Leigh-Mardon Pty. Limited v PRC Inc

No judgment structure available for this case.

I ,

; : \o io I w a
JUDGMENT No. ........ ........ .. ........ ..,.

I . r - WYM
, .

IN THE FEDERAL COURT ;OF AUSTRALIA

1 1

NEW SOUTH WALES D I S T R I ~ REGISTRY ) No G 900 of 1992
GENERAL DMSION

BETWEEN: LEIGH-MARDON PTY LIMITED
Applicant

m: PRC INC
Fust Respondent
PRC INTERNATIONAL PTY LIMITED
Second Respondent

Coram: Davies J.
Date: 17 December 1992
Place: Sydney

MINUTES OF ORDER

(1) That the application be amended so that a fist return date is specified which gives ample time to PRC Inc after s e ~ c e to consider its position

before being required to enter an appearance.
(2) That together with the application there be served a copy of the statement of claim and the affidavits which have been filed, the exhibts tendered in ths motion and a sealed copy of this order.
(3) That there also be served with the documents a notice to PRC Inc signed by the solicitor for the applicant directing the attention of PRC Inc to, and setting out the content of Rules, 2, 6 and 7 of Order 9 of the Federal Court Rules.

THE COURT ORDERS THAT:
Leave be granted to the Applicant to serve originating process out of Australia pursuant to Order 8 of the Federal Court Rules.
Terms of the gant of leave wdl be:-

m: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.

IN THE FEDERAL COURT OF AUSTKALIA

1 1
NEW SOUTH WALES DISTRICT REGISTRY ) No G 900 of 1992
1
GENERAL DMSION 1

BETWEEN: LEIGH-MARDON PTY L I M m D
Applicant

m: PRC INC
First Respondent
PRC INTERNATIONAL PTY LIMITED
Second Respondent

m: Davies J.
Date: 17 December 1992
Place: Sydney

REASONS FOR JUDGMENT

This is a motion seeking leave to serve originating process in the United States of

America, pursuant to the provisions of Order 8 of the Federal Court Rules.
The Rule permits such service in the following circumstances, inter a11a:-
"(a) where the proceeding 1s foundul on a cause of action arising in the Commonwealth;
...

(ab) where the proceed~ng:

(iii) and the contract:
IS for damages or other rehef in respect of the breach of a contract,
JS made in the Commonwealth;
where the proceeding is founded on a tort committed in the

@c) Commonwealth;
(ad) where the proceeding 1s founded on, or is for the recovery of, damage suffered wholly or partly m the

Commonwealth caused by a tortious act or ormsslon, wherever occurnng;
(b) where the proceeding 1s founded on a breach of an Act,
where the breach IS committed in the Commonwealth;

(c)

where the proceeding 1s founded on a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth,"

Under Rule 2 of Order 8, the Court may grant leave where a is satisfied that the
proceeding is one within its jurisdiction and falls within the categories specified, and that
the applicant has a pnma facie case for the relief sought. The grant of leave is

The dispute between the parties arises out of a memorandum of agreement dated

18 June 1991 which, on the evidence before the Court, was made in Melbourne on 21
June 1991.
A recital of the agreement was:-
"WHEREAS, Leigh-Mardon and PRC have determined that it is in their respective

interests to establish a relationship to cooperate in the pursuit of government contracts assonated with Computer Aded Aqulsltlon and h g s t ~ c s and Support (CALS), and particularly with respect to the Engineering Data Management Information System (EDMICS), in Australia or the fulfilment of Fore~gn Military Sales (FMS) contracts

relating to Australia wh~ch are entered Into in the Unites States"

Clause 3 provided:-
"3. Best Effom. Each party will exert its best effow to produce a proposal or proposals
which will cause the selection by the Australlan Department of Defence of EDMICS, and the award of a contract to whchever party IS appropriate as the prime contractor for the program(s), and the acceptance of PRC or Leigh-Mardon as the subcontractor for the work appropnate for assignment to the subcontractor herein, and each party wll contlnue to exert its best efforts toward this objective throughout any and all negotiations concerning proposed contracts or subcontracts whlch may follow the submiss~on of such proposal(s)."
Several provisions of the memorandum of agreement suggest that the agreement

was limited to obtaining a contract in relation to the Royal Australian Navy. Thus,
Clause 1 states inter a1ia:-
"Lelgh-Mardon and PRC, acting indepcndcntly in thelr respectwe countries, agree to cooperate in the marketing and sale to the Australlan Department of Defence, whether d~rectly or as a Foreign Milltary Sales (FMS) case, of a computer-aided logstlcs and support system known as or similar to the Englnecring Data Management Information System (EDMICS) to support the Royal Australlan Navy (RAN)."

