Commonwealth Bank of Australia v White

108. The criteria considered in Sterling Pharmaceuticals were referred to with approval by the High Court of Australia in Henry v Henry [1996] HCA 51; (1996) 185 CLR 571 at 590; and also in CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 at 390 n98. I adopt the criteria applied in Sterling Pharmaceuticals. I shall consider each of the criteria as applied to the present proceeding.

113. The Jaffray proceeding against Lloyd's, to which White is a party, was commenced in November 1997. The third party proceeding was instituted against Lloyd's by White on 30 January 1998. The time difference is minimal, therefore, a matter of two months only.

(2) Whether the determination of one proceeding is likely to have a manifest effect on the other

118. In determining Lloyd's application concerning jurisdiction Byrne J concluded that White will "be bound by the findings of fact and law in that [ie. the Jaffray] trial": [1999] VSC 262 at para 93. The conclusion, conceded by White, is required by the doctrine of issue estoppel: see Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at pp.531-532; Brewer v Brewer [1953] HCA 19; (1953) 88 CLR 1 at pp.14ff. Given that both the Jaffray proceedings and the Victorian proceeding concern the largely same substratum of fact and that, in essence, the same relief is sought in both proceedings, the determination of the Jaffray proceeding may have a manifest effect on the Victorian proceeding. For example, if Lloyd's were to lose the Jaffray trial then (subject to proof of individual reliance, causation and loss) White might seek to recover damages in that proceeding that would cover the losses that he suffered as a result of his membership of Lloyd's (including, for example, underwriting losses paid either directly or through the drawdown of a letter of credit, membership fees and other expenses of his underwriting). If, on the other hand, Lloyd's were to win the Jaffray trial, then the allegations currently advanced by White against Lloyd's in the Victorian proceeding would need to be re-visited and re-pleaded in the light of the relevant findings of fact and law. Such findings may include findings as to whether the relevant brochure and the global accounts contained representations as alleged and, if so, whether those representations were false as alleged.

121. In the principal proceeding White contends by way of defence the implied term. In the bank third party claim the bank claims that if White succeeds against the bank and proves fraud or unconscionable conduct by Lloyd's or if White succeeds against Lloyd's in this proceeding or in the Jaffray proceedings then the bank is entitled to relief against Lloyd's. Whether Lloyd's acted fraudulently is apparently the central issue in the Jaffray proceedings. Although the bank is not a party to the Jaffray proceedings, the bank will seek relief from Lloyd's. It has therefore specifically fixed its claim against Lloyd's to the outcome of the Jaffray action and to the findings in that proceeding. Further, White's solicitor, Mr Foster, deposed on affidavit in this application that if the court in Jaffray holds that certain documents relied upon by White as evidencing fraud by Lloyd's do not in fact evidence such fraud, White may wish to re-consider his "notice of fraud" defence against the bank. If White does not press his "notice of fraud" defence, the bank's third party claim against Lloyd's will fall away. If, on the other hand, those documents are part of a successful fraud finding against Lloyd's, White might feel encouraged to pursue his defence in relation to the "notice of fraud" claims against the bank.

126. It was submitted on behalf of Lloyd's and, I accept, that the public interest would not be jeopardised by the granting of a temporary stay in the present case. On the contrary, the public interest would be served by the efficient disposition of the present case with a minimum wastage of court time and a maximum saving of costs. In my view, the public interest will not be served if court time is wasted and costs are incurred unnecessarily.

(4) The undesirability of two courts competing to see which of them

132. It is apparent that this factor is unlikely to come into play as the Jaffray trial, commenced on 28 February 2000 with an estimated duration of between three and six months, will be concluded in all likelihood before any trial is commenced in Victoria, irrespective of whether a stay is granted or not.

(5) Consideration of circumstances relating to witnesses

137. It was urged on behalf of Lloyd's that many of the witnesses relied upon by Lloyd's in the Jaffray proceeding are elderly and in poor health. So much was not rebutted. It is feasible, therefore, that it would be oppressive to require those witnesses to assist with the preparation of witness statements for use in the Victorian proceeding before they have completed giving evidence in the Jaffray proceedings. It may be oppressive to Lloyd's also to require it to prepare witness statements for the Victorian proceeding before it is quite clear as to the issues that will remain for determination in that proceeding following judgment in Jaffray. Further, it could be burdensome to the parties and their witnesses if duplication in the preparation and settling of witness statements was permitted to occur. There would be, in addition, increased costs and burdens to the parties in endeavouring to obtain co-operation of witnesses many of whom are elderly and retired.

