Strohschneider v Ehlert and the Estate of Ehlert - [2008] SADC 54

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
STROHSCHNEIDER v EHLERT AND THE ESTATE OF EHLERT
[2008] SADC 54
Judgment of His Honour Judge Beazley
6 May 2008
PROCEDURE
Appeal from decision of a Master - Private International Law - Master stayed proceedings on basis of forum non conveniens - genesis of proceedings a contract for the sale and purchase of land situate in the Republic of Germany by parties then resident in Germany - the substantive law is that of the Republic of Germany - whether the Master applied the wrong test - application of the "clearly inappropriate forum" test - whether South Australia is a clearly inappropriate forum - whether the Mocambique Rule applies - whether jurisdiction ought be declined.
Held: South Australia is a clearly inappropriate forum - form of order for a stay varied - otherwise appeal dismissed.
District Court Act 1991 s 43(2); District Court Rules 6R8, 6R100(2), referred to.
Neilson v Overseas Project Corporation of Victoria Ltd (2005) 79 ALJR 1736; Regie Nationale des Usines Renault v Zhang (2002) 210 CLR 491; British American Tobacco Australia Pty Ltd v Peter Gordon & Anor [2007] NSWSC 230; Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; Garsec v His Majesty The Sultan of Brunei [2007] NSWSC 882; Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418; Garnett: Stay of Proceedings in Australia: A 'clearly inappropriate' test? (1999) MULR 2; British South Africa Co v Companhia de Mocambique (1893) AC 602; Dagi v BHP (No2) (1997) 1 VR 428 at 433-441; Schmidt v Che Sul Won & Others [1998] 3 VR 435; Banque Paribas v Jarrett (1991) BC 9102895 (unreported Victorian Supreme Court decision of Ormiston J 25/7/91); Murakami v Wiryadi [2006] NSWSC 1354; BHP v Schultz (2004) 221 CLR 400 at [258-259]; Puttick v Fletcher Challenge Forests Pty Ltd [2007] VSCA 264; Keenco v SAAT (1974) 8 SASR 226 at 235; McGregor v Potts [2005] NSWSC 1098, considered.

STROHSCHNEIDER v EHLERT AND THE ESTATE OF EHLERT
[2008] SADC 54
Introduction

On 5 March 2004, Lenz Strohschneider (‘the plaintiff”), a resident of the Republic of Germany, issued the within proceedings against Rolf Ehlert and Robyn Ehlert (“the Ehlerts”), then residents of Normanville in the State of South Australia. The proceedings, at least to some degree, arose out of the sale and purchase of certain land situated in the Republic of Germany. The case, on any view, has a significant nexus with Germany. On 3 May 2005, Rolf Ehlert died. By order made on 14 September 2006 Robyn Ehlert in both her personal capacity; and as personal representative for the estate of her late husband became the named defendants (“the defendants”).
By notice for specific directions dated 6 December 2006, the defendants sought orders that the action be dismissed or stayed, “as this Honourable Court does not have the jurisdiction; or alternatively, that South Australia is clearly an inappropriate forum for the within action”.
Prima facie, this seemed to be an unusual application by the defendants, as residents of South Australia. The foreign plaintiff has chosen to forego the natural advantages of his residential jurisdiction in the Republic of Germany. The defendants allege that it would be oppressive to them to have to litigate in their own place of residence. Courts have been reluctant to stay proceedings upon the application of a party who is sued in his home jurisdiction. See Schmidt v Won & Others [1998] 3 V.R. 435, McEntee v Connor (1994) 4 Tas R. 18 at 25, Keenco v SAAT (1974) 8 SASR 226 at 235 and Banque Paribas v Jarrett (1991) [B.C. 9102895].
However, on 6 March 2007, the Master delivered comprehensive reasons for concluding that the District Court of South Australia is clearly an inappropriate forum for the determination of the proceedings. He then made orders:
1.Extending or abridging the time for the making of the application by the defendants to 6 December 2006, nunc pro tunc;
2.Staying the within proceedings on the basis that the District Court of South Australia is clearly an inappropriate forum for their determination.
The plaintiff appeals against both orders made by the Master. That appeal is brought pursuant to section 43(2) of the District Court Act 1991, and is by way of rehearing. I note the difference between the current 6 DCR 292 and DCR 97.01 of the 1992 Rules. In the event nothing turns upon that difference.
It is clear that the power to stay proceedings is discretionary and the exercise of the discretion is “a matter for individual judgment, and to a significant extent, a matter of impression”. See Puttick v Fletcher Challenge Forests Pty Ltd [2007] VSCA 264. The authorities make it clear that reasonable minds may differ on the question of what is “a clearly inappropriate forum”. As this appeal centres upon whether the defendants had satisfied the onus of proof upon them to justify a stay, it is necessary to detail the evidence before the Master.
