Common Law Principles Concerning Stay of Proceedings Against Foreign Defendants
37 Both Opponents filed a Notice of Appearance in the proceedings. One aspect of the application they made to McDougall J was for leave to withdraw their Notices of Appearance, on the ground that the Notices of Appearance had been filed at a time when the Claimant's case asserted a connection with New South Wales that the Claimant's case as ultimately formulated, did not assert. McDougall J refused leave to withdraw the Notices of Appearance. There is no application for leave to appeal against that refusal.
38 When both Opponents have appeared, the Supreme Court clearly has jurisdiction to deal with the case alleged against them. The effect of the stay granted by McDougall J is that, notwithstanding that it has jurisdiction over the dispute, the Court declines to exercise that jurisdiction.
39 Quite independently of any particular rules of court, courts have on occasions declined to exercise jurisdiction vested in them. A circumstance in which a question has commonly arisen of whether a court should decline to exercise jurisdiction is when proceedings are brought in the court against a foreign defendant, and the foreign defendant alleges that the dispute should be tried in some foreign court, rather than in the local court. It has been in that context that principles have developed about the circumstances in which the local court should, or should not, decline to exercise jurisdiction.
40 Principles governing that topic that were developed in 19th-century England were encapsulated by Scott LJ in St Pierre v South American Stores (Gath & Chaves) Ltd [1936] 1 KB 382, at 398:
"The true rule about a stay ... may I think be stated thus: (1.) A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English Court if it is otherwise properly brought. The right of access to the King's Court must not be lightly refused. (2.) In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the court that the continuance of the action would work an injustice because it would be oppressive or vexatious to him or would be an abuse of the process of the Court in some other way; and (b) the stay must not cause an injustice to the plaintiff. On both the burden of proof is on the defendant."
41 The principle in St Pierre came to be questioned in the House of Lords in The "Atlantic Star" [1974] AC 436; MacShannon v Rockware Glass Ltd [1978] AC 795; Amin Rasheed Shipping Corporation v Kuwait Insurance Co [1984] AC 50 and Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460. In summary, the English position came to be that a court should stay litigation against a foreign defendant if the English court was not the appropriate forum for the resolution of the dispute.
42 In Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197 a majority of the High Court (Brennan, Deane and Gaudron JJ, Wilson and Toohey JJ dissenting) adhered to the principle stated in St Pierre, but differed in their explanation of what that principle meant. Given its adoption by later authority, is appropriate to set out the explanation given by Deane J. At [6]-[7]; 247-248 his Honour said that the words "oppressive" and "vexatious" as used by Scott LJ in St Pierre:
"… were not used as directly descriptive of the conduct of the plaintiff but as descriptive of the objective effect which continuance of the action would have on the defendant: "the defendant must satisfy the Court that the continuance of the action would work an injustice because it would be oppressive or vexatious to him ... ". On that approach which, in my view, should be accepted as correct, I do not think that one should read into the words a requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff: note the contrary view expressed by Lord Kilbrandon in The "Atlantic Star", at p 477, and by Lord Salmon in MacShannon , at pp 818-819. Rather, it seems to me that those words should be read, in the St. Pierre formulation, as describing and characterizing the objective effect, on balance, of a continuation of the particular forum as the venue of the proceedings rather than as describing the conduct of the plaintiff in selecting or persisting with that forum (cf. per Gibbs J, Cope Allman , at p 494: " the exercise ... of ... jurisdiction would be vexatious to the defendants or would result in any real injustice to them "). That reading of the words is consistent with the approach adopted by this Court in Maritime Insurance Co , at pp 200-201, where the Court engaged in an assessment of what the effect of continuation of the proceedings in the Victorian Supreme Court would, on balance, be as a matter of objective fact. If the plaintiff is not acting bona fide or in pursuit of a legitimate advantage in pursuing the proceedings in the legal system of this country, that will, of course, make it much easier for a continuation of the proceedings to be characterized as vexatious or oppressive, since there will be little if anything to put into the balance against the inconvenience which would be sustained by the defendant. On that approach, " oppressive " should, in this context, be understood as meaning seriously and unfairly burdensome, prejudicial or damaging while " vexatious " should be understood as meaning productive of serious and unjustified trouble and harassment.
