Pico Holdings Inc v Dominion Capital P/L
[2001] VSC 333
•30 August 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 6630 of 2001
| PICO HOLDINGS INCORPORATED | Plaintiff |
| V | |
| DOMINION CAPITAL PTY. LTD. | Defendant |
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JUDGE: | BONGIORNO, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 30 AUGUST 2001 | |
DATE OF JUDGMENT: | 30 AUGUST 2001 | |
CASE MAY BE CITED AS: | PICO HOLDINGS INC. v. DOMINION CAPITAL PTY. LTD. | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 333 | |
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Practice and Procedure – Unconditional appearance – Submission to jurisdiction – Withdrawal – Contractual choice of forum clause – Stay of proceedings – Rule 25.01 Rules of Civil Procedure.
Contract – Choice of forum clause – Waiver – Acts constituting waiver – Refusal of stay of proceedings.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. M. Pearce | Gilbert & Tobin |
| For the Defendant | Mr. J. Styring | Malleson Stephen Jaques |
HIS HONOUR:
On 11 July 2001 a writ was issued by Pico Holdings Incorporated against Dominion Capital Pty Ltd, which writ was apparently regularly served, such that on 24 July 2001 an appearance, unconditional in form, was entered by the defendant.
Thus, on its face, a submission to the jurisdiction of this Court to entertain the action upon which the writ was based was made by the defendant. Laurie v. Carroll [1958] 98 C.L.R. at 310. In that case (at 323) the proposition that jurisdiction depends upon service is made plain by the judgment of the majority (Dixon CJ, Williams and Webb JJ) who, after describing the origin writs in personam their Honours said:
"It is in this that the source is to be found of our conception of the foundation of the jurisdiction of our own courts in actions in personam and to that source both Viscount Haldane and Holmes J refer. The defendant must be amenable or answerable to the command of the writ. His amenability depended and still primarily depends upon nothing but presence within the jurisdiction. 'The service of the writ, or something equivalent thereto, is absolutely essential as the foundation of the court's jurisdiction. Where a writ cannot legally be served upon a defendant the court can exercise no jurisdiction over him. In an action in personam the converse of this statement holds good, and wherever a defendant can be legally served with a writ, there the court, on service being effected has jurisdiction to entertain an action against him. Hence, in an action in personam, the rules as to the legal service of writ define the limits of the court's jurisdiction'."
In an affidavit filed in this proceeding Mr Troiani, the solicitor for the defendant, deposes to the circumstances in which the appearance was entered. He says that he was instructed on 24 July at about midday at which time he calculated that the time for entering an appearance had probably already expired. Accordingly, he entered an immediate unconditional appearance. He places the time of that entry as being about 3.10 p.m.
Two days later he first obtained substantive instructions from his client, which instructions included reference to Clause 12 of one of the promissory note upon which this action is based. He says: "Upon reading this clause I formed the opinion that the proper law of the promissory note was the law of the State of California. I also formed the opinion, although the question is to be determined pursuant to the law of California, that the above clause conferred exclusive jurisdiction (in respect of any disputes between the parties to the promissory note) on the Californian Court referred to in the clause."
He went on to say that he formed the view that in light of that clause the unconditional appearance had been filed in error and that there was clearly an issue of jurisdiction in this proceeding. He said that had he been aware of all of the relevant facts at the time the appropriate course of action would have been to have filed a conditional appearance so as to preserve his client's position so far as the jurisdiction question was concerned.
He said further that on 26 July he obtained his client's instructions to engage Californian lawyers and, subject to their advice, to instruct them to make application in the United States for an injunction to restrain the plaintiff from taking any further steps in this proceeding.
Five days later, on 31 July, he wrote to the solicitors for the plaintiff in terms as follows:
"We refer to the above proceeding. Our client considers that the proceeding is unfounded. In view of Clause 12 of the December 2000 promissory note on which your client relies in its statement of claim, we have instructions to commence separate proceedings in the United States of America for an injunction to restrain your client from taking any further steps in relation to the proceeding in the Supreme Court of Victoria. We propose to do so unless your client discontinues the proceeding or undertakes to take no further step in relation to it by close of business this Wednesday, 1 August 2001. Please confirm by that time that your client is prepared to do so, failing which our client proposes to commence the overseas proceedings without further notice."
