Bagsfirst Global v Global Brands

Agar v Hyde (2000) 201 CLR 552 Garsec v His Majesty the Sultan of Brunei [2007] NSWSC 882 Garsec v His Majesty the Sultan of Brunei [2008] NSWCA 211 General Steel Industries Inc v Commission for Railways (NSW) (1964) 112 CLR 125 CASES CITED : Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 Puttick v Tenon Limited (2008) 238 CLR 265 Regie Nationale Des Usines Renault SA v Zhang (2002) 210 CLR 491 Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538

PARTIES : Bagsfirst Global Pty Limited (Plaintiff) Global Brands (Football) Pte Ltd (Defendant)

COUNSEL : J C Giles (Plaintiff) J G Harrowell (Solicitor) (Defendant)

SOLICITORS : Norton Rose Australia (Plaintiff) Hunt and Hunt (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

27 August 2010 (ex tempore - revised 27 August 2010)

2010/147131 BAGSFIRST GLOBAL PTY LTD v GLOBAL BRANDS (FOOTBALL) PTY LTD JUDGMENT

1 HIS HONOUR: The plaintiff, a company incorporated in New South Wales and carrying on business there and elsewhere, sues the defendant, a company incorporated in the Republic of Singapore and carrying on business there and elsewhere, for damages for breach of contract. The contract on which the plaintiff sues the defendant is a "supply appointment agreement" apparently made on 30 June 2009. The contract was made in contemplation of the FIFA World Cup (then to be held, and since held, in South Africa in 2010). In substance, it provided for the defendant to source orders for particular kinds of FIFA, or World Cup, branded merchandise and to pass those orders on to the plaintiff to be filled. 2 The plaintiff's case, in substance, is that the defendant failed to procure the orders that were both represented and warranted, that the plaintiff accordingly suffered substantial loss of profit, and that in addition an advance of commission paid by the plaintiff to the defendant, not having been earned in its entirety, should be refunded. 3 I am concerned today with the defendant's notice of motion seeking orders either that the service of the originating process on it be set aside pursuant to UCPR r 12.11, or that it be set aside pursuant to r 11.7(2)(a), or that the proceedings be stayed pursuant to r 11.7(2)(b). 4 In the events that have happened, the debate became focused not so much on whether service was authorised under UCPR r 11.2 and Schedule 6 but, rather, on whether, as a matter of discretion, the proceedings should be stayed (or service set aside) so that the dispute could be heard in what the defendant contends is the clearly appropriate forum: the courts of the Republic of Singapore. In other words, as the case evolved, the defendant suggested that this Court was a clearly inappropriate forum for the resolution of the disputes that the plaintiff litigates in these proceedings. 5 I referred to "the events that have happened". That is because, at the outset of the hearing, the plaintiff sought and was granted leave to amend its summons and its commercial list statement. The effect of the amendments is, amongst other things, to allege that there was an implied term of the contract on which the plaintiff sues to the effect that if the defendant did not procure sufficient orders, or business, to justify the advance royalty paid by the plaintiff to the defendant, then the defendant would repay the unearned portion of that royalty to the plaintiff on demand. 6 Mr Harrowell, who appeared for the defendant, accepted that by reason of that amendment there was a "pleaded" case of breach in this State of an agreement made (on his submission) outside the State. On that basis, Mr Harrowell accepted, (but not otherwise), there was a "hook" under Schedule 6. The hook is to be found in para (c)(iv) of that Schedule: Schedule 6 Proceedings in respect of which originating process may be served outside Australia

(c) if the subject-matter of the proceedings is a contract and the contract: (iv) is one a breach of which was committed in New South Wales, 7 Where an application is made to set aside service of originating process under r 12.11, the factors to which attention is directed are conventionally said to be:

(1) that the claims advanced in the process do not fall within r 11.2 read in conjunction with Schedule 6; (2) that the court is a clearly inappropriate forum; or (3) that the claim has no real prospects of success.

8 Those principles are elaborated in the decision of the plurality (Gaudron, McHugh, Gummow and Hayne JJ) of the High Court of Australia in Agar v Hyde (2000) 201 CLR 552 at 575[55]. It is not necessary to give any more detailed citation. 9 For the reasons that I have just given, the first of those grounds is not (if ever it was) relevant. The third was not argued. That is to say, it was not argued that the plaintiff's case, as pleaded, is clearly one that should not be permitted to go forward applying the "General Steel" (General Steel Industries Inc v Commission for Railways (NSW) (1964) 112 CLR 125) test (which the plurality in Agar at 575 - 576[57] accepted was the way in which the third ground should be dealt with). 10 Accordingly, whether one looks at r 12.11 or at the alternative paragraphs of r 11.7, one comes back to "clearly inappropriate forum". 11 Rule 11.7 reads as follows: 11.7 Setting aside originating process served outside Australia (cf SCR Part 10, rule 6A)

(1) The Supreme Court may make an order of a kind referred to in rule 12.11 (Setting aside originating process etc) on application by a defendant on whom originating process is served outside Australia.

