Dial a Dump v Extec Screen and Crushers

[2001] NSWSC 569

CITATION:	Dial A Dump v Extec Screen & Crushers [2001] NSWSC 569 revised - 10/07/2001
CURRENT JURISDICTION:	Equity Division Commercial List
FILE NUMBER(S):	SC 50015/01
HEARING DATE(S):	29 June 2001
JUDGMENT DATE:	29 June 2001
PARTIES :	Dial A Dump Pty Ltd v Extec Screen & Crushers Limited
JUDGMENT OF:	Hunter J

COUNSEL :	Applicant/ defendant: J Van Aalst Respondent / plaintiff: P Braham
SOLICITORS:	Applicant/ defendant: Hardings Respondent / plaintiff: Deacons
CATCHWORDS:	Practice & Procedure - forum non conveniens - application to stay or strike out - 'clearly inappropriate forum' test applied.
DECISION:	Application refused with costs.

THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

COMMERCIAL LIST

HUNTER J

FRIDAY 29 JUNE

50015/01 - DIAL A DUMP PTY LTD v EXTEC SCREENS & CRUSHERS LIMITED

EX TEMPORE JUDGMENT

1    This is an application by amended notice of motion filed 29 June 2001 in which the defendant seeks the following orders:

“1. An order pursuant to Part 10 rule 1A(1)(b) that the originating process being founded on a breach of contract in the United Kingdom and not in the State of New South Wales, be struck out .

2. In the alternative, an order that the proceedings herein be stayed by reason that this Court is clearly not the appropriate forum, pending the determination of the issues between the parties in a Court of appropriate jurisdiction in the United Kingdom.”

2    The proceedings arise out of a claim for commission arising out of the alleged breaches of an agreement between the plaintiff and the defendant said to have been entered into about March of 1998 (the agreement).

3    The defendant is a company incorporated in the United Kingdom and is the manufacturer of certain crushing equipment. The plaintiff, a corporation resident in this State, alleges that under the agreement it became entitled to payment of commission upon specified machinery of the defendant manufactured by it and supplied to customers in Australia.

4    The plaintiff alleges breach of the following terms of the agreement:

“Dial A Dump shall be paid its said commission by bank transfer in Sterling to its account maintained for that purpose in the United Kingdom. Commission shall be due not later than 30 days following payment clearance for the product into the territory.
Extec shall inform Dial A Dump of every potential sale in the territory as soon as possible.”

5    The plaintiff alleges that the defendant has failed to pay the subject commission and has failed to provide the information referred to in the second quoted provision of the agreement. It is accepted by the plaintiff that the breach of the first of those quoted terms must be taken as having occurred in the United Kingdom but contends, I think correctly, that any breach of the second term, as alleged, would have taken place in this State.

6    I think the only other pertinent provisions of the agreement are the following:

“In return for this arrangement Dial A Dump and all associated companies will lend their good will in promoting the Extec products throughout the territory. Dial A Dump will provide a depot and facilities at their discretion. Dial A Dump will assign the existing company ‘Extec Screens & Crushers Pty’ to Extec Screens and Crushers or their nominee.
Dial A Dump will support the marketing effort through access to their existing operation at their discretion…
Access to Dial A Dump premises for such additional organizations/ persons shall be at the absolute discretion of Dial A Dump.
Any dispute or conflict between the parties arising out of or from the operation of this agreement shall be resolved by submitting the matter to the arbitration service offered by the Law Society of New South Wales. Decisions made by this service shall be binding upon both parties…”

7    The affidavit in support of the application is that of Stephen Paul Walls sworn 30 May 2001 and that of Michael Peacock sworn the same day.

