High Court of Australia|1988-11-23|Before: Kirby P, Priestley JJ, Clarke J, Gaudron JJ

Contender 1 Ltd v Lep International Pty Ltd [1988] HCA 60; (1988) 82 ALR 394; (1988) 63 ALJR 26 (23 November 1988)

CONTENDER 1 LIMITED v. LEP INTERNATIONAL PTY LIMITED AND ANOR

Wilson(1), Brennan(2), Dawson(1), Toohey(1) and Gaudron(1) JJ.

2. It is alleged in the respondent's statement of claim that the respondent arranged for the shipment of a cargo of art sculptures from New York to Sydney on board the vessel "Cavara", which at all material times was owned by the appellant and chartered to the second defendant. It is also alleged that the respondent was entitled to take delivery of the cargo in Sydney as a holder or, alternatively, as an endorsee of the bill of lading. The cargo arrived in Sydney in a damaged condition. The statement of claim seeks damages from inter alia, the appellant, alleging breach of duty under the bill of lading and breach of duty by the appellant in its capacity as a bailee of the cargo. It is unnecessary to detail the allegations any further since the only issue in the appeal concerns the manner in which the Court of Appeal dealt with the application for leave to appeal.

3. The respondent's originating process was served on the appellant in Bermuda. Thereafter the appellant entered a conditional appearance and moved Clarke J. in the Supreme Court either to set aside the service for the reason that there was no legal authority for service to be effected outside the jurisdiction or, alternatively, to stay the proceedings on the principle of forum non conveniens.

4. The respondent, in arguing for the validity of the service, relied independently upon each of pars (a), (b) and (e) of the Supreme Court Rules 1970 (N.S.W.), Pt 10 r.1(1). Rule 1(1) authorizes the service of process outside New South Wales in the circumstances there mentioned. The paragraphs in question read as follows:

5. In the proceedings before Clarke J., counsel for the appellant conceded that his client was the owner of the vessel but argued that there was no legal basis for the action against the appellant for the reasons that: (i) the appellant was not a party to the bill of lading and therefore was not liable to action for breach of the obligations contained therein; (ii) the appellant had not been a bailee of the cargo; and (iii) there was no factual basis which imposed upon the appellant any duty to take reasonable care of the cargo. The charter-party and bill of lading relating to the voyage and cargo were before Clarke J. and the appellant led evidence in support of its application.

6. Clarke J., in considering whether the service out of the jurisdiction was appropriate, adopted the test enunciated by Lord Radcliffe in Vitkovice Horni a Hutni Tezirstvo v. Korner (1951) AC 869 at p 883, namely, was it a case where "on consideration of all admissible material there remains a strong argument for the opinion that the qualifying conditions are indeed satisfied." In the present context, the "qualifying conditions" refer to the matters set out in pars (a), (b) and (e) of r.1(1). The appellant did not challenge the application of this test.

7. In the result, Clarke J. held that the respondent had provided the requisite proof of a contract binding the owner as carrier under the bill of lading. His Honour was also of the view that the respondent had provided the requisite proof on the bailment count. These conclusions attracted pars (a) and (b) in support of the service of the originating process on the appellant. It was unnecessary for his Honour to consider par.(e). With respect to the application for a stay, his Honour was not persuaded that the appellant had made out a case.

8. The appellant then applied to the Court of Appeal for leave to appeal, offering the following reasons why leave should be given:

"1. The question of parties to the bill of lading

SYD 504 was resolved upon the construction of

Clause 9 of the New York Produce Exchange Form

of Time Charter. This is a question of

material interest in the maritime community

and accordingly the Third Defendant

respectfully submits that this is an

appropriate case for leave to appeal.

2. The Third Defendant contends that the learned

Judge erred as a matter of law upon the

question of whether the Third Defendant was a

party to the bill of lading SYD 504.

3. The Third Defendant contends that the learned

Judge erred as a matter of law upon whether

this Honourable Court had jurisdiction under

Part 10 Rule 1(1)(a), (b) or (e) of the

Supreme Court Rules.

