Raveh v The Official Receiver of the State of Israel in his capacity as Liquidator North America Bank Ltd (in Liq)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: RAVEH -v- THE OFFICIAL RECEIVER OF THE STATE OF ISRAEL in his capacity as LIQUIDATOR NORTH AMERICA BANK LTD (IN LIQ) [2002] WASCA 27

CORAM: PARKER J
TEMPLEMAN J
OLSSON AUJ

HEARD: 17 DECEMBER 2001

DELIVERED : 27 FEBRUARY 2002

FILE NO/S: FUL 159 of 2001

BETWEEN: GAD RAVEH
Appellant (Defendant)
AND
THE OFFICIAL RECEIVER OF THE STATE OF ISRAEL in his capacity as LIQUIDATOR NORTH AMERICA BANK LTD (IN LIQ)
Respondent (Plaintiff)

FILE NO/S :FUL 166 of 2001

BETWEEN :THE OFFICIAL RECEIVER OF THE STATE OF ISRAEL in his capacity as LIQUIDATOR NORTH AMERICA BANK LTD (IN LIQ)
Appellant (Second Defendant)
AND
HUGH MCLERNON
First Respondent (First Plaintiff)
GAD RAVEH
ESTHER RIKI SADEH RAVEH
Second Respondent (Second Plaintiffs)
MICHAEL RAVEH
DAN RAVEH
RUTH RAVEH
Third Respondents (Third Plaintiffs)
KPMG LEGAL (A Firm)
Fourth Respondent (First Plaintiff)

Catchwords:

Practice and procedure - Appeal - Application to stay local action on the grounds that related proceedings pending in Israel - Whether WA is the convenient forum for the resolution of dispute

Legislation:

Nil

Result:

Both appeals dismissed subject to variation of the primary judge's order in CIV 1360 of 2001 so as to include liberty to the respondent to apply to lift the stay

Category: B

Representation:

FUL 159 of 2001

Counsel:

Appellant (Defendant) : Mr D M Stone
Respondent (Plaintiff) : Mr J L Sher

Solicitors:

Appellant (Defendant) : Williams & Hughes
Respondent (Plaintiff) : Corrs Chambers Westgarth

FUL 166 of 2001

Counsel:

Appellant (Second Defendant)                 :        Mr J L Sher
First Respondent (First Plaintiff)              :        Mr D M Stone
Second Respondent (Second Plaintiffs)    :        Mr D M Stone
Third Respondents (Third Plaintiffs)        :        Mr D M Stone
Fourth Respondent (First Plaintiff)         :        Mr D M Stone

Solicitors:

Appellant (Second Defendant)                 :        Corrs Chambers Westgarth
First Respondent (First Plaintiff)              :        Williams & Hughes
Second Respondent (Second Plaintiffs)    :        Williams & Hughes
Third Respondents (Third Plaintiffs)        :        Williams & Hughes
Fourth Respondent (First Plaintiff)           :        Williams & Hughes

Case(s) referred to in judgment(s):

Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65
Brunswick NL v Sam Graham Nominees Pty Ltd (1989) 2 WAR 207
Express Newspapers Plc v News (UK) Ltd & Ors [1990] 3 All ER 376
Henry v Henry (1995) 185 CLR 571
National Commercial Bank & Anor v Wimborne & Ors (1979) 11 NSWLR 156
Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197
Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287
The Commonwealth of Australia v Verwayen (1990) 170 CLR 394
The Official Receiver of the State of Israel in his capacity as the liquidator North America Bank Ltd (in liq) v Raveh (2001) 24 WAR 53

Case(s) also cited:

Akai Pty Ltd v The People's Insurance Company Ltd (1996) 188 CLR 418
Bonython & Ors v Commonwealth of Australia [1951] AC 201
CSR Limited v Ligra Insurance Australia Ltd (1996) 189 CLR 345
Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40
House v The King (1936) 55 CLR 499
L Grollo Darwin management Pty Ltd & Anor v Victor Plaster Products Pty Ltd & Anor (1978) 33 FLR 170
Marlborough Harbour Board v Charter Travel Co Ltd & Anor (1989) 18 NSWLR 223
Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460
St Pierre & Ors v South American Stores (Gath and Chaves) Ltd & Ors [1936] 1 KB 382
State of Victoria v Hansen [1960] VR 582
Voth v Manildra Flour Mills Pty Ltd & Anor (1990) 171 CLR 538

PARKER J: I agree with the orders proposed by Templeman J and with his reasons which I have read in draft.
TEMPLEMAN J: The Official Receiver of the State of Israel, in his capacity as liquidator of the North America Bank Ltd (in liq), applied to the Court for a stay of two actions to which he is a party. In one action the Official Receiver is the plaintiff, in the other, he is a defendant. In each case, the basis for the stay application was that Western Australia is not the convenient forum for the resolution of the relevant dispute. The applications were heard by McKechnie J who granted a stay in the Official Receiver's action, but declined to stay the other action. In each case, the unsuccessful party now appeals, with the leave of McKechnie J.