8    Mr Walls is a sales consultant for the defendant and is familiar with its business activities. In 1998 he came into contact with representatives of the plaintiff which led to a representative of the plaintiff visiting an exhibition held in Germany in 1998 at which the defendant exhibited - this, in turn, led to the agreement, the subject of these proceedings. He evidenced the terms and conditions upon which the defendant's machinery is sold and supplied to customers, clause 14 of which is in the following terms:

“ 14. Governing Law

a) The Seller may, without prejudice to its liabilities hereunder, assign, transfer or sub-contract the Contract or any part thereof to any person or company.
b) No waiver of any term of the Contract by the Seller shall be deemed to be a further or continuing waiver of any term of the Contract.
c) No right of licence is granted by the Contract to the Customer under any patent, copyright, registered design or other protection except the right to use or resell the Goods.
d) The Clause headings in these Terms and Conditions are for ease of reference only and will not affect the interpretation hereof.
e) If any part of these Terms and Conditions of sale is at any time found to be in contravention of the relevant law, or to be contradictory with another part of the Terms and Conditions, only that particular part shall be superceded and all other Terms and Conditions shall remain in force.
f) The construction, validity and performance of the contract shall be governed by and subject in all respects to the law of England and Wales and all disputes arising out of this contract shall be subject to the exclusive jurisdiction of the Courts of England and Wales.”

9    He evidenced further the facts that the defendant carries on its business in Derbyshire in England, that its business of manufacturing machinery is substantial, as is reflected by an annual turnover of £50,000,000, of which he estimates 70 percent is from overseas sales. The records of the defendant are kept in the United Kingdom.

10    The affidavit of Mr Peacock, deposes to the facts that he is a solicitor experienced in litigation who has been retained by the defendant in conjunction with Sydney lawyers. He has been instructed to commence proceedings in the United Kingdom against the plaintiff in relation to matters that would substantially overlap the issues raised in these proceedings. It seems that the institution of those proceedings is awaiting the outcome of this application. He also evidenced the identity and place of residence of potential witnesses for the defendant and the nature, extent and location of relevant business records which may be involved by way of discovery in the proceedings. They are located primarily in Derbyshire and at Sheffield, where the finance and administration department of the defendant is situated.

11    He identified the defendant’s witnesses as being Messrs Walls, Douglas and Cooper, each being resident and have their employment in England. He also expressed the opinion that the financial controller of the defendant may be a necessary witness.

12    It is clear from his affidavit that there is available a procedure in the English High Court system for a commercial case such as this which would ensure its expeditious preparation and setting down for trial within a period of 12 months after the issue of proceedings. It was his opinion that the dispute between the parties could be more suitably tried in the United Kingdom than in this State.

13    The affidavit of Ian Malouf sworn 26 June 2001 in opposition to the application, he being the plaintiff's managing director, evidenced the circumstances in which the alleged agreement was entered into between the parties. I think little utility is to be gained from referring to that material in any detail.

14    Generally, it referred to the nature of the agreement, the detailed circumstances in which, allegedly, it was brought into existence and its performance. He identified activities allegedly undertaken by him in Australia to promote the defendant's product range as set out more particularly in paragraphs 6 and 8 of his affidavit. He also identified the extent to which the defendant, allegedly, has penetrated the Australian market following the agreement.

15    He stated that there are three principal employees of the plaintiff who would be required to give evidence in the proceedings, along with its former accountant and a person familiar with the marketing activities conducted by the plaintiff on behalf of the defendant. In addition to those, he lists five other persons relating to the distribution of the defendant's products in Australia and "several other purchasers of the Extec machinery" as likely witnesses for the plaintiff. It is his evidence that one of the witnesses is 74 years of age and, as such, a reluctant traveller to proceedings in England.

16 The first question to be considered is whether the plaintiff has satisfied the test for service of originating process outside of the State as outlined in Part 10 rule 10.1A of the Supreme Court Rules. The plaintiff relies upon subrule 1A(1)(c)(iii) and (iv). Subrule (c) is in the following terms:

“10.1A. (1) Subject to rule 2 and rule 2A, originating process may be served outside Australia in the following cases:
…
(c) where the subject matter of the proceedings is a contract and the contract:
(i) is made in the State;
(ii) is made on behalf of the person to be served by or through an agent carrying on business or residing in the State;
(iii) is governed by the law of the State ; or
(iv) is one a breach of which was committed in the State…”

17    It has been submitted on behalf of the applicant that sub-rule (c) should be read conjointly so that originating service process may be served outside of Australia only where all of the factors in sub-pars (i) -(iv) are satisfied.

