Borch & Ors v Answer Products Inc & Ors [2000] QSC 379

Supreme Court of Queensland|2000-10-26|Before: Holmes, J

Thynne & Macartney as town agents for Hede Byrne Hall for the plaintiffs

[1] HOLMES J: The applicant first defendant seeks the setting aside of service of the plaintiffs' claim on it, under Rule 16(f) of the Uniform Civil Procedure Rules 1999. It contends that the claim was served without leave in circumstances where the proceeding does not fall within any of the categories set out in of the . That rule prescribes the types of proceedings which may be served without leave:

124 (1) An originating process for any of the following may be served on a person outside Australia without the court's leave -

(a) a proceeding based on a cause of action arising in Queensland;

(ii) obtaining evidence for a future claim relating to property in Queensland;

(c) a proceeding in which an Act, deed, will, contract, obligation or liability affecting property in Queensland is sought to be interpreted, rectified, set aside or enforced;

(d) a proceeding for relief against a person domiciled or ordinarily resident in Queensland;

(i) the administration of the estate of a person who died domiciled in Queensland; or

(ii) relief that might be obtained in a proceeding for the administration of the estate of a person who died domiciled in Queensland;

(i) the trust is created or declared by an instrument; and

(iii) the execution relates to trust property in Queensland; and

(iv) the trust ought to be executed under the law of Queensland;

(ii) made by 1 or more parties carrying on business or residing in Queensland; or

(iii) made by or through an agent carrying on business or residing in Queensland on behalf of a principal carrying on business or residing outside Queensland; or

(h) a proceeding based on a breach of contract committed in Queensland, regardless of where the contract was made and whether or not the breach was preceded or accompanied by a breach (wherever occurring) rendering impossible the performance of a part of the contract that ought to be performed in Queensland;

(i) a proceeding based on a contract containing a condition by which the parties agree to submit to the jurisdiction of the court;

(j) a proceeding for the recovery of an amount payable under an Act to an entity in Queensland;

(k) a proceeding based on a tort committed in Queensland;

(i) all or part of which was suffered in Queensland; and

(ii) caused by a tortious act or omission (wherever happening);

(m) a proceeding affecting a person in relation to the person's membership of -

(ii) a partnership, association or other entity formed, or carrying on any part of its affairs, in Queensland;

(n) a proceeding for a contribution or indemnity for a liability enforceable in the court;

(o) a proceeding for an injunction ordering a defendant or respondent to do, or refrain from doing, anything in Queensland (whether or not damages are also claimed);

(p) a proceeding properly brought in Queensland against a person in which another person outside Queensland is a necessary or proper party to the proceeding;

(q) a proceeding brought under the Civil Aviation (Carrier's Liability) Act 1959 (Cwlth) -

(ii) in relation to damage that happened in Queensland;

(r) a proceeding in which a person has submitted to the jurisdiction of the court;

(s) a proceeding in which the subject matter of the proceeding, so far as it concerns the person is property in Queensland;

(t) a proceeding concerning the interpretation, effect or enforcement of -

(ii) an Imperial or Commonwealth Act affecting property in Queensland;

(u) a proceeding concerning the effect or enforcement of an executive, Ministerial or administrative act done, or purported to have been done, under an Act;

(v) a proceeding relating to an arbitration held in Queensland;

(w) a proceeding about a person under a legal incapacity who is domiciled or present in, or a resident of, Queensland;

(x) a proceeding, so far as it concerns the person, falling partly within 1 or more of paragraphs (a) to (w).

[2] From the statement of claim and what was said without challenge from the bar table, it emerges that there are four plaintiffs. The second and third plaintiffs are the parents of the first plaintiff, who, it is alleged, suffered facial injuries when the suspension forks on a mountain bicycle belonging to his brother, the fourth defendant, failed as he was attempting to perform a manoeuvre on it. The first plaintiff sues for personal injuries resulting from that accident, the second plaintiff for nervous shock, the third plaintiff for damages which seem to be in the nature of loss of consortium, and the fourth for the damage to his bicycle. It is pleaded that the first defendant was the manufacturer of the suspension forks and supplied them to the second defendant, with whom it had a contract for the importation and resale of the parts. The third defendant, it is said, sold the bicycle, including the suspension forks, to the fourth plaintiff. So far as the first defendant is concerned, the causes of action alleged are negligence and contravention of s75AD of the Trade Practices Act 1974.

