Natureland Parks Pty Ltd v My-Life Corp Pty Ltd
[1996] FCA 466
•14 JUNE 1996
CATCHWORDS
CONTRACT - Australian corporations carrying on business overseas - application under Trade Practices Act for relief - discussion of necessity of Minister's consent - jurisdiction of Federal Court - forum non conveniens - arbitration clause.
Federal Court Rules Order 9 Rule 7(1)
Trade Practices Act 1974 (Cth)
Commercial Arbitration Act 1986 (SA)
Yamaji v Westpac Banking Corporation (No 2) (1993) 115 ALR 240
Tycoon Holdings Pty Ltd v Trencor Jetco Inc (1995) ATPR 41 413
St Pierre v South American Stores (Gath & Chaves) Ltd [1936] 1 KB 382
Oceanic Sun Life Special Shipping Company Inc v Fay (1988) 165 CLR 197
Spiliada Maritime Corporation v Consulex Ltd [1987] 1 AC 460
No SG 21 of 1996
NATURELAND PARKS PTY LTD First Applicant
-and-
MY-LIFE USA CORPORATION Second Applicant
-and-
MY-LIFE CORPORATION PTY LTD First Respondent
-and-
KENNETH STOCKLEY Second Respondent
-and-
PAUL ANDREW BEAL Third Respondent
-and-
SALLY STOCKLEY Fourth Respondent
-and-
PETER JOHN WINFIELD Fifth Respondent
O'Loughlin J
Adelaide
14 June 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIA DISTRICT REGISTRY ) No SG 21 of 1996
)
GENERAL DIVISION )
BETWEEN:
NATURELAND PARKS PTY LTD
First Applicant
-and-
MY-LIFE USA CORPORATION
Second Applicant
-and-
MY-LIFE CORPORATION PTY LTD
First Respondent
-and-
KENNETH STOCKLEY
Second Respondent
-and-
PAUL ANDREW BEAL
Third Respondent
-and-
SALLY STOCKLEY
Fourth Respondent
-and-
PETER JOHN WINFIELD
Fifth Respondent
MINUTES OF ORDER
CORAM: O'Loughlin J
PLACE: Adelaide
DATE: 14 June 1996
THE COURT ORDERS THAT:
The proceedings be stood over to 21 June 1996 at 9.00 am for the purpose of the making of orders, including orders as to costs.
The parties provide to the Associate of The Honourable Justice O'Loughlin, by 4.00 pm 20 June 1996 an agreed minute of the orders to be made (including the orders to be made as to costs) and if agreement has not by then been reached, the respective minutes of the orders for which they will respectively contend and brief outlines of the submissions made in favour of those respective forms.
Note: The Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA )
)
SOUTH AUSTRALIA DISTRICT REGISTRY ) No SG 21 of 1996
)
GENERAL DIVISION )
BETWEEN:
NATURELAND PARKS PTY LTD
First Applicant
-and-
MY-LIFE USA CORPORATION
Second Applicant
-and-
MY-LIFE CORPORATION PTY LTD
First Respondent
-and-
KENNETH STOCKLEY
Second Respondent
-and-
PAUL ANDREW BEAL
Third Respondent
-and-
SALLY STOCKLEY
Fourth Respondent
-and-
PETER JOHN WINFIELD
Fifth Respondent
REASONS FOR JUDGMENT
CORAM: O'Loughlin J
PLACE: Adelaide
DATE: 14 June 1996
Application to set aside originating process.
The applicants in these proceedings, Natureland Parks Pty Ltd ("Natureland") and My-Life USA Corporation are said to be South Australian and Californian Corporations respectively.
It is pleaded in the statement of claim that Natureland is "a shareholder of the second applicant" and it was stated from the Bar table that Messrs Phillip and John Pittman, both Australian residents, were involved in the management of both applicants. The first respondent, My-Life Corporation Pty Ltd, is alleged to be a trading corporation duly incorporated pursuant to the laws of Queensland and each of the second, third, fourth and fifth respondents is said to be an Australian resident who is "a director of the first respondent" and who, at all material times "acted as a servant and agent of the first respondent".