Background

In August 1993, Mr Gad Raveh, who has both Israeli and Australian citizenship, owed the North America Bank Ltd an amount of at least $US 2,951,950 and a substantial amount of interest.
On 12 August 1993, Mr Raveh entered into an agreement with the Official Receiver in his capacity as liquidator of the Bank. The agreement was written in the Hebrew language but a translation of it is before the Court. In the agreement, Mr Raveh declared that in view of his financial situation he was unable to discharge the whole of the debt. That being so, the Official Receiver agreed to accept the sum of $US 750,000 in satisfaction of the amount due.
In support of his declaration that he was unable to discharge the whole of the debt, Mr Raveh provided an affidavit in which he set out his financial circumstances. By cl 8.1 of the agreement, it was agreed that Mr Raveh would repay the whole of the principal debt:
"Should it transpire that any of the statements in the affidavit … or part of any such statement is untrue, and the difference between that stated and reality is material …"
For the purpose of that clause, the term "material" was defined to mean a difference which would have caused the Official Receiver not to agree to make the agreement, had he known of the difference.
In the affidavit, Mr Raveh declared that his assets in Israel had "a negative value". He then provided some information in support of that statement.

Mr Raveh then declared:
"Apart from the assets set forth in my affidavit, and apart from additional assets of a total value of up to US$ 100,000 (I add the reservation mentioned above in respect of additional assets of a value up to US$ 100,000 for the sake of caution only), I do not have any assets of any description, whether fully owned or partially owned, whether directly or indirectly, including an asset held an(d) registered in the name of an attorney and/or agent and/or trustee and/or relative, and including land, chattels, money, goods, rights under insurance policies, shares, claims, rights, benefit, profit and other asset of whatsoever description, whether an existing right or a future right, whether a certain right or conditional right."
A little later in his affidavit, Mr Raveh declared that he was unaware of any fact that would materially change the state of affairs set forth in his affidavit.
In cl 8.6 of the agreement, Mr Raveh declared that his financial situation, as set out in his affidavit, was "not within the knowledge of anyone who is acquainted with him and in touch with him in Australia". Mr Raveh went on to declare that the disclosure of his financial situation and any overt or covert investigation into his affairs would be likely to undermine his credibility in Australia and to frustrate his ability to pay the liquidator and/or give him bank guarantees.
In view of that declaration, the Official Receiver agreed that he would not initiate an investigation against Mr Raveh in Australia unless at least one of a number of alternative conditions was fulfilled. One of those conditions was that information of substance had come to the knowledge of the Official Receiver which raised concern about the truth of statements in Mr Raveh's affidavit.
Subsequently, as a result of information which he had then received, the Official Receiver applied to the District Court of Jerusalem for an order authorising him to conduct an investigation into Mr Raveh's financial affairs.
An order was obtained and a wide ranging investigation was then undertaken. As a result, the Official Receiver learned that Mr Raveh was a beneficiary of an Australian discretionary trust known as the Interlaken Trust which had as its principal asset, a controlling interest in the Peters & Brownes Ltd group of companies in Australia.
The Official Receiver learned also that proceedings brought by Mr Raveh in this Court for the purpose of establishing his rights in relation to the Interlaken Trust were about to be settled, with the result that Mr Raveh or his nominees would become beneficially entitled to property having a very substantial value.
In addition, the Official Receiver came to the view that in 1992, Mr Raveh owned a substantial residential property in Israel through the medium of Dumara Pty Ltd, an Australian company of which he was the sole director and which acted as a trustee for him.
In the light of this information, the Official Receiver came to the view that Mr Raveh had misrepresented his financial position in the 1993 affidavit in a way that was material to the agreement: and that he was therefore liable to repay the whole of the debt originally due to the North America Bank Ltd.
A legal practitioner acting on behalf of the Official Receiver met Mr Raveh in Tel Aviv in September 2000 in order to establish whether Mr Raveh had "any substantial defence" to the Official Receiver's claim. Mr Raveh failed to satisfy the Official Receiver that he did have a defence. That being so, the Official Receiver applied to the District Court of Jerusalem for an order authorising him to bring a claim against Mr Raveh and his wife for a sum of approximately $US 8 million. On 24 September 2000, the Official Receiver obtained from the District Court of Tel Aviv – Jaffa what may be described conveniently as a world-wide Mareva injunction restraining Mr Raveh and his wife from dealing with or disposing of their assets.
On 14 March 2001, the Official Receiver commenced an action in Western Australia by way of a writ of summons endorsed with a claim for a Mareva order to the value of $US 8 million, pending the final resolution of the proceedings in the District Court of Tel Aviv – Jaffa.
The application for a Mareva order was argued before Murray J on 16 March 2001. On the same day, his Honour gave a judgment dismissing the application: The Official Receiver of the State of Israel in his capacity as the liquidator North America Bank Ltd (in liq) v Raveh (2001) 24 WAR 53.
Murray J held (at par[27]) that no substantive proceedings could be issued out of the Supreme Court of Western Australia in respect of the 1993 agreement. His Honour so held on the basis that a Mareva order cannot be granted for the purpose of enforcing foreign process: such an order will be granted only against a defendant who acts in a way which is calculated to defeat the enforcement in Western Australia of a substantive right pursued by a plaintiff in this Court.
Following that decision Mr Raveh counterclaimed in the Official Receiver's action for declarations that at all material times he had no interest other than a contingent beneficial interest in the property of the Interlaken Trust, that the assets of the Trust had no value, that he had no interest in certain residential property in Australia and Israel and that, as at 16 August 1993, he had not held assets having a total value exceeding $US 100,000.
On 13 April 2001, the action brought by Mr Raveh in relation to his interest in the Interlaken Trust was settled. The terms of settlement involved the payment of a substantial sum of money to KPMG Legal pursuant to an Escrow Deed. Those moneys were to be distributed as directed by Mr Hugh McLernon who was the protector of one of the funds established by the Trust. Entities associated with Mr McLernon had provided funds to enable Mr Raveh to prosecute the action.
On 11 May 2001 the Official Receiver filed a statement of claim in his Mareva action: and on 17 May, Mr Raveh filed a defence and counterclaim. The Official Receiver filed a reply and defence to counterclaim on 4 May.
In the meantime, the Official Receiver had notified KPMG Legal of the existence of the worldwide Mareva order granted out of the District Court of Tel Aviv – Jaffa. As a result, KPMG Legal declined to distribute the funds held pursuant to the Escrow Deed.
On 13 July 2001, Mr McLernon, Mr and Mrs Raveh and their children commenced proceedings against KPMG Legal and the Official Receiver in this Court. In that action, the plaintiffs sought injunctions requiring KPMG Legal to comply with the terms of the Escrow Deed. The plaintiffs also sought damages against KPMG Legal for their failure to perform their obligations and against the Official Receiver for threatening KPMG Legal with a claim for damages should they distribute the funds held in escrow.

