Hilad v SCI

[1999] NSWSC 486

CITATION:	Hilad v SCI [1999] NSWSC 486
CURRENT JURISDICTION:	Commercial
FILE NUMBER(S):	50008/99
HEARING DATE(S):	14, 21 May 1999
JUDGMENT DATE:	27 May 1999
PARTIES :	Hilad Corporation Pty Limited - Plaintiff SCI (Sales Curve Interactive) Limited - First Defendant Bryan Joseph Ennis (also known as Bill Ennis) - Second Defendant
JUDGMENT OF:	Rolfe J

COUNSEL :	Mr M.J. Slattery QC/Mr G.A. Seib - Plaintiff Mr I.M. Jackman - Defendants
SOLICITORS:	Kemp Strang - Plaintiff Minter Ellison - Defendants
CATCHWORDS:	Application by defendants to stay proceedings pursuant to Part 11 rule 8 and by the plaintiff for leave to proceed pursuant to Part 10 rule 2.; Necessity for plaintiff to establish jurisdictional nexus through Part 10 rule 1A.; Onus on the plaintiff: The News Corporation Limited v Lenfest Communications Inc (1996) 21 ASCR 552 and the cases therein cited applied.; "Tacking" of causes of action not permitted: W.F.M. Motors Pty Limited v Maydwell (Bryson J - 23 April 1993 - unreported; C.E. Heath Underwriting and Insurance (Australia) Pty Limited & Anor v Barden & Ors (Rolfe J - 19 October 1994 - unreported; Australian Iron and Steel v Jumbo Scheepvaart (1988) 14 NSWLR 507; Ramcorp Limited & Ors v DFC Financial Services Limited & Ors (Waddell CJinEq - 30 April 1990 - unreported).; C.E. Heath Underwriting and Insurance (Australia) Pty Limited & Anor v Barden & Ors and the cases referred to therein and News Corporation followed.; Onus on party where a "choice of court" provision is in a contract: Akai Pty Limited v People's Insurance Co Limited (1995) 126 FLR 204 and (1996) 188 CLR 418 followed. Policy considerations underlying this approach noted.; Construction point: construction of a commercial contract: Fitzgerald & Anor v Masters (1956) 95 CLR 420; Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99; Continental Bank NA v Aeakos Companie Naviera SA & Ors [1994] 1 WLR 528 followed.
DECISION:	(1) The service of the Summons filed on 28 January 1999 on each of the defendants be set aside in whole.; (2) The proceedings commenced by that Summons be stayed generally.; (3) The plaintiff's Notice of Motion filed on 19 April 1999 be dismissed.; (4) The plaintiff pay the defendants' costs of the proceedings including both Notices of Motion.

61

HIS HONOUR:

Introduction

1 By a Summons issued on 28 January 1999 the plaintiff, for which Mr M.J. Slattery of Queen’s Counsel and Mr G.A. Seib of Counsel appeared, sued the defendants, for which and whom Mr I.M. Jackman of Counsel appeared, seeking declaratory relief in relation to three agreements whereby the plaintiff asserted that it was appointed the first defendant’s exclusive agent in Australia and New Zealand for the distribution of the first defendant’s computer software containing games played on computer screens. The agreements were identified as the General Distribution Agreement, the Carmageddon 2 Distribution Agreement and the Purchase Agreement. The Summons also formulated claims for relief based on the type of estoppel found in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387; breach of fiduciary duty and breaches of the provisions of the Trade Practices Act and the Fair Trading Act, (“the Acts”).
2 It was pleaded that the plaintiff is incorporated in Australia and that the first defendant is incorporated in the United Kingdom. The evidence established that the plaintiff carried on business of importing and distributing computer software for home entertainment purposes in Australia and New Zealand, and that the defendant carried on business in England of supplying and selling computer software for home entertainment purposes, inter alia, to its distributors. The second defendant was, at all material times, a senior executive of the first defendant.
3 By a Notice of Motion filed on 26 March 1999, which was subsequently amended by an Amended Notice of Motion filed on 29 April 1999, the defendants sought orders pursuant to Part 11 rule 8 that service of the Summons be set aside “in whole or in part”; that the proceedings be stayed in so far as they contain the allegations in paragraphs 7 to 12, 15 to 17, 38 to 41, 44 to 51, and 59 of the Plaintiff’s Contentions relating to the “general distribution agreement”; that the proceedings be stayed generally; and for ancillary relief.
4 By a Notice of Motion filed on 19 April 1999 the plaintiff sought leave to proceed pursuant to Part 10 rule 2. The plaintiff accepted that such leave could only be granted if at least one or more of the causes of action pleaded had the jurisdictional nexus with this State required by Part 10 rule 1A, although it did not accept, notwithstanding a line of authority concerning the “tacking” of causes of action which did not have such a nexus, that it had to establish that all causes of action pleaded had to fall within one of the sub-rules of Rule 1A. Its submission was that provided one or more of the causes of action had the required jurisdictional nexus other causes of action, which did not, could be relied on, particularly if they arose out of the same basic factual matrix.
5 When the motions came on for hearing Counsel agreed it was convenient to hear the plaintiff’s motion first. The plaintiff relied on the affidavit of its managing director, Mr David Mendels, sworn 23 April 1999, the exhibits thereto becoming Exhibit A. The defendants relied on the affidavit of their solicitor, Ms Ann Louise Donohue, sworn 25 March 1999. No objection was taken to the affidavits, and neither of the deponents was required for cross-examination.
6 The defendants’ basic submissions were that a number of causes of action pleaded in the Summons did not have the jurisdictional nexus necessary to satisfy Part 10 rule 1A; that causes of action which did not have that nexus could not be “tacked” onto those which did; that the plaintiff had not established that the causes of action which did have the necessary nexus were sufficiently likely to succeed; and that the General Distribution Agreement expressly provided not only a “choice of law” clause, but also a “choice of court” clause, which gave the English High Court of Justice exclusive jurisdiction. Clause 10.1, which it was agreed could have been worded better, states:-
“This agreement shall be governed by and interpreted in accordance with UK laws and Parties hereby submit to the exclusive jurisdiction of the High Court of Justice in AJA.”
The difficulty in wording was, firstly, the reference to “in AJA”. It was submitted that this was a patent error, the obvious intention of the parties being that the jurisdiction was conferred on the English High Court of Justice. There are a number of reasons why I consider this submission should be accepted. Secondly, there is some problem about the subject matter of the disputes to be heard pursuant to that clause. In my opinion, the clause covers all disputes arising out of the agreements.
7 The General Distribution Agreement was the first into which the parties entered. It was part of the plaintiff’s case that at least certain of its terms were implied into the Carmageddon 2 Distribution Agreement. It was submitted by the defendants that the choice of court provision was also implied into that agreement and the Purchase Agreement, so that all disputes, at least in relation to the three agreements, were to be heard in the English High Court of Justice.
The Burden Of Proof On The Plaintiff
8 In The News Corporation Limited v Lenfest Communications Inc (1996) 21 ASCR 553 Giles J gathered together the authorities on the onus the plaintiff must discharge to persuade the Court that it has jurisdiction pursuant to the sub-rules to Rule 1A: p.557. His Honour continued:-
“To what does that extend? It clearly includes the burden of establishing that the Rules authorise service of the summons outside Australia, but the position is less clear so far as Lenfest asked the Court to decline to exercise jurisdiction on forum non conveniens grounds or on more general discretionary grounds.”
9 Subsequently, at p.557, his Honour confirmed that where there are multiple claims, each must come within one or more of the paragraphs of Rule 1A(1) and, at p.558, he continued:-
“For present purposes the standard of proof required of News is sufficiently expressed in terms of the prima facie or arguable case, but bearing in mind, as noted by Rogers J in Pendal Nominees Pty Limited v M & A Investments Pty Limited (1989) 18 NSWLR 383 at 394-5, that ‘where the apparently qualifying condition for service is an issue that will not thereafter be reagitated, one may well look for a greater degree of assurance than in a case .. where the question will not only be argued at the hearing but will be the ultimate issue’. I have considered how the standard of proof might be satisfied in Esanda Finance Corporation Limited v Wordplex Information Systems Limited (1990) 19 NSWLR 146 and Williams v Lips-Heerlen BV, building upon Pendal Nominees .., but a prima facie or arguable case is still required: Bank of America v Bank of New York (1995) ATPR 41-390 at 40,340, 40,341.”
Thus, the plaintiff must establish a prima facie or arguable case and, in C.E. Heath Underwriting and Insurance (Australia) Pty Limited & Anor v Barden & Ors (Rolfe J - 19 October 1994 - unreported), I said, at p.1:-
“On such an application the plaintiffs have the onus of establishing that the causes of action pleaded have at least one jurisdictional nexus demanded by Part 10 rule 1A and that in respect of those causes of action the evidence shows a prima facie or arguable case.”
I referred to the authorities and continued:-
“In so far as it may be thought that ‘arguable’ provides for a higher test than ‘prima facie’ I prefer ‘prima facie’.
10 I do not have to concern myself with forum non conveniens grounds because Mr Jackman expressly conceded that if I came to the view that the plaintiff had established a jurisdictional nexus, it could not be said that this Court is a clearly inappropriate forum. In relation to the “choice of court” provision the question of onus arises if it is found that the English High Court of Justice has been invested with jurisdiction by the parties’ agreement. Mr Jackman submitted that the plaintiff had not established the strong grounds necessary to exercise the discretion to override that provision.
11 In Akai Pty Limited v People’s Insurance Co Limited (1995) 126 FLR 204, the Court of Appeal held that the proper exercise of discretion in such a case required that a stay should be granted, if such a clause existed, unless strong cause for not doing so was shown by the party bringing proceedings in another court, the burden of proving such a cause being on that party, namely the plaintiff in the present case. Although Kirby P dissented in the ultimate result, I do not understand his Honour to have taken a different view on this point. The Court of Appeal’s decision was reversed by the High Court: Akai Pty Limited v People’s Insurance Co Limited (1996) 188 CLR 418, but this part of its judgment was not, as I understand it, overruled. In that case the relevant clause provided:-
“Governing Law
This policy shall be governed by the laws of England. Any dispute arising from this policy shall be referred to the Courts of England.”
The respondent sought a stay, which O’Keefe CJCommD granted, and which decision the Court of Appeal, by a majority, upheld. In the High Court the majority, Toohey, Gaudron and Gummow JJ, stated that the appeal turned on the proper construction of the Insurance Contracts Act 1984 (Cth), and concluded that the second sentence of clause 9 was rendered void by the terms of that Act and thus determined the appeal on that basis. At p.444 their Honours accepted, as I understand it, the more general proposition relating to “choice of court” clauses in the absence of a specific statutory provision and, after referring to the judgment of Fullagar J in Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577, continued:-
“The stay in the present case was sought essentially in aid of such an implied negative stipulation that no other Court has jurisdiction to determine disputes. This stipulation, which may be described as a foreign jurisdiction clause, does not operate to exclude the jurisdiction of the Supreme Court of New South Wales, although it may constitute a ground for that Court to refuse to exercise its discretion.”
The footnote to that statement included a reference to Wilson and Ocean Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197.
12 The minority, Dawson and McHugh JJ, said, at pp.424-425:-
“A choice of law clause does not constitute a submission to the jurisdiction of the courts of a chosen legal system. A choice of courts clause does. The second sentence or part of clause 9 is clearly a choice of courts clause. The question then arises whether it constitutes a submission to the exclusive jurisdiction of the Courts which it specifies.”
13 Their Honours considered that question was determined by a construction of the clause and irrespective of whether the word “exclusive” was used. They held that the “choice of court” clause amounted to a submission to the exclusive jurisdiction of the English Courts. They referred to various authorities demonstrating that “the law has always been solicitous that when parties do contract to submit their disputes to the exclusive jurisdiction of the courts of another country they should be held to their bargain”: p.427: Huddert Parker Limited v The Ship “Mill Hill” (1980) 81 CLR 502 and Oceanic Sun Line. This led them to refer to the requirement that if there was an agreement as to the choice of court, it will require strong reasons before the Court will not enforce the bargain, although a discretion remains to refuse a stay “if sufficient cause is shown”.
The Proper Construction Of Clause 10.1
14 Clause 10.1was drafted in England by the first defendant, or those acting on its behalf, as part of a draft Distribution Agreement. It was furnished to the plaintiff in circumstances in which Mr Slattery contended that the first defendant was seeking an offer from the plaintiff as to the basis of which the plaintiff was prepared to deal with it. Mr Slattery submitted that the execution of the last page of this draft by Mr Mendels on 15 November 1996 and the return of that page to the first defendant constituted the offer, but that clause 10.1, essentially because of the words “in AJA”, was meaningless.
15 There is no doubt that the draft was intended to record, at least, the terms of an agreement between the first defendant and the plaintiff. It clearly provided by the choice of law clause that the applicable law was English or United Kingdom law. In my opinion there can be no doubt that the choice of court provision related to the English High Court of Justice. The words “the High Court of Justice”, in the context not only of clause 10.1 but of the whole draft agreement, clearly refer to the English High Court of Justice and the additional words thereafter add nothing to it. As a matter of construction they are superfluous and, in my view, should be ignored.
16 In Fitzgerald & Anor v Masters (1956) 95 CLR 420 at pp.426-427, Dixon CJ and Fullagar J dealt with a somewhat similar problem. Their Honours said:-
“There is a superficial difficulty in clause 8 because it purports to incorporate a set of conditions so far as they are inconsistent with what has been specifically agreed upon. No real difficulty, however, is created. Words may generally be supplied, omitted or corrected, in an instrument where it is clearly necessary in order to avoid absurdity of inconsistency. Here it would be indeed absurd to suppose that the parties having expressed their agreement on a number of special and essential matters, should intend to incorporate by reference terms inconsistent with what they had specially agreed upon. What they must clearly have intended is to incorporate a set of general conditions except so far as they were inconsistent with what they had specially agreed upon, and clause 8 must be read as if it said ‘consistent’ or ‘not inconsistent’.”
17 In Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99, at p.109, Gibbs J said, in a passage often relied on:-
“It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the Court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The Court has no power to make or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust ‘even though the construction adopted is not the most obvious, or the most grammatically accurate’ …”
18 In Continental Bank NA v Aeakos Compania Naviera SA & Ors [1994] 1 WLR 528, at 592, Steyn LJ said:-
“But what disputes does it cover? The answer is not to be found in the niceties of the language of clause 21.02. It is to be found in a commonsense view of the purpose of the clause. We are emboldened to adopt this approach by the observation of Lord Diplock in Antaios Compania Naviera SA v Salen Rederierma AB [1985] AC 192, 201:
‘if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense’.

