Benson v Rational Entertainment Enterprises Ltd

The statement of claim

1. It will be necessary to refer to the relevant allegations in the plaintiff's statement of claim.
2. The statement of claim contains a number of allegations of fact, that were intended to support claims made by the plaintiff in his claim for relief that were based upon the premise that the defendants held the US$285,000 on trust for the plaintiff. At the hearing, the plaintiff accepted that his trust claim was misconceived. Accordingly, in due course, an order will be made that the claims for relief, and the allegations of fact concerning the trust claim, will be struck out of the statement of claim.
3. Separately, the plaintiff conceded that his trust claim did not fall within any paragraph contained in Schedule 6 of the UCPR, so that he could not, in any event, maintain the trust claim in this Court on the basis of a statement of claim that was served on the defendants outside Australia.
4. The relevant remaining claims for relief in the statement of claim were: 6. In the alternative, damages against the [defendants] for: … b. Breach of the loan. 7. Further and/or in the alternative, an order that the sum of US $285,000 be repaid to [the plaintiff], together with any interest accruing thereon, on the basis of monies had and received by the [defendants].
5. I will refer only to the allegations in the statement of claim that are important to the resolution of the present application.
6. In par 13, the plaintiff alleged that, in and from about 2004, he registered, and commenced to operate from Sydney, an online poker account with Full Tilt Poker. The plaintiff did not make any specific allegation concerning the contract between himself and the relevant Full Tilt Companies, or give particulars of how that contract was made.
7. In pars 15 to 19, the plaintiff pleaded the circumstances in which, as at 29 June 2011, the Full Tilt Companies held US$806,744.17 in the plaintiff's account, which included the sum of US$285,000, which had been paid into the plaintiff's account.
8. The plaintiff's account was in the name of "OzGary". The plaintiff alleged that the US$285,000 had been deposited into that account.
9. The plaintiff pleaded what he described as "the Rational Group Take Over Full Tilt Poker" in pars 20 to 26. The plaintiff used the expression "the Rational Group" to describe the defendants.
10. The plaintiff alleged that, on or about 29 June 2011, the Alderney Gambling Control Commission issued suspension notices against the Full Tilt Companies. That required those companies to immediately suspend operations, and relevantly to cease to allow existing customers to withdraw funds that were held in their online poker accounts. That prevented the plaintiff from withdrawing funds from his account.
11. On or about 31 July 2012 (in fact 27 July 2012), the first and third defendants, among others, entered into what the plaintiff described in the statement of claim as the USA Settlement Deed.
12. As a consequence of that deed, the defendants took control and possession of, and participated in, the operations of Full Tilt Poker, its website, and the online poker accounts of players previously operated and held by the Full Tilt Companies, including the plaintiff's account.
13. On or about 9 October 2012, the fourth defendant, which was not a party to the settlement deed, was granted a licence to operate as Full Tilt Poker by the Isle of Man Gambling Commission.
14. From about 6 November 2012, players having online poker accounts with Full Tilt Poker were generally able to regain access to their online poker accounts.
15. The plaintiff made the following allegation in par 26 of his statement of claim: … As and from 2012 the [defendants, or any one or more of them] received and commenced to hold monies deposited by [the plaintiff] in the OzGary Account: a. As a borrower; and/or b. upon terms previously binding the Full Tilt Companies, inter-alia, that the funds held in the OzGary Account would be available for immediate withdrawal at any time using any of the numerous withdrawal options provided on the FTP Website.
16. The plaintiff did not plead, in any specific way, the basis upon which the defendants, or any of them (as he put it), became bound by the terms that had previously bound the Full Tilt Companies.
17. There was no allegation made by the plaintiff (and no evidence to this effect led by the defendants) that the plaintiff actually engaged in gambling on poker games online while Full Tilt Poker was being operated by the defendants. Accordingly, there was no allegation, or evidence, that could support a finding that, by conduct, the plaintiff had agreed to contract with the defendants on the terms that they issued (as opposed to the terms on which the plaintiff had previously contracted with the Full Tilt Companies).
18. I note that the statement of claim does not address the significance of the fact that the first and third defendants were the only defendants who were party to the settlement agreement, and the fourth defendant was apparently the party that continued to operate Full Tilt Poker. The position of the second defendant is not made clear in the statement of claim. Neither the plaintiff nor the defendants made anything of this in their submissions.
19. In par 27 of his statement of claim, the plaintiff alleged that on or about 15 November 2012, by reason of their control of the OzGary account, the defendants reduced the balance in the account from US$806,744.17 to US$521,744.17, resulting in a shortfall of US$285,000. He alleged that, despite repeated demands, the defendants have refused the plaintiff access to the sum of US$285,000, and refused to make that sum available to him for immediate withdrawal.
20. In par 28, the plaintiff alleged that, by letter dated 2 October 2013, from their lawyers to the plaintiff's solicitors, the defendants, among other things, "refused, in answer to written demands for the return of the US$285,000, to pay or make available to [the plaintiff] for withdrawal, the sum of US$285,000".
21. As a result of that refusal, the plaintiff pleaded claims alternatively in contract and quasi contract against the defendants.
22. There may, with respect, be some imprecision in the statement of claim as it is presently drafted. As I presently understand it, the plaintiff's quasi contract claim is based upon the circumstances in which the defendants came to possess, and have control of, the money in the plaintiff's account by reason of the execution of the settlement agreement. He claims that the settlement agreement had the effect that, in practical terms, the plaintiff's contract with the Full Tilt Companies ended (and probably technically was frustrated, although the plaintiff has not formally pleaded that). The defendants received the money that the Full Tilt Companies had previously held in an account on behalf of the plaintiff, by reason of the forfeiture agreement that they entered into with the United States. The United States then gave that asset to the first and third defendants, among other companies. The settlement agreement imposed upon the PokerStars Companies the obligation to make that money available for immediate cash withdrawal by the plaintiff (as the plaintiff claims that it was an online poker account balance of himself, as a non-US player of the Full Tilt Group). The plaintiff was not a party to the settlement agreement, so he alleges that the relevant defendant holds the US$285,000 for him as money had and received.
23. Alternatively, in some way that the statement of claim does not make clear (in the sense of by the provision of adequate particulars) the events following the settlement agreement had the effect that the contract that the plaintiff originally had with the Full Tilt Companies was novated in favour of the defendants. Accordingly, the plaintiff claimed, the relevant defendant is under a contractual obligation to pay to him the US$285,000.

The Settlement Agreement

1. It appears from the first recital to the settlement agreement that, on 14 April 2011, a complaint was filed in the United States District Court for the Southern District of New York seeking the forfeiture of, among other things, all assets of the PokerStars Companies. As I have noted, two of the defendants, the first and third, were included in the PokerStars Companies.
2. It appears from another recital that, under the terms of another agreement with the United States, the Full Tilt Companies had forfeited assets to the value of US$731,000,000 to the United States, and the effect of the settlement agreement was that this sum was going to be transferred by the United States to the PokerStars Companies, on the basis that a sum of US$547 million would be forfeited by those companies to the United States, and that within 90 days of the Closing Date (as defined) the PokerStars Companies would make the balance of US$184 million available for withdrawal by all non-US players of the Full Tilt Group.
3. The settlement agreement included the following terms: 1. The PokerStars Companies agree to (a) settle the forfeiture and civil money laundering claims alleged in the Amended Complaint and (b) acquire from the United States certain assets forfeited by a separate Stipulation and Order to the United States by the Full Tilt Group (the "Forfeited Full Tilt Assets", set forth in Exhibit B) to be conveyed to the PokerStars Companies or their designees for the aggregate sum of approximately $731 million, as set forth below. The transfer of the Forfeited Full Tilt Assets from the United States to the PokerStars Companies or their designees (the "Asset Transfer") shall take place within six business days of the latter of the Court's entry of this Stipulation and Order and the forfeiture of the Full Tilt Assets (the date of the Asset Transfer, the "Closing Date"), subject to the terms of Paragraph 2. 2. The PokerStars Companies shall forfeit some of $547 million (the "Forfeited PokerStars Property"), to be transferred to the United States Marshals Service as follows [a timetable is then set out]. 5. The PokerStars Companies, within 90 days of the Closing Date, shall make available for immediate cash withdrawal, without any limitation or restriction other than as required by any applicable law, the online poker account balances of all non-US players of the Full Tilt Group, as of June 29, 2011, which are believed to total approximately $184 million… 7. In the event that the PokerStars Companies fail to make any of the payments described in Paragraph 2 or fail to comply with paragraphs 5 or 6, this action may be reinstated against the PokerStars Companies… and all right, title, and interest in the Forfeited Full Tilt Assets shall be returned to the United States.
