Flexicommercial Pty Ltd ACN 644 644 860 v Watters

Texts Cited: Conflict of Laws in Australia, Nygh, 10th Edition (2020)

Category: Procedural rulings

Parties: Flexicommercial Pty Ltd ACN 644 644 860 (Plaintiff)
Shane William Watters (First Defendant)
Katharine Theresa McLennan (Second Defendant)
Matthew Dylan Watters (Third Defendant)

Representation: Counsel:
T Bateman (Plaintiff)
J Pokoney (Defendants)
Solicitors:
Bridges Lawyers (Plaintiff)
Mills Oakley Lawyers (Defendants)

File Number(s): 2024/00410897

Publication restriction: No

JUDGMENT – EX TEMPORE

1. Before the Court for determination are two Notices of Motion. One filed by the defendants on 20 January 2025 seeks, in substance, orders under Part 12.11 of the Uniform Civil Procedure Rules 2005 (NSW) that either the plaintiff's originating process be set aside or a declaration be made that the Court has no jurisdiction or, in the further alternative, that the Court declines to exercise jurisdiction in the proceedings. The submissions on that motion have been focused on the Court granting a stay. The second Notice of Motion was filed by the plaintiff on 28 March 2025 and seeks summary judgment in the proceedings.

2. The Motions have been listed for hearing together. Submissions have been provided in relation to the defendants' Notice of Motion. The Court has been greatly assisted by the written submissions which have been filed by counsel for the parties.

3. The background to the matter in relation to both motions is set out in the following affidavits:

(a) For the defendants, the affidavits of:

(i) Nicole Muscat dated 20 January 2025; (ii) Katherine Theresa McLennan dated 27 March 2025; and (iii) Samuel Barber of 9 April 2025;

(b) For the plaintiff, the affidavits of Kailum Dennis Latimer-Micek dated 28 March 2025 and 1 May 2025.

4. The materials in evidence establish to my satisfaction that proceedings were commenced by the plaintiff in this Court on 30 October 2024 seeking judgment in various amounts against the three defendants. The matter arises out of loan agreements entered into by the plaintiff, which is a financier, with Sanwyn Pty Ltd (in Liq) (“Sanwyn”) relating to the funding of the purchase by Sanwyn of certain equipment which appears to be haulage type equipment. The agreements entered into relate to three separate amounts funded, and repayments were made by Sanwyn to the plaintiff under the agreements.

5. However, a liquidator was appointed to Sanwyn on 3 July 2024 and, at various dates, the plaintiff terminated each of the agreements with Sanwyn. The defendants were guarantors under the agreements although the third defendant was only a guarantor under the third agreement.

6. In the material relied upon and annexed to the affidavits are the various security agreements entered. Various matters should be noted in relation to the agreements as follows:

(a) Sanwyn had its registered office in Queensland; (b) Sanwyn conducted its operations in Queensland; (c) Each of the guarantors is and was at all material times located in Queensland; (d) The plaintiff has its registered office in New South Wales; (e) The plaintiff conducts its business from New South Wales; (f) The plaintiff advanced and received moneys in New South Wales; (g) Each of the agreements makes clear that the goods financed were to be used only in the customer's general business operations which operations were based in Queensland.

7. Clause 13.11 of each of the relevant agreements is significant. It provides as follows:

"Governing law and jurisdiction. This Specific Security Agreement is governed by the law of the State or Territory in which Customer is located. Customer irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the State or Territory of in which Customer is located."

8. The “Customer” is defined as Sanwyn. Accordingly, the relevant contract in each case is governed by the law of Queensland. Similarly, the Customer is by the contract taken to have irrevocably and unconditionally submitted to the non‑exclusive jurisdiction of the courts of Queensland.

9. It is submitted on behalf of the plaintiff that on its proper construction, that clause is to be construed as a non-exclusive jurisdiction clause as opposed to an exclusive jurisdiction clause: see paragraphs 24 to 25 of the submissions of counsel for Flexicommercial.

