Flowtech Engineering Pty Ltd v VA Tech Australia Pty Ltd

Case

[2005] WADC 68

15 APRIL 2005

No judgment structure available for this case.

FLOWTECH ENGINEERING PTY LTD -v- VA TECH AUSTRALIA PTY LTD [2005] WADC 68
Last Update:  23/05/2005
FLOWTECH ENGINEERING PTY LTD -v- VA TECH AUSTRALIA PTY LTD [2005] WADC 68
Jurisdiction: DISTRICT COURT OF WESTERN AUSTRALIA   Citation No: [2005] WADC 68
Case No: CIV:1423/2004   Heard: 6 APRIL 2005
Coram: PRINCIPAL REGISTRAR GETHING   Delivered: 15/04/2005
Location: PERTH   Supplementary Decision:
No of Pages: 15   Judgment Part: 1 of 1
Result: Order granted for deponent to attend for cross-examination
[Click here for Judgment in Adobe Acrobat Format ]
Parties: FLOWTECH ENGINEERING PTY LTD (ACN 101 701 937)
VA TECH AUSTRALIA PTY LTD (ACN 003 703 008)

Catchwords: Stay of proceedings Arbitration clause Request to cross-examine deponents
Legislation: International Arbitration Act 1974 (Cth)
Supreme Court Rules

Case References: Freehill Hollingdale and Page v Bandwill Pty Ltd & Anor [2000] WASCA 150
Lovell v West Australian Police Union & Anor, unreported; SCt of WA; Library No 930387; 30 June 1993
Sullivan v Henderson [1973] 1 WLR 333
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 211 ALR 342
Trinity Enterprises Pty Ltd v Drum Services WA Pty Ltd (1992) 7 WAR 587
West Australian Construction Industry Redundancy Fund Ltd v Ortin & Ors [2002] WASC 185

Hughes v Gales (1995) 14 WAR 434
Ledger v Cleveland Nominees Pty Ltd [2001] WASC 269
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Tampion v Anderson (1973) 3 ALR 414

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

                  IN CHAMBERS
LOCATION : PERTH CITATION : FLOWTECH ENGINEERING PTY LTD -v- VA TECH AUSTRALIA PTY LTD [2005] WADC 68 CORAM : PRINCIPAL REGISTRAR GETHING HEARD : 6 APRIL 2005 DELIVERED : 15 APRIL 2005 FILE NO/S : CIV 1423 of 2004 BETWEEN : FLOWTECH ENGINEERING PTY LTD (ACN 101 701 937)
                  Plaintiff

                  AND

                  VA TECH AUSTRALIA PTY LTD (ACN 003 703 008)
                  Defendant



Catchwords:

Stay of proceedings - Arbitration clause - Request to cross-examine deponents


Legislation:

International Arbitration Act 1974 (Cth)
Supreme Court Rules


Result:

Order granted for deponent to attend for cross-examination


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Representation:

Counsel:


    Plaintiff : Mr K Yin
    Defendant : Mr M Gerus


Solicitors:

    Plaintiff : Murcia Pestell Hillard
    Defendant : Blakiston & Crabb


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

Freehill Hollingdale and Page v Bandwill Pty Ltd & Anor [2000] WASCA 150
Lovell v West Australian Police Union & Anor, unreported; SCt of WA; Library No 930387; 30 June 1993
Sullivan v Henderson [1973] 1 WLR 333
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 211 ALR 342
Trinity Enterprises Pty Ltd v Drum Services WA Pty Ltd (1992) 7 WAR 587
West Australian Construction Industry Redundancy Fund Ltd v Ortin & Ors [2002] WASC 185

Case(s) also cited:

Hughes v Gales (1995) 14 WAR 434
Ledger v Cleveland Nominees Pty Ltd [2001] WASC 269
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Tampion v Anderson (1973) 3 ALR 414



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      PRINCIPAL REGISTRAR GETHING:

Introduction

1 This action concerns a claim by the plaintiff for a sum of approximately $190,000 alleged to be due to the plaintiff as a result of certain steel fabrication works performed by the plaintiff for the defendant.

2 The defendant has entered a conditional appearance, but has sought to stay the action on the basis that the parties contracted for any disputes arising between them to be governed by an arbitration clause. The arbitration clause is contained in a document headed "General Commercial Conditions" which the defendant contends forms part of its contract with the plaintiff. The relevant clause, cl 80, ("the Arbitration Clause") provides that all disputes are to be referred to arbitration in Vienna. Specifically it provides:

          "18. APPLICABLE LAW AND JURISDICTION.

