Eagle v Delta Haze Corporation
[2000] VSC 513
•8 December 2000
| SUPREME COURT OF VICTORIA | Do not Send for Reporting |
| COMMERCIAL AND EQUITY DIVISION | Not Restricted |
COMMERCIAL LIST
No. 2117 of 1999
F5109
| Robert Lindsay Eagle | Plaintiff |
| v | |
| Delta Haze Corporation | Defendant |
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JUDGE: | Mandie J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17, 20 November 2000 | |
DATE OF JUDGMENT: | 8 December 2000 | |
CASE MAY BE CITED AS: | Eagle v Delta Haze Corporation | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 513 | |
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Practice and Procedure – application to set aside service of writ served in California – implied terms as to payment in Victoria – action commenced in California – discretion to stay proceeding.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr B. Quinn | Eagle & Partners |
| For the Defendant | Mr M. Moshinsky | Nevett Ford |
HIS HONOUR:
The plaintiff (or “Mr Eagle”), a Victorian practitioner who resides and has his sole place of business in Victoria, sues the defendant (or “Delta Haze”), a Nevada Corporation with its main or sole place of business in California. By summons dated 19 July 2000 the defendant seeks an order that service of the amended writ upon it outside Australia be set aside or that the proceeding be stayed. By summons dated 3 November 2000 the plaintiff seeks an order that he be at liberty to proceed in this proceeding. The original writ was filed by solicitors Eagle & Partners (the plaintiff’s practice name) on 24 December 1999 in the Commercial List. The statement of claim alleged that a Licence Agreement between the parties dated 1 July 1999 and a Marketing Agreement dated 1 January 1994 between the defendant and Eagle’s Ears Inc assigned by the latter company to the plaintiff on 30 June 1999 had both been wrongly terminated by the defendant and sought a declaration, injunctions, moneys due and accounts. The endorsement under Order 7.02 for service out of Australia and in the USA relied upon a breach of contract committed in Victoria, namely a letter of termination from the defendant’s US attorneys dated 8 December 1999. The defendant by its Victorian solicitors, Nevett Ford, entered a conditional appearance on 11 February 2000 and thereafter filed an affidavit showing that the said letter of termination was posted in California (and thus the alleged breach was not committed in Victoria). As a consequence, orders were made by consent on 10 March 2000 setting aside service of the writ outside Australia and adjourning the plaintiff’s summons for directions to 28 April 2000. By letter dated 27 April 2000 from Eagle & Partners to Nevett Ford, Eagle & Partners advised that the amended statement of claim and amended endorsement would be filed the next day and that copies would be provided to Nevett Ford “as a matter of courtesy”. The letter further advised that the plaintiff would seek a further adjournment of the summons for directions to 26 May 2000 (no doubt, as would have been evident, to allow time for service of the amended writ and for any consequent action by the defendant). The summons for directions was by order made 28 April 2000 adjourned to 26 May 2000. Although the plaintiff said (by letter to the court) that he anticipated filing the amended writ and statement of claim on 28 April 2000, this did not in fact happen. Instead on 26 May 2000, the plaintiff appeared and obtained leave to file and serve an amended writ and statement of claim. The documents were filed that day. I will refer to their contents in due course. The summons for directions was further adjourned to 21 July 2000.
On 5 June 2000 Delta Haze commenced an action by summons against Mr Eagle in the Superior Court of the State of California for the County of Los Angeles, Central District (No. BC231153). In the above circumstances, I do not think that it was vexatious or oppressive for the defendant to commence the Californian action[1]. On 6 June 2000, the defendant was served in Nevada with a copy of the amended writ and amended statement of claim and other relevant documents in this Victorian proceeding. On 15 June 2000 Delta Haze filed a first amended complaint for declaratory and injunctive relief in the Californian action.
[1]cf. Henry v Henry (1996) 185 CLR 571, 591
On 19 July 2000 the defendant’s summons now before this Court was filed. On 21 July 2000 orders were made by consent providing for the filing of affidavits and for an adjourned directions date for the intended hearing of the defendant’s application on 6 October 2000.
