Gunns Forest Products Limited v Fulgham Industries Inc
[2004] TASSC 89
•26 August 2004
[2004] TASSC 89
CITATION: Gunns Forest Products Limited v Fulgham Industries Inc [2004] TASSC 89
PARTIES: GUNNS FOREST PRODUCTS LIMITED
ACN 004 208 904
formerly NORTH FOREST PRODUCTS LIMITED
formerly NORTH BROKEN HILL LIMITED
v
FULGHAM INDUSTRIES INC
GRAYSON ENGINEERING LIMITED
VERO INSURANCE NEW ZEALAND LTD (Third Party)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 490/2002
DELIVERED ON: 26 August 2004
DELIVERED AT: Hobart
HEARING DATES: 3 August 2004
JUDGMENT OF: Evans J
CATCHWORDS:
Procedure – Supreme Court procedure – Tasmania – Jurisdiction and generally – Stay of third party proceedings – Inappropriate forum.
Oceanic Sun Line Special Shipping Company Inc v Fay (1987 – 1988) 165 CLR 197, applied.
Aust Dig Procedure [265]
REPRESENTATION:
Counsel:
Second Defendant: N Sweeney
Third Party C A Cunningham
Solicitors:
Second Defendant: Page Seager
Third Party Simmons Wolfhagen
Judgment Number: [2004] TASSC 89
Number of Paragraphs: 9
Serial No 89/2004
File No 490/2002
GUNNS FOREST PRODUCTS LIMITED ACN 004 208 903 formerly NORTH FOREST PRODUCTS LIMITED, formerly NORTH BROKEN HILL LIMITED
v FULGHAM INDUSTRIES INC, GRAYSON ENGINEERING LIMITED,
VERO INSURANCE NEW ZEALAND LTD (Third Party)
REASONS FOR JUDGMENT EVANS J
26 August 2004
The third party, Vero Insurance New Zealand Limited ("Vero"), applies to have third party proceedings instituted against it by the second named defendant, Grayson Engineering Limited ("Grayson"), permanently stayed on the ground that this Court is an inappropriate forum for the determination of these proceedings.
On 6 June 1998, a log handler crane owned by the plaintiff, Gunns Forest Products Limited ("Gunns"), which contained structural steel components that had been manufactured by Grayson, collapsed. The crane had been installed for Gunns at Hampshire in Tasmania by the first named defendant, Fulgham Industries Inc ("Fulgham"), pursuant to a contract dated 12 November 1993. Grayson is a New Zealand corporation that fabricates structural steel. On the evidence put before the Court, it appears that in early 1994, Grayson provided fabricated components for the crane pursuant to a contract it had with Fulgham, a corporation based in Georgia, USA. The contract had been negotiated with Grayson by a New Zealand subsidiary of Fulgham, Fulgham (NZ) Ltd. Following the collapse of the crane, Gunns instituted proceedings claiming damages from Fulgham and Grayson. Gunns' claim against Grayson is for damages for breach of a duty to exercise due care and skill in the fabrication of the crane components. Grayson has issued a third party notice to Vero and by its statement of claim in the third party proceedings Grayson seeks indemnification in relation to Gunns' claim from Vero pursuant to a policy of insurance. In the statement of claim Grayson also seeks indemnification in respect of claims made against Grayson by Fulgham arising from an earlier action instituted by Gunns against Fulgham in this Court, action No 100/2000. In that action, Fulgham has instituted third party proceedings against Grayson. The material before me does not explain how those proceedings can properly be the subject of a claim for indemnification by means of third party proceedings in the action before me. In considering whether this Court is an appropriate forum for the determination of the third party proceedings, I will focus on the indemnification Grayson seeks from Vero referable to Gunns' claim against Grayson.
In summary, Vero denies that it is liable to indemnify Grayson in relation to Gunns' claims as:
· The policy relevantly only covers Grayson in relation to damages and claimant's costs and expenses in respect of accidental damage to property happening within the "Geographical Limits", which term is defined in the policy as "products supplied by the insured directly or indirectly into New Zealand or indirectly to elsewhere in the world …". Vero says Grayson supplied the crane components direct to Gunns in Tasmania and for this reason any claim referable to the components is outside the policy.
