Re Point of Pay Pty Ltd
[2012] VSC 380
•4 September 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
No. 1946 of 2012
IN THE MATTER of POINT OF PAY PTY LTD
| POINT OF PAY PTY LTD | Plaintiff |
| v | |
| DARRYL ROOTS | Defendant |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 August 2012 | |
DATE OF JUDGMENT: | 4 September 2012 | |
CASE MAY BE CITED AS: | Re Point of Pay Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 380 | Revised 5 September 2012 |
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CORPORATIONS – Practice and procedure – Application for a stay of proceedings on the grounds that the Court is an inappropriate forum – Proceedings instituted by the defendant against the plaintiff in the New Zealand Employment Relations Authority – Defendant alleges wages and entitlements owed by the plaintiff – In this Court, the plaintiff alleges breach of contract of employment with defendant and claims damages under the Corporations Act 2001 and in contract – Authority has exclusive jurisdiction in New Zealand to hear employment disputes – Authority considering whether it has jurisdiction over the substance of the issues in dispute between the parties – Local proceedings found to be oppressive and vexatious – Application for a temporary stay of proceedings granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | PH Solomon SC with BW Jellis | Holding Redlich |
| For the Defendant | NAT Harrington | Mills Oakley Lawyers |
CASES CITED:
CSR v Cigna: CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345
Henry: Henry v Henry (1996) 185 CLR 571
Gilmore: In the Marriage of Gilmore (1993) 110 FLR 311
Oceanic Sun: Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197
Regie Nationale: Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491
Reinsurance: Reinsurance Australia Corp Ltd v HIH Casualty and General Insurance Ltd (in liquidation) (2003) 54 ALR 29
White: Commonwealth Bank of Australia v White (No 1) [1999] 2 VR 681
Voth: Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538
HIS HONOUR:
Introduction
Mr Roots appeals from the decision of an Associate Justice who refused his application for the stay of these proceedings.
On 1 March 2010, Mr Roots entered into an employment agreement with Point of Pay Pty Ltd (POP) to market and develop POP’s business in New Zealand. POP is an Australian company controlled by Mr Daniel Elbaum that developed and sells a unique secure online (internet) payment system (the POP Technology). Mr Roots’ employment with POP was terminated by POP on 9 December 2011.
On 27 January 2012, Mr Roots instituted proceedings against POP and Mr Elbaum in the Employment Relations Authority (ERA) in Auckland, New Zealand seeking unpaid salary, holiday pay, redundancy compensation and unpaid work expenses of some A$206,000. On 10 February 2012, POP responded to Mr Roots’ proceeding in the ERA asserting, inter alia, that that claim did not fall within the ERA’s jurisdiction and otherwise denying Mr Roots’ claims and alleging a “commercial agreement” with Mr Roots whereby Mr Roots was to receive one third of the shares in Point of Pay New Zealand Limited (POP NZ) in consideration of giving up half his salary. POP contends that the commercial agreement supersedes the employment agreement with Mr Roots.
Shortly thereafter, on 4 April 2012, POP instituted proceedings against Mr Roots in the Supreme Court of Victoria claiming damages under the Corporations Act 2001 for alleged breaches by Mr Roots of obligations imposed on him by the Act under his employment contract with POP and for breach of contract, claiming that Mr Roots wrongly diverted to POP NZ business opportunities of POP with two potential customers: Convendium Limited and Paymark Limited.
Mr Roots seeks a stay of POP’s Supreme Court proceedings on the basis that this Court is an inappropriate forum. Where proceedings between the parties have been regularly instituted in a foreign jurisdiction, this Court may stay proceedings commenced in this Court, temporarily or permanently, on inappropriate forum grounds where this Court is a clearly inappropriate forum. This will be the case if continuation of the proceedings in this Court would be oppressive or vexatious to the defendant.
Thus the issues for determination are:
(a) whether the ERA has jurisdiction to hear the matters in dispute between Mr Roots and POP;
(b) whether the continuation of the proceedings in this Court would be oppressive or vexatious to Mr Roots; and
(c) whether this Court should stay the proceedings temporarily or permanently.