It might have been thought likely, that having regard to Mr Troiani's opinion as he expressed it in the affidavit to which I have referred, that at that point some step would have been taken on behalf of the defendant to regularise the proceeding from its point of view by seeking to withdraw its appearance and substituting for that appearance a conditional appearance or by the performing of some other act, consistent with its maintaining that the jurisdiction of this Court had been effectively supplanted by the clause in the promissory note to which his attention had been drawn. No such step was taken. In fact between 31 July and 27 August the action proceeded in the ordinary way with an interlocutory application being made and that application being defended by the defendant.
The steps taken between 31 July and 27 August are set out in the affidavit of the plaintiff's solicitor Georgina Elspeth Hayden of 28 August, in which Ms Hayden recites the history of the matter between 31 July 2001 and 27 August.
Included in that history is reference to a bundle of correspondence passing between the solicitors for the plaintiff and the solicitors for the defendant, which correspondence has been exhibited. None of that correspondence which emanated from the defendant's solicitors refers in any way to the threat contained in the 31 July letter, notwithstanding of course that the time limit attached to that threat had long since passed.
On 1 August the parties attended before the Practice Court, the defendant applied for and was granted an adjournment of an interlocutory summons; on the same date an interim order was made by Beach J and the defendant by its counsel applied for security in relation to an undertaking attached to that order. The judge refused the application for security.
On 10 August the defendant served an affidavit of Peter David Voss, in opposition to the plaintiff's application for a Mareva order. On 13 August a further affidavit was served by the defendant. On 15 August the question of the Mareva order was again before the Practice Court and the defendant was represented by counsel when the judge referred the matter to the Listing Master.
On the application before the Listing Master, counsel for the defendant advised the Listing Master that the defendant was considering applying for leave to cross-examine one of the plaintiff's deponents. On 16 August, the defendant communicated further with the plaintiff's solicitors, with a proposal containing a proposed consent to submit to orders being entered against it by the Court in relation to the Mareva proceedings.
On 20 August, the matter came before me. On that occasion, the defendant was again represented by counsel and did not seek to resile from the offer which had been made in the letter to which I have already referred. Indeed during the course of the hearing, counsel for the defendant informed the Court that it was willing to submit to an order as set out in that letter.
Whilst it is true that during the course of that hearing, counsel for the defendant advised the Court that the defendant was preparing an application in the United States for an order enjoining the plaintiff from continuing proceedings in this court, there was no challenge in terms to the jurisdiction of this Court to continue hearing the matter.
On 23 August, the defendant issued a summons seeking to withdraw its unconditional appearance and seeking to file a conditional appearance and also sought orders seeking a permanent stay of the proceedings and making an application for security for costs in the alternative. Subsequently, the defendant has defended the judgment summons put on by the plaintiff, which is still pending, by the filing of affidavits, notwithstanding that at one point, early this week, it obtained (for a very short time) an injunction in a Californian court restraining the plaintiff from proceeding further.
The parties agree that on its proper construction, Clause 12 of the promissory note to which reference has been made, constitutes a reference to the Courts of California exclusively, for the determination of disputes arising under that note. I should add that there is an identical clause in the other promissory note, numbered 13. However, the plaintiff says that the defendant has waived its right to seek enforcement of that exclusive jurisdiction reference by reason of its having appeared to the writ in this Court and having participated in the action since that time. The defendant says that it entered its appearance by mistake and now seeks to withdraw that appearance and substitute for it a conditional appearance.
The application to withdraw the appearance is made under Rule 25.01. A party who has filed an appearance in a proceeding may withdraw the appearance at any time, with the leave of the court. If the defendant were permitted to withdraw its appearance, it would do so and file a conditional appearance, following which it would then move for a stay of proceedings on the ground that the court should enforce the exclusive jurisdiction clause to which I have referred. In the determination of that application, the court would apply the principles set out by the High Court in Oceanic Sunline Special Shipping Company Inc. v Fay (1998) 165 C.L.R. 197. The question which would be determined on that application would be whether the defendant had waived its right to insist upon the exclusive jurisdiction clause being applied or whether the exclusive jurisdiction clause should be applied by the Court staying the action, to permit the subject matter of the action to be litigated in the nominated Californian court.