However, the statement of clalm, under the heading of 'Estoppel', relies upon the

the contract to "Private sectorship-build~ng operations in Australia, to the Royal allegation that there was conduct on behalf of PRC Inc which extended the operation of

Australian Ar Force (RAAF) and to the Austrahan Army".
I
I . .
>

In any event, there came to be a dispute between the parties as to the ambit and content of their arrangement. On 3 June 1992, PRC Inc's legal department in Sydney

i
8
>

I . , -
sent a fax to Dr K.F. McDowell, who acted for the applicant, which read:-

"Thank you for meeting with us yesterday. As we discussed, PRC is of the strong opmion
that the subject Agreement is unenforceable for the reasons stated at that meeting.
As you were informed, PRC recently submitted an EDMICS' Tender proposing Le~gh-

Mardon ('LM') for certain of the EDMICS' work, but we were unable to obta~n approval

of LM as a subcontractor. The subject Agreement, even 1T adjudged to be enforceable,

is at an end pursuant to its terms. (See Article 12.)
At the meeting, information obtained much earlier by PRC that LM was actively participating in the interchange of imaging technical data with a competitor in violation of the P R a M Agreement was confirmed, i.e., LM and Kodak have entered into a written SIX-month Agreement for the interchange of imagiog technology, which, if the Agreement were enforceable, IS m matenal breach of the Agreement excusing further performance of the Agreement by PRC, and entitling PRC to tennlnate the Agreement. (See Artlcle 13.)
T ~ I S letter, wthout prejudice to PRCs positlon that the Agreement is not enforceable, constitutes wntten notice of PRC's election to terminate Lhe Agreement for the reasons stated m t b s notlce should the subject Agreement be found to be enforceable.

PRC has arranged to partic~pate in thc July 1992 CALS' conference in Sydney. Should

your client, LM, partic~pate in the conference, LM should not communicate or advertise
that it is associated with PRC, m any manner, wlth regard to CALS capabilities."
The applicant treated this letter as a repudiation of the agreement and accepted

the repudiation.
On 29 July 1992, there was an announcement that PRC Inc had entered into an arrangement with Austrahan Defence Industries Limited, an Australian Government business enterprise, the majority of shares of which are held by the Minister of Defence

on behalf of the Commonwealth of Austraha. The principal activity of Australian Defence Industries Ltd is the production and repair of defence equipment. It manages,

owns and controls the Garden Island Naval Dockyard in New South Wales and clothing and munitions factories. The arrangement was that PRC Inc would provide to Australian Defence Industries Ltd semces of the kind that had been the subject of cooperation between the applicant and PRC Inc.

The applicant claims in the first instance that PRC Inc dld not use its best efforts
to put forward a proposal which would bring about the award of a contract to either
PRC Inc or the applicant, in which the other was named as sub-contractor.

That claim is also put on the basis of fiduciary relationship. The claim was said

by Mr T. Hancock, counsel for the applicant, to be based on tort, but as I read the
statement of claim and understand it, it merely expresses incidents of the contractual
arrangement between the parties.
The applicant further alleges that PRC Inc, by the conduct and actions which were relied upon by the applicant, was bound by the promissory estoppel to which I have already referred. It is further alleged that, if the conduct and actions were not promissory, they were misleading and deceptive or likely to mislead and deceive and
therefore a breach of s.52 of the Trade Practices Act 1974 (Cth).

A further claim is brought aga~nst PRC Intematlonal Pty Linuted, an Australian

subsidiary of PRC Inc. It is alleged that PRC International Pty Limited was involved in

all the breaches alleged against PRC.
The matters claimed against PRC under the headings of contract, estoppel and

fiduciary relationship all seem to me to be matters arlsing out of the written agreement
between the parties extended in its ambit by the alleged conduct and oral arrangements
of the parties. The written contract was entered into in Australia. The conduct and oral

arrangements rehed upon to extend its ambit also occurred in Australia. In these circum-
stances, the claim is made in respect of a contract entered into in Australia.
The breaches are alleged to have occurred in Australia, for they occurred in

relation to contracts sought with respect to the Australian Defence Forces and, in particular, relate to the activity of the respondents in relation to Australian Defence
Industries Ltd, the owner of the Garden Island Dockyard.
The damage suffered by the applicant was suffered in Australia.
Insofar as there is conduct relled upon as a breach of s.52 of the Trade Practices