4. Exhibit A to the settlement agreement listed all of the companies in the Full Tilt Group. The list includes all of the four companies that the plaintiff alleged in his statement of claim constituted the Full Tilt Group.
5. Exhibit B contained a description of the forfeited Full Tilt Assets. Clause 7 of that exhibit stated that those assets included: any and all cash and cash equivalents including all bank accounts held by the Full Tilt Group name…
6. The practical effect of the settlement agreement was, when implemented in conjunction with the prior forfeiture to which the Full Tilt Group had been a party, that the money in all bank accounts previously held by the Full Tilt Group was forfeited to the United States, and then transferred by the United States to the PokerStars companies. For the purposes of an application such as the present, it must be assumed that these facts may support proof by the plaintiff that all of the money that the Full Tilt Companies had previously held for him, including the US$285,000, was transferred by the United States to the defendants.
7. The plaintiff is not privy to the obligation created by clause 5 of the settlement agreement that the PokerStars Companies, within 90 days of the Asset Transfer (see clause 1) shall make available for immediate cash withdrawal… the online poker account balances of all non-US players of the Full Tilt Group.
8. Although the issue may not be entirely clear, it will appear from the correspondence to which reference is made below, that the issue between the parties is whether the US$285,000 falls within the description of "online poker account balances" in clause 5 of the settlement agreement.
9. There is some indication in the correspondence that the defendants take the position that they were not obliged by clause 5 of the settlement agreement to pay the sum of US$285,000 to the plaintiff, because it should properly be characterised in some other way than an online poker account balance.
10. At this stage of the proceedings, however, the defendants have not been required to file a defence, and there is scope for imprecision in the determination of what the issues would be at a hearing, if the proceedings were permitted to go forward in this jurisdiction.
11. In his primary affidavit, the plaintiff gave evidence of the circumstances in which he first became a customer of Full Tilt Poker. He said that he followed links to the Full Tilt Poker website. From the options available he completed a registration form that invited him to become a customer, and to download the software. He confirmed that he wished to install that software. He provided a username and password. He established the "OzGary" account, with an address, phone number and details of his birth. He said that all particulars reflected the fact that they were provided from his office located in 23 Birdwood Street, Sylvania, New South Wales. The telephone and email details were Australian, as was his place of birth. Soon after the time of establishing the account, he electronically produced his New South Wales Driver's Licence and the Council rate notice for his Sydney home.
12. He said that the account was funded through NetTeller, which is an online "e-wallet" facility maintained in US dollars. All of these steps were undertaken from his office situated at 23 Birdwood Street Sylvania.
13. As I have mentioned, the plaintiff's statement of claim did not provide full particulars of his contract with the Full Tilt Companies. In his primary affidavit, the plaintiff annexed a number of printouts, which the parties agreed had been obtained by a process, which all parties used, to ascertain the contents of websites as at specific past dates. The plaintiff annexed to his affidavit printouts, relevantly called "Site Terms" and "Withdrawal". The printout headed "Withdrawal" contained a heading called "Withdrawal options". It stated methods for players to withdraw monies from their accounts. It included the statements: Withdrawal Options At Full Tilt Poker, we believe our players should be able to withdraw funds from their accounts as easily as they can make deposits. To initiate your withdrawal just follow these simple steps: … If you have a preferred processor or withdrawal method associated with your account, you may make an immediate withdrawal by clicking on Select If you do not have any immediately available withdrawal options associated with your account or you wish to withdraw using a different method, please see below … If you funded your player account using a payment processor, you may choose to have your withdrawal credited to that process. If you prefer not to use these options, you may create an account with another payment processor from the options shown below … Payment processors We offer a variety of payment processors to meet your specific needs. Please note that the amount you may be able to withdraw from your player account may vary depending on your balance and the frequency of your transactions.
14. This method of withdrawal of customers' funds from their accounts appears to relate to the use of electronic payment processors, which is a reference to electronic arrangements provided by various service providers, which enable players to transfer money from their bank accounts via the payment processors to the Full Tilt Companies, and vice versa.
15. The evidence showed that the plaintiff used a number of payment processors at various times in connection with his account with the Full Tilt Companies.
16. A method of withdrawal by cheque was also offered if the amount to be withdrawn was between $100 and $2000.
17. I note that the document headed "Withdrawal" contains a statement at the bottom "Other Withdrawal Options". The customer is invited to click on three possibilities, being "Instant eChecks, Visa MasterCard, and Cash Transfer". The evidence does not include the information that would be presented if any of these options was selected. However, it is reasonable to infer that the Full Tilt Companies permitted cash transfers. That inference is made the easier by the statement at the beginning of the document that "we believe our players should be able to withdraw funds from their accounts as easily as they can make deposits".
18. The plaintiff's primary affidavit contained evidence of a number of deposits made directly into his Commonwealth Bank of Australia foreign currency account, by senders called Envoy Services Ltd, Pocket Kings Ltd and Access Priority Ltd, which, in some unexplained way, transferred funds from the OzGary account, I infer in response to withdrawal applications by the plaintiff. The deposits occurred between 20 May 2010 and 8 June 2011, shortly before the date of the settlement agreement.
19. The address of the Bank given on the advices of a direct deposit issued to the plaintiff by the Bank is Premium Business Services GPO Box 2719 Sydney NSW 2001 Australia. I therefore infer that the relevant branch of the Bank was situated in this State.
20. The plaintiff's evidence also included a number of emails to the plaintiff on 24 June 2011, from a person who had the email address "wiretransfer@fulltiltpoker.com", in which the sender explained the steps that, I infer the Full Tilt Companies were taking to respond to a request by the plaintiff to transfer $375,000 to the plaintiff's bank account.
21. I find that the terms of the contract between the plaintiff and the Full Tilt Companies provided for a wide range of withdrawal options, which included an entitlement on the part of the plaintiff to require the Full Tilt Companies to pay the amount requested to be withdrawn by electronic transfer into the plaintiff's bank account in this State.
22. For completeness, I should note that the defendants' standard terms and conditions (printed out on 16 June 2015) contained a reference in clause 6 to "Deposits and withdrawal policy". Customers were required to click on the indicated part of the web page to open this policy. Whatever the policy said, it has not been included in the evidence.
23. This evidence was relevant to an argument put by the defendants, that the relevant contract did not oblige or contemplate that, if the plaintiff was entitled to withdraw money from his account, the amount withdrawn would be paid to him in New South Wales.
24. The defendants' solicitor swore an affidavit in which he explained that he had found the terms and conditions of contracts entered into by the Full Tilt Company, as at 8 March 2011 and 9 June 2011 by implementing the same search process as had the plaintiff. He annexed these terms and conditions to his affidavit.
25. Each of the two terms and conditions contained the following clause: 16 GOVERNING LAW AND JURISDICTION 16.1. These terms of use shall be governed by, interpreted, and otherwise construed pursuant to and in accordance with Alderney law without giving effect to conflicts of laws principles. 16.2. Any disputes arising in connection with these terms of use may be referred to the AGCC in accordance with the relevant provisions of the Alderney Gambling Regulations 2006 but in respect of any disputes which are not or cannot be resolved by the AGCC: and in respect of any other disputes or matters arising out of or concerning these terms of use or their enforceability you irrevocably submit for our benefit to the exclusive jurisdiction of the Courts of Alderney 16.3. Contact details for the AGCCC are as follows: [address given].
26. The plaintiff said in his evidence in reply that "no such terms and conditions were brought to my notice when I established the OzGary account with Full Tilt Poker".
27. I am satisfied that, for the purposes of this application, the evidence establishes that both the printouts annexed to the plaintiff's primary affidavits, and the two printouts annexed to the defendants' solicitor's affidavit, were available on the Full Tilt Companies' website. In a manner that is common with websites, the contents of this site are set out in a manner that enables a person, who has accessed the site, to click on particular documents in order to open them. It appears that, when the plaintiff obtained the printouts that he annexed to his affidavit, he was selective in the documents that he opened. He did not select and open, and print out, the "Terms & Conditions". The defendants' solicitor did.
28. I am therefore satisfied that the contract between the plaintiff and the Full Tilt Companies included the clauses in the terms and conditions, including clause 16.