The only sensible construction of clause 21.02 is that it is a submission of disputes in connection with the loan facility to the jurisdiction of the English Courts.”

19 Mr Slattery also submitted that the contra proferentem rule should be applied as the document was submitted by the first defendant. However, it must be borne in mind that it was his basic submission that it constituted an offer made by the plaintiff to the first defendant. There are other portions of the document, which have, apparently, been altered by the plaintiff and, in all these circumstances, in so far as the contra proferentem rule has any real impact in a case such as the present, I do not regard it as leading to the conclusion that clause 10.1 should be rendered meaningless.
20 In my opinion all these authorities lead to the result that the Court, in interpreting clause 10.1, must approach it in a commonsense way. It would defy that concept to conclude that reference was being made to some court other than the English High Court of Justice, or that it was not being made to the English High Court of Justice.
The Plaintiff’s Basic Submissions
21 The plaintiff’s primary submission was that each of the causes of action pleaded in the Summons falls within one of the provisions of Part 10 rule 1A, and that even if it is ultimately found that one or some of them do not, the Court should not exercise its discretion to set aside service or stay the proceedings generally. He submitted that the decisions in WFM Motors Pty Limited v Maydwell (Bryson J - 23 April 1993 - unreported) and C.E. Heath are not authority for the proposition that a Summons which contains claims, some of which fall within certain of the paragraphs in Part 10 rule 1A and some of which do not, may not be served out of the jurisdiction. My understanding, subject to certain further submissions made by Mr Slattery, is that one is entitled to proceed on claims which fall within at least one of the sub-rules in Part 10 rule 1A, but that one cannot “tack” on to any one or more of those claims ones which do not fall within one of the relevant provisions.
22 Mr Slattery, however, submitted that there is a conflict of opinion within this State, and that whilst the view I have just expressed is supported by the decision in Australian Iron and Steel v Jumbo Scheepvaart (1988) 14 NSWLR 507, C.E. Heath and News Corp, it is contrary to the decision in Ramcorp Limited & Ors v DFC Financial Services Limited & Ors (Waddell CJinEq - 30 April 1990 - unreported).
23 He submitted that in none of the cases does it appear that precise argument was put to the Court as to the proper construction of the words “originating process”, “the proceedings” and “founded upon” in Part 10 rule 1A or its equivalents in other jurisdictions; that there is a plain distinction in Rule 1A between the concept of the whole originating process and the causes of action in it; and that on its true construction the rule permits pleaded causes of action which do not have the necessary jurisdictional nexus to proceed provided causes of action which satisfy that test are also pleaded and, more particularly, when the causes of action without the necessary nexus arise out of essentially the same facts as those which do have it. He concluded that Part 10 rule 1A(x) does not contradict this construction.
24 Mr Slattery’s submission is that the “originating process” is the document whereby the proceedings are instituted and Rule 1A provides that that may be served outside Australia in certain circumstances. Inherent in the submission is the argument, to which I have just referred, that a number of causes of action may be pleaded in an originating process, one or some of which must and one or some of which may not fall within the various sub-rules of rule 1A, but, provided that at least one cause of action falls within one sub-rule service is authorised.
25 I think it important to note that the words “where the proceedings are founded on” are used in relation to only some of the sub-rules: (a), (b), (d) and (e). The various other sub-rules show that these are but instances in which the originating process may be served outside Australia. A consideration of all the sub-rules shows, clearly enough in my view, that in respect of any cause of action sought to be litigated in this State the jurisdictional requirement is that there be a connection with the State in one or other of the ways specified in the various sub-rules, either by reason of the cause of action or its constituent elements, or of the position of the person sought to be served. The restriction to matters falling within the sub-rules is reinforced by sub-rule (x) contrary to Mr Slattery’s submission.
26 In C.E. Heath, in considering a similar submission at p.24, I said:-
“As I am satisfied the necessary jurisdictional nexus does not exist to allow the causes of action based on breach of contracts to go forward, the question of discretion does not arise. If I find other causes of action do have the necessary jurisdictional nexus and, in the exercise of discretion should be allowed to proceed, the authorities, with one possible exception, preclude the ‘tacking’ of a cause of action not having the jurisdictional nexus onto one which does: Gosman v Ockerby [1908] VLR 298, Siskina (Cargo Owners) v Distos Compania Naviera SA [1979] AC 210, Vitkovic Itorni A Hutnic Tezirstro v Korner [1951] AC 869, Australian Iron and Steel Pty Limited & Anor v Jumbo Scheepvaart Maatschappij (Curacao) MV (1998) 14 NSWLR 507 and Lloyds. I think, with respect, that this result is thrown up by a construction of the Rules. In so far as the decision of Waddell CJinEq in Ramcorp Limited & Ors v DFC Financial Services Limited & Ors (30 April 1990 - unreported) may be thought to be authority for allowing causes of action, which do not have a jurisdictional nexus to be joined with causes of action which do, because they arise out of the same factual substratum, I do not think it should be followed. However in the way in which the matter seems to have been argued, as set forth in the judgment, no point was taken about the necessity to find a jurisdictional nexus. Thus it was not a matter his Honour was required to consider.”
The reference to “Lloyds” in that citation is Williams v The Society of Lloyds & Ors [1994] 1 VR 274. As I have said, Giles J took a similar approach in News Corp at pp.557-558 in terms which did not suggest any doubt about the matter.
27 In my opinion the law is that it is not permissible to allow causes of action which do not fall within one of the sub-rules of Rule 1A to be joined with causes of action which do. I do not consider that the various Courts, in coming to that decision, have overlooked the precise words of the Rules, but rather that they have applied them. Mr Slattery further submitted that where various causes of action, some of which fall within the sub-rules under rule 1A and some of which do not, all arise out of the same factual substratum, there can be no prejudice to the defendant in allowing the latter to go ahead because it will be necessary to litigate the factual issues in relation to a cause of action which is permitted. However, it is necessary to keep firmly in mind that the Rules are providing for circumstances in which a litigant, not otherwise amenable to the jurisdiction, may be made so, and state with precision the circumstances in which that may occur. Essentially, and I appreciate this is speaking a little generally, it must be established that the cause of action or the defendant has a nexus with this State, they being the circumstances in which it is considered appropriate that a foreigner should be made amenable to the jurisdiction of this Court. In these circumstances I do not consider it is an answer to the terms of the Rules to assert an absence of “prejudice” as “in effect” giving the Court power to extend the words used, and thus to extend the exorbitant jurisdiction of the Court to make a foreigner amenable to the Court’s jurisdiction.
28 The defendants submitted that a Summons, which contains claims which fall only partly within the sub-rules of Rule 1A, may not be served out of the jurisdiction if it contains another claim which is not within the Rule, and that sub-rule (x) shows that the Rule does not authorise the joinder of a claim which does not fall within one of the other sub-rules.
29 I do not accept the first part of the submission. The view to which I came in C.E. Heath was that certain of the causes of action should be stayed permanently and certain should not, and that it was for the plaintiffs to decide whether they wished to proceed on the latter causes of action only.
30 It is now necessary to consider the various claims pleaded.