Each respondent filed a conditional appearance and thereafter moved the Court on notice pursuant to the provisions of O 9 r 7(1) of the Rules of the Federal Court of Australia for an order that the originating process be set aside on the ground that this Court does not have jurisdiction to hear these proceedings. In the alternative, the respondents sought a like order on the ground that "this jurisdiction is not the proper forum for the hearing of these proceedings".
The orders sought in the notice of motion were supported by the affidavit of Kenneth John Stockley, the second respondent and Paul Andrew Beal, the third respondent. The following statement of facts has been extracted, in part, from those affidavits and, in part, from the statement of claim. These statements of facts are not formal findings but they are
presented at the highest level in aid of the orders sought by the respondents.
The first respondent marketed certain health food products and on 1 May 1992, pursuant to a Distributorship Agreement, it appointed the first applicant the distributor of its products in the United States of America for a period of 15 years. It is not stated where the agreement was executed but, as the first respondent was a Queensland company and the first applicant was a South Australian company I infer that it was executed in Australia. The rights under that Distributorship Agreement were assigned on 3 December 1993 by the first applicant to the second applicant. It would seem that this was done with the knowledge and approval of the first respondent and I will proceed on that premise. It is not stated where that assignment was executed but there seems to be sufficient information in the affidavit of Mr Stockley to infer, at this stage that the assignment was executed in the United States.
The Distributorship Agreement fell apart in 1995 and these proceedings have been instituted as a consequence. It is claimed that the first respondent breached contractual commitments and engaged in conduct that was misleading and deceptive in breach of the provisions of s 52 of the Trade Practices Act 1974 (Cth) ("the TPA").
The following assertions of facts are also relevant for the purpose of determining these preliminary issues. According to the information contained in the affidavits of Mr Stockley and Mr Beal (and the applicants did not file any affidavits refuting these assertions). Mr Stockley caused a Californian corporation to be incorporated which, so he said, would perform the obligation of the first respondent under the Distributorship Agreement. In other words, as I understand it, the first respondent supplied goods to its associated Californian corporation which then distributed those goods to the second applicant in accordance with the terms of the original Distribution Agreement.
Mr Beal has asserted a Californian connection by deposing that after "June 1992 all payments (with a few rare exceptions) made by the second applicant pursuant to the Distributorship Agreement ... were paid by the second applicant to (the associated Californian corporation)". The respondents also relied on the claim that a second associated Californian corporation gave financial assistance to the second applicant so that it could comply with its obligations under the Distributorship Agreement. I take that into account only in the sense that it was open to the second applicant to seek and obtain financial assistance from any American business house. However, despite the submissions of Mr Lunn, counsel for the respondents, I cannot, at this stage, identify whether contractual commitments were created between either of the
applicants and the first respondent's associated Californian corporation.
A summary of this involved arrangement is that two groups of Australians agreed, in Australia, for distribution rights with respect to certain products in the United States; they each formed American corporations and they each carried on business in the United States. As between themselves, their respective rights and obligations were governed by the original Distributorship Agreement. Those rights and obligations appeared to have been varied orally in the United States during the course of negotiations in the United States between the parties.
When the matter was called on for hearing, Mr Cameron, counsel for the applicants, sought an adjournment. He submitted that because of the provisions of s 5 of the TPA it was necessary for his clients to obtain the consent of the Minister to the prosecution of these proceedings. That section relevantly provides:-
Part IV, IVA and V extended to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia or by Australian citizens o persons ordinarily resident within Australia.
(1A) ....
....
Where a claim under section 82 is made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act
extends by virtue of sub-section (1) or (2) of this section except with the consent in writing of the Minister
A person other than the Minister or the Commission is not entitled to make an application to the Court for an order under subsection 87 (1) or (1A) in a proceeding in respect of conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister.
The Minister shall give a consent under subsection (3) or (4) in respect of a proceeding unless, in the opinion of the Minister:
(a)the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct; and
(b)it is not in the national interest that the consent be given."
Section 52 of the TPA which prohibits a corporation, in trade or commerce, from engaging in conduct that is misleading or deceptive or that is likely to mislead or deceive is found in Part V of that Act. In the application and statement of claim, the relief that has been sought by the applicants includes damages pursuant to s 82 of the TPA. There is, however, no claim for relief under s 87. Hence, there was (or will be) a need for the applicants to obtain the Minister's consent under subs 5(3) of the TPA although it will not be necessary to apply for consent under subs 5(4). The contents of subs 5(4) have, however, been quoted so that they may be compared with the contents of subs 5(3).