On 1 September 2000 the Californian Court (Hon. James R. Dunn, Judge) heard a motion by Mr Eagle to quash the Delta Haze action on jurisdictional grounds or to stay the same pending resolution of this proceeding. The Californian court denied the motion to quash and took “off calendar” the stay motion “unless and until the court is made aware of whether the court in Australia believes that there is jurisdiction there” and ordered that Mr Eagle respond to the amended complaint within 15 days. On 15 September 2000, Mr Eagle’s US attorneys filed an Answer and Cross-Complaint in the Californian action. I note that the Californian Judge stated in a subsequent hearing that it was mandatory under Californian Civil Procedure to file any related Cross-Complaint at the time of the Answer.
In this proceeding, substantial affidavits were filed only a little outside the times fixed, but the parties apparently were not ready for the hearing, and on 6 October 2000 the parties again by consent obtained orders which made provision for the exchange of further affidavits and of outlines of submissions and which adjourned the hearing to 17 November 2000.
On 20 October 2000 the parties told the Californian Court that they had agreed to exchange documents by 22 November 2000 and to set depositions in the first half of December 2000. The Californian Court fixed 9 February 2001 for a post-mediation status conference and 4 April 2001 for a 5-7 day court and jury trial (on the assumption that the case proceeded in California).
Turning to the amended endorsement on the writ, two grounds are relied upon. The plaintiff first relies upon alleged breaches committed within Victoria of contracts made elsewhere (Rule 7.01(1)(g)). The breaches are said to be constituted by the failure of the defendant to pay to the plaintiff moneys due under a Licence Agreement and a Marketing Agreement, it being alleged that it was an implied term of each agreement that he be paid in Victoria. Secondly, the plaintiff relies upon alleged damage suffered wholly or partly in Victoria caused by tortious acts occurring elsewhere (Rule 7.01(1)(j)). The damage suffered is apparently the loss of royalty payments to him under certain sub-publishing agreements and the tortious acts are said to be the intentional inducements by Delta Haze of the sub-publishers to break their agreements with the plaintiff by instructing them to make the said payments directly to Delta Haze itself.
Rule 8.09 empowers the court to set aside a writ or its service or stay a proceeding on application by the defendant before filing an appearance. Rule 7.05 provides:
"(1)The Court may make an order of a kind referred to in Rule 8.09 on application by a party served with originating process out of Australia.
(2)Without limiting paragraph (1), the Court may make an order under this Rule on the ground –
(a)that service out of Australia is not authorised by these Rules; or
(b)that Victoria is not a convenient forum for the trial of the proceeding."
Two matters should be noted at the outset to which I will return later. First, it can be seen that the court has a general discretion to make an order under Rule 7.05(1) which is not limited in its exercise to the grounds set forth in Rule 7.05(2). Second, it may be argued that the ground stated in Rule 7.05(2)(b) "that Victoria is not a convenient forum" is phrased in less stringent terms than the test of "clearly inappropriate forum" enunciated in Voth v Manildra Flour Mills Pty Ltd[2]. In relation to those two matters, I note that the High Court in Agar v Hyde[3] said in relation to the New South Wales rules:
"[55]On application to set aside service, or to have the court decline to exercise jurisdiction, attention might be directed to any of a number of features of the proceeding, the claims made in it, or the parties in it, in aid of the proposition that the court should not exercise jurisdiction. Part 10 r 6A is cast in general terms and it would be wrong to attempt some exhaustive description of the grounds upon which the rule might be invoked. Nevertheless, it may be expected that three common bases for doing so are first, that the claims made are not claims of a kind which are described in Pt 10 r 1A, secondly, that the court is an inappropriate forum for the trial of the proceeding and thirdly, that the claims made have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claim. Whether the rules prescribe a different test for determining questions of inappropriate forum from that developed at common law is a question which we need not stay to consider."
[2](1990) 171 CLR 538
[3](2000) 173 ALR 665
"Breaches committed within Victoria" of contracts made in the USA
The question is whether there is a good or strong arguable case that the jurisdictional nexus exists[4]. In that light, I turn to the circumstances here.