          18.1 Subject clause 18.2, hereof, all disputes arising in connection with the present Contract or related to its violation, termination or nullity which cannot be settled by mutual agreement, shall be finally settled under the Rules of Arbitration and Conciliation of the International Arbitral Centre of the Economic Chamber in Vienna by one or more arbitrators appointed in accordance with these Rules. Arbitration proceedings shall be held English language. Austrian substantive law under exclusion of the UN-Convention on Contracts for the International Sale of Goods 1980 shall apply. The place of arbitration shall be Vienna.

          18.2 The Purchaser reserves the right of recourse to the civil court competent according to the applicable law of civil procedures. Also in this case Austrian substantive law under exclusion of the UN-Convention on Contracts of the International Sale of Goods 1980 shall apply."

3 In support of its stay application, the defendant filed four affidavits. Two of the of the affidavits, dated 10 August 2004 and 4 February 2005 were filed by one Paul Anthony Broadhurst, the project manager for the defendant. The third was filed by one Dr Guenter Karl, who is a member
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      of the Legal Affairs team for the VA Tech group of companies, which includes the defendant. The fourth was filed by the defendant's solicitor.
4 The plaintiff filed an affidavit in opposition to the stay by one Frank Mastaglia, dated 13 September 2004, Mr Mastaglia being the managing director of the plaintiff.

5 In response to the stay application, the plaintiff has sought orders under O 36 r 2(3) of the Supreme Court Rules that Mr Broadhurst make himself available at the hearing of the stay application in order to be cross-examined on his affidavit. This application was adjourned to a special appointment, heard by me and is the subject of these reasons.


Relevant law

6 The relevant statutory relevant discretion in the Supreme Court Rules is found in O 36 r 2(3) in the following terms:

          "(3) Subject to these Rules, evidence maybe given by affidavit upon any originating summons, originating motion or petition, and on any application made by motion or summons, but the Court may order the attendance for cross-examination of the person making any such affidavit, and if such person fails to attend his affidavit shall not be used in evidence without the leave of the Court."
7 The discretion to order the attendance for cross-examination is in general terms. A similar discretion in general terms is found in O 16 r 2(2) in the context of summary judgment application on behalf of a defendant. The general discretions in these two rules are to be contrasted to the more specific discretion found in O 14 r 4(4)(b) in the context of a plaintiff's application for summary judgment. In that context, the discretion is limited in the following terms:
          "… if it appears to the Court that there are special circumstances which make it desirable that he should do so, to attend and be examined on oath."
8 Order 26 r 2(3) is not qualified by the "special circumstances" caveat. This must be taken to be a conscious choice by those drafting the Supreme Court Rules. Consequently, it follows that it is not necessary for a party seeking to invoke the discretion in O 36 r 2(3) to show that "special circumstances" exist before the discretion can be exercised in its favour.


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9 In Trinity Enterprises Pty Ltd v Drum Services WA Pty Ltd (1992) 7 WAR 587, at 588, Master Adams stated that O 16 r 2(2) is likewise not restricted in its terms to "special circumstances". However, Master Adams went on to say that, nonetheless, "good reasons must be shown why any order should be made under O 16 r 2(2) and that where an order is to be made appropriate restrictions ought to be considered". That comment is equally applicable to the context of O 36 r 2(3).

10 The decision of Master Adams contains a useful summary of the issues that may arise if cross-examination of witnesses is permitted on an interlocutory application (at 588-589).

          "The provisions of O 11, r 4(4) are repeated in almost identical terms in O 15, r 4(3) and the English equivalent of that latter provision came under scrutiny in Sullivan v Henderson [1973] 1 WLR 333; [1973] 1 All ER 48 where Megarry J had this to say (at 338; 51):

          'The present case seems to me to illustrate the difficulties that may arise if leave to cross-examine a witness on his affidavit is give in cases under O 86. The summary process under O 86 is one thing and the trial of an action is another; a hearing under O 86 with oral evidence is liable to become neither one nor the other, and to share the disadvantages of each. The hearing ceases to be summary, and the absence of pleadings and discovery, for example, prevents the hearing from achieving the exhaustiveness of a trial. The court may be put in the position at the end of a two day hearing, of saying that there ought to be a trial of the action, in which case there will then be the repetition of much that has occupied the court and the parties during the hearing under O 86. I observe that r 5(3)(b) of the Order, which authorises the making of an order for the defendant to attend and be examined on oath qualifies the power by the words 'if it appears to the court that there are special circumstances which make it desirable that he should do so'. These are weighty qualifications, and I would subscribe to the cautionary words of Field J in Millard v Baddley [1884] WN 96 (affirmed [1884] 28 SJ 427), uttered in relation to the corresponding procedure under O 14. There may be cases where it is right to give leave to cross-examine, perhaps limited to a single point, though this has its own problems both for counsel and for litigants who are bursting to reveal all; and in


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          any case I would expect cases in which it would be desirable for such leave to be given to be comparatively rare occurrence'.