10. The principle of law stated in those paragraphs appears to be appropriate. I refer to the decision of the Court of Appeal in The J & P Marlow (No 2) Pty Ltd v Joseph Hayes & Andrew McCabe [2023] NSWCA 117 where Meagher and Kirk JJA made clear that the meaning of the terms in a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. In other words, that a commercial contract should be given a businesslike interpretation. That is consistent with numerous High Court decisions such as Electricity Generation Corporation v Woodside Energy Limited (2014) 251 CLR 640; [2014] HCA 7 at [35].

11. In my view, applying that test, the clause in question in each agreement clearly amounts to a non-exclusive jurisdiction clause and not an exclusive jurisdiction clause.

12. What does that mean? Some assistance is provided by the decision of the Court of Appeal in Joshan v Pizza Pan Group Pty Ltd [2021] NSWCA 219 in which Bell P (as his Honour then was) indicates in paragraph 81 the proper way in which such a clause is to be interpreted. His Honour stated:

"Generally speaking (although the true nature of all such clauses is driven by their precise wording), a non-exclusive jurisdiction clause entails no more than a submission to the nominated jurisdiction. It neither requires litigation to proceed in that forum nor precludes either party from suing in another forum which has jurisdiction to resolve the dispute between the parties. To do so does not entail a breach of the non-exclusive jurisdiction clause."

13. It is clear the law of Queensland would apply to the current dispute. Counsel for the defendants both in written and in oral submissions accepted that the law of contract in Queensland which would be applicable in any dispute between the parties relating to the contracts in question is unlikely to be materially different from that of New South Wales.

14. The question therefore firstly, is whether this Court has jurisdiction in the matter. In my view, this Court has jurisdiction to determine the matter even where the defendants are outside the State because the defendants have been duly served under the Service and Execution of Process Act 1992 (Cth): see s 47 of the District Court Act 1973 (NSW).

15. The question therefore then turns to whether the Court in its discretion should stay the proceedings on the basis of forum non conveniens.

16. In his comprehensive and learned judgment in Joshan*,* Bell P considered s 20(3) of the Service and Execution of Process Act. However, his Honour also gave a comprehensive background to the principles relating to private international law. What is clear from that judgment and from High Court authorities to which I will refer, is that the law in this country is not that stated by the House of Lords in the Spiliada case (see Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460) but in decisions of the High Court of Australia.

17. The statement of the correct legal principles applicable is helpfully set out in both counsel's submissions. I particularly refer to paragraphs 18 to 20 of the submissions of counsel for Flexicommercial and the helpful provision by counsel for the defendants of extracts from Nygh's Conflict of Laws in Australia, 10th Edition (2020) at pp 202-203.

18. In summary, the test for forum non conveniens in Australia is whether the Court in question is a "clearly inappropriate forum": see Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 564-5. It is unnecessary for the purposes of this Notice of Motion to set out the full details of the legal history of arriving at that test. However, as is stated in the submissions of counsel for the plaintiff, the majority of the High Court in Voth applied the principles relating to a stay in forum non conveniens applications as stated by Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 247-248.

19. The following matters are noted in relation to the principles applicable:

(a) The power is discretionary in 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; (b) The power to grant a stay should only be exercised in a clear case; (c) The onus lies upon the defendant to satisfy the local court (here, in the present case) that it is so inappropriate a forum for the proceedings’ determination that their continuation would be oppressive and vexatious to the defendant; (d) Ordinarily, that will not be established unless the defendant can point to some appropriate tribunal in another jurisdiction to which the defendant is amenable and which would entertain the particular proceedings at the suit of the plaintiff. In the present case, that is clearly a court in Queensland and there is no issue as to that; (e) Ordinarily, an application should be made promptly. That does not appear to be an issue here; (f) The defendant must establish that the local forum in which the proceedings have been commenced is a clearly inappropriate forum. The terms "oppressive" and "vexatious" have been used and it is said that they should not be narrowly or rigidly construed.