[3] There was argument as to who bore the onus of demonstrating that the proceeding did or did not fall within the categories of Rule 124, and what standard had to be met by the party bearing the onus. For the applicant first defendant, Mr Sofronoff QC relied on a number of decisions of the New South Wales Supreme Court (Pendal Nominees & Anor v M & A Investments Pty Ltd & Anor[1]; CE Heath Underwriting & Insurance (Australia) Pty Ltd & Anor v Barden & Ors,[2]; Hilad v SCI[3]; News Corporation Limited v Lenfest Communications Inc[4]) for the proposition that the onus lay on the respondent plaintiffs, arguing that the relevant New South Wales Supreme Court Rule, Part 10 Rule 1A, was similar in form to Rule 124(1). He relied also on a decision of Derrington J in Rideout v Glaxo Group Limited[5], in which the competing arguments on onus were discussed. His Honour did not find it necessary to decide the issue, concluding that the result would be the same wherever the onus lay. However, in an addendum to his decision, he referred to Voth v Manildra Flour Mills Pty Ltd [6]as suggesting that the onus rested on the plaintiff at least in a context where leave to proceed was required.

[4] I do not find decisions under the New South Wales Rules nor under the now superseded Supreme Court Rules of this state of much assistance because of the basic differences between the structure of proceedings under those provisions and what is required under Part 7 of the Uniform Civil Procedure Rules. Under the New South Wales Rules, originating process may be served without prior leave provided the case falls within one of the categories set out in Pt 10, r1A(1). However, if the defendant does not appear, the plaintiff cannot proceed further without leave (Pt 10 r 2). Where the foreign defendant applies to have service set aside, the court has a discretion, and may make an order setting aside service on the non-exhaustive grounds that the service is not authorised by the rules or that the court is an inappropriate forum for the trial of the proceedings (Pt 10 r 6A).

[5] Similarly, Order 11 of the Supreme Court Rules permitted service outside Australia in a number of specified circumstances, but gave a discretion to the court, "upon being satisfied by affidavit" of proper service under Rule 1 of the order, to give liberty to proceed. By contrast, Part 7 does not require the plaintiff to obtain leave to proceed; but in the event of an application to set aside service under Rule 126, it allows the court no discretion:

"The court must, on application by a defendant or respondent, set aside service of an originating process under this part if service of it is not authorised under Rule 124."

[6] In any event, it is by no means clear that the onus on a setting aside application rests on the defendant under the New South Wales Rules. In Australian Iron and Steel Pty Ltd v Jumbo Scheepvaart Maatschappij (Curacao) NV, Yeldham J, in respect of Pt 10 r 6A, made the following observation:

"What has been inserted in the new r 6A is really no more than an expression of the powers which the court, under the old rules, exercised in any event, the onus being upon the applicant for an order under such rule" [7].

That statement has been read to differing effect. Rogers CJ, in Pendal Nominees v M & A Investments[8], while acknowledging it was capable of more than one interpretation, did not take it to mean that the onus lay on the applicant for the order setting aside the service. He, however, noted that there were "weighty arguments" in favour of a shift of the onus to the defendant seeking to set aside service, before concluding that no single test could be applied. On the other hand in Esanda Finance v Wordplex Info Systems[9] Giles J regarded Yeldham J as expressing the view, in the passage set out above, that the onus was on the applicant in an application under Pt 10 r 6A.