Here, the first hurdle that the defendant must jump is the hurdle of obtaining leave to withdraw its unconditional appearance. In normal circumstances, by its filing an unconditional appearance, the defendant submits to the jurisdiction of the Court and has waived any objection to the Court hearing the case. The defendant says however that Mr Troiani's original mistake, brought about, I might hastily add, by lack of instructions and not by any misapprehension of either the facts or the law, leads this Court to the situation where the discretion to permit the withdrawal of the appearance is enlivened. However, that discretion must be exercised judicially and in light of all the facts of the case, including in this case, the allegations by the plaintiff that the defendant has waived its right to object to the jurisdiction, so that even if a conditional appearance were now entered, no stay of proceedings would follow, so that the appearance would become unconditional, thus maintaining the jurisdiction of this Court to hear the case on its merits. Accordingly, the proper exercise of the discretion under Rule 25.01 involves a consideration of whether there has indeed been a waiver.
As Chernov J set out in Schweitzer v Kroner Verwaltungs, GMBH & Anor (unreported 24 June 1997) waiver in the context presently being considered involves a voluntary act by a defendant unequivocally evincing an intention to abandon an objection to jurisdiction. In National Commercial Bank v Wimborne [1979] 11 N.S.W.L.R. 156 at 176, Holland J said:
"In this field, as in others, the allegation of 'waiver' by a party of some right is that in law the right has been lost. Waiver in this sense is a conclusion of law based on relevant facts.
To constitute waiver the facts must show a voluntary act unequivocally evincing an intention to abandon or not to assert a right and such intention may be express or its existence imputed from conduct."
In this case, on 31 July the defendant asserted a right to object to the jurisdiction of this Court to hear the matter, based on the exclusive jurisdiction clauses contained in the relevant documents. It did so, adding that it would take proceedings to protect its right in the event the plaintiff did not concede that right by close of business on 1 August. Not only did the plaintiff not concede that right by 1 August, but on that very date informed the defendant that it rejected its assertions and put it on notice that it (the plaintiff) should be given sufficient notice of any application for injunctive relief made to a court in the United States. Almost a month passed and nothing occurred. Nothing, that is, which would suggest that the defendant was continuing to assert the right it earlier claimed. Indeed, as I have already detailed, the defendant took a number of steps in the course of this action in which it made no claim to be maintaining the objection to jurisdiction but rather defended the proceeding as if no such right existed.
Of particular importance in this regard was its failure to raise the question of jurisdiction as an answer or partial answer to the plaintiff's claim for a Mareva order. Even if Mr Styring was be correct in saying that the jurisdiction claim and the plaintiff's response to it may have constituted a serious issue to be tried (although that may be doubted having regard to the terms of the exclusive jurisdiction clause which seems clear: Akia Pty. Ltd. v People's Insurance Company Ltd (1996) C.L.R. 188 at 418), the fact that it was not raised at all leads in my view to the necessary inference that at that stage at least it had abandoned its objection to jurisdiction. I instance that particular Act, but also point to the filing of affidavits, the exchanges of correspondence, the appearances in court and the proffering of an order to which it was prepared to consent as further facts from which the inference of waiver is virtually compelled.
Accordingly, I am satisfied that it is a necessary inference from the acts of the defendant since 1 August and up to at least 27 August, that it had waived its right to object to the jurisdiction of this Court in terms of the exclusive jurisdiction clause contained in each of the promissory notes.
Mr Styring for the defendant relied upon a number of cases and drew my attention to them. Each of them is either distinguishable insofar as they need to be distinguished, or in fact supports the proposition which I have found was made out.
In this case the failure of the defendant to seek to enforce its claimed right over such a period combined with the acts to which I have referred, are sufficient in my opinion to raise the necessary inference of waiver.
The question then is what order should now be made. Whilst it may be true that the proof of the mistake under which the original unconditional appearance was entered gives rise to a right to have the question of withdrawal of that appearance considered under Rule 25.01, the question is clearly discretionary. Having regard to the finding which I have made as to the defendant's having waived its rights, I consider that it ought not now be permitted to withdraw its appearance. As I have already indicated, were it to be permitted to do so and replace that appearance with a conditional appearance, it would then have to move for a stay of the proceeding. Such application would raise the identical issue of waiver which I have already found against it.
Accordingly, the defendant's application to withdraw its unconditional appearance is dismissed.
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