29. There is a question in these proceedings as to whether, after PokerStars "acquired" the Full Tilt Companies' business, as a result of the implementation of the settlement agreement, the contract between the plaintiff and the defendants continued to be governed by the terms of the original contract with the Full Tilt Companies, or whether those terms were replaced with the defendants' own terms.
30. The evidence shows that the defendants' standard terms, as at 16 June 2015, contained a clause 14, that made the law of the Isle of Man the governing law of the contract, and gave the courts of the Isle of Man exclusive jurisdiction over any claim made against the defendants. The Full Tilt Companies' standard terms stipulated that the law of Alderney was the proper law, and the courts of that place were given exclusive jurisdiction. This difference may be relevant to the determination of the question of whether New South Wales is an inappropriate forum for the trial of the proceedings, for the purposes of UCPR r 11.7(2)(b).
31. As will be seen below, in correspondence between the solicitor for the plaintiff and the Israeli lawyers for the defendants, those lawyers asserted that the Full Tilt Companies' "associated assets were transferred to the" defendants. That would suggest that, in so far as contracts with customers were assets, what was transferred was the contract between the plaintiff and the Full Tilt Companies, on the standard terms issued by those companies.
32. The plaintiff tendered evidence of an investigation undertaken by his solicitor concerning the web address at the foot of the defendants' standard terms printed out on 16 June 2015. The result of the search was that the solicitor could not find any terms and conditions that had been posted on that website prior to 11 April 2014. The plaintiff accordingly submitted that there were no standard terms issued by the defendants prior to that date. The defendants responded by submitting that this apparent result may be a consequence of confusion, and it is possible that earlier standard terms and conditions had been published at some other web address, which nonetheless related to the contract between the defendants and their customers. I regard this response to be mere speculation given the state of the evidence.
33. The defendants did not tender any evidence to establish that the plaintiff had utilised his contract with the defendants (for example, by playing games of poker) in a manner that would support a submission that he had elected to continue his contract, but on the standard terms and conditions issued by the defendants.
34. Furthermore, given the exceptional circumstances in which the Full Tilt Companies' contracts were transferred to the defendants, I would not accept that the defendants could change the terms and conditions simply by establishing on their website a means for customers to click upon an icon and open the terms and conditions, without the defendants taking some additional step to positively warn their customers that the terms and conditions had changed.
35. I am not satisfied, on the evidence available at this stage of the proceedings, that the defendants' standard terms and conditions became part of the contract between the plaintiff and the defendants.
36. The attempts that plaintiff made to recover the US$285,000 from the defendants led to his receiving an email from a person identified only as Israel, who apparently formed part of "Full Tilt Operations", which was part of "Full Tilt Poker-Support", dated 14 November 2012, which stated as follows: Hi Gary, In the last two weeks we have carried out an investigation on your Full Tilt Poker account (known as OzGary). The cause of this investigation was the need to identify the source of funds on your OzGary account. During the course of our investigation and after reviewing all 2011 transactions, we have identified a transaction in the value of $285,000 from account PokerNews 1 to your OzGary account, dated June 22 2011. As you may be aware, as part of the settlement reached with the US Department of Justice Southern District of New York, the Rational Group obtained certain assets of Full Tilt Poker. Under this settlement agreement the Rational Group did not assume any liabilities of the previous Full Tilt Poker companies and therefore previous contractual agreements that Full Tilt Poker may have had with affiliates were excluded. As such, the Rational Group is not liable and will not pay for affiliated earnings. Due to the fact that the transferred funds from the account Poker News1 to your OzGary account were clearly identified as affiliate earning, we have deducted these funds from your OzGary account, and we can now confirm that your account is in good standing. I would like to thank you for your patience and understanding during this process. Regards, Israel
37. Neither this email, nor any other aspect of the evidence, explains what an "affiliate" is, or what any "affiliate earnings" are, or why categorising the US$285,000 in this manner exempts the defendants from the need to pay the amount to the plaintiff. There is also no information or evidence that justifies the assertion that the US$285,000 falls within the category alleged.
38. On 1 August 2013, the plaintiff's solicitor wrote a letter addressed to "Operations Manager Rational Group Douglas Bay Complex" at an address in the Isle of Man. The business name "Rational Group Douglas Bay Complex" was not identified in the evidence, but I infer that it was a business associated with the defendants, because of the inclusion of the words "Rational Group" in its name.
39. The plaintiff's solicitor's letter is a response to the 14 November 2012 email. It contained the statement: Our client has always maintained that the transfer of the sum of $285,000 was a player to player transfer, not affiliate earnings. Accordingly, our client has and continues to demand the return of the sum of $285,000.
40. I find that this letter had the effect, for the purposes of the present proceedings, of a demand that the defendants repay the US$285,000 to the plaintiff, and, as it was written by his solicitors in this State, it was by implication a demand that the payment be made in this State.
41. The solicitor asked Full Tilt Poker to review its decision, and set out at some length the plaintiff's version of the facts concerning the sum of US$285,000. I will not set out the detail of the submissions made by the plaintiff's solicitor. That is largely because I do not adequately understand the submission, and it was not explained in the evidence. It suggests that players held what was called "a real money account", which was also known as the player's "online poker account". The real money account was maintained in US dollars. Funds in this account were available for immediate withdrawal at any, time using any of the many withdrawal options provided by Full Tilt Poker; it could be played with on the real money poker tables; and it could be transferred to another player or players via a player-to-player transfer. There were also apparently accounts known as "affiliate accounts" where "affiliate earnings were credited by [Full Tilt Poker] and accumulated by the affiliate". The solicitor asserted that there was a mechanism whereby an affiliate could request to have affiliate earnings paid to them, in which case the amount in the affiliate account could be transferred to the real money on-line poker account.
42. It will be sufficient to note (as my present understanding of the submissions made by the plaintiff's solicitor in their letter does not enable me to go further) that the essential claim of the plaintiff is that the US$285,000 was paid into the OzGary account (being a real money account) from another player via a player-to-player transfer, and did not come from an affiliate account.
43. It appears from this letter (although the evidence does not disclose in detail) that the plaintiff tried to satisfy his claim against the relevant defendant by involving the Isle of Man Gambling Supervision Commission. It appears that the Commission may initially have formed the view that the defendants' position was correct, but the solicitor asserted that the Commission had moderated its view, and suggested that the plaintiff ask Full Tilt Poker to review the position. That was the purpose of the letter. The letter concluded: In the event that FTP refuses to review the decision, we would ask that FTP agree to disclose to our client, via the Commission, the evidence and submissions (if any) that FTP has put before the Commission, so that our client can address the facts and circumstances that may be relied upon if the Commission is called upon to determine the matter.
44. The plaintiff's solicitor's letter generated a response from Hertzog Fox & Niemen, which from its letterhead is an extremely large firm of lawyers who practice in Tel Aviv, Israel. After referring to the plaintiff's solicitor's 1 August 2013 letter, the letter states: "Our client, the Rational Group, has instructed us to respond to your letter". The letter refers to the demand made by the solicitor that the defendants should pay him a total amount of US$285,000.
45. The letter states that the Full Tilt brand and associated assets were transferred to the Rational Group following an agreement between their client and the US Department of Justice, under the settlement agreement.
46. The lawyers asserted that the plaintiff's claim was groundless for a number of reasons: being in summary, first; that the plaintiff was not a party to the settlement agreement; secondly, that the settlement agreement explicitly provided that the Rational Group "shall not assume any liability of the Full Tilt Group… other than those explicitly provided"; and thirdly, that section 5 of the settlement agreement only required their client to "make available for immediate withdrawal… the online poker account balances of all non-US players of the Full Tilt Group as of June 29, 2011…"
47. The following explanation was given for the clients' position: After conducting a thorough investigation, our client concluded that an amount of at least $285,000 out of the balance of the OzGary Account as of June 29, 2011, was as a result of affiliate earnings which were transferred to the OzGary Account by another account named "PokerNews1" several days before that date. The fact that these funds were transferred between the two accounts does not change their nature such that the money in the accounts becomes player's balances. In fact, the evidence of the activity on this account shows that it was solely used for your client's business and is not for playing poker. Therefore your client is a creditor of the group of companies that formerly operated the Full Tilt business and not a "player" for the purposes of the repayment obligations set out in section 5 of the Settlement Agreement.