20. Counsel for the defendants has cited a number of matters which it is submitted point to the fact that New South Wales is a clearly inappropriate forum and that Queensland should instead be the forum and the Court should stay the current proceedings. Those matters are as follows:

21. The subject matter of the proceedings is significantly connected with Queensland and not New South Wales. Clearly a number of factors are important in providing connections to Queensland being Sanwyn, the defendants, the business of Sanwyn and the location of the vehicles the subject of the agreements. However, the plaintiff is located in New South Wales but it is a commercial entity which undertakes lending as its business and in my view its location is not as significant a matter under that aspect;

22. The matter of convenience points to Queensland as any likely witnesses would be the defendants who are located in Queensland but the plaintiff's case would be largely documentary with commercial witnesses here. In relation to that matter it is unclear to me, unlike in the Joshan case, that there is any great significance in the location of the witnesses. There is nothing clear on the evidence before me that there is any significant issue as to the financial position of the defendants or medical conditions or the like. The defences which have been indicated as ones which might potentially be raised all appear to be legal defences turning substantially on the commercial documents. The position is unlike the position in Joshan where, as noted by Bell P, Defences and Cross‑Claims were filed raising a real issue about the relevant ongoing viability of the business in that case with the likely need for expert evidence relating to local conditions in South Australia. In my view, this case is somewhat different from that case;

23. The plaintiff has not pointed to and cannot point to any legitimate juridical advantage from commencing in New South Wales and would suffer no juridical prejudice if the proceedings were transferred to Queensland. There appears to be some force in that submission but, conversely, there does not appear to be any juridical disadvantage to the defendants from remaining in New South Wales;

24. It is submitted that the clause which provides that the law of Queensland will apply and provides the non-exclusive jurisdiction indication is relevant. First, as I indicated above, it is not suggested that there is any material difference in the law between Queensland and New South Wales on the contracted issues. Secondly, as indicated by counsel for the plaintiff and as I have previously stated, really a non-exclusive jurisdiction clause merely amounts to a submission to jurisdiction. However, the combination is of some relevance in taking into account the balance of factors.

25. I note that Bell P in Joshan refers to authorities indicating that a short and succinct judgment is appropriate in these types of disputes balancing the factors: see paragraphs 32-33. As indicated by his Honour, that does not seem to be the result in virtually every case in this area. Nevertheless, in the present case, looking at all of the factors, the matter turns on whether the Court is of the view that New South Wales is a clearly inappropriate forum within Voth.

26. I take into account the submissions which have been made both orally and in writing by the parties. I take into account in particular the choice of Queensland as the law and the location of the defendants albeit that the plaintiff has its offices here. There were no particular issues relating to the defendants referred to in the evidence as to finance or health but one should assume that it is more inconvenient to individuals to come to another jurisdiction than a commercial entity which is used to undertaking its business in all jurisdictions.

27. However, I am not satisfied that New South Wales is a clearly inappropriate forum on balancing the factors. The matters in particular I take into account are:

(a) That proceedings have been properly on their face commenced in New South Wales; (b) That cl 13.11 of the various agreements only provides a non-exclusive jurisdiction clause; (c) Although the choice of law is Queensland it is accepted that there appears to be no material difference between the law of both jurisdictions as to the contractual issues likely to arise; (d) Although the defendants and the subject matter of the proceedings are linked to Queensland, the plaintiff is in New South Wales and there do not appear to be additional matters linking the witnesses which would make it important for the matter to be heard in Queensland. Similarly, the legal issues which appear to be likely to be raised do not appear to have a central focus to Queensland. This should be contrasted with Joshan; (e) Although there is both a combination of a choice of law clause and a non‑exclusive jurisdiction clause in the present case, that was also the position in Joshan: see at [79]. That was not seen as an overwhelming factor in that case. Of course, we are applying a different test in the present case.

24. Taking all of the matters into account, in my view they do not point to New South Wales as being a clearly inappropriate forum and accordingly I decline to stay the proceedings on that basis. For those reasons, in my view the appropriate order is that the Notice of Motion filed on 20 January 2025 is dismissed.

25. [His Honour then heard submissions on costs and considered the second Notice of Motion.]

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Amendments

23 May 2025

Removal of the word draft on final version of judgment.