Colosseum Investment Holdings Pty Ltd & Anor v Vanguard Logistics Services Pty Ltd & Ors

Supreme Court of NSW|2005-08-10|Before: Palmer J

CITATION : Colosseum Investment Holdings Pty Ltd & Anor v Vanguard Logistics Services Pty Ltd & Ors [2005] NSWSC 803

Equity Division JURISDICTION : Admiralty List

DECISION : Court has jurisdiction; stay refused.

Law Reform (Miscellaneous Provisions) Act 1946 (NSW) - s.5 LEGISLATION CITED : - Supreme Court Rules 1970 (NSW) - Pt 8 r.2, Pt 10 r.1A(1), r.2(1), r.6A, Pt 11 r.8(1)(h)

Agar v Hyde (2000) 201 CLR 552 - Brix Neilsen v Oceaneering Australia Pty Ltd [1982] 2 NSWLR 173 - Challenor v Douglas [1983] 2 NSWLR 405 - CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 - Darrell Lea Chocolate Shops Pty Ltd v Spanish-Polish Shipping Co Inc ("the Katowice II") (1990) 25 NSWLR 568 - Flaherty v Girgis (1985) 4 NSWLR 248 CASES CITED : - Henry v Henry (1996) 185 CLR 571 - Maclaine Watson & Co Private Ltd v Bing Chen [1983] 1 NSWLR 163 - Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 - Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 - Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 - Westpac Banking Corporation v Commonwealth Steel Co Ltd [1983] 1 NSWLR 735

Colosseum Investment Holdings Pty Ltd - First Plaintiff Cherrington Asia Pacific Pty Ltd - Second Plaintiff Vanguard Logistics Services Pty Ltd - First Defendant/Cross Claimant PARTIES : SSA Terminals LLC - Second Defendant/Second Cross Defendant COSCO Container Lines Company Limited - First Cross Defendant SSA Marine, Inc - Third Cross Defendant

P. Silver - Plaintiffs COUNSEL : Dr A.S. Bell - First Defendant/Cross Claimant G.J. Nell - Second Defendant and Cross Defendants

Wordsworth Lawyers - Plaintiffs SOLICITORS : Norton White Lawyers - First Defendant/Cross Claimant Ebsworth & Ebsworth - Second Defendant and Cross Defendants

1 The Plaintiffs ("Colosseum" and "Cherrington") and the First Defendant/Cross Claimant ("Vanguard") are companies incorporated and carrying on business in New South Wales. 2 The Second Defendant/Second Cross Defendant ("Terminals") is a company incorporated in Washington in the United States of America and carries on business in Seattle. 3 Colosseum and Cherrington have commenced proceedings in the New South Wales Supreme Court ("the NSW Proceedings") against Vanguard and Terminals arising out of an accident which occurred in the Port of Seattle on 7 September 2003. A drilling rig owned by Colosseum and leased to Cherrington was damaged in the course of loading onto a ship. Vanguard is alleged to be the freight forwarder engaged by Cherrington to transport the rig; Terminals was the operator of the terminal at which the accident occurred. 4 Vanguard has cross claimed in the NSW Proceedings against COSCO Container Lines Company Ltd ("COSCO"), Terminals and SSA Marine, Inc ("Marine"). COSCO is a company incorporated in China having its principal place of business in Shanghai; Marine is a company incorporated in Washington and having its principal place of business in Seattle. 5 After Cherrington had commenced the NSW Proceedings against Vanguard alone and before the joinder of any other parties, Vanguard and two related corporations ("the Vanguard Parties") commenced proceedings against COSCO and another corporation ("the COSCO Parties") in the United States District Court at Seattle ("the Seattle Proceedings"). In the Seattle Proceedings the Vanguard Parties seek indemnity in respect of any amounts for which they may be found liable to Colosseum and Cherrington in the NSW Proceedings. Terminals and Marine have subsequently been joined as Defendants in the Seattle Proceedings. 6 The NSW Proceedings and the Seattle Proceedings are both continuing in their courses towards trial. 7 COSCO, Terminals and Marine, by their Notice of Motion filed on 13 December 2004, seek orders in the alternative that:

the Cross Claim filed by Vanguard in the NSW Proceedings joining them as Cross Defendants be set aside or permanently stayed; or

this Court declines to exercise jurisdiction in respect of the Cross Claim. 8 Vanguard, by its Notice of Motion filed on 28 April 2005, seeks orders that:

the Further Amended Statement of Claim filed by Colosseum and Cherrington in the NSW Proceedings be set aside or permanently stayed; or, in the alternative,

this Court decline to exercise jurisdiction in the NSW Proceedings. 9 Colosseum and Cherrington, by their Notice of Motion filed on 28 April 2005, seek leave to proceed against Terminals in the NSW Proceedings under Pt 10 r.2(1) Supreme Court Rules 1970 (NSW) ("SCR"). 10 In the event that Vanguard's primary application for strike out or stay of the NSW Proceedings fails and the motion of Colosseum and Cherrington succeeds, Vanguard, by Notice of Motion filed on 28 April 2005, seeks leave to proceed against COSCO, Terminals and Marine in the NSW Proceedings under Pt 10 r.2(1) SCR. 11 The four Notices of Motion raise common issues:

whether the Supreme Court of New South Wales has jurisdiction to entertain the claims of Colosseum and Cherrington against Terminals in the NSW Proceedings;

whether the Supreme Court of New South Wales has jurisdiction to entertain Vanguard's Cross Claim against COSCO, Terminals and Marine in the NSW Proceedings;

