New Zealand has no jurisdiction to determine matters in issue
29Section 19 provides as follows:
19 Order of stay of proceeding
(1) On application under section 17, the Australian court may, by order, stay the proceeding if it is satisfied that a New Zealand court:
(a) has jurisdiction to determine the matters in issue between the parties to the proceeding; and
(b) is the more appropriate court to determine those matters.
(2) In determining whether a New Zealand court is the more appropriate court to determine those matters, the Australian court must take into account the following matters:
(a) the places of residence of the parties or, if a party is not an individual, its principal place of business;
(b) the places of residence of the witnesses likely to be called in the proceeding;
(c) the place where the subject matter of the proceeding is situated;
(d) any agreement between the parties about the court or place in which those matters should be determined or the proceeding should be commenced (other than an exclusive choice of court agreement to which subsection 20(1) applies);
(e) the law that it would be most appropriate to apply in the proceeding;
(f) whether a related or similar proceeding has been commenced against the defendant or another person in a court in New Zealand;
(g) the financial circumstances of the parties, so far as the Australian court is aware of them;
(h) any matter that is prescribed by the regulations;
(i) any other matter that the Australian court considers relevant;
and must not take into account the fact that the proceeding was commenced in Australia.
(3) An order under subsection (1) may be made subject to any conditions the Australian court considers are appropriate in order to facilitate, without delay or undue expense, the determination of the matters in issue between the parties to the proceeding.
30Thus the Australian court has a discretion to stay the proceeding if satisfied of two conditions, the first being that a New Zealand court has jurisdiction to determine the matters in issue between the parties to the proceeding, and the second being that the New Zealand Court is the more appropriate court to determine those matters, having regard to the factors listed in s 19(2). (While the power to stay is a discretionary one, in that the statute permits but does not require the court to stay the proceedings if satisfied that the New Zealand court has jurisdiction and is the "more appropriate court", I accept that it would be an exceptional case, if there is one at all, in which being satisfied that the New Zealand court had jurisdiction and was the more appropriate one, the Court would not stay the Australian proceedings).
31As to the first condition, the matters in issue in the proceeding are claims for relief by way of (1) leave under Corporations Act, s 236, to bring proceedings for compensation pursuant to Corporations Act, s 1317H for alleged breaches of directors' duties under Corporations Act, s 181, 182 and 183; (2) a compulsory purchase order under Corporations Act, 233, for alleged oppression within s 232; and (3) damages for breach of clause 14.1 of the Limited Partnership Agreement dated 30 May 2013 between Mr Douglas, Mr Webber and DWE AS.
32The New Zealand courts would plainly have jurisdiction in respect of the claim under the Limited Partnership Agreement; and were that the only matter in issue the (albeit non-exclusive) choice of jurisdiction clause in the Limited Partnership Agreement would weigh significantly in favour of a conclusion that the courts of New Zealand were more appropriate [cf Asciano v ARTC Ltd [2008] NSWSC 652, [18]-[19]; Taurus v Aurox [2010] NSWSC 1223, [38]]. However, that claim forms only a small part of the plaintiff's case; indeed, the plaintiff's counsel was hard-pressed to indicate how the evidence supported any such claim at all. In substance, the plaintiff's claim is one in respect of members' rights and directors' duties in connection with DWE AS, an Australian company, under the Corporations Act - although the defence will contend that Mr Douglas' duties and Mr Webber's rights must be viewed in the context of the Limited Partnership Agreement, the Management Agreement and the Independent Contractor Agreement.
33Save insofar as statute otherwise provides, the content of the duties of a company director are governed by the law of the company, which is that of the place of incorporation [Pergamon Press Ltd v Maxwell [1970] 2 All ER 809; [1970] 1 WLR 1167, 1172; Konamaneni v Rolls Royce Industrial Power (India) Ltd [2002] 1 All ER 979; [2002] 1 WLR 1269, [52]-[55]; Base Metal Trading Ltd v Shamurin [2004] EWCA Civ 1316; [2005] 1 WLR 1157, [56]; Oates v Consolidated Capital Services Ltd (2008) 66 ACSR 277, [41]; Titchfield Management Ltd v Vaccinoma Inc (2008) 68 ACSR 448, [37]]. That of itself does not necessarily mean that a foreign court would not have jurisdiction, but where the claim is a statutory one, it may be doubtful that it can be litigated in a foreign court. Thus in Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65, Sir Nicolas Browne-Wilkinson V-C doubted that an English Court would apply the (CTH) Trade Practices Act 1974 as part of the applicable law, even though the proper law of the contract was Queensland. In Donohue v Armco Inc [2001] UKHL 64; [2002] 1 All ER 749, it was common ground that a claim under the (USA) Federal Racketeer Influenced and Corrupt Organisations Act (18 USC s 1962(c)) could not be brought in an English court, even though such claims fell within the terms of an exclusive jurisdiction clause (at 773a). In Williams v The Society of Lloyds [1994] 1 VR 274, McDonald J appears to have accepted, in the course of staying proceedings for damages for misrepresentation in Australia, in favour of proceedings in England, that the English court would not have jurisdiction to grant relief under the Trade Practices Act (at 320.40-321.25, 325.43-47). In Commonwealth Bank of Australia v White [1999] 2 VR 681, Byrne J, in declining to enforce an exclusive choice of jurisdiction in favour of the courts of England, took into account that the plaintiff's claim for misleading and deceptive conduct and for breaches of the companies legislation would not be available in the English courts.
