Geoffrey Wayne Aldred & Hellen Doris Aldred (t/a Direct Fascia Supplies) v Australian Building Industries - [1987] NTSC 45 - NTSC 1987 case summary — Zoe

NTNTSC

Geoffrey Wayne Aldred & Hellen Doris Aldred (t/a Direct Fascia Supplies) v Australian Building Industries

[1987] NTSC 45

Supreme Court of the NT|1987-08-06|Before: Nader J

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Source facts

Court

Supreme Court of the NT

Decision date

1987-08-06

Before

Nader J

Source

Original judgment source is linked above.

Judgment (2 paragraphs)

[1]

Geoffrey Wayne Aldred & Hellen Doris Aldred (t/a Direct Fascia Supplies) v Australian Building Industries (t/a Australian Building Industries) [1987] NTSC 45; 48 NTR 59; 89 FLR 68 (6 August 1987)

[2]

COURT IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA Nader J.(1) CWDS Contract - words and phrases - jurisdiction clause

meaning of 'attorn' - whether exclusive jurisdiction clause or anticipatory submission to jurisdiction - stay of proceedings - whether application for stay should be refused - relevant considerations. Cases applied: Evans Marshall and Co. Ltd. v Bertola SA and Anor (1973) 1 All ER 992 Huddart Parker Ltd v The Ship Mill and Her Cargo [1950] HCA 43; (1950) 81 CLR 502 Cases considered: Lewis Construction Co Pty Ltd v M. Tichauer Societe Anonyme [1966] VicRp 45; (1966) VR 341 The Eleftheria Cases referred to: Heyman v Darwins Ltd Mackender v Feldia AG Metropolitan Tunnel and Public Works Ltd v London Electric Railway Co YTC Universal Ltd (in liquidation) v Trans Europa Compania de Aviacion SA, (1968) Bar Library Transcript 366 The Christos (1977) 1 Lloyd's Law Reports 109 WC Thomas and Sons Pty Ltd v Bunge (Australia) Pty Ltd; General Produce Co, Third Party ; HRNG DARWIN #DATE 6:8:1987 Counsel for Applicant/Defendant: Mr Philbrick Counsel for Respondent/Plaintiff: Mr Waters ORDER The application for a stay of proceedings is dismissed. The defendant will pay the plaintiffs' costs of the application. JUDGE1 This is an interlocutory application by the defendant for an order striking out the plaintiffs' action for want of jurisdiction. The summons was amended to include a claim for a stay of the plaintiffs' action.