The stay applications

The Official Receiver's applications to stay both his Mareva action and the McLernon action (as I shall call them) came before McKechnie J on 5 October 2001. His Honour delivered a judgment on 19 October in which he stayed the Mareva action but declined to stay the McLernon action.
McKechnie J noted that the parties were not in dispute as to the appropriate legal principles, which he set out in the following passage. In this appeal it has not been suggested that his Honour was wrong. He said:
"In Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197, Deane J held at 247 - 248:
'That power [to stay on inappropriate forum grounds] is a discretionary one in the sense that its exercise involves a subjective balancing process in which the relevant factors will vary and in which both the question of the comparative weight to be given to particular factors in the circumstances of a particular case and the decision whether the power should be exercised are matters for individual judgment; and to a significant extent, matters of impression. The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him.'
In Voth v Manildra Flour Mills Pty Ltd (supra) the High Court settled the differences of opinion between the Justices in Oceanic Shipping Co by approving (at 564 - 565) the approach just quoted of Deane J.
In Henry v Henry (1995-1996) 185 CLR 571 the majority expanded to a degree what had been said in Voth as follows:
'It was also held in Voth that, in determining whether the local court is a clearly inappropriate forum, 'the discussion by Lord Goff in Spiliada [1987] AC 460 at 564-565 (sic 477 - 478 and 482 - 484) of relevant "connecting factors" and "a legitimate personal or juridical advantage" provides valuable assistance.' In this last regard, Lord Goff of Chieveley expressed the view that legitimate personal or juridical advantage is a relevant but not decisive consideration, the fundamental question being 'where the case may be tried "suitably for the interests of all the parties and for the ends of justice.'"
McKechnie J then set out the background to the applications and the competing contentions of the parties. In relation to the Mareva action, McKechnie J noted that there was a substantial geographical connection with Western Australia and that it might be necessary for witnesses from Western Australia to give evidence in proceedings in Israel. He continued:
"However, the substance of the dispute between the parties entirely concerns the law of Israel. The dispute has arisen because of the agreement and affidavit. Without that genesis there would be no Western Australian proceedings. It is alleged against Mr Raveh that he gave false information in an affidavit thereby breaching a deed, the construction of which is subject to Israeli law. Whether the information in his affidavit was in fact false is ultimately a question of fact, or perhaps mixed fact and law, depending upon the construction of the Interlaken Trust and the Dumara Trust."
A little later, his Honour said:
"I conclude that the Supreme Court of Western Australia is a clearly inappropriate forum to grant the relief sought by the defendant by way of counterclaim when regard is had to the whole of the litigation in Israel. The Western Australian proceedings cannot dispose of the issues between the parties and the fact that the Supreme Court of Western may make a declaration, though of some relevance, is not in the circumstances very persuasive. As to the question of estoppel, I have put it to one side because of my strong impression that these proceedings are clearly Israeli proceedings and that any determination by the Supreme Court of Western Australia, whether by way of binding declaration of right or not, is not appropriate in all the circumstances. I would therefore grant the plaintiff's application for a stay."
In relation to the McLernon action, McKechnie J held that although there was "an undoubted connecting link to the State of Israel and to the Israeli proceedings" the Supreme Court of Western Australia was not "a clearly inappropriate forum". That was because:
"There are a number of Western Australian parties as well as Mr Raveh. The action concerns events in Western Australia and the settlement of proceedings in Western Australia. The issue in Western Australia is not identical to that issue to be decided in the Israeli court. There is currently a regularly issued Mareva order. Whether, and to what extent, that has prevented the final distribution in Western Australia, the subject of CIV 1995 of 2001, is a different issue from whether the order should have been granted in the first place in the Israeli proceedings ..."