if this Court has jurisdiction to entertain the claims against Terminals and the Cross Claims against COSCO, Terminals and Marine, whether those claims should be dismissed or permanently stayed on the ground of forum non conveniens, including lis alibi pendens. 12 All Notices of Motion were heard together, the evidence in one being evidence in the others. Mr G. Nell of Counsel appeared for COSCO, Terminals and Marine, Dr A. Bell of Counsel appeared for Vanguard, and Mr P. Silver of Counsel appeared for Colosseum and Cherrington. 13 Colosseum and Cherrington opposed the applications of COSCO, Terminals and Marine for a stay of the whole of the NSW Proceedings, as did Vanguard, subject to a qualification. If the Court were minded to stay the Cross Claim in the NSW Proceedings by Vanguard against COSCO, Terminals and Marine, Vanguard would seek that the claims of Colosseum and Cherrington against it should not proceed in New South Wales but that the whole of the NSW Proceedings should be stayed to allow all claims between all parties to be litigated in the Seattle Proceedings. It is concerned that it might be found liable to Colosseum and Cherrington in the NSW Proceedings but when it seeks indemnity against COSCO, Terminals and Marine in proceedings commenced in the United States, those parties would not be bound by the findings of this Court and United States Court could find that the defendants in such proceedings were not liable to Vanguard because Vanguard was not liable in law to Colosseum and Cherrington. The facts

14 The facts relevant to this application are helpfully summarised by Mr Nell in his written submissions; there is no dispute about these facts for the purposes of these applications. 15 In July 2003, Cherrington entered into a contract to perform drilling work for an oil pipeline project in China. In August 2003, Cherrington leased certain drilling equipment from Colosseum in order to perform that drilling contract. 16 Colosseum purchased the drilling equipment from the manufacturer, a company located in Ohio. Colosseum and Cherrington allege that in August 2003 Cherrington entered into an agreement with Vanguard whereby Vanguard would arrange for the transportation of the drilling equipment from the factory in Ohio to China. 17 By its Defence in the NSW Proceedings, Vanguard denies that it entered into a contract with Cherrington for the transportation of the equipment and denies that it was a carrier of the equipment. Rather, Vanguard says that it arranged for the transportation of the equipment on behalf of DCL Hong Kong Ltd ("DCL"), a company incorporated in Hong Kong. Vanguard and DCL are part of a group of companies called the NACA Logistics Group ("the Group"). The Group has its corporate headquarters in Los Angeles and fifty-five offices around the world, including in Sydney. The Manager of the Group in the Sydney office at the relevant time was Mr Ahuja. 18 In August 2003 Mr Ahuja was requested by Cherrington to handle shipments associated with the drilling work which Cherrington was to carry out in China. Mr Ahuja in turn requested a member of the Group, NACA (Logistics) USA Inc ("NACA") to make arrangements in accordance with Cherrington's requirements. NACA is a company incorporated in California. 19 NACA booked the carriage of the drilling equipment from the United States to China with COSCO. COSCO is a vessel-operating common carrier, with vessels calling at various ports in the United States. The booking was made pursuant to a Service Contract which was then in existence between NACA and COSCO in which NACA received certain discounted rates. 20 A Confirmed Booking Notice was issued on behalf of COSCO recording intended shipment of the drilling equipment from Seattle on board the MV Jing Po He . The equipment was transported by road from Ohio to Terminal 18 in the Port of Seattle, where it was to be loaded on board the vessel. 21 Terminals is the lessee and manager of Terminal 18 in the Port of Seattle. It employs all of the longshoremen and management personnel at that terminal. Terminals also operates the container cranes at the terminal. Terminals was retained by COSCO to stevedore COSCO vessels pursuant to an agreement whereby Terminals was to provide all stevedoring services with respect to discharging and loading of COSCO vessels at Terminal 18. 22 The drilling equipment was delivered to Terminal 18 on 2 September 2003. Employees of Terminals moved the equipment to the ship dockside and prepared it for lifting onto the vessel. All of the persons involved in the rigging and lifting of the equipment were employees of Terminals. 23 On 7 September 2003 part of the equipment, namely, the drilling unit, was being loaded on board MV Jing Po He by the Terminal crane. In the course of loading the drilling unit fell and, according to Colosseum and Cherrington, it was damaged beyond repair.

24 On 30 April 2004, Colosseum and Cherrington each commenced separate proceedings against Vanguard in the Common Law Division of the Supreme Court of New South Wales, claiming damages in respect of the loss incurred by reason of the dropping of the drilling unit during loading. 25 On 24 August 2004 NACA, DCL and Vanguard (to which I refer as "the Vanguard Parties") commenced the Seattle Proceedings against COSCO and an associated company, COSCO North America Inc. In those proceedings the Vanguard Parties claimed indemnity in respect of any liability which they might incur arising from the proceedings which Colosseum and Cherrington had commenced in New South Wales. 26 On 25 August 2004, the two sets of proceedings commenced by Colosseum and Cherrington in the Common Law Division were transferred to the Admiralty List, Equity Division. 27 On 6 September 2004, Vanguard filed a Cross Claim against COSCO, Terminals and Marine in the proceedings commenced by Cherrington. 28 On 7 September 2004, the Seattle Proceedings were amended by joining Terminals and Marine as defendants. 29 On 9 September 2004, the proceedings separately commenced in New South Wales by Colosseum and Cherrington were consolidated by the joinder of Colosseum as a Plaintiff in the proceedings commenced by Cherrington so that the parties to those proceedings became, as they are now, i.e. Colosseum and Cherrington as Plaintiffs, Vanguard and Terminals as Defendants, Vanguard as Cross Claimant and COSCO, Terminals and Marine as Cross Defendants. These are the proceedings to which I have referred as the NSW Proceedings. 30 A timetable has been set in the Seattle Proceedings whereby interlocutory steps are to be taken so as to prepare the matter for a trial commencing in early January 2006. The trial is estimated to last three days. There is, of course, no guarantee that the trial will commence at the time stipulated. 31 No date has been set for the trial of the NSW Proceedings.

