set down for hearing.
33 In my view, the plaintiff has failed to make out a basis for an anti-suit injunction and I would dismiss the application.
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