ADELAIDE, 24 April 1997 (hearing), 12 June 1997 (decision)

Solicitors: Fisher Jeffries as Agent for Mallesons Stephens Jacques (Vic.)

The plaintiffs in this action are the University of South Australia (the first plaintiff) and nine additional plaintiffs who are employees of the first plaintiff. The first defendant is GNB Battery Technologies Limited (GNB). It is pleaded that GNB is a manufacturer and distributor of exit lights. According to the statement of claim the second defendant, Rawsons Electrical Pty Ltd (Rawsons) is an electrical retailer and installer.

The plaintiffs have pleaded that in early 1988 Rawsons entered into an agreement for the sale and distribution of exit lights at the Underdale Campus of the South Australian College of Advanced Education. After the date of the contract the first plaintiff acquired, by statute, all the rights and obligations of the College of Advanced Education. According to the pleadings Rawsons installed the lights and on 11th March 1992 a fire broke out at the Underdale Campus. It is alleged that the fire was caused by an electrical fault in a capacitor which is a component of the exit lights. It is further alleged that GNB manufactured the lights.

The plaintiffs are suing for loss and damage caused as a result of the fire. The claim is based on various causes of action including breach of contract and negligence by Rawsons and negligence, breach of statutory duty and breach of the Trade Practices Act 1974 by GNB.

On 5th September 1996 GNB issued a third party notice against Nichicon (Singapore) Pte Ltd (Nichicon). It is pleaded in the third party statement of claim that Nichicon carries on business in Singapore as a manufacturer and seller of capacitors and that it provides advice to potential customers about capacitors manufactured and sold by it. It is pleaded that in about October 1983 Nichicon made various representations to GNB about capacitors which it was able to supply for emergency lighting units. It is further pleaded that Nichicon arranged for the manufacture of circuit boards and the assembly of emergency lighting units for GNB. GNB stipulated that the capacitors for the lighting units were to be supplied by Nichicon. It is alleged that the lighting units were manufactured initially by B & Lee Electronics Engineering Pte Ltd (B & Lee) and subsequently by Siant Electronics Pte Ltd (Siant).

Mr Delkousis, a solicitor acting for Nichicon, summarised the effect of the third party notice in his affidavit of 16th April 1997 in the following manner: "By way of summary, GNB in the Third Party Notice alleges, inter alia, that:

(a) during the period 1984 to 1988, it sold Emergency Lighting Units in Australia;

(b) the Emergency Lighting Units had been manufactured for GNB in Singapore, initially by B & Lee and subsequently by Siant;

(c) the Emergency Lighting Units contained 1.8 mfd 250V capacitors which were rated as direct current (ie 'DC') rather than as alternating current (ie 'AC');

(d) the capacitors used in the Emergency Lighting Units had been supplied by Nichicon;

(e) Nichicon had represented that it would and had supplied 'AC' rated capacitors;

(f) Nichicon is liable to indemnify GNB or make contribution for any liability of GNB to the plaintiffs in this proceeding." 6. Prior to the commencement of proceedings in the South Australian matter GNB commenced proceedings against Nichicon in the Supreme Court of Victoria. The written statement of claim was filed on 27th August 1993. GNB's action is principally for negligent misstatement. The effect of the allegations is also summarised by Mr Delkousis in his affidavit as follows: "(a) during the period 1984 to 1988, [GNB] sold emergency lighting units in Australia (the 'Emergency Lighting Units');

(b) the Emergency Lighting Units had been manufactured for GNB in Singapore, initially by B & Lee Electronics Engineering Pte Ltd ('B & Lee') and subsequently by Siant Electronics Pte Ltd ('Siant');

(c) the Emergency Lighting Units contained 1.8 mfd 250V capacitors which were rated as direct current (ie 'DC') rather than as alternating current (ie 'AC');

(d) the use of the 'DC' capacitors caused a number of Emergency Lighting Units to ignite and the premises occupied by third parties in which those Emergency Lighting Units had been installed to catch fire and burn (the 'Losses');

(e) the capacitors used in the Emergency Lighting Units had been supplied by Nichicon;

(f) Nichicon is liable to GNB for the Losses as Nichicon had represented that it would and had supplied 'AC' rated capacitors." 7. The Victorian proceedings are going through the interlocutory stages. Part of the loss and damage claimed by GNB in those proceedings comprises claims made upon GNB for damage resulting from fires allegedly caused by the ignition of the capacitors supplied by Nichicon in emergency lighting units. The claims total $563,964.62 and include damage said to have been caused in the fire at the Underdale Campus of the South Australian College of Advanced Education.