18    I have been referred to no authority to support that proposition. That is not my reading of the sub-rule. I think the plaintiff satisfies both criteria in sub-pars (c) (iii) and (iv) for service outside of Australia. Insofar as it concerns the breach consisting of the alleged failure of the defendant to provide to the plaintiff information of potential sales that is, clearly, I think, a breach occurring within this State.

19    Further, I think a number of matters suggest that the proper law of the contract is the law of this State, principal amongst which is the agreement of the parties to submit disputes to arbitration under the auspices of the Law Society of New South Wales. Whilst that is not an unequivocal expression of choice of law, I think in the circumstances of performance of this agreement one should infer such a choice of law on the part of the parties. Whilst it is common ground that such a choice of law is not conclusive, it nevertheless is a matter of some weight in my view, in considering the question the proper law of the contract is the law of this State, I think it is.

20    Other factors dictating that the proper law of the contract is the law of New South Wales are to be found in the quoted portions of the agreement, in particular those requirements that imposed upon the plaintiff the obligation of lending its goodwill in promoting the defendant's products throughout Australia; of providing depot facilities; of supporting the defendant's marketing effort through access to the plaintiff's existing operation and the provision of access to the plaintiff's premises for additional organisation and persons as may be required for the venture.

21    While these matters are said to be at the discretion of the plaintiff, it is clear that the plaintiff's alleged involvement in earning commission was extensive and was located exclusively within Australia. Place of performance of the agreement, together with the ‘choice of law’ provision, I think, strongly dictates a conclusion that the proper law of the contract is the law of this State.

22    It was argued on behalf of the applicant that a contrary inference should be drawn from the fact that the condition of sale by the defendant to its customers contained the governing law provision quoted earlier in these reasons. I do not agree. I think that is really a neutral factor, only of significance as between the defendant and its customers and having no bearing upon its relationship with the plaintiff.

23    It then turns to be considered whether this is the appropriate forum for the hearing of these proceedings. I have no doubt that it is. The parties are agreed that the test to be applied is the "clearly inappropriate forum" test as laid down in the joint judgment of the High Court in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538.

24    In Kirby v ICC : ICC v Hamburg [2000] NSWSC 289 I had occasion to consider this test in the following way:

“In the joint judgment of Mason CJ., Deane, Dawson and Gaudron JJ. in Voth …, when addressing the task confronting the trial judge in an application of this kind, the following observation was made :

“Ordinarily, however, it will be unnecessary for the primary judge to do more than briefly indicate that, having examined the material in evidence and having taken account of the competing written and oral submissions, he or she is of the view that the proceedings should or should not be stayed on forum non conveniens (i.e “clearly inappropriate forum”) grounds”.


…

Voth forms part of a series of cases in the High Court which established that the ‘clearly inappropriate forum’ test was the test to be applied in forum non conveniens cases in Australia, beginning with the exposition of that principle by Deane J. in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 247 et seq.

“In the light of the foregoing and at the cost of some repetition, it is possible to identify in summary form what I see as the modern content of the traditional principles governing the power of a court in this country to order that proceedings which have been regularly instituted within jurisdiction should be dismissed or stayed on inappropriate forum grounds. That power is a discretionary one in the sense that its exercise involves a subjective balancing process in which the relevant factors will vary and in which both the question of the comparative weight to be given to particular factors in the circumstances of a particular case and the decision whether the power should be exercised are matters for individual judgment and, to a significant extent, matters of impression. The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him. Ordinarily, a defendant will be unable to discharge that onus unless he can identify some appropriate foreign tribunal to whose jurisdiction the defendant is amenable and which would entertain the particular proceedings at the suit of the plaintiff. Otherwise, that onus will ordinarily be discharged by a defendant who applies promptly for a stay or dismissal if he persuades the local court that, having regard to the circumstances of the particular case and the availability of the foreign tribunal, it is a clearly inappropriate forum for the determination of the dispute between the parties. The reason why that is so is that, once it is accepted that the adjectives “oppressive” and “vexatious” are not to be narrowly or rigidly construed and are to be applied in relation to the effect of the continuation of the proceedings rather than the conduct of the plaintiff in continuing them, the continuation of proceedings in a tribunal which is a clearly inappropriate forum would, in the absence of exceptional circumstances being established by the plaintiff (cf. Spiliada Maritime Corp. v. Cansulex Ltd .), be oppressive or vexatious to such a defendant if there is some available and appropriate tribunal in another country.”