Background
The genesis of the plaintiff’s proceedings is a written agreement for the sale and purchase of real property situated in the Republic of Germany on or about 3 January 1998 (“the 1998 contract”). At that time the plaintiff, on the one hand, and the Ehlerts on the other, resided in Germany. The plaintiff asserts that shortly after the 1998 contract was executed, the Ehlerts took possession of the property. He further asserts that the Ehlerts did not complete the purchase, and later abandoned the property. The Ehlerts left Germany in late 1998 and resided thereafter at Normanville. On 7 March 2001, the plaintiff and the Ehlerts entered into a further written agreement (“the 2001 contract”).
The plaintiff asserts that in the 2001 contract the Ehlerts acknowledged that in consequence of their default, the plaintiff was entitled to rescind the 1998 contract, and recover compensation for financial loss sustained by him in consequence of that default.
Pleadings
It must be said that the particulars pleaded in the amended Statement of Claim and in the amended Defence are scant. I assume that they were drafted with the question of jurisdiction being the major focus.
(a) Amended Statement of Claim
By amended statement of claim dated 18 September 2006, the plaintiff asserts that both the 1998 contract and the 2001 contract were “effected in Germany and that German law will apply in these proceedings”. He further asserts that pursuant to German law, the 2001 contract is a “declaratory acknowledgment of debt” and in consequence thereof, the defendants are estopped from challenging their liability to the plaintiff.
The plaintiff seeks “specific performance of the 2001 contract”. In the alternative, he seeks an order fixing compensation “in accordance with his rights of recision (sic) exercised in the 2001 contract”. In the further alternative, he seeks damages for breach of contract. (My emphasis.)
The plaintiff quantifies his losses in the sum of 650,860.96 Euros. The major component of his claim is the sum of 200,000 Euros being the alleged difference between the purchase price due under the 1998 contract and the purchase price on resale; together with interest in the sum of 405,378.83 Euros.
(b) Amended Defence
By amended defence dated 6 December 2006, the defendants assert that the District Court of South Australia has no jurisdiction to entertain what they describe as, “the plaintiff’s action for determination of a title to, or the right to possession of, the immovable property in Germany being a land parcel number 351/9, Asam Street, 18, which is situate out of the State of South Australia”. Alternatively, they contend that the action should be dismissed or stayed as South Australia is “clearly an inappropriate forum and Germany is clearly a more appropriate forum”. They contend that, in any event, the alleged debt is statute barred pursuant to section 35 of the Limitation of Actions Act 1936.
In addition, the defendants:
·admit that German law applies to the alleged contracts;
·admit that they executed the 1998 contract on or about 30 January 1998;
·do not specifically plead to the 2001 contract, however assert that “paragraph III of the 2001 contract is vague and unenforceable in its terms”.
·allege that the defendant, Robyn Ehlert:
-       did not understand the nature and effect of the agreements;
-       was not provided with any English interpretation of the agreements.
-       was under the undue influence of and control of her late husband;
-       did not receive independent advice in consequence of which it would be unconscionable for the plaintiff to proceed against her;
-       was not present on the signing of either the 1998 or 2001 contract;
·plead that they left Germany in December 1998 to reside in South Australia;
·assert that they cancelled the 1998 agreement when the necessary funds were not forthcoming; and
·allege that the plaintiff failed to mitigate his loss and sold the property at an undervalue.
The Evidence before the Master
The learned Master admitted into evidence two affidavits of the defendants’ solicitor, Mr Pertl, sworn respectively on 6 December 2006, and 21 January 2007, and two affidavits of the plaintiff’s solicitor, Mr Maitland, sworn respectively 16 January 2007, and 29 January 2007. That affidavit material was essentially in the nature of submissions. Neither party produced to the Court the respective contracts. Nor were the relevant terms of such contracts referred to specifically in the affidavit material. I assume that those contracts did not include a choice of Courts clause. [c.f. Akai Pty Ltd v Peoples Insurance Co Ltd (1996) 188 CLR 418].
In his affidavits the defendants’ solicitor, Mr Pertl said, by reference to the pleadings, that it was common ground that the respective contracts were entered into in Germany, and related to the sale and purchase of German land. He opined that because the substantive law of the Republic of Germany would apply to the formation and execution of those contracts, and to any alleged unconscionable conduct, the law on these issues may be complex, and therefore best determined by German Courts.
The defendants asserted that, with the exception of the defendant, Robyn Ehlert, all necessary witnesses would have to travel from Germany. Amongst those nominated by the defendants are the plaintiff; the respective experts on German law; those witnesses present on the alleged signing of the 1998 and 2001 contracts; the respective valuers of the land; any witnesses with respect to the quantum of the alleged damages, and to the issue of unconscionable conduct. The defendants allege that if the matter proceeded in Germany, the only foreign witness would be the defendant, Robyn Ehlert.