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. The reason why that is so is that, once it is accepted that the adjectives " oppressive " and " vexatious " are not to be narrowly or rigidly construed and are to be applied in relation to the effect of the continuation of the proceedings rather than the conduct of the plaintiff in continuing them, the continuation of proceedings in a tribunal which is a clearly inappropriate forum would, in the absence of exceptional circumstances being established by the plaintiff (cf Spiliada Maritime Corp v Cansulex Ltd (1987) 1 AC 460, at p 478), be oppressive or vexatious to such a defendant if there is some available and appropriate tribunal in another country. Admittedly, that approach to the " vexatious " and " oppressive " test is less stringent and less rigid than would have been accepted in the nineteenth century. Under it, the applicable test pursuant to traditional principles can, in the ordinary case, properly be seen as an " inappropriate forum " test. It cannot, however, properly be seen as a " more appropriate forum " test since the mere fact that a tribunal in some other country would be a more appropriate forum for the particular proceeding does not necessarily mean that the local court is a clearly inappropriate one."
43 Voth v Manildra Flour Mills Proprietary Ltd [1990] HCA 55; (1990) 171 CLR 538 established that the test in Australian law by reference to which a court should decide whether to stay proceedings that had been commenced in it was whether the court was a "clearly inappropriate forum"; the test was not whether there was a more appropriate forum somewhere else. The joint judgment of Mason CJ, Deane, Dawson and Gaudron JJ at [30]; 554 identified four principles that were common ground to the majority in Oceanic Sun:
"First, a plaintiff who has regularly invoked the jurisdiction of a court has a prima facie right to insist upon its exercise. Secondly, the traditional power to stay proceedings which have been regularly commenced, on inappropriate forum grounds, is to be exercised in accordance with the general principle empowering a court to dismiss or stay proceedings which are oppressive, vexatious or an abuse of process and the rationale for the exercise of the power to stay is the avoidance of injustice between parties in the particular case. Thirdly, the mere fact that the balance of convenience favours another jurisdiction or that some other jurisdiction would provide a more appropriate forum does not justify the dismissal of the action or the grant of a stay. Finally, the jurisdiction to grant a stay or dismiss the action is to be exercised "with great care" or "extreme caution". "
44 Concerning the first of those principles, the majority also recognised at [54]; 566 that in some cases too much weight may have been given to "the notion that a proceeding regularly invoked provides a prima facie right to have the proceeding continue in that forum". (The majority in Henry v Henry [1996] HCA 51 at [28]; (1996) 185 CLR 571 at 589 also drew attention to that passage.) Further, the majority in Voth stated, at [40]; 559, the circumstances in which that prima facie right did not arise:
"Granted that there is an obligation on the domestic courts of this country to exercise jurisdiction which is conferred upon them - a matter on which the majority in Oceanic Sun was united - it does not extend to cases where it is established that the forum is clearly inappropriate."
45 Concerning the second of those principles, the joint judgment in Voth identified the substantial differences of approach between Brennan J on the one hand, and Deane and Gaudron JJ on the other in Oceanic Sun as either being, or arising from, differences of view about the shade of meaning to be attributed to "oppressive" and "vexatious". They said, at [31]; 555, that Deane J in Oceanic Sun said that:
"…' oppressive ' should, in this context, be understood as meaning seriously and unfairly burdensome, prejudicial or damaging while ' vexatious ' should be understood as meaning productive of serious and unjustified trouble and harassment" (1988) 165 CLR, at p 247. His Honour also took the view that the words should be read as describing and characterizing the objective effect, on balance, of a continuation of the proceedings and a particular forum as the venue of proceedings rather than as describing the conduct of the plaintiff in selecting or persisting with that forum. Gaudron J (1988) 165 CLR, at p 266, stated her agreement with the test stated by Deane J, subject to a qualification to which we shall refer later in these reasons."