In that passage His Honour used the adjectives “oppressive” and “vexatious” in the following way (at 247):

“On that approach, “oppressive” should, in this context, be understood as meaning seriously and unfairly burdensome, prejudicial or damaging while “vexatious” should be understood as meaning productive of serious and unjustified trouble and harassment.”

Further explanation is to be found in CSR Ltd v Cigna Insurance Australia Ltd (1996-1997) 189 CLR 345 at 390-391 and 400-401 in the following terms:

“The test which, in this country, governs a stay of proceedings in favour of proceedings in another country is as stated in Voth v Manildra Flour Mills Pty Ltd . In that case, this Court declined to adopt the more appropriate forum test laid down by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd and accepted, instead, the test propounded by Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay , namely, that a stay is only to be granted if the Australian court is a clearly inappropriate forum.
It was pointed out in the joint majority judgment in Voth that it was common ground in the judgments of the majority in the earlier case of Oceanic Sun that “the traditional power to stay proceedings … on inappropriate forum grounds, is to be exercised in accordance with the general principle empowering a court to dismiss or stay proceedings which are oppressive, vexatious or an abuse of process and the rationale for the exercise of the power to stay is the avoidance of injustice…. in the particular case.
It is clear from the rationale for the exercise of the power to stay proceedings and, also, from the words “oppressive”, “vexatious” and “abuse of process” in Voth , in Oceanic Sun and in the earlier cases considered in Oceanic Sun , including St Pierre v South American Stores (Gath & Chaves) Ltd , that the power to stay proceedings on grounds of forum non conveniens is an aspect of the inherent or implied power which, in the absence of some statutory provision to the same effect, every court must have to prevent its own processes being used to bring about injustice….
In cases such as the present, where different issues are involved in the local and foreign proceedings, albeit that the different proceedings arise out of the same sub-stratum of fact, the question is not whether the Australian court is a clearly inappropriate forum for the litigation of the issues involved in the Australian proceedings. Rather, the question must be whether, having regard to the controversy as a whole, the Australian proceedings are vexatious or oppressive in the Voth sense of those terms, namely, that they are “productive of serious and unjustified trouble and harassment” or “seriously and unfairly burdensome, prejudicial or damaging.”

I read that last paragraph as though the words “court is a clearly inappropriate forum” in the sense that they were interpolated after the word “Australian” where it last appears in the passage quoted. In Oceanic Deane J., in discussing the balancing of competing claims of different jurisdictions, offered the view (at 243) that the:

“starting point… must be the prima facie right of a plaintiff to insist upon the exercise of competent jurisdiction which he has regularly invoked [and that such a] prima facie right of a plaintiff is not to be lightly displaced or denied”

and noted that “the jurisdiction” was one which should be exercised “with great care” or “extreme caution” (at 244).”

25    It is accepted that the applicant carries the onus of establishing that this is clearly an inappropriate forum and in my view the application falls well short of discharging that onus, having regard, in particular, to the evidence of Mr Malouf.

26    While there will be some inconvenience to the defendant in endeavouring to conduct these proceedings in Australia, I think that modern technology is capable of minimising that inconvenience substantially, having in mind the practice of this Court to require the provision of statements of evidence prior to hearing (an exercise which I would anticipate could be conveniently performed by the defendant in the United Kingdom) and recourse to video conferencing link which may avoid the necessity of one or more of the United Kingdom witnesses attending a hearing of the proceedings in this Court.

27    For those reasons the application is refused and the applicant is to pay the respondent's costs of the application.

oOo

Last Modified: 07/11/2001