32 By a Further Amended Statement of Claim: - Cherrington alleges that it entered into a contract with Vanguard for the transportation of the drilling equipment from the United States to China, that it was an implied term of that contract that Vanguard would take reasonable care in carrying out its obligations, and that Vanguard, by the negligence of its agents or subcontractors, was negligent in carrying out its obligations whereby Cherrington has suffered loss and damage in that it has lost the profits it would have derived from the timely delivery of the drilling equipment; - alternatively, Cherrington sues Vanguard for damages in detinue for detaining the drilling equipment from 16 March 2004 onwards;

Colosseum alleges that it is the owner of the drilling equipment, that Vanguard owed it a duty of care in transporting the equipment, that Vanguard by its agents or subcontractors breached its duty of care to Colosseum whereby Colosseum has suffered loss and damage in that it has lost the value of the equipment and the profits to be derived therefrom;

Colosseum and Cherrington both allege that Terminals was responsible for the loading of the equipment at the Port of Seattle, that Terminals owed each of them a duty of care in the loading operation, that the damage to the equipment was caused by the negligence of Terminals, its servants and agents, and that Colosseum and Cherrington have thereby suffered loss and damage in that they have lost the profits to be derived from the drilling equipment. 33 By its Defence filed on 21 January 2005, Vanguard:

denies that there was a contract between it and Cherrington for the transport of the drilling equipment or that it was the carrier of the equipment;

denies that it owed any duty of care to Cherrington or Colosseum in respect of the drilling equipment;

denies that damage was caused to the drilling equipment by the negligence of Vanguard, its agents or subcontractors;

denies that it has detained the drilling equipment from 16 March 2004 onwards but says that if it is in possession of the drilling equipment its refusal to re-deliver it is in reliance upon a lawful maritime lien for unpaid freight owed by Cherrington;

says that if it was the carrier of the drilling equipment, it is entitled to the limitations and exonerations provided in the United States Carriage of Goods by Sea Act ("US COGSA "). 34 By its Amended Cross Claim:

Vanguard alleges against COSCO that it was the operator of the MV Jing Po He and the carrier of the cargo to be carried on that vessel, that COSCO as carrier owed a duty of care to Colosseum in respect of the carriage of the drilling equipment and that COSCO breached its duty of care in the loading of that equipment;

Vanguard alleges against Terminals, or Marine in the alternative, that it was the stevedore responsible for the loading of the drilling equipment, that it owed a duty of care to Colosseum in the loading of the equipment, and that it breached its duty of care;

Vanguard alleges that if it is liable to Colosseum and Cherrington in respect of the damage to the drilling equipment, COSCO and Terminals, or alternatively, Marine, are also liable in respect of the same damage so that Vanguard is entitled to contribution or indemnity from COSCO, Terminals or Marine pursuant to s.5 Law Reform (Miscellaneous Provisions) Act 1946 (NSW), or in equity. 35 COSCO, Terminals and Marine have not filed any Defence to the Cross Claim in the NSW Proceedings.

36 By a First Amended Complaint the Vanguard Parties allege that:

on or about 7 September 2003 NACA entered into a contract of carriage with COSCO whereby COSCO agreed to transport the drilling equipment safely from Seattle to China;

Terminals or Marine provided stevedoring services for the loading of the drilling equipment;

the drilling equipment was damaged by the negligence of COSCO and in breach of its contract of carriage;

the drilling equipment was damaged by the negligence of Terminals or Marine in breach of a warranty of workmanlike service;

pursuant to the contract with COSCO, the Vanguard Parties are entitled to indemnity from COSCO in respect of any losses which they may incur as a result of damage to the drilling equipment;

pursuant to the warranty of workmanlike service, the Vanguard Parties are entitled to indemnity from Terminals or Marine in respect of any losses which they may incur as a result of damage to the drilling equipment;

the Vanguard Parties are entitled to recover from COSCO, Terminals or Marine all losses which they may incur by the negligence of the Defendants which occasioned damage to the drilling equipment. 37 COSCO, Terminals and Marine have filed Defences in the Seattle Proceedings denying negligence and pleading, inter alia, defences under US COGSA and the Bill of Lading.

38 COSCO, Terminals and Marine are not residents of NSW nor do they carry on business or otherwise have any presence in this State or, indeed, in Australia. They have not submitted to the jurisdiction of this Court in the NSW Proceedings and they have not been served in New South Wales with the proceedings. This Court therefore has no in personam jurisdiction at common law to entertain the claims of Colosseum and Cherrington against Terminals and the claims of Vanguard against COSCO, Terminals and Marine. 39 By their Notice of Motion, Colosseum and Cherrington seek leave to proceed against Terminals under Pt 10 r.2(1) on the ground that service of the NSW Proceedings was validly effected on Terminals under Pt 10 r.1A(1)(e) and (i). Vanguard submits that service of its Cross Claim in the NSW Proceedings has been validly effected on COSCO, Terminals and Marine under Pt 10 r.1A(1)(e) and (f). Those provisions are in the following terms: " 1A Cases for service of originating process

(1) Subject to rule 2 and rule 2A, originating process may be served outside Australia in the following cases:

(e) where the proceedings, wholly or partly, are founded on, or are for the recovery of damages in respect of, damage suffered in the State caused by a tortious act or omission wherever occurring,

(f) where the proceedings are for contribution or indemnity in respect of a liability enforceable by proceedings in the Court,