48. The lawyers asserted that their clients were not required to pay the debt claimed by the plaintiff.
49. On 4 March 2014, the Isle of Man Gambling Supervision Commission advised the plaintiff's solicitor by email that it regarded the dispute between the parties to the present proceedings as being outside its role as the gambling regulator, because of the "jurisdictional and technical complexity" of the issue.

Does the plaintiff's claim come within Schedule 6?

1. It is now necessary to determine whether the plaintiff has established that his claims against the defendants fall within one of the heads of extraterritorial jurisdiction in Schedule 6.
2. The plaintiff relies upon pars (b) and (c), which provide: (b) if the proceedings are founded on a breach in New South Wales of a contract (wherever made), whether or not the breach is preceded or accompanied by a breach (wherever occurring) that renders impossible the performance of any part of the contract which ought to be performed in New South Wales, (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,
3. In each case it is necessary for the plaintiff to establish to the requisite degree of satisfaction of the Court that the proceedings are founded on a breach of contract in this State, or the subject-matter of the proceedings is a contract in respect of which a breach was committed in this State.
4. As par (b) makes clear, if a breach of the contract occurs in this State, it is immaterial whether or not the breach was preceded or accompanied by a breach of the same contract in any other jurisdiction.
5. These paragraphs apply to quasi-contractual obligations as much as they do to contracts: Schweitzer v Kronen Verwaltungs GmbH [1998] VSC 190: and see Nygh's Conflict of Laws in Australia (9 Ed) at [3.7].
6. The plaintiff accepted that he has the burden of proving that one of the paragraphs in Schedule 6 is satisfied: see Kim Michael Productions Pty Ltd v Tropical Islands Management Ltd [2010] NSWSC 269 at [27].
7. I accept the following statement of principle concerning the identification of the place of breach, where the breach consists of non-feasance, in Nygh at [3.70] (citations omitted): Where the breach consists of non-feasance, the place of the breach is the place where the obligation in question is due to be performed. This is a matter for interpretation depending on the express or implied intention of the parties, the customs of the trade or the particular type of contract involved. Where the breach is non-payment of a debt, the place of performance is the place where the payment is to be made. If no such place is prescribed, the court must construe the contract, taking into account as one of the relevant factors the residence or place of business of the creditor. But the rule that the debtor must seek out the creditor is not automatically applied, especially where the creditor has more than one place of business…
8. As I understand it, the parties in essence accepted this principle. The plaintiff relied in particular on the decision of Ipp J (as his Honour then was) in Coates v Charles Porter & Sons Pty Ltd (1990) 2 ACSR 733 at 735. The defendants relied primarily on Kim Michael Productions v Tropical Islands Management Ltd at [29]. The plaintiff placed more emphasis on the importance of the debtor seeking out the creditor in the creditor's place of residence than did the defendants.
9. In principle, the issue of where a breach of contract by omission occurs must depend upon where the contract required the act of performance to occur, and that must depend upon the proper construction of the contract. If the contract does not expressly identify the place of performance, where the obligation is to pay money to a creditor, the traditional view that the debtor must pay the creditor in the creditor's place of residence will carry significant weight. However, the issue remains one of construction, and the proposition that the creditor is entitled to be paid in the creditor's place of residence must give way if all of the circumstances relevant to the proper construction of the contract point to a different conclusion.
10. Schweitzer v Kronen Verwaltungs GmbH at [39]-[43] is authority for the proposition that the failure to perform a quasi-contractual obligation requiring the payment of money occurs, when the payment is not made, at the place of residence or business of the person to whom the debt is due. See also Coates v Charles Porter & Sons Pty Ltd at 735.
11. In cases where the obligation that the plaintiff seeks to enforce is quasi-contractual, there will not, of cause, be a contract that will provide for a particular place for performance. It is likely that, by default, there will need to be a rule that determines where a quasi-contractual obligation is required to be performed.
12. It is necessary to address the question of the degree of satisfaction that the Court must form that the plaintiff has established the grounds in Schedule 6 upon which he relies, before the Court will reject the defendants' application under UCPR rules 11.7 and 12.11. That question arises because the issue of whether the Court can, and should, exercise jurisdiction in this matter must be decided on the basis of the allegations in the statement of claim, and the preliminary and incomplete evidence that is available to the parties at this stage of the proceedings.
13. In Ritchie's Uniform Civil Procedure NSW at [11.7.5] the following answer is given to this question: The threshold issue of authority for foreign service of the originating process raises a similar question to one of the issues that arises in an application for leave to proceed under UCPR 11.4. That question is degree of satisfaction required that the proceedings fall within one or other of the categories of authorised service. As noted in [11.4.10], the Plaintiff does not have to establish a "prima facie" or "good arguable" case. It is sufficient for a plaintiff to satisfy the court that there is a real issue to be determined (that assessment being made on essentially the same basis as a defendant's application for summary judgment): see Agar v Hyde (2000) 201 CLR 552…
14. Earlier, at [11.4.10] the learned editors say the following, in relation to the case where the plaintiff is required to seek the Court's leave to proceed under UCPR r 11.4: On an application for leave under the present rule, and particularly on an application by the foreign defendant under r 11.7 - when there may be evidence disputing the primary facts relied upon by the plaintiff - difficult questions can arise about the extent to which the court must be satisfied the case falls within the provisions of Sch 6… Under the former Rules, and notwithstanding that they differed in some respects from the provisions in the English Rules, it was accepted that the court had to be satisfied there was a good arguable case that the qualifying conditions of Sch 6 had been complied with [authorities set out]. A similar position had been applied under the present rules, even though there is no express requirement, either in r 11.4 or 11.7, that the court be "satisfied" that the qualifying conditions have been made out. The appropriate standard of satisfaction was that of the "good arguable case": Hyde v Agar (1998) 45 NSWLR 487 at 503-6; Bank of America v Bank of New York (1995) ATPR 41-390, and under that criterion, the strength of the evidence required to show that there is sufficient "arguable" or "prima facie" compliance with the qualifying conditions was important:… However, in Agar v Hyde (2000) 201 CLR 552… [51], [56]-[61], a majority of the High Court said that the degree of satisfaction required was the same as that required to survive an ordinary application for summary judgment. The majority held that Bank of America v Bank of New York… should be overruled to the extent that it required any greater satisfaction about the strength of the plaintiff's claim.
15. Ritchie's thus states that before the decision of the High Court in Agar v Hyde, the plaintiff on an application such as that which is now before the Court was required to establish that there was a "good arguable case" that the relevant ground in Schedule 6 had been established, but following the decision of the plurality in that case, it is now only necessary for the plaintiff to establish that his or her claim that the ground has been made out would survive an application for summary judgment by the defendant, if that were the issue on an application for summary judgment.
16. If that is a correct reading of the position adopted by the learned authors, then I must respectfully disagree. In my opinion, the High Court has not relevantly changed the law as stated by the New South Wales Court of Appeal in Hyde v Agar, and I am bound to apply that decision.
17. It is necessary to distinguish between an application made by a defendant under UCPR rules 11.7(2)(a) and 12.11 for an order setting aside an originating process (or other order available under rule 12.11) on the ground that the service of the originating process was not authorised by the rules, and an order setting aside an originating process on the ground that the plaintiff's claim has insufficient prospects of success to warrant the Court allowing the claim to proceed to hearing.
18. In Agar v Hyde, the plurality (Gaudron, McHugh, Gummow and Hayne JJ) said (citations omitted): [50] In deciding whether Pt 10 r 1A applied, and thus permitted service outside Australia of the originating process in these two actions, attention must be directed to the way in which the claims made by the respondents are framed. The paragraphs speak of "proceedings [which] are founded on" a specified matter such as a cause of action arising in the State or a tort committed in the State. That focuses attention upon the nature of the claim which is made. That is, is the claim a claim in which the plaintiff alleges that he has a cause of action which, according to those allegations, is a cause of action arising in the State? [51] The inquiry just described neither requires nor permits an assessment of the strength (in the sense of the likelihood of success) of the plaintiff's claim. The Court of Appeal was wrong to make such an assessment in deciding whether the rules permitted service out. In so far as the contrary was held in Bank of America v Bank of New York it should be overruled. The application of these paragraphs of r 1A depends on the nature of the allegations which the plaintiff makes, not on whether those allegations will be made good at trial. Once a claim is seen to be of the requisite kind, the proceeding falls within the relevant paragraph or paragraphs of Pt 10 r 1A, service outside Australia is permitted, and prima facie the plaintiff should have leave to proceed.