- Act, that conduct is alleged to have occurred in Australia.
Accordingly, the claims fall within paragraphs 4(a), (aa), (ab), (b) and (c) of Order

8 Rule 1.

It does not seem to me that the matters, as pleaded, ra~se a tort committed by

PRC Inc.
In respect of the matters alleged to found the claims, the evidence before me is

limited but sufficient, I think, to found a prima facie case for the purpose of service out
of the jurisdiction. In particular, the claims set out in the fax to Dr KF. McDowell of
3 June 1992 that the agreement was unenforceable or had come to an end pursuant to
Article 12, provide a basis for concluding that the applicant has an arguable case upon
the issues raised.
The matters I have mentioned would provide a sufficient ground for the

favourable exercise of discretion, but there is a substantial factor pointing the other way.
Paragraph 20 of the Memorandum of Agreement provides:
"20. Junsd~ction. This Agreement shall bc governed by and construed in accordance with the laws of the Commonwealth of Virginia, United States of America. Any judicial proceeding by one party against the other involving any controversy or cla~m ansing out of or rclaung to the pcrformance of services under this agreement shall be instituted only in the United States Distnct Court for the Northern Distnct of Virgin~a, or the appropriate court of the Commonwealth of Virgima Both PRC and Leigh-Mardon agree to subm~t o the personal junsdiction of the above courts in any such proceeding and each waives the nght to trial by jury that 11 may possess in such civll acuon "

In the light of this clause, whlch provides for the exclusive junsdiction of the United States District Court for the Northern District of Virginia or the appropriate
court of the Commonwealth of Virginia, the principle to be applied 1s that stated by Dixon J. in Huddart Parker Ltd v. The Sh~o Mill H111 (1950) 81 C.L.R. 502 where his
Honour said at 508:-

"It follows that, in my.opin~on, t h ~ s Court has power to stay the suits if, upon a proper
exerclse of the Court's discretion. it appears that it is a course which should be taken. ... But the Courts begin with the fact that there is a special contract between the partles to refer, and therefore in the language of Lord Moulton in Bmtol Corporatton v. John Alrd

& CO (1913) A.C. 241, at p.259, cons~der the circumstances of a case with a strong b~as
in favour of maintaining the special bargain or as Scrutton L J. said in Menopoluan Tunnel and Publrc Workc Ltd v. London Elecmc Rollway Co. (1926) Ch 371, at p 389, 'A guidmg principle on one s ~ d e and a very natural and proper one, is that parties who have made a contract should keep it ' At the same tlme, as 1s shown by the two cases at&, the Court's discretion has not been restncted by any exclusive definit~on of the circumstances which will warrant a refusal of the stay: see Lord Parker m Aird's Case (1913) A.C., at p.260, and per Smnon LJ. in the Menopoluan flrnnel Case (1926) Ch., at pp.389,390."

Particular factors which might influence the exercise of the discretion were enunciated
by Brandon J. in The Eleftheria (1969) 2 All E.R. 641 at 645. I need not deal with the
many reported cases which, applying these principles, have granted or refused the orders
sought.
Accordingly, I start with a strong bias in favour of maintaining the bargain from

whlch the parties contracted. But there are many significant factors whlch point the
other way. They are:-

(9

The matters whlch are the subject of the litigation are all matters which concern Australia, not the United States.

(ii)

The clause was contained in the contract which provided for action to be taken both in the United States and in Australia. These present proceedings concern only the steps taken in Australia.
(W Whereas the principles to be applied with respect to
contract, estoppel and fiduciary relationship will show
differences between the laws of Australia and the laws

applicable in Virginia, the general concepts are likely to be reflected in one way or another in the laws of both places and the differences can be explained by expert evidence. On the other hand, the jurisdiction

jurisd~alon which must be exercised by an Australian

with respect to s.52 of the Trade Practices Act is a

court This factor is an important one for, although the claim under s.52 does not presently loom large in the statement of claim, I have the impression that it may develop significantly as events unfold.

(iv)

The principal evidence, both oral and documentary, is likely to be available in Australia, for much of the conduct which is the subject of the dispute concerns actions taken by both the applicant and the PRC group with respect to Australian Defence Industries Ltd and its activities at the Garden Island Dockyard.
(V) The subject matter of the dispute concerns the provision of semces and equipment to the Australian

Defence Forces, so that it is likely that the issue of public interest immunity will have to be considered when orders for the discovery of documents and other information are made. This is an important factor, for an Australian court should deal with such an issue.