The application for the adjournment was resisted by the respondents on several grounds. First, it was claimed that it would be a useless exercise to grant the adjournment as the proceedings were fatally flawed; it was claimed that subs 5(3), properly interpreted, meant that the consent of the Minister should have been obtained before the institution of proceedings. Next it was said that even if the Minister's consent could properly be obtained to the continuation of these proceedings, this Court should nevertheless set aside the originating process on the doctrine of forum non conveniens.
I do not understand the respondents to have pursued their original claim that the Court lacked jurisdiction (other than in respect of the question of the absence of the Minister's consent). Perhaps this is because all respondents are Australian residents and, as Mr Lunn acknowledged, they had been served with these proceedings in Australia. That being the case there would not be room for an argument about the existence of jurisdiction; jurisdiction has been established by residence and service. However, in these circumstances, the doctrine of forum non conveniens might still be relevant as it is concerned with the manner in which a court might exercise its jurisdiction. Finally, the adjournment was opposed because it was submitted that the parties had agreed to resolve any disputes by arbitration. The respondents asserted that even though they had not submitted to the
jurisdiction, arbitration was a factor to be bourn in mind in the exercise of any judicial discretion.
Mr Lunn relied upon the decision of Drummond J in Yamaji v Westpac Banking Corporation (No 2) (1993) 115 ALR 240 as authority for the proposition that the applicants should have obtained the Minister's consent before instituting these proceedings; he submitted that they cannot now remedy that omission. I do not agree with that submission but in order to give it due consideration, it is necessary to consider the facts in Yamaji's Case (supra). In that case, the applicants claimed damages under s 82 and also relief under s 87 of the TPA. They filed their application and statement of claim without obtaining the prior consent of the Minister. Thereafter they sought and obtained the necessary consents (which consents identified the ex-Australian conduct as that which had been particularised in nominated paragraphs of the statement of claim). With that history of the proceedings, Drummond J was then faced with an application for leave to file and serve an amended statement of claim. The proposed new statement of claim alleged ex-Australian conduct on the part of a respondent that had not earlier been pleaded, and so, had not been before the Minister when he had granted his consent.
Those were the circumstances in which his Honour commented upon the operation and meaning of the subs-s 5(3) and 5(4) of the TPA. He said, and I respectfully agree that subs-s 5(4) "prohibits a person instituting proceedings for an order" (p244) under s 87 in respect of relevant conduct that occurs outside Australia unless the requisite ministerial consent has first been obtained. His Honour noted the difference in language in subs 5(3) commenting, as I do, that there is no apparent reason why the language of the two sub-sections should be different. But the fact remains that the language of the two sub-sections is so different that it could not be said that it is a requirement of subs 5(3) that an applicant who claims damages under s 82 (but who does not seek relief under s 87) must obtain the consent of the Minister before the institution of the proceedings.
I therefore reject the primary submission that Mr Lunn advanced on behalf of the respondents. In my opinion the applicants were entitled to commence these proceedings, as they have done, without first obtaining the consent of the Minister. Section 5 does not prevent the institution of proceedings without the consent of the Minister but only requires consent before relief can be granted: See also the remarks of Einfeld J in Tycoon Holdings Pty Ltd v Trencor Jetco Inc (1995) ATPR 41-413 at p 40,581. In Yamaji's case it was necessary to consider the status of an amended statement of claim with respect to the issue of the Minister's consent. That is not a matter which needs, at this stage, to be determined in these proceedings.
Mr Cameron, counsel for the applicants, intimated that his clients would be seeking the leave of the court to file and serve a further amended statement of claim. If that course is to be adopted, it should occur before any application is made to the Minister. If the Minister is deposed to grant his consent, that consent will be specific to the version of the statement of claim that is then before the Minister. It cannot be assumed that the Minister's consent would have application to a subsequent amendment.
I turn then to the respondents' next argument. The doctrine of forum non conveniens, as it applies in Australia, is based on the rule propounded by Scott LJ in St Pierre v South American Stores (Gath & Chaves) Ltd [1936] 1 KB 382 at 398.