[7] In Voth v Manildra Flour Mills Pty Ltd[10], Toohey J noted that the question of onus was liable to be resolved by the terms of the applicable Supreme Court Rules; so that in New South Wales and Victoria, where the defendant could apply to set aside service on the grounds that the relevant court was an inappropriate forum, the onus lay on the defendant. (That conclusion would, one presumes, extend equally to an application to set aside service on the other ground specifically contemplated by r 6A(2); that is, that service of the originating process was not authorised.) In any event, he considered that the onus should not be dictated by the relief sought, so that it should lie on the defendant whether it sought a stay of proceedings or an order setting aside leave to serve outside the jurisdiction. Toohey J was, however, in the minority in Voth v Manildra. The majority concluded that the onus of proof should differ as between an application to set aside service and an application to stay proceedings, characterising the first as involving a question of whether the court should assume jurisdiction and the second as a question of whether it should decline jurisdiction.

[8] In the present case there is, as I have observed, no element of discretion. The court's enquiry is purely as to whether the proceeding falls within the categories set out in Rule 124, and there are no competing issues of convenience such as may arise in applications for leave, or for stay of proceedings. As I observed in the course of argument, the question of onus really becomes a somewhat sterile argument when what has to be decided is whether on the material before me the plaintiffs' proceeding falls within Rule 124. Given, however, that under the scheme of the Rules the plaintiff at no time is required to obtain leave, either to serve or to proceed, and that Rule 126 is couched in the negative ("if service ... is not authorised") I conclude that the onus lies on the defendant whose application it is to set aside service. But, as I have said, given the limited nature of the exercise involved, it seems unlikely that that conclusion is of much moment.

[9] It is, however, in my view, consistent with the approach which the majority in Agar v Hyde[11] described as appropriate in deciding whether provisions permitting service outside Australia (in that case Pt 10 r 1A of the New South Wales Supreme Court Rules) applied. Their Honours said that attention must be focussed "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?" They continued:

"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 statement of claim might suffice, they said, to assess whether the plaintiff's claim fell within the provisions enabling service outside Australia, although it was conceivable that further evidence might be required to establish matters not appearing from the pleading.

[10] Wherever one concludes that the onus falls, the nature of the process is similar: an examination of the pleadings and any additional material relied on by the plaintiffs to ascertain whether Rule 124 is engaged. It is thus of limited assistance to speak of a "prima facie case" or "strong arguable case". I have taken the view that the defendant has the carriage of the negative argument; but given the absence of discretion and the relative unlikelihood of evidentiary issues emerging, that onus is of little practical significance to the exercise.

[11] Some argument was directed to the adequacy of the plaintiffs' material. An affidavit was filed by the plaintiffs' solicitor, Mr Hede, swearing to his information by the plaintiffs and belief that "all the facts contained" in their statement of claim were "true and correct". Mr Sofronoff QC rightly pointed to the inadequacy of such a statement, both in its failure to identify the grounds for the belief sworn to by Mr Hede, and in the unlikelihood of the plaintiffs being able to provide all the information in the statement of claim in any case. That inadequacy, however, seems to me inconsequential having regard to the exercise prescribed in Agar v Hyde. It is not necessary, in my view, that the plaintiffs' allegations be sworn to; what is necessary is that they are of a type which falls within Rule 124.

[12] Mr Myers relied on three sub-paragraphs of Rule 124(1) as supporting service of the proceedings on the first defendant. They were:

(i) all or part of which was suffered in Queensland; and

(ii) caused by a tortious act or omission (wherever happening);

(p) a proceeding properly brought in Queensland against a person in which another person outside Queensland is a necessary or proper party to the proceeding;

(x) a proceeding, so far as it concerns the person, falling partly within 1 or more of paragraphs (a) to (w)."