19. The plurality thus held that the strength of the plaintiff's case for the relief claimed is not a factor that is relevant to the question whether the relevant paragraph in Schedule 6 has been established. Their Honours continued: [52] Often enough, the statement of claim will reveal all that it is necessary to know to assess whether a plaintiff's claim is of the requisite kind. But that may not always be so. For example, the place of making of a contract, or the place of breach of a contract, may not appear from the pleading and some evidence may be required to establish that a relevant paragraph of Pt 10 r 1A27 is engaged. And where, as here, a plaintiff relies on Pt 10 r 1A(1)(i), which provides for service outside the State on a person who is properly joined as a party to proceedings "properly brought against a person served or to be served in the State", other considerations may arise in deciding both whether the joinder is proper and whether the action is "properly brought". Those questions may, however, be left to one side in the present cases because (subject to one consideration to which it will be necessary to return) it is clear that each of the proceedings is "wholly or partly … founded on, or [is] for the recovery of damages in respect of, damage suffered in the State caused by a tortious act or omission wherever occurring".28 The claim in each of the present matters is framed in negligence and alleges that tortious acts or omissions caused the damage which the respondent suffered when injured in New South Wales.
20. Significantly, their Honours held that, on the facts of the case before them, it was "clear" that at least one of the heads of extraterritorial jurisdiction was satisfied. The plurality then considered the relationship between applications for leave to proceed required to be made by the plaintiff, and applications to set aside the originating process made by the defendant: [53] In some cases, an application for leave to proceed will not be opposed. It is an application which may be made without serving notice of the motion on the defendant. Where the application is made without notice to a defendant, there will be no occasion to consider any question about the strength of the plaintiff's claim. If, however, as was the case in each of these matters, the application for leave to proceed is opposed, and is joined with an application by parties served outside Australia to set aside service or to have the court decline to exercise its jurisdiction, other considerations arise. It is necessary, in such a case, to recall that there are different issues raised on the hearing of an application for leave to proceed from those that arise on the hearing of applications to set aside service or to decline to exercise jurisdiction. [54] Central to the inquiry on an application for leave to proceed is whether the originating process makes claims of a kind which one or more of the paragraphs in Pt 10 r 1A mention. If the originating process makes such a claim, r 1A provides that the process may be served outside Australia and, on proof of service of the process, the court's jurisdiction is, prima facie, properly invoked over the party who has been served. In the absence of some countervailing consideration, leave to proceed should then be given. [55] On an application to set aside service, or to have the court decline to exercise jurisdiction, attention might be directed to any of a number of features of the proceeding, the claims made in it, or the parties to it, in aid of the proposition that the court should not exercise jurisdiction. Part 10 r 6A is cast in general terms and it would be wrong to attempt some exhaustive description of the grounds upon which the rule might be invoked. Nevertheless, it may be expected that three common bases for doing so are first, that the claims made are not claims of a kind which are described in Pt 10 r 1A, secondly, that the court is an inappropriate forum for the trial of the proceeding and thirdly, that the claims made have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claims. Whether the rules prescribe a different test for determining questions of inappropriate forum from that developed at common law is a question which we need not stay to consider. In these cases, it is necessary to deal only with the last of the bases we have mentioned. It was on this that the appellants chiefly relied.
21. The first of the three common bases identified by their Honours equates to the enquiry raised by UCPR rule 11.7(2)(a); and the second to that raised by rule 11.7(2)(b). The third concerns the question whether one of the orders permitted by rule 12.11(1) should be made because the plaintiff's claim has insufficient prospects of success. As their Honours made clear in the last sentence of the extract set out immediately above, they were only concerned with this third basis. As noted above, they had already decided that the first basis was clearly satisfied, and it was unnecessary to consider the second basis. The following part of their Honours' reasons was not concerned with the strength of the case required to satisfy the Court as to the first basis: [56] If service was authorised by the rules, and has been properly effected, the court's authority to determine the issues that are raised by the proceeding has been regularly invoked. If the court is not persuaded that it is an inappropriate forum for trial of the proceedings, it will have reached that conclusion having given due weight to the considerations of comity and restraint which we mentioned earlier. Only then do the prospects of success of a claim made in originating process served outside Australia fall for consideration. [57] It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court's jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. … [60] For these reasons, the same test should be applied in deciding whether originating process served outside Australia makes claims which have such poor prospects of success that the proceeding should not go to trial as is applied in an application for summary judgment by a defendant served locally.
22. The conclusion of their Honours at [60] does not relate to the degree of satisfaction that is required before the Court will accept that one of the grounds in Schedule 6 has been established.
23. That is consistent with the following observation by Gleeson CJ: [8] The outcome of the appeals does not turn upon competing views as to the meaning and operation of Pt 10 of the Supreme Court Rules 1970 (NSW). I see no error in the approach to the relevant rules taken by the Court of Appeal in the present case. The Court of Appeal stressed that, when considering, on an application for leave to proceed under Pt 10 r 2, whether there is a good arguable case, the test is to be related to the jurisdictional nexus required by Pt 10 r 1A, not the merits of the claim for relief. It held that, in the present case, the test was clearly satisfied. On the discretionary aspects of Pt 10 r 2, Pt 10 r 6A and Pt 11 r 8, the Court of Appeal attached no practical significance, adverse to the respondents, to assertions that the jurisdiction invoked was exorbitant, and that restraint was appropriate.
24. The Chief Justice therefore accepted that the Court of Appeal had made no error in the test it applied to determine whether the relevant grounds in the equivalent of Schedule 6 had been established.
25. Callinan J considered the issue at [106] to [109]: [106] The language of the rules is not without ambiguity. Take Pt 10 r 1A(1)(a) and (d). Does the word "founded" mean having a real foundation on a cause of action (tort) arising in the State? How firm a foundation is required? Does the expression "cause" mean an actual cause of action, that is to say, facts stated which if proved would definitely, necessarily, or only, arguably establish a right to relief? The rules do not use the words "prima facie" or "arguable" but it could hardly have been intended that a plaintiff at this early stage should be obliged to prove a case. Nor do the rules use the language of any of the formulations discussed by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) in which his Honour settled upon a test of "manifestly groundless", for a strike-out application to succeed. [107] Contender 1 Ltd v LEP International Pty Ltd throws light on the issues here. There the court was asked to give meaning to the New South Wales Rule in Pt 10 r 1(1)(a) and (b) which was then in force and which stated conditions as follows: (a) where the proceedings are founded on a cause of action arising in the State; (b) where the proceedings are founded on a breach in the State of a contract wherever made, whether or not the breach is preceded or accompanied by a breach wherever occurring that renders impossible the performance of any part of the contract which ought to be performed in the State. [108] The appellant in that case did not challenge the application of the test adopted by Clarke J, at first instance, who had referred to a statement of Lord Radcliffe in Vitkovice Horni a Hutni Tezirstvo v Korner that, "on consideration of all admissible material there remains a strong argument for the opinion that the qualifying conditions are indeed satisfied". Wilson, Dawson, Toohey and Gaudron JJ on appeal did not disapprove that test and Brennan J (as he then was) said this in apparent approval of it: The Court was required to determine at the outset whether the case falls within Pt 10 r 1: if the case does not fall within that rule there is no jurisdiction to conduct a trial. In Vitkovice Horni a Hutni Tezirstvo v Korner, Lord Radcliffe propounded the test for determining whether statutory conditions for service out of the jurisdiction are satisfied: on consideration of all admissible material, is there a strong argument for the opinion that the qualifying conditions are satisfied? The parties in this case agree that that is the appropriate test. It is, of course, a test appropriate to the resolution of the question of jurisdiction at the very beginning of the case, not after the trial. At that stage, as his Lordship noted:"… the existence of the conditions that govern the authority cannot be ascertained with the same finality as would be appropriate at a trial, in which evidence and argument could be exhaustively deployed." In this case, if the Court's jurisdiction depended on issues of law alone, the trial would not place the Court of Appeal in any better position to deal with the relevant legal principles. And, to the extent that jurisdiction depended on issues of fact, the appropriate test was the test stated by Lord Radcliffe. It was erroneous in principle for the Court of Appeal to decide to wait for finality in the ascertainment of the facts at trial before deciding an application which called for determination before the jurisdiction of the Court over a foreign defendant is asserted. [109] The rules to be construed here are capable of being construed broadly or narrowly. There is no authority that would compel the court to go to either of these extremes. I would therefore adopt and apply the test of "strong argument for the opinion", propounded by Lord Radcliffe in Vitkovice, keeping in mind his Lordship's caution that the existence of the relevant conditions cannot be ascertained with the same finality as on a trial after the exhaustive deployment of evidence and argument.