[4](Agar v Hyde (2000) 173 ALR 665, 667 per Gleeson CJ; Commonwealth Bank of Australia v White [1999] 2 VR 681, 693; Williams v The Society of Lloyd's [1994] 1 VR 274, 291-2)
By a Licence Agreement executed by both parties on or about 1 July 1999 the defendant licensed to the plaintiff (trading as Euterpe Music) the right to conduct certain portions of the defendant's business throughout the entire world (excluding Canada and the USA) – "the Territory". It appears to have been common ground that both parties executed the Licence Agreement in California (although it may be that the defendant in fact executed it in Nevada). The following features of the Licence Agreement should be noted: it was for a term of five years; it stated that the defendant's business was previously that of "owning, licensing and/or exploiting musical compositions, photographs and other materials"; the licence related to the whole of the defendant's business in the Territory; the defendant should pay the plaintiff base remuneration of US$48,000 annually (US$3,000 calendar monthly "in respect of those months in which [the plaintiff] is not required to travel outside Australia" and US$6,000 calendar monthly in respect of the remaining months ("which shall be a minimum of four (4) months") together with payment for a reimbursement of a number of other specified costs; the defendant should pay to the plaintiff an incentive payment of 10% of gross receipts from the Territory in excess of the base remuneration amount (gross receipts to include all moneys which the plaintiff should direct any third party to pay direct to the defendant); the defendant should provide the plaintiff with a Delta Haze American Express Corporate Card "for use in relation to business expenses, but subject to reimbursement … for items not incurred in the course of and related to representation of Delta Haze"; the plaintiff should receive $100 daily for each day exceeding 121 in the calendar year for which he was required to travel outside Australia in the course of the agreement; and there are mutual best efforts provisions.
Certain further provisions need to be set out:
"20.Entire Agreement. This writing is intended by the parties to be a final expression of their Agreement. It is also intended to be a complete and exclusive statement of the terms of this Agreement, the sole and only Agreement between them correctly setting forth their obligations to each other as of this date and contains all of the covenants and agreements between the parties with respect to those services. No course of prior dealings between the parties and no usage of the trade shall be relevant to supplement or explain any term used in this Agreement. Acceptance or acquiescence in a course of performance rendered under this Agreement shall not be relevant to determine the meaning of this Agreement even though the accepting or acquiescing party has knowledge of the nature of the performance and opportunity for objection. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, that are not embodied herein and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding.
21.Modification. This Agreement or any of its terms cannot be modified, changed, altered, appealed, discharged or terminated except by an instrument in writing (referring specifically to this Agreement) executed by the party against whom enforcement of any such modification is sought.
22.Amendments. The provisions of this Agreement may be waived, altered, amended, repealed, or otherwise changed, in whole or in part, only on the written consent of all parties to this Agreement.
30.Governing Law. This Agreement has been executed in the place indicated below and shall be construed in accordance with, and governed by, the laws of the State of New York.
35.Notice. All notices, requests, demands, options and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if served personally on the party to whom notice is to be given, or within seventy-two *72) hours after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and if properly addressed to the party, at his address set forth on the signature page of this Agreement or any other address that any party may designate by written notice to the others."
The "signature page" bore the following names and addresses under the signatures:
"Delta Haze Corporation
By: Margaret Geraldine Blake
President
Address: 1475 Terminal Way,
Suite E
Reno, NV 89502-3219, USAEuterpe
By: Robert Lindsay Eagle
Proprietor
Address: 50-52 Drayton Crescent,
Park Orchards, Victoria 3114
Australia"
By a Marketing Agreement made in January 1994 between the defendant and Eagle's Ears Inc (a Cayman Islands company owned or controlled, despite its name, by the defendant and not by the plaintiff), Eagle's Ears Inc was retained by the defendant, for five years, to provide consulting, marketing, collection and other services for the exploitation and promotion of the defendant's business to the world‑wide market. The Marketing Agreement provides for a collection fee to be paid to Eagle's Ears of 5% of the gross collections (including moneys paid direct to the defendant) and that "[a]ll services performed by Eagle's Ears and any revenues derived from the same shall not be considered the business nor the income of Eagle's Ears" and that "Eagle's Ears agrees to disclose and irrevocably to assign all revenues less its collection fee to [the defendant] immediately on receipt by Eagle's Ears". The Marketing Agreement further provides: that Eagle's Ears is an independent contractor and that the agreement "does not create an employment, partnership, joint venture or other agency relationship". The Agreement contains the same or similar entire agreement provisions and notice provisions as set out above. The governing law of the agreement is the law of the Cayman Islands. The relevant address of Eagle's Ears set out under the signature is in the Cayman Islands.