The plaintiff acknowledged that the laws of the Republic of Germany should apply to the proceedings. He submitted that the defendants had no proper basis to complain about his choice to proceed in their home jurisdiction. He asserted that the evidence is essentially documentary in nature, and that accordingly, there ought to be few foreign witnesses to be called.
Annexed to the affidavit of Mr Maitland, on behalf of the plaintiff, was what was described as an “incomplete” report of Oliver Pfueller, said to be an expert on German law and a person who is resident in South Australia. Mr Pfueller asserted that the general jurisdiction of German courts, in so far as it relates to compensation or damages claims, is deemed to be the defendants’ place of residence. This assertion appears to be that a German court would decline to permit the service of proceedings upon a resident of South Australia.
Mr Pfueller referred in his report to the names of witnesses to the executed contracts. As to the 2001 contract Mr Pfueller noted that the defendant Robyn Ehlert was not present when that contract was executed in Germany. She had executed an authority in Adelaide in the presence of the German Consul.
The defendants objected to the report of Mr Pfueller. In addition, they submitted that the plaintiff’s claim was so intimately connected with the title to real estate in Germany, that this Court lacked jurisdiction in consequence of the rule laid down in British South Africa Co v Companhia de Mocambique (1983) AC 602 (the Mocambique Rule). The latter case involved a claim for damages for trespass to South African land, which was held not to be justiciable in an English Court.
They finally submitted that, in any event, the District Court of South Australia was a “clearly inappropriate forum”.
The Reasons of the Master
The Master made reference to the effect of the Mocambique Rule at [64]. At [113] he referred to the 1998 contract as being for the sale of land in Germany. He then said: “The alleged further agreement of March 2001 also appears to have been made in Germany, and related to the subject matter being situated in Germany.” It is unclear whether the Master made any finding as to the Mocambique Rule. The order made by him appeared to relate to the “clearly inappropriate forum” ground alone.
As to the defendants’ objection to the report of Mr Pfueller the Master said at [90] that he did not propose to disregard the report in its entirety but that he would take note of the defendants’ criticisms. These included the rather vague nature of the report; and the fact that the author of the report purported to reach conclusions as to the “ultimate issues”. See O’Brien v Gillespie (1996) 41 NSWLR 549. He noted that the then counsel for the plaintiff had made certain concessions, and that “there is no longer before the Court an issue on whether German Courts have jurisdiction”. I am not convinced that such a wide concession was made. Indeed there appears to have been a proviso made by the plaintiff’s counsel on the question of German jurisdiction at [85]. The Master determined that question at [103] as follows:
“I have accordingly approached this matter on the basis that it has not been established at this stage by either party that either a German Court or the District Court of South Australia lack jurisdiction to hear the dispute so I will determine the application on this basis”.
The Master directed himself as to the principles expressed by the High Court of Australia in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538, and its adoption of the “clearly inappropriate” forum test. I gratefully adopt his summary at [75] of his reasons:
⁷⁵The majority in Voth (at p557) preferred the “clearly inappropriate forum” test to the traditional test which had been that adopted by Brennan J in Oceanic where a narrow and precise operation was given to the words “oppressive” and “vexatious”.
⁷⁶     The majority in Voth said at p556:
“The content of the ‘clearly inappropriate forum’ test is more expansive than the traditional test applied by Brennan J. The former test, unlike the latter, recognizes that in some situations the continuation of an action in the selected forum, though not amounting to vexation or oppression or an abuse of process in the strict sense, will amount to an injustice to the defendant when the bringing of the action in some other available and competent forum will not occasion an injustice to the plaintiff. …”
⁷⁷     In relation to the “more appropriate forum” test the majority said (at paragraph 34):
“It is designed to ensure that the cause of action is litigated in the natural or more appropriate available forum and litigation in that forum will generally reflect the balance of convenience between the parties. The justification for the selected forum declining to exercise its jurisdiction is that it defers to the exercise of jurisdiction by another available and more appropriate forum.”
⁷⁸     And at paragraphs 36 and 37:
“The “clearly inappropriate forum” test is similar to and, for that reason, is likely to yield the same result as the “more appropriate forum” test in the majority of cases. The difference between the two tests will be of critical significance only in those cases – probably rare – in which it is held that an available foreign tribunal is the natural or more appropriate forum but in which it cannot be said that the local tribunal is a clearly inappropriate one. But the question which the former test presents is slightly different in that it focuses on the advantages and disadvantages arising from a continuation of the proceedings in the selected forum rather than on the need to make a comparative judgment between the two forums. That is not to deny that considerations relating to the suitability of the alternative forum are relevant to the examination of the appropriateness or inappropriateness of the selected forum. The important point is that, in those cases in which the ascertainment of the natural forum is a complex and finely balanced question, the court may more readily conclude that it is not a clearly inappropriate forum.