The Summons
31 In dealing with an application such as this it is necessary, firstly, to examine the matters pleaded. In the part of the Summons dealing with the Nature of Dispute it was asserted:-

“1. By an oral agreement made in May 1998 the Plaintiff (‘Hilad’) was made by the First Defendant (‘SCI’) the exclusive distributor in Australia and New Zealand of SCI’s computer software product ‘Carmageddon 2’ (‘the Carmageddon 2 Distribution Agreement’).

2. Alternatively to the contention in paragraph 1 above, by written agreement between them Hilad was from October 1996 the exclusive distributor of the computer software products of SCI in Australia and New Zealand (‘the General Distribution Agreement’).

3. Under the Carmageddon 2 Distribution Agreement and the General Distribution Agreement SCI’s obligations are both contractual and of a fiduciary character.

4. By its express terms, the General Distribution Agreement was automatically renewed each October for a further 12 month period unless terminated in writing at least 45 days before the end of the current period.

5. Hilad remained SCI’s exclusive distributor of SCI’s Products in the Territory of Australia and New Zealand (as defined in the General Distribution Agreement) up to and including October 1998, when the General Distribution Agreement automatically renewed for a further 12 months through to October 1999.

6. Further, by a separate agreement (‘the Purchase Agreement’) Hilad agreed to purchase and SCI agreed to sell to Hilad 40,000 units of SCI’s product known as ‘Carmageddon 2’ as soon as it became available for commercial distribution.

7. Hilad alleges that SCI has committed breaches of the Purchase Agreement, the Carmageddon 2 Distribution Agreement and, or alternatively, the General Distribution Agreement, in that it:


(a) wrongfully purported to terminate the Carmageddon 2 Distribution Agreement and/or the General Distribution Agreement in or about October 1998;

(b) purported to appoint another distributor (‘Sega Ozisoft’) as the distributor of SCI’s Product ‘Carmageddon 2’ in the Territory in and from October 1998; and

(c) refused to supply the agreed units of ‘Carmageddon 2’ to Hilad.


8. Alternatively, Hilad says that by reason of its conduct SCI is estopped from denying the existence of the Purchase Agreement, the Carmageddon 2 Distribution Agreement and, or alternatively, the General Distribution Agreement on the principles of Waltons Stores (Interstate) Limited -v- Maher (1988) 164 CLR 387.

9. Hilad claims damages for the said breaches of contract by SCI.

10. Alternatively, by reason of the Carmageddon 2 Distribution Agreement and clause 5 of the General Distribution Agreement and the conduct of the parties, SCI is a fiduciary of Hilad in the relationship of Principal and Distributor: Hospital Products Ltd -v- United States Surgical Corp (1984) 156 CLR 41. In committing the breaches referred to in paragraph 7(b) above, SCI is also in breach of fiduciary duty. SCI failed to inform Hilad of its negotiations to secure an alternative distributor for its products, namely Sega Ozisoft, in or about October 1998. Hilad seeks equitable damages or alternatively an account with respect to the said breach of fiduciary duty.

11. Yet further and alternatively, Hilad claims damages for misleading conduct pursuant to the Trade Practices Act (Cth), 1974 or alternatively the Fair Trading Act (NSW), 1987 . The misleading conduct arises from representations made by SCI to Hilad concerning Hilad’s continuing right to the distribution of SCI’s Products, and in particular the product ‘Carmageddon 2’, and further in relation to SCI’s failure to inform Hilad that SCI at all times was purporting to reserve for itself the right to withhold distribution of SCI’s Products from Hilad.

12. Hilad also seeks damages against the Second Defendant, a Director of SCI, as an aider and abetter of, or alterntiavely, a person knowingly concerned in, the misleading conduct of SCI pursuant to the Trade Practices Act (Cth), 1974 or alternatively the Fair Trading Act (NSW), 1987 .

13. Hilad also seeks equitable compensation against the Second Defendant as a person who knowingly participated in the breach of fiduciary duty by SCI described in paragraph 10 above.”

32 In its Contentions the plaintiff pleaded its incorporation in Australia, the first defendant’s incorporation in the United Kingdom, the plaintiff’s principal business activities as the importation and distribution of computer software for home entertainment purposes, and the first defendant’s principal business as the supplier and seller to distributors of computer software for, inter alia, home entertainment purposes.
33 In paragraph 5 it was pleaded that by an agreement made at Atlanta in the United States on or about 28 May 1998 between the second defendant, who is a director of the first defendant, and Mr Mendels, (“the Carmageddon 2 Distribution Agreement”):-
“.. and in consideration of Hilad agreeing to purchase quantities of certain current but less marketable computer software programmes distributed by SCI, SCI appointed Hilad as SCI’s exclusive distributor of its computer software product known as ‘Carmageddon 2’ within Australia and New Zealand.
PARTICULARS
The quantities of the then current but less marketable computer software programmes of SCI were:

(i) One thousand five hundred units of ‘Frenzy’ on Sony Playstation.

(ii) One thousand units of ‘SpellCross’;

(iii) Eight thousand units of ‘Live Wire’ on Sony Playstation and three thousand units of ‘Live Wire’ on personal computer.”