(i) where the proceedings are properly brought against a person served or to be served in the State and the person to be served outside the State is properly joined as a party to the proceedings." 40 Mr Silver, for Colosseum and Cherrington, submits that damage has been suffered in the State of New South Wales by Colosseum and Cherrington by the tortious act of Terminals in Seattle in that economic loss has been suffered by Colosseum and Cherrington as companies incorporated in and carrying on business within New South Wales. The economic loss is loss of profits which otherwise would have been derived from the drilling equipment had it not been damaged beyond repair. 41 Mr Silver submits, correctly, that "damage" for the purposes of Pt 10 r.1A(1)(e) is not limited to physical injury but includes any compensable damage caused by tort, including economic loss: Flaherty v Girgis (1985) 4 NSWLR 248, at 266E; Brix-Neilsen v Oceaneering Australia Pty Ltd [1982] 2 NSWLR 173; Challenor v Douglas [1983] 2 NSWLR 405. 42 Mr Nell, for COSCO, Terminals and Marine, says that while the Further Amended Statement of Claim in the NSW Proceedings alleges that Colosseum and Cherrington have suffered financial loss by the tortious act or omission of Terminals, it does not expressly allege that the financial loss was suffered by Colosseum and Cherrington "in New South Wales" nor is there evidence that that financial loss was suffered by the Plaintiffs in this State. 43 In response, Mr Silver relies on the decision of Carruthers J in Darrell Lea Chocolate Shops Pty Ltd v Spanish-Polish Shipping Co Inc ( "the Katowice II ") (1990) 25 NSWLR 568. In that case, the plaintiff carried on business in New South Wales as a manufacturer and retailer of chocolates. The plaintiff purchased from a German company a machine to be used in manufacturing chocolates in New South Wales. The machine was damaged while it was being loaded onto the first defendant's vessel at Hamburg, for carriage to Sydney. 44 The machine was discharged from the vessel and repaired by the German company in Germany. The cost of the repairs was paid by the plaintiff's insurer which then sought to recover the cost of repairs by suing the owner of the vessel in the name of the plaintiff in the Supreme Court of New South Wales. The question arose whether the plaintiff had suffered damage in the State of NSW within the meaning of Pt 10 r.1A(1)(e). Carruthers J held that it had. 45 At p.577, his Honour said: "The plaintiff carries on its business in New South Wales. It is here that its expenses are incurred, its records maintained and its profits are made. The subject machine was required for use in its business in this State and it was contemplated that when the machine arrived in New South Wales from Germany, it would be in an operational condition. By reason of the injury occasioned to the machine in Germany, it was necessary for the plaintiff to incur the obligation to repair the machine so that it would arrive for use in the plaintiff's business in an operational condition. The evidence before me does not indicate whether the contractual arrangement for the machine to be repaired by Bauermeister was made in New South Wales or in Germany. However I do not think that anything turns on this. Absent the requisite insurance cover, the assets of the plaintiff would have been depleted in New South Wales in order to meet the expenditure incurred in the repair. If one accepts that the expense was incurred in Germany, it does not necessarily mean that the damage to the plaintiff was not suffered in New South Wales. I can see nothing logically inconsistent about the physical injury to the machine being caused in Germany, the obligation to pay for the repair being incurred in Germany, and the damage, in the sense of the consequential disadvantage or detriment, being suffered by the plaintiff in this State. The matter would, of course, have been much simpler if the plaintiff had sued for loss of profits flowing from the delayed delivery of the machine. However, I am satisfied that in these proceedings for recovery of the cost of repairs to the machine the plaintiff has a good arguable case for service upon Polish Ocean Lines outside the jurisdiction." 46 Mr Nell seeks to distinguish this decision on the facts of the present case. He pointed out that Carruthers J was able to find that the machinery was required for use in New South Wales whereas in the present case the drilling equipment was required for use in China. Carruthers J observed that, but for the insurance cover, the assets of the plaintiff would have been depleted in New South Wales by reason of the payment of the costs of repairs even though carried out in Germany whereas, Mr Nell says, in the present case there is no evidence of what assets Colosseum or Cherrington have in New South Wales which may be subject to depletion by the losses sustained by damage of the drilling equipment. 47 Mr Nell has not been able to refer me to any authority for the proposition that a company incorporated in this State does not necessarily suffer damage in this State for the purposes of Pt 10 r.1A(1)(e) if the damage claimed is loss of profits. Indeed, Carruthers J seems implicitly to reject such a proposition in the passage from Darrell Lea which I have quoted when his Honour says that "[t]he matter would … have been much simpler if the plaintiff had sued for loss of profits flowing from the delayed delivery of the machine" . I take his Honour to mean that the question of location of "damage" in the case before him was complicated by the fact that the damage claimed was only the payment of the cost of repairs and that the payment had been made in Germany; if the plaintiff had sued for loss of profits the matter would have been simpler because the plaintiff, being a company resident in New South Wales, would have suffered the loss of profits in this State. 48 A company, like a natural person, is an indivisible entity. Like a natural person, a company is made richer or poorer by a financial transaction regardless of where that transaction takes place. The transaction may have been effected as part of a particular business conducted overseas by the company and that business may be one of several different types of business conducted by the company. The overseas businesses may even be separately administered and may have separate accounting and reporting procedures. Nevertheless, ultimately, the result of the overseas transaction is reflected in the financial position of a singly entity, the company itself. If the transaction produces loss to the company, it must be taken into account in assessing the solvency of the company. An insolvent company incorporated in this State may be wound up by the Supreme Court of this State, regardless of where its assets are located, regardless of where its liabilities are incurred, and regardless of whether the transactions producing insolvency occurred within or outside this State. 49 In my opinion, a company which is incorporated in New South Wales and has its principal place of business in New South Wales is located in New South Wales and if it suffers economic loss by reason of a tort it suffers damage in New South Wales for the purpose of Pt 10 r.1A(1)(e) regardless of where the tort was committed. It is, therefore, not necessary for the company to allege expressly in its pleading that it has suffered economic loss in New South Wales; such an allegation is implicit in its allegation that it has suffered economic loss. 50 Because Colosseum and Cherrington are incorporated in New South Wales and have their principal places of business in the State, I hold that any economic loss which they may have suffered by reason of the tortious acts of Terminals in relation to the drilling equipment is damage suffered by them in New South Wales, so that service of the NSW Proceedings was validly effected on Terminals under Pt 10 r.1A(1)(e).