The appeal in the Mareva action

There are six grounds of appeal. They are as follows:

Ground 1

1.The learned Judge erred in fact and law and in failing to give sufficient weight to the following matters which were not disputed (or not substantially disputed) before him:-
1.1that the issues raised by the counterclaim (in CIV 1360 of 2001) were, as his Honour found, central to the determination of the legal controversy between the parties; [2001] WASC 289.52;
1.2that the resolution of the central issue his Honour identified depended, on the application of West Australian law (the proper law of the Interlaken Trust and Dumara Trust) in determining Western Australian property rights;
1.3all of the evidence going to the central issue his Honour identified was Western Australia based and was likely, because of the nature of the dispute, to involve the attendance of several Western Australian witnesses at trial: cf [2001] WASC 289.49;
1.4the determination of the central issue involved the reception into evidence of the audited accounts of Western Australian companies, the production of Western Australian documents of title and financial records, all of which would be admitted into evidence in a proceeding before the Court, without further proof;
1.5Mr Raveh proposed to adduce expert accounting evidence from an expert resident in Western Australia;
1.6the Official Receiver had not shown (as a matter of fact) that a judgment of the Court would not create an issue estoppel or res judicata in proceedings before the District Court in Tel Aviv and the evidence adduced on behalf of Mr Raveh as to foreign law (Israeli law) was that an issue estoppel or res judicata would be created;
1.7the Official Receiver had invoked the jurisdiction of the Court and that, as his Honour acknowledged, the proceedings on the counterclaim had been brought and conducted properly and were in all respects proper; [2001] WASC 289.53;
1.8the Official Receiver had adduced no evidence as to the conduct of his case in Western Australia or Israel and that, for example, it did not appear how much (and what) evidence he proposed to adduce.