PRC Inc. has a wholly owned subsidiary which carries on business in Australia and it appears to have a legal department in Sydney. Accordingly, PRC Inc will more readily conduct the htigation in Australia than the applicant will in Virginia.
(vii) The second respondent is an Australian company
carrying on business in Australia. The claim against it,

as a party involved in the breaches, appears to encompass all or substantially all of the matters put agalnst PRC Inc.

Weighing up all the factors, it appears to me that Australia 1s clearly the appropriate forum for the present litigation and that I should exercise the discretion to permit the applicant to serve the originating process out of Australia. Leave will
therefore be granted.

Terms of the grant of leave wll be:-

(1) That the application be amended so that a first return date
is specified which gives ample tlrne to PRC Inc after service
to consider its position before belng required to enter an
appearance.
(2) That together with the application there be served a copy of

the statement of claim and the affidavits which have been filed, the exhibits tendered in this motion and a sealed copy
of this order.
(3) That there also be served with the documents a notice to
PRC Inc signed by the solicitor for the applicant directing
the attention of PRC Inc to, and setting out the content of
Rules 2, 6 and 7 of Order 9 of the Federal Court Rules.
I certify that this and the 9 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Mr Justice Davies.

Date: 17 December 1992

Counsel for the Applicant: T.J. Hancock
Solicitors for the Applicant: Michell Sillar
Date of hearing: 7 December 1992
8 December 1992
Date of judgment: 17 December 1992

\o \o \Tqa

JUDGMENT No. ........ ........ .. I ........ ....

IN THE FEDERAL COURT OF AUSTRALIA 1

I

1

NEW SOUTH WALES DISTRIm REGISTRY ) No G 900 of 1992

I

1

l

GENERAL DMSION

1

BETWEEN: LEIGH-MARDON PTY LIMITED
Applicant

AND: PRC INC
Fust Respondent
PRC INTERNATIONAL PTY LIMITED
Second Respondent

m: Davies J.
M: 17 December 1992
- Place: Sydney

MINUTES OF ORDER

THE COURT ORDERS THAT:
Leave be granted to the Applicant to serve originating process out of Australia pursuant to Order 8 of the Federal Court Rules.
Terms of the grant of leave will be:-

(1)

That the application be amended so that a first return date is specified which gives ample time to PRC Inc after service to consider its position before being requued to enter an appearance.

(2)

That together with the apphcation there be served a copy of the statement of claim and the affidavits which have been filed, the exhibts tendered in this motion and a sealed copy of this order.

(3)

That there also be served wth the documents a notice to PRC Inc signed by the solicitor for the applicant directing the attention of PRC Inc to, and setting out the content of Rules, 2, 6 and 7 of Order 9 of the Federal Court Rules.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA 1
1
NEW SOUTH WALES DISTRICX REGISTRY ) No G 900 of 1992
GENERAL DIVISION

BETWEEN: LEIGH-MARDON PTY LIMITED
Applicant

AND: ?RC INC
First Respondent
PRC INTF,RNATIONAL PTY LIMITED
Second Respondent

m: Davies J.
Date: 17 December 1992
Place: Sydney

REASONS FOR JUDGMENT

This is a motion seeking leave to serve orlpnatmg process in the United States of
America, pursuant to the provisions of Order 8 of the Federal Court Rules.
The Rule permits such service in the following circumstances, inter a1ia:-

"(a) where the proceed~ng IS founded on a cause of actlon arising m the Commonwealth;
...

(ab) where the proceeding
S for damages or other rehef m respect of the breach of a contract;
and the contract:
is made m the Commonwealth;

where the proceedmg is founded on a ton c n m t t e d in the
Commonwealth;
where the proceedlng is founded on, or is for the recovery of, damage suffered wholly or partly m the Commonwealth caused by a tonlous act or ormsslon, wherever occurring;

(b) where the proceeding is founded on a breach of an Act, where the breach IS committed m the Commonwealth;
(c) where the proceeding a founded on a breach, wherever

oaumng, of an Act. and 1s brought in respect of, or for

the rccovery of, damage suffered wholly or partly m the
Commonwealth.'