(6) Whether work done on pleadings, particulars, discovery, interrogatories

143. It necessarily follows that work done in this proceeding on pleadings, particulars, discovery, interrogatories and preparation would be wasted insofar as that work concerns issues which, following Jaffray, may no longer be justiciable or in dispute as between the parties. Furthermore, it is readily comprehensible that Lloyd's Australian legal advisers would need constant access to Lloyd's English legal advisers, to Lloyd's documents and to Lloyd's witnesses in order to complete interlocutory steps and prepare generally for the trial of the Victorian proceeding. Access would be severely limited as a consequence of the involvement of Lloyd's English legal advisers in the conduct of the Jaffray trial, the participation of Lloyd's witnesses in the Jaffray trial and the deployment of relevant documentation in the Jaffray trial.

146. In addition, there is a confidentiality regime in place as requested by third parties in the Jaffray proceedings. Hence, access by Lloyd's Australian legal advisers to documents discovered and witness statements filed in Jaffray is in all likelihood limited. It would be a very substantial task, necessarily requiring the involvement of Lloyd's English legal advisers, to sift out from general discovery in Jaffray documents not the subject of confidentiality orders and to commence an entirely independent discovery process in relation to documents said to constitute approximately 35,000 crates of Lloyd's documents. It also said that those documents are not centrally indexed.

149. Whilst Lloyd's will be obliged to make discovery at some point wastage would be minimised if discovery was delayed until the determination of Jaffray when the issues outstanding between the parties to the Victorian proceeding will be known and documents and witness statements in Jaffray are likely, of the confidentiality regime, subject for the most part to the terms to be available.

(7) The undesirability of substantial waste of time and effort if it becomes a

common practice to bring actions in two courts involving substantially the same issues

155. In my view, for the reasons already stated this factor is self-evidently applicable in the present case. Although relying on different causes of action, White is currently seeking some relief from Lloyd's in relation to much of the same sub-stratum of fact in two separate courts.

(8) How far advanced the proceedings are in each court

160. As already considered, the trial of Jaffray actually commenced on 28 February 2000. In the Victorian proceeding, Lloyd's has done nothing more than file an appearance and pursue the initial interlocutory application before Byrne J and this application.

(9) The law should strive against permitting multiplicity of proceedings in relation to similar issues

165. For the reasons already expressed, I consider this factor is made out in that a stay is appropriate so as to avoid multiplicity of proceedings.

(10) Generally balancing the advantages and disadvantages to each party

170. If White is successful in the Jaffray proceedings, he will have suffered no prejudice if in the meantime the progress of his claims in Victoria is delayed. He may no longer need to pursue such claims. Indeed, if the Jaffray proceeding is resolved in White's favour, time and the substantial expense incurred by the parties in connection with the Victorian proceeding will have been wasted. If, on the other hand, White is not successful in the Jaffray proceeding then, if a stay is granted in Victoria pending the determination of the Jaffray proceeding, that stay will fall away and it will be for the parties to make submissions as to the future conduct of the action having regard to issues that remain outstanding in light of the findings in Jaffray. It is important in this respect that Lloyd's undertakes to pay interest in respect of sums recovered by the bank from White during the period of any stay ordered insofar as the bank itself is unable to recover such interest from White thereby ensuring that the bank will suffer no prejudice if the proceeding is stayed. In addition, the bank prays in aid of its claim against Lloyd's the findings of the English Court in Jaffray. Depending on the outcome of Jaffray, White will revisit his "notice of fraud" defence to the bank's claim against him. The alternative is that Lloyd's will have to address allegations of fraud in two forums concurrently if the bank's claims against White and Lloyd's are permitted to proceed before Jaffray is determined.

175. It was urged on behalf of Lloyd's that the fact that a foreign court has granted an anti-suit injunction restraining White from further prosecuting his claim in this forum is a factor that should weigh in the exercise of the discretion in favour of granting a stay. On behalf of Lloyd's it was acknowledged that this court is not bound to give effect to the injunction granted by Cresswell J in the Jaffray proceedings. However, it was urged that the this court should do so for reasons based on notions of comity.

