FEDERAL COURT OF AUSTRALIA
Siemens WLL v BIC Contracting LLC (garnishee order) [2023] FCA 1664
File number: NSD 1152 of 2021 Judgment of: STEWART J Date of judgment: 22 December 2023 Catchwords: PRIVATE INTERNATIONAL LAW – location of a chose in action – whether general principle that a debt is located where it is recoverable is displaced by special agreement of the parties or an exclusive right of suit rendering a location other than the debtor’s domicile the proper place of enforcement – where debt is owed by an Australian corporation arising under a contract subject to London arbitration and English law – whether debt situated in England – whether garnishing the debt is beyond the territorial jurisdiction of the Court or the reach of the statutory provision
PRACTICE AND PROCEDURE – garnishee orders – whether “inappropriate” – whether there exists a real or substantial risk of commercial harm to garnishee or other third parties
EVIDENCE – whether application to set aside a garnishee order is an “interlocutory proceeding” for the purposes of s 75 of the Evidence Act 1995 (Cth)
Legislation: Evidence Act 1995 (Cth) ss 59, 75, 135
Federal Court of Australia Act 1976 (Cth) ss 23, 24(1A), 53
International Arbitration Act 1974 (Cth) s 8(3)
Federal Court Rules 2011 (Cth) rr 39.05(a), 39.05(c), 41.10
Civil Procedure Act 2005 (NSW) ss 117(1), 123(4)
Interpretation Act 1987 (NSW) s 12(1)(b)
Uniform Civil Procedure Rules 2005 (NSW) r 39.38(1)
Convention on the Recognition and Enforcement of Foreign Arbitral Awards 330 UNTS 3
Davies M, Bell AS, Brereton PLG and Douglas M, Nygh’s Conflict of Laws in Australia (10th ed, LexisNexis Butterworths, 2019)
Lord Collins of Mapesbury and Harris J (general eds), Dicey, Morris & Collins: The Conflict of Laws (16th ed, Sweet & Maxwell, 2022)
Mortensen R, Garnett R and Keyes M, Private International Law in Australia (5th ed, LexisNexis, 2023)
Cases cited: Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 3) [1996] FCA 518; 64 FCR 55
AssetInsure Pty Ltd v New Cap Reinsurance Corp Ltd (in liq) [2006] HCA 13; 225 CLR 331
Barcelo v Electrolytic Zinc Co of Australasia Ltd [1932] HCA 52; 48 CLR 391
BHP Group Ltd v Impiombato [2022] HCA 33; 96 ALJR 956
Bouwer v Titan Corp Ltd [1997] FCA 1077; 73 FCR 241
City Finance Co Ltd v Matthew Harvey & Co Ltd [1915] HCA 75; 21 CLR 55
Commissioner of State Revenue v Can Barz Pty Ltd (No 2) [2016] QCA 323; [2017] 2 Qd R 537
Despot v Registrar General of NSW [2014] NSWSC 1303
Deutsche Schachtbau-und Tiefbohrgesellschaft mbH v R’As al-Khaimah National Oil Co [1990] 1 AC 295
Enemalta plc v The Standard Asia Club Ltd [2021] EWHC 1215 (Comm)
European Bank Ltd v Citibank Ltd [2004] NSWCA 76; 60 NSWLR 153
Ex parte Coote (1948) 49 SR (NSW) 179
Firebird Global Master Fund II Ltd v Republic of Nauru [2014] NSWCA 360; 89 NSWLR…
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- Case
- [2023] FCA 1664
- Decision Date
CaseChat Overview and Summary
The court examined the general principle that a debt is located where it is recoverable, and whether this principle could be displaced by a special agreement or exclusive jurisdiction. Citing English authorities such as Hardy Exploration & Production (India) Inc v Government of India and SAS Institute Inc v World Programming Ltd, the court found that an exclusive jurisdiction or arbitration agreement could establish the situs of a debt in the chosen jurisdiction. The court noted the existence of a contrary English decision, Perrin v Revenue and Customs Commissioners, but distinguished it on the basis of its applicability to tax debts. The court concluded that the debt in question was situated in England due to the arbitration agreement, making enforcement there the proper place.
Given that the debt was situated in England, the court found that the garnishee order was beyond its territorial jurisdiction and thus inappropriate. The court also considered whether setting aside the order would cause commercial harm to the garnishee or third parties, but found no substantial risk of harm. The application to set aside the garnishee order was not considered an interlocutory proceeding under s 75 of the Evidence Act 1995 (Cth).