As I understand the submissions made by counsel for Mr Raveh, although all these grounds are maintained, particular reliance is placed in grounds 1.2, 1.7 and 1.8.
In relation to ground 1.7, counsel submitted that as a matter of law, a plaintiff who had invoked the jurisdiction of a court could not be granted a stay. Counsel had been unable to find any case in which that proposition had been stated. Counsel therefore relied on statements of principle drawn from other authorities.
Counsel described the reasons of Gaudron J in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 as the most persuasive in support of his submission. In Verwayen, the majority of the High Court held that the Commonwealth should not be permitted to raise a limitations defence to a claim for which it had previously admitted liability. Gaudron J, who formed part of the majority, based her decision on the doctrine of waiver, which her Honour described (at p 481) "by reference to the taking of inconsistent positions …". In the course of her reasons, Gaudron J referred to various examples having a common aspect: that by reason of one party adopting a particular stance "the relationship of the parties has changed" (p 484). Where that is the case, the first party is taken to have waived his rights. Gaudron J used the term waiver:
" … to signify deliberate action or inaction which has resulted in a changed relationship to which the parties will be held whether or not detriment is actually established." (p 485)
Counsel relied also on Express Newspapers Plc v News (UK) Ltd & Ors [1990] 3 All ER 376. There, the plaintiff newspaper proprietor sued the defendant newspaper proprietor, alleging infringement of its copyright in the text of an exclusive interview.
The defendant served a defence. It also counterclaimed for infringement of its own copyright in the text of an interview which had been published by the plaintiff. The counterclaim was described as "the mirror image" of the plaintiff's claim.
The plaintiff was granted summary judgment. The defendant then applied for summary judgment on its counterclaim. It contended that the plaintiff should not be permitted to raise a defence when it had asserted that there was no defence to its own claim, which was legally indistinguishable from the counterclaim.
Browne-Wilkinson V-C found for the defendant. He held (at p 383):
"There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance."
In my view, neither this principle, nor that identified by Gaudron J in Verwayen assists Mr Raveh in the present case. The Official Receiver has not waived any rights in relation to Mr Raveh, or adopted inconsistent attitudes toward him. The Official Receiver has sued in Israel to set the 1993 agreement aside. He has sued in this Court to obtain a Mareva injunction. There is a significant difference between the two sets of proceedings; a matter to which I shall refer in more detail later in these reasons. Although the Official Receiver has pleaded in both proceedings that Mr Raveh made untrue statements in his affidavit, there is no inconsistency in the course he has taken. The Official Receiver has not approbated and reprobated.
This case may be contrasted with Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65, in which a plaintiff had commenced two sets of proceedings: one in Queensland, the other in England. The only difference between the proceedings was that one defendant had been sued in England, while there were six defendants to the Australian action. The plaintiff was met by a counterclaim in the English proceedings. The plaintiff then offered to stay its claim and applied for a stay of the counterclaim.
Browne-Wilkinson V-C, having held (at p 70) that the plaintiff should be required to elect which set of proceedings it wished to pursue, went on to give leave to the plaintiff to discontinue its claim. His lordship also stayed the counterclaim. He made those orders on the basis that it was "plainly more appropriate" that the case should be decided in Queensland.
Browne-Wilkinson V-C held that the plaintiff "should not have commenced two sets of proceedings relating to the same subject matter, either in the same jurisdiction or in two different jurisdictions". However, that is not an issue which arises in this case. As I have said, the Official Receiver is pursuing different remedies in Israel and Western Australia. In any event, Mr Raveh has not taken any objection based on duplication.
The case does not, therefore, assist Mr Raveh. Furthermore, it demonstrates, contrary to his counsel's submission, that a stay may be granted on the application of a plaintiff.
A further authority on which Mr Raveh relies is Brunswick NL v Sam Graham Nominees Pty Ltd (1989) 2 WAR 207. There the Full Court held that the conduct of a party in prosecuting proceedings in Court amounted to an election to waive its rights to have the dispute resolved by arbitration.
In the present case, however, the Official Receiver has not made an election between inconsistent courses. I repeat: he has pursued two complementary actions, one of which he now wishes to stay.
Counsel for Mr Raveh relied also on the principle stated by Holland J in National Commercial Bank & Anor v Wimborne & Ors (1979) 11 NSWLR 156, 174, that:
" … a foreign plaintiff, not otherwise subject to the jurisdiction of the Court, who brings an action in the Court submits himself by necessary implication to every matter of counter-claim that would operate as a defence to his action or that would as a set-off or cross-claim arising out of the same subject matter reduce or extinguish the plaintiffs' claim; and also, at least if he is not a foreign Sovereign, to a counter-claim founded on or directly arising out of the same subject matter as the plaintiffs' claim that would require to be tried in order to do justice between the parties in relation to that subject matter even if it might result in a judgment against the plaintiff on the counter-claim."
The essence of counsel's submission was that the principle is applicable here to prevent the Official Receiver from avoiding the counterclaim by which Mr Raveh seeks to establish that the statements he made in his 1993 affidavit were true.
It is important to note, however, that Wimborne's case was not concerned with a stay application. The relevant issue was whether the plaintiffs had submitted to the jurisdiction. They were, respectively, a company established under the laws of Saudi Arabia and a Crown Prince of that Kingdom who sued in his private capacity. The plaintiffs sued under guarantees. They were met with a defence and cross-claim, to which they objected on the grounds that they were not present in New South Wales and not subject to the jurisdiction of its courts. For the reasons set out above, Holland J rejected that contention.
I accept that by the application of the principle set out above, the Official Receiver, having invoked the jurisdiction of this Court, is bound to submit to Mr Raveh's counterclaim. I assume for present purposes, without deciding, that the counterclaim is founded on, or arises directly out of, the same subject matter as the Official Receiver's claim.
However, the Official Receiver is not seeking to avoid the counterclaim while at the same time prosecuting his own claim: he wishes to have the entire action stayed. The sole question in such an application is whether the chosen forum is clearly inappropriate. While I accept it to be unusual for a plaintiff to raise such a question, I am not persuaded that the law prevents him from doing so, at least where he is the defendant to a counterclaim.
The question therefore falls to be answered by reference to the various factors considered by McKechnie J, as "matters for individual judgment; and to a significant extent, matters of impression", as Deane J put it in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 247-8.
Mr Raveh contends that McKechnie J failed to give sufficient weight to the matters set out in grounds 1.1 to 1.8. However, it was for his Honour to give them such weight as he thought appropriate.
In fact, some of those grounds mis-state the position. McKechnie J did not find (as asserted in ground 1.1) that the issues raised by the counterclaim "were central to the determination of the legal controversy between the parties".
What his Honour said (in par [52]) was:
"The Supreme Court of Western Australia can never be seised (sic) of the full dispute between the parties; it would be limited to one, albeit important, issue in the dispute. That issue is central, not peripheral, to the Israeli proceedings."
This passage highlights an important distinction between the proceedings in this Court and the Israeli proceedings. In the Israeli action, according to the translation of the statement of claim, the Official Receiver contends that:
"(Mr Raveh's) declarations in the 1993's agreement are, as they were from the start when they were given, false and completely different from the reality at that time, in a manner that if the (Official Receiver) knew about the disparity, he would not have entered into the agreement with (Mr Raveh)." (my emphasis)
In this Court, however, the issue of the falsity of Mr Raveh's 1993 affidavit is pleaded by the Official Receiver for the purpose of explaining the basis in which a Mareva Injunction was granted in the District Court of Tel Aviv-Jaffa. The allegation that Mr Raveh acted dishonestly is used to support the contention that he may remove assets from the jurisdiction or deal with them in some fashion to defeat the claims made by the Official Receiver in the Israeli proceedings. In this Court, the Official Receiver does not seek to have the 1993 Agreement set aside.
For that reason McKechnie J was correct, in my view, in saying, in par [52] of his reasons, that the Supreme Court of Western Australia could never be seized of the full dispute between the parties. His Honour was equally correct in the statement at par [50] of his reasons, that "the substance of the dispute between the parties entirely concerns the law of Israel".
In the resolution of that dispute, Mr Raveh wishes to establish that at all material times he had only a contingent beneficial interest in the property of the Interlaken Trust; and that his interest had no value. That will no doubt require Mr Raveh to adduce valuation and accounting evidence from Western Australia. It may also be necessary for evidence to be given as to the law of Western Australia relating to discretionary trusts.
Three observations may be made about those matters. First, Mr Raveh has, I think, created that situation himself, by not disclosing his interest in the Interlaken Trust when he entered into the 1993 agreement.
Secondly, even if Mr Raveh succeeds in establishing the limited nature and value of his interest in the Trust as a matter of Western Australian law, that alone will not resolve the dispute in his favour. Two questions will remain:
(1)was Mr Raveh entitled to deny that he had any of the rights referred to in par 9 of his affidavit; and if not,
(2)was the difference between the reality and the statement made by Mr Raveh such that, had the Official Receiver known of the difference, he would not have made the 1993 agreement?
The answers to those questions will turn on the construction of the 1993 agreement and Mr Raveh's affidavit. It is rightly accepted by counsel for Mr Raveh that the documents must be construed in accordance with the law of Israel. That being so, the "central issue" referred to in grounds 1.1 to 1.4 will not determine the outcome of the Israeli proceedings.
Thirdly, the questions of construction of the 1993 agreement and affidavit are not raised in the proceedings in this Court. The result, in my view, is that this Court is a clearly inappropriate forum in which to determine the issues raised by the defence and counterclaim, when those issues are raised in a wider context in the Israeli proceedings.
In forming that view, I have had regard to the decision of the majority of the High Court in Henry v Henry (1995) 185 CLR 571 at 590, where their Honours held:
"Foreign proceedings usually fall for consideration in a context in which they involve the same or related factual issues as those involved in the local proceedings, but not the same legal issue and, perhaps, not the same parties. Even in cases of that kind it may sometimes be appropriate to grant a temporary stay of the local proceedings to allow the factual issues to be determined in the other jurisdiction. There are more compelling considerations in favour of a stay of the local proceedings if, as can happen, there are proceedings in another country which has jurisdiction to entertain those proceedings and the proceedings are between the same parties and with respect to the same issue or controversy."
In the present case, those "more compelling considerations" are present: proceedings are pending in Israel, which obviously has jurisdiction to entertain them, despite the fact that the controversy involves, to a certain extent, the application of the law of Western Australia. Clearly, it is open to the Israeli Court to determine the applicable law of Western Australia and apply it in the litigation, just as we should do if our roles were reversed.
Alternatively, the Israeli Court may consider it preferable for the issues involving Western Australian law to be determined here. If the Official Receiver applied for the stay to be lifted in those circumstances, Mr Raveh could hardly oppose such a course. This Court would then deal with the counterclaim, as a matter of comity.
Similar considerations commended themselves to Lockhart J in Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287. There, Australian proceedings were stood out of the list pending the determination of New Zealand proceedings which had a wider scope, albeit a substantial identity of issues.
Although a permanent stay was granted in the present case, I think it would be appropriate to vary the order made by McKechnie J so as to include liberty to the Official Receiver to apply to lift the stay if the circumstances warranted such a course.
In ground 1.6, Mr Raveh contends that the Official Receiver has not shown that a judgment of this Court would not create an issue estoppel in the Israeli proceedings or be considered there as res judicata. On the evidence of Mr Jacob Weinroth, an experienced Israeli lawyer who acts for Mr Raveh in those proceedings, a declaration made by the Supreme Court of Western Australia on the merits of a dispute which is material to the dispute before the Israeli Court, will be final and binding on the same parties in that Court.
That contention is not accepted by the Official Receiver. However, he has not placed any direct evidence before the Court. We have only an affidavit from the Official Receiver's local solicitor, deposing to the opinion of Mr Amit Pines, his instructing solicitor in Israel.
McKechnie J held that the Official Receiver carried the burden of proving that the Western Australian proceedings would not be determinative of the Israeli proceedings. However, his Honour said he was unable to determine the question one way or the other.
In my view, that was the correct stance for McKechnie J to adopt. Although the proof of a foreign law is technically a question of fact, it is undesirable, when the matter is in issue, to determine such a question simply by weighing admissible direct evidence against hearsay evidence which may be admissible only by virtue of s 79 of the Evidence Act 1906.
In any event, I do not think it matters for present purposes which of Mr Weinroth's or Mr Pines' opinions is correct. As I have noted above, if Mr Raveh was granted the declarations he seeks on his counterclaim, that result would not, of itself, determine the Israeli proceedings in his favour. And I repeat: the fact that Mr Raveh's action has been stayed would not prevent the issues raised by the counterclaim from being determined at some future time in this Court if it became appropriate to lift the stay.
Finally, in relation to ground 1, I do not think there is any substance to ground 1.8. In my view, the nature of the Official Receiver's claims in this Court and the Israeli Court are sufficiently clear from his pleadings. The lack of detail clearly did not trouble McKechnie J. This is clear from par 53 of his Honour's reasons, where he said:
"On some occasions the presence of witnesses and geographical connection will weigh heavily. In this case, the history of the proceedings and the relief sought decisively sways the exercise of my discretion. I conclude that the Supreme Court of Western Australia is a clearly inappropriate forum to grant the relief sought by the defendant by way of counterclaim when regard is had to the whole of the litigation in Israel."
That was a view which was open to McKechnie J: and I am not persuaded he was wrong in adopting it.
I am not persuaded, therefore, that McKechnie J erred in fact or law, or in failing to give sufficient weight to the matters relied on by Mr Raveh in ground 1. In summary, the central issue between the parties is whether Mr Raveh misrepresented his financial position in a material way when he entered into the 1993 agreement, such that it should now be set aside. That issue raises questions of Western Australian law which are raised also by Mr Raveh's counterclaim in this Court. However, the 1993 agreement is to be construed in accordance with Israeli law. The issues involving that law are not before this Court, which is therefore a clearly inappropriate forum in which to determine the issues raised by the counterclaim. However, as a matter of comity, those issues could be determined here, if that would assist the Israeli Court.