For the reasons given below, I conclude that the Supreme Court of Victoria is a clearly inappropriate forum and a temporary stay should be ordered.
The ERA proceedings and the Supreme Court proceedings
It is first necessary to describe the two proceedings in a little more detail. In the NZ proceedings, Mr Roots claims from POP and Mr Elbaum arrears of unpaid salary and other entitlements consequent upon the termination of his employment by POP amounting to over A$200,000.
Mr Roots says that he commenced employment with POP on 1 March 2010 and was employed as head of business development and marketing international markets. Mr Roots says that he is resident in New Zealand. He alleges that Mr Elbaum is the sole director of the company with effective control and is a major shareholder.
Mr Roots says that under his written employment agreement he was entitled to a base salary of A$200,000 a year plus redundancy and other entitlements.
Mr Roots says that in or about March 2010, Mr Roots and Mr Elbaum (on behalf of POP) agreed in principle to a proposal to form and operate POP NZ, with that company paying half Mr Roots’ salary and POP being liable for the other half of his salary, save that POP was liable to top up Mr Roots’ pay to the extent that POP NZ failed to make payment.
Mr Roots says that the proposal was subject to being properly documented and that a final binding agreement was not reached. He says that his employment contract was not varied or superseded as a new binding agreement was not reached. Consequently, he says, POP remained liable under his employment agreement to pay his full salary and other benefits under that employment contract.
Mr Roots says that in December 2011, POP terminated his employment but has wrongly refused to pay his outstanding salary, benefits and redundancy entitlements. He says that POP denies liability relying on the proposal relating to POP NZ (which POP calls the ‘commercial agreement’) and wrongly asserts that his employment agreement had been varied by the commercial agreement.
Mr Roots further claims a penalty against POP and Mr Elbaum that can be ordered under the Employment Relations Act 2000 (NZ).
POP’s and Mr Elbaum’s response to Mr Roots’ claim in NZ
POP and Mr Elbaum have filed a response to Mr Roots’ claims in the ERA stating that they make their response without conceding that the jurisdiction of the ERA applies. The respondents say that the matter does not fall within the ERA’s jurisdiction and should have been brought in the civil jurisdiction.
The respondents say that, in March 2010, Mr Roots entered into a commercial agreement with POP whereby he acquired an interest in POP NZ by offering to reduce his salary in exchange for one third of the shares (which he received and still has) and a directorship in that company (the commercial agreement). They say that the essence of Mr Roots’ case is not a wage arrears claim but, rather, that POP NZ is not a profitable company and that Mr Roots wants to unravel his investment in POP NZ.
The respondents say that Mr Roots has received his agreed contractual entitlements to salary, holiday pay and redundancy compensation under the employment agreement as modified by the parties’ commercial agreement and that POP reimbursed Mr Roots all expenses that he was contractually entitled to. Consequently, they say, Mr Roots has no proper grounds to claim penalties against POP or Mr Elbaum. The respondents submit that Mr Roots’ claim does not fall within the ERA’s jurisdiction, given that it is a claim to unravel the commercial agreement made for a commercial interest in POP NZ.
At this stage, the ERA has not ruled on POP’s and Mr Elbaum’s claim that it has no jurisdiction to entertain Mr Roots’ claims.
The Supreme Court proceedings
The statement of claim alleges the employment agreement of 1 March 2010 under which Mr Roots was employed by POP as its business development and marketing manager. The claim alleges there are express terms of the agreement:
(a)Mr Roots would be engaged from 1 March 2010 as business and marketing manager of the plaintiff with responsibility for the promotion and use of the POP technology in New Zealand;
(b)Mr Roots would ensure the creation of business strategies and market development plans for POP which supported POP’s business; and
(c)Mr Roots would be based in New Zealand but would also spend at least four days per month, unless otherwise agreed, at POP’s head office in Oakleigh, Victoria.