8. Nichicon has applied for a permanent stay of the South Australian proceedings on the ground that they constitute an abuse of the process of the court. In the alternative I am asked to set aside the third party proceedings (or alternatively service thereof) on the grounds that service out of Australia is not authorised by r18 of the Supreme Court Rules and that South Australia is not a convenient forum for the trial of the proceedings.

9. The claim that the South Australian third party proceedings are an abuse of the process of the court is based on Nichicon's assertion that they raise the same issues of law in fact as do the proceedings commenced in Victoria. The principle relied upon by Nichicon as entitling it to an order for a permanent stay of proceedings on this ground is well recognised. In McHenry v Lewis (1982) 22 Ch D at 400 Jessell M.R. observed:

"In this country, where the two actions are by the same man in Courts governed by the same procedure, and where the judgments are followed by the same remedies, it is prima facie vexatious to bring two actions where one will do." 10. The vexation complained of in the present matter is of the same type as that raised in McHenry v Lewis. To quote again from Jessell M.R (p402):

"The vexation, if any, consists in bringing several proceedings to try the same question or series of questions." 11. It is also well recognised that the power to stay proceedings on this ground should be exercised with considerable caution. (McHenry v Lewis supra at 406; Moore v Inglis (1976) 50 ALJR 589 at 593). The application was refused in McHenry v Lewis but granted in Moore v Inglis. Mr Harris, for the applicant, placed considerable reliance on the latter case. The circumstances in Moore v Inglis pointed strongly to vexatious litigation. The plaintiff, was an employee in the Parliamentary Library in Canberra. She brought an action in the High Court against three senior officers in her department, the Commonwealth, the Commonwealth Attorney-General and the secretary of the Commonwealth Attorney-General's department in which she sought relief by way of 29 declarations or injunctions, but not damages. The action was based on the plaintiff's transfer from one post to another and the allocation to her of a different room from that previously occupied by her. The statement of claim alleged five different kinds of conspiracy. At the time this action was brought the plaintiff had already commenced another action in the Supreme Court of the Australian Capital Territory against the three officers of her department and two other employees. In that action the plaintiff claimed damages for conspiracy and defamation. Most of the facts pleaded in each case were the same and, in substance, the subject matter was the same in each action.

12. Mason J who heard the application stayed the High Court proceeding. He described the statement of claim as rambling and repetitious and bearing "a haunting resemblance" to previous litigation commenced by the same plaintiff. Neither the causes of action nor the defendants were precisely the same, in each case, but the substance of the two actions was the same. Mason J referred to the plaintiff's stated purpose for bringing the action (supra at 592):

"In argument the plaintiff stated that the purpose of bringing the action in this Court was to enable declarations to be made that there were criminal conspiracies on foot and that illegalities had occurred so that these declarations could then be taken into account in the assessment of damages in the Supreme Court. Viewed against this background, all the matters complained of in this Court and the different relief sought here are subsidiary and subservient to the claim for damages for conspiracy made in [the Supreme Court action]." 13. His Honour concluded (592):

