Perry, Mei Ling v BMAX Asset Management Ltd
[2009] VCC 793
•15 July 2009
| IN THE COUNTY COURT OF VICTORIA | Revised |
(Not) Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST – GENERAL DIVISION
Case No. CI-09-00328
| MEI LING PERRY & ANOR | Plaintiffs |
| v | |
| BMAX ASSET MANAGEMENT LTD & ANOR | Defendants |
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| JUDGE: | HIS HONOUR JUDGE ANDERSON |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 18 June 2009 |
| DATE OF JUDGMENT: | 15 July 2009 |
| CASE MAY BE CITED AS: | Perry, Mei Ling & Anor v BMAX Asset Management Ltd |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 0793 |
REASONS FOR JUDGMENT
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| Catchwords: | Practice and procedure – Appropriate forum for dispute to be litigated – Written agreement provided for the parties to submit “to the non- exclusive jurisdiction of the New South Wales courts” – Whether proceeding should be stayed in this court – Section 20 Service and Execution of Process Act 1992 (Commonwealth) |
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A. Foster | Foster Nicholson Legal |
| For the Defendants | Mr J. Richardson | Piper Alderman |
| HIS HONOUR: |
1 Whether or not the action proceeds in this court depends upon a consideration of the “appropriate court” to determine the matters in issue between the parties. This will depends in part upon the operation of “jurisdiction” clauses in two commercial agreements the plaintiffs sue upon. The defendants submit that the clauses oblige the plaintiffs to issue proceedings in the courts of New South Wales (including federal courts) and the action should only proceed in that State. By summons, the defendants seek an order that the proceeding be stayed or alternatively dismissed.
2 The statement of claim contains two claims based on two separate agreements. The plaintiffs allege that on 1 July 2007 the first plaintiff entered into an agreement to sell to the first defendant the substantial part of her shareholding in the second
defendant. The first plaintiff seeks specific performance of the agreement requiring
the first defendant to complete the purchase of the shares and to pay to the first
defendant the balance of purchase price, being $28,000.3 The second claim, by the second plaintiff, is for the payment of the sum of $92,000 plus GST and interest for consultancy services performed pursuant to a consultancy agreement with the second defendant, and as a result of the first defendant’s failure to indemnify the second plaintiff.
4 defendants, by email dated 12 February 2009, agreed to accept service of the writ.
The writ was sent by email to the defendants. Subsequently, after the plaintiffs’
solicitors threatened to enter judgment in default of appearance, the defendants’
solicitors wrote to the plaintiffs’ solicitors noting that service by email did not comply
with the provisions of the Service and Execution of Process Act. Eventually, on
11 March 2009, the solicitors agreed to accept service on behalf of the defendants.This proceeding was commenced by a writ dated 30 January 2009. A director of the stay the proceeding was issued on 21 April but was made returnable on 18 June 2009.
5 No defence has presently been filed by the defendants. In an affidavit filed in the application, the defendants allege that the written shares sale agreement was subject to an oral agreement, reached at a meeting at an unstated location between representatives of the parties, that “all payments under the share sale deed be
deferred until such time as the fund was operational and the business had sufficient
funds to make the payment”. It was alleged that “the operational and fee-earning conditions had not occurred”. In relation to the consultancy agreement dispute, it was alleged that “the first plaintiff’s performance was inadequate”.
6 The first plaintiff exhibited to an affidavit a letter to her from the second defendant dated 31 October 2008. The letter is marked “Draft for discussion”, and sets out further detail of the basis upon which the defendants dispute the plaintiffs’ claims.
7 The shares sale agreement provided in clause 12, “Governing law and jurisdiction”, as follows:
“12.1 Governing Law This agreement is governed by the laws of New South Wales.
12.2 Submission to Jurisdiction Each party irrevocably and unconditionally submits to the non- exclusive jurisdiction of the New South Wales courts and courts of appeal from them. Each party waives any right it has to object to an action being brought in those courts including, but not limited to, claiming that the action has been brought in an inconvenient forum or
that those courts do not have jurisdiction”.
8 The consultancy agreement provided in clause 10.6, “Governing law and jurisdiction”, as follows:
”(a) This contract is governed by and must be interpreted in accordance with the laws in force in New South Wales. (b) Each party irrevocably and unconditionally submits to the non- exclusive jurisdiction of the courts of New South Wales and the federal courts of Australia and waives any right to object to any proceedings being brought in any of those courts”.
9 The following are the relevant circumstances concerning the entry into, performance and alleged default arising from the shares sale agreement:
a.