34 It was pleaded in paragraph 6 that the express and implied terms of the Carmageddon 2 Distribution Agreement were that the first defendant would distribute “Carmageddon 2” in Australia and New Zealand exclusively through the plaintiff and through no other distributor within those countries; that the duration of that agreement would be coincident with the period during which “Carmageddon 2” was commercially distributed by the first defendant; that the plaintiff would diligently promote and market “Carmageddon 2” to a marketing standard no less than that demonstrated by the plaintiff previously in relation to its distribution of other products of the first defendant; that the first defendant would grant and the plaintiff would have the benefit of the same credit and financial arrangements as had been extended by the first defendant to the plaintiff with respect to products previously distributed by the first defendant through the plaintiff, namely at least thirty days credit; and that the first defendant would otherwise carry out all its obligations under clause 5 of the form of written Distribution Agreement, (“the General Distribution Agreement”), subsequently pleaded.
35 Mr Slattery submitted that the provisions of clause 5 of the General Distribution Agreement were impliedly incorporated in the “Carmageddon 2 Distribution Agreement”. This raised the further question, viz if they were what other provisions of that agreement, if any, were implied in the “Carmageddon 2 Distribution Agreement”.
36 The particulars of the agreement were pleaded thus:
“The terms referred to in sub-paragraphs (a), (c) and (d) above were express terms of the Carmageddon 2 Distribution Agreement discussed between Mr Ennis on behalf of SCI and Mr Mendels on behalf of Hilad on 28 May, 1998 in Atlanta USA. The term referred to in sub-paragraph (b) above is a term implied from the nature of the product agreed to be distributed. The term referred to in sub-paragraph (e) above is implied from the nature of the promise of distribution rights made on 28 May 1998 by Mr Ennis to Mr Mendels.”
37 In paragraph 7 the General Distribution Agreement is pleaded both “further and in the alternative”. It was pleaded that by an agreement made in Australia on or about 15 November 1996 between the first defendant as “the Principal” and the plaintiff as “the Distributor”, the first defendant appointed the plaintiff its exclusive distributor of computer software products within the Territory of Australia and New Zealand.
38 The Agreement was particularised by reference to a document headed “Draft Distribution Agreement”, which appears at pp.30 to 33 of Exhibit A.
39 In paragraph 8 various terms of that document were pleaded.
40 It is convenient to pause at this point to note that on 25 October 1996 the first defendant sent a facsimile transmission to the plaintiff stating that the option for computer software known as “SWIV” was available and requesting an offer from the plaintiff if it was interested. On 4 November 1996 the first defendant sent a further facsimile transmission to the plaintiff seeking confirmation that it would like to have exclusive distribution rights for “SWIV” and requesting that the plaintiff fax an “offer as soon as possible”. On 14 November 1996 the first defendant sent a further facsimile transmission to the plaintiff enclosing a copy “of your Distribution Agreement as requested from Bill”. That was the Draft Distribution Agreement and, on 15 November 1996, Mr Mendels returned the execution page, which had on it clause 10.1, signed by him on behalf of the plaintiff, and documentation lodging an order with the first defendant. He in fact signed at the place provided for the signature of the first defendant and the document was never signed on its behalf.
41 Mr Slattery submitted that the legal effect of what Mr Mendels did was to make an offer to the first defendant in the terms of the draft agreement, which offer was accepted by the subsequent forwarding of software goods to the plaintiff and the advising of the plaintiff, such advice being given in Australia, that that was being done. In that way Mr Slattery sought to have the acceptance of an offer made in Australia. He submitted that had Mr Mendels’ signing of the draft constituted the acceptance of an offer contained in the draft, that would have constituted an acceptance where it was communicated, namely in England, such that the contract for which he contended would have been entered into there.
The Purported Effect Of The General Distribution Agreement
42 Because of the reliance placed by the plaintiff on the General Distribution Agreement in respect of a number of matters, it is necessary to examine it in some greater detail. The parties were the first defendant, which is named as “the Principal”, and the plaintiff, which is named as “the Distributor”, and it recited that the Principal manufactures goods including “the Products” which the Distributor wished to sell in the Territory. The Commencement Date was October 1996 and the Expiry Date October 1997, the “Term” being defined as twelve months rolling (automatically renewed) unless terminated in writing at least forty five days before the Expiry Date. The “Territory” was defined in the typescript as “Australia” and there was added, apparently by Mr Mendels, “& NZ”. “Rights” were defined as “the exclusive rights to carry on the business in the Territory for the Term”, “business” having been defined as “the promotion and sale of the products by the distributors and all matters related”.
43 “Products” were defined as:-
“Video game programmes as produced on any form of cartridge, disc, compact disc (CD) or other similar media, as shown in the Principal’s published price list (Schedule A) relative to the Products, which will be up-dated from time to time.”
44 The Schedule showed the product as “SWIV” 3D PC-CD Rom Finished Product, with a unit price of Twelve pounds and minimum quantity guaranteed of one thousand units.
45 Clause 4 granted the plaintiff exclusive rights, and clause 5 set out the first defendant’s obligations, which included prohibitions upon its infringing or derogating from the rights and the requirement that it should support the plaintiff in its efforts to promote the business and, inter alia, to supply samples of the products and promotional and advertising material related to them; to provide and promptly update information about the products; and to supply details of production schedules, release dates, press releases and other information as may be reasonably necessary in relation to new products. Clauses 5.4 and 5.5 obliged the first defendant to supply to the plaintiff the Products in accordance with orders received from it and, subject to availability, with all reasonable despatch, and to pass on to the plaintiff any enquiries, orders or other leads within the Territory.
46 Clause 6 imposed obligations on the plaintiff, and clause 8 was a warranty and representation by the first defendant to the plaintiff that it was empowered to grant the rights. Clause 9 provided for termination either for serious or persistent breach of the provisions of the agreement and a failure to remedy them within thirty days of being required to do so in writing, and in other circumstances, which included the right to terminate at least forty five days before the Expiry Date, as provided under the definition of “Term”.
47 Clause 10.1 was in the terms to which I have referred and, accordingly the parties agreed, on the assumption there was an agreement, that the law applicable was that of the United Kingdom. There was the further issue I have identified.
48 There was no real issue between the parties that the General Distribution Agreement was concluded. Each wished to rely on portions of it. This agreement marked the commencement of contractual arrangements between the parties and, in particular, the exclusive dealership provisions. In my opinion, the two subsequent agreements have to be viewed together with the General Distribution Agreement.
A Return To The Summons
49 In paragraph 9 of the Summons it was pleaded that a number of matters existed in the relationship of the plaintiff and the first defendant from at least May 1998:-
“.. whether such matters arose from the terms of the Carmageddon 2 Distribution Agreement or the General Distribution Agreement or the conduct of each of SCI and Hilad.”
This points up the significance of the General Distribution Agreement to the plaintiff.
Those matters were stated as the existence of a valuable market in Australia for the plaintiff’s distribution of the first defendant’s software products and, in particular, “Carmageddon 2”; in the case of the Carmageddon 2 Distribution Agreement the discretion of the first defendant to promote and market and, in the case of the General Distribution Agreement, the existence of the discretion in the first defendant to promote and market and an obligation to support the plaintiff’s efforts to promote and market; and the manner and extent of the first defendant’s support of the plaintiff’s promoting and marketing efforts being within the general discretion of the first defendant. It was further pleaded that the first defendant had, from time to time, knowledge of the availability and scheduled availability of forthcoming and planned products, possession of samples of and promotional materials relating to those products, knowledge of production schedules, planned or proposed release dates and general information about new products, control of the release and supply of new products subject in the case of the General Distribution Agreement to a contractual obligation of reasonable despatch, and knowledge of enquiries, orders or other leads and opportunities for distribution of its products.
50 The pleading continued that the first defendant had various discretions it was able to exercise, whereas the plaintiff had little or no way of checking whether they were being exercised in the best interests of both the plaintiff and the first defendant. It was further contended that the plaintiff was “vulnerable” to any failure by the first defendant to exercise the discretions and use its knowledge and control in the best interests of both parties, so that a failure to do so would constitute damage to the plaintiff’s distribution goodwill in the first defendant’s Products, and that in the circumstances the plaintiff relied upon the first defendant to protect and develop the plaintiff’s distribution goodwill in the Products in Australia and New Zealand.
51 It was pleaded that by reason of those matters the first defendant was under a fiduciary obligation where its interests conflicted with those of the plaintiff to act bona fide and reasonably and with due regard to the separate interests of the plaintiff, and where its interests came into conflict with those of the plaintiff, not to profit from that conflict by failing to act bona fide and reasonably and with due regard to the separate interests of the plaintiff. It was not pleaded that these requirements constituted implied terms of the agreement.
52 In paragraph 11 it was pleaded that pursuant to the terms of the General Distribution Agreement, the plaintiff purchased certain products from the first defendant in or about November 1996 and, in paragraph 12, that pursuant to the terms of the General Distribution Agreement the first defendant provided to the plaintiff, free of charge, certain promotional and product information. The Products purchased were one thousand units of “SWIV” and four thousand units of “Carmageddon”.
53 Thereafter a number of representations were pleaded. The first representation appears in paragraph 14 of the Summons, which alleged that in or about 18 to 21 June 1997 the second defendant, on behalf of the first defendant, orally represented to Mr Mendels that the first defendant was excited about the job the plaintiff was doing for it and the publicity it had created; that the first defendant had a lot of new titles under development; that the new titles included “Carmageddon 2”; and that the first defendant would provide the plaintiff with a release schedule for the new titles, including “Carmageddon 2”. These were referred to as “the First Representations” and the evidence of them is contained in paragraphs 44 and 45 of Mr Mendels’ affidavit, which established that they were made in Atlanta in the United States.
54 In paragraph 15 it was pleaded that on or about 23 June 1997 “in reliance upon the First Representations” the plaintiff agreed to vary the General Distribution Agreement with respect to further purchases of “Carmageddon”. The variation was alleged to be oral in a conversation between Mr Mendels and the second defendant on 23 June 1997, (paragraph 46 of Mr Mendels’ affidavit), which took place whilst Mr Mendels was in California. Mr Mendels deposed, although he attributed the date as “23 June 1996” I think incorrectly, that the second defendant asked how many units of “Carmageddon” Mr Mendels wanted, to which he replied four thousand. Mr Mendels said that the second defendant asked him whether, if he was given another ten thousand units, he would take them “with extended terms”, to which he replied he would, although the plaintiff would not be able to pay for them until September or October. He said the second defendant replied “Very well. I’ll give you until September”.
55 It was pleaded that this amounted to a variation of the General Distribution Agreement so that the plaintiff would purchase on extended credit terms of sixty days from the date of receipt of shipment, presumably in lieu of ten days before shipment, and, in paragraph 17, that “pursuant to the General Distribution Agreement” the plaintiff purchased a further fourteen thousand units of “Carmageddon”. The pleadings showed the extent to which the plaintiff relied on the terms of the General Distribution Agreement, a reliance which was reinforced in Mr Slattery’s submissions.
56 In a facsimile transmission from the first defendant to the plaintiff dated 25 June 1997 it was stated that the first defendant was confirming, pursuant to an earlier conversation:-
“We have arranged for the delivery of your next four thousand units to be delivered along with your new order of ten thousand units to be collected from our warehouse on the 30th June 1997.
You have already paid for the four thousand units on their way to you, but are being given sixty days credit terms for the fourteen thousand.
If you need any further assistance please do not hesitate to give me a call.”
Although Mr Jackman submitted that the variation in relation to payment was only in respect of the one consignment, I am satisfied that it was intended to vary the basic requirement under the General Distribution Agreement that payment should be made ten days before shipment.
57 In paragraph 18 of the Summons it was pleaded that on or about 15 July 1997 the plaintiff received in Australia by facsimile transmission a Release Schedule from the first defendant, which contained an express representation that “Carmageddon 2” would be released in 1998. This was defined as “the second representation” and, in paragraph 19, it was pleaded that between 7 September 1997 and 9 September 1997, in reliance upon the first and second representations, the plaintiff made arrangements to attend and did attend a computer software trade show in Los Angeles.
58 In paragraph 20 it was pleaded that on or about 7 September 1997, in reliance upon the first and second representations, Mr Mendels on behalf of the plaintiff attended a dinner at the invitation of the first defendant during which its managing director represented to him that the first defendant was pleased with the work the plaintiff was doing as its distributor in Australia and New Zealand, and with the way the plaintiff had “hyped” the title “Carmageddon” in that Territory and with the sales of “Carmageddon” achieved in the Territory, and looked forward to a long relationship with the plaintiff “with all future SCI titles”. This was referred to as the third representation and the terms of the conversation are set forth in paragraph 53 of Mr Mendels’ affidavit, which disclosed that the dinner was held in London.
59 In paragraph 21 it was pleaded that on or about 10 September 1997, apparently at a meeting held at the first defendant’s offices in London, the second defendant represented to the plaintiff that the first defendant hoped to provide it with demonstration discs of “Carmageddon 2” by November 1997. This was defined as the fourth representation and, in paragraph 54 of his affidavit, Mr Mendels stated that it was made at a meeting at the first defendant’s offices, presumably in London. This is made clear by the statement in paragraph 56 that Mr Mendels returned to Australia on 12 September 1997.
60 It was pleaded in paragraph 22 that in or about October 1997 the General Distribution Agreement was automatically renewed for a further twelve months until October 1998 and, in paragraph 23, that in or about November 1997, in reliance upon the representations, the plaintiff purchased five thousand units of “the Carmageddon Splat Pack” from the first defendant and, in paragraph 24, that on or about 3 December 1997, in reliance upon the representations, the plaintiff purchased a further five hundred units of “Carmageddon”.
61 The fifth representation upon which reliance is placed was pleaded in paragraph 25 of the Summons. It is alleged that in or about early December 1997 in Australia the second defendant, on behalf of the first defendant, orally represented to the plaintiff that it had done a great job in distributing “Carmageddon”; that the first defendant was extremely happy with it; that there was no way that the first defendant would work with any other distributor in the Territory of Australia and New Zealand; that the plaintiff had shown loyalty to the first defendant and the first defendant would show loyalty to it; that the first defendant looked forward to a strong relationship in the future with the plaintiff on the first defendant’s new titles; that the plaintiff had done a top job in promoting “Carmageddon” and made it and the first defendant’s name successful in Australia and New Zealand; that the plaintiff would make “Carmageddon 2” very successful in Australia and New Zealand; that as soon as demonstration discs of “Carmageddon 2” were available the first defendant would supply them to the plaintiff; and that the first defendant would start supplying the plaintiff with promotional materials in respect of “Carmageddon 2” so that the plaintiff could commence publicity on its release in March 1998.
62 The evidence in support of these representations is set forth in paragraphs 61 to 69 of Mr Mendels’ affidavit, and it was submitted by Mr Slattery that these representations “showed a high degree of dependence” by the plaintiff.
63 In paragraph 26 it was pleaded that in or about February 1998, in reliance upon the representations, Mr Mendels attended the first defendant’s offices in London, during which the second defendant represented that “Carmageddon 2” was in its first stages of development and was looking very good and would be available in the second half of 1998. It was further pleaded that in the meantime the first defendant would be releasing other new titles including “Frenzy”, and that it would give the plaintiff an update on release dates when they were known. This is referred to as the sixth representation and the evidence in relation to it appears in paragraph 71 of Mr Mendels’ affidavit. Mr Slattery submitted that there was no cause of action until the representation was acted on and, in paragraph 27, it was pleaded that in or about April 1998, in reliance upon the representations, the plaintiff committed management time and expertise and expended funds to undertake and did undertake investigations of the potential market in Australia and New Zealand for the sale of “Carmageddon 2” in various formats. As a result the plaintiff submitted a commercially valuable forecast of its likely orders for “Carmageddon 2” assuming its release in early November 1998. In paragraph 28 it was pleaded that in reliance on the representations and in its capacity as distributor of the first defendant’s products in Australia and New Zealand, Mr Mendels and his product manager, Ms Machado, attended a computer software trade show in Atlanta between 28 and 30 May 1998.
64 In paragraph 29 it was pleaded that during that computer software trade show a meeting was held between the second defendant and Ms Barrett, on behalf of the first defendant, and Mr Mendels and Ms Machado, on behalf of the plaintiff, at which the first defendant orally represented to the plaintiff “certain matters that also constituted the making of the Carmageddon 2 Distribution Agreement”. It was pleaded that it was represented that the first defendant would not work with distributors other than the plaintiff in Australia and New Zealand; that the first defendant would be releasing four new titles, including “Carmageddon 2”; that the first defendant expected the plaintiff to purchase all new titles to be released by it; that “Carmageddon 2” would be released on personal computer in October/November 1998, on Sony Playstation in March/April 1999 and on Nintendo 64 in March 1999; and that the second defendant demonstrated a “Beta Version” of “Carmageddon 2” to Ms Machado on behalf of the plaintiff. These were referred to as the seventh representations and it was submitted by Mr Slattery that they provided the conduct which is alleged to be “tortious”.