4. The Third Defendant respectfully submits that

the construction and extent of jurisdiction of

this Honourable Court is an appropriate matter

for leave to appeal.

5. The learned Judge erred as a matter of law as

to whether the Third Defendant had any

possession of the cargo so as to give rise to

a duty of care or duty in bailment.

6. The learned Judge erred as a matter of law as

to whether New South Wales was the more

convenient forum."

9. The application was heard by the Court of Appeal in the course of its dealing with the practice list. Immediately on the conclusion of the argument, the Court announced its decision in these terms:

"The court is not of the opinion this is a

matter suitable for leave, it believes it will be

in a better position to deal with any relevant

legal principles when the facts have been fully

heard at the trial.

The second point, namely the discretion, is a

matter in which his Honour appears to have had

before him the relevant and applicable principles

and it would not on its own warrant leave.

The summons for leave is dismissed, the

claimant must pay the opponents' costs."

10. The sole question agitated in the present appeal is whether the Court of Appeal erred in law in its consideration of the application for leave, so far as the application raised the question of authority to serve originating process outside the jurisdiction. Counsel for the appellant acknowledged that he could not attack the manner in which the Court dealt with the application for a stay of proceedings.

11. It may be said at once that it is not for this Court to resolve the question whether leave should have been granted. If the appeal succeeds, the appropriate order will be to remit the matter to the Court of Appeal to deal with the application for leave according to law, it being a matter for that Court either to grant or to refuse leave.

12. The decision of Clarke J., involving the question whether to set aside the service out of the jurisdiction of an originating process or, alternatively, whether to grant a stay of the proceedings, was a decision on a matter of practice or procedure: Black v. Dawson (1895) 1 QB 848; Gosper v. Sawyer [1985] HCA 19; (1985) 160 CLR 548, at pp 558, 565. The power to order service of process on the appellant derived from the Supreme Court Rules. Whether the power should be exercised depended upon there being "a strong argument ... that the qualifying conditions are indeed satisfied". The principles governing the propriety of the manner in which the Court of Appeal dealt with the application for leave are those discussed by this Court in Adam P. Brown Male Fashions Pty. Ltd. v. Philip Morris Inc. [1981] HCA 39; (1981) 148 CLR 170. It is well established that an appellate court will exercise particular caution in undertaking to review a decision on a matter of practice or procedure. While no rigid and exhaustive criteria to guide an appellate court have been laid down, "the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration": Philip Morris, at p.177.

13. We think it is pertinent to consider whether any injustice was occasioned by the decision of Clarke J., not with a view to discharging the task which rested on the Court of Appeal but in order to evaluate the strength of the attack which the appellant makes upon the short reasons delivered by the Court of Appeal when refusing leave. The issues arising before Clarke J., notwithstanding the interlocutory character of the proceedings, were issues which were fundamental to the ultimate determination of the action. It is clear that at the trial the outcome of the case is likely to be determined by the decision of the trial judge on the question whether the appellant was a party to the bill of lading or, alternatively, on the question whether the master's possession of the cargo rendered the appellant liable as a bailee for failing to render up the cargo in good condition. At the trial evidence may be tendered touching those questions additional to that placed before Clarke J. on the preliminary application. If the ultimate determination of those questions favours the appellant, then the action against it will be dismissed and the appellant will be compensated for the erroneous joinder by an order for costs. Mention was made of the fact that the second defendant, which is subject to a claim for indemnity by the appellant in the event that the latter is held to be liable to the respondent, is in liquidation. But this consideration cannot constitute relevant injustice to the appellant because no question of indemnity can arise until the appellant is fixed with liability. In the light of these considerations, we are unable to discern any injustice flowing to the appellant from the decision of Clarke J.