The shares sale agreement was executed by the first defendant in either North Sydney or Sydney.
b.
The agreement provided for the first defendant to acquire most of the first plaintiff’s shareholding in the second defendant.
c.
The vendors under the agreement were Michael Ganci and the first plaintiff. The vendors’ address was given in the agreement as Yarraville, Victoria.
d.
The purchaser was the first defendant (as trustee for the BMAX Management Unit Trust). Its address given in the agreement and its registered office and principal place of business is North Sydney, New South Wales. The ultimate holding company of the first defendant is BMAX Property Group Holdings Pty Ltd, which also has its registered office and principal place of business in North Sydney.
e.
The shares sold by the agreement were in the second defendant, at that time named Manna Funds Management Pty Ltd, with its registered office in Camberwell, Victoria. From 30 July 2007 to 11 March 2009 the registered office of the company was the first plaintiff’s office at Footscray, Victoria. On 11 March 2009, after the writ was issued, the defendants changed the registered office to Sydney, New South Wales. The second defendant is now the Responsible Entity for the BMAX Property Trust, and its registered office and principal place of business is Sydney, New South Wales. The first defendant is the ultimate holding company of the second defendant. Neither defendant maintains an office in any other jurisdiction in Australia.
f.
The defendants now act as the operating companies for a retail property trust (BMAX Property Trust) which invests in commercial properties, all of which are currently located in New South Wales.
g.
The defendants say the payments contemplated by the agreement, or part of them, were made from the first defendant’s bank account in Sydney. The plaintiffs say that “all payments” by the first defendant to the first plaintiff were to be paid to the first plaintiff “at my office in Footscray, Victoria”.
h.
Certain tasks required to complete the agreement were carried out in Sydney, including the valuation of the second defendant by the first defendant’s board of directors, the handover of responsibilities and certain key documents
required by clause 3.3(a) and the transfer and lodgement of shares.
i. The oral agreement relied on by the defendants as its only ground of defence was said to have been reached by the parties at a meeting although the location of the meeting is not stated.
10 The following are the relevant circumstances concerning the entry into, performance and alleged default arising from the consultancy agreement:
a.
The consultancy agreement was executed by the second plaintiff and both defendants at North Sydney.
b.
The address in the agreement of the second plaintiff and second defendant was Yarraville, Victoria, and the address of the first defendant was North Sydney, New South Wales. The first plaintiff is the sole director of the second plaintiff and lives in Yarraville and has her office in Footscray.
c.
The consultancy services were to be provided by the first plaintiff with a view to upgrading the second defendant’s Australian Financial Services Licence from wholesale capability to retail capability.
d.
The defendants say the consultancy services involved the first plaintiff visiting the first defendant’s Sydney office twice a week to carry out her functions pursuant to the agreement. The plaintiffs say that “about 90 per cent of all the responsibilities” under the consultancy agreement were performed in Victoria.
e.
The defendants say the payments contemplated by the agreement, or part of them, were made from the first defendant’s bank account in Sydney. The plaintiffs say that “all payments” by the first defendant to the second plaintiff were paid at the second plaintiff’s “bank account with the Bendigo Bank in Footscray, Victoria”.
11 It is anticipated that at a trial of the disputes raised in the proceeding, the only witnesses for the defendants would be three persons who are directors of either or both defendants. The first plaintiff would also be a witness, although, without a defence, it is not clear whether there would be other witnesses for the plaintiffs.
12 Pursuant to the shares sale agreement, payment of the purchase price was required to be paid by the first defendant to the first plaintiff “or as it may direct in writing in cash or by bank cheque or in a form that the parties may otherwise agree in writing” (clause 3.4). Pursuant to the consultancy agreement, the first defendant was required to pay the consultancy fee to the second plaintiff “in a timely manner as agreed” between the first defendant and the second plaintiff (clause 5.1).
13 There is no issue in this case that the County Court has jurisdiction to entertain the plaintiffs’ claims and that the writ could have been properly served in New South Wales pursuant to the Service and Execution of Process Act. A material part of each cause of action arose within Victoria:
a. The agreements were partly performed in Victoria. b.
The alleged breach of agreement arguably occurred in Victoria, as ordinarily it would be expected that payment would be required in Victoria, the place of residence of the plaintiffs.
14. The defendants submit that the court should stay the proceeding, exercising the powers in Rule 8.09 of the County Court Civil Procedure Rules 2008 and s.20 of the Service and Execution of Process Act 1992. Pursuant to s.20(3), “The court may
order that the proceeding be stayed if it is satisfied that a court of another State, that
has jurisdiction to determine all the matters in issue between the parties, is theappropriate court to determine those matters”.