34But even if the forum's choice of law rules would otherwise permit a foreign statutory claim to be litigated before it [as to which see A.S. Bell, Forum Shopping and Venue in Transnational Litigation, Oxford 2003, [3.111]], there is an additional obstacle where the statute confers jurisdiction only on a specified court or courts, not including a foreign court. Corporations Act, s 237, confers jurisdiction on "the Court". Section 1317H similarly confers jurisdiction on "a Court". Sections 232 and 233 likewise confer jurisdiction on "the Court". By s 58AA, "Court" means, relevantly, any of the Federal Court of Australia, the Supreme Court of a State or Territory of Australia, or the Family Court of Australia. No other court may exercise the powers given by those sections. Necessarily, that means that no foreign court may do so. (Where, under the Act, jurisdiction is not limited to a "Court" but given to any "court", it is at least arguable that a foreign court whose choice of law rules selected Australian law as applicable would be able to exercise such Corporations Act jurisdiction as is exercisable by any "court", as distinct from a "Court").
35The applicant argued that s 58AA was not a provision conferring jurisdiction, for which Australian Securities and Investments Commission v Edensor Nominees Pty Limited [2001] HCA 1; (2001) 204 CLR 559; (2001) 37 ACSR 1 was cited. That case was decided on the previous (VIC) Corporations Law, which was state legislation, and the issue was whether particular (state) jurisdiction had been conferred on the Federal Court. But I would accept that s 58AA, in its current form, does not of itself confer jurisdiction. However, while it does not itself confer jurisdiction, it has the effect, particularly in the light of s 58FF(2), that when read in conjunction with the provisions that do confer jurisdiction on a "Court", that such jurisdiction is limited to the Courts so defined. In other words, where a function under the Act is given to a "Court" (as distinct from a "court"), only a Court as so defined can exercise that function. Sections 237, 1317H, 232 and 233 are such provisions, and jurisdiction under them is limited to such "Courts" and is not given to other courts, including foreign courts.
36Although in a somewhat different context, the point is illustrated by the High Court's rejection, in In the Marriage of J G and R J Smith [1986] HCA 36; (1986) 161 CLR 217; (1986) 10 Fam LR 769, of the proposition that the Family Court had accrued jurisdiction to approve a release of rights under (NSW) Family Provision Act 1984, s 31, included in a maintenance agreement under the (Cth) Family Law Act 1975. Gibbs CJ, Wilson and Dawson JJ said:
There is a further, and quite independent, reason for concluding that the Family Court cannot give an approval for the purposes of s 31 of the Family Provision Act. That section makes a release effective only if the Supreme Court has given its approval to it. An approval by the Family Court is not an approval by the Supreme Court, and would not satisfy s 31(3).
37Mason, Brennan and Deane JJ said:
It is sufficient for us to say that if the Family Court assumed an accrued jurisdiction to make an order under s 31 of the Family Provision Act approving a release in a maintenance agreement, the order would none the less not be an order of the Supreme Court. It therefore would not amount to an approval by the "Court" which is referred to in s 31(3), with the consequence that the release would have no effect by virtue of s 31(2). It is quite impossible to read the reference to "Court" in s 31, viewed in the light of the definition of "Court" in s 6(1), otherwise than as a reference to the Supreme Court. It follows that the Family Court does not possess accrued jurisdiction to approve a release for the purposes of the State Act.
38It follows that the New Zealand court does not have jurisdiction to grant the principal relief sought by the plaintiff in these proceedings, being relief that can be granted only by a "Court" within the meaning of the Corporations Act.
39While (NZ) Companies Act 1993, s 165, gives the High Court of New Zealand a power to grant leave for a statutory derivative action analogous to that under Corporations Act, s 237, the corollary of In the matter of Featherston Resources Limited [2014] NSWSC 1139, [15]-[31], is that that power is available only in relation to a company registered under the New Zealand Act, and not an "overseas company" within the meaning of that Act. The applicant argued that, by operation of the definition of "related company" in s 2, the reach of the section was extended to DWE AS, but that definition also is expressed in terms of "a company", and not an "overseas company". In my view, the High Court of New Zealand would not have jurisdiction to grant leave under s 165 for a statutory derivative action in respect of an Australian company. Moreover, even if it did, that would not make the New Zealand court a "Court" with jurisdiction to grant relief under the provisions of the Corporations Act that are invoked by the plaintiff, and which provide the governing law as to directors' duties and members' rights of an Australian company.
40For all those reasons, the New Zealand court does not have jurisdiction to determine the matters in issue between the parties to this proceeding. The condition in s 19(1)(a) is not satisfied.
41It is therefore unnecessary to consider the second condition, in s 19(1)(b). However, while acknowledging that a number of factors favour New Zealand - including that New Zealand is the place of residence of the main protagonists (Mr Douglas and Webber), and probably of most of the material witnesses, and that the Limited Partnership Agreement contains a non-exclusive choice of jurisdiction clause in favour of New Zealand - the test directs attention to the more appropriate, not the more convenient, court, so that while convenience is undoubtedly an important consideration, it is not determinative [Featherston Resources Limited, [53]-[54]], and the courts of the place of incorporation are usually the appropriate forum for determination of disputes about the duties of directors [Pergamon Press Ltd v Maxwell; Konamaneni v Rolls Royce Industrial Power (India) Ltd, [52]-[55]; Base Metal Trading Ltd v Shamurin, [56]; Oates v Consolidated Capital Services Ltd, [41]; Titchfield Management Ltd v Vaccinoma Inc, [37]]. There would appear to be even less reason for concluding otherwise where the alleged breaches occurred in Australia.