Under Rule 2 of Order 8, the Court may grant leave where it is satisfied that the
proceeding is one within its junsdiction and falls wth~n the categories specified, and that

the applicant has a prima fac~e case for the rehef sought. The grant of leave is

discretionary.
The dispute between the parties anses out of a memorandum of agreement dated

18 June 1991 wfuch, on the evidence before the Court, was made in Melbourne on 21
June 1991.
A recital of the agreement was:-

'WHE&AS, Leigh-Mardon and PRC have determined that it is m their respective

interests to estabhsh a relationsh~p to cooperate in the pursuit of government contracts
associated w t h Computer Aded Aquisltton and Loptlcs and Support (CALS), and parttcularly with respect to the Eng~neenng Data Management Information System (EDMICS), in Austraha or the fulfilment of Fore~gn Mihtary Sales (FMS) contracts relaung to A u s m h which are entered Into in the Umtes States"

Clause 3 provided:-
3 . Best E R m . Each parry t y l exert its best efforts to produce a proposal or proposals
which will cause the selection by the Austral~an Depanment of Defence of EDMICS, and the award of a m n m a to whichever party IS appropnate as the pnme contraaor for the program(s), and the acceptance of PRC or Lergh-Mardon as the subcontractor for the work appropnateforass~gnment to the subcontractor herein, and each parrywill contmue to exert its best efforts toward thls objective throughout any and all negotiations concerntng proposed contracts or subcontracts whlch may follow the submlsslon of such proposal(s)."
Several provisions of the memorandum of agreement suggest that the agreement

was Ilmited to obtaining a contract in relation to the Royal Australian Navy. Thus,
Clause 1 states inter alia:-

"Le~gh-Mardon and PRC, acting independently m therr respectwe wuntnes, agree to

cooperate m the markettng and sale to the Austral~an Depanment of Defence, whether

directly or as a Foreign Mil~tary Sales (FMS) case, of a computer-aided loglst~cs and

support system known as or slmilar to the Eng~neenng Data Management lnforrnat~on
System (EDMICS) to support the Royal Australtan Navy (RAN)."

However, the statement of claim, under the heading of 'Estoppel', rehes upon the

Australian h Force (RAAF) and to the Austrahan Army". the contract to "Private sectorshlp-buildlng operations in Australia, to the Royal allegation that there was conduct on behalf of PRC Inc which extended the operation of

In any event, there came to be a dispute between the parties as to the arnbit and
content of their arrangement. On 3 June 1992, PRC Inc's legal department in Sydney
sent a fax to Dr KF. McDowell, who acted for the applicant, which read:-

Thank you for meeting with us yesterday. As we discussed, PRC IS of the strong opmton j
that the subjezt Agreement IS unenforceable for the reasons stated at that meeung 1

- ! i

As you were informed, PRC recently submitted an EDMICS' Tender propostng Letgh-

Mardon ('LM') for certam of the EDMICS' work, but we were unable to obtain a p p r o ~ l

of LM as a subconuactor. The subject Agreement, even if adjudged to be enforceable,

IS at an end pursuant to its terms. (See Article 12)
At the meetmg, informatton obtalned much earher by PRC that LM was actively participating in the mterchange of imaging techntcal data wth a competitor in violat~on of the PRCLM Agreement was confirmed, i.c, LM and Kodak have entered Into a
written su-month Agreement for the interchange of imaging technology, which, if the Agreement were enforceable, IS m material breach of the Agreement excuslng further performance of the Agreement by PRC. and entitl~ng PRC to terminate the Agreement (See Article 13.)
T ~ I S letter, mthout prejudice to PRC's positton that the Agreement IS not enforceable, constttutes written nottce of PRCs electton to tenntnate the Agreement for the reasons stated m this notlce should the subject Agreement be found to be enforceable

PRC has arranged to parttapate in the July 1992 CALS' conference m Sydney. Should

your cltent. LM, pantapate in the conference, LM should not mmmuntcate or advertlse i
that it is assonated w t h PRC, m any manner, mth regard to CALS' capabilities." 1 I
I -
l- .
I?
!
The applicant treated tlus letter as a repudiation of the agreement and accepted

the repud~ation. i ,
i
!
On 29 July 1992, there was an announcement that PRC Inc had entered into an

L .

arrangement with Australian Defence Industnes Limited, an Australian Government

i

buslness enterprise, the majority of shares of which are held by the Minister of Defence i' l

on behalf of the Commonwealth of Australia. The principal activity of Australian 1 . !
1-
Defence Industries Ltd is the production and repair of defence equipment. It manages, I
i
I .
owns and controls the Garden Island Naval Dockyard in New South Wales and c l o t h g I
l ' ~
I
and munitions factories. The arrangement was that PRC Inc would provide to Australian