51 In case I am wrong in my conclusion as to jurisdiction under Pt 10 r.1A(1)(e) I should consider the alternative ground for jurisdiction under subparagraph (i) relied upon by Colosseum and Cherrington. 52 There is no issue that the NSW Proceedings are properly brought against Vanguard and that Vanguard has been properly served within New South Wales. The question is whether Terminals is "properly joined" in the NSW Proceedings within the meaning of Pt 10 r.1A(1)(i). 53 The test for jurisdiction under that subparagraph is now well established: if a foreign party to be served had been resident within New South Wales, could it properly have been sued as a defendant in the proceedings together with another defendant which is, in fact, resident in the State? That test does not require that the foreign party be liable to the plaintiff jointly with, or in the alternative to, the defendant which is resident within the State: Westpac Banking Corporation v Commonwealth Steel Co Ltd [1983] 1 NSWLR 735, at 739. It is sufficient if joinder of the foreign party as defendant would have been permitted by any of the rules of court had the foreign defendant been resident in the State: see e.g. Maclaine Watson & Co Private Ltd v Bing Chen [1983] 1 NSWLR 163, at 167. 54 Here, the liability of Terminals to Colosseum and Cherrington for negligent damage of the drilling equipment depends on a substratum of fact which is common to the Plaintiffs' claim against Vanguard in the NSW Proceedings. If Terminals had been resident in New South Wales at the commencement of the NSW Proceedings it could properly have been joined as a co-defendant with Vanguard in the proceedings under Pt 8 r.2(a)(i). 55 Accordingly, I hold that service of the NSW Proceedings on Terminals has validly been effected under Pt 10 r.1A(1)(i).

56 Dr Bell, who appears for Vanguard, submits that Vanguard has validly effected service of the Cross Claim on COSCO, Terminals and Marine under Pt 10 r.1A(1)(e). He says that Vanguard, being incorporated in New South Wales, has suffered and will continue to suffer damage within New South Wales in the form of the costs and expenses of the defence of the NSW Proceedings and the damages which it will have to pay to Colosseum and Cherrington if its defences fail. That loss has been occasioned by the tortious negligence of COSCO, Terminals or Marine which resulted in injury to the drilling equipment and the consequential commencement of the NSW Proceedings against Vanguard. 57 The incurring of liability by Vanguard for the legal costs and expenses of defending the NSW Proceedings is a loss which Vanguard has already incurred. If it succeeds in its defences, its costs and expenses of the NSW Proceedings will not necessarily be recoverable in full from the unsuccessful parties. Further, Vanguard must make provision in its accounts as a contingent liability for the damages which it may be called upon to pay to Colosseum or Cherrington if they succeed. 58 Accordingly, Dr Bell submits, the requirements of Pt 10 r.1A(1)(e) are met. 59 In those circumstances, I am of the opinion that Vanguard has incurred economic loss by reason of the commencement of the NSW Proceedings against it. For the reasons which I have given earlier, I am satisfied that economic loss suffered by Vanguard, being a company incorporated and carrying on business in New South Wales, is damage suffered by Vanguard in this State for the purposes of Pt 10 r.1A(1)(e). 60 Accordingly, I hold that service of the Cross Claim on COSCO, Terminals and Marine was validly effected under Pt 10 r.1A(1)(e).

61 The issue which has occupied most attention in the argument of Counsel is not whether this Court has jurisdiction over the foreign parties in the NSW Proceedings under Pt 10 r.1A but rather whether, having that jurisdiction, the Court should decline to exercise it on discretionary grounds. 62 The issue is raised by the Notice of Motion of COSCO, Terminals and Marine, which is an application under Pt 10 r.6A or, alternatively, an application in the exercise of the Court's inherent jurisdiction. The same principles are applicable in either case. 63 Rule 6A provides: " Setting aside service outside Australia

(1) The Court may make an order of a kind referred to in Part 11 rule 8 (which relates to setting aside etc originating process) on application by a person on whom an originating process is served outside Australia.

(2) Without limiting subrule (1), the Court may make an order under this rule on the ground:

(a) that the service of the originating process is not authorised by these rules, or

(b) that this Court is an inappropriate forum for the trial of the proceedings." 64 Under Pt 11 r.8(1)(h) the Court may, on application by a defendant to any originating process, decline in its discretion to exercise its jurisdiction in the proceedings. 65 The parties are agreed that the test which governs the stay of local proceedings in favour of proceedings in another country is that stated by Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197, at 247.8-248.5. That test was adopted by the High Court in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538, at 564.9; see also Henry v Henry (1996) 185 CLR 571; CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345. 66 It is worthwhile setting out the often-quoted passage from the judgment of Deane J in Oceanic Sun Line which states the test: "In the light of the foregoing and at the cost of some repetition, it is possible to identify in summary form what I see as the modern content of the traditional principles governing the power of a court in this country to order that proceedings which have been regularly instituted within jurisdiction should be dismissed or stayed on inappropriate forum grounds. That power is a discretionary one in the sense that its exercise involves a subjective balancing process in which the relevant factors will vary and in which both the question of the comparative weight to be given to particular factors in the circumstances of a particular case and the decision whether the power should be exercised are matters for individual judgment and, to a significant extent, matters of impression. 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." 67 Deane J defined "oppressive" in this context as "seriously and unfairly burdensome, prejudicial or damaging" ; and "vexatious" as "productive of serious and unjustified trouble and harassment" : ibid at 247. 68 It is accepted that although Pt 10 r.6A(2)(b) permits the Court to make orders setting aside proceedings or declining jurisdiction on the ground that the Court is "an inappropriate forum" , the same concepts and considerations apply to the test under the Rules as apply to the test of "clearly inappropriate forum" under the common law, as stated by Deane J in Oceanic Sun Line and adopted in Voth : Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491, at [25]. 69 A review of the authorities shows that factors relevant to the exercise of the Court's discretion to stay proceedings or decline jurisdiction on the ground of forum non conveniens include, but are not limited to, the following:

i) a consideration of the true nature and full extent of the issues involved in proceedings in the local court and in the foreign court;

ii) whether, in the light of that consideration, the foreign court has jurisdiction to deal with the same subject matter as is before the local court;

iii) the degree of connection which both proceedings share with the law of the foreign court and the law of the local court;

vi) whether local professional or other standards of care have a bearing on the legal quality of the relevant acts or transactions or the liability of the parties;

viii) where the relevant evidence in the action is to be found;

ix) whether the application to the local court for a stay or dismissal has been made with reasonable promptness;

x) the stage which proceedings in the foreign court have reached in comparison with the stage of proceedings in the local court;

xi) the order in which the two sets of proceedings were instituted and the costs which have been incurred in each;

xii) whether each court recognises the orders and decrees of the other;

xiii) which court can provide more effectively for the complete resolution of the whole of the controversy between the parties;

xiv) that a party properly invoking the jurisdiction of the local court has a prima facie right to insist upon the exercise of that jurisdiction, so long as that prima facie right is not given undue emphasis;

xv) that considerations of comity and restraint should be taken into account where a defendant carries on business in a foreign country and the jurisdiction of the courts of that country would be recognised under local conflict rules;

xvi) the undesirability of allowing two independent actions involving the same question of liability to proceed contemporaneously in the courts of different countries;

xvii) whether the dominant purpose of a party in commencing proceedings in one jurisdiction or another is to prevent another party from pursuing remedies available in the courts of another country having jurisdiction: Oceanic Sun Line at 248; Voth at 570-571; Henry at 578-579, 588-589, 590, 592-593; Agar v Hyde (2000) 201 CLR 552, at [42]-[43]; CSR v Cigna at 399, 401. 70 These factors can be given no particular order of priority nor is any one of them of such significance as to outweigh all or any of the others. This is because resolution of the issue of forum non conveniens depends on the "general circumstances" of the case; exercise of the power to dismiss or stay proceedings on that ground ultimately depends upon a subjective balancing process taking into account some or all of these factors or, perhaps, some other factors. To a significant extent, the exercise is a matter of impression and judgment yet the power to stay should not be exercised unless the applicant has satisfied the Court that it is a clear case: Oceanic Sun Line at 247-248; Henry at 593. 71 It is precisely because the discretion to be exercised involves so much of subjective judgment and impression that the High Court in Voth said at 565 that in the ordinary case of an application for stay or dismissal on the ground of forum non conveniens: "… counsel should be able to furnish the primary judge with any necessary assistance by a short, written (preferably agreed) summary identification of relevant connecting factors and by oral submissions measured in minutes rather than hours. There may well be circumstances in which the primary judge may conclude that it is desirable to give detailed reasons balancing the particular weight to be given to the presence or absence of particular connecting factors and explaining why the local forum is or is not a clearly inappropriate one. Ordinarily, however, it will be unnecessary for the primary judge to do more than briefly indicate that, having examined the material in evidence and having taken account of the competing written and oral submissions, he or she is of the view that the proceedings should or should not be stayed on forum non conveniens (ie 'clearly inappropriate forum') grounds ." [Emphasis added.] 72 A first instance judge may, perhaps, be permitted a wry smile at the advice given by the High Court as to the permissible extent and content of a judgment in "an ordinary case" : in the present judicial climate, a judgment following that advice would receive a frosty welcome in the Court of Appeal.

73 Mr Nell submits that the following factors warrant the Court, in its discretion, declining to exercise jurisdiction in the Cross Claim:

COSCO, Terminals and Marine are not residents of New South Wales nor do they carry on business here;

Terminals is incorporated in Washington, has its principal place of business in Seattle and operates terminals in Seattle, Washington and California;

COSCO is incorporated in China, has its principal place of business in Shanghai and carries on business all around the world;

although COSCO operates a regular service from Australia to Hong Kong and other parts in China the shipment of the drilling equipment in the present case had nothing to do with that service;

the damage to the drilling equipment occurred in Seattle;

the acts and omissions of persons said to amount to negligence occurred in Seattle or, possibly, elsewhere in the United States and not in New South Wales;

all those involved in the rigging and lifting of the drilling equipment were employees of Terminals and reside and are employed in Seattle;

all of the witnesses to the accident and the surveyor attending the vessel at the time of loading are located in Seattle;

there may be witnesses to the accident amongst the ship's crew, but they are not located in New South Wales;

the damaged drilling rig remains in Seattle and the surveyors who examined it are all located in Seattle;

the manufacturer of the drilling rig which has provided an estimate for the cost of repairs is located in Ohio;

the witnesses to the accident located in Seattle cannot be compelled by subpoena to give evidence in the NSW Proceedings but they can be subpoenaed to give evidence in the Seattle Proceedings;

all of the booking and contractual arrangements for the receipt, loading and shipment of the drilling equipment were made in the United States;

the limitation and exoneration defences arising from the booking and contractual arrangements under Unites States law which are relied upon by COSCO, Terminals and Marine in the Seattle Proceedings would also be relied upon by them in answer to Vanguard's Cross Claim in the New South Wales and by Terminals in answer to the claims by Colosseum and Cherrington;

all of the witnesses to these booking and contractual arrangements are resident and employed in the United States, with the possible exception of Mr Ahuja, who is resident in Sydney;

the substantive law for the determination of the claims for Colosseum and Cherrington in negligence against Terminals is United States law as the lex loci delicti: Regie Nationale at [75];

the claims of Colosseum and Cherrington in negligence against Terminals have a substantial connection with the law of the United States;

the courts of the United States are best suited to dealing with the application of United States law, particularly when the substantial majority of the evidence relating to the cause of action in negligence is located in the United States;

the substantive claim of Vanguard in negligence against COSCO, Terminals and Marine is also to be determined by United States law as the lex loci delicti so that the same considerations apply as in the claims by Colosseum and Cherrington against Terminals;