The availability of relief in a foreign forum will always be a relevant factor in deciding whether or not the local forum is a clearly inappropriate one. But such a decision neither turns upon an assessment of the comparative procedural or other claims of the foreign forum nor requires the formation of substantive views about either the merits of that forum’s legal system or the standards and impartiality of those who administer it. Indeed, circumstances could well exist in which the local court was a clearly inappropriate one notwithstanding that there was no other tribunal which was competent to entertain the particular proceedings …”
⁷⁹     Likewise Toohey J said at paragraph 18:
“An approach in terms of the clearly inappropriate forum must look to the appropriateness of the local forum and not necessarily to any other forum. It carries with it as a possible consequence that the forum in which the proceedings are commenced may be held clearly inappropriate without arriving at any conclusion as to the appropriateness of another forum. And that is so, even if there is another forum thought to be appropriate but in which proceedings cannot, for one reason or another, be commenced.”
⁸⁰As to the weight to be placed to the chosen forum, the majority said at paragraph 54:
“It seems to us that Lee J in Anglo-Australian Foods Ltd v Von Planta (1988) 20 FCR 34 and French J in Green v Australian Industrial Investment Ltd (1989) 90 ALR 500 placed too much weight upon the notion that a proceeding regularly invoked provides a prima facie right to have the proceeding continue in that forum. That is not to deny that, in deciding whether it has been established that the chosen forum is clearly inappropriate, the extent to which the law of the forum is applicable in resolving the rights and liabilities of the parties is a material consideration. In this respect Gaudron J stated in Oceanic Sun (at p206) as a qualification to her endorsement of the view of Deane J, that the selected forum should not be seen as an inappropriate forum 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. We agree with Gaudron J 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.”
⁸¹In applying those principles to the resolution of the issue in that case the majority said at paragraphs 68 and 69:
“We turn therefore to consider the factors relevant in the present appeal to the exercise of the discretion whether or not to order that the action be stayed. In favour of a stay are the considerations that: the action has a substantial connexion with the law of Missouri; the relevant acts and omissions took place predominantly in Missouri; the appellant resides and works in Missouri and the professional standards of accountants in Missouri will therefore be relevant to his liability, if any; in large part the damage which the appellant was alleged to have caused was referable to United States taxation law; and the greater part of the evidence in any trial of the action would be found in Missouri.
On the other hand, the plaintiffs in the action are residents of New South Wales and may therefore reasonably point to the advantages to them in practical terms of bringing an action in the local courts; the transactions have some connexion with New South Wales and with Australian revenue laws; and, to a large extent at least, the damage was suffered in New South Wales. However these last considerations are natural consequences and incidents of residence in a particular jurisdiction and, as such, are merely different aspects of the right of any plaintiff to bring an action in the courts of the jurisdiction wherein he or she resides. That is a legitimate personal or juridical advantage which is acknowledged by the prima facie right of a plaintiff to insist upon the exercise of a jurisdiction which he or she has regularly invoked, but beyond that it has little weight.”

The Master accepted that the substantive law which applies is that of the Republic of Germany. He was satisfied that the defendants will require, as witnesses, an expert in German law, an expert valuer and other witnesses from Germany to testify as to any undue influence exerted upon Robyn Ehlert, and the events leading to the execution of both contracts. In addition, he referred to the number of separate components of the plaintiff’s alleged losses, and concluded that unless those items were agreed, a number of different witnesses would need to be called from Germany. The Master accordingly accepted the submission of the defendants’ solicitor that unless the action was heard in Germany, the costs to the defendant Robyn Ehlert of having to bring her witnesses to Australia would be oppressive.
The Master then concluded [at 129] of his reasons:
“in these circumstances, I have come to the conclusion, following the principles in Voth, that the defendants have established ‘clear and compelling basis for the relief sought’ (Olsson J in Rick Cobby) and that a stay of this action should be granted as the District Court of South Australia is a clearly inappropriate forum”.
Issues on the Appeal
On the hearing of the Appeal, Dr Bleby, who then appeared for the plaintiff, abandoned those grounds which related to the way in which the Master had treated the evidence of Mr Pfueller. He did, however, maintain that the onus remained upon the defendants to establish that an alternative forum was available in Germany. The principal issue on the appeal remains as to whether the defendants had discharged their onus to establish that the District Court of South Australia was “clearly an inappropriate forum”. The defendants, for their part, relied upon the findings of the Master; and, alternatively, sought to maintain without having filed a Notice of Contention, that in any event, this Court lacked jurisdiction because of the application of the Mocambique Rule.