The applicant elected to proceed with the application for a stay without prejudice to its challenge to the jurisdiction of the court. The jurisdiction issue would involve such an investigation of the evidence that, it was submitted, it would be better to determine that question at the hearing of the action when the evidence would have to be adduced in any event. I accepted the suggestion as practicable, and this application now proceeds only as to whether there should be a stay of proceedings.
The action, in this court, brought by the plaintiffs, resident in the Northern Territory, against the defendant, incorporated in Queensland, depends upon what Mr Philbrick, counsel for the applicant, described as a distributorship agreement. The agreement, made on 1 July 1983, contains a clause in the following terms: '15. This agreement shall be construed in accordance with the laws of the State or territory set forth in the Sixth Schedule hereto (hereinafter called "the jurisdiction") and the parties hereto attorn to the courts of that jurisdiction.' THE SIXTH SCHEDULE The Jurisdiction: (Vide Clause 15) The State of Queensland, (Commonwealth of Australia)'
The competing submissions can be encapsulated as follows.
The applicant says that an effect of clause 15 is that the parties have agreed to institute and prosecute all litigation arising from any dispute concerning the agreement in courts of competent jurisdiction in Queensland and no other. Accordingly, the plaintiffs are in breach of the agreement in bringing action in this court. This court should, in accordance with justice and with the authorities refuse to permit such a course and should grant a stay of proceedings.
The respondents say that clause 15 is so vague and uncertain in meaning that the court should disregard it. It was drafted by the applicant, and, insofar as it is unclear, it would be proper to resolve the ambiguity against the applicant. Even if it is not so ambiguous as to warrant being disregarded, at the most, the only effect of the clause is to create a bias in favour of granting a stay: to place an onus upon the respondents to show that despite that bias this court should nevertheless proceed to hear the action. The facts, it is submitted, justify refusing a stay notwithstanding that bias.
Although a considerable amount of argument took place concerning the meaning of the clause, 'the parties hereto attorn to the courts of that jurisdiction.', it remains difficult to attribute to it an exact meaning. It may have been intended to express an agreement between the parties that in the event of any dispute the parties shall not object to the jurisdiction of the courts of Queensland whether or not those courts have jurisdiction under the general law. For example, if a dispute arose out of an alleged breach of the agreement in Tasmania involving a defendant resident in Tasmania, it may be argued that the parties by clause 15 have attorned or submitted to the courts of Queensland in any event so that if sued in Queensland the defendant would be in breach of clause 15 to object to the jurisdiction. Such a construction of clause 15, in the example given, would not, in terms, amount to an agreement not to resort to the Tasmanian courts in a case where they had jurisdiction under the general law. The clause would be an anticipatory submission to the jurisdiction of Queensland courts by a party in the event that it is invoked by the other party. Another possible interpretation is that the clause is an agreement that the parties will resort to Queensland courts and to no other in the event of a dispute: that is, that it is an 'exclusive jurisdiction clause'.
Dictionaries are unhelpful as to the meaning of attorn in its present context. Although Volume 1 of the Compact Edition of the Oxford English Dictionary (OUP 1971) p 139 has a very full entry for the word, including both transitive and intransitive uses, there is really nothing there to cast light on the exact sense in which the word is used in clause 15. Especially is it unhelpful in connexion with its intransitive meanings: clause 15 uses the word intransitively, its only object being indirect. The Macquarie Dictionary (Macquarie Library) p 149 includes: 'to turn over to another; transfer.' According to my researches, the word tornare, in classical times, meant 'to turn in a lathe'. By the middle ages the preposition ad had attached, with assimilation, to tornare to form the word attornare, 'to turn to'. It is known to be dangerous to assume that the origin of a word is a reliable guide to its present meaning. However, the evidence of its early meanings is not inconsistent with the possible effects I have attributed to the clause in which it is used.
I suspect that the expression 'attorn to the courts' is a term of art familiar to many but to which counsel and I happen to be strangers. Counsel were able to do little more than suggest that the words were used because they were on the drafting solicitor's computer programme. Is it a consequence of the age of word processors that man must attorn mastery to the machine? In Henry v Geoprosco International Ltd (1974) Lloyds Law Reports 536 at p 538, a question before Willis J. sitting on the Queen's Bench Division was whether the defendants had submitted to the jurisdiction of an Albertan court by urging before that court that Alberta was not the forum conveniens and by asking for a stay. In disposing of the case in favour of the defendant, Willis J. said, '...under that law the defendants were merely protesting jurisdiction and did not attorn by doing so.' Here the word seems to be almost the exact equivalent of 'submit'. Whatever the exact meaning of the clause, having regard to its general import, it must have been intended to have a meaning close to 'submit'. It remains unclear, even if one treats the word 'attorn' as synonymous with 'submit', which, if either, of the alternatives suggested above was in the minds of the parties. So vague is the expression that it may be rash even to assume that the parties were ad idem. Although I favour the former of the two possibilities postulated, namely, that the clause is an agreement not to contest the jurisdiction of the Queensland courts, nevertheless, recognizing the possibility that I am mistaken, I shall proceed on the basis that the second alternative may be the correct one, namely, that it is an 'exclusive jurisdiction clause', that the parties have agreed to refer all disputes to the Queensland courts, and that the action is brought in this court in breach of the stipulation in clause 15. I shall now consider whether, on that basis, the applicant should have its stay.