, I .
l
1-
Defence Industries Ltd services of the kind that had been the subject of cooperation
i'
between the applicant and PRC Inc. 1

The applicant claims in the first lnstance that PRC h c d ~ d not use its best efforts

to put forward a proposal which would bnng about the award of a contract to either
PRC h c or the applicant, in which the other was named as sub-contractor.
That claim is also put on the basis of fiduciary relationship. The claim was said

by Mr T. Hancock, counsel for the applicant, to be based on tort, but as I read the
statement of claim and understand if it merely expresses incidents of the contractual
arrangement between the parties.
The applicant further alleges that PRC Inc, by the conduct and actions which were relied upon by the apphcant, was bound by the promissory estoppel to which I have already referred. It is further alleged that, if the conduct and actlons were not promissory, they were misleading and deceptive or likely to mislead and dece~ve and
therefore a breach of s.52 of the Trade Practices Act 1974 (Cth).
A further claim is brought agalnst PRC International Pty Limited, an Australian

subsidiary of PRC Inc. It is alleged that PRC International Pty M t e d was involved in

all the breaches alleged against PRC.
The matters claimed against PRC under the headings of contract, estoppel and
fiduciary relationship all seem to me to be matters arising out of the written agreement
between the parties extended m its ambit by the alleged conduct and oral arrangements
of the parties. The written contract was entered into in Australia. The conduct and oral

- 6 -

arrangements relied upon to extend its ambit also occurred in Australia. In these circurn-
stances, the claim is made in respect of a contract entered into in Australia.
The breaches are alleged to have occurred in Australia, for they occurred in relation to contracts sought with respect to the Australian Defence Forces and, in particular, relate to the activity of the respondents in relation to Australian Defence
Industries Ltd, the owner of the Garden Island Dockyard.
The damage suffered by the applicant was suffered in Australia.
Insofar as there is conduct relied upon as a breach of s.52 of the Trade Practices

- Act, that conduct is alleged to have occurred in AustraIia.
Accordingly, the clalms fall within paragraphs 4(a), (aa), (ab), (b) and (c) of Order

8 Rule 1.
It does not seem to me that the matters, as pleaded, raise a tort committed by

PRC Inc.
In respect of the matters alleged to found the clams, the evidence before me is

hnited but sufficient, I think, to found a prima facie case for the purpose of senice out
of the jurisdiction. In particular, the claims set out in the fax to Dr KF. McDowell of
3 June 1992 that the agreement was unenforceable or had come to an end pursuant to
Article 12, provide a basis for concluding that the applicant has an arguable case upon
the issues rased.
The matters I have mentioned would provide a sufficient ground for the

favourable exercise of discretion, but there 1s a substantial factor pointing the other way.
Paragraph 20 of the Memorandum of Agreement provides:
"20. Jumdtcnon. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Vlrginia. United States of Amenca. Any judicial proceeding by one party agalnst the other mvolvlng any controversy or claim ansing out of or relatlne to the ~erformance of services under tbls ameement shall be lnstltuted only

in the ~ n i k d Staies D~stnct Court for the onh he& Dlstnct of V~rgmia, or thk
appropriate coun of the Commonwealth of Virginia. Both PRC and Leigh-Mardon agree to submit to the personal junsdict~on of the above w u m m any such proceeding and each walves the right to trlal by jury that ~t may possess in such civil action."

In the l~ght of thls clause, which provides for the exclusive junsdiction of the

United States Dlstrict Court for the Northern District of Vuginia or the appropriate
court of the Commonwealth of Vlrginia, the principle to be applied is that stated by
Dixon J, in Huddart Parker Ltd v. The Shiu Mill H111 (1950) 81 C.LR. 502 where h ~ s
Honour said at 508:-
"It follous that, in my opinion, thls Court has power to stay the suits if, upon a proper
exerclse of the Coun's discretion. 11 appears that it a a course which should be taken. ...
But the Couns begin wth the facl that there is a special contracl behveen the panles to refer, and therefore m the language of Lord Mouhon In -01 Corporanon v. John Aird & Co. (1913) AC 241, a1 p.259, consider the nrcumstances of a case wth a strong blas in favour of matntalning the spec~al bargaln or as Scrutton W. said in Meuopoluan Tunnel and Pllblic Worh Lrd v. London Elecmc Railway CO (1926) Ch. 371, at p.389, 'A guidlng principle on one side and a very natural and proper one, is that parties who have made a contract should keep ir' At the same time, as is shown by the two cases cited, the Coun's hcretlon has not been restricted by any exclusive definition of the circumslances which anll warrant a refusal of the stay: see Lord Parker m A d ' s Case (1913) AC, at p.250, and per Scrunon U. in the Meuopoluan Tunnel Case (1926) Ch., at pp389390."