26. It therefore appears that Gleeson CJ accepted the approach adopted by the Court of Appeal. The plurality did not deal with the necessary degree of satisfaction concerning what they described as the first basis. Callinan J adopted the "strong argument for the opinion" test.
27. As the plurality disapproved Bank of America v Bank of New York [1994] NSWCA 17; [1995] ATPR 41-390, it will be appropriate to make the following observations about that decision, which concerned an application for leave to appeal from a decision by Rolfe J. One of the respondents had been served with an originating process issued by the Supreme Court of New South Wales out of the jurisdiction, and the other had been served within the jurisdiction. The claimants sought leave to proceed against the first respondent under Supreme Court Rules Pt 10 rule 2, and the first respondent sought an order that the proceedings against it be stayed, because there was no nexus between the proceedings and this State, as required by rule 1A. The second respondent claimed that the proceedings against it should be stayed on forum non conveniens grounds, even though it had been served with process within the State.
28. Meagher JA (with whom Powell JA agreed) summarised the grounds upon which Rolfe J found in favour of the respondents, and stayed the proceedings, as follows: The claimants' motion was unsuccessful and the opponents' motion was successful. On all points I think Rolfe J was correct. The reason why his Honour held that neither of the claimants could pursue the Bank of New York, a foreign resident, in New South Wales was the absence of any necessary jurisdictional nexus within the meaning of Pt10 R1A and because there was no prima facie case demonstrated against that company. The reason why his Honour held that they could not pursue the Bank of New York Australia Ltd was that New South Wales was an inconvenient forum.
29. Rolfe J decided both that the claimants had not established the necessary nexus between the proceedings and the State, and that there was no prima facie case demonstrated by the claimants against the first respondents on the merits. Meagher JA agreed with Rolfe J on all points, which included his Honour's reliance upon the fact that the claimants had not established a prima facie case. Kirby P noted that, before the primary judge, the claimants "repeatedly asserted that they could establish "a prima facie case" and "a prima facie entitlement to relief"".
30. Meagher JA recorded that the claimants had argued that, because of the change to the relevant provisions of the Supreme Court Rules that had recently occurred, it was not necessary for the claimants to establish a prima facie case that one of the grounds for the exercise of extraterritorial jurisdiction in rule 1A had been established. His Honour said on that subject: Once it is perceived that R1A is still the governing rule, the barrier over which all actions against foreign residents must pass, unless the defendants wish to submit to the jurisdiction, the question which arises is whether the plaintiff, in a R2 application, must prove that he falls within one of the categories specified in R1A on a prima facie basis, or whether he must prove the existence of a merely arguable case, or whether he should prove something else. In my opinion it is unnecessary to decide this question as the claimants could not demonstrate the existence of a relevant cause of action on any conceivable basis. As far as their case in contract is concerned, I have already alluded to the fatal weaknesses in it. They are so fatal, in my view, that they preclude the claimants demonstrating a case on the only contracts on which they sued, no matter what test was applied.
31. Meagher JA therefore started by raising the question of the degree of satisfaction that the Court must form as to whether one of the grounds for the exercise of extraterritorial jurisdiction has been satisfied, and, with respect, he then found that it was unnecessary to answer that question because the claimants could not demonstrate the existence of a relevant cause of action on any conceivable basis.
32. Noting that the Court of Appeal was dealing with an application for leave to appeal, it appears from the reasons for judgment the Court may have accepted that the strength of the plaintiff's claim for final relief was relevant to the question of whether the equivalent of UCPR rule 11.7 applied.
33. The High Court in Agar v Hyde reversed the decision of the Court of Appeal; it did not decide that the reasoning of the Court of Appeal, concerning the level of satisfaction required to prove that one of the grounds equivalent to those in Schedule 6 had been satisfied, should not be upheld. In the joint judgment, the Court of Appeal said at 503-506: The first issue to decide is whether this Court should adopt the "good arguable case" test. We conclude that it should, provided it is understood that the test is to be applied to establishing the jurisdictional nexus. It is difficult to see any difference between a "prima facie" test and an "arguable case" test. (See Underwriting Insurance (Aust) Pty Ltd v Barden, Supreme Court of New South Wales, Rolfe J, unreported 19 October 1994.) The difference, if any, arises by the introduction of a qualifying adjective before "arguable" namely, either "good" or "strong". Should any such adjective be introduced for purposes of the Rules of this Court?
34. The Court of Appeal thus stated that the "good arguable case" test applied to the issue of whether the relevant grounds in, what is now, Schedule 6 have been established. Their Honours continued: R1A(1), like its analogues, contains a series of objectively stated pre-conditions: "contract", "tort", "cause of action", "damage", "domicile", "breach" etc. A mere allegation is not enough. However, the courts have always been conscious that they should not embark at this stage upon a trial of substantive causes of action, such as whether there was a "tort" or a "breach of contract". The context in which the nexus issue has to be determined is the assumption of jurisdiction by the court. Plainly, the court will not assume jurisdiction where it appears that the applicant has no arguable case. Does the applicant have to show more? In our opinion he or she may have to do so, but the strength to which the "arguable case" must be a "good" one will vary with the applicable provision or provisions of r1A and the circumstances. Until 1988 Pt10 of the New South Wales Supreme Court Rules set out in r1 criteria required to be met in order to permit service outside New South Wales (the equivalent of r1A). The system was then, as it was and remains in England, that prior leave of the Court was necessary before service outside New South Wales could occur. However, such service could only occur: "(2) Where the Court is satisfied on the following matters - (a) That the proceedings are proceedings to which r1 applies; and (b) That the Applicant has a prima facie case for the relief which he seeks." In the Bank of America case, this Court rejected the proposition that the change to the Rules in 1988 had effected a significant transformation in the approach to be adopted with respect to these matters. As noted above, the Court rejected the proposition that the discretion under Pt10 r2 was enlivened even when the case did not fall within one of the particular subrules of Pt10 r1A. In Bank of America the Court was concerned with the subject of Pt10 r2(a) of the old Rules ie, the link to the pre-conditions. That case was not concerned with Pt10 r2(b) of the old rules which required "a prima facie case for the relief" sought. This latter provision has no equivalent in the new rules. The general issue of strength of the case is a relevant consideration for the exercise of the separate discretion under Pt10 r2. But no particular test of proof is there stipulated.
35. The Court of Appeal drew attention to the fact that under the "old" rules, there was an express requirement that the applicant for leave to proceed demonstrate that he or she had a prima facie case for the substantive relief sought in the proceedings. Their Honours continued: Before us, the respondents propounded a higher test of a "strong arguable case". It finds its origin in the speech of Lord Radcliffe in Vitkovice (at 883): "... A case does not sufficiently appear to be a proper case for the purposes of this Order unless on consideration of all admissible material there remains a strong argument for the opinion that the qualifying conditions are indeed satisfied." His Lordship thought that a "prima facie case" maybe too low a test and said he preferred "a strong case for argument" (at 884). This has not prevailed as a test in England, and there is no reason to adopt it here. However, what is significant in his Lordship's reasoning is that the test is to be applied to the satisfaction of "the qualifying conditions", not to the merits of the case. … In Seaconsar, in the course of his analysis of the case law, Lord Goff of Chieveley (at 454) explained Vitkovice in terms that indicated that the relevant test of "good arguable case" had to be applied to each of the relevant aspects of the pre-conditions of the English Rule there relied on, namely, "all three elements of contract, breach and place of breach" (454B). His Lordship went on to indicate that it was wrong to apply any such test of "good arguable case" to the merits of the Plaintiff's case as a whole (454D). Whilst his Lordship acknowledged that questions of strength of the case were relevant to the exercise of the final discretion, he concluded (at 456): "But if jurisdiction is established under r 1(1), and it is also established that England is the forum conveniens, I can see no good reason why any particular degree of cogency should be required in relation to the merits of the plaintiff's case." His Lordship further concluded (457B) that the English Court of Appeal had erred in considering it necessary to establish a "good arguable case on the merits" of the existence of contract made within the jurisdiction under the English counterpart of Pt 10 r 1A(1)(c)(i). He held that: "... it was enough for Seaconsar to establish ... that there was ... a serious issue to be tried." A similar approach is appropriate for the Rules of this Court.