"There is no relevant limitation on the jurisdiction of the Supreme Court to grant relief by way of declaration and injunction which does not apply to this Court. Consequently, the circumstances that the relief claimed in the two Courts is different is not in itself a reason for allowing the two actions to continue. Putting aside the inherent deficiencies in her claim to relief, deficiencies which would work against her case as much in this Court as in the Supreme Court, there is no reason why the plaintiff could not, or cannot, seek relief by way of declaration and injunction in addition to, or in substitution of, damages in the action in the Supreme Court. Any difficulty which the plaintiff may encounter in securing appropriate amendments to the proceedings in the Supreme Court will stem, not from jurisdictional limitations, but from the manner in which the plaintiff has presented her case to date and from the insufficiency of the matters upon which she relies to ground the relief which she claims. However, these difficulties do not provide a reason for allowing the plaintiff to maintain a second proceeding in this Court relating to the subject matter already in course of litigation in the Supreme Court." 14. I was also referred to a decision of Cox J in Australian Consolidated Industries Ltd v Scholle Industries Pty Ltd (1982) 62 FLR 289. The plaintiffs instituted proceedings in this court against the defendant for an injunction and damages for alleged infringement of letters patent for an invention, namely, a tap for use in wine making. At the time the South Australian proceedings were instituted there was on foot in the Supreme Court of Victoria an action by the plaintiff claiming damages and injunctive relief in relation to a "Mark 1" version of the tap. The differences between the "Mark 1" version of the tap and the "Mark 2" model which was the subject of the South Australian proceedings were immaterial and, with minor amendments, the Victorian proceedings could have been amended to encompass the later model. After referring to McHenry v Lewis and Moore v Inglis Cox J said (295): "It may be different where the actions are begun in different countries, but that is not a relevant consideration in this case. While the Supreme Courts of Victoria and South Australia are constituted under separate State legal systems, both courts are exercising, in the two actions instituted by the plaintiffs, the same invested jurisdiction under the Patents Act, and the relief that each court may order is the same. There may be minor differences as to evidence or procedure between the practices of the two courts, but it has not been suggested that they would make any material difference to the trial of these actions. The invested jurisdiction is Commonwealth-wide, in the sense that it necessarily extends to any acts of infringement occurring anywhere in Australia, and the orders made by either court in this jurisdiction would operate everywhere in Australia. Dr. Emmerson, for the plaintiffs, referred to the principles governing a stay of proceedings set out in the speech of Lord Diplock in Rockware Glass Ltd. v MacShannon [1978] A.C. 795, at p.812. However, that was a case in which the plaintiffs were said to be forum-shopping, so the matter before the House of Lords was simply whether they should be permitted to sue in one court rather than another. Section 147 of the Patents Act is adequate to deal with that problem in patent actions in this country. The question raised by the defendant's summons is of a different type (although no doubt both can be subsumed under a general requirement of fairness), and is to be answered in accordance with the principle affirmed in McHenry v. Lewis.

As there was, in my opinion, no sufficient reason forthcoming for expecting the defendant to fight the same battle on two different fronts, I indicated that I was disposed to make the order requested by the defendant that the proceedings in this Court be stayed indefinitely, upon the defendant undertaking not to oppose such amendments as the plaintiffs might need to make to the Victorian pleadings in order to bring in the alleged Mark 2 breaches that occurred after the issue of the Victorian writ. It would then be open to the plaintiffs to seek a similar interlocutory injunction in the Supreme Court of Victoria. However, the application for interlocutory relief in the present action having got so far, Dr. Emmerson thereupon argued strongly for the alternative course of the plaintiffs being permitted to amend the South Australian pleadings in order to include the allegations of infringement with respect to the Mark 1 tap. I considered that this would be a reasonable solution to the problem, and I therefore dismissed the defendant's summons, with costs against the plaintiffs, upon the plaintiffs undertaking to make the necessary amendments in the South Australian action and thereupon to discontinue the Victorian Action." 15. In the present case Mr White, for GNB, conceded that, to a large extent, the issues raised by the two sets of litigation were the same. However he drew attention to one aspect of the South Australian proceedings which was not part of the Victorian proceedings. In addition to claiming an indemnity from Nichicon in respect of any liability GNB might have to the plaintiffs, there is an alternative claim for contribution pursuant to s26 of the Wrongs Act. GNB's pleading on the issue is in paragraph 63 which, in so far as it is relevant, states that GNB claims: "(b) In the alternative contribution in the form of complete indemnity pursuant to Section 26 of the Wrongs Act as amended in respect of any liability of the First Defendant to the Plaintiffs for damages and costs on the grounds that having regard to the extent of the Third Party's responsibility for the costs and damage suffered by the Plaintiff and as liability on the part of the First Defendant was negligible and that the latter should be entitled to the exemption from liability to make any contribution.

(c) In the alternative contribution to such extent as is just and equitable having regard to the respective degrees of responsibility of the First Defendant and the Third Party for the loss and damage suffered by the Plaintiff." 16. Mr White explained that the issue of contribution which GNB had raised in the South Australian proceedings is not an issue which could be litigated in the course of the Victorian proceedings. Contribution is dealt with in Part IV of the Wrongs Act 1958 (Vic.). Section 23B(6) provides: "(6) References in this section to a person's liability in respect of any damage are references to any such liability which has been or could be established in an action brought against that person in Victoria by or on behalf of the person who suffered the damage and it is immaterial whether any issue arising in any such action was or would be determined (in accordance with the rules of private international law) by reference to the law of a place outside Victoria." 17. Mr White submitted that the Victorian Supreme Court Rules would not permit an action in relation to the fire to be brought by the University of South Australia and the other plaintiffs against Nichicon in Victoria. In my view this argument is correct.

18. On the material presently before me I accept that there is a genuine reason for commencing proceedings in South Australia. However Mr Harris has raised important concerns about the paucity of the pleadings on the issue of contribution. In many cases the issues on contribution will be apparent from the other pleadings. However that is not so in the present case. I think this is a matter which calls for directions pursuant to r37.08 with a view to ordering particulars of the claim for contribution and, in particular, the manner in which it is claimed that Nichicon might be liable to the plaintiffs in the South Australian proceedings.