Submissions of Counsel
(a) The plaintiff
Dr Bleby for the plaintiff submitted that as the defendants were resident in South Australia at the time of the service of the proceedings, it followed that the plaintiff had properly invoked the jurisdiction of the Courts in South Australia.
He stressed that the matters raised in Mr Pertl’s affidavits amounted to no more than speculation, and that mere speculation is insufficient to satisfy the onus of establishing that South Australian Courts are “clearly an inappropriate forum”. He submitted that German law could quite easily be proved in the proceedings, and it did not follow that there was a need for an expert, let alone two experts to attend from Germany.
He criticised the vague nature of the defendants’ pleadings on the issue of the plaintiff’s alleged failure to mitigate. He submitted that most of the questions of damage including valuation issues could be resolved after the completion of discovery of documents. He submitted that the only defence to the proceedings was the rather vague suggestion of undue influence. This was something purely in the control of the defendants and would not, of itself, lead to witnesses being called from Germany. He submitted that although the Master had correctly directed himself as to the Voth test, he had, in fact, applied the “more appropriate forum” test.
In essence, he submitted that I should conclude that the Master erred in finding that it would be oppressive to the defendants for them to have to bring a number of witnesses from Germany. That finding was again based upon speculation unsupported by either the pleadings or the evidence, such as it was. He pointed to the expressions used by the Master namely that the witnesses “may well be required” rather than finding that they would be required.
He submitted that the subject case ought be contrasted with cases such as Voth, where the defendant had resided in a foreign jurisdiction, and was being forced into a jurisdiction which happened to suit the plaintiff. He stressed that the power to stay should only be exercised in a clear case. He asked, rhetorically, how could it be oppressive to the defendants to have the action determined in the jurisdiction in which they reside?
He submitted that the onus upon the defendants could not be satisfied unless they established that the German Courts would entertain these proceedings.
He submitted that leaving to one side the report of Mr Pfueller, there was no evidence that the German Courts would or could entertain the action. He submitted that it was not for the plaintiff to prove the negative, however the Pfueller report at least raised the prospect that German Courts would deny jurisdiction, by refusing to permit the plaintiff to serve proceedings out of the jurisdiction.
(b) the defendant
Mr Stathopoulos for the defendants criticised the lack of particularity in the plaintiff’s pleadings.
While acknowledging that the Master did not reach any conclusion as to the applicability of the Mocambique Rule, he maintained that the Rule did apply to the facts of this case so as to deny jurisdiction to this Court. He submitted that the action was so closely related to the title to land in Germany that it was covered by the Rule.
As to the question of whether a German Court would entertain the proceedings he submitted that there was a presumption that German Courts would do so.
He submitted that all of the connecting factors overwhelmingly established that South Australia is a clearly inappropriate forum, as “everything took place in Germany and German law applies”. He denied that the need for witnesses to attend from Germany was speculative. He submitted that the inferences drawn by the Master were entirely reasonable, and that the plaintiff’s submissions had no regard to the way in which the defendants would conduct their case.
In this case, he submitted, there was no connection with South Australia save for the defendants’ residence.
Discussion
Jurisdiction
As the majority of the High Court said, in Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491 at [7-10], questions of jurisdiction are to be distinguished from those of choice of law:
“A Court has jurisdiction in a civil action either because the plaintiff has served the originating process on the defendant while within its territorial jurisdiction or because applicable ‘long arm’ provisions have been invoked. The assumption of jurisdiction raises no question as to the law to be applied in deciding the rights and duties of the parties. That last question might, in some cases, affect whether the Court should decline to exercise its jurisdiction and stay the proceedings. But the authority of a Court to decide a question of forum non conveniens and, also, to decide the substantive rights and duties of the parties comes from the fact of the service of the process…The answer to the law to be applied in deciding the rights and duties of [the parties] affects the decision whether the Court should decline to exercise its jurisdiction and stay the action brought against [the defendants].
There can be no doubt, in this case, that the jurisdiction of the District Court of South Australia has properly been invoked, because the Ehlerts were resident in this State as at the dates of issue and service of the proceedings. The question is whether the Court should decline to exercise jurisdiction.
The Mocambique Rule
It is appropriate to deal with the application of the Mocambique Rule. I assume that because of his conclusion as to this Court being a clearly inappropriate forum the Master did not need to determine this issue.