          It seems to me that this decision amply illustrates some of the difficulties that are likely to arise if oral evidence is to be admitted in summary proceedings.

          A further warning was also stated by Fullagar J in CassrichNominees Pty Ltd v Griffiths(unreported, Supreme Court, Vic 13 October 1987) reported in Williams, Civil Procedure Victoria, Vol 3, par 16004 in these terms:

          'It is stated in the cases, and I think wisely stated in the cases, that cross-examination on a final judgment summons should not be commonly indulged in. It is obvious why that is so. The whole procedure is designed to achieve a quick judgment when the right decision is plaint without the necessity of a trial.'

          Although O 16, r 2(2) does not in terms require special circumstances to be shown the warnings quoted in these two authorities coupled with the general undesirability of allowing summary proceedings to turn into a trial lead me to the view that good reasons must be shown why any order should be made under O 16, r 2(2) and that where an order is to be made appropriate restrictions ought to be considered.' "

11 In Trinity Enterprises (supra),the plaintiff had sought summary judgment. In response, the first defendant filed an affidavit of one of its directors. The plaintiff sought an order requiring the director to attend for cross-examination and produce further documents. In the particular facts of the case, Master Adams made the order requiring the director in question to attend for cross-examination. In particular, Master Adams noted that to allow the summary judgment application to proceed without the director's evidence being tested by cross-examination could lead to an injustice (at 590).

12 The principles upon which a court should grant leave to cross-examine the deponent of an affidavit were considered by McKechnie J in West Australian Construction Industry Redundancy Fund Ltd v Ortin & Ors [2002] WASC 185, at pars [7]-[9] as follows:

          "[7] [Orders for cross-examination] are likely to be unusual. I am not sure that I agree with Cross LJ in Comet Products UK

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          Ltd v Hawkex Plastics Ltd [1971] 2 QB 67 at 77 where he states:

          '… It is, I think, only in a very exceptional case that a judge ought to refuse an application to cross-examine a deponent on his affidavit.'

          [8] Nor would I necessarily agree that a court should be slow to allow cross-examination on an affidavit in interlocutory proceedings as to do so can not only prolong but cloud the issues to be resolved in such proceedings: see Master Adams: In the matter of Whitemark Pty Ltd (1992) 7 WAR 54.

          [9] Rather, I think the proper view is that cross-examination on an affidavit should be permitted whenever the interests of justice require. Delay and clouding the issues are aspects of the interests of justice, not determinative of them."

13 The relevant principles were also considered by the Full Court in Freehill Hollingdale and Page v Bandwill Pty Ltd & Anor [2000] WASCA 150. In a joint judgment the Court (Owen J, Steytler J and Miller J) made the following comments.
          "There is ample authority for the proposition that the discretion to permit cross-examination in interlocutory examination applications will be sparingly exercised: Sullivan v Henderson [1973] 1 WLR 333 and in the matter of Whitemark Pty Ltd (1992) 7 WAR 54 at 56. This is even more so where there is a likelihood that cross-examination will cover broad issues raised in the action: Scanlon v American CigaretteCo(Overseas) Pty Ltd (No 1) [1987] VR 261 at 274.

          There was material before the trial Judge as to the extent to which there would be duplication of issues between the main action and the stay application. His Honour was concerned about the extent to which he would have to investigate, in the stay application, issues that were central to the main action and as to whether it would be possible effectively to deal with both questions without cross-examination."

14 In the present case, applying these authorities, it is convenient to consider the facts against three broad headings:
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      (a) Are there factual issues on which cross-examination of Mr Broadhurst may assist the Court;

      (b) What is the risk of injustice, or prejudice, to the defendant if an order for cross-examination is made?

      (c) What is the risk of injustice, or prejudice, to the plaintiff if an order for cross-examination is not made?