Ground 2

2.His Honour erred in fact and in law in giving significant weight to the fact that the genesis of the dispute between the parties was a Deed of Settlement and affidavit (the affidavit) executed by Mr Raveh in Perth in 1993. His Honour erred in not giving weight to the facts that:-
2.1the sole, or the principal, matter at issue between the parties (whether in Australia or in Israel) was whether or not, on 16 August 1993, Mr Raveh held assets of a value of in excess of US$100,000;
2.2as at 16 August 1993, Mr Raveh, who was then an Australian citizen and resident in Western Australia, had no Israeli property or business interests;
2.3as at 16 August 1993, Mr Raveh's business and personal interests were all in Western Australia, and as a consequence the question of whether the affidavit was false was a matter which involved, exclusively, questions of title to, and value of, Western Australian property;
2.4the allegations of falsity (of the affidavit) made by the Official Receiver were, exclusively, on the basis that as at 16 August 1993 Mr Raveh held, controlled or was beneficially entitled to, Western Australian assets and/or in 1990 Mr Raveh had dissipated his Western Australian property with a view to defeating the Official Receiver's claims;
2.5the Deed of Settlement and the affidavit were executed by Mr Raveh in Perth in 1993.

Having regard to my reasons in relation to ground 1, I am not persuaded that McKechnie J erred as contended in this ground.
In any event, ground 2.1 states the position inaccurately. The sole matter at issue between the parties is not the value of Mr Raveh's assets as at 16 August 1993. And from the way in which the Official Receiver has pleaded his case, I doubt whether it is the principal issue. The issue which is raised by par 38 of the Statement of Claim (AB 797) is whether Mr Raveh "knowingly made false statements … materially different from the reality."

The matters referred to in grounds 2.2, 2.3 and 2.4 were all taken into account by McKechnie J in setting out the rival contentions. The weight given to those matters was a matter for his Honour.
The fact that the 1993 agreement and affidavit were executed by Mr Raveh in Perth is of no significance, in my view. Although McKechnie J made no reference to this fact, he cannot be said to have erred.

Ground 3

3.The learned Judge erred in the following matters of fact:-
3.1that the Official Receiver contended that, as at 16 August 1993, Mr Raveh purchased, or owned, a house at Hertzlia Pituach through Dumara Pty Ltd; the purchase took place in 1997; [2001] WASC 289.33;
3.2Mr Raveh contended that he had no beneficial interest in the Interlaken Trust; [2001] WASC 289.19;
3.3that whether or not Mr Raveh and the members of his family had a beneficial interest under the Interlaken trust was at issue between the parties: [2001] WASC 289.19: there is no such issue – Mr Raveh accepted that he and his family had a beneficial interest under the Trust, but contended (correctly as a matter of Western Australian law) that the entitlement under the Trust gave him no vested beneficial interest in the Trust property and that, as a matter of fact, he did not control the Trust.

I mention this ground for the sake of completeness. It was not pursued in argument before the Court: and in my view, it is without substance. I do not accept that McKechnie J erred as contended in ground 3.1. He summarized the Official Receiver's claim, but without setting out the detail: par [33].
I accept that the reasons of McKechnie J contain the errors identified in grounds 3.2 and 3.3 in the sense that his Honour did not distinguish between a non-vested beneficial interest and a beneficial interest which had no value. In my view, these grounds raise only a lawyer's quibble and are of no significance.