65 It was pleaded in paragraph 30 that in reliance on the representations and, in particular, the seventh representation, the plaintiff placed orders with the first defendant for the purchase of each of the new software products. The particulars of the placing of the orders were that they were placed orally by Ms Machado with the second defendant during the meeting, and were confirmed by an E-mail message from Ms Machado to the second defendant dated 11 June 1998.
66 In paragraph 31 it was pleaded that at the request of the second defendant in performance of the Carmageddon 2 Distribution Agreement and in reliance upon the representations, the plaintiff, on 18 June 1998, agreed to increase its order of the new title “Frenzy” to two thousand units and to confirm its order for 2,000 units of “Carmageddon” upon terms, inter alia, that the total value of the purchase was 38,000 and that delivery would take place from 1 July 1998. The particulars alleged that the request from the second defendant was oral and made in a telephone conversation between him and Mr Mendels on 11 June 1998, and that the plaintiff then placed an order on the first defendant dated 18 June 1998 in the sum of 38,000.
67 In paragraph 32 it was pleaded, once again further and alternatively, that between 28 May 1998 and 11 June 1998, in consideration for the plaintiff’s agreement to purchase the first defendant’s less marketable computer software programmes, the first defendant agreed to sell and deliver to the plaintiff, and the plaintiff agreed to purchase, inter alia, forty thousand units of “Carmageddon 2” of various configuration at the first defendant’s then list price. The particulars alleged that the Purchase Agreement was partly oral and partly written and, to the extent that it was oral, the same particulars as those given in relation to paragraph 30 were applicable, and to the extent that it was in writing it was contained in an E-mail transmission from the plaintiff to the first defendant dated 11 June 1998.
68 In paragraphs 33 and 34 it was pleaded that on 29 June 1998, and before the period during which delivery was permitted under the order referred to in paragraph 31(2), Mr Mendels orally requested the second defendant to agree to vary the terms of the Purchase Agreement so that the shipment of the goods in that order would not take place until August 1998. The evidence of this conversation is contained in paragraph 92 of Mr Mendels’ affidavit and, although it is not pleaded that the first defendant agreed, it appears from the evidence, which of course must be treated as prima facie only, that the second defendant agreed and, in paragraph 93, Mr Mendels deposed that at no time did the second defendant indicate to him that the first defendant would not abide by its agreement as to delayed shipment of “Frenzy”.
69 In paragraph 34 it was pleaded that despite the variation in paragraph 33 the first defendant did not delay shipment, but delivered the goods to the plaintiff in mid July 1998 together with an additional five hundred units of “Carmageddon”.
70 In paragraphs 35 and 36 the eighth representation was pleaded, it being alleged that by an E-mail transmission dated 9 July 1998 the first defendant represented to the plaintiff, inter alia, that the release schedule for “Carmageddon 2” was November 1998 and, on or about 27 July 1998, the plaintiff received art work from the first defendant relating to “Carmageddon 2”:-
“.. and thereafter in reliance upon the Representations commenced using the same for the purposes of promoting ‘Carmageddon 2’ in the Territory of Australia and New Zealand”.
71 In paragraph 96 of his affidavit Mr Mendels stated that during June, July, August and September 1998 there was continued correspondence between the plaintiff and the first defendant in relation to the release of the new titles and promotional material for “Carmageddon 2”.
72 In paragraph 38 it was pleaded that by reason of the early shipment and pursuant to the General Distribution Agreement the purchase price did not fall due for payment before 1 October 1998, being sixty days after the earliest agreed date for receipt of shipment, namely 1 August 1998, and, in paragraph 39, that wrongfully and in breach of the General Distribution Agreement, the first defendant purported to demand payment prior to the due date and, in paragraph 40, that notwithstanding that payment was not due the plaintiff arranged additional financing to effect early payment. It was further pleaded that the plaintiff transferred part of the moneys raised to the first defendant’s bank account by telegraphic transfer on 18 September 1998 “and was ready, willing and able to pay the balance” on 25 September 1998. In this regard it was submitted that the plaintiff had acted to its detriment by arranging for the provision of finance through its bank.
73 In paragraph 42 it was pleaded that on 24 September 1998 the second defendant, on behalf of the first defendant, orally represented to Mr Mendels in Australia that the first defendant had not appointed anyone else to be a distributor for its products in Australia, and that the plaintiff was the only distributor. In paragraph 113 of his affidavit Mr Mendels set out the conversation he alleged he had.
74 In paragraph 43 it was pleaded that to the knowledge of the first defendant this representation was false in that on and prior to 24 September 1998, Sega Ozisoft Pty Limited, (“Sega”), held itself out as being the distributor in Australia of “Carmageddon 2” on behalf of the first plaintiff; that on and prior to that date the first defendant had agreed with Sega to appoint it as its distributor with respect to “Carmageddon 2”; and that alternatively on or prior to that date the first defendant was in the course of negotiations with Sega with a view to appointing it as its distributor in Australia and New Zealand of “Carmageddon 2”, which appointment was subsequently made. Mr Jackman conceded that there was evidence that this representation was false. He submitted that there was no evidence that the plaintiff acted in reliance on it or suffered any financial loss in consequence of it.
75 In paragraph 44 it was pleaded that in or about October 1998 the General Distribution Agreement was automatically renewed for a further twelve months until October 1999 and, in paragraph 45, that on or about 1 October 1998 the first defendant purported to terminate the General Distribution Agreement and the Carmageddon 2 Distribution Agreement by refusing thereafter to supply “Carmageddon 2” to the plaintiff. Once again this showed the close relationship the plaintiff attributed to those two agreements. In paragraph 46 it was pleaded that the termination was wrongful and in breach of the various agreements. This was repeated in various ways. It was also pleaded that the first defendant breached its fiduciary duties, is estopped in various ways, and has engaged in misleading and deceptive conduct or conduct likely to mislead or deceive, pursuant to the provisions of the Acts. The second defendant is sought to be joined, inter alia, on the basis that he was a person who had aided, abetted, counselled or procured, or alternatively was knowingly concerned in, the said misleading conduct pursuant to s.75B of the Trade Practices Act and, further, that he knowingly participated in the breaches of fiduciary duty by the first defendant.
The United Kingdom Proceedings
76 In her affidavit of 25 March 1999 Ms Donohue stated that on 11 November 1998 the first defendant commenced proceedings in the High Court of Justice in England to recover a debt of 27,800 from the plaintiff for unpaid invoices relating to deliveries of “Frenzy”. Annexure “A” to her affidavit is a copy of the Writ of Summons in those proceedings. In paragraph 3 of the Statement of Claim it was pleaded that in or around October 1996 the parties entered into an agreement pursuant to which the defendant would distribute the game “SWIV” in Australia for a minimum period of twelve months, such agreement being evidenced by a draft unsigned Distribution Agreement containing in clause 9 provision for termination in the event of serious or persistent breach of its provision and a failure to remedy such breach within thirty days of written notice requiring that to be done. The Statement of Claim also pleaded clause 10.1 dealing with the applicable law and exclusive jurisdiction.
77 In paragraph 4 it was pleaded that from time to time the parties agreed that the plaintiff should distribute other of the first defendant’s computer games in Australia, but that no agreement was reached in relation to the distribution of “Carmageddon II”. In paragraph 5 it was pleaded that prior to the institution of the proceedings the plaintiff made false claims to the effect that the first defendant had granted it the exclusive right to distribute “Carmageddon II” in Australia and New Zealand.
78 The balance of the Statement of Claim is concerned with the recovery of the debt in respect of the game “Frenzy”. The relief claimed was a declaration that the plaintiff does not have the right to distribute “Carmageddon II” in Australia and New Zealand and for payment of the amount allegedly owing.
79 In the affidavit in support of the application for leave to serve out of the jurisdiction the solicitor for the first defendant referred to the jurisdiction clause and, after quoting it, stated:-
“Whilst this clause is unhappily drafted, I suggest that the clear intention of the parties must have been for the agreement to be interpreted in accordance with English law and for the parties to submit to the jurisdiction of the High Court in England.”
80 By its Points of Defence the plaintiff admitted the entry into an agreement in October 1996 and asserted that it had various rights thereunder and, in relation to the monetary claim, denied for various reasons the obligation to pay. In paragraph 10 of its Defence it pleaded that it was entitled to damages by way of equitable set-off for breach of various terms of the 1996 agreement.
81 Exhibit B was a letter from the solicitors for the first defendant in London to the solicitors for the plaintiff in London dated 10 May 1999, the second paragraph of which reads:-
“The claim for a declaration that your client did not have any rights to distribute ‘Carmageddon II’ followed approaches made by your client to other distributors in Australia asserting rights in ‘Carmageddon II’ and threatening to sue any other distributor that purported to distribute the game. Our client therefore had every right to seek the declaration that it did. It does now appear to be common ground, however, that your client does not have any rights in ‘Carmageddon II’ and accordingly that part of our client’s case can be withdrawn.”
The final paragraph stated:-
“That leaves the question of forum. The agreement between our clients provides for the agreement to be governed by UK law with the parties submitting to the exclusive jurisdiction of the High Court of Justice. We cannot see any reason in these circumstances why our client should consent to the substantial dispute between our clients, namely whether or not our client was entitled to terminate the agreement being litigated in New South Wales. If your client will agree to withdraw the New South Wales proceedings, our client will agree that the costs of these proceedings should be treated as being in the cause of the English proceedings and will consent to whatever form of amendment your client considers necessary so that its claim can be brought here, again with costs in the cause. Otherwise, unless our client succeeds in its forum application in New South Wales, then the actions will have to proceed in tandem.”
82 Exhibit C is a letter from the plaintiff’s solicitors in London to their solicitors in Sydney stating:-
“You have asked me whether there is equivalent legislation in England to Section 52 of the Trade Practices Act 1974, which provides that a corporation shall not engage in misleading or deceptive conduct. I can confirm that there is no primary legislation in England equivalent to Section 52.
There is secondary legislation which, inter alia, prohibits misleading advertising and the like. However, there is no legislation prohibiting misleading or deceptive conduct by corporations in such broad terms as Section 52.”
The Carmageddon 2 Agreement And The Purchase Agreement
83 Mr Slattery submitted that the plaintiff’s primary contractual claim is based upon the Carmageddon 2 Agreement pleaded in paragraph 5 of the Summary of Contentions, the entry into which was preceded by a series of representations made by the first defendant through the second defendant to the plaintiff “in the forum”. It is submitted that “these causes of action” fall within sub-rules (a), (b), (c)(iii) and (iv). He also submitted that portion of the General Distribution Agreement was implied in that agreement.
84 As pleaded the contract was made in Atlanta and not in New South Wales. Accordingly, sub-rules (a) and (c)(i) do not avail the plaintiff and, indeed, Mr Slattery does not rely upon the latter.
85 Mr Slattery relied nextly upon sub-rule (b), which provides:-
“where the proceedings are founded on a breach in the State of a contract wherever made, whether or not the breach is preceded or accompanied by a breach wherever occurring that renders impossible the performance of any part of the contract which ought to be performed in the State.”
86 By two E-mail transmissions of 1 and 2 October 1998, which were received by the plaintiff in Sydney, the first defendant purported to terminate the Carmageddon 2 Distribution Agreement for breach, namely the failure to pay. These breaches, it was submitted by Mr Slattery, occurred in New South Wales. Mr Jackman’s submission was that the place of the breaches alleged in paragraphs 45 to 47, being the allegation of a wrongful termination and a refusal to supply, was England as that was “the place where the decision as to the alleged termination was made, and where supply was to be effected”. He elaborated by submitting that the appointment of another agent was made in England and that it was this breach which prevented the first defendant from honouring its obligations under the pleaded agreements and, hence, it was not a breach which occurred in New South Wales.
87 The difficulty I have with this submission is that whilst the decision may have been taken in England it was not the decision-making process, which led to the termination and refusal to supply, but the communication of that decision to the plaintiff. Until the decision was acted upon, it cannot, in my view, be asserted that there was a breach. It was acted upon by advising the plaintiff in New South Wales of the termination and thus, in my opinion, the breach occurred at that point and in New South Wales. If the view is taken that it was the taking of the decision and/or the appointment of another agent, which all occurred in England, that does not overcome sub-rule (b) if, as happened, there was a breach in New South Wales by the communication of the termination said by the plaintiff to have been wrongful. This invokes the second part of the sub-rule (b).
88 Mr Slattery also submitted that the breaches necessarily entailed breaches of a number of the provisions of clause 5 of the General Distribution Agreement, which, of necessity, had to be performed by the first defendant in New South Wales.
89 In all these circumstances I am satisfied that breaches occurred in New South Wales and that, accordingly, the necessary jurisdictional nexus has been established in relation to the Carmageddon 2 Distribution Agreement and the General Distribution Agreement. However, this conclusion throws up for consideration the inter-relationship between those two agreements and the effect, if any, of clause 10.1.
90 I have come to the conclusion that it is not possible to draw a distinction between the Carmageddon 2 Distribution Agreement, on the one hand, and the General Distribution Agreement, on the other. Indeed, Mr Slattery’s submissions did not attempt to do so. He maintained that some of the terms of the General Distribution Agreement were implied into the Carmageddon 2 Distribution Agreement, and that there were variations of the former agreement, which impacted on the latter. The pleading asserted that the one act constituted a breach of both. In my opinion the pleaded and evidentiary relationship between these two agreements is such that one cannot tease out some provisions that only apply to the General Distribution Agreement, and some which apply to both. I consider that the preferable view is that the Carmageddon 2 Distribution Agreement was a refinement or extension of the General Distribution Agreement and that the proper conclusion is that its terms were, therefore, part of it. Thus it picked up clause 10.1, or, alternatively, the Carmageddon 2 Distribution Agreement was merely a further implementation of the General Distribution Agreement, so that all its terms were applicable.
91 I am also of the view that in so far as the Purchase Agreement may be said to be a separate agreement, it was similarly an extension of the General Distribution Agreement, in the sense that it emanated from it with the same conclusions.
92 In the result the view to which I have come is that all the agreements pleaded are subject to clause 10.1 of the General Distribution Agreement. There is no doubt, in my opinion and for the reasons I have stated, that clause 10.1 is an exclusive “choice of court” provision and that, accordingly, any proceedings based on the alleged breach of any of the agreements should be stayed, at least pending their resolution in the High Court of Justice. The conclusions apply whatever the jurisdictional nexus unless, of course, the plaintiff can show strong cause why a stay should not be granted. I am not satisfied that there are. Mr Slattery submitted that the plaintiff would lose the juridical advantage of not being able to rely on the Acts, but that has never been treated as sufficient to show strong cause. It is merely a consequence of the parties’ agreement, which is otherwise enforced. However, lest I am wrong in this conclusion I shall consider other submissions.
The Proper Law Of The Contract
93 In addition Mr Slattery contended and Mr Jackman disputed that the law of New South Wales is the proper law of the Carmageddon 2 Distribution Agreement, essentially on the basis that New South Wales is the system of law with which that agreement has its closest and most real connection: Bonython v The Commonwealth (1950) 81 CLR 486.
94 Mr Jackman submitted that the proper law was English law by virtue of clause 10.1 and, in any event, it was that law with which the agreement had its closest and most real connection, because the goods were supplied by an English company in England to freight forwarders in England to be paid for in that country; title to the goods passed in England; and because the Territory of the alleged exclusive right of distribution comprised both Australia and New Zealand, thus making it inappropriate, notwithstanding the principal place of the plaintiff’s business, to choose Australia rather than New Zealand.
95 I am not satisfied that the law of New South Wales is the proper law of the Carmageddon 2 Distribution Agreement in the sense that it is the jurisdiction with which the agreement has its closest and most real connection. The agreement was entered into in the United States and obliged the parties to perform activities in both England and Australia. Those to be carried out in England were as essential to it as those required to be performed in New South Wales. There cannot, for the reasons I have stated, be any preference for New South Wales law, particularly when one adds the provisions of clause 10.l.
Damages
96 Mr Slattery relied initially on damages for breach of contract having been occasioned in New South Wales, which he submitted satisfied sub-rule (a). Mr Jackman submitted that damage is not the gist of an action for breach of contract and, accordingly, the cause of action did not arise where the damage occurred. He also relied on authorities defining “cause of action” as meaning “the act on the part of the defendant which gave the plaintiff cause of complaint”: Distillers Co (Biochemicals Limited) v Thompson [1971] AC458 and Voth v Manildra Flour Mills Pty Limited (1990) 171 CLR 538. It is not necessary to pursue this matter further because in his final submissions, notwithstanding the written submissions, Mr Slattery conceded that his submission could not be correct and he withdrew it.
The Purchase Agreement
97 The next agreement to which regard must be had is the Purchase Agreement pleaded in paragraph 32. That agreement was not entered into in New South Wales. I am not satisfied that the breach of it occurred in New South Wales. The breach pleaded in paragraph 34 is that shipment was not delayed. This overlooks that delivery was to be made in England to the plaintiff’s freight forwarder, which would arrange shipment. However, if this be thought to be over-technical, the breach, therefore, occurred when the goods were delivered to the first defendant for shipment without delay and, in my opinion, each breach, if there were two, occurred in England. Either breach, of course, had the consequence that the goods were delivered in New South Wales earlier than it is alleged they were agreed to be. However, that was a consequence of the breach rather than its occurrence. In the result I do not consider that the Purchase Agreement is one in respect of which the plaintiff has established the necessary jurisdictional nexus. Essentially for the reasons I have given I do not consider that it has been established that the law of New South Wales is the proper law of this agreement nor of the General Distribution Agreement.