14. Returning to the statement made by the Court of Appeal when refusing leave, we do not believe that this Court should be zealous to discern a failure on the part of that Court to fulfil its duty. The task confronting an applicant for leave is well known. Both parties were represented by counsel and a statement of the reasons why leave should be given had been filed. It is inconceivable that in those circumstances the Court was not fully apprised of all the material considerations. If their Honours took the view, as we have demonstrated they may well have done, that there was no injustice to the appellant in allowing complex questions of disputed fact to go to trial, then in our opinion they were entitled in refusing leave to say that the Court was not of the opinion that it was a matter suitable for leave. By adding the words that the Court "believes it will be in a better position to deal with any relevant legal principles when the facts have been fully heard at the trial", it is not to be assumed that the Court was thereby abdicating its responsibility to determine the application for leave to appeal according to law. Implicit in this statement is a recognition that at trial the evidence may not be limited to the evidence placed before Clarke J. From what was said in this Court by counsel for the respondent, it seems that there may be further evidence relating to the circumstances in which the charter was entered into, a consideration relevant to the position of the appellant under the charter-party.

15. As we have said, the real question is whether the appellant has shown error on the part of the Court of Appeal in dealing with the application for leave to appeal. We do not think that the appellant has done so; we would therefore dismiss the appeal.

BRENNAN J. The Court of Appeal refused leave to appeal against a decision by Clarke J. dismissing the appellant's application to set aside service upon it in Bermuda of originating process issued out of the Supreme Court of New South Wales. This appeal is brought to review the order of the Court of Appeal. The order by Clarke J. affirmed the jurisdiction of the Supreme Court to entertain the suit in which damages for breach of an alleged contract of carriage or for negligence are claimed against the appellant, a foreign corporation which has no presence in this country and which carries on no business here. His Honour's order did not determine the procedure which the Court would follow in exercising its jurisdiction; it determined that the Court had a jurisdiction to exercise.

2. The asserted jurisdiction is said to arise under Pt 10 r.1 of the Rules of the Supreme Court which authorizes extraterritorial service of process in the cases specified in the sub-rules. The jurisdictions asserted over foreigners under some of the provisions of r.1 are "'exorbitant' jurisdictions which run counter to the normal rules of comity among civilised nations ... (and) the sub-rules are to be strictly construed in favour of the foreigner": per Lord Diplock in Siskina (Cargo Owners) v. Distos S.A (1979) AC 210, at pp 254-255. The jurisdiction asserted in this case is clearly "exorbitant" in that sense, for a foreigner resident abroad who is served in a foreign place with process commencing an action in personam is, in the absence of an overriding local statute, immune from the jurisdiction of a local court: Sirdar Gurdyal Singh v. Rajah of Faridkote (1894) AC 670, at p 684; Laurie v. Carroll [1958] HCA 4; (1958) 98 CLR 310, at pp 322,323; Gosper v. Sawyer [1985] HCA 19; (1985) 160 CLR 548, at pp 564,565; Flaherty v. Girgis [1987] HCA 17; (1987) 162 CLR 574, at pp 599,600. The order made by Clarke J. concluded against the appellant the question of its immunity from the jurisdiction of the Supreme Court of New South Wales. The Court of Appeal had to decide whether to grant leave to appeal against that order. That Court did not think the matter was suitable for the grant of leave because "it believes it will be in a better position to deal with any relevant legal principles when the facts have been fully heard at the trial".

3. In my respectful opinion, their Honours misconceived the nature of the order which they had been asked to review and in consequence the exercise of their discretion to grant leave to appeal miscarried. The question whether the appellant was amenable to the exercise of the Court's jurisdiction could not be left until the jurisdiction had been exercised. The Court was required to determine at the outset whether the case falls within Pt 10 r.1: if the case does not fall within that rule there is no jurisdiction to conduct a trial. In Vitkovice Horni a Hutni Tezirstvo v. Korner (1951) AC 869, Lord Radcliffe (at p 883) propounded the test for determining whether statutory conditions for service out of the jurisdiction are satisfied: on consideration of all admissible material, is there a strong argument for the opinion that the qualifying conditions are satisfied? The parties in this case agree that that is the appropriate test. It is, of course, a test appropriate to the resolution of the question of jurisdiction at the very beginning of the case, not after the trial. At that stage, as his Lordship noted (at p.885):

"the existence of the conditions that govern the

authority cannot be ascertained with the same

finality as would be appropriate at a trial, in

which evidence and argument could be exhaustively

deployed."