Mr Sofronoff, in the course of argument, proposed another (for the purpose of demonstrating it to be unsustainable) namely, (t): "a proceeding concerning the interpretation, effect or enforcement of ... an Act". s.124(1)(l) "tortious act or omission"

[13] The statement of claim pleads that the first plaintiff suffered injuries at Toowoomba as a result of the failure of the suspension forks on the bicycle. It seems plain enough that the damage, on that pleading, was suffered in Queensland. It is further pleaded that the incident by which that injury was occasioned was caused by the first defendant's negligence or contravention of the Trade Practices Act 1974 in the following particulars:-

"20.1 manufacturing and supplying the said forks for export to and sale within Queensland when they knew or ought to have known that the same were unfit and dangerous to be used as a component of the bicycle and that the same were likely to fracture suddenly in the course of reasonable use in that the same were not of correct or proper design or construction and/or that they were fitted in such a manner that they would or might become, as they in fact became, defective forks;

20.2 manufacturing and supplying the said Manitou precision suspension forks as aforesaid without first ascertaining or ensuring whether by way of examination, test, inspection or otherwise that the said forks were and would remain safe and sound to be used as a component of a mountain bicycle over relatively rough terrain including high jumps; and

20.3 failing to take any or any reasonable or adequate or effective precautions in the manufacture of the said Manitou precision suspension forks when they knew and intended that they would be used in that role without any intermediate or previous examination."

"The Manitou precision suspension forks supplied by the First Defendant and/or Second Defendant had a `defect' within the meaning of that term as defined in the Trade Practices Act 1974 in that in the course of proper and expected use the said forks suddenly fractured causing the First Plaintiff to be struck in the mouth whereby he suffered the injuries."

[15] In respect of the negligence allegation, Mr Sofronoff contended that the pleading was inadequate to establish a prima facie case. It lacked, he said, particulars of place of manufacture or supply of the bicycle; knowledge or intention as to the use of the suspension forks; knowledge of the possibility of damage or injury in the absence of reasonable care in the manufacture of the parts; knowledge that the part was unfit and dangerous; knowledge that it was likely to fracture suddenly in the course of reasonable use; the contract or place of contract with the second defendant for the importation and resale of the part; the manufacture and supply of the part without first ascertaining or ensuring by examination, test or inspection that it was and would remain safe; and the failure to take reasonable or adequate or effective precaution in the manufacture of the part when it knew and intended it would be used without intermediate or previous examination.

[16] All of those matters, Mr Sofronoff submitted, again no doubt with force, were required to be pleaded by virtue of the Uniform Civil Procedure Rules; specifically, Rules 149(1)(b), 150(1)(k) and 157.

[17] That submission raised squarely the question of whether the allegation of negligence, inadequately particularised for the purposes of the rules, could suffice to meet the requirements of Rule 124; or whether, as Mr Sofronoff contended, only a properly pleaded cause of action would do. As he pointed out, in the ordinary course of events, a defendant resident in the jurisdiction in a like situation would apply for particulars. That was not, he said, open to his client, because to do so would require a submission to the jurisdiction.

[18] I have come to the conclusion that it is not necessary that a plaintiff's causes of action be properly pleaded for the purposes of other rules, in order to come within Rule 124(1). It is sufficient that the elements of the cause of action are pleaded. If an allegation is made in the pleadings that damage was suffered in Queensland and was caused by a tortious act, an allegation falling within Rule 124(l) has been made for the purposes of the inquiry prescribed in Agar v Hyde. I am fortified in that view by Lindgren J's analysis in Cell Tech v Nokia[12] of O 9 r 7(1) of the Federal Court Rules, which provides for an application to set aside service of an originating process. His Honour pointed out that the focus of concern was the "originating process", in that case the application (here the claim):

"The attack is not upon the accompanying affidavit or statement of claim (cf O 4, r 6), although the content of those documents may be relevant to the attack upon the invoking of the court's power by the applicant"[13].

"The statement of claim is useful as a statement of facts and causes of action relied on but, as noted earlier, R 7(1) of O 9 does not provide for an attack on pleadings. Therefore, subject to any question of costs, I should not be astute to find that Cell Tech does not have a prima facie case for damages merely because an amendment to its statement of claim may be shown to be necessary or desirable"[14].