The principle derives from British South Africa Co v Companhia de Mocambique [1983] AC 602. As I have indicated this case involved a claim for damages for a trespass which had occurred in South Africa. The House of Lords held that such a claim was not justiciable in an English Court. The Rule was affirmed by the House of Lords in Hesperides Hotels Ltd v Muftizade [1979] AC 508. The rule was expressed as the Courts having no jurisdiction to entertain an action for the determination of the title to, or the right to possession of, any immovable situate in a foreign land or the recovery of damages for trespass to such an immovable.
In Regie Nationale des Usines Renault v Zhang (2002) 210 CLR 491 at [76], the majority of the High Court reserved for further consideration the effect of the Mocambique Rule.
The Victorian Supreme Court in Dagi v BHP (No 2) (1997) 1 VR 428 at 441, considered what it described as “the uncertainty which attends [the Rule’s] ambit and the exceptions to which it is subject”, and concluded that Australian Courts “will refuse to entertain a claim where it essentially concerns rights, whether possessory or proprietary, to or over foreign land, for these rights arise under the law of the place where the land is situate and can be litigated only in the Courts of that place. However the claim must not merely concern those rights, it must essentially concern them. This is because the rights must be the foundation or gravamen of the claim”.
This formulation was affirmed in Schmidt v Won and Others [1998] 3 V.R. 435 and applied in Murakami v Wiryadi [2006] NSWSC 1354.
The subject proceedings do not relate to title to foreign land. The land has been sold. It is an in personam claim for compensation or damages.
Accordingly, in my opinion the subject proceedings fall within an exception to the Rule, in that the question of title arises only incidentally. Accordingly, the Mocambique Rule does not apply so as to deny jurisdiction to this Court.
Is this Court a clearly inappropriate forum?
Rule 22.01 of the 1992 District Court Rules refers to whether the Court “is the proper forum for the trial”(my emphasis). District Court Rule 6 R 100(2)(c) refers to a “challenge to the appropriateness of the Court as a forum for the hearing of the action”. It has been held that despite the difference in wording in such Rules of Court the test remains whether the Court is a clearly inappropriate forum. See Regie National des Usines v Zhang (2002) 210 CLR 491 at [25].
(a) the allegedly vague nature of the evidence of oppression
I accept, as did the Master, that the evidence in the respective affidavits was scant. However, this is the nature of such an application taken at a time when pleadings have not been settled. At this stage of the proceedings one cannot speculate about what issues will arise at trial or attempt to predict whether the issues raised in the defence will be pursued.
As Brereton J said in McGregor v Potts [2005] NSWSC 1098 at [51]:
“At the early stage of proceedings at which such questions must be determined it will often not be possible to say with accuracy how long the trial may take, nor precisely what witnesses will be called, nor what issues might go to trial and which may fall away, nor whether the case will even get to trial … The “clearly inappropriate forum test contemplates a trial on all issues extant at the time that the forum question is determined, and does not speculate that the case may narrow as it progresses. In an application of this type, necessarily brought at an early stage of the proceedings, the significance of the potential prejudice ought not be discounted by the circumstance that it remains to some extent a matter of conjecture. The Court proceeds on the assumption that the case will run to trial on all issues, and considers the relative convenience of each forum on that assumption”.
I respectfully adopt that dicta. In my opinion, the Master was entitled, at this stage of the proceedings, to assume that all matters including issues of quantum were in dispute and that it would be necessary for witnesses as identified in his reasons to attend from Germany. The Master was entitled to conclude that the connection with Germany was overwhelming. There was no doubt that German law would apply. This was a substantial factor in favour of the natural forum of the German Courts.
As to the question of witnesses the Master was not asked to have regard to any potential evidence of the representative of the German Consul in Adelaide who witnessed Mrs Ehlert’s authority to execute the 2001 contract. No regard was had to the relative ease of modern travel, and alternative methods of giving evidence by out of court transmissions; as well as the obvious inconvenience to Mrs Ehlert if she were sued in a foreign country, and in a foreign language. Contrast Keenco v SAAT (1974) 8 SASR 216 at 235. Having regard to these matters does not alter the inevitable finding that wherever the proceedings were heard, there would be a need for Mrs Ehlert to instruct German solicitors to investigate and advise on all matters connected to the subject action. In the subject case at the least it cannot be said that it would be less costly for Mrs Ehlert to litigate in Australia. However the Master found and I entirely agree with him that the need to transport the entire case from Germany, together with the defendants’ need to appoint German lawyers in any event will inevitably lead to increased costs to them in litigating in their resident jurisdiction. Contrast Schmidt v Won (1998) 3 VR 435, Keenco v SAAT (1974) 8 SASR 226 at 235 and Banque Paribas v Jarrett (1991) BC 9102895. In my opinion the Master was justified in finding at this stage of proceedings that it was vexatious and oppressive to the defendants to have to litigate the action in South Australia.