36. In the first of the extracts set out above, it appears that the Court of Appeal adopted the "good arguable case" test as the test to be applied to determine whether the relevant ground in Schedule 6 has been made out. There may be a question as to whether the Court of Appeal suggested, in the last sentence extracted immediately above, that it is sufficient if the plaintiff establishes that there is a serious issue to be tried in determining whether the ground of jurisdiction in Schedule 6 is satisfied. I do not interpret the judgment as having this effect. I am aided in coming to this conclusion by the observations made by Callinan J in Agar v Hyde, which I have set out above. Those observations also suggest, flowing from Vitkovice, that the appropriate test is the "good arguable case" test.
37. It will now be necessary to consider whether the plaintiff has established a good arguable case that the defendants breached their contract with him in this State, by failing to comply with his demand that they repay him US$285,000, and whether their failure to pay that sum constituted a breach in this State of a quasi-contractual obligation that they owed to the plaintiff, on the basis of money had and received.
38. In my view, the plaintiff has established, on the basis of the matters alleged in his statement of claim, and the evidence that is before the Court at this stage of the proceedings, a good arguable case that the defendants have breached their contract by failing to pay to him in this State the amount of US$285,000. I have found, above, that it is most probably the case that the terms of the contract between the plaintiff and the defendants allowed the plaintiff to choose his method of withdrawal, and that included permitting him to require the defendants to pay the money in his account that he wished to withdraw by electronic transfer, into an account nominated by the plaintiff. Although the plaintiff's solicitor's letter of 1 August 2013 did not nominate payment details, it did demand payment of the sum in question. The defendants, by their lawyers, refused to make the payment, before the plaintiff gave account details to permit the electronic transfer to occur. It is not necessary for me to decide the issue finally, but in my view, the evidence is sufficiently strong to establish a good arguable case that the plaintiff elected to require the defendants to pay him the relevant amount in this State.
39. The plaintiff's quasi-contractual claim appears to arise out of the obligation imposed upon the defendants by clause 5 of the settlement agreement, that they "shall make available for immediate cash withdrawal… the online poker account balances of all non-US players of the Full Tilt Group". There may be scope for argument about the meaning of the expression "make available for immediate cash withdrawal". The words themselves only expressly require the defendants to permit the relevant players to withdraw their online poker account balances. They say nothing about the mechanism whereby the monies to be withdrawn are to be paid to the players. Plainly, withdrawal is only one side of the transaction, as payment into some account of the players will be necessary before the transaction is completed.
40. In my view, there is at least a strong argument that the expression "make available for immediate cash withdrawal" carries with it the implication that the defendants will implement any proper request by the players as to how the relevant monies are to be transferred to the players' accounts. If that construction of the expression is correct, then the plaintiff's solicitors' letter of 1 August 2013 would operate as a request that the plaintiff be paid the sum of US$285,000 in this State, for the reasons given above.
41. Additionally, the plaintiff has a good arguable case that he is entitled to be paid the amount that he claims to be quasi contractually owed by the defendants in this State, by operation of the general principle of law that I have considered above, that in cases where one party has a quasi-contractual obligation to pay money to another, that obligation must be performed in the place of residence of that other.
42. Accordingly, I find that the plaintiff has established, to the requisite degree of satisfaction, that the alternative claims that he makes against the defendants in his statement of claim satisfy the requirements of pars (b) and (c) of Schedule 6.
43. The defendants therefore fail on their motion in so far as they rely upon UCPR r 11.7(2)(a).

Is this Court an inappropriate forum?

1. The next question is whether the defendants have established, for the purposes of UCPR r 11.7(2)(b), that this Court is an inappropriate forum for the trial of these proceedings.
2. As I understand the parties' submissions, they all accepted that the appropriate test that should be applied by the Court to determine whether this Court is an inappropriate forum was as stated by Garling J in Barach v University of New South Wales [2011] NSWSC 431, as follows: [63] Both parties proceeded upon the basis that the principles applicable to the consideration of whether the court was an inappropriate forum in accordance with r 11.7(2)(b) of the UCPR were those stated by the High Court of Australia in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. [64] The principles are referred to in the judgment of Mason CJ, Deane, Dawson and Gaudron JJ at 564 where it was said: It follows that, subject to the question of onus …, the principles to be applied in applications to set aside service and in applications for a stay on inappropriate forum grounds are those stated by Deane J in Oceanic Sun (1988) 165 CLR 197 at 247-248]. [65] It is as well to examine what Deane J said in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 248. He said, in identifying, in summary form, the modern content of traditional principles governing the power of the court to order that proceedings be dismissed or stayed on inappropriate forum grounds, this: The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him. Ordinarily, 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 particular proceedings at the suit of the plaintiff. Otherwise, that onus will ordinarily be discharged by a defendant who applies promptly for a stay or dismissal if he persuades the local court that, having regard to the circumstances of the particular case and the availability of the foreign tribunal, it is a clearly inappropriate forum for the determination of the dispute between the parties. The reason why that is so is that, once it is accepted that the adjectives "oppressive" and "vexatious" are not to be narrowly or rigidly construed and are to be applied in relation to the effect of the continuation of the proceedings rather than the conduct of the plaintiff in continuing them, the continuation of proceedings in a tribunal which is a clearly inappropriate forum would, in the absence of exceptional circumstances being established by the plaintiff … be oppressive or vexatious to such a defendant if there is some available and appropriate tribunal in another country. … [T]he mere fact that a tribunal in some other country would be a more appropriate forum for the particular proceedings does not necessarily mean that the local court is a clearly inappropriate one. [66] The test in Voth and Oceanic Sun derives from the common law. [67] In applying that test to the phrase used in the UCPR (and earlier identical forms of the rule) which is "… inappropriate forum …" rather than "… clearly inappropriate forum …", a possibility that there may be a difference, was identified, but not decided, in the judgment of Gaudron, McHugh, Gummow and Hayne JJ in Agar at [55]. [68] The matter fell for further consideration in Regie Nationale Des Usines Renault SA v Zhang (2002) 210 CLR 491 where the plurality judgment, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said with respect to an earlier, but identical form of the rule presently being considered, at [24]-[25]: [24] The expression "inappropriate forum" in par (b) of Pt 10, rule 6A(2) is less emphatic than the expression "clearly inappropriate forum", the latter being the term adopted in Voth to determine whether an Australian court should decline to exercise its jurisdiction. … [25] Because 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, the same concepts and considerations necessarily inform the test of "inappropriate forum" in [the rules] as inform the "clearly inappropriate" forum test adopted in Voth. And because the ultimate consideration is the prevention of injustice, they inform it in the same way. [69] It therefore accorded with authority to apply the "clearly inappropriate" test and the principles developed by courts to the application of the UCPR in this case. The parties' approach to this question in this litigation, accorded with the approach, as well as the approach adopted by Hammerschlag J in a most lucid exposition of these principles, if I may respectfully say, in Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWSC 270. [70] The onus of proving to the court that it is a clearly inappropriate forum for the hearing of the proceedings rests on the 7th defendant, who is the applicant: See r 11.7(2)(b) of the UCPR, Voth at 589-590 per Toohey J, Oceanic Sun at 248 per Deane J.