19. In these circumstances and subject to the other main argument raised by Mr Harris I think it would be appropriate to adjourn consideration of Nichicon's application for a permanent stay of proceedings pending compliance with any directions which might be given along the lines which I have suggested. At this stage, however, I am not convinced that GNB has embarked upon a vexatious cause of action which should be stayed permanently.

20. As I have pointed out, the application also seeks the setting aside of the third party notice and the statement of claim filed in relation to it or, alternatively, the service thereof, on the grounds that the service outside Australia was not authorised or that South Australia is not a convenient forum for the trial of the proceedings. Mr Harris argued that as there had been a challenge to the court's jurisdiction to entertain the third party proceedings the onus was on the respondent as the party issuing those proceedings to establish by evidence that there was "a strong argument to support each element of the cause of action".

21. The rules relating to service out of the jurisdiction have undergone considerable change in recent years. It is no longer necessary to obtain leave to serve a summons out of Australia (r18.02). R37.01(7) provides that the rules relating to the service of summonses are to apply to the service of the third party notice as if it was a summons. Categories of cases in which there can be service out of Australia without leave are set out in r18.02. In so far as it is relevant to the present case r18.02 provides, somewhat ungrammatically, as follows: "A summons may be served out of Australia without leave of the Court whenever the subject matter of the claim is or relates to:

(fa) Where the proceedings, wholly or partly, are founded on, or are for the recovery of damages in respect of damage suffered in the State caused by a tortious act or omission wherever occurring." 22. Under the old Supreme Court Rules service out of the jurisdiction required leave (O11 r1) and an application for a grant of leave had to be supported by "an affidavit stating the grounds on which the application is made and that, in the deponent's belief, the plaintiff has a good cause of action, and showing in what place or country the defendant is, or probably may be found". (O11 r3A). O11 r3A(2) provided that:

"No such leave shall be granted unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction under this order." 23. There have been changes in other States to the rules for service out of the jurisdiction and the wording of the new rules differs from State to State. This may account for different approaches to the interpretation of the respective rules in Victoria and New South Wales particularly.

24. Mr Harris placed considerable reliance on the interpretation of the relevant Victorian Rules by McDonald J in Williams v The Society of Lloyd's [1994] VicRp 19; [1994] 1 VR 274. The categories of cases in which service may take place out of the jurisdiction without an order of the court are similar to those in South Australia. (See r7.01 of the Victorian Supreme Court Rules). R7.04(1) requires the court to be "satisfied that the subject matter of the proceeding so far as it concerns (the party served) is within r7.01" before it can make an order that the plaintiff shall be at liberty to proceed where the party has not filed an appearance. After reviewing a number of cases McDonald J concluded that it was for the plaintiff to persuade the court that there is "a strong arguable case" that service of the claim out of the jurisdiction is justifiable under one or other of the categories referred to in the rules.

25. In New South Wales a more flexible approach has been adopted. The New South Wales Rules are broadly similar to the South Australian Rules. In Pendall Nominees Pty Ltd v M & A Investments Pty Ltd (1989) 18 NSWLR 383 at 394 Rogers CJ Comm. D. said:

"The self-evident intention of the amendments to the Rules, made in 1988, was to liberalise the Rules as to exercise of jurisdiction and enlarge the scope for exercise of discretion in accordance with the developing conflicts of law rules. I am inclined to the view that, if indeed, the former rules made applicable the approach enshrined in the English authorities, the amendment to the rules did effect a change. The new rule no longer requires the court to be 'satisfied', whether service is authorised by one, or other, of the nexus provisions. Nonetheless, evidence of the nexus remains a matter of considerable importance. It seems to me that it is not appropriate to attempt to lay down any general rule of what is required in order to make out a case for service outside the jurisdiction. No single test will meet all the circumstances. Thus, where the apparently qualifying condition for service is an issue that will not thereafter be reagitated, one may well look for a greater degree of assurance than in a case, such as the present, where the question will not only be argued at the hearing but will be the ultimate issue. As well, the very nature of the dispute seems to me to be of importance, not necessarily just in relation to the question of discretion." 26. Giles J reached a similar conclusion in Esanda Finance Corporation Ltd v Wordplex Information Systems Ltd (1990) 19 NSWLR 146 at 290: "The relevant rules prior to the amendments in 1988 required that the court 'be satisfied' that the proceedings were proceedings to which Pt 10, r 1 applied and that the plaintiff had a prima facie case for the relief sought. The parallel with s. 11 of the Service and Execution of Process Act (Cth) is obvious. That requirement conditioned the grant of leave to serve the originating process out of Australia, or the confirmation of service. The scheme introduced by the amendments to the Rules in 1988 did away with leave to serve the originating process out of Australia. Instead Pt 10, r 2, now provides that the plaintiff shall not proceed against a defendant who does not appear except with the leave of the court. There is no requirement stated that anything be made to appear to the court, or that the court be satisfied as to anything.