178. The High Court of Australia considered the principles applicable to stay orders and anti-suit injunctions in CSR Limited v Cigna Insurance Aust Limited (1997) 189 CLR 345. The High Court observed that anti-suit injunctions are a matter to be approached with caution. In Cigna (at 372 per Brennan CJ) cited with approval the observations of Lord Scarman in British Airways v Laker Airways [1984] UKHL 7; (1985) AC 58 at 95:

"The approach has to be cautious because an injunction restraining a person within the jurisdiction of the English court from pursuing a remedy in a foreign court where, if he proves the necessary facts, he has a cause of action is, however disguised and indirect, an interference with the process of justice in that foreign court. Caution is needed even in a 'forum convenience' case, ie, a case in which a remedy is available in the English as well as in the foreign court. Caution is clearly very necessary where there is no remedy in the English court in respect of the cause of action which, if the facts be proved, is recognised and enforceable by the foreign court."

182. The High Court held that the court's inherent power to protect the integrity of its processes may authorise the grant of an anti-suit injunction. The court further held that if the commencement of legal proceedings involves unconscionable conduct or the unconscientious exercise of a legal right, an injunction may be granted in the exercise of equitable jurisdiction in restraint of those proceedings regardless of where they have been instituted. In the joint judgment of Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ the position was stated (at 392) thus:

"The inherent power to grant anti-suit injunctions is not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes. Quite apart from the inherent power of a court to protect its own processes, a court may, in the exercise of the power deriving from the Chancery Court, make orders in restraint of unconscionable conduct or the unconscientious exercise of legal rights. If the bringing of legal proceedings involves unconscionable conduct or the unconscientious exercise of a legal right, an injunction may be granted by a court in the exercise of its equitable jurisdiction in restraint of those proceedings no matter where they are brought. In some cases, the equitable jurisdiction to restrain unconscionable conduct may be exercised in aid of legal rights. Thus, as the respondents correctly contend, if there is a contract not to sue, an injunction may be granted to restrain proceedings brought in breach of that contract, whether brought here or abroad. Similarly, an injunction may be granted in aid of a promise not to sue in a foreign jurisdiction constituted, for example, by an agreement to submit to the exclusive jurisdiction of the courts of the forum."

186. Indeed, the application of anti-suit injunctions have been considered in recent times in the Federal Court of Australia in the context of competing jurisdictions between State Supreme Courts and the Federal Court: Cook Inc v World Medical Manufacturing Corp unreported judgment of Goldberg J dated 24 September 1999; [1999] FCA 1333; Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd unreported judgment of Sundberg J dated 24 December 1999; [1999] FCA 1842; Construction, Forestry, Mining and Energy Union v Multiplex Constructions Pty Ltd unreported judgment of Marshall J dated 14 February 2000; [2000] FCA 101; Australian Workers' Union v Yallourn Energy Pty Ltd unreported judgment of Merkel J dated 8 February 2000; [2000] FCA 65.

189. The anti-suit injunction having been granted by the English court in the Jaffray proceedings raises the issue as to its application to this court. As observed by the High Court in Cigna (at 395-396) an anti-suit injunction acts in personam but nevertheless interferes with the processes of the foreign court. As a consequence, it may be perceived as a breach of comity by that court. In Cigna (at 395) the High Court considered the English and North American authorities in relation to the application of comity and observed that the notion was explained by the Supreme Court of the United States in Hilton v Guyot [1895] USSC 185; (1895) 159 US 113 at 163-164 as follows:

"'Comity', in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws."

193. Applying those principles to the present matter it is appropriate on the basis of duty, convenience and in recognition of citizens' rights under the law that I recognise the judicial act of the court in the Jaffray proceedings of granting the anti-suit injunction.

196. It was also urged on behalf of Lloyd's that the fact that White contracted to litigate exclusively in the foreign jurisdiction together with the fact that the law of the foreign jurisdiction constituted the proper law of the contract between White and Lloyd's were factors to weigh in favour of granting the stay. For the reasons already stated, and particularly in reliance upon the findings of Byrne J in Commonwealth Bank of Australia v White (No. 1) there are separate issues that cannot be determined in the English court and under English law. If this was the only factor relied upon in support of the stay I would decline to do so. However, as there are other compelling factors already considered it is unnecessary for me to determine whether to exercise the discretion on this basis.

199. Ultimately I am satisfied that Lloyd's ought succeed on its application for a stay of the proceeding pending the outcoming of the judgment in the Jaffray proceedings. Accordingly, I will make appropriate orders staying the proceeding until further order subject to the undertaking proffered by Lloyd's.