(b) the fact that jurisdiction has properly been invoked
Dr Bleby referred to the decision of the majority in Voth’s case at p554:
“First, a plaintiff who has regularly invoked the jurisdiction of a Court has a prima facie right to insist upon its exercise. Secondly, the traditional power to stay proceedings which have been regularly commenced on inappropriate forum grounds, is to be exercised in accordance with the general principle empowering a Court to dismiss or stay proceedings which are oppressive, vexatious or an abuse of process, and the rationale for the exercise of the power to stay is the avoidance of injustice between parties in a particular place. Thirdly the mere fact that the balance of convenience favours another jurisdiction or that some other jurisdiction would provide a more appropriate forum does not justify the dismissal of the action or the grant of a stay. Finally, the jurisdiction to grant a stay or dismiss the action is to be exercised “with great care” or “extreme caution”.
In my opinion the majority in the High Court regarded the fact that the proceedings had been regularly invoked as just one of the factors to take into account in determining whether the chosen forum was a clearly inappropriate forum. Greater weight would be given to that factor to show that it was not clearly inappropriate if it were fairly arguable that the substantive law of the chosen forum applied to determine the rights of the parties. In the subject case it is the substantive law of Germany which will apply.
It the subject case little weight is to be given to any legitimate juridical advantage to the plaintiff in selecting the jurisdiction. See BHP v Schultz at [285]. In any event it does not appear to me that the plaintiff has identified any juridical advantage save for the risk that German Courts may not entertain the action.
(c) the application of foreign law
It is common ground that the applicable law is the law of the Republic of Germany. The Master, with respect, was correct in concluding that this is a very significant factor, because German Courts would be best qualified to apply it. There is also an additional cost (whether it be by way of one or two experts in German law) in having to prove that foreign law. See Voth’s case at [307] and BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at [259]. Puttick v Fletcher Challenge [2007] VSCA 264, and Murakami v Wiryadi at [46]. I note that in Regie National des Usines Renault v Zhang at [81], the High Court, when considering a tortious claim said that “an Australian Court cannot be a clearly inappropriate forum merely by virtue of the circumstance the choice of law rules which apply to the forum require its courts to apply foreign law as the lex causae”. This however needs to be placed in context. In the subject case all of the connecting factors, including the fact that the law to be applied is its Civil law relate to the Republic of Germany. While Australian Courts have regularly been required to apply foreign law, there can be no doubt that its Civil law is more appropriately applied by the Courts of Germany. There is equally no doubt that this is a substantial factor in favour of this Court being “a clearly inappropriate” forum.
(d) Whether German Courts would entertain the proceedings?
In Oceanic Sun Line Shipping Co Inc v Fay (1988) 165 CLR 197 at 248 Deane J. said that “a defendant will be unable to discharge that onus unless he can identify some appropriate foreign tribunal to whose jurisdiction the defendant is amenable and which would entertain the proceedings at the suit of the plaintiff”.
In Voth’s case the majority did envisage cases where Australian Courts would be clearly inappropriate even where there was no amenable foreign tribunal. See Garsec v The Sultan of Brunei [2007] NSWSC 882 at [126]. However the Court did affirm that the availability of relief in a foreign forum will always be a relevant factor in deciding whether or not the local forum is a clearly inappropriate one.
In the subject case the only “evidence” that the German Courts would not entertain the proceedings is the opinion expressed by Mr Pfueller. As I have already noted I do not consider that the concession of the plaintiff’s counsel before the Master went so far as to permit a finding that the German Courts would not decline jurisdiction. It appears that the Master may have reversed the onus in finding at [103] that neither party had satisfied him that a German Court lacked jurisdiction.
The defendants submitted that in the absence of any evidence I should be satisfied that the German Courts would entertain this action. This submission was made on two bases, firstly that the subject matter concerned contracts made in Germany, and finally because of the “presumption” that the lex fori choice of law rules are the same as Australian choice of law rules.
In Neilson v Overseas Projects Corporation [2005] 79 ALJR 1736, the High Court said that the Courts of Australia are not presumed to have any knowledge of foreign law. In the absence of evidence of the foreign tribunals choice of law rules, the majority in Neilson’s case said at [60] and [125] that “there is a presumption that in the absence of evidence, then the lex fori choice of law rules are the same as Australian choice of law rules”.
In the subject case the defendants presumably rely upon the rules of this Court relating to service outside the jurisdiction in respect of contracts made within the jurisdiction. (1992 DCR 18.02 (e)).
While one might readily presume that the German Courts would entertain such an action so intimately connected with Germany, there is at least an inference raised, in the report of Mr Pfueller, that in respect of pecuniary or mere damages claims, that German Courts will not entertain the action. Further it may be that the action might be construed as one involving undue influence occurring outside Germany and in South Australia.