Vanguard's Cross Claim in the NSW Proceedings for contribution or indemnity depends on establishing that COSCO, Terminals and Marine are liable for the same loss and damage as Colosseum and Cherrington have sued Vanguard to recover and that liability depends on the law of the United States as the lex loci delicti;

the liability of COSCO, Terminals and Marine to Vanguard for negligence is, therefore, best dealt with by the court in Seattle in the Seattle Proceedings;

Colosseum and Cherrington could have sued Terminals in Seattle, a jurisdiction to which Terminals is clearly amenable;

if a stay or dismissal of the Cross Claim is not granted, COSCO, Terminals and Marine face the prospect of having to defend the same claims against them by Vanguard in both the NSW Proceedings and the Seattle Proceedings, with the difficulties, risks and additional costs which that predicament involves;

the United States Court will be able to make orders for indemnity and contribution amongst tortfeasors, such as are sought by Vanguard in the Cross Claim in the NSW Proceedings under the Law Reform (Miscellaneous Provisions) Act , under the general maritime law of the United States;

a claim for contribution or indemnity analogous to, if not identical with, that pleaded in Vanguard's Cross Claim in the NSW Proceedings could be pleaded by Vanguard in the Seattle Proceedings, if they sought to amend appropriately;

Vanguard has pleaded a cause of action against Terminals and Marine in the Seattle Proceedings which it has not pleaded against them in its Cross Claim in the NSW Proceedings, namely, a claim based on a breach of an implied warranty of workmanlike service said to be given by Terminals and Marine, so that if Vanguard is permitted to prosecute its Cross Claim in New South Wales, Terminals and Marine still face a further claim by Vanguard in the Seattle Proceedings;

the Seattle Proceedings are well advanced and are fixed for hearing in January 2006 whereas no date for trial has been set in the NSW Proceedings. 74 These considerations are indeed weighty: they invoke the factors to which I have referred in paragraph 69(ii), (iii), (iv), (v), (vi), (vii), (viii), (x) and (xvi). 75 Dr Bell and Mr Silver submit that the following factors warrant the Court in continuing to exercise jurisdiction in the whole of the NSW Proceedings:

the claims by Colosseum and Cherrington against Vanguard are clearly founded entirely within the jurisdiction of this Court and have a real connection with New South Wales in that:

the three parties are incorporated and carry on business in New South Wales;

the contract upon which Cherrington sues was made in New South Wales and is governed by New South Wales law;

the claim in tort depends, inter alia, upon whether Vanguard owed Colosseum and Cherrington a duty of care under New South Wales law;

the economic loss to which Colosseum and Cherrington are exposed is, and will be, suffered in New South Wales;

the claims by Colosseum and Cherrington against Marine are within the jurisdiction of the Court by reason of Pt 10 r.1A(1)(e) and (i);

the jurisdiction of this Court has been properly invoked by Colosseum and Cherrington against Vanguard and Marine in the NSW Proceedings;

the NSW Proceedings were commenced before the Seattle Proceedings;

the NSW Proceedings, as presently constituted, are the only proceedings capable of effectively resolving all matters in controversy between all parties because:

Colosseum and Cherrington are not parties to the Seattle Proceedings;

if all controversies between all parties are not decided in the same Court there is a risk that the New South Wales Court could find that Vanguard was liable to Colosseum and Cherrington as a carrier but a United States court could find that Vanguard was merely a party arranging the provision of carriage and did not have any principal liability to Colosseum and Cherrington which could found a claim for contribution against COSCO, Terminals and Marine;

contrary to the assertion of COSCO, Terminals and Marine that large numbers of witnesses resident in the United States will need to be called, it is likely that the major issues will not be factual, i.e. whether or not negligence occurred, but legal, i.e. contractual interpretation and the operation of limitation and Himalaya clauses;

in so far as the evidence of United States witnesses such as stevedores is required in the NSW Proceedings, the evidence may be given by video link without undue inconvenience and expense;

in so far as the evidence of senior executives of COSCO, Terminals and Marine may be required in the NSW Proceedings, they also may give evidence by video link and, further, overseas travel by people in their positions is not an uncommon feature of transnational litigation;

although the claims in negligence will be governed by American law as the lex loci delicti, COSCO, Terminals and Marine have not demonstrated, at any level of specificity, what features of the American law of negligence provide an advantage to them over the law of New South Wales: Regie Nationale at [72];

an Australian court cannot be a clearly inappropriate forum merely by virtue of the circumstance that its choice of law rules require it to apply foreign law as the lex causae, e.g. the United States law of negligence or US COGSA ; Regie Nationale at [81];

the risks, expense and inconvenience of parallel proceedings in New South Wales and Seattle must be seen in the context that on 13 January 2005 the American attorney of Vanguard requested COSCO, Terminals and Marine to agree to hold the Seattle Proceedings in abeyance pending the determination of the NSW Proceedings so as to permit the parties to focus their attention on the NSW Proceedings and to agree that the parties would share with New South Wales' legal representatives information necessary for the resolution of all claims in the NSW Proceedings; that request was refused on 17 January 2005. 76 These considerations, also, are weighty: they invoke the factors to which I have referred in paragraph 69(i), (ii), (iii), (iv), (v), (vii), (xiii), (xiv) and (xvi).