POP alleges there were further express terms of the written agreement:
(a)Mr Roots would honestly and faithfully serve POP; and
(b)Mr Roots would obey proper and lawful directions and instructions of Mr Elbaum, who constituted the Board of Directors of POP.
POP alleges that, at all material times, Mr Roots was an officer (and employee) of POP for the purposes of the Corporations Act 2001.
POP alleges there were terms implied by law into Mr Roots’ employment by POP under the agreement as follows:
(a)As an officer of POP, Mr Roots would exercise his powers and discharge his duties in good faith in the best interests of POP and for a proper purpose;
(b)as an officer of POP, Mr Roots would not improperly use his position either to gain an advantage for himself or someone else, or to cause detriment to POP;
(c)Mr Roots would not improperly use information which he had obtained as an officer of POP either to gain an advantage for himself or for someone else or to cause detriment to POP; and
(d)Mr Roots would not engage in misleading or deceptive conduct or in conduct which was likely to mislead or deceive.
POP alleges that these duties are imposed under ss 181(1), 182(1) and 183(1) of the Corporations Act 2001.
POP alleges that Mr Roots has breached his obligations in five respects. In substance it is alleged he breached the terms of his employment and the duties imposed upon him by the Act under the sections mentioned above, by misrepresenting to two customers in NZ, Convendium Limited and Paymark Limited, that POP NZ was the authorized licence holder of the POP technology in NZ and wrongly diverting business opportunities with two potential customers, Convendium Limited and Paymark Limited, to POP NZ (in which Mr Roots had a one-third interest) to the loss of POP. Mr Roots is also alleged to have breached these terms and the duties imposed by the Corporations Act 2001 in not observing instruction given to him by POP.
POP claims damages, orders under s 1317H of the Corporations Act 2001 and further or other orders as may be deemed appropriate, interest, and costs.
The Victorian proceedings appear to be designed specifically to raise causes of action that cannot be heard in NZ. Three of the five claims allege breaches by Mr Roots of his duties under the Corporations Act 2001. Two appear to be simple breaches of contract. In substance, the complaint is that Mr Roots wrongly diverted to POP NZ custom for POP technology that should have been that of POP. The claims revolve around the arrangements between Mr Roots and Mr Elbaum in relation to Mr Roots’ employment by POP.
The three claims that allege breaches of the Corporations Act 2001 allege breaches of provisions that are essentially a codification of common law obligations imposed on employees under contract or at equity. Such claims were not made by POP in the Victorian proceedings. This tends to suggest that the pleadings have been drawn in a way to ensure that these claims can only be determined in Australia.
The New Zealand jurisdiction
Under s 161 of the Employment Relations Act 2000 (NZ) (the ER Act) the ERA has exclusive jurisdiction to make determinations about ”employment relationship problems.” That expression is defined in s 5 of the ER Act. The jurisdiction includes:
(a) disputes about the interpretation, application or operation of an employment agreement (s 161(1)(a)); and
(b) matters related to a breach of an employment agreement (s 161(1)(b)).
The ER Act provides that, except as provided in the Act, no court has jurisdiction in relation to any matter that, under sub-s (1), is within the exclusive jurisdiction of the Authority (s 161(3)).
The ER Authority is also invested with broad remedial powers in respect of matters related to employment agreements. It may make any order the High Court or District Court may make under certain statutes (s 162).
A challenge to the determination of the ER Authority is made to the Employment Court (s 179). The Court is a court of record (s 186). The Court has a broad oversight jurisdiction in respect of the ER Authority (s 187).
The relevant legal principles to inappropriate forum
The relevant principles appear to be as follows:
(a) The court may stay proceedings commenced in the court on inappropriate forum grounds where the court is a clearly inappropriate forum, which will be the case if continuation or the proceedings in that court would be oppressive in the sense of seriously and unfairly burdensome or prejudicial, or vexatious in the sense of productive of serious and unjustifiable trouble and harassment.[1]
[1]Henry at 587.
(b) The rationale for the exercise of the power to stay is the avoidance of injustice between parties in a particular case.[2]
[2]Voth at 554.