That points to a more flexible approach to the assumption of jurisdiction over a foreign defendant. The starting point is still one or more of the paragraphs in Pt 10, r 1, but there is greater flexibility in the determination of whether the proceedings fall within one of the paragraphs and whether the proceedings should otherwise continue in this Court. There being no criteria specified in Pt 10, r 2, all the circumstances of the case must be taken into account. The same flexibility can be seen in relation to any application by the foreign defendant pursuant to Pt 10, r 6A. That rule provides that the court may make an order of the kind referred to in Pt 11, r 8 incorporating a wide variety of possible orders whereby the applicant might not be subjected to the court's jurisdiction, including to 'decline in its discretion to exercise its jurisdiction in the proceedings'. The rule goes on to provide that without limiting that power the court may make an order that the service was not authorised by the rules or that 'this Court is an inappropriate forum for the trial of the proceedings'. Again, no criteria are specified, so that all the circumstances of the case must be taken into account." 27. In South Australia the plaintiff may apply to the court "for such directions as the Court may think fit" in the event that a person served with a summons out of the jurisdiction fails to file an appearance. (r24.01) Where a defendant challenges jurisdiction or the validity of the service of the summons under r22.01 no criteria is laid down for the court to follow in considering the challenge. It would seem that the considerations relied upon in the New South Wales cases for adopting a more flexible approach are equally applicable to the South Australian Rules. The features identified by McDonald J in Williams' case which enabled him to distinguish the Victorian Rules are not present in the South Australian Rules. In my view the approach suggested by Rogers CJ and Giles J is appropriate in relation to the procedure to be adopted under our rules.

28. In considering whether the subject matter of the proceedings is within r18.02(fa) the focus is on the third party proceedings which incorporate claims for indemnity and contribution. The claim by the plaintiff in the main proceeding is relevant only in regards to context or background. (McCleave v Gyles [1902] 1 Ch. 287 at 300; Saltram Wine Estates Pty Ltd v Independent Stave Co (1992) 57 SASR 156 at 162.)

29. Although I acknowledge the appropriateness of the flexible approach suggested in the New South Wales authorities, care must be taken to ensure that a foreigner is required to submit to the jurisdiction only when a case for jurisdiction is made out under the rules. In the Esanda Finance case Giles J said (at 155):

"The relatively limited propositions for which Ex parte Walker; Re Caldwell's Wines Ltd [1931] NSWStRp 32; (1931) 31 S.R. (NSW) 494 and W A Dewhurst and Co Pty Ltd v Cawrse [1960] VicRp 44; [1960] V.R. 278, stood has been overtaken by these changes. That does not mean that it is unnecessary to consider whether one of the paragraphs in Pt 10, r 1, is applicable, or that there is no need at all for a plaintiff to address that matter. In many, if not most, cases a plaintiff who failed to bring evidence demonstrating that the service overseas was authorised would not be given leave to proceed, or would fail in resisting an application to have the originating process and its service set aside; and in some cases the weight of competing evidence on that question would fall for recognition." 30. In my view the present case calls for some evidence by the respondent to establish a prima facie case for jurisdiction. It seems there could be no valid objection to affidavit evidence, perhaps based on information and belief in certain respects. However there should be some basis founded on evidence. It is of relevance to note that in so far as the third party claim is based on contribution, there is no indication, even on the pleadings, as to how the respondent would seek to make out its case.

31. I am prepared to allow the respondent the opportunity to put its case in order in respect of both of the issues which have been argued before me. I will hear the parties as to the orders which should be made in order to put into effect the course of action which I have suggested.

32. I should add that, leaving aside the matters raised on the two main issues which I have discussed, it has not been demonstrated that South Australia is a clearly inappropriate forum having regard to the matters referred to in Voth v Manildra Flour Mills Pty Ltd and Anor [1990] HCA 55; (1990) 171 CLR 538 at 564f. I am not prepared, therefore, to stay the action on this ground.