77 I have given careful consideration to the competing factors which the parties urge in favour of their respective positions. However, the exercise of discretion whether or not to decline jurisdiction in the NSW Proceedings does not involve a weighing up of the factors placed by the parties on one side of the scales or another in order to arrive at a view whether it is more appropriate that all issues between the parties be tried in Seattle or in New South Wales. 78 Rather, the exercise requires that I be persuaded by COSCO, Terminals and Marine that the Supreme Court of New South Wales is a clearly inappropriate forum for trial of the issues raised in the NSW Proceedings in that a trial of those issues in New South Wales "would be productive of injustice, because it would be oppressive in the sense of seriously and unfairly burdensome, prejudicial or damaging, or vexatious, in the sense of productive of serious and unjustified trouble and harassment" : Regie Nationale at [78]. 79 I am not persuaded that the New South Wales Supreme Court is a clearly inappropriate forum for trial of all of the issues in the NSW Proceedings. I shall enumerate the reasons. The order in which I give the reasons does not indicate the respective weight given to each of them. All of the reasons combined have formed the impression upon which the exercise of my discretion rests. The subtraction of one or other reason would not lead to the overall impression being different. 80 First, the NSW Proceedings are properly commenced against Vanguard. Indeed the Supreme Court of New South Wales is the only court in which Colosseum and Cherrington could properly have sued Vanguard. 81 Second, the joinder of Terminals in the NSW Proceedings is valid and within the Court's jurisdiction under Pt 10 r.1A(1)(e) and (i). 82 Third, the NSW Proceedings as presently constituted are the only proceedings capable of resolving finally all matters in controversy between all parties, since Colosseum and Cherrington are not parties in the Seattle Proceedings. If the Cross Claim in the NSW Proceedings is stayed or dismissed on discretionary grounds, Vanguard might suffer a judgment against it in these Proceedings but be held in the Seattle Proceedings not to be liable in law to Colosseum or Cherrington. A stay of the whole of the NSW Proceedings would force Colosseum and Cherrington to go to Seattle to sue Vanguard for claims in contract and in tort which are squarely within this Court's jurisdiction and which are governed by New South Wales law. 83 Fourth, the resolution of all issues between all parties will involve the application of the law of New South Wales and the law of the United States, whether those issues are determined by the New South Wales Supreme Court or by the Court in Seattle. The fact that some issues are governed by the law of the United States does not, in itself, make this Court a clearly inappropriate forum to determine those issues. 84 Fifth, the NSW Proceedings were commenced first and it was open to COSCO, Terminals and Marine, when they were joined as parties, to suspend the Seattle Proceedings and to abide the result in the NSW Proceedings without prejudice to their rights in the Seattle Proceedings, as they were invited to do. However, they declined to do so. 85 Sixth, ease of enforcement of orders made in the NSW Proceedings against COSCO, Terminals and Marine is no easier or more difficult than enforcement of orders which might be made against Vanguard, Colosseum or Cherrington in the Seattle Proceedings. There is no bi-lateral treaty or multi-lateral international convention in force between the United States and any other country whereby reciprocal recognition and enforcement of civil judgments is facilitated. 86 A party seeking enforcement in Australia of a judgement obtained in the Seattle Proceedings must do so under the common law. Under the Rules of Court in Washington the Seattle Court would not recognise as conclusive a judgment of the Supreme Court of New South Wales against COSCO, Terminals and Marine because this Court does not have personal jurisdiction over those parties: RCW 6.40.040(1)(b). Further, a judgment of this Court need not be recognised at all by the Seattle Court if, jurisdiction being based only on personal service under Pt 10 r.1A(1), "the foreign court was a seriously inconvenient forum for the trial of the action" : RCW 6.40.040(1)(f). 87 Seventh, the unavailability of, or inconvenience to, witnesses who are United States residents in giving evidence in the NSW Proceedings should not be given undue weight. As has frequently been pointed out by the courts, international travel in transactions involving international trade and in the transnational litigation which may ensue is no longer uncommon. In cases of this kind video link evidence from some or all of the overseas witnesses can remove or ameliorate hardship, inconvenience and undue expense to the witnesses and the parties. Dr Bell, on behalf of Vanguard, has indicated that Vanguard would consent to the evidence of all overseas witnesses being given by video link. 88 Eighth, in addition to witnesses from the United States, there will be witnesses resident in New South Wales who will be called to give evidence proving the relevant contract with Vanguard and proving economic loss to Colosseum and Cherrington. Orders

89 Bearing in mind the considerations to which I have referred, I am not satisfied that the Supreme Court of New South Wales is a clearly inappropriate forum, in the sense explained in Voth , to determine all of the issues raised in the NSW Proceedings as they are presently constituted. 90 Accordingly, I do not accede to the application of COSCO, Terminals and Marine to decline to exercise this Court's jurisdiction in relation either to the Cross Claim in the NSW Proceedings or in relation to those Proceedings as a whole. 91 The Notice of Motion filed by COSCO, Terminals and Marine on 13 December 2004 is dismissed. 92 The Notice of Motion filed by Vanguard on 28 April 2005 is dismissed. 93 Leave to proceed against Terminals under Pt 10 r.2(1) is granted to Colosseum and Cherrington in the NSW Proceedings, pursuant to their Notice of Motion filed on 28 April 2005. 94 Leave to proceed against COSCO, Terminals and Marine under Pt 10 r.2(1) is granted to Vanguard in respect of its Cross Claim in the NSW Proceedings, pursuant to its Notice of Motion filed 28 April 2005. 95 I will hear the parties as to costs. - oOo -

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