(c) The power of the court to stay proceedings is discretionary in the sense that it involves balancing various factors and assessing the weight to be given to the various factors.[3]
[3]Oceanic Sun at 247-248 per Deane J.
(d) Relevant factors include:[4]
[4]Henry.
(i) whether each country will recognise the others orders and decrees;
(ii) which forum can provide more effectively for the complete resolution of the matters involved in the parties’ controversy;
(iii) the order in which the proceedings were instituted, the stage which have reached and the cost that the parties have incurred;
(iv) the connection of the parties and the subject matter of the dispute each of the jurisdictions and to have regard to the issues on which relief might depend in those jurisdictions;
(v) the ability of the parties to participate in the respective proceedings on an equal footing;
(vi) the true nature and full extent of the issues involved in the controversy between the parties;
(vii) whether the local proceeding offers a juridical advantage over the proceedings in the other forum.[5]
[5]Reinsurance.
(e) Prima facie, it is vexatious and oppressive (in the strict sense of those terms) to commence second or subsequent actions in the courts of Australia if an action is already pending with respect to the matter in issue.[6]
[6]Henry at 591.
(f) It may sometimes be appropriate to grant a temporary stay of the local proceeding to allow the factual issues to be determined in another jurisdiction.[7]
(g) Proceedings brought for the dominant purpose of preventing another party from pursuing remedies available in another country and not available in this country are oppressive and vexatious in the Voth sense of those words.[8]
[7]Henry at 590.
[8]CSR v Cigna at 401.
In Oceanic Sun, Deane J laid down the test for the application of the inappropriate forum principle that has subsequently been adopted and applied by the full bench of the High Court. His Honour said that the power to dismiss or stay proceedings regularly instituted within jurisdiction is a discretionary one which should only be exercised in a clear case, and that the onus rests on the defendant to satisfy the local court in which the proceedings have been instituted that it is so inappropriate a forum for the determination of the proceedings that their continuation would be oppressive and vexatious to the defendant.
Justice Deane said that ordinarily a defendant will not be able to satisfy that onus unless he can identify some appropriate foreign tribunal to whose jurisdiction the defendant is amenable. His Honour said that the adjectives “oppressive” and “vexatious” relate to the effect of the continuation of the proceedings rather than the conduct of the plaintiff in the continuation of the proceedings.[9]
[9]Oceanic Sun at 248 per Deane J.
Justice Deane said that the proper approach was to read those words as describing and characterising the objective effect, on balance, of a continuation in the selected forum rather than in describing the conduct of the plaintiff in selecting the forum.[10] His Honour said that “oppressive“ means “seriously and unfairly burdensome, prejudicial or damaging” while “’vexatious‘ should be understood as meaning productive of serious and unjustified trouble and harassment.”[11] The High Court adopted that meaning in Henry (discussed below) and also in Regie Nationale.[12]
[10]Ibid at 246-247.
[11]Ibid at 247.
[12]Regie Nationale at 521 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
In Oceanic Sun, Deane J pointed out that the expression forum non conveniens suggested that the test is to identify the most convenient forum. His Honour said that the power to stay proceedings on inappropriate forum grounds, however, was based on “the general principle empowering a court to dismiss or stay proceedings which are vexatious or oppressive or an abuse of process. Its rationale is the avoidance of injustice between the parties in the particular case.”[13]
[13]Oceanic Sun at 249.
In Voth,[14] the High Court held that the principles to be applied in applications for a stay on inappropriate forum grounds were those stated by Deane J in Oceanic Sun. Their Honours added that in the application of those principles the discussion of Lord Goff in Spiliada of relevant “connecting factors’ and “a legitimate personal or juridical advantage” provides valuable assistance.[15]
[14]At 564-565 per Mason CJ, Deane, Dawson and Gaudron JJ.
[15]Ibid.
The High Court in Voth added that the substantive law of the forum is a very significant factor in the exercise of the court’s discretion, but the court should not focus upon that factor to the exclusion of all others.[16]
[16]Ibid at 566.