46 The joint judgment reached the conclusion, at [51]; 564-5, that, subject to a question of onus which is not of present relevance:
"… the principles to be applied in applications to set aside service and in applications for a stay on inappropriate forum grounds are those stated by Deane J in Oceanic Sun (1988) 165 CLR, at pp 247-248. In the application of those principles the discussion by Lord Goff in Spiliada [1987] AC, at pp 477-478, 482-484 of relevant " connecting factors " and " a legitimate personal or juridical advantage " provides valuable assistance."
47 The discussion of Lord Goff that has thus been recognised by the High Court as providing "valuable assistance" for the purpose of identifying connecting factors is, at 477-478:
"Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. These are the factors which Lord Diplock described, in MacShannon's case [1978] AC 795, 812 as indicating that justice can be done in the other forum at " substantially less inconvenience or expense ". Having regard to the anxiety expressed in your Lordships' House in the Société du Gaz case, 1926 SC (HL) 13 concerning the use of the word " convenience " in this context, I respectfully consider that it may be more desirable, now that the English and Scottish principles are regarded as being the same, to adopt the expression used by my noble and learned friend, Lord Keith of Kinkel, in The Abdin Daver [1984] AC 398, 415 when he referred to the " natural forum " as being " that with which the action had the most real and substantial connection ." So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction (as to which see Crédit Chimique v James Scott Engineering Group Ltd , 1982 SLT 131), and the places where the risk parties respectively reside or carry on business."
48 The discussion of Lord Goff that has been recognised by the High Court as providing "valuable assistance" for the purpose of identifying the type of matters that count as a "legitimate personal or juridical advantage" for the application of the principle concerning grant of a stay is, at 482-484:
"(8) Treatment of "a legitimate personal or juridical advantage"
Clearly, the mere fact that the plaintiff has such an advantage in proceedings in England cannot be decisive. As Lord Sumner said of the parties in the Société du Gaz case, 1926 S.C.(H.L.) 13, 22:
"I do not see how one can guide oneself profitably by endeavouring to conciliate and promote the interests of both these antagonists, except in that ironical sense, in which one says that it is in the interests of both that the case should be tried in the best way and in the best tribunal, and that the best man should win."
Indeed, as Oliver LJ [1985] 2 Lloyd's Rep 116, 135, pointed out in his judgment in the present case, an advantage to the plaintiff will ordinarily give rise to a comparable disadvantage to the defendant; and simply to give the plaintiff his advantage at the expense of the defendant is not consistent with the objective approach inherent in Lord Kinnear's statement of principle in Sim v Robinow , 19 R. 665, 668.
The key to the solution of this problem lies, in my judgment, in the underlying fundamental principle. We have to consider where the case may be tried "suitably for the interests of all the parties and for the ends of justice." Let me consider the application of that principle in relation to advantages which the plaintiff may derive from invoking the English jurisdiction. Typical examples are: damages awarded on a higher scale; a more complete procedure of discovery; a power to award interest; a more generous limitation period. Now, as a general rule, I do not think that the court should be deterred from granting a stay of proceedings, or from exercising its discretion against granting leave under R.S.C. Ord. 11, simply because the plaintiff will be deprived of such an advantage, provided that the court is satisfied that substantial justice will be done in the available appropriate forum. Take, for example, discovery. We know that there is a spectrum of systems of discovery applicable in various jurisdictions, ranging from the limited discovery available in civil law countries on the continent of Europe to the very generous pre-trial oral discovery procedure applicable in the United States of America. Our procedure lies somewhere in the middle of this spectrum. No doubt each of these systems has its virtues and vices; but, generally speaking, I cannot see that, objectively, injustice can be said to have been done if a party is, in effect, compelled to accept one of these well-recognised systems applicable in the appropriate forum overseas. … Then take the scale on which damages are awarded. Suppose that two parties have been involved in a road accident in a foreign country, where both were resident, and where damages are awarded on a scale substantially lower than those awarded in this country. I do not think that an English court would, in ordinary circumstances, hesitate to stay proceedings brought by one of them against the other in this country merely because he would be deprived of a higher award of damages here.