"The true rule about a stay ... may I think be stated thus:
(1.) A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English Court if it is otherwise properly brought. The right of access to the King's Court must not be lightly refused. (2.) In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the Court that the continuance of the action would work an injustice because it would be oppressive or vexatious to him or would be an abuse of the process of the Court in some other way; and (b) the stay must not cause an injustice to the plaintiff. On both the burden of proof is on the defendant."
In electing to follow St Pierre v South America Stores (supra) the High Court in Oceanic Sun Life Special Shipping Company Inc v Fay (1988) 165 CLR 197 declined to follow the lead of the House of Lords in Spiliada Maritime Corporation v Consulex Ltd [1987] 1 AC 460. In the United Kingdom, a respondent can now obtain a stay:-
"... where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably for the interests of all the parties and the ends of justice."
(Spiliada Maritime (supra) at 476)
The respondents' arguments were, in my opinion, limited to issues of convenience: that is, as most of the trading activities took place in the United States and as some of the respondents' witnesses were Californian residents, it would be more convenient to litigate the issues through the United States Courts. Such an argument might find favour under the principles laid down by the House of Lords in Spiliada Maritime (supra) but they have not addressed the requirement of vexation or oppression as are referred to St Pierre v South American Stores (supra). It was not seriously suggested that the applicants lacked bona fides in instituting these proceedings. I have concluded that the respondents cannot invoke the doctrine of forum non conveniens.
There remains then the question of arbitration. This was not raised as a separate issue; rather the respondents drew attention to an "Arbitration Clause" (Cl 27) in the Distributorship Agreement, submitting that they would, in due course, if necessary, rely upon the clause and the provisions of s 53 of the Commercial Arbitration Act 1986 (SA) to have the proceedings set aside. Sub-section 53(1) of that act is in the following terms:-
"53 (1) If -
(a)a party to an arbitration agreement commences proceedings in a court against another party to the agreement in respect of a matter agreed to be referred to arbitration;
(b)an application for a stay of the proceedings is made by another party to the arbitration agreement;
(c)the application is made -
(i)before the applicant has delivered pleadings or taken any other step in the proceedings other than the entry of an appearance; or
(ii)by leave of the court - at some later stage in the proceedings;
(d) the court is satisfied -
(i)that there is not sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(ii)that the applicant was at the commencement of the proceedings and still remains ready and willing to do all things necessary for the proper conduct of the arbitration,
the court may make an order staying the proceedings and may give such directions with respect to the future conduct of the arbitration as it thinks fit."
The proposition that was advanced by Mr Lunn was to the effect that the respondents had not yet submitted to the jurisdiction
and hence, were not able presently to advance any argument based upon the application of s 53 of the Commercial Arbitration Act. Even so, the Court should, according to Mr Lunn, have regard to the prospect of arbitration as a matter to be called in aid in deciding whether or not to grant a stay. I cannot accept that argument. The issue of arbitration may well arise at a later stage; but perhaps it will not. In any event the applicants must be given an opportunity to consider their position. They need not do that unless and until the respondents move the Court for orders and satisfy the Court that the provisions of the Commercial Arbitration Act apply to the commercial arrangements that existed between these litigants.
For the reasons set out above, I am not prepared to make any of the orders sought by the respondents in their notice of motion. On the other hand, it is clear that there are deficiencies in the present statement of claim: Mr Cameron acknowledged them. It is not therefore appropriate to contemplate having the applicants seek the consent of the Minister based on the current statement of claim. In my opinion these proceedings should be stood over to 21 June 1996 at 9.00 am for the purpose of the making of orders, including orders as to costs. The parties are to provide to my Associate by 4.00 pm 20 June 1996 an agreed minute of the orders to be made (including the orders to be made as to costs) and if agreement has not by then been reached, the
respective minutes of the orders for which they will respectively contend and brief outlines of the submissions made in favour of those respective forms.
I certify that this and the preceding pages are a true copy of the Reasons for Judgment of The Honourable Justice O'Loughlin
Associate:
Dated:
Counsel for the Applicants : Mr R A Cameron
Solicitor for the Applicants : Townsends
Counsel for the Respondents : Mr J E Lunn
Solicitor for the Respondents : O'Loughlins as agents for Barker Gosling
Date of Hearing : 27 May 1996
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