By an Assignment of Marketing Agreement dated 30 June 1999, between Eagle's Ears, the plaintiff and the defendant, Eagle's Ears assigned to the plaintiff all its right title and interest in the Marketing Agreement on the terms and conditions set out, with the plaintiff's acceptance and the defendant's consent.
The Assignment in fact directly varies or novates the Marketing Agreement because, for example, cl.4 contains specific provisions between the plaintiff and the defendant "clarifying" the duties of the plaintiff under the Marketing Agreement and cl.6 provides that the relationship between the plaintiff and the defendant "shall be that of an independent contractor" and that the assignment "does not create an employment, partnership, joint venture or other agency relationship". The signature page also sets out the names and addresses of the parties including the address of the plaintiff in Victoria.
None of the agreements contain any express provision as to any place at which the defendant is required to make the agreed payments. The amended statement of claim alleges that it was an implied term of the Licence Agreement that (save when the plaintiff agreed and directed otherwise) any payment payable by the defendant to the plaintiff would be payable to the plaintiff in the State of Victoria (para 12). The amended statement of claim further alleges that there was a similar implied term of "the Marketing Agreement as varied by the Assignment of Marketing Agreement" (para 22). The pleading relies upon facts that the plaintiff at all times resided and carried on business in Victoria and upon the content of the notice provisions in the agreements.
Is there a good or strong arguable case for the existence of the implied terms?
In the absence of evidence to the contrary, the court must assume (although it may not be the case) that the law of New York in one case, and the law of Cayman Islands in the other case, is no different from the law of Victoria in relation to the construction of these agreement, for the purpose of ascertaining whether they contain any and what obligation or implied term as to the place or places for making payments to the plaintiff.
In cases where the place of payment is not specified, courts have generally applied a rule that it is the debtor's duty to seek the creditor in order to pay him at his place of business or residence, if within the jurisdiction, or even if outside the jurisdiction where he was outside the jurisdiction when the contract was made[5].
[5]Chitty on Contracts (28th ed.) Vol. 1, para 22-054
For example, in Drexel v Drexel[6], the facts were that the plaintiff wife and the defendant husband were an American couple living in England who entered a separation agreement drawn up by American lawyers and executed by the plaintiff in England and the defendant in America. Neville J said (at 259-260):
"What I have to ascertain is whether the proper legal construction of [the agreement's] terms involve payment to [the plaintiff] in England. It seems to me there can be no serious doubt about that question. If it was not payable to the creditor where she lived, where was it payable? It seems to me the conclusion that it was payable to the creditor wherever she might be living is necessary in order to preserve the obligation, because if the debtor is not bound to pay anywhere, it seems to me that the creditor has what may be called a right but something which can never be enforced. I think that the rule of our law, and I assume the American Law is the same, - at all events I have no evidence to the contrary – is that the debtor must seek his creditor and must pay him. I think there is no doubt where the payment was intended to be, because [the plaintiff] was living in England and was intending to live in England."
[6][1916] 1 Ch 251
Of course, in each case, the particular contract, the parties and the circumstances in which the contract was entered into must be considered without detracting from the rule generally applied[7].
[7]See Charles Duval & Co Ltd v Gans [1904] 2 KB 685, 689-691; Earthworks and Quarries Ltd v F.T. Eastment and Sons Pty Ltd [1996] VR 24, 26; Shallay Holdings Pty Ltd v Griffith Cooperative Society Ltd [1983] 1 VR 760
Looking at the Licence Agreement itself, it is in my view both obvious and necessary in order to give business efficacy to the agreement that a term be implied as to the required place of payment of the plaintiff and that that place be the place of residence and business of the plaintiff in Victoria as recorded in the agreement. That conclusion is supported by the notices provision. There is nothing in the agreement to support a reasonable contention that any other place ought be implied as either the required place, or an alternative place for payment of the plaintiff[8].
[8]cf. Cuban Atlantic Sugar Sales Corporation v Compania de Vapores San Elefterio Limitada [1960] 1 QB 187, 194
The circumstances in which the agreement was entered into do not affect that conclusion. The circumstances provide no additional support for Nevada. The evidence shows that the defendant carries on business in California and it is accepted that the agreement was executed there. However, the plaintiff had no residence, place of business or bank account in California but did have a permanent residence and place of business in Victoria.