(2) Without limiting subrule (1), the Supreme Court may make an order under this rule: (a) on the ground that the service of the originating process is not authorised by these rules, or (b) on the ground that the court is an inappropriate forum for the trial of the proceedings. 12 Again, for the reasons just given, subr (2)(a) need not be considered. Although subr (2)(b) does not use the words "clearly inappropriate forum", the effect of the decision of the High Court in Regie Nationale Des Usines Renault SA v Zhang (2002) 210 CLR 491 (see Gleeson J, Gaudron, McHugh, Gummow and Hayne JJ at 503 - 504[24], [25]) is that the rule should be so read. 13 So read, the rule calls up the factors discussed in many cases, including Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538, Renault, and (affirming the continued applicability of the "clearly inappropriate forum" test) Puttick v Tenon Limited (2008) 238 CLR 265. 14 The requirements of the rule, and of the "clearly inappropriate forum" test, were considered both in my judgment in Garsec v His Majesty the Sultan of Brunei [2007] NSWSC 882 and, on appeal, [2008] NSWCA 211. 15 For the reasons elaborated in the judgment of Campbell JA in the Court of Appeal, at [40] and following, the "clearly inappropriate forum" test requires that the continuation of the proceedings in this Court must be oppressive or vexatious to the defendant, or must be an abuse of the processes of this Court in some other way. That follows, as his Honour pointed out, from the judgment of Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 247 - 248. It is of particular importance to refer to the judgment of Deane J in Oceanic because it was his Honour's formulation of the test and reasons for it that were adopted by the majority (Mason CJ, Deane, Dawson and Gaudron JJ) in Voth at 564 - 565. 16 The decision of the majority in Voth at 554 identifies four principles that need to be borne in mind in considering the exercise of the discretion with which I am now concerned. They are:

(1) A plaintiff who regularly invokes the jurisdiction of a court has a prima facie right to insist on the exercise of that jurisdiction;

(2) The rationale for the exercise of the power to stay is to avoid injustice in the particular case;

(3) One needs more than mere balance of convenience; and

(4) The jurisdiction to grant a stay or dismiss an action is to be exercised with great care or extreme caution. 17 The first of those factors should not be given preponderant weight, as their Honours said at 566. Further, as their Honours said at 559, the courts of this country have an obligation to exercise, when it is regularly invoked, jurisdiction that is conferred upon them. It is for that reason, among others, that the test for declining jurisdiction (and so either to dismiss or to stay) requires that the court be a clearly inappropriate forum for the resolution of the disputes between the parties. 18 Again, staying with the decision of the majority in Voth, their Honours at 564 - 565 referred to the speech of Lord Goff of Chieveley in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 477 and following through to 484. His Lordship there spoke of the need to identify relevant connecting factors between the jurisdiction and the litigation (and for that matter, between the alternative jurisdiction and the litigation) and a consideration of legitimate personal or juridical advantages accruing to one party or the other, as the choice of jurisdiction goes. His Lordship elaborated on that, saying that connecting factors include matters of convenience and expense (such as availability of witnesses) and other matters such as the law governing the relevant transaction and the places where the parties reside, or carry on their business. 19 With that lengthy reminder of the principles that govern the exercise of the discretion, I return to the facts in this case. As I have said, one party has its origin and a place of business in this State, and the other has its origin and a place of business in Singapore. It is, I think, clear that each party carries on business, not only in its home jurisdiction but, more generally, around the globe. It is equally clear that the officers and employees of each party travel around the globe in pursuit of business opportunities. The evidence suggests that negotiations for the contract (and for an earlier contract) took place in Singapore, Australia, Brazil and Argentina. 20 If the proceedings are heard in this Court, there will be some advantage to the plaintiff, which has its place of business in this State and whose relevant officers and employees are, presumably, domiciled (if not in the strict then at least in the popular sense of that word) in this State. One would infer that the plaintiff's relevant records are maintained in this State. 21 Similar factors would go to the advantage of the defendant if the proceedings were heard in the courts of Singapore. 22 Those considerations seem to me to indicate that each party has a legitimate personal advantage in having the proceedings heard in what might be called its "home" court. There has been no suggestion that either this Court, or the Supreme Court of Singapore, would be in any way unable to deal with the dispute, or that there is some special juridical advantage that would accrue, because of the legal system of one place rather than the other, from having the proceedings heard in one court, rather than the other. 23 One needs to look also at the terms of the contract. Clause 30 reads as follows:

30. Governing Law This Agreement is governed by and shall be interpreted in accordance with Singapore law.

The Company submits to the non-exclusive jurisdiction of the Singapore courts.