Henry is of particular relevance to this case. In Henry, the plurality of the High Court[17] upheld an appeal by the wife from the Full Court of the Family Court of Australia, which had granted a stay of proceedings instituted by the husband in the Family Court of Australia after the wife had issued prior proceedings in Monaco.
[17]Dawson, Gaudron, McHugh and Gummow JJ.
The wife was a German national resident in Monaco, married to an Australian citizen who (until 1993) had been resident in Monaco. They were married in Germany in 1977. They moved to Monaco some ten or eleven years later. In late 1993, the husband had returned to Australia and commenced divorce proceedings against the wife in the Family Court of Australia. He also brought proceedings in that court with respect to property.
The wife applied for the Australian proceedings to be stayed or dismissed in favour of proceedings which she had already instituted in Monaco. The wife failed in the Family Court and appealed to the High Court.
The High Court considered the connection between the parties and the competing jurisdictions. The High Court also took into account the status of the Monégasque proceedings when the stay application was heard by the Judicial Registrar of the Family Court. The High Court also considered the basis of jurisdiction in Australia and in Monaco. There was no material to indicate whether, and (if so) in what circumstances, an Australian divorce would be recognised in Monaco. If a divorce was granted in Monaco, it would be recognised in Australia.
In Henry, the plurality corrected or qualified several legal principles adopted by the Full Court of the Family Court of Australia in Gilmore. The Full Court said that there is a prima facie right of a party who has invoked the jurisdiction to insist on its exercise. The plurality said that too much weight might be given to that notion. The plurality said that there may be cases in which the prima facie right has some role in determining whether or not a stay should be granted, for example in what is an otherwise finely balanced contest. The plurality in Henry said, however, that “there are also cases in which that notion can do little more than indicate that the onus lies on the party seeking a stay to establish the chosen forum is clearly inappropriate.”[18]
[18]Henry at 589 per Dawson, Gaudron, McHugh and Gummow JJ.
The plurality in Henry also rejected the statement in Gilmore that the selected forum will not be seen as inappropriate “if it is fairly arguable that the substantive law of the forum is applicable in the determination of the rights and liabilities of the parties.” The plurality said that the correct principle is that “the substantive law of the forum is a very significant factor in the exercise of the court’s discretion, but the court should not focus upon that factor to the exclusion of others.”[19]
[19]Ibid at 589, quoting Voth at 566 (which in turn cites Oceanic Sun at 566 per Gaudron J).
The plurality in Henry said that there also appeared to be an assumption in Gilmore that duplication of proceedings in a country is not, of itself, relevant to the question whether Australia is a clearly inappropriate forum. The plurality said that: [20]
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.
[20]Henry at 590.
The plurality said that “[e]ven in cases of that kind it may be sometimes appropriate to grant a temporary stay of the local proceedings to allow the factual issues to be determined in the other jurisdiction.”[21] The plurality said that: [22]
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.
[21]Ibid (my emphasis).
[22]Ibid.
The plurality compared parallel proceedings in another country with multiple proceedings with respect to the same subject matter in different courts of Australia. Their Honours said that “[i]t is prima facie vexatious and oppressive, in the strict sense of those terms, to commence second or subsequent actions in the courts of Australia if an action is already pending with respect to the matter in issue.”[23]
[23]Ibid at 591.
The plurality said that the problems that arise where the identical issue or the same controversy is to be litigated in different countries which have jurisdiction with respect to the matter are such that “prima facie, the continuation of one or the other should be seen as vexatious or oppressive within the Voth sense of those words.”[24]
[24]Ibid.
The plurality said that: [25]
… the fact that there are or, even, that there may be simultaneous proceedings in different countries with respect to the same controversy is highly relevant to the question whether the local proceedings are oppressive in the sense of ‘seriously and unfairly burdensome, prejudicial or damaging,’ or, vexatious, in the sense of ‘productive of serious and unjustified trouble and harassment’.
[25]Ibid.