Particular factors which might influence the exercise of the discretion were enunciated
by Brandon J. in The Eleftheria (1969) 2 AU E.R. 641 at 645. I need not deal wth the many reported cases which, applying these principles, have granted or refused the orders sought.

Accordingly, I start with a strong bias in favour of maintaining the barga~n from

which the parties contracted. But there are many s i m c a n t factors which point the
other way. They are:-

(0 The matters which are the subject of the litigation are
all matters which concern Australia, not the United
States.

(ii>

The clause was contalned in the contract which provided for action to be taken both m the United States and in Australia. These present proceedings concern only the steps taken in Australia.

(hi)

Whereas the principles to be applled with respect to contract, estoppel and fiduciary relatlonshlp will show differences between the laws of Australia and the laws applicable in Virginia, the general concepts are likely to be reflected in one way or another in the laws of both places and the differences can be explained by

jurisdla~on which must be exerclsed by an Australian with respect to s.52 of the Trade Practices Act is a expen evidence. On the other hand, the junsdiction

court This factor is an important one for, although the clam under s.52 does not presently loom large in the statement of claim, I have the impression that it may develop significantly as events unfold.

The principal endence, both oral and documentary, is likely to be available in Australia, for much of the conduct which is the subject of the dispute concerns actions taken by both the applicant and the PRC group with respect to Australian Defence Industries Ltd and its activities at the Garden Island Dockyard.

(V)

The subject matter of the dispute concerns the provision of services and equipment to the Australian Defence Forces, so that it is likely that the issue of public merest immuruty will have to be considered when orders for the discovery of documents and other information are made. This is an important factor, for an Australian court should deal with such an issue.
(vi) PRC Inc. has a wholly owned subsidiary which cames
on business m Australia and it appears to have a legal

department in Sydney. Accordmgly, PRC Inc will more readily conduct the hgation in Australia than the applicant will in Virginia.
(G) The second respondent is an Australian company
carrying on business in Australia. The clam against it,

as a party involved in the breaches, appears to encompass all or substantially all of the matters put against PRC Inc.

Weighing up all the factors, it appears to me that Australia 1s clearly the appropriate forum for the present lltlgation and that I should exerclse the discretion to permlt the applicant to serve the orig~nating process out of Austraha. Leave Hill
therefore be granted.

Terms of the grant of leave will be:-

(1)

That the application be amended so that a first return date is specified which glves ample tlme to PRC Inc after service
to conslder its posltion before being required to enter an
appearance.
(2) That together with the application there be served a copy of

the statement of claim and the affidavits which have been filed, the exhibits tendered in this motion and a sealed copy
of this order.

(3)

That there also be served with the documents a notlce to PRC Inc signed by the solicitor for the applicant directing
the attention of PRC Inc to, and setting out the content of
Rules 5 6 and 7 of Order 9 of the Federal Court Rules.

I certify that thls and the 9 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Mr Justice Davies.

Date: 17 December 1592

Counsel for the Apphcant: T.J. Hancock
Solicitors for the Applicant:
Date of hearing: 7 December 1992 8 December 1992
Date of judgment: 17 December 1992

Actions

Download as PDF Download as Word Document

Citations

Leigh-Mardon Pty. Limited v PRC Inc [1992] FCA 1010

Cases Citing This Decision

0

Cases Cited

0

Statutory Material Cited

0

NEW SOUTH WALES D I S T R I ~	REGISTRY	) No G 900 of 1992
GENERAL DMSION

IN THE FEDERAL COURT OF AUSTKALIA	1 1
NEW SOUTH WALES DISTRICT REGISTRY	) No G 900 of 1992
1
GENERAL DMSION	1

@c)	Commonwealth;
(ad)	where the proceeding 1s founded on, or is for the recovery of, damage suffered wholly or partly m the
Commonwealth caused by a tortious act or ormsslon, wherever occurnng;
(b)	where the proceeding 1s founded on a breach of an Act,
where the breach IS committed in the Commonwealth;
(c)	where the proceeding 1s founded on a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth,"

was limited to obtaining a contract in relation to the Royal Australian Navy.	Thus,
Clause 1 states inter a1ia:-

of LM as a subcontractor.	The subject Agreement, even 1T adjudged to be enforceable,
is at an end pursuant to its terms.	(See Article 12.)