The General Distribution Agreement
98 The General Distribution Agreement was allegedly entered into on 15 November 1996, in the circumstances to which I have referred. I have noted the plaintiff’s submissions as to how that occurred. Mr Jackman has submitted that it is artificial to regard Mr Mendels’ facsimile transmission of 15 November 1996 as an offer, which the first defendant accepted by the supply of goods. He has submitted that Mr Mendels was accepting the terms offered to him by the first defendant’s facsimile transmission of 14 November 1996. In my view this submission should not be accepted. It is clear from the correspondence to which I have referred that the first defendant was seeking an offer from the plaintiff. In my opinion it would be straining the words emanating from the first defendant too far to find that the proffered draft agreement amounted to an offer. At best the first defendant was indicating that it was prepared to treat on the basis of the terms of that draft agreement if the plaintiff made an offer pursuant to it.
99 The difficulty, so far as the acceptance of the offer by conduct is concerned, is that the plaintiff proffered order forms requiring delivery to JAS Freight Forwarders at an address in England: pp.27, 50 and 80 of Exhibit A. Further clause 3.8 of the draft Distribution Agreement provided that the price was to be “FOB UK”, which means, as was not disputed by Mr Slattery, that the property in the goods passed in England: Exhibit A p.30. In Exhibit A at p.35 there is a facsimile transmission from Mr Mendels to the first defendant stating:-
“Would you please ensure that these goods are shipped to JAS by Friday the 22nd November in order to make our consolidation on Saturday. Delivery details on our order (copy attached).”
In my view this shows that the acceptance was to be by performance in England and, therefore, the contract was not entered into in New South Wales.
Estoppel
100 The plaintiff relies upon an estoppel of the type identified in Waltons Stores (Interstate) Limited. The six elements required to be proved by the plaintiff to give rise to such an estoppel, which were identified by Brennan J at pp.428-429, were cited, namely:-
“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that:
(1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship;
(2) the defendant has induced the plaintiff to adopt that assumption or expectation;
(3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation;
(4) the defendant knew or intended him to do so;
(5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and
(6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.”
101 It must be borne in mind that in that case there had not been an exchange of contracts necessary to bring into existence a binding agreement for a lease, but that, none-the-less, the appellant was estopped from denying that it was bound by reason of its conduct. However, in my opinion, that is very different from the present case where the parties clearly had entered into contractual relations and, as Mr Slattery has submitted, the plaintiff’s primary case is based on the existence of a contract.
102 It seems to me that in the present case the existence of the contracts is highly significant, because the relief sought by the plaintiff is that the first defendant is estopped from denying the existence and terms of the Carmageddon 2 Distribution Agreement, the Purchase Agreement, or, alternatively, the General Distribution Agreement. I am satisfied, for the reasons I have given, that the plaintiff has established, to the extent required at this stage, that such agreements existed and, viewing the evidence as a whole, there can be no doubt that the parties considered that they were in contractual relations. Therefore, in my opinion, it becomes artificial to be seeking to raise an issue of estoppel. Put another way I do not understand the first defendant to be denying that the parties entered into contractual relations. The issues are where the contracts were entered into, their terms and where, if at all, they were breached. In the event of it being found that any of the contracts were breached the further questions arise as to damages and where any proceedings should be brought.