ORDERS:
1. Order 3 of the orders made on 11 September 2023 be vacated.
2. The garnishee order for debts issued upon LMENA Pty Ltd on 11 September 2023 be set aside.
3. The applicants, jointly and severally, pay LMENA Pty Ltd’s costs.
4. The parties have liberty to apply to vary order 3 by filing and serving any evidence and brief submissions in support of any such variation by 16 February 2024, in which event:
(a) any party opposing the variation file and serve any evidence and brief submissions in opposition within seven days thereafter;
(b) the party applying for the variation file and serve brief submissions in reply within seven days thereafter; and
(c) subject to further order, the application for variation be determined on the papers.
Orders
Orders of the court
1. Order 3 of the orders made on 11 September 2023 be vacated.
2. The garnishee order for debts issued upon LMENA Pty Ltd on 11 September 2023 be set aside.
3. The applicants, jointly and severally, pay LMENA Pty Ltd’s costs.
4. The parties have liberty to apply to vary order 3 by filing and serving any evidence and brief submissions in support of any such variation by 16 February 2024, in which event:
(a) any party opposing the variation file and serve any evidence and brief submissions in opposition within seven days thereafter;
(b) the party applying for the variation file and serve brief submissions in reply within seven days thereafter; and
(c) subject to further order, the application for variation be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
However, the position is more complicated than that. In Hardy Exploration & Production (India) Inc v Government of India [2018] EWHC 1916 (Comm); [2019] QB 544 at [82] it was held that the general rule or presumption is open to displacement if it can be demonstrated that the relevant debt is properly recoverable or enforceable in a jurisdiction other than the debtor’s residence or domicile. The example is given of a case where suit must be brought against the debtor in that other jurisdiction, such as by a “special agreement” or an “exclusive right of suit” agreed between the parties in question. It was observed that if the position were otherwise, the anomalous situation may arise where a third party debt order is made in respect of a debt which a foreign court with exclusive jurisdiction holds to be non-existent. That is a powerful consideration. In Hardy Exploration, a third-party debt order against an English company which owed a debt to the Government of India under agreements subject to the jurisdiction of the Indian courts was set aside as being beyond the jurisdiction of the English court because the situs of the debt was in India. The analysis in Hardy Exploration as set out above was adopted and applied by the Court of Appeal in SAS Institute Inc v World Programming Ltd [2020] EWCA Civ 599 at [59]-[60], although neither party to that case challenged that analysis. Citing those authorities, the authors of Dicey, Morris & Collins: The Conflict of Laws (16th ed, Sweet & Maxwell, 2022) at [23.026] state that:[A]n exclusive jurisdiction or arbitration agreement is likely to establish that the debt is located at the place of the chosen court or agreed seat of the tribunal, as that replaces the debtor’s residence as the normal place of enforcement—enforcement for these purposes has been understood to mean the place where a judgment may be obtained against the debtor, not the place or places where the debtor’s assets are located. It should be noted that there is a decision in England to the contrary. Judge Hellier in the First-Tier Tribunal (Tax Chamber) in Perrin v Revenue and Customs Commissioners [2014] UKFTT 223 (TC); [2014] SFTD 919 held that although the debt in question was subject to the law of the Isle of Man and any disputes were to be resolved in the courts of the Isle of Man, the debt was located in England where the debtor’s assets were and where it could thus be enforced (at [34]-[45]). That decision may be influenced by considerations peculiar to tax debts, and in any event must give way to the later, and higher, authorities of Hardy Exploration and SAS Institute. There are also more recent authorities in England that accept the Hardy Exploration analysis as correct: Enemalta plc v The Standard Asia Club Ltd [2021] EWHC 1215 (Comm) at [11]; Ross Leasing Ltd v Nile Air [2021] EWHC 2201 (Comm) at [17]-[20]; Lakatamia Shipping Co Ltd v Su [2023] EWHC 1874 (Comm) at [72]. As far as Australian authority is concerned, in Davies M, Bell AS, Brereton PLG and Douglas M, Nygh’s Conflict of Laws in Australia (10th ed, LexisNexis Butterworths, 2019) at [32.33], Hardy Exploration is cited as an example of the broader principle that a right of action is situated in the place where it can most effectively be enforced. There does not otherwise appear to be Australian authority directly on point.