In my opinion, looking at the matter as a whole, the accepted tests for implication of the term alleged are satisfied – at least, there is a good arguable case for the same and for the conclusion that the jurisdictional nexus is made out.
I add that the entire agreement provision does not exclude such an implied term[9].
[9]See Etna v Arif [1999] 2 VR 353 at [46]
For similar reasons, I consider that it is an implied term of the Marketing Agreement, as reconstituted by the Assignment, that the plaintiff should be paid at his place of residence and business in Victoria. If anything the position may be stronger; it was not suggested that the plaintiff could be paid in the Cayman Islands. At any rate, there is again a good or strong arguable case for the jurisdictional nexus.
Damage suffered wholly or partly in Victoria caused by tortious acts occurring elsewhere
There were a number of "initial" sub-publishing agreements entered into between Eagle's Ears and publishing companies in various parts of the world. The parties accepted as typical an agreement between Eagle's Ears and Shamrock Records in Austria ("RLE6"). Eagle's Ears executed and entered the agreements "o.b.o." (on behalf of) King of Spades Music, a business name of the defendant. Eagle's Ears granted to Shamrock Records the right, throughout Austria, to exploit and promote certain listed musical compositions in consideration of specified royalty payments to be made by Shamrock Records to Eagle's Ears. The agreement provided for payment to Eagle's Ears by wire transfer to a Barclays Bank PLC account either in New York City or in Grand Cayman. The agreement was governed by New York law.
The amended statement of claim alleges that initial sub-publishing agreements said that the provision (cl. 3(d)) as to mode of payment was subject to contrary instructions from Eagle's Ears. However, cl. 3(d) does not appear to contemplate any change to the nominated modes of payment by Eagle's Ears, only as to the nominated currency.
Prior to 30 June 1999, Eagle's Ears had been licensed by the defendant on terms similar to those of the licence granted by the defendant to the plaintiff on 1 July 1999. After this change of licensee, the plaintiff says that the defendant gave notice (see "RLE10") to all of the initial sub-publishers that the defendant's licence to Eagle's Ears had been terminated, that the plaintiff was now licensed in the Territory and that "[a]ll payments, copies of statements and remittances relating to the business of [the defendant] in the Territory which would otherwise have been sent to Eagle's Ears or in accordance with its written directions should henceforth be sent to [the plaintiff in Victoria] or otherwise in accordance with [the plaintiff's] written directions".
The amended statement of claim refers to this notice (para 13) and then alleges:
"14.A copy of the Notice was delivered to each initial sub-publisher who thereafter made all payments pursuant to the initial sub‑publishing agreement to which it was a party in accordance with the Plaintiff's directions and accepted the Plaintiff in substitution for Eagle's Ears Inc. as a party to its respective initial sub‑publishing agreement.
15.In the premises a new sub-publishing agreement the novated sub-publishing agreement), upon the terms of the initial sub-publishing agreement, was made between each initial sub-publisher and the Plaintiff in substitution for the initial sub-publishing agreement to which that initial sub-publisher was a party.
16.Further or in the alternative, by virtue of the Plaintiff's Licence and the facts alleged in paragraphs 13 and 14 herein, the Plaintiff was, from 1 July 1999:
(a)the successor, licensee or assign of Eagle's Ears Inc. within the meaning of clause 9 of each initial sub-publishing agreement referred to in paragraph 6(e) herein; and
(b)bound by and entitled to the benefit of and interest in each of the initial sub-publishing agreements."
The amended statement of claim also alleges that there were six "direct sub-publishing agreements" entered into between the plaintiff and various sub-publishers in specified territories within the Territory which provided for payment of royalties to the plaintiff by the direct sub-publishers and, subject to contrary instructions from the plaintiff, that those royalties were to be paid by wire transfer to the plaintiff's bank account in Melbourne. The statement of claim goes on to allege that by directing both the initial and the direct sub-publishers, on or about 12 February 2000, to forward all payments to the defendant's bank account in Nevada, the defendant had knowingly interfered with the plaintiff's rights under the sub-publishing agreements and that the plaintiff had thereby suffered damage in Victoria, namely the amounts of the royalty payments which as a result had not been received by the plaintiff in Victoria.