15. The clearest and most authoritative statement of the principles to apply in determining an application under s.20(3) of the Service and Execution of Process Act is in the case of St George Bank Ltd v McTaggart [2003] QCA 59, a decision of the Court of Appeal of the Supreme Court of Queensland. McPherson JA, in delivering the judgment of the Court, stated that, “What must be demonstrated before a stay can be
ordered under s.20(3) is that another State court with jurisdiction to determine all the
matters in issue is ‘the appropriate court to determine those matters’”. He said that,
“Identifying all the matters in issue is, however, a prerequisite to deciding on theappropriate court; but the matters in issue are, I consider, capable of being identified without the necessity of a formal pleading by way of defence, provided the affidavit or
other material demonstrates what those issues are” (para. 9).
16. McPherson JA agreed with an earlier judicial pronouncement that, “the expression
appropriate court in s.20 of the Act [was] the one with which the action has the most real and substantial connection, and which can therefore be regarded as the natural
forum” (para. 10).
17. He noted that s.20(4) listed “a series of factors to be taken into account, which are not
expressed to be exhaustive but to ‘include’ what follows in paras (a) to (f) of s.20(4), but specifically not to include ‘the fact that the proceeding was commenced in the place of issue’. In view of the presence of the word ‘include’, I do not consider it would be correct to regard the provisions of s.20(4) as a complete code of the factors to be
considered in deciding an application under s.20(3) to stay proceedings” (para. 11).
18. In the case before the Court of Appeal, McPherson JA noted that, “As regards para
(e) of s.20(4), there is no discernible difference between the law of Queensland and that of Western Australia that is applicable to the matters in issue between the
parties” (para. 13). He also approached the issue on the basis that, “in s.20(4)(b) the
expression subject matter of the proceeding refers to the cause of action” (para. 16).19. He noted that, “In Rick Cobby Pty Ltd v Podesta Transport Pty Ltd (1997) 139 FLR
54, 58, Olsson J said that the applicant for a stay must demonstrate a ‘clear and
compelling basis for the relief sought’”. McPherson JA considered, however, that in the case before the Court of Appeal, the applicants for a stay of proceedings, “were bound to discharge the onus of satisfying the court on the balance of probabilities that the proceedings ought to be stayed, leaving it to the District Court in Western Australia as the appropriate court to determine all the matters in issue between them and the plaintiff” (para. 17).
20. McPherson JA said that in the case before the Court of Appeal, “the question is whether the District Court of Queensland or of Western Australia is the one with which the action has the most real and substantial connection, and which can therefore be regarded as the natural forum” (para. 20).
21. The matters referred to in sub-section (4) which “the court is to take into account in
determining whether that court of another State is the appropriate court for the
proceeding” are:
a.
“The places of residence” of the parties and likely witnesses. The plaintiffs reside in Melbourne, the defendants in Sydney. The issues in the proceeding are presently not clear, but it is likely that officers of the defendants from Sydney and the first plaintiff would give evidence.
b.
“The place where the subject matter of the proceeding is situated”. The first claim relates to the sale of shares in a company that was registered and carrying on business in Melbourne. The purchaser was a New South Wales company, and it was intended that the company whose shares were purchased would be restructured and would carry on business in New South Wales. Payment for the shares was to be made in Melbourne. The consultancy work related to the operations of the second defendant in New South Wales. Part of the work was performed by the first plaintiff on behalf of the second plaintiff in both Melbourne and Sydney.
c.
“The financial circumstances of the parties”. There is no evidence of this matter.
d.
“Any agreement between the parties about the court or place in which the proceeding should be instituted”. This matter will be discussed below.
e.
“The law that would be most appropriate to apply in the proceeding”. Both relevant agreements provided that the laws of New South Wales were to govern the agreement and its interpretation.
f.
“Whether a related or similar proceeding has been commenced”. There are apparently no other relevant proceedings, although the present proceeding includes two separate claims governed by separate agreements with different
“jurisdiction clauses”.
22. The court must not have regard to the fact that the proceeding was commenced in the County Court at Melbourne, but may make any order “subject to such conditions
as the court considers just and appropriate in order to facilitate determination of the
matter in issue without delay or undue expense” (s.20(5)).
23. The parties expressly provided in each relevant agreement that courts other than the present court should exercise “non-exclusive jurisdiction”. The shares sale agreement provided for the “New South Wales courts”, and the consultancy agreement for the “courts of New South Wales and the federal courts of Australia”. The clauses expressly provided a waiver by the parties of any objection to proceedings being brought in the specified courts, and in the shares sale agreement the waiver expressly extended to the courts even if the forum were inconvenient or those courts did not have jurisdiction.