Factual issues requiring cross-examination

15 The critical issue here is whether there are any issues on which cross-examination of Mr Broadhurst may assist the Court to properly determine the stay application.

16 The defendant asserts, to use the language of Master Adams in Trinity Enterprises, that there is no "good reason" to make Mr Broadhurst available for cross-examination as there is no relevant issue in his affidavit on which cross-examination could assist the Court. Counsel for the defendant went so far as to say that the statutory discretion to allow cross-examination was not enlivened for this same reason: there being no relevant issue of fact on which cross-examination should be allowed. To my mind, that submission construes the discretion too narrowly. On its face, the discretion in O 36 r 2(3) is enlivened by the mere filing of an affidavit. Having said that, the existence of a relevant factual issue on which cross-examination could assist the Court is of central relevance to the exercise of the discretion under O 36 r 2(3).

17 The key issue of fact for the stay application is whether the contract between the parties contains the Arbitration Clause.

18 The legal context in which this factual issue fails to be considered has been the subject of recent extensive consideration by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 211 ALR 342. In that case, the respondent had sued the appellant for damages it suffered as a result of certain batches of an influenza vaccine being damaged through exposure to the wrong temperatures. The appellant sought to rely on an exclusion clause in the relevant "Conditions of Contract". Both at first instance and before the Court of Appeal the respondent successfully argued that it was not bound by the exclusion clause. The High Court allowed the appeal, finding that the relevant exclusion clause formed part of the contact between the parties.

19 In argument before me, counsel for the defendant referred to the following passage in the joint judgment of the Court (at par [35] p 350):


(Page 9)
          "A striking feature of the evidence at trial, and of the reasoning of the learned primary Judge, is the attention that was given to largely irrelevant information about the subjective understanding of the individual participants in the dealings between the parties".
20 The thrust of the defendant's submissions in this case was that any possible cross-examination of Mr Broadhurst would only go to "largely irrelevant information about the subjective understanding of the individual participants in the dealings between the parties", and thus should not be allowed.

21 The general rule articulated by the High Court is in the following terms (at par [57] p 356):

          "If there is a claim of mis-representation, or non est factum, or if there is an issue as to whether a document was intended to affect legal relation or whether, on the other hand, it was tendered as a mere memorandum of a pre-existing contract, or a receipt, or if there is a claim for equitable or statutory relief, then even in the case of a signed document it may be material to know whether a person who has signed it was given sufficient notice of its content. The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document."
22 Counsel for the defendant in the present case submitted that the evidence before the Court shows that Mr Mastaglia had signed a document which contained the Arbitration Clause, and that the plaintiff has not pointed to any "vitiating element" of the kind referred to by the High Court. Consequently, the defendant's submission is that there is no relevant issue of fact on which cross-examination ought to be allowed.

23 The plaintiff's position can be summarised by stating that the relevant factual issue is what documents, words and conduct comprised the contract between the parties and, in particular, whether the contract so formed included the Arbitration Clause. This is consistent with its statement of claim in which the agreement between the parties is said to be partly in writing, partly oral and partly arising by conduct (par [4]).


(Page 10)

24 The critical paragraphs Mr Mastaglia's affidavit for present purposes are par 21 and par 31. They are in the following terms:

          "21. After I had signed the Summary of Contract Negotiations Broadhurst informed me that the Defendant required me sign every page of the Initial Tender and the Invitation to Tender. He gave me a bundle of documents, and sometime later I signed each page at the bottom corner and returned the documents to him. I do not recall having retained a copy of these documents after signing. My understanding was that I was signing these documents to confirm that I had received them previously and not by way of confirmation that they formed part of the finalised agreement between Plaintiff and Defendant. I thought the Summary of Contract Negotiations contained all the relevant terms, to the exclusion of Invitation to Tender and the Initial Tender.

          31. At no stage prior to the commencement of these proceedings had I read or been informed that the Arbitration Clause existed. No persons from or on behalf Defendant had ever mentioned to me the existence of the Arbitration Clause, or suggested that I read it. By signing every page of the documents put before me by Broadhurst it was not my intention to assert that I had read every page, but rather to confirm that I had received the documents in question. I was not aware of the existence or nature of Arbitration Clause either prior to entering into the Agreement, or at any stage before the commencement of these proceedings."

25 Mr Mastaglia thus raises the issue of whether the General Conditions of Contract containing the Arbitration Clause formed part of the contract between the parties, or, on his evidence, was a document which he was required to acknowledge receipt of, but which did not form part of the contract.