In Huddart Parker Ltd v The Ship Mill Hill and Her Cargo [1950] HCA 43; (1950) 81 CLR 502, Dixon J. was considering the effect of a clause for arbitration in an agreement for salvage services. In doing so his Honour expressed what I perceive to be an expression of principle. Where parties have made a contract to refer disputes to arbitration, there is a strong bias in favour of maintaining that contract. Dixon J. quoted Scrutton L.J. in Metropolitan Tunnel and Public Works Ltd v London Electric Railway Co. (1926) Ch 371 at p 389: 'A guiding principle on one side and a very natural and proper one, is that parties who have made a contract should keep it.' At the time of the decision in the Huddart Parker Case, November 1950, Dixon J. was able to say that the cases he had referred to showed that the court's discretion had not been restricted by any exclusive definition of the circumstances which would warrant a refusal of a stay. Although I do not think his honour said so expressly, I gathered that he regarded it to be proper that no such a priori criteria should be set. Dixon J. refused a stay, but his reasons were complicated by considerations not relevant to this case.
Hudson J. in Lewis Construction Co. Pty Ltd v M. Tichauer Societe Anonyme, [1966] VicRp 45; (1966) VR 341, was considering a contract with a stipulation that in the case of litigation the Commercial Court of Lyon was to be the only competent court. His Honour observed that the stipulation did not operate to oust the jurisdiction of the Victorian court which he found existed by reason of the fact that the contract had been made in Victoria. It had been necessary to consider this basis of jurisdiction because the defendant was not present within the jurisdiction. But, he said, such a stipulation is equivalent to an agreement to refer the disputes within its ambit to arbitration as though it were a submission under section 5 of the Arbitration Act 1958 (Vic.). His Honour then (at p374) referred to authorities for the proposition that, where there is such an agreement and application is made to stay proceedings brought in breach of the agreement, before allowing the action to proceed the court must be satisfied on good grounds that it ought not to stay: Heyman v Darwins Ltd (1942) AC 356 at p388; or it should approach the question of a stay with a strong bias in favour of maintaining the special bargain and holding the parties to their contract: Huddart Parker Case (supra).
The Eleftheria, (1969) 2 All ER 641, decided by Brandon J. in the Probate, Divorce and Admiralty Division, concerned an application for stay of an action brought by cargo owners against shipowners on the ground that the contracts of carriage sued on contained a Greek jurisdiction clause and were governed by Greek law. Brandon J. said: 'The principles established by the authorities can, I think, be summarised as follow: (I) where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the defendants apply for a stay, the English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (II) the discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (III) The burden of proving such strong cause os on the plaintiffs. (IV) In exercising its discretion, the court should take into account all the circumstances of the particular case. (V) In particular, but without prejudice to (IV), the following matters, where they arise, may properly be regarded: (a) In what country the evidence of the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts; (b) Whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects; (c) With what country either party is connected, and how closely; (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages; (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would --- (i) be deprived of security for that claim, (ii) be unable to enforce any judgment obtained, (iii) be face with a time-bar not applicable in England, or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.' In the event, after considering the material factors, Brandon J. granted a stay.
The facts of a more recent English case bear a similarity to the case at bar. Evans Marshall and Co Ltd v Bertola SA and another, (1973) 1 All ER 992, concerned a dispute between an English wholesale wine merchant, the plaintiff, and a Spanish wine vendor, Bertola. The plaintiff entered an agreement with Bertola for distribution of the latter's products. Clause 15 provided: 'If any law claim arises between the two parties it will be submitted to the Barcelona Court of Justice.' The events leading to the plaintiff issuing a writ out of the English court and applying for leave to serve notice of it out of the jurisdiction are complicated and need not be recounted except to mention that the immediate cause of the action was the giving of notice by Bertola of termination of the distributorship agreement. Kerr J. granted leave for service out of the jurisdiction, but made other orders not favourable to the plaintiff. The plaintiff appealed and Bertola cross-appealed. The main judgment on the appeal was that of Sachs L.J. Under the heading Jurisdiction his Lordship considered the effect of clause 15. He considered whether the English courts should permit the continuance of the proceedings against Bertola in view of clause 15. His Lordship noted that at the trial it was likely there would be a contest whether or not the clause was an "exclusive jurisdiction clause". For the purposes of the appeal, the plaintiff conceded that