The plurality said that courts should “strive, to the extent that Voth permits, to avoid that situation.”
In Henry, the plurality gave particular attention to identifying the subject matter of the controversy in the two proceedings. Even though procedures, substantive law and remedies may differ, they found that the subject matter was the marital relationship.
The plurality identified several considerations that they said were relevant to the stay issue. They said that no question of a stay arises unless the courts of the respective countries have jurisdiction with respect to the parties and their marriage. The plurality said that it may be necessary to adjourn the local proceedings to enable the foreign court determine whether it has jurisdiction.
The plurality also recognised the following relevant (although not exhaustive) considerations:
(a) whether each country will recognise the others orders and decrees;[26]
[26]Ibid at 592.
(b) which forum can provide more effectively for the complete resolution of the matters involved in the parties’ controversy;[27]
[27]Ibid.
(c) the order in which the proceedings were instituted, the stage which they have reached and the costs that have been incurred;[28]
[28]Ibid.
(d) the connection of the parties and the subject matter of the dispute to each of the jurisdictions and to have regard to the issues on which relief might depend in those jurisdictions;[29] and
(e) the ability of the parties to participate in the respective proceedings on an equal footing.[30]
[29]Ibid.
[30]Ibid at 593.
The plurality said that ultimately the question of whether Australia is a clearly inappropriate forum depends on the general circumstances of the case, taking into account the true nature and full extent of the issues involved.[31]
[31]Ibid.
The High Court held that the Family Court had failed to take several relevant considerations into account. It set aside the dismissal of the wife’s application and remitted the matter to the Family Court to decide in accordance with the High Court’s judgment.
In Regie Nationale, the High Court confirmed that a court’s power to stay proceedings is an aspect of its inherent or implied power to prevent its own processes being used to bring about injustice and cited with approval the plurality’s exposition of the relevant principles in Henry.
Considerations where there are proceedings pending here and abroad
In CSR v Cigna, the High Court considered an appeal by CSR from decisions of the Supreme Court of New South Wales issuing an anti-suit injunction against CSR at the suit of Cigna and refusing CSR’s application for a stay of proceedings by Cigna against CSR.
In substance, CSR had sought indemnity from Cigna under insurance policies issued by Cigna for asbestos claims made in the United States against CSR. Cigna rejected the claims. CSR then took proceedings against Cigna in the United States seeking a declaration that it was entitled to be indemnified by Cigna and also made claims for damages including under the Sherman Act.
On the other hand, Cigna took proceedings against CSR in the Supreme Court of New South Wales seeking an anti-suit injunction against CSR to restrain it from pursuing its US proceedings and also sought declarations that it was not obliged to indemnify CSR for US claims against CSR.
The plurality[32] said that before deciding whether to grant an anti-suit injunction the Supreme Court of New South Wales ought to have decided whether it or the US court should hear and determine the matter in issue. The plurality said that that question involved “the further question whether the Australian court is an appropriate forum, in the Voth sense of it not being clearly inappropriate, for the determination of that matter.”[33]
[32]Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ.
[33]Ibid at 397.
The plurality said that where different issues are involved in the local and foreign proceedings, the relevant question is not whether the Australian court is a clearly inappropriate forum for the litigation of the issues involved in the Australian proceedings. Rather, the question is whether, having regard to the controversy as a whole, the Australian proceedings are vexatious or oppressive in the Voth sense of those terms, namely, that they are ”productive of serious and unjustified trouble and harassment“ or ”seriously and unfairly burdensome, prejudicial or damaging.”[34]
[34]See Oceanic Sun at 247 per Deane J.
The plurality said that the dominant purpose of the NSW proceedings against CSR was to prevent continuation of the US proceedings by CSR. They said that the US proceedings had been properly instituted and sought a remedy under the Sherman Act that was not available in NSW. The plurality said that: [35]
Proceedings which are brought for the dominant purpose of preventing another party from pursuing remedies available in the courts of another country and not available in this country are ’seriously and unfairly …. [p]rejudicial [and] damaging’. They are, thus, oppressive in the Voth sense of that word.