[19] To similar effect is the following statement by Burchett J in TPC v The Gillette Company[15]:

"It is important that the questions arising when a party served outside the jurisdiction seeks to have the service set aside be kept distinct from the questions which might arise upon, for instance, a dispute about further and better particulars, or about a point of pleading. A procedure which did not observe that distinction would be cumbersome to the point of absurdity."

and there is also some assistance to be gained from an observation of French J in Western Australia v Vetter Trittler [16]

"Whatever is required to satisfy the court that there is a prima facie case, that satisfaction should leave open the possibility that the respondent once served could move to strike out the statement of claim or invoke other provisions of the rules which provide for summary disposition of proceedings. To the extent that it does not, the rules may be setting too high a threshold for service out of jurisdiction."

[20] Mr Sofronoff made a number of points about the Trade Practices Act claim. The alleged breach of s75 AD of the Trade Practices Act could not, he said, amount to a "tortious act or omission". That proposition is not beyond doubt. In Commonwealth Bank of Australia v White [17], Byrne J concluded that the expression "tortious act or omission" comprehended misleading and deceptive conduct in contravention of the Trade Practices Act. His Honour noted that conduct proscribed by s 52 bore many of the hallmarks of tort. Such conduct was a wrong, for which a remedy lay in damages, capable of being awarded in common law courts as well as the Federal Court. It was frequently the case that claims under the Trade Practices Act were made with common law claims. The policy which underlay the proscription of the conduct in question was that of enforcing commercial morality. At the same time, there was nothing in the history of the Victorian rule in relation to service outside the jurisdiction (which bears similarities, although it is not identical, to the Queensland rule) which suggested that the word "tort" should be restricted to traditional common law causes of action. His Honour's reasoning would appear to apply equally to a claim of supply of defective goods causing injury made under s 75AD of the Trade Practices Act. It may well be, therefore, that the cause of action mounted under that section is capable of falling within paragraph 124(1)(l). For reasons which will become apparent, I do not find it necessary to decide that point.

s.124(1)(t): "a proceeding concerning the interpretation, effect or enforcement of ... an Act"

[21] Mr Sofronoff argued that the Trade Practices Act claim was not capable of falling within Rule 124 (1) (t), which clearly in its terms distinguishes between State and Commonwealth legislation, referring in its first limb to an "Act" (defined by s 6 of the Acts Interpretation Act 1954 to mean "an Act of the Queensland Parliament") and in its second limb to "an Imperial or Commonwealth Act affecting property in Queensland". There is no question of property being affected in this case, and I am satisfied that the Trade Practices claim could not fall within either limb of this category.

Absence of extra-territorial jurisdiction for Trade Practices Act claim

[22] Another difficulty that Mr Sofronoff pointed to in respect of the Trade Practices Act claim was that Part VA of the Trade Practices Act, within which s 75AD is contained, has no extra-territorial application. Section 5(1) of the Act applies to give extra-territorial effect to Parts IVA and Part V of the Act. Mr Sofronoff submitted, correctly in my view, that, both from first principles and by inference from the absence of an equivalent provision in respect of Part VA, s 75AD was incapable of having application outside the jurisdiction. Again, however, it is not necessary for me to decide that point.

S 124(1)(p):"a necessary or proper party to the proceeding"

[23] Because I have concluded that the negligence claim falls within Rule 124(l) it is not necessary for me to decide whether it could equally be comprehended by subparagraph (p). However, it seems clear that were the first defendant within the jurisdiction it would be properly be made a defendant under Rule 65, since whatever rights to relief the plaintiffs may have as against the three defendants arise out of the same series of events. There was no argument that the proceeding was not properly brought in Queensland against the second and third defendants.

s124(1)(x): "a proceeding ... falling partly within 1 or more of paragraphs (a) to (w)"

[24] There remains the question of the effect of my conclusion that the claim in negligence falls within Rule 124(1)(l), so far as the balance of the proceeding is concerned. Mr Sofronoff relied on Rule 124(1)(x) and the following statement of Giles J in News Corporation Ltd v Lenfest Communications Inc[18] :

"Where there are multiple claims, each of the claims must come within one or more of the paragraphs, and a plaintiff cannot proceed against the foreign defendant on claims not falling within a paragraph."

for the proposition that the service of the Trade Practices Act claim could not be supported by the conclusion that the negligence claim fell within Rule 124.