The defendant submitted that the plaintiff had shown no jurisdictional nexus on these parts of his claim and further that the claims were hopeless and it would be futile to permit them to proceed for the following main reasons:
(i)the plaintiff had shown no arguable loss because he was not entitled to withhold from the defendant any part of the amount of royalties received from sub-publishers;
(ii)the plaintiff had no contractual relationship with the initial sub-publishers;
(iii)the defendant had no belief that the plaintiff had "become" a party to the initial sub-publishing agreements in either of the ways pleaded;
(iv)the defendant had no knowledge of the direct sub-publishing agreements.
The foregoing matters involve disputed questions of fact or of mixed fact and law, including construction of a number of agreements. I am unable to conclude that the plaintiff's claims are unarguable in all respects. However I do not think that there is a good arguable case that the plaintiff has suffered damage in Victoria by the non‑receipt of the royalty payments. The plaintiff conceded that he was not entitled to any part of the royalty payments. His only entitlements to payment arose from the Licence Agreement and the assigned Marketing Agreement. The jurisdictional nexus has not been established. The plaintiff indicated that, if it was so decided, he would elect not to proceed with the tortious part of his claims.
Inappropriate forum
The defendant submitted on the evidence that Victoria was a clearly inappropriate forum for trial of the proceeding because, inter alia:
(i)the dispute had virtually no connection with Victoria;
(ii)the business relationship between the plaintiff and the defendant was established and developed predominantly in California;
(iii)the plaintiff had worked for the defendant extensively in the United States, particularly California;
(iv)nearly all face to face dealings between the plaintiff and the defendant's personnel had taken place in California;
(v)the subject-matter of the agreements was essentially copyrights to musical compositions owned by the defendant which had its place of business in California;
(vi)the governing law of the Licence Agreement was New York law;
(vii)there were more witnesses in California;
(viii)a proceeding was on foot in California, which had commenced before service of the amended Writ, and which could allow for the ventilation of all issues;
(ix)a substantial issue was whether the Licence Agreement was void under New York law.
The last point needs some explanation. In the Californian action, in addition to alleging termination of the agreements for cause, the defendant says that the plaintiff while in California drafted the Licence Agreement and the Assignment of Marketing Agreement "acting in his capacity as counsel to [the defendant] and in like capacity presented them to the defendant for execution, advised the defendant to enter into them and that they did not materially change the "extant arrangement"; that the plaintiff so advised the defendant without warning of any actual or potential conflict of interest and without obtaining any conflict waiver. According to an affidavit of the defendant's Californian attorney:
"6.Another issue raised in the Californian action is whether the License Agreement was void ab initio. The legal basis of this claim is that under New York law (which is the law governing the License Agreement) a contract between an attorney and client, even on matters unrelated to the subject of the representation, is not enforceable unless (a) the transaction is fair and reasonable to the client, and (b) the terms are fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client, and (c) the lawyer advises the client to seek the advice of independent counsel in connection with the transaction, and (d) the client consents, in writing, after full disclosure, to the terms of the transaction and to the lawyer's inherent conflict of interest in connection with the transaction. Additionally, New York law provides an agreement between a lawyer and client is void if the lawyer as part of the transaction acquires an interest in media rights with respect to the subject matter of the employment. Now produced to me and marked Exhibit 'AK1' is a true copy of New York Codes, Rules And Regulations ('NYCRR') Section 1200.23, which sets forth these requirements. Now produced to me and marked Exhibit 'AK2' is a true copy of selected New York case authority exemplifying the stringent requirements to which an attorney participating in business dealings with his client must adhere.