[35]CSR v Cigna at 401.
The plurality held that the NSW proceedings should be stayed pending the outcome of the US proceedings.
POP relies on White, where Byrne J of this Court considered an application by Lloyds of London to stay proceedings brought by Mr White against Lloyds of London. Lloyds of London relied on the fact that Mr White was also a party to proceedings in London against Lloyds. In the Victorian proceedings, Mr White made claims against it under the Trade Practices Act 1974 (Cth), claims for negligent misrepresentation and for breaches of the companies legislation. Byrne J said that although the two proceedings had a common factual substratum, the causes of action relied on in Victoria had no “counterparts in the London litigation.” His Honour applied the test laid down in CSR v Cigna as set out above, and held that he was not satisfied the bringing or continuance of the Victorian proceeding “is vexatious or oppressive in that sense.”[36]
[36]Ibid at [95].
POP also relies on Reinsurance, where Jacobson J of the Federal Court of Australia considered an application to stay Australian proceedings brought by reinsurers (ReAc and MondeRe) against insurers (HIH and others). Essentially, the reinsurers claimed that they were induced by the misleading and deceptive conduct of the insurers to enter into reinsurance of contracts of insurance (of lines of finance for the production of several films) in breach of s 52 of the Trade Practices Act 1974 (Cth). The representations were also the subject of proceedings in the UK by HIH and other parties to the Australian proceedings that had been on foot for some three years. ReAc was not a party to the UK proceedings. MondeRe had been joined as a defendant to the UK proceedings. Justice Jacobson took into account several connecting features of the controversy to the UK proceedings. His Honour found, however, that but for the legitimate juridical advantage arising from the Trade Practices Act claim, the controversy considered as a whole would be vexations or oppressive in the Voth sense, “namely that the Australian proceedings would be productive of serious and unjustifiable trouble or seriously and unfairly burdensome”.[37]
[37]Ibid at [289].
Justice Jacobson said that this would be so even though ReAc was not a party to the UK proceedings. His Honour said that: [38]
What would have made the Australian proceedings vexatious in the absence of the Trade Practice Act claims is the fragmentation which arises from the commencement of proceedings in this court in which the applicants seek to agitate questions which are already in issue overseas. … [B]ut for the Trade Practice Act cause of action the appropriate course would have been for the [applicants] to [institute proceedings] in the jurisdiction where proceedings are already on foot.
[38]Ibid at [291].
Two features of the controversy are of particular relevance. The relevant contracts between the insurers and the reinsurers contained truth of statement clauses. In the UK, such clauses had been held to preclude an insurer or reinsurer from avoiding the contract of insurance or claim damages for negligence or non-disclosure and that to avoid the contract or claim damages the insurer or reinsurer would have to prove a positive case in fraud such as would entitle them to rescind for fraudulent misrepresentation or to recover damages for deceit.[39]
[39]Ibid at [14]-[19].
On the other hand, Jacobson J said that such a clause did not preclude a claim under the Trade Practices Act if the agreement was itself induced by misleading conduct. Thus, he said, the Trade Practices Act provided a distinct and unique basis of liability that was not available in the UK proceedings that was particularly relevant where alleged misrepresentations that lay at the heart of the dispute. Justice Jacobson described this feature as a “juridical advantage.”
His Honour concluded that, in those circumstances, a stay was not warranted.
Has the ERA jurisdiction to determine the dispute raised in Victoria?
POP contends that the ERA does not have jurisdiction to hear the claims made under the Corporations Act 2001. Accordingly, it submits, the local forum could not be clearly inappropriate.
There is no dispute that the ERA could not determine the claims under the Corporations Act 2001 made in the Victorian proceedings. On the evidence before me, the controversy between Mr Roots and POP and Mr Elbaum is over the agreement between them about Mr Roots’ employment by POP. On one hand, Mr Roots is claiming that he has a straight employment agreement and that the proposed agreement concerning his acquisition of a one-third interest in POP NZ was never completed. Mr Elbaum and POP assert that the proposed agreement was completed and that agreement altered the terms of Mr Roots employment with POP. Further, POP alleges that in breach of his employment agreement with POP, Mr Roots has wrongly diverted business to POP NZ.