4. In this case, if the Court's jurisdiction depended on issues of law alone, the trial would not place the Court of Appeal in any better position to deal with the relevant legal principles. And, to the extent that jurisdiction depended on issues of fact, the appropriate test was the test stated by Lord Radcliffe. It was erroneous in principle for the Court of Appeal to decide to wait for finality in the ascertainment of the facts at trial before deciding an application which called for determination before the jurisdiction of the Court over a foreign defendant is asserted.

5. The Court of Appeal could not properly have refused leave on the ground that the order of Clarke J. related to a mere matter of practice and procedure. This Court drew a sharp distinction between mere matters of practice and procedure and matters of jurisdiction founded on service ex juris in Gosper v. Sawyer (at pp 557-559, 563-565) unless, perhaps, all that is involved is the manner in which a discretionary power to order (or to confirm) service is exercised: see p 565 and Black v. Dawson (1895) 1 QB 848, at p 849. In the present case, if the appellant's argument was upheld, it was not amenable to the jurisdiction of the Supreme Court and the Court had no discretion to assert jurisdiction over it.

6. It follows that the caution which marks an appellate court's review of decisions pertaining to practice and procedure (Adam P Brown Male Fashions Pty.Ltd. v. Philip Morris Inc. [1981] HCA 39; (1981) 148 CLR 170, at p 177) has no application in this case. Even if the order of Clarke J. is described as an order relating to practice and procedure, an appellate court is bound to have regard to the direct effect of the order on the substantive rights of the parties: Paringa Mining & Exploration Company PLC v. North Flinders Mines Limited and Others (unreported (High Court), 17 October 1988). The Court of Appeal appears to have considered that if, at the end of the trial, the appellant was absolved from liability, no injustice would be done. But, if the appellant's arguments be correct, the order of Clarke J. would work an injustice against it by subjecting it involuntarily to the Court's jurisdiction.

7. No doubt, if the Court of Appeal had formed a clear opinion adverse to the success of the proposed appeal it would have been right to refuse leave (Ex parte Bucknell [1936] HCA 67; (1936) 56 CLR 221, at p 225); but the Court did not form that opinion, except on the question of the exercise by Clarke J. of a discretion to stay the action on the ground that the Supreme Court of New South Wales was a "forum non conveniens". The appellant does not challenge this aspect of the Court's decision. However, the exercise of a discretion to stay arises only if the Court has jurisdiction to entertain the suit against the appellant. As the Court did not form an opinion as to the success of the appeal and as the reason assigned by the Court of Appeal for refusing leave to appeal against the affirmation of jurisdiction by Clarke J. reveals appealable error, the appeal against the decision of the Court of Appeal must be allowed unless this Court - in the place of the Court of Appeal - were to apply the test in Ex parte Bucknell for itself and come to a clear opinion adverse to the success of the appeal. I am unable to come to that opinion but I do not elaborate my reasons for saying so as special leave to appeal to this Court was granted on the understanding that the merits of the decision reached by Clarke J. should not be overhauled on this appeal.

8. I would allow the appeal, set aside the order of the Court of Appeal refusing leave to appeal to that Court and remit the matter to that Court to hear and determine further the appellant's application for leave to appeal.

Contender 1 Ltd v Lep International Pty Ltd [1988] HCA 60;

At a glance

Court

Decision date

Before

Source

Judgment (29 paragraphs)

Contender 1 Ltd v Lep International Pty Ltd [1988] HCA 60; (1988) 82 ALR 394; (1988) 63 ALJR 26 (23 November 1988)

Parties

Legislation Cited (1)

Cases Cited (7)