Benson v Rational Entertainment Enterprises Ltd

Is this Court an inappropriate forum?

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.
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.
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.
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'".
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."
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".
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.
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.
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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