103 Mr Slattery submitted that it may be that the defendants will seek to raise defences that no contract or contracts were entered into and that, in those circumstances, he should not be precluded from pleading an estoppel at this stage. I disagree. The question whether a contract was entered into requires consideration of a number of questions. Many matters relevant to that issue could not, in the ordinary run of cases, give rise to a question of estoppel. The evidence does not satisfy me that in the present case that may happen.
104 In News Corporation, Giles J considered the question of estoppel at length and, at p.571, expressed the view:-
“I consider that the better view is that the cause of action arose in America or England, where there took place the conduct which generated the assumption (the telephone conferences), the adoption of the assumption (Mr McWilliam’s reliance), and the second element of that which could make departure from the assumption unconscionable (failure to give notice to News). The argument for the cause of action arising in New South Wales is, in my view, far from strong, and I do not think it achieves a prima facie or arguable case of sufficient satisfaction that News has established that the estoppel claim comes within paragraph (a) of Part 10 rule 1A(1).”
This confirmed that estoppel may be a cause of action but, in the view to which I have come, the estoppel claim is irrelevant and inappropriate.
Fiduciary Duty
105 The next claim concerns breach of fiduciary duty, it being alleged that the first defendant owed fiduciary duties to the plaintiff. The circumstances in which fiduciary duties may arise in a commercial context have been essentially laid down by the High Court in Hospital Products Limited v United States Surgical Corporation & Ors (1984) 156 CLR 41. In that case it was held that a fiduciary relationship did not exist between a supplier and its supply agent at the suit of the supplier. Mr Slattery accepted this, but he said that the facts of each case must be looked at and that one could not say that merely because a commercial relationship existed between the parties there was not a fiduciary duty. I shall assume, for present purposes, that that is correct. However, when one looks at the facts of the present case I am not satisfied, having regard to the onus carried by the plaintiff, that it has established any facts which relevantly distinguish the case from Hospital Products. I should also note that Mr Slattery expressly abandoned the submission that breach of a fiduciary duty constituted a tortious act or omission.
The Trade Practices Act And The Fair Trading Act
106 Finally the plaintiff relied, as against the first defendant, upon sub-rules (m) and (s) in addition to sub-rule (a), the first two of which provide respectively:-