[25] To the News Corporation case as authority on this point might be added any number of others: Williams v The Society of Lloyd's[19]; Commonwealth Bank of Australia v White [20]; Siskina v Distos Compania Naviera SA[21]; Tycoon Holdings v Trencor Jetco Inc[22]; Australian Iron and Steel Pty Ltd v Jumbo Scheepvaart Maatschappij (Seuracao) NV [23]; Hilad v SCI[24]and two earlier decisions of this case in Tricon Industries v Abel Lemon & Co Pty Ltd[25]and D'Ath v TNT Australia Pty Ltd[26]. The difficulty is that none of those cases considered a provision in the terms of paragraph (x).

[26] Neither O 11 r 1 of the English Rules of the Supreme Court (considered in Siskina) nor Rule 7.01(1) of the Victorian Supreme Court Rules (relevant in Williams v The Society of Lloyds, Commonwealth Bank of Australia v White) contained a similar paragraph. Similarly, both Tricon Industries and D'Ath v TNT Australia Pty Ltd were decided under O 11 r 1 of the Supreme Court Rules, which did not contain an equivalent paragraph to (x). The Rules were amended in 1993 to a form containing categories roughly equivalent to those in Rule 124, including subparagraph (x). In respect of Pt 10 r 1A of the New South Wales Supreme Court Rules (applicable in Hilad, Australian Iron and Steel, and News Corporation v Lenfest) and O 8 r 1 of the Federal Court Rules (relevant in Tycoon Holdings v Trencor) there is a crucial difference. Pt 10 r 1A(x) of the Supreme Court Rules of New South Wales reads as follows:

"Where the proceedings, so far as concerns the person to be served falls partly within one or more of the foregoing paragraphs and fall, as to the residue, within one or more of the others of the foregoing paragraphs."

O 8 r 1(n) of the Federal Court Rules is in identical terms, save that the word "proceeding" is used, with a corresponding change to the verbs to meet the singular noun. In sharp contrast, subparagraph (x) contains no prescription as to a residue of the proceedings falling within other paragraphs.

[27] Mr Sofronoff submitted that I should read paragraph (x) of Rule 124 as having the same meaning and effect as paragraph (x) of the New South Wales rule. I can see no warrant for doing so. The predecessor to paragraph (x) was introduced into O 11 r1 of the Supreme Court Rules by an amendment made in 1993[27]. It post-dated both the Federal Court and New South Wales rules; but, significantly, the form of those rules was not adopted. It also post-dated the decisions in Tricon Industries and D'Ath v TNT, both of which had dealt with the service of originating process containing claims both within and without the requirements of the relevant rule. In its terms, it permits service of an originating process for a proceeding falling partly within one or more of the paragraphs. I can see no warrant for imposing a further requirement that the balance of the proceeding must also fall within the paragraphs, nor any basis for supposing that the omission of such a requirement from the rule was accidental.

[28] The result, as I construe the rule, is that a proceeding may be served outside the jurisdiction provided that it falls, at least in part, within one of the paragraphs of Rule 124. In the present case, the plaintiffs' claim in negligence falls within the rule, and they are, accordingly, entitled to serve the originating process on the first defendant notwithstanding that other parts of the proceeding (specifically the Trade Practices Act action) might not fall within the rule. Accordingly, the application to set aside service on the first defendant must be dismissed. I will hear the parties as to costs.

[3] (1999) NSWSC 486, 27 May 1999

[18] 21 ACSR 553 at p.557

[24] (1999) NSWSC 486 (27May 1999)

Aviation (Carrier's Liability) Act 1959

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