3. The available evidence establishes the following propositions relevant to the question whether this Court is an inappropriate forum: 1. The plaintiff's residence was in New South Wales at the time he entered into the contract with the Full Tilt Companies. There is no evidence that he has changed his usual place of residence since that time. There is some evidence that he was in the United States on the day of the hearing, but it does not follow from that that he has changed his usual residence. 2. The plaintiff has retained solicitors in this State to act for him in his claim against the defendants. 3. The defendants' lawyers carry on their practice in the State of Israel. There is no evidence that those lawyers carry on practice in either Alderney or the Isle of Man. As I have noted above, a letter written by the plaintiff's solicitors to the operating address of the defendants in the Isle of Man prompted a respondent from the lawyers in Israel. 4. There is no evidence that the defendants maintain any office in Alderney or the Isle of Man operated by any employees at either place, who may be required to give evidence in these proceedings. 5. Indeed, there is no evidence that the defendants operate any significant business physically either in Alderney or the Isle of Man. 6. The email dated 14 November 2012, written to the plaintiff by the person called Israel, and the defendants' lawyers' letter dated 2 October 2013, when read together, suggest that proof of the issue of whether the US$285,000 should be included in the "online poker account balances" of the plaintiff for the purposes of clause 5 of the settlement agreement, or whether it fell within some other classification which did not require the defendants to pay that amount to the plaintiff, will depend upon an analysis of the records of the defendants, which I infer are likely to be kept in electronic form, but in any event appear to be documentary. 7. There has been no suggestion by any of the parties that the resolution of this dispute will require the calling of witnesses who are resident in some foreign jurisdiction. If that proves not to be entirely true, it does not appear that the resolution of the issues in dispute will require a substantial amount of contentious testimonial evidence. 8. The better view appears to be that the contract between the plaintiff and the defendants still contains the clause which makes the law of Alderney the proper law of the contract, and requires both parties to submit to the exclusive jurisdiction of the courts of Alderney. However, one consequence of the settlement agreement, and the prior forfeiture of the Full Tilt Companies' assets to the United States, is that Alderney no longer has any real or genuine connection with the contract between the present parties. There is no suggestion that the parties will benefit in any way if the Court takes an approach that requires the dispute to be determined by the courts of Alderney. I will have more to say on this issue below. 9. There is no evidence about the courts of Alderney, or the convenience to the parties of being required to litigate this dispute in those courts. 10. There is no evidence concerning the content of the law of Alderney, and there has been no suggestion that any special laws of that jurisdiction, which are different in content to the laws of this State, will be required to be applied in the determination of this dispute. 11. Accordingly, there is no evidence that could justify a conclusion that any exceptional expense or difficulty will arise if it is necessary to prove any applicable rules of the law of Alderney in these proceedings. 12. There is no evidence that the defendants are amenable to proceedings commenced by the issue of any originating process by any court in the United States. 13. Although I have acknowledged that there may be some scope for argument concerning the proper construction of clause 5 of the settlement agreement, the defendants did not suggest that there was any principle of the law of any applicable jurisdiction in the United States, that would cause the relevant terms of the settlement agreement to have any different effect to the construction of the settlement agreement by application of the principles of construction that would be applied by this Court. 14. There is no evidence therefore to support any conclusion that, if it became necessary for a party to prove any principle of law of any jurisdiction in the United States, that would create a particular difficulty if the proceedings were heard in this Court, or any greater difficulty than if the claim were required to be pursued in Alderney or the Isle of Man. 15. Although clause 7 of the settlement agreement would permit the United States Justice Department to reinstate the proceedings in the United States District Court for the Southern District of New York, if the defendants failed to comply with par 5 of the settlement agreement, that is a step that is not available personally to the plaintiff.
4. It is necessary to have particular regard to the fact, as I have found above, that the evidence that is before the Court at this stage of the proceedings justifies a finding that the contract between the plaintiff and the defendants probably contains a term under which the plaintiff has submitted to the exclusive jurisdiction of the courts of Alderney. As Brennan J (as his Honour then was) said in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 231: "Before a court can refuse to enforce a contractual stipulation in order to allow a plaintiff a right to sue which he has bargained away the court must have substantial grounds prevailing over what Dixon J in The "Mill Hill" [Huddart Parker Ltd v Ship Mill Hill (1950) 81 CLR 502]at 509 called 'a strong bias in favour of maintaining the special bargain'".
5. I accept the statement of principle made by Giles CJ Comm D (as his Honour then was) in FAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 559 at 569: The criterion familiar in relation to a stay of proceedings on forum non conveniens grounds, whether this Court is a clearly inappropriate forum (see Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538), is displaced or modified when there is a submission to the exclusive jurisdiction of the courts of another country. In such circumstances the starting point is that the parties should be held to their bargain, and while this Court retains its jurisdiction and may decline to grant a stay of proceedings substantial grounds for doing so are required: see Huddart Parker Ltd v The Ship "Mill Hill" (1950) 81 CLR 502 at 508-509; Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 230-231, 259; Akai Pty Ltd v Peoples Insurance Co Ltd (1995) 8 ANZ Ins Cas ¶61-254 at 75,855; (1996) 71 ALJR 156 at 160-161 (dissenting in the result but unimpaired on this point), 170; 141 ALR 374 at 380-381; 393. The principles identified in The Eleftheria Owners of Cargo Lately Laden on Board the Ship or Vessel Eleftheria v The Eleftheria (Owners) [1970] P 94 at 99 are established in England (see, eg, Aratra Potato Co Ltd v Egyptian Navigation Co (The El Amria) [1981] 2 Lloyd's Rep 119, The Sennar (No 2) [1985] 1 Lloyd's Rep 521 and Citi-March Ltd v Neptune Orient Lines Ltd [1996] 1 WLR 1367; [1996] 2 All ER 545). They have been adopted in the Court of Appeal and the High Court, and in my opinion I should apply them. They are: "(1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the defendants apply for a stay, the English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such a strong cause is on the plaintiffs. (4) In exercising its discretion the court should take into account all the circumstances of the particular case."
6. Beazley J (as her Honour then was) applied the same principles in Leigh-Mardon Pty Ltd v PRC Inc (1993) 44 FCR 88 at 95. After setting out the same extract from The Eleftheria [1970] P 94 as Giles CJ Comm Div, her Honour added: His Honour then referred to particular matters which might, in an appropriate case, be taken into account in the exercise of discretion, including: "(a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts; (b) Whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects; (c) With what country either party is connected, and how closely; (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages; (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would - (i) be deprived of security for that claim, (ii) be unable to enforce any judgment obtained, (iii) be faced with a time-bar not applicable in England, or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial." Brandon J stated (at 103) that the Court "should give full weight to the prima facie desirability of holding the plaintiffs to their agreement" and that the Court should not simply pay lip service to this principle by giving effect to "a mere balance of convenience". See also Aratra Potato Co Ltd v Egyptian Navigation Co (The El Amria) [1981] 2 Lloyds Rep 119. This approach has been consistently applied by the Courts. As Hudson J had said earlier in Lewis Construction Co Pty Ltd v M Tichauer Societe Anonyme [1966] VR 341 at 347, Courts will approach an application for a stay in a case where there is an exclusive foreign jurisdiction clause "with a strong bias in favour of maintaining the special bargain and holding the parties to their contract". See also Mackender v Feldia AG [1967] 2 QB 590 at 604 and The Bremen et al v Zapata Off-Shore Co 407 US 1 (1972) at 12, 15, where the Chief Justice of the United States Supreme Court, in holding that " … a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power, such as that involved here, should be given full effect" stated " … in the light of present day commercial realities and expanding international trade we conclude that the forum clause should control absent a strong showing that it should be set aside".
7. The present is an exceptional case, in which the effect of the settlement agreement, produced as a result of the application of the law of the United States that was sought to be enforced by the United States Justice Department, has been to sever the connection between the plaintiff and the Full Tilt Companies, and by a process of apparent forfeiture and transfer to create a contractual relationship between the plaintiff and the defendants (or at least arguably so for the purposes of the present application). There is now no real connection at all between any of the parties to these proceedings, or the circumstances of the case, and Alderney, save for the appearance that the contract is governed by the law of Alderney. This final circumstance may still have been significant to the issue of whether the Court should hold the plaintiff to the exclusive jurisdiction clause, if the defendants had established that there were significant differences between the law of Alderney and the law of this State, and substantial inconvenience would have arisen if the law of Alderney had to be proved in these proceedings. The defendants did not seek to do so. I have therefore placed little weight on the apparent presence in the contract of the exclusive jurisdiction clause in determining whether this Court is an inappropriate forum for the trial of the proceedings.
8. On the basis of these considerations, I could not find that this Court is an inappropriate forum, let alone a clearly inappropriate forum. It is a positively appropriate forum for the plaintiff to pursue his claim against the defendants. It may not be an entirely appropriate forum from the perspective of the defendants, but I do not see that there is any other forum that clearly is more appropriate than this Court, as there appear to be a number of alternatives - Alderney, the Isle of Man and the United States being the principal ones - which may possibly be more appropriate in some ways, but in no case to such a degree that this Court would be inappropriate. The evidence does not establish that any significant or unfair imposition will be put upon the defendants, if they are required to defend the plaintiff's claim in this Court.
9. In these circumstances I make the following orders: 1. The defendants' amended notice of motion is dismissed. 2. The parties are directed to deliver submissions as to the appropriate costs order to be made (having regard to the dismissal of the defendants' amended notice of motion and the matters considered in pars 12 and 13 of these reasons for judgment) to the associate to Robb J within 14 days. 3. The plaintiff is directed to file and serve an amended statement of claim (having regard to the matter considered in par 12 of these reasons for judgment) within 14 days. 4. Exhibits may be returned forthwith in accordance with the rules of the Court.

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