PRC has arranged to partic~pate	in thc July 1992 CALS' conference in Sydney. Should
your client, LM, partic~pate	in the conference, LM should not communicate or advertise

subsidiary of PRC Inc.	It is alleged that PRC International Pty Limited was involved in
all the breaches alleged against PRC.

Terms of the grant of leave wll be:-
(1)	That the application be amended so that a first return date
is specified which gives ample tlrne to PRC Inc after service
to consider its position before belng required to enter an appearance.
(2)	That together with the application there be served a copy of
the statement of claim and the affidavits which have been filed, the exhibits tendered in this motion and a sealed copy
of this order.
(3)	That there also be served with the documents a notice to
PRC Inc signed by the solicitor for the applicant directing
the attention of PRC Inc to, and setting out the content of Rules 2, 6 and 7 of Order 9 of the Federal Court Rules.

Date:	17 December 1992
Counsel for the Applicant:	T.J. Hancock
Solicitors for the Applicant:	Michell Sillar
Date of hearing:	7 December 1992
8 December 1992
Date of judgment:	17 December 1992

(1)	That the application be amended so that a first return date is specified which gives ample time to PRC Inc after service to consider its position before being requued to enter an appearance.
(2)	That together with the apphcation there be served a copy of the statement of claim and the affidavits which have been filed, the exhibts tendered in this motion and a sealed copy of this order.
(3)	That there also be served wth the documents a notice to PRC Inc signed by the solicitor for the applicant directing the attention of PRC Inc to, and setting out the content of Rules, 2, 6 and 7 of Order 9 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	1
1
NEW SOUTH WALES DISTRICX REGISTRY	) No G 900 of 1992
GENERAL DIVISION

"(a) where the proceed~ng	IS founded on a cause of actlon arising m the Commonwealth;
...
(ab)	where the proceeding

(b)	where the proceeding is founded on a breach of an Act, where the breach IS committed m the Commonwealth;
(c)	where the proceeding a founded on a breach, wherever

the applicant has a prima fac~e	case for the rehef sought. The grant of leave is
discretionary.

'WHE&AS,	Leigh-Mardon and PRC have determined that it is m their respective
interests to estabhsh a relationsh~p	to cooperate in the pursuit of government contracts

was Ilmited to obtaining a contract in relation to the Royal Australian Navy.	Thus,
Clause 1 states inter alia:-

Thank you for meeting with us yesterday. As we discussed, PRC IS of the strong opmton	j
that the subjezt Agreement IS unenforceable for the reasons stated at that meeung	1

Mardon ('LM')	for certam of the EDMICS' work, but we were unable to obtain a p p r o ~ l
of LM as a subconuactor.	The subject Agreement, even if adjudged to be enforceable,
IS at an end pursuant to its terms.	(See Article 12)

PRC has arranged to parttapate in the July 1992 CALS' conference m Sydney.	Should
your cltent. LM, pantapate in the conference, LM should not mmmuntcate or advertlse	i
that it is assonated w t h PRC, m any manner, mth regard to CALS' capabilities."	1 I
I -
l- .
I?
!
The applicant treated tlus letter as a repudiation of the agreement and accepted

which the parties contracted.	But there are many s i m c a n t factors which point the
other way. They are:-

[1992] FCA 1010

17 Dec 1992

Terms of the grant of leave will be:-
(1)	That the application be amended so that a first return date is specified which glves ample tlme to PRC Inc after service
to conslder its posltion before being required to enter an appearance.
(2)	That together with the application there be served a copy of
the statement of claim and the affidavits which have been filed, the exhibits tendered in this motion and a sealed copy
of this order.
(3)	That there also be served with the documents a notlce to PRC Inc signed by the solicitor for the applicant directing
the attention of PRC Inc to, and setting out the content of Rules 5 6 and 7 of Order 9 of the Federal Court Rules.

Date:	17 December 1592
Counsel for the Apphcant:	T.J. Hancock
Solicitors for the Applicant:
Date of hearing:	7 December 1992 8 December 1992
Date of judgment:	17 December 1992