Based on the evidence before me, this claim should turn on the true nature of the agreement between Mr Roots and POP, and in particular what was the agreement, if any, with respect to POP NZ and whether a concluded agreement was reached under which Mr Roots agreed to take shares in POP NZ in lieu of remuneration. The resolution of that dispute should also determine the issue of whether Mr Roots and Mr Elbaum agreed on the business POP NZ was to have.
Mr Roots claims that the ERA and ultimately the Employment Court of New Zealand could determine the claims made by POP if they were reframed as breach of contract claims or claims in equity arising out of the relationship of employer and employee. Mr Roots says that factual claims could readily be made without reference to the Corporations Act 2001.
Mr Roots says that such claims could be made under the ER Act as they relate to a dispute about the interpretation, application or operation of an employment contract or they relate to matters related to a breach of an employment contract (s 161(1)(a) and (b)). Mr Roots has obtained an opinion from Ms Kathryn Beck, an expert in New Zealand employment law, who says that those issues fall within the jurisdiction of the ERA. Ms Beck says that the factual matters raised by POP in the Australian proceedings could be made the subject of a cross-claim. Mr Roots says that he would not object to such claims being made out of time.
Would the continuation of the proceedings be oppressive or vexatious?
In my opinion, the continuation of the Supreme Court proceedings would clearly be inappropriate at this stage in the sense that the proceedings would be vexatious and oppressive to Mr Roots, in that the proceedings would be seriously and unfairly burdensome to Mr Roots. He would be obliged to fight substantially the same issues on two fronts. He is a New Zealand resident. His employment duties were to be carried out substantially in New Zealand. He was retrenched in New Zealand and the alleged breaches of the commercial agreement all took place in New Zealand.
For similar reasons, in my opinion, the proceedings are prejudicial or vexatious to Mr Roots as they are likely to produce serious and unjustifiable trouble and harassment. It is not irrelevant when considering these factors to observe that the complaints made against Mr Roots by POP can probably be thoroughly ventilated in the New Zealand proceeding and that it appears they have been brought in Australia and formulated under the Corporations Act as a means of harassing and vexing Mr Roots.
Should this Court should stay the proceedings temporarily or permanently, if at all?
In my view, a temporary stay of the Victorian proceedings should be ordered while the NZ proceedings proceed. A stay should be granted on the condition that Mr Roots does not object to POP and Mr Elbaum counterclaiming before the ERA for damages against Mr Roots based on the factual allegations made in the Victorian proceedings.
A temporary stay will allow the ERA or the Employment Court to determine whether it has jurisdiction over the matters raised by POP and Mr Elbaum in their reply or counterclaim. If the ERA or the Employment Court determines it does have jurisdiction then the stay should remain on foot until those proceedings have concluded. If at the conclusion of the NZ proceedings, POP wishes to pursue and is able to pursue the Corporations Act causes of action, then it may apply for the stay to be lifted. As mentioned above, the High Court in Henry recognised that a temporary stay of the local proceedings may be appropriate to permit the factual issues to be resolved in the other jurisdiction or to determine whether the foreign court has jurisdiction.
In my view, this course will not deny POP availing itself of any juridical advantages that it perceives in the Corporations Act claims (if there be any) over the claims that otherwise might be made under the contract of employment between Mr Roots and POP, while avoiding POP’s proceedings oppressing and vexing Mr Roots.
Conclusion
For these reasons, on the undertaking of Mr Roots not to object to the late filing of any counterclaim POP or Mr Elbaum wishes to make in the NZ proceedings arising out of the matters referred to in the statement of claim filed herein, I order that:
1 the appeal be allowed;
2 these proceedings be stayed temporarily until further order; and
3 I reserve liberty to apply.
I shall hear the parties on costs.
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