“(m) where the proceedings concern the construction, effect or enforcement of an Imperial Act or Commonwealth Act, or a regulation or other instrument having or purporting to have effect under such an Act, affecting property in the State;

…

(s) where the proceedings concern the construction, effect or enforcement of an Act or a regulation or other instrument having or purporting to have effect under an Act.”

107 The claims under the Acts assert that the representations and each of them were and was made in trade or commerce, that they were misleading and deceptive or likely to mislead or deceive, that the defendants intended to reserve the right not to appoint the plaintiff its distributor of “Carmageddon 2” in Australia and New Zealand or to supply “Carmageddon 2” to it in the future and failed to inform the plaintiff of this intention:-
“.. which in the circumstances hereinbefore pleaded by reason of s.51A of the Trade Practices Act and s.41 of the Fair Trading Act was misleading or deceptive, or was likely to mislead or deceive.”
108 In paragraph 55 it was pleaded that “by reason of its reliance upon the misleading conduct referred to in paragraphs 53 and 54” the plaintiff has suffered loss and damage. It is not in issue, as I understand it, that the Fair Trading Act 1987 does not have extra-territorial operation, and that the Trade Practices Act only has that operation to the extent provided in s.5, which has no applicability to the first defendant. Nor was it in issue that the first defendant was neither incorporated in nor carried on business in Australia. In these circumstances it is necessary, in my opinion, to have regard to any representations, which were made in Australia. In paragraph 18 the second representation is pleaded as one having been made in Australia that “Carmageddon 2” would be released in 1998. The fifth representations are pleaded in paragraph 25 as having been made in Australia between 1 and 3 December 1997, the relevant representation (in the sense of providing a foundation for a cause of action), in my opinion, being that pleaded in sub-paragraph (c), namely:-
“There was no way that SCI would work with any other distributor in the Territory of Australia and New Zealand.”
There is no direct evidence from Mr Mendels that, in reliance on this representation, he caused the plaintiff to act in any way differently from the way in which it otherwise would have acted. There is no doubt that the plaintiff continued to do business with the first defendant, and the reasonable inference is that if it had been told something to the contrary it would not have done so. But that is a somewhat different proposition and, on the whole of the evidence, I am not satisfied that this representation caused the plaintiff to continue to trade with the first defendant. I consider it would have continued to do so. Nor, in consequence thereof, am I satisfied that it suffered any financial loss. Damages are the only remedy sought under the Acts.
109 The eighth representation, which is pleaded in paragraph 35, relates to the fact that the release schedule for “Carmageddon 2” was November 1998, and the ninth representations, which are alleged to have been made in Australia on 24 September 1998, assert that the first defendant had not appointed anyone else to be a distributor for its products in Australia, and that the plaintiff was the only distributor of its products in Australia.
110 Section 51A(1) provides:-
“For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.”
111 It was not contended by Mr Jackman that the representations to which I have referred were not, as the evidence presently stands, made in Australia. Rather he submitted that the evidence does not establish a prima facie case for damages for misleading and deceptive conduct in relation to those representations and that there is no evidence to suggest that the second, fifth and eighth representations were false either as to matters of fact or as to the first defendant’s intentions.
In my opinion the second and eighth representations cannot give rise to any cause of action, there being no suggestion of any falsity in relation to them. I think that the fifth representations, and particularly the one to which I have referred, do constitute representations on which the plaintiff could sue if it had established a prima facie case of reliance and damage. In my opinion, the onus would have been on the first defendant to show that it had reasonable grounds for making the representation. However, as I have said, the evidence does not satisfy me that there was reliance or damage.
112 Mr Jackman conceded that there was evidence that the ninth representation was false. He submitted that the evidence did not establish that the plaintiff acted to its detriment in reliance on that representation, nor that it suffered any damage in consequence of it. I am satisfied that these submissions must be accepted. On 25 September 1998 Mr Mandels was advised that there was another agent and he immediately acted. Thereafter the E-mails of 1 and 2 October 1998 were received. The plaintiff did not act in reliance on the representation and suffered no damage by virtue of its falsity.
113 So far as the claims under the Acts are concerned, I have proceeded on the basis most favourable to the plaintiff, viz that in so far as representations were made in Australia it would be entitled to sue on them if it could show a prima facie case for the elements of the claim. I do not think that the exclusive law or jurisdiction clause would relate to those claims and, if otherwise satisfied of the necessary requirements, I would have allowed these claims to proceed in New South Wales. But I am not so satisfied.
The Claim Against The Second Defendant
114 My rejection of the claims under the Acts against the first defendant necessarily means that the claims against the second defendant cannot be allowed to proceed. However, lest others take the view that my decision in this regard is wrong, I shall deal briefly with those claims.
115 The claim based upon s.75B of the Trade Practices Act requires it to be strictly proved that the person was an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention: Yorke & Anor v Lucas (1985) 158 CLR 661.
116 I am not satisfied that the second defendant had the necessary intent or knowledge in relation to the fifth representations, notwithstanding that he made them. I have pointed out that the relevant representation in those representations relates to future conduct upon which the onus of proof of reasonable cause would lie on the first defendant. In my view it is very difficult to attribute the necessary knowledge and intent to a person alleged to be guilty of accessory liability in those circumstances.
117 As to the ninth representations, however, I am satisfied that the proper inference to be drawn from all the facts is that the second defendant, at the prima facie level with which I am dealing with the matter, had the necessary knowledge and intent on the basis of which I would have permitted the proceedings to go ahead against him, but for the reasons to which I have referred.
118 Finally, the plaintiff sought damages against the second defendant in that he knowingly participated in the breaches of fiduciary duty. Once again it is possible to dispose of this matter on the basis that the principal claim has not been made out. Once again, as others may take the view that it has been, I shall deal with it. Mr Jackman submitted that this allegation requires proof of dishonesty: Royal Brunei Airlines SDN BHD v Tan [1995] 2 AC 378. In delivering the opinion of the Privy Council Lord Nicholls of Birkenhead said, at p.392:-
“Drawing the threads together, their Lordships’ overall conclusion is that dishonesty is a necessary ingredient of accessory liability. It is also a sufficient ingredient. A liability in equity to make good resulting loss attaches to a person who dishonestly procures or assists in a breach of trust or fiduciary obligation. It is not necessary that, in addition, the trustee or fiduciary was acting dishonestly, although this will usually be so where the third party who is assisting him is acting dishonestly. ‘Knowingly’ is better avoided as a defining ingredient of the principle, and in the context of this principle The Baden [1993] 1 WLR 509 scale of knowledge is best forgotten.”
119 When one goes back to paragraph 49 of the Summons I am unable to conclude that all the allegations are ones in respect of which the necessary test can be said to apply to the second defendant.
Conclusions
120 In the result I am of the view that the service of the Summons on the defendants should be set aside in whole and that the proceedings should be stayed generally. The consequence of coming to this view is that the plaintiff’s Notice of Motion should be dismissed.
121 The parties did not address me on costs, but I see no reason why costs should not follow the event.
Orders
122 I order that:-
(1) The service of the Summons filed on 28 January 1999 on each of the defendants be set aside in whole.
(2) The proceedings commenced by that Summons be stayed generally.
(3) The plaintiff’s Notice of Motion filed on 19 April 1999 be dismissed.
(4) The plaintiff pay the defendants’ costs of the proceedings including both Notices of Motion.
(5) Exhibits be returned.

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