As to Mr Pfueller’s report I have taken the view that while much of it is inadmissible, I can have regard to it to satisfy myself that there is at least an argument that the German Courts may decline jurisdiction.
During argument I invited counsel for the defendants to seek instructions as to the giving of an undertaking that they would submit themselves to the jurisdiction of the Courts of the Republic of Germany. In that respect I adopted the approach in McGregor v Potts (2005) NSWSC 1098 at [86], Voth’s case and Regie National des Usines Renault v Zhang at [183].

Unlike that which occurred in McGregor’s case, the defendants in the subject case ultimately have declined to give any such undertaking.
In Schmidt v Won (1998) 3 VR 435 Ormiston J.A., albeit in a case where all of the parties were residents of different States of Australia said:
“There may be factors which would otherwise lead to the preferring of the Courts of South Korea, such as the actual land, the probability that South Korean law will have to be examined, and the likelihood that the witnesses generally reside in South Korea. But that is not to the point where the party seeking the stay is unable to show that there is an appropriate foreign tribunal in South Korea to whose jurisdiction the respondents are amenable. Unless the respondents show both that they can be sued in that jurisdiction, and that they are willing to subject themselves to it (my emphasis), then it lies ill in their mouths to suggest that Courts of the country in which they reside are clearly inappropriate and that it would be oppressive to them to fight the litigation in this country”.
Conclusion and orders
In my opinion, and consistent with the conclusion of the Master, it is in the interests of the parties that the matters in dispute be resolved by proceedings to be commenced in the Courts of the Republic of Germany. The Civil law of Germany is best applied by those Courts rather than this Court. While I accept that the subject case is unusual in that the foreign plaintiff is willing to bear the burden of proceeding in the defendants’ resident jurisdiction, the fact remains that all of the connecting factors relate to Germany. From the defendants’ point of view they will, at least at this stage of proceedings, need to transport their witnesses from Germany, and instruct solicitors in Germany to investigate; obtain witness statements; and complete inspection of documents. Those documents will undoubtedly be in the German language and the defendants would obtain little benefit from giving evidence in English in this Court.
In my opinion the Master was correct, on the evidence tendered before him, and upon his understanding of the concessions apparently made by the plaintiff’s counsel as to jurisdiction, in finding that the continuation of the proceedings in this Court would be vexatious and oppressive to the defendants within the principles expressed in Voth’s case. Such a finding would justify an order for the permanent stay of the within proceedings on the basis that this Court is a clearly inappropriate forum. I accept as did the Master that there is a need for a clear case to find that the jurisdiction in which the plaintiff has issued proceedings, is a “clearly inappropriate forum”. In my opinion there was, at the least, some confusion as to the nature of the concession made by counsel as to the jurisdiction of the German Courts to entertain the subject proceedings. It remained a live issue. The Master, as I have indicated may have reversed the onus on this issue. In addition the Master certainly did not have the benefit of the dicta of the Court of Appeal in Schmidt v Won as to the exercise of the discretion where the alternative forum is in doubt. Accordingly it is necessary for me to consider the matter afresh. I am conscious that the defendants must establish that this Court is a clearly inappropriate forum – not that the Courts of Germany are a more appropriate forum. I have already adopted the Masters findings that it would be oppressive and vexatious to the defendants to require them to litigate the action in this State, notwithstanding their residence here. I have carefully considered the dicta in the Schmidt case.
I accept that in the Schmidt case, it was more probable than not that there was no alternative amenable jurisdiction. I accept also the force of Mr Stathopoulos’ submission that the German Courts are likely to entertain the action. In my opinion however some doubt remains, and only time will tell whether the German Courts will decline jurisdiction. Unlike Schmidt’s case it is not appropriate to refuse an order for a stay because of the uncertainty as to the alternative forum. Also unlike McGregor’s case it is not appropriate to impose a condition that the defendants submit to the jurisdiction of the German Courts, given that they have already declined to give such an undertaking.
Having reached similar findings as the Master as to the question of oppression, I find that this Court is a clearly inappropriate forum. I now consider whether the order to stay the proceedings ought be conditioned in the exercise of my discretion. In my opinion some mechanism must be put in place to cover the position in the event that jurisdiction is denied in Germany. Save for one variation I would confirm the two orders made by the Master. That variation is necessary insofar as the order of the Master resulted in a permanent stay.
It is achieved by adding as Clause 3 to the orders made by the Master on 6 March 2007:
“3. I give leave to the plaintiff to apply for dissolution of the stay in paragraph 2 hereof in the event that the German Courts decline jurisdiction in respect of similar proceedings to be issued by the plaintiff in Germany”.
Save for that variation I would dismiss the appeal. I will hear the parties as to the costs of the appeal.