7.The requirement that all terms of the agreement be disclosed in writing is strictly enforced. Under New York law, an agreement between a lawyer and client that does not have all terms reduced to writing, or which the client did not fully comprehend may be rescinded. Mr Eagle does not contend that the terms were fully disclosed and transmitted in writing to the client in a manner that could be reasonably understood by the client. Instead, he has claimed that there was an implied agreement between he and his client that he would be substituted as a party to the sub-publishing agreements existing as of 1 July 1999. Likewise, Mr Eagle has not claimed that his client consented, in writing, after full disclosure, to the terms of the transaction and to the lawyer's inherent conflict of interest in connection with the transaction. Therefore, important factual issues in relation to this claim will be whether Mr Eagle acted as an attorney in California in connection with the drawing of the License Agreement, (which according to Mr Eagle, caused him to acquire an interest in media rights), whether Mr Eagle's representation of Delta Haze Corporation (which the Californian Court has already determined did business in California and was headquartered there) was at least in part as an attorney, whether the services Mr Eagle was contemplated to perform under the License Agreement were at least in part as an attorney and whether Mr Eagle fully disclosed in writing to Delta Haze Corporation both his conflict of interest and all aspects of the agreement which is the subject of this claim.
8.The Californian Court will itself determine the content of New York law. Additionally, if the matter proceeds to trial, Delta Haze Corporation will call an expert witness to testify regarding the standard of care under New York law that attorneys who engage in business dealings with their clients are expected to adhere to."
In my opinion, for all of the reasons advanced by the defendant, Victoria is a clearly inappropriate forum for the trial of the issues between the parties. Apart from being the plaintiff's home and business base and, as I have found, the place for payment of the plaintiff, Victoria has no particular connection with the issues in dispute. It is arguable that a variety of legal issues will arise for determination under New York law, both as to construction of the Licence Agreement and as to the consequences of the plaintiff acting as an attorney for the defendant, if he did. In that regard, there is evidence that the plaintiff in California, using the defendant’s letterhead, signed letters as a “Solicitor” which were addressed to English solicitors (see exhibit “SCL2” to the affidavit of La Vere sworn 19 September 2000) and that the plaintiff in California, and elsewhere in the world, also used the Victorian letterhead of “Eagle & Partners, Solicitors and Attorneys” arguably on behalf of the defendant in one or more instances (see again exhibit “SCL2”).
In reaching this conclusion, I have taken into account the existence of the Californian action as one factor while recognising that the existence of the action does not of itself render this forum inappropriate[10].
[10]Rocklea Spinning Mills Pty Ltd v Consolidated Trading Corp [1995] 2 VR 181
In this regard, it seems to me that, in addition to Victoria being a clearly inappropriate forum, California is the natural forum for this proceeding. I note what was said by the High Court majority in Voth at p.558:
“The ‘clearly inappropriate forum’ test is similar to and, for that reason, is likely to yield the same result as the ‘more appropriate forum’ test in the majority of cases. The difference between the two tests will be of critical significance only in those cases – probably rare – in which it is held that an available foreign tribunal is the natural or more appropriate forum but in which it cannot be said that the local tribunal is a clearly inappropriate one. But the question which the former test presents is slightly different in that it focuses on the advantages and disadvantages arising from a continuation of the proceedings in the selected forum rather than on the need to make a comparative judgment between the two forums. That is not to deny that considerations relating to the suitability of the alternative forum are relevant to the examination of the appropriateness or inappropriateness of the selected forum. The important point is that, in those cases in which the ascertainment of the natural forum is a complex and finely balanced question, the court may more readily conclude that it is not a clearly inappropriate forum.
The availability of relief in a foreign forum will always be a relevant factor in deciding whether or not the local forum is a clearly inappropriate one. But such a decision neither turns upon an assessment of the comparative procedural or other claims of the foreign forum nor requires the formation of subjective views about either the merits of that forum’s legal system or the standards and impartiality of those who administer it.” (Emphasis added)
Alternatively, to the extent that Rule 7.05(2)(b) simply means that the test is whether Victoria is "not a convenient forum", I am satisfied that it is not a convenient forum.
There will of course be inconvenience to whichever party is required to litigate outside his or its own jurisdiction, but on the disclosed facts in relation to the business relationship between the parties I consider that no injustice will be caused to the plaintiff in being required to litigate in California whereas it would in my opinion be unfair to require the defendant to litigate in Victoria, a jurisdiction having a technical but no substantial connection with the matters in dispute.
Looking at the whole matter in the court's discretion under Rule 7.05(1) I am of the view that it is appropriate on the defendant’s application to order a stay of this proceeding for the reasons already referred to together with the further factor that in the Californian action a complaint and answer and cross-complaint have been exchanged and a trial date is already set. The plaintiff’s summons is dismissed.
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