it should be so regarded, 'and that accordingly the burden lying on the plaintiffs when asserting that they can successfully claim to continue proceedings here is heavier than it would be if the jurisdiction given to the Barcelona court had not been exclusive.' Sachs L.J., agreed with Kerr J. that because of special circumstances the case was a proper one for the exercise of jurisdiction. Sachs L.J. said that Kerr J. had referred to the the judgment of Diplock L.J. in Mackender v Feldia AG, (1967) 2 QB 590 at 604, where he said: 'I...should require very strong reasons to induce me to permit one of them to go back on his word'; and to that of Lord Denning M.R. in YTC Universal Ltd (in Liquidation) v Trans Europa Compania de Aviacion SA, (1968) Bar Library transcript 366 at p 3, where he said: '...effect should usually be given to (the) agreement, though there may be exceptional cases where a case may be allowed to proceed in these courts despite such agreement...'. Sachs L.J. noted that the exceptional circumstances justifying Kerr J.'s decision had been fully set out by Kerr J. and that he would satisfy himself by summarising them. The substance of the case exclusively concerned the marketing of sherry in the United Kingdom. All essential witnesses were in the United Kingdom. Spanish law did not differ from English law in relevant respects to any substantial extent. Other reasons not material here were given.
Reference may also be made to W.C. Thomas and Sons Pty Ltd v Bunge (Australia) Pty Ltd; General Produce Company, Third Party, [1975] VicRp 78; (1975) VR 801; and The Christos, (1977) 1 Lloyd's Law Reports 109.
The authorities are not in conflict, and the various cases seem to apply the same test although they express it in different ways. On the basis which I have said may well be incorrect, namely, that clause 15 is an 'exclusive jurisdiction clause', there is a 'strong bias' in favour of maintaining it. The effect of that strong bias is to place a burden on the party seeking to disregard it to show facts that justify allowing him to do so. The bias is stronger in a case having an international element.
What are the significant facts ? Mrs Aldred, one of the plaintiffs, and her husband, the other plaintiff, reside at Wagaman, a suburb of Darwin. They are the chief witnesses in their case. The plaintiffs manage their business personally. There are no other persons able to do their work. If they were required to be absent from Darwin for any time their business would suffer seriously. They know of no-one who is able to operate their business for them in their absence. All of the evidence to be called on behalf of the plaintiffs is available in Darwin. This was specifically shown by Mr Waters, counsel for the plaintiffs, by reference to the facts alleged in the statement of claim. The plaintiffs intend to call their accountants who reside in Darwin. It would be very costly for the plaintiffs to take them to Queensland. Mr David Dauth, a witness to be called by the plaintiffs, has a business in Darwin. Mr Dauth will be severely inconvenienced if he were required to travel to Brisbane.
There is no evidence acceptable to me of what particular witnesses would have to come to Darwin on behalf of the defendant. There is no evidence of what hardship or inconvenience, if any, they would suffer by doing so. As Mr Waters observed, neither the plaintiffs nor the court have been told by the defendant what the trial issues will be. There is no means by which the court can weigh the assertion of Mr Behnfeld, the Managing Director of the defendant, unsupported by explanation, that he would be required to travel to Darwin on a number of occasions, or his bald assertion that 'senior representatives' of the defendant would also have to come to Darwin to give evidence. What will their evidence tend to prove? Mr Behnfeld says that his absence and the absence of senior members of ABI would be most inconvenient and costly to ABI and to ABI's network as it would interrupt the day-to-day management and administration of ABI and its network. ('ABI' is an abbreviation of the name of the defendant.) As Mr Waters said, it is not possible to evaluate these assertions. The court was not told what issue Mr Behnfeld would give evidence about. It was not told why he would have to come to Darwin 'on a number of occasions'. We remain in total ignorance why senior representatives of ABI are needed in Darwin. What issues will they testify about? Such evidence as there is creates the strong impression that the defendant is a firm of substance having 'senior representatives' and 'distributors' throughout Australia. I am convinced that the minimising of total hardship would favour the holding of the trial in Darwin.
The fact that the proper law of the contract is the law of Queensland is of little countervailing effect. It was conceded by the parties that the laws of Queensland and those of the Northern Territory are the same in all material respects. Furthermore, it cannot be said that that the defendant would lose any particular advantage it had bargained for, either adjectival or substantive, if the trial were to take place here. If there were an international element in the case, more serious consideration would have to be given to that question.
As the evidence stands, there is no question in my mind that the plaintiffs have shown the case to be quite exceptional. Their burden has been made lighter than it might have been if the defendant had not shown an almost cavalier approach towards telling the court what its case is about. It could have done so without submitting to the jurisdiction. Although the plaintiffs bear the onus, the failure of the defendant to adopt a positive approach to the application in respect of the issues to be raised by it and the form of its evidence in relation to those issues created a situation in which the court could the more readily accept the evidence of the plaintiffs.
The application for a stay of proceedings is dismissed. The defendant will pay the plaintiffs' costs of the application.