· The policy does not cover the cost of repairing, reconditioning or replacing any product that gives rise to a claim and Gunns' claim against Grayson is for damages of this nature.
· The policy excludes liability in relation to damage to any product supplied by the insured where such damage is due to any defect therein or the unsuitability thereof. Vero says the Gunns' claim against Grayson is for damages due to a defect in, or the unsuitability of, the components supplied.
It is now recognised that the principles to be applied in applications for a stay of proceedings on inappropriate forum grounds are those stated by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay (1987 – 1988) 165 CLR 197 at 247 – 248 and that in the application of those principles the discussion by Lord Goff in Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460 at 477 – 478 and 482 – 484 of relevant "connecting factors" and "a legitimate personal or judicial advantage" provides valuable assistance; see Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 564, 472 and 580. In Oceanic Sun Line at 247 – 248, Deane J said:
"[I]t 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 [1987] 1 AC 460, at p 478), be oppressive or vexatious to such a defendant if there is some available and appropriate tribunal in another country. Admittedly, that approach to the 'vexatious' and 'oppressive' test is less stringent and less rigid than would have been accepted in the nineteenth century. Under it, the applicable test pursuant to traditional principles can, in the ordinary case, properly be seen as an 'inappropriate forum' test. It cannot, however, properly be seen as a 'more appropriate forum' test since the mere fact that a tribunal in some other country would be a more appropriate forum for the particular proceedings does not necessarily mean that the local court is a clearly inappropriate one."
Neither the terms of the insurance policy nor any other circumstance provides any basis for concluding that the parties agreed to confer exclusive jurisdiction over disputes arising under the policy on the courts of New Zealand. It is accepted by both parties that the proper law of the insurance policy is that of New Zealand. I proceed on the basis of that acceptance, it accords with the principles for the determination of the proper law of a contract; see Akai Pty Ltd v The People's Insurance Co Ltd (1996) 141 ALR 374 at 390 – 391.
Counsel for Vero does not assert that his client will not obtain justice in this jurisdiction. He does however submit that there is no connection between Tasmania and the subject matter of the dispute between Grayson and Vero, that is, the decision of Vero made and notified to Grayson in New Zealand to deny indemnity to Grayson under the policy of insurance that was agreed in New Zealand concerning the business there conducted by Grayson. Counsel goes too far in asserting that Tasmania has no connection to the dispute between the parties. To a substantial degree the factual issues that underpin Grayson's claim for indemnification relate to Tasmania. It is in Tasmania that the crane components were installed and allegedly failed, and it is in Tasmania that the damages in respect of which Grayson seeks indemnification have been suffered. It is reasonable to infer that most of the witnesses to these matters are in Tasmania or would find it as convenient to travel to Tasmania to give evidence as it would be for them to travel to New Zealand. There is no suggestion other than that the principal action between Gunns and Grayson should be heard and determined in Tasmania. The determination of that action is of direct relevance to Grayson's claim for indemnification against Vero. Should Gunns succeed, the findings of fact that are pertinent to that success will underpin Grayson's claim for indemnification against Vero. An obvious benefit of Grayson's claim for indemnification against Vero being heard in Tasmania is that this will allow all related matters in dispute to be disposed of in the course of one hearing. A further significant benefit is that in resolving all issues in the course of the same hearing, there is no scope for the controversy to be litigated twice with possibly different results. This is avoided as in the ordinary course the principal action and the third party proceedings will be tried concurrently. This benefits both Grayson and Vero.
Counsel for Vero submits that to determine the third party proceedings in Tasmania would be oppressive and vexatious to Vero as personnel and other witnesses such as Grayson's insurance broker would have to travel to Tasmania to give evidence. No evidence put before me directly supports this contention and such evidence as there is suggests that very few witnesses will need to be called for the purposes of the defence of the third party proceedings. To a significant degree that defence will turn on the construction of the policy of insurance. Ordinarily the parol evidence rule excludes extrinsic evidence when determining the meaning or legal effect of words used in a written contract. With the co-operation of the parties, evidence from witnesses in New Zealand may be given by means of an audio-visual link.
In all the circumstances, I am quite unpersuaded that Tasmania is a clearly inappropriate forum for the determination of the third party proceedings.
The application for a stay is dismissed.
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