Ground 4

4.The learned Judge erred in law and in his approach to the question of issue estoppel or res judicata under the law of Israel, a matter of fact which he held he could not decide. His Honour should have held that:-
4.1Mr Raveh had adduced evidence that a binding declaration of right by the Court would create an issue estoppel/res judicata in proceedings in Tel Aviv;
4.2the Official Receiver had endeavoured to contradict that evidence with the hearsay account of an (Australian) solicitor in an affidavit which was unsatisfactory in both form and substance;
4.3the Official Receiver had not discharged the onus of showing that a binding declaration of right made by the Court would not create an issue estoppel in the District Court in Tel Aviv.

I have dealt with this ground in my reasons relating to ground 1.

Ground 5

5.The learned Judge erred in fact, and in law, in deciding the application on the basis that the substance of the dispute between the parties entirely concerned the law of Israel when:-
5.1that had not been shown;
5.2the substance (or central issue in) the dispute concerned the title to, value of, and control of, Western Australian trust property.

I have dealt with this ground in my reasons relating to ground 1.

Ground 6

6.The learned Judge erred in fact and law, and in his approach in that, notwithstanding he (with respect) correctly expressed the 'clearly inappropriate forum test' he in effect decided that the District Court in Tel-Aviv – Jaffa was a more appropriate forum and did not decide the question whether or not the continuance of Mr Raveh's counterclaim would be so oppressive and unjust as to amount to an abuse of the process of the Court.

I have already expressed the view that this Court is a clearly inappropriate forum in which to determine the issues raised by the counterclaim, when those issues will need to be determined in the wider context of the Israeli proceedings.
Although McKechnie J did not decide, expressly, the question whether or not the continuance of the counterclaim would be so oppressive and unjust as to amount to an abuse of the process of the Court, it was not necessary for his Honour to do so. That is because it is implicit in the test propounded by Deane J in The Oceanic Sun Line case (supra) at 248, that the continuation of proceedings in a tribunal which is a clearly inappropriate forum is ipso facto oppressive or vexatious within the broad interpretation of that expression and the absence of exceptional circumstances.
I would therefore dismiss the appeal, subject to a variation of the order made by McKechnie J so as to include liberty to the Official Receiver to apply to lift the stay in circumstances to which I have referred above.

The appeal in the McLernon action

The grounds of appeal are as follows:
1The learned Judge erred in fact and law in failing to find that the Supreme Court of Western Australia is a clearly inappropriate forum on the basis of the following matters:
1.1the issues raised in Supreme Court Action CIV 1360 of 2001 are, as his Honour found, central to the determination of the legal controversy between the parties; [2001] WASC 289.52;
1.2that the parties are domiciled in and the second plaintiffs and third plaintiffs are citizens of Israel;
1.3the issues in the Israeli proceedings will determine ultimately the right of the Second Defendant to the proceeds of the funds in the settlement agreement the subject of the action;
1.4there is currently a regularly issued mareva order in Israel which if binding upon the Plaintiffs prohibits the distribution of the settlement proceeds under the terms of the settlement deed.
The Learned Judge should have therefore found that the Second Defendant was entitled to a stay of the proceedings pending the outcome of the Israeli proceedings.
Ground 1.1 reproduces ground 1.1 of Mr Raveh's grounds of appeal. As I have noted above, that is a mis-statement of the position.
Ground 1.2 is inaccurate: Mr McLernon and KPMG Legal are not domiciled in Israel. And although the Raveh family may have Israeli domicile (a matter usually relevant only to taxation issues) they are all resident in Western Australia.
The statement contained in ground 1.3 is correct up to a point. However, the issue in the McLernon action is whether KPMG Legal is justified in withholding the funds subject to the Escrow Deed, having regard to the existence of the Mareva order granted by the Israeli court. Whether or not the Official Receiver is ultimately successful in the Israeli proceedings, the fact remains that the Mareva order was regularly granted.
Ground 1.4 contains a statement which is in issue in the McLernon action. Counsel for the Official Receiver submitted that McKechnie J should have taken greater account of the fact that the McLernon action "is inextricably linked to the Israeli proceedings". In substance, that is no more than a submission that McKechnie J should have exercised his discretion differently. However, since it is clear that McKechnie J took into account all the matters upon which the Official Receiver relies, I am not persuaded that he mis‑exercised his discretion.

For these reasons, I consider that the appeal in the McLernon action should be dismissed.
OLSSON AUJ: I have had the advantage of reading the reasons for judgment of Templeman J in draft. I agree with both his reasoning and the conclusions to which he has come.

[2002] WASCA 27

27 FEBRUARY 2002

Key Legal Topics

Areas of Law

Civil Litigation & Procedure

Legal Concepts

Appeal

Stay of Proceedings

Jurisdiction