But the underlying principle requires that regard must be had to the interests of all the parties and the ends of justice; and these considerations may lead to a different conclusion in other cases. For example, it would not, I think, normally be wrong to allow a plaintiff to keep the benefit of security obtained by commencing proceedings here, while at the same time granting a stay of proceedings in this country to enable the action to proceed in the appropriate forum. … Again, take the example of cases concerned with time bars. Let me consider how the principle of forum non conveniens should be applied in a case in which the plaintiff has started proceedings in England where his claim was not time barred, but there is some other jurisdiction which, in the opinion of the court, is clearly more appropriate for the trial of the action, but where the plaintiff has not commenced proceedings and where his claim is now time barred. Now, to take some extreme examples, suppose that the plaintiff allowed the limitation period to elapse in the appropriate jurisdiction, and came here simply because he wanted to take advantage of a more generous time bar applicable in this country; or suppose that it was obvious that the plaintiff should have commenced proceedings in the appropriate jurisdiction, and yet he did not trouble to issue a protective writ there; in cases such as these, I cannot see that the court should hesitate to stay the proceedings in this country, even though the effect would be that the plaintiff's claim would inevitably be defeated by a plea of the time bar in the appropriate jurisdiction. Indeed a strong theoretical argument can be advanced for the proposition that, if there is another clearly more appropriate forum for the trial of the action, a stay should generally be granted even though the plaintiff's action would be time barred there. But, in my opinion, this is a case where practical justice should be done. And practical justice demands that, if the court considers that the plaintiff acted reasonably in commencing proceedings in this country, and that, although it appears that (putting on one side the time bar point) the appropriate forum for the trial of the action is elsewhere than England, the plaintiff did not act unreasonably in failing to commence proceedings (for example, by issuing a protective writ) in that jurisdiction within the limitation period applicable there, it would not, I think, be just to deprive the plaintiff of the benefit of having started proceedings within the limitation period applicable in this country. … It is not to be forgotten that, by making its jurisdiction available to the plaintiff - even the discretionary jurisdiction under R.S.C., Ord. 11 - the courts of this country have provided the plaintiff with an opportunity to start proceedings here; accordingly, if justice demands, the court should not deprive the plaintiff of the benefit of having complied with the time bar in this country. Furthermore, as the applicable principles become more clearly established and better known, it will, I suspect, become increasingly difficult for plaintiffs to prove lack of negligence in this respect. The fact that the court has been asked to exercise its discretion under R.S.C., Ord. 11, rather than that the plaintiff has served proceedings upon the defendant in this country as of right, is, I consider, only relevant to consideration of the plaintiff's conduct in failing to save the time bar in the other relevant alternative jurisdiction. The appropriate order, where the application of the time bar in the foreign jurisdiction is dependent upon its invocation by the defendant, may well be to make it a condition of the grant of a stay, or the exercise of discretion against giving leave to serve out of the jurisdiction, that the defendant should waive the time bar in the foreign jurisdiction; this is apparently the practice in the United States of America."
49 The power to stay proceedings on grounds of clearly inappropriate forum has been held to be an aspect of the inherent or implied power which, in the absence of some statutory provision to the same effect, every court must have to prevent its own processes being used to bring about injustice: CSR Limited v Cigna Insurance Australia Ltd [1997] HCA 33; (1997) 189 CLR 345 at 391.
50 A further source of the power of the Court to stay proceedings is section 67 Civil Procedure Act 2005:
"Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day."