24. exclusive A body of law has grown up in relation to what are described as “subject to the “exclusive jurisdiction” of a foreign court, the defendant would prima facie be entitled to a stay of proceedings in order to enforce the parties’ agreement. This principle would operate quite separately from any argument that the foreign court was a more convenient forum for the dispute.
25. The position is less clear in relation to “non-exclusive jurisdiction” clauses. The courts have stated that in such cases the courts will ordinarily hold the parties to their bargain if the agreement discloses an intention to submit to the jurisdiction of a particular court. On the authorities there seems little doubt that, if proceedings had been issued in the District Court of New South Wales in relation to the present disputes, the proceeding would not have been stayed upon application of the present plaintiffs. By their contracts, these parties would ordinarily be regarded as having irrevocably waived their right to object to the disputes being determined by an appropriate court in New South Wales.
26. The argument in the present case goes further. The defendants contend that from the contracts there should be inferred a submission to the jurisdiction of the New South Wales (or federal) courts, and an agreement not to litigate in other courts. In my view, the authorities do not stand for such a proposition, and the relevant contractual provisions cannot be interpreted in this way for the following reasons:
a.
The provisions refer to submission to the “non-exclusive” jurisdiction of particular courts. If these words are to have any meaning, they cannot automatically, or even prima facie, exclude the jurisdiction of other courts.
b.
The waiver provision relates to the position if a contracting party were to bring a proceeding in a named court. In that case, the other party cannot object to the proceeding being determined in that court, whatever argument it might
have about inconvenience of the forum or lack of jurisdiction.
27. non-exclusive jurisdiction of “the courts of New South Wales and the federal courts of
Australia”. The federal courts of Australia, most relevantly, would refer to the Federal
Court and the Federal Magistrates Court. Each court has registries in each state.In relation to the consultancy agreement, the parties have agreed to submit to the court, although it is difficult to see how the dispute about the consultancy agreement (a debt claim with a defence of inadequate performance of contractual obligations) might be issued in a federal court, let alone out of a registry with no relationship to the location of the parties or the matters in issue.
28. In determining the defendants’ application, the court must take into account the terms of the parties’ agreement about “the court or place in which the proceeding should be instituted”. That agreement was not that the New South Wales courts (or, in the case of the consultancy agreement, the federal courts as well) were to have exclusive
jurisdiction, but that if proceedings were brought by a party in those courts, the other
party could not object on the grounds of inconvenience or lack of jurisdiction.29. In the present case, there is little basis for determining that the present forum is not “appropriate” or that any other court (and particularly the District Court of New South Wales) would be a more “appropriate” forum. The contracts are to be governed by, and interpreted in accordance with, the laws of New South Wales. However, there was no suggestion that the applicable law in relation to the parties’ agreements would be different in New South Wales and Victoria.
30. At present, the dispute is articulated in the statement of claim and in the material referred to in one of the defendants’ affidavit and a letter exhibited to an affidavit sworn by the first plaintiff. If a defence were filed, the issues in dispute between the
parties would be clearer and it would be easier for the parties to identify the issues needing to be determined and the witnesses likely to be called at the trial. It seems clear, however, from the material presently filed, that all claims are being made by the
plaintiffs and are being resisted by the defendants. Whilst almost six months has passed since the issue of the writ, I am not prepared to apportion responsibility for that delay.
31. Although the parties made it clear by their contracts that New South Wales law was to determine their disputes, and if proceedings were issued in that jurisdiction that the parties would submit to having their disputes determined in those courts, there is not on the present material any real basis for me to find that a court in New South Wales is the “appropriate court” to determine the matters in issue between the parties. It may be, however, that after the defendants have filed their defences a different conclusion might be reached.
32. do not have a more “real and substantial connection” with the New South Wales or
federal court or that any of these should be regarded as the “natural forum” for the
dispute. The critical issues in dispute relate to the performance of the agreementsAt the present time, however, I consider that the matters in issue between the parties jurisdiction in this regard would seem at least as strong as the other courts suggested as the “appropriate” court or “natural forum”. The defendants have not made out the basis for a stay of the proceeding, and accordingly the defendants’ summons dated 21 April 2009 will be dismissed.
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Certificate
I certify that these 9 pages are a true copy of the reasons for decision of His Honour
Judge Anderson delivered on 15 July 2009.
Dated: 15 July 2009.
Julien Lowy
Associate to His Honour Judge Anderson
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