26 For present purposes, I do not need to determine this issue. Rather, it is sufficient to identify it as an issue of fact that will need to be determined on the hearing of the stay application.

27 In this context, the following passage from the judgment of the Court in the Toll Holdings case is relevant (at par [40] p 351-352):


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          "This court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstance known to the parties, and the purpose and object of the transaction."
28 Applying this principle, in determining the issue of whether or not the Arbitration Clause forms part the contract between the parties, the Court can look to the words and conduct of each party for the purpose of determining what the words and conduct would have led a reasonable person in the position of the other party to believe. It can look to the surrounding circumstances known to the parties and the purpose and object of the transaction. It cannot look to the words and conduct of each party for the purpose of determining the subjective beliefs and understandings of the parties.

29 The question then becomes whether cross-examination of Mr Broadhurst would be of assistance to the Court in determining the issue as framed in the preceding paragraph.

30 The defendant is entitled to have the stay application determined at an early stage in the proceedings, so as not to be put to the risk of the expense and inconvenience of dealing with the dispute between the parties twice: once in the District Court trial, and again in the arbitration assuming it was successful at trial in asserting that the dispute ought to have been determined by arbitration. That being so, the Court will have to make a finding of fact on whether the Arbitration Clause forms part of the contract between the parties at an interlocutory stage without the "exhaustiveness" of a trial (to quote Megarry J in Sullivan v Henderson [1973] 1 WLR 333, which I have quoted above in the passage from the judgment of Master Adams in the Trinity Enterprises).


(Page 12)

31 In this context, it would seem to assist the Court to have the benefit of the cross-examination of Mr Broadhurst, provided that in doing so the risk of injustice to the defendant if cross-examination is ordered is otherwise outweighed by the risk of injustice to the plaintiff if cross-examination is not ordered.


Risk of injustice to the defendant if cross examination is ordered

32 Counsel for the defendant outlined three broad grounds of prejudice that the defendant would suffer if cross-examination is ordered.

33 The first broad ground of prejudice is that requiring Mr Broadhurst to attend and be cross-examined the hearing of the stay application will be extended by about a day. In part this is because if Mr Broadhurst is to be cross-examined, Mr Mastaglia is likely to be required to attend and be cross-examined (which the plaintiff’s counsel indicated it would consent to). Without cross-examination, the stay application would be able to be dealt with in half a day. To my mind, this prejudice can substantially be overcome by an appropriate costs order.

34 The second broad ground of prejudice is the cost and inconvenience of Mr Broadhurst coming to Perth from his office in Karratha. This has two elements. The first is the payment of the airfare and accommodation expenses, which is a matter that can be dealt with by an appropriate costs order. The second is the impact on Mr Broadhurst's activities as project manager for the defendant. This impact can be mitigated by scheduling the hearing of the stay application around a date convenient to Mr Broadhurst, perhaps a date on which he is in Perth on other matters.

35 The third broad ground is the duplication of trial issues, referred to by Megarry J in Sullivan, which I have quoted above in the passage from the judgment of Master Adams in Trinity Enterprises. Specifically, the Court needs to consider the extent to which ordering a party to attend for cross-examination will result in a duplication of the issues between the trial of the action and the hearing of the interlocutory application.

36 In this case, the factual question in the interlocutory application is whether or not the Arbitration Clause formed part of the contract between the parties. The question for the trial of the action is whether the plaintiff is entitled to payment for additional work performed by it for the defendant over and above the work contemplated in the initial contract. There will be some duplication around the issue of what documents, words and conduct comprised the contract between the parties. However, in the stay application the focus of the inquiry is on whether the


(Page 13)
      Arbitration Clause formed part of the contract. At the trial (should the matter proceed to trial and not go to arbitration), the focus will be on whether the defendant had an obligation to pay the plaintiff for additional works beyond the initial scope of the contract.
37 In this respect, the present case may be contrasted to the circumstances facing the Court in the Freehill Hollingdale and Page case. In that case, the Judge at first instance had adjourned to the trial of the action an application by the appellant for a stay of proceedings on the grounds that they involved maintenance and champerty. The appellant had also sought to cross-examine deponents of affidavits filed in opposition. The trial Judge declined to make a cross-examination order. This decision was not challenged on appeal. His Honour was of the view that "there would be much unnecessary duplication of complex factual issues by argument of a stay application in advance of the main action" (par [31]). However, the Full Court held that the trial Judge should have nonetheless allowed the stay application to proceed without the order for cross-examination.