24 Whilst the choice of Singaporean law as the governing law of the contract might be seen to indicate some preference for litigation in Singapore, that tentative indication of preference is, I think, undone by the fact that, in the very next sentence, the parties agreed that the jurisdiction of the courts of Singapore was non-exclusive. In other words, it seems to me, it is legitimate to infer from cl 30 that the parties in fact accepted the possibility, as a real possibility, that litigation might occur elsewhere. If that were to happen, however, then by application of the first sentence, the court hearing the dispute would be bound to apply Singaporean law. 25 There was no evidence to support the proposition (and the proposition was not put) that there are some peculiar features, or complexities, of Singaporean law which render it markedly different from the laws of, and thus opaque to the courts of, this State. 26 On the contrary, I think the Court is entitled to take account of the fact that Singaporean law is, at heart, a common law system and that since Singapore is a major international trade and financial centre, its laws are likely to be accessible to all. In any event, if there are some peculiar features of Singaporean law on which the parties cannot agree (and there is no evidence that this is likely to be so) there are both well established and newer mechanisms for resolving those disputes. 27 Thus, I do not think that the terms of the contract provide any strong indication in favour of one jurisdiction rather than the other. 28 The evidence suggests that the contract was to be performed in various places. The plaintiff's case is that the defendant was bound to procure orders from enterprises in a large number of countries, including the United States of America, the United Kingdom, India, Turkey, the Benelux countries, China, Spain, and Portugal. 29 It is said that the orders were to be compiled by the defendant in Hong Kong, and then forwarded to the plaintiff in Sydney for execution. On that basis, it seems to me likely that, wherever the dispute is to be heard, there is at least a possibility that witnesses will be required to come from various parts of the globe to the court in which the litigation is tried. Whilst I am prepared to accept that Singapore may be more central, and thus more convenient, that is a long way short from saying that this Court is clearly inappropriate. 30 Mr Harrowell pointed to the possibility that his client might wish to cross-claim against the various entities from whom, on the plaintiff's case, it was required to procure business to be passed on to the plaintiff. That may be so, although I have some difficulty in seeing how it would arise on the way that the plaintiff's case is "pleaded". But even if it is so, there is no reason why that could not happen here. 31 In this context, it is important to note that the breach alleged is that, in breach of implied terms that it would enter into appropriate distribution agreements and would enforce those agreements, the defendant did not obtain sufficient commitments to forward to the plaintiff to enable the plaintiff to earn the expected revenues. On the face of things, that case of breach would be made out by an examination of the defendant's records, which records, of course, would be discoverable. 32 If the defendant has kept proper records, they should enable the plaintiff to see exactly what contracts were entered into, and how it was (if at all) that the defendant intended to perform its alleged contractual obligations. Although I accept that the defendant's records are likely to be kept in Singapore, in these days of electronic discovery, the task of producing and inspecting in this city can hardly be regarded as greatly more burdensome than the task of producing and inspecting in Singapore. 33 When one looks at the likely range of witnesses, the probabilities seem to be that there will be witnesses from New South Wales, and witnesses from Singapore, and perhaps witnesses from elsewhere in the world. In other words, wherever the proceedings are heard, someone is going to have to travel for the purposes of giving evidence. 34 Again, while Singapore might be seen as more central than Sydney, the difference does not strike me as being so manifest that it is clearly vexatious or oppressive to require the defendant to bring its witnesses to this city. 35 According some, although not dispositive, weight to the plaintiff's choice of jurisdiction, and bearing in mind both the warning that courts should be slow to decline to exercise jurisdiction that is conferred upon them and the high standard set by the "clearly inappropriate forum" test, I am not satisfied that this is a case that is appropriate for the exercise of the discretion to stay. 36 I order that the defendant's notice of motion filed on 9 July 2010 be dismissed. 37 I order the defendant to pay the plaintiff's costs of the notice of motion. 38 I stand the proceedings over to the directions list on 10 September 2010.

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