38 Another relevant factor is that the estimate of both counsel is that the stay application is likely to take a day or perhaps a day and half inclusive of cross-examination of Mr Broadhurst and Mr Mastaglia. That falls short of the sort of extensive factual exercise referred to in the Freehill Hollingdale and Page decision. It also falls short of the extensive factual exercise referred to in Lovell v West Australian Police Union & Anor,unreported; SCt of WA; Library No 930387; 30 June 1993.

39 These risks of prejudice or injustice to the defendant must be balanced against the risk of prejudice or injustice to the plaintiff if the cross-examination order is not made.


Risk of injustice to the plaintiff if cross-examination is not ordered

40 The primary prejudice to the plaintiff if cross-examination is not allowed is that it will have been deprived of the opportunity to raise in cross-examination factual issues relevant to the question of whether or not the Arbitration Clause forms part of the contract between the parties. Moreover, at this early stage in the action, the plaintiff has not had the benefit of obtaining discovery from the defendant, nor had the opportunity to interrogate officers of the defendant, factors influencing the Court to allow cross-examination in the Trinity Enterprises decision.


(Page 14)

41 In this context, it becomes relevant to look at the consequences to the plaintiff if the Arbitration Clause forms part of the contract between the parties and the stay application is granted.

42 The defendant submits that by operation of the International Arbitration Act 1974 (Cth) s 7, once the Court finds that the Arbitration Clause forms part of the contract between the parties, it has no discretion, and must stay the proceedings. Counsel for the defendant sought to play down the consequent inconvenience to the plaintiff of having to pursue an arbitration under the Arbitration Clause. I am not persuaded by those submissions. The Arbitration Clause makes is clear that the place of the arbitration shall be Vienna. This makes is highly likely that the plaintiff would have to either go to Vienna or engage representation in Vienna in order to proceed with the arbitration. Moreover, Austrian substantive law applies. This will require the plaintiff to retain the services of someone familiar with Austrian law. Even if the actual arbitration is able to be conducted in Vienna with the plaintiff participating in some electronic manner (for example by video or audio link) there is likely to be considerable expense involved. This expense is likely to exceed the costs of litigation in the District Court. The amount in dispute is said to be approximately $190,000, raising the risk that pursuit of a claim of this magnitude by arbitration in Vienna will be not economically feasible. Mr Mastaglia states that seeking dispute resolution by arbitration would be "extremely difficult" (par [33]).

43 By contrast, from the affidavit Dr Karl filed on behalf of the defendant it is apparent that he is resident or works in Vienna (from the address given at the head of the affidavit) as a member of the legal affairs team of the defendant's parent company. From this it appears that an arbitration in Vienna is not likely to cause the defendant any particular additional expense or inconvenience.


Determination

44 The key issue is whether the interests of justice require Mr Broadhurst be made available for cross-examination.

45 The starting point in determining the issues is the finding that there are issues on fact on which the cross-examination of Mr Broadhurst may be of assistance to the Court.

46 On the evidence before me, as I have summarised, it is likely to be extremely difficult for the plaintiff to pursue its claim should its only avenue of recourse be an arbitration in Vienna. That being so, the justice


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      of the situation would seem to require the plaintiff to be given every opportunity to raise factual issues relevant to the question of whether or not the Arbitration Clause forms part of the contract between the parties. More specifically, to use words of the High Court in Toll Holdings case, the plaintiff should be able to cross-examine Mr Broadhurst as to the "surrounding circumstances known to the parties, and the purpose and object of the transactions".
47 For the reasons set out above, the prejudice, or risk of injustice, to the defendant by making this order is prejudice of a lower magnitude than the prejudice to the plaintiff if the order is not made, and in the main able to be mitigated by costs orders and court scheduling to accommodate Mr Broadhurst.

48 In the circumstances, the interests of justice require that Mr Broadhurst make himself available to be cross-examined at the hearing of the stay application. I noted that during submissions counsel for the plaintiff stated that the plaintiff would be prepared to make Mr Mastaglia likewise available for cross-examination.

49 I will hear counsel as to the precise formulation of the necessary orders.

50 My inclination is to reserve the costs of this application to the Registrar hearing the stay application. If it transpires that cross-examination of Mr Broadhurst provides little assistance to the Court, the defendant’s right to seek the costs of this application